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Surmodics (SRDX) Q2 Earnings Top Estimates, '24 View Up
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Surmodics, Inc. (SRDX - Free Report) delivered earnings per share (EPS) of 7 cents in the second quarter of fiscal 2024 against the year-ago quarter’s loss of 40 cents per share. The metric beat the Zacks Consensus Estimate of a loss of 36 cents per share by 119.4%.
GAAP EPS for the quarter was 2 cents, narrower than the year-earlier loss of 55 cents per share.
Revenues in Detail
Surmodics registered revenues of $31.9 million in the fiscal second quarter, up 18% year over year. The figure surpassed the Zacks Consensus Estimate by 11%.
The top line was boosted by solid year-over-year product sales growth from the Medical Device business.
Excluding SurVeil drug-coated balloon (DCB) license fee revenues, total revenues increased 19% year over year to $30.9 million.
Segmental Analysis
Surmodics operates via two reportable segments — Medical Device and IVD.
In the reported quarter, sales in the Medical Device segment summed $24.8 million, up 26% from the year-ago quarter. Excluding SurVeil DCB license fee revenues, Medical Device revenues increased 29% to $23.7 million year over year. This figure compares to our Medical Device fiscal second-quarter revenue projection of $22.5 million.
Medical Device revenue growth was primarily driven by product sales of $11.1 million, up 40% year over year. Product sales growth was driven primarily by fulfillment of the initial stocking order for the SurVeil DCB from Abbott (Surmodics’ exclusive distribution partner for the product) and continued sales growth from the Pounce thrombectomy device platform.
In the quarter under review, IVD sales declined 5% to $11 million, primarily driven by lower sales of colorimetric substrate products. This figure compares to our IVD fiscal second-quarter revenue projection of $6.3 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 $18.1 million, up 17.9% from the prior-year quarter. This figure compares to our fiscal second-quarter revenue projection of $17.7 million.
Royalties and license fees revenues totaled $11.4 million, up 21% from the prior-year quarter. This figure compares to our fiscal second-quarter revenue projection of $9.5 million.
Research, development and other revenues were $2.4 million, up 1.2% year over year. This figure compares to our fiscal second-quarter revenue projection of $1.6 million.
Margin Trend
In the quarter under review, Surmodics’ gross profit increased 15.8% to $24.9 million. However, the gross margin contracted 120 basis points to 77.7%. We had projected 76.2% of gross margin for the fiscal second quarter.
Selling, general & administrative expenses increased 0.9% to $13.1 million. Research and development expenses increased 1% year over year to $8.8 million. Operating expenses, excluding product costs, decreased 14% to $24.2 year over year.
Adjusted operating profit totaled $1.5 million against the prior-year quarter’s adjusted operating loss of $4.4 million.
Financial Position
Surmodics exited second-quarter fiscal 2024 with cash and cash equivalents of $33 million compared with $23.4 million at the end of the fiscal first quarter of 2024. Total long-term debt at the end of second-quarter fiscal 2024 was $29.5 million.
Net cash used in operating activities at the end of second-quarter fiscal 2024 was $1.4 million compared with $16.6 million a year ago.
Fiscal 2024 Guidance
Surmodics has revised its financial outlook for fiscal 2024.
The company now projects fiscal 2024 revenues in the range of $122 million-$124 million, representing a decrease of 8-6% over the comparable prior-year period. This is raised and tightened from the earlier projection of $117 million-$121 million. The Zacks Consensus Estimate currently stands at $120.6 million.
Excluding SurVeil DCB license fee revenues, Surmodics now expects fiscal 2024 total revenues between $118 million and $120 million, representing an increase of 15-17% compared with fiscal 2023. This is raised and tightened from the prior outlook of revenues between $113 million and $117 million, representing an increase of 10-14% compared to fiscal 2023.
Adjusted loss per share for fiscal 2024 is now expected to be in the range of 47-67 cents. This compares with the earlier provided projections of a loss per share of 87 cents to $1.17. The Zacks Consensus Estimate currently stands at a loss of 90 cents per share.
Our Take
Surmodics exited the second quarter of fiscal 2024 with better-than-expected results. The solid uptick in the overall top line and bottom line was impressive. The company registered robust revenues from its medical device and its primary sources, which was encouraging.
Per the fiscal second-quarter earnings release, Surmodics announced the completion of limited market evaluation (LME) and commercial launch of two new mechanical thrombectomy systems for the peripheral venous and arterial vasculatures, the Pounce Venous Thrombectomy System and the Pounce LP (Low Profile) Thrombectomy System.
In January, Surmodics announced the successful early clinical use and LME of the Pounce LP Thrombectomy System, which is designed for the removal of acute-to-chronic thrombi and emboli in peripheral arteries ranging from 2 mm to 4 mm, such as those found below the knee.
However, the gross margin contraction does not bode well for Surmodics. Continued adverse impacts due to supply-chain challenges also raise our apprehension.
Surmodics currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Align Technology, Inc. (ALGN - Free Report) , Ecolab (ECL - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Align Technology, carrying a Zacks Rank of 2 (Buy), reported first-quarter 2024 adjusted EPS of $2.14, beating the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Align Technology has a long-term estimated growth rate of 6.9%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.
Ecolab, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. ECL’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 1.7%.
Ecolab’s shares have rallied 33.8% against the industry’s 9.3% decline in the past year.
Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, beating the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 7.5%.
