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Surmodics (SRDX) Q1 Earnings Top Estimates, FY23 View Revised
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Surmodics, Inc. (SRDX - Free Report) delivered an adjusted loss per share of 50 cents in the first quarter of fiscal 2023, which is wider than the year-ago quarter’s loss of 13 cents per share. However, the figure was narrower than the Zacks Consensus Estimate of a loss of 64 cents per share.
Our projection of loss per share was 64 cents, in line with the Zacks Consensus Estimate.
GAAP loss per share for the quarter was 56 cents, wider than the year-earlier loss of 20 cents per share.
Revenues in Detail
Surmodics registered revenues of $24.9 million in the fiscal first quarter, up 8.4% year over year. The figure surpassed the Zacks Consensus Estimate by 3.1%.
The fiscal first-quarter revenue compares to our estimate of $24.4 million.
The top line was boosted by solid year-over-year product sales growth from the Medical Device business. However, this was partially offset by a decrease in Surmodics’ In Vitro Diagnostics (IVD) revenues.
Segmental Analysis
Surmodics operates via two reportable segments — Medical Device and IVD.
In the reported quarter, sales at the Medical Device segment summed $19 million, up 12.5% from the year-ago quarter. Per management, strong sales of Surmodics’ performance coating reagents and device products, including important contributions from sales of the company’s Pounce and Sublime products, significantly drove the segment. The company also saw higher royalty and license fee revenue.
This figure compares to our Medical Device fiscal first-quarter revenue projection of $17.7 million.
In the quarter under review, IVD sales declined by 2.9% to $5.9 million, primarily resulting from the completion of a customer development program.
This figure compares to our IVD fiscal first-quarter revenue projection of $6.7 million.
The company also derives revenues from three primary sources — Product sales, Royalties and license fees, and Research, development and other fees.
In the quarter under review, Product sales were $14.2 million, up 15.3% from the prior-year quarter. Royalties and license fees revenues totaled $8.8 million, up 8.2% from the prior-year quarter. Research, development and other revenues were $1.9 million, down 24.5% year over year.
In the quarter under review, Surmodics’ gross profit rose 6.3% to $19.7 million. Gross margin contracted 157 basis points to 78.9%.
Selling, general & administrative expenses rose 43.9% to $13.2 million. Research and development expenses went up 9.3% year over year to $12.7 million. Adjusted operating expenses of $25.9 million rose 24.6% year over year.
Adjusted operating loss totaled $6.3 million compared with the prior-year quarter’s adjusted operating loss of $2.4 million.
Financial Position
Surmodics exited first-quarter fiscal 2023 with cash and cash equivalents of $26.4 million compared with $18.9 million at the end of fiscal 2022. The company ended first-quarter fiscal 2023 with total debt of $29.5 million compared with $10 million at the end of fiscal 2022.
Net cash used in operating activities at the end of first-quarter fiscal 2023 was $10.8 million compared with net cash used in operating activities of $7 million a year ago.
Fiscal 2023 Guidance
Surmodics has revised its full-year financial outlook.
The company now projects fiscal year revenues to be within the range of $102 million-$106 million, representing an increase of 2-6% over the comparable prior-year period. This is lower than the previous outlook of $103 million-$107 million, reflecting an uptick of 3-7% over the comparable prior-year period. The Zacks Consensus Estimate for the same is currently pegged at $105.3 million.
Adjusted diluted loss per share for fiscal 2023 is now expected within the range of $2.09-$1.69 compared with the prior outlook of adjusted diluted loss per share of $2.54-$2.14. The Zacks Consensus Estimate for the same is currently pegged at a loss of $2.35 per share.
Our Take
Surmodics exited the first quarter of fiscal 2023 with better-than-expected results. The company registered robust revenues from its Medical Device segment, as well as from its Product sales, and royalties and license fees. During the quarter, Surmodics witnessed strong contributions from sales of its Pounce and Sublime products, indicating their continued solid demand. This looks promising for the stock.
In October 2022, Surmodics announced its entry into a new, five-year credit agreement with MidCap Financial, which is encouraging. Announcements like the favorable 24-month data from its TRANSCEND clinical trial of the SurVeil drug-coated balloon (DCB) and positive 12-month data from its SWING first-in-human study of Sundance Sirolimus DCB raise our optimism about the stock.
However, the company’s dismal year-over-year bottom-line results in the fiscal first quarter are concerning. Lower revenues from the IVD segment and a decline in research, development and other revenues are discouraging. The gross margin contraction also does not bode well for the stock. Surmodics continued to incur operating losses in the reported quarter, which further raised our apprehension.
Zacks Rank and Key Picks
Surmodics currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Cardinal Health, Inc. (CAH - Free Report) , McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Cardinal Health, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2023 adjusted EPS of $1.32, beating the Zacks Consensus Estimate by 16.8%. Revenues of $51.47 billion outpaced the consensus mark by 2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 6.4%.
McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.
