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Surmodics (SRDX) Beats on Q2 Earnings & Revenues, Raises View
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Surmodics, Inc. (SRDX - Free Report) reported adjusted earnings of 7 cents per share in second-quarter fiscal 2018, up 40% year over year. The Zacks Consensus Estimate was a loss of a penny.
Revenues in the quarter increased 8.8% to $19.1 million, beating the Zacks Consensus Estimate of $18 million.
The stock has a Zacks Rank #2 (Buy). Surmodics has outperformed its industry in a year's time. The stock has returned 62.4%, compared with the industry's rise of 11.4%. The return is also higher than the S&P 500 index's return of 11.3%.
Segmental Analysis
Surmodics reports revenues under two segments — Medical Device and In Vitro Diagnostics (IVD).
Medical Device
In the reported quarter, sales improved 10.4% to $14.1 million due to lower hydrophilic royalty revenues. Notably, royalty and license fee revenues totaled $8.4 million, up from the year-ago quarter’s $1.1 million. The uptick in royalty and license fee revenues reflects Surmodics’ strength in the hydrophilic coatings royalties. Further, the company gained license fee income of $0.5 million from the recently announced collaboration with Abbott.
Medical Device Products sales rose $0.5 million in the reported quarter on solid Medical device sales.
Medical device customer research and development revenues declined $0.3 million on a year-over-year basis. This unit generated $0.2 million of operating income in second-quarter fiscal 2018, compared with operating income of $1.5 million in the year-ago quarter.
IVD
In the quarter under review, sales increased 4.8% to $5 million. The upside came on the back of strong growth and stabilization across BioFX, microarray and antigen product sales.
Operating income in the segment was $2.4 million in the reported quarter, compared with $2.2 million in the second quarter of fiscal 2017.
Product gross margins contracted 120 basis points (bps) in the second quarter to 66.5% of product sales compared with 67.7% in the year-ago period. Margins in the quarter suffered from expenses in the Irish facility infrastructure and lower Medical-Device product gross margins.
In the second quarter of fiscal 2018, R&D expenses were 56.5% of net sales, higher than 46.5% of net sales in the year-ago quarter.
SG&A expenses in the second quarter of fiscal 2018 were 33.8% of revenues, 480 bps higher year over year.
Guidance
Surmodics raised guidance for fiscal 2018.
Surmodics expects fiscal 2018 revenues in the range of $75-$79 million, up from the previous band of $72 million to $75 million.
The company expects fiscal 2018 earnings per share between negative 6 cents and 9 cents, compared with the previous estimate of negative 20 cents and 5 cents. The Zacks Conensus Estimate is currently pegged at a loss of 2 cents per share.
In Conclusion
Surmodics exited the second quarter of fiscal 2018 on a solid note, beating the Zacks Consensus Estimate on both the counts. Further, solid performance in the In Vitro Diagnostics segment, which gained from strong growth and stabilization across BioFX, microarray and antigen product sales, holds promise. Surmodics issued a solid guidance for fiscal 2018. The company's solid initiatives to strengthen research and development programs bode well.
On the flip side, the company witnessed significantly high operating losses. Product sales declined due to shipment issues, particularly in the Medical Device segment. Further, foreign-exchange woes related to the Creagh Medical buyout have been a major dampener. Surmodics’ drug-coated balloons face stiff competition in niche space. The company’s margins are expected stay under pressure, thanks to expenses in the Irish facility infrastructure and lower Medical-Device product gross margins.
Q1 Earnings of MedTech Majors at a Glance
A few better-ranked stocks in the broader medical space, which reported solid earnings this season are Baxter International Inc. (BAX - Free Report) , Varian Medical Systems, Inc. and Intuitive Surgical, Inc. (ISRG - Free Report) .
Baxter reported first-quarter 2018 adjusted earnings per share of 70 cents, which beat the Zacks Consensus Estimate by 12.9% and improved from the year-ago quarter’s figure of 58 cents.
Varian reported second-quarter fiscal 2018 adjusted earnings of $1.15 per share, which beat the Zacks Consensus Estimate of $1.06. Adjusted earnings improved 27.8% on a year-over-year basis.
Intuitive Surgical reported adjusted earnings of $2.44 per share, which surpassed the Zacks Consensus Estimate by 22.6%. Revenues totaled $848 million, which beat the Zacks Consensus Estimate by 10.6%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
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Surmodics (SRDX) Beats on Q2 Earnings & Revenues, Raises View
Surmodics, Inc. (SRDX - Free Report) reported adjusted earnings of 7 cents per share in second-quarter fiscal 2018, up 40% year over year. The Zacks Consensus Estimate was a loss of a penny.