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Surmodics (SRDX) Q2 Earnings Top Estimates, '24 View Up
Surmodics, Inc. (SRDX - Free Report) delivered earnings per share (EPS) of 7 cents in the second quarter of fiscal 2024 against the year-ago quarter’s loss of 40 cents per share. The metric beat the Zacks Consensus Estimate of a loss of 36 cents per share by 119.4%.
GAAP EPS for the quarter was 2 cents, narrower than the year-earlier loss of 55 cents per share.
Revenues in Detail
Surmodics registered revenues of $31.9 million in the fiscal second quarter, up 18% year over year. The figure surpassed the Zacks Consensus Estimate by 11%.
The top line was boosted by solid year-over-year product sales growth from the Medical Device business.
Excluding SurVeil drug-coated balloon (DCB) license fee revenues, total revenues increased 19% year over year to $30.9 million.
Segmental Analysis
Surmodics operates via two reportable segments — Medical Device and IVD.
In the reported quarter, sales in the Medical Device segment summed $24.8 million, up 26% from the year-ago quarter. Excluding SurVeil DCB license fee revenues, Medical Device revenues increased 29% to $23.7 million year over year. This figure compares to our Medical Device fiscal second-quarter revenue projection of $22.5 million.
Medical Device revenue growth was primarily driven by product sales of $11.1 million, up 40% year over year. Product sales growth was driven primarily by fulfillment of the initial stocking order for the SurVeil DCB from Abbott (Surmodics’ exclusive distribution partner for the product) and continued sales growth from the Pounce thrombectomy device platform.
In the quarter under review, IVD sales declined 5% to $11 million, primarily driven by lower sales of colorimetric substrate products. This figure compares to our IVD fiscal second-quarter revenue projection of $6.3 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 $18.1 million, up 17.9% from the prior-year quarter. This figure compares to our fiscal second-quarter revenue projection of $17.7 million.
Royalties and license fees revenues totaled $11.4 million, up 21% from the prior-year quarter. This figure compares to our fiscal second-quarter revenue projection of $9.5 million.
Research, development and other revenues were $2.4 million, up 1.2% year over year. This figure compares to our fiscal second-quarter revenue projection of $1.6 million.
Margin Trend
In the quarter under review, Surmodics’ gross profit increased 15.8% to $24.9 million. However, the gross margin contracted 120 basis points to 77.7%. We had projected 76.2% of gross margin for the fiscal second quarter.
Selling, general & administrative expenses increased 0.9% to $13.1 million. Research and development expenses increased 1% year over year to $8.8 million. Operating expenses, excluding product costs, decreased 14% to $24.2 year over year.
Adjusted operating profit totaled $1.5 million against the prior-year quarter’s adjusted operating loss of $4.4 million.
Financial Position
Surmodics exited second-quarter fiscal 2024 with cash and cash equivalents of $33 million compared with $23.4 million at the end of the fiscal first quarter of 2024. Total long-term debt at the end of second-quarter fiscal 2024 was $29.5 million.
Net cash used in operating activities at the end of second-quarter fiscal 2024 was $1.4 million compared with $16.6 million a year ago.
Fiscal 2024 Guidance
Surmodics has revised its financial outlook for fiscal 2024.
The company now projects fiscal 2024 revenues in the range of $122 million-$124 million, representing a decrease of 8-6% over the comparable prior-year period. This is raised and tightened from the earlier projection of $117 million-$121 million. The Zacks Consensus Estimate currently stands at $120.6 million.
Excluding SurVeil DCB license fee revenues, Surmodics now expects fiscal 2024 total revenues between $118 million and $120 million, representing an increase of 15-17% compared with fiscal 2023. This is raised and tightened from the prior outlook of revenues between $113 million and $117 million, representing an increase of 10-14% compared to fiscal 2023.
Adjusted loss per share for fiscal 2024 is now expected to be in the range of 47-67 cents. This compares with the earlier provided projections of a loss per share of 87 cents to $1.17. The Zacks Consensus Estimate currently stands at a loss of 90 cents per share.
Our Take
Surmodics exited the second quarter of fiscal 2024 with better-than-expected results. The solid uptick in the overall top line and bottom line was impressive. The company registered robust revenues from its medical device and its primary sources, which was encouraging.
Per the fiscal second-quarter earnings release, Surmodics announced the completion of limited market evaluation (LME) and commercial launch of two new mechanical thrombectomy systems for the peripheral venous and arterial vasculatures, the Pounce Venous Thrombectomy System and the Pounce LP (Low Profile) Thrombectomy System.
In January, Surmodics announced the successful early clinical use and LME of the Pounce LP Thrombectomy System, which is designed for the removal of acute-to-chronic thrombi and emboli in peripheral arteries ranging from 2 mm to 4 mm, such as those found below the knee.
However, the gross margin contraction does not bode well for Surmodics. Continued adverse impacts due to supply-chain challenges also raise our apprehension.
Surmodics, Inc. Price, Consensus and EPS Surprise
Surmodics, Inc. price-consensus-eps-surprise-chart | Surmodics, Inc. Quote
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 Align Technology, Inc. (ALGN - Free Report) , Ecolab (ECL - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Align Technology, carrying a Zacks Rank of 2 (Buy), reported first-quarter 2024 adjusted EPS of $2.14, beating the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Align Technology has a long-term estimated growth rate of 6.9%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.
Ecolab, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. ECL’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 1.7%.
Ecolab’s shares have rallied 33.8% against the industry’s 9.3% decline in the past year.
Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, beating the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 7.5%.