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Marginal Earnings Beat at SurModics

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SurModics Inc.’s (SRDX - Free Report) first quarter fiscal 2014 (ended Dec 31, 2013) adjusted earnings of 21 cents per share beat the Zacks Consensus Estimate by a penny. The first quarter fiscal 2014 earnings increased 17% from the year-ago period. The year-over-year growth was primarily attributable to higher revenues.

Quarterly Highlights

Revenues (on an adjusted basis) climbed 4.5% year over year to $13.9 million. The Zacks Consensus Estimate was $14 million. Increased sales of vitro diagnostics offerings and hydrophilic coatings were the primary reasons behind the year-over-year improvement.

For the reported quarter, royalties and license fees accounted for approximately 53.8% of total revenues with product sales and research & development accounting for 38.9% and 7.3%, respectively.

SurModics’ revenues from the Medical Devices segment came in at approximately $10.5 million, flat year over year. Bulk of the segmental revenues came from the sales of hydrophilic coatings, which climbed 5% from the year-ago period on an adjusted basis. Revenues from the In Vitro Diagnostics unit increased marginally to $3.3 million in the first quarter of fiscal 2014. This was the13th consecutive quarter in which segmental product revenues surged. Revenues of the division benefited from strong sales of microarray slides. The company expects the division to perform better in the coming quarters of fiscal 2014.

SurModics exited the quarter with cash and investments of $53.1 million with no debt. During the first quarter of fiscal 2014, SurModics bought back 380,011 shares at a cost of $8.9 million under the repurchase program worth $20 million cleared in fiscal 2013. The repurchase program highlights the company’s commitment to create value for shareholders.

 Fiscal 2014 Projection

SurModics continues to expect fiscal 2014 revenues in the range of $58–$62 million, well above the revenues recorded in fiscal 2013. The Zacks Consensus Estimate currently hints at revenues of $60 million for fiscal 2014. The company continues to forecast fiscal 2014 capital expenditure in the range of $2.2–$2.5 million.

SurModics currently carries a Zacks Rank #3 (Hold). Investors interested in the medical industry can also consider stocks like NuVasive, Inc. (NUVA - Free Report) carrying a Zacks Rank #1 (Strong Buy), Covidien and Baxter International Inc (BAX - Free Report) , both carrying a Zacks Rank #2 (Buy).

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