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Surmodics (SRDX) Q1 Earnings Top Estimates, FY23 View Revised
Surmodics, Inc. (SRDX - Free Report) delivered an adjusted loss per share of 50 cents in the first quarter of fiscal 2023, which is wider than the year-ago quarter’s loss of 13 cents per share. However, the figure was narrower than the Zacks Consensus Estimate of a loss of 64 cents per share.
Our projection of loss per share was 64 cents, in line with the Zacks Consensus Estimate.
GAAP loss per share for the quarter was 56 cents, wider than the year-earlier loss of 20 cents per share.
Revenues in Detail
Surmodics registered revenues of $24.9 million in the fiscal first quarter, up 8.4% year over year. The figure surpassed the Zacks Consensus Estimate by 3.1%.
The fiscal first-quarter revenue compares to our estimate of $24.4 million.
The top line was boosted by solid year-over-year product sales growth from the Medical Device business. However, this was partially offset by a decrease in Surmodics’ In Vitro Diagnostics (IVD) revenues.
Segmental Analysis
Surmodics operates via two reportable segments — Medical Device and IVD.
In the reported quarter, sales at the Medical Device segment summed $19 million, up 12.5% from the year-ago quarter. Per management, strong sales of Surmodics’ performance coating reagents and device products, including important contributions from sales of the company’s Pounce and Sublime products, significantly drove the segment. The company also saw higher royalty and license fee revenue.
This figure compares to our Medical Device fiscal first-quarter revenue projection of $17.7 million.
In the quarter under review, IVD sales declined by 2.9% to $5.9 million, primarily resulting from the completion of a customer development program.
This figure compares to our IVD fiscal first-quarter revenue projection of $6.7 million.
The company also derives revenues from three primary sources — Product sales, Royalties and license fees, and Research, development and other fees.
In the quarter under review, Product sales were $14.2 million, up 15.3% from the prior-year quarter. Royalties and license fees revenues totaled $8.8 million, up 8.2% from the prior-year quarter. Research, development and other revenues were $1.9 million, down 24.5% year over year.
Surmodics, Inc. Price, Consensus and EPS Surprise
Surmodics, Inc. price-consensus-eps-surprise-chart | Surmodics, Inc. Quote
Margin Trend
In the quarter under review, Surmodics’ gross profit rose 6.3% to $19.7 million. Gross margin contracted 157 basis points to 78.9%.
Selling, general & administrative expenses rose 43.9% to $13.2 million. Research and development expenses went up 9.3% year over year to $12.7 million. Adjusted operating expenses of $25.9 million rose 24.6% year over year.
Adjusted operating loss totaled $6.3 million compared with the prior-year quarter’s adjusted operating loss of $2.4 million.
Financial Position
Surmodics exited first-quarter fiscal 2023 with cash and cash equivalents of $26.4 million compared with $18.9 million at the end of fiscal 2022. The company ended first-quarter fiscal 2023 with total debt of $29.5 million compared with $10 million at the end of fiscal 2022.
Net cash used in operating activities at the end of first-quarter fiscal 2023 was $10.8 million compared with net cash used in operating activities of $7 million a year ago.
Fiscal 2023 Guidance
Surmodics has revised its full-year financial outlook.
The company now projects fiscal year revenues to be within the range of $102 million-$106 million, representing an increase of 2-6% over the comparable prior-year period. This is lower than the previous outlook of $103 million-$107 million, reflecting an uptick of 3-7% over the comparable prior-year period. The Zacks Consensus Estimate for the same is currently pegged at $105.3 million.
Adjusted diluted loss per share for fiscal 2023 is now expected within the range of $2.09-$1.69 compared with the prior outlook of adjusted diluted loss per share of $2.54-$2.14. The Zacks Consensus Estimate for the same is currently pegged at a loss of $2.35 per share.
Our Take
Surmodics exited the first quarter of fiscal 2023 with better-than-expected results. The company registered robust revenues from its Medical Device segment, as well as from its Product sales, and royalties and license fees. During the quarter, Surmodics witnessed strong contributions from sales of its Pounce and Sublime products, indicating their continued solid demand. This looks promising for the stock.
In October 2022, Surmodics announced its entry into a new, five-year credit agreement with MidCap Financial, which is encouraging. Announcements like the favorable 24-month data from its TRANSCEND clinical trial of the SurVeil drug-coated balloon (DCB) and positive 12-month data from its SWING first-in-human study of Sundance Sirolimus DCB raise our optimism about the stock.
However, the company’s dismal year-over-year bottom-line results in the fiscal first quarter are concerning. Lower revenues from the IVD segment and a decline in research, development and other revenues are discouraging. The gross margin contraction also does not bode well for the stock. Surmodics continued to incur operating losses in the reported quarter, which further raised our apprehension.
Zacks Rank and Key Picks
Surmodics currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Cardinal Health, Inc. (CAH - Free Report) , McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Cardinal Health, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2023 adjusted EPS of $1.32, beating the Zacks Consensus Estimate by 16.8%. Revenues of $51.47 billion outpaced the consensus mark by 2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 6.4%.
McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.