Surmodics Reports Second Quarter of Fiscal Year 2023 Financial Results; Updates Fiscal Year 2023 Financial Guidance
Surmodics, Inc. (Nasdaq: SRDX) reported Q2 fiscal 2023 financial results showing total revenue of $27.2 million, a 4% increase year-over-year. However, the company reported a GAAP diluted earnings per share (EPS) loss of $(0.55) compared to $(0.29) in the same period last year. Non-GAAP EPS also declined to $(0.40) from $(0.22).
Key highlights include a 7% increase in Medical Device revenue to $19.7 million, driven by strong sales of the Pounce and Sublime platforms. Despite this growth, the company faced challenges with FDA approval for its SurVeil drug-coated balloon, which remains under review. Surmodics updated its fiscal year 2023 revenue guidance to between $103 million and $106 million, indicating an increase of 3% to 6% compared to the previous year.
- Total revenue increased by $1.1 million, or 4%, to $27.2 million.
- Medical Device revenue rose by 7% to $19.7 million, with product sales up 23% year-over-year.
- Updated guidance reflects optimism with projected revenue of $103 million to $106 million for FY 2023.
- GAAP net loss increased to $(7.7) million from $(4.1) million year-over-year.
- Non-GAAP loss per share worsened to $(0.40) from $(0.22) in the prior year.
- Operating costs rose by 8% to $28.0 million, partly due to workforce restructuring expenses.
Second Quarter Fiscal 2023 Financial Summary
-
Total Revenue of
, an increase of$27.2 million 4% year-over-year -
GAAP Diluted EPS of
, compared to$(0.55) in the prior-year period$(0.29) -
Non-GAAP Diluted EPS of
, compared to$(0.40) in the prior-year period$(0.22)
Second Quarter and Recent Business Highlights
-
On
January 19, 2023 ,Surmodics announced it received a letter from theU.S. Food and Drug Administration (“FDA” or the “Agency”) related to its premarket approval (“PMA”) application for the SurVeil™ drug-coated balloon (“DCB”). In the letter, the FDA indicated that the application was not then approvable, while providing guidance as to a path forward. -
On
March 28, 2023 ,Surmodics announced it received positive, formal feedback from the FDA related to the company’s proposed approach to submit an amended PMA application for the SurVeil DCB. In its verbal and written feedback, the FDA requested additional clarification related to already completed biocompatibility studies and revisions to the company’s proposed labeling to amend the PMA application to put it into an approvable form. -
On
April 19, 2023 ,Surmodics announced the first successful patient use of the Sublime™ radial access microcatheter, the industry’s first suite of torqueable peripheral microcatheters, designed for navigating tortuosity and crossing complex lesions and available for both transradial and transfemoral procedures. -
On
April 20, 2023 ,Surmodics announced enrollment of the first patient in PROWL, the Pounce™ Thrombectomy System Retrospective Registry, to collect real-world efficacy and safety outcomes data for endovascular interventions using the Pounce system for the non-surgical removal of emboli and thrombi in the peripheral arterial vasculature.
“Second quarter total revenue performance was driven by growth in our Medical Device segment, which increased
Second Quarter Fiscal 2023 Financial Results |
|||||||||||||||
|
Three Months Ended |
|
Increase (Decrease) |
||||||||||||
|
2023 |
|
2022 |
|
$ |
|
% |
||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
||||
Medical Device |
$ |
19,707 |
|
|
$ |
18,453 |
|
|
$ |
1,254 |
|
|
|
7 |
% |
In |
|
7,491 |
|
|
|
7,653 |
|
|
|
(162 |
) |
|
|
(2 |
)% |
Total revenue |
$ |
27,198 |
|
|
$ |
26,106 |
|
|
$ |
1,092 |
|
|
|
4 |
% |
Total revenue increased
Medical Device revenue increased
Product gross profit (defined as product sales less product costs) increased
Operating costs and expenses, excluding product costs, increased
GAAP net loss was
Adjusted EBITDA loss was
Balance Sheet Summary
As of
Fiscal Year 2023 Financial Guidance
The company now expects fiscal 2023 GAAP diluted loss per share to range from
Non-GAAP diluted loss per share in fiscal 2023 is expected to range from
As has been the company’s practice with past guidance, revenue from regulatory-related milestones, such as upon receipt of PMA for the SurVeil DCB, is not included in guidance until after they are achieved.