Revenues in the quarter increased 8.8% to $19.1 million, beating the Zacks Consensus Estimate of $18 million.
The stock has a Zacks Rank #2 (Buy). Surmodics has outperformed its industry in a year's time. The stock has returned 62.4%, compared with the industry's rise of 11.4%. The return is also higher than the S&P 500 index's return of 11.3%.
Segmental Analysis
Surmodics reports revenues under two segments — Medical Device and In Vitro Diagnostics (IVD).
Medical Device
In the reported quarter, sales improved 10.4% to $14.1 million due to lower hydrophilic royalty revenues. Notably, royalty and license fee revenues totaled $8.4 million, up from the year-ago quarter’s $1.1 million. The uptick in royalty and license fee revenues reflects Surmodics’ strength in the hydrophilic coatings royalties. Further, the company gained license fee income of $0.5 million from the recently announced collaboration with Abbott.
Medical Device Products sales rose $0.5 million in the reported quarter on solid Medical device sales.
Medical device customer research and development revenues declined $0.3 million on a year-over-year basis. This unit generated $0.2 million of operating income in second-quarter fiscal 2018, compared with operating income of $1.5 million in the year-ago quarter.
IVD
In the quarter under review, sales increased 4.8% to $5 million. The upside came on the back of strong growth and stabilization across BioFX, microarray and antigen product sales.
Operating income in the segment was $2.4 million in the reported quarter, compared with $2.2 million in the second quarter of fiscal 2017.
Surmodics, Inc. Price, Consensus and EPS Surprise
Surmodics, Inc. Price, Consensus and EPS Surprise | Surmodics, Inc. Quote
Margin Details
Product gross margins contracted 120 basis points (bps) in the second quarter to 66.5% of product sales compared with 67.7% in the year-ago period. Margins in the quarter suffered from expenses in the Irish facility infrastructure and lower Medical-Device product gross margins.
In the second quarter of fiscal 2018, R&D expenses were 56.5% of net sales, higher than 46.5% of net sales in the year-ago quarter.
SG&A expenses in the second quarter of fiscal 2018 were 33.8% of revenues, 480 bps higher year over year.
Guidance
Surmodics raised guidance for fiscal 2018.
Surmodics expects fiscal 2018 revenues in the range of $75-$79 million, up from the previous band of $72 million to $75 million.
The company expects fiscal 2018 earnings per share between negative 6 cents and 9 cents, compared with the previous estimate of negative 20 cents and 5 cents. The Zacks Conensus Estimate is currently pegged at a loss of 2 cents per share.
In Conclusion
Surmodics exited the second quarter of fiscal 2018 on a solid note, beating the Zacks Consensus Estimate on both the counts. Further, solid performance in the In Vitro Diagnostics segment, which gained from strong growth and stabilization across BioFX, microarray and antigen product sales, holds promise. Surmodics issued a solid guidance for fiscal 2018. The company's solid initiatives to strengthen research and development programs bode well.
On the flip side, the company witnessed significantly high operating losses. Product sales declined due to shipment issues, particularly in the Medical Device segment. Further, foreign-exchange woes related to the Creagh Medical buyout have been a major dampener. Surmodics’ drug-coated balloons face stiff competition in niche space. The company’s margins are expected stay under pressure, thanks to expenses in the Irish facility infrastructure and lower Medical-Device product gross margins.
Q1 Earnings of MedTech Majors at a Glance
A few better-ranked stocks in the broader medical space, which reported solid earnings this season are Baxter International Inc. (BAX - Free Report) , Varian Medical Systems, Inc. and Intuitive Surgical, Inc. (ISRG - Free Report) .
While Intuitive Surgical and Varian sport a Zacks Rank #1 (Strong Buy), Baxter carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Baxter reported first-quarter 2018 adjusted earnings per share of 70 cents, which beat the Zacks Consensus Estimate by 12.9% and improved from the year-ago quarter’s figure of 58 cents.
Varian reported second-quarter fiscal 2018 adjusted earnings of $1.15 per share, which beat the Zacks Consensus Estimate of $1.06. Adjusted earnings improved 27.8% on a year-over-year basis.
Intuitive Surgical reported adjusted earnings of $2.44 per share, which surpassed the Zacks Consensus Estimate by 22.6%. Revenues totaled $848 million, which beat the Zacks Consensus Estimate by 10.6%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>