Conference Call Today at
An audio replay of the conference call will be available beginning at
About
Safe Harbor for Forward-looking Statements
This press release, and disclosures related to it, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, including statements regarding: submitting an amended PMA application in an approvable form, including not needing additional biocompatibility studies to do so, and the expected timing for submitting an amended PMA application; receiving premarket approval for the SurVeil DCB, the timing thereof, and providing future updates on our progress; our pipeline of prospective customers for Sublime radial and Pounce arterial thrombectomy platforms; our future prospects; enhanced, sustainable long-term growth and value creation; our expectation of significant growth and contribution potential from our Sublime radial and Pounce arterial thrombectomy platforms and their expected year-over-year growth rate for full fiscal 2023; expanding and enhancing the portfolio managed by our direct sales force, including expanding our existing clinical indications with the development of new additions to our portfolio; the potential to bring innovations in complex coronary arterial procedures to peripheral interventions; gaining physician feedback on our microcatheter product and progressing towards limited market introductions of the product portfolio; our expectations related to the PROWL
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with
Condensed Consolidated Statements of Operations (in thousands, except per share data) (Unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Revenue: |
|
|
|
|
|
|
|
||||||||
Product sales |
$ |
15,350 |
|
|
$ |
13,964 |
|
|
$ |
29,584 |
|
|
$ |
26,308 |
|
Royalties and license fees |
|
9,429 |
|
|
|
9,844 |
|
|
|
18,194 |
|
|
|
17,943 |
|
Research, development and other |
|
2,419 |
|
|
|
2,298 |
|
|
|
4,353 |
|
|
|
4,858 |
|
Total revenue |
|
27,198 |
|
|
|
26,106 |
|
|
|
52,131 |
|
|
|
49,109 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
||||||||
Product costs |
|
5,738 |
|
|
|
5,107 |
|
|
|
11,005 |
|
|
|
9,604 |
|
Research and development |
|
12,924 |
|
|
|
13,712 |
|
|
|
25,667 |
|
|
|
25,375 |
|
Selling, general and administrative |
|
12,970 |
|
|
|
11,116 |
|
|
|
26,209 |
|
|
|
20,311 |
|
Acquired intangible asset amortization |
|
867 |
|
|
|
1,071 |
|
|
|
1,780 |
|
|
|
2,160 |
|
Restructuring expense |
|
1,282 |
|
|
|
— |
|
|
|
1,282 |
|
|
|
— |
|
Total operating costs and expenses |
|
33,781 |
|
|
|
31,006 |
|
|
|
65,943 |
|
|
|
57,450 |
|
Operating loss |
|
(6,583 |
) |
|
|
(4,900 |
) |
|
|
(13,812 |
) |
|
|
(8,341 |
) |
Other expense, net |
|
(782 |
) |
|
|
(102 |
) |
|
|
(1,561 |
) |
|
|
(179 |
) |
Loss before income taxes |
|
(7,365 |
) |
|
|
(5,002 |
) |
|
|
(15,373 |
) |
|
|
(8,520 |
) |
Income tax (expense) benefit |
|
(368 |
) |
|
|
919 |
|
|
|
(203 |
) |
|
|
1,625 |
|
Net loss |
$ |
(7,733 |
) |
|
$ |
(4,083 |
) |
|
$ |
(15,576 |
) |
|
$ |
(6,895 |
) |
|
|
|
|
|
|
|
|
||||||||
Basic net loss per share |
$ |
(0.55 |
) |
|
$ |
(0.29 |
) |
|
$ |
(1.11 |
) |
|
$ |
(0.50 |
) |
Diluted net loss per share |
$ |
(0.55 |
) |
|
$ |
(0.29 |
) |
|
$ |
(1.11 |
) |
|
$ |
(0.50 |
) |
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
14,030 |
|
|
|
13,917 |
|
|
|
14,010 |
|
|
|
13,896 |
|
Diluted |
|
14,030 |
|
|
|
13,917 |
|
|
|
14,010 |
|
|
|
13,896 |
|
Condensed Consolidated Balance Sheets (in thousands) |
|||||
|
|
|
|
||
|
2023 |
|
2022 |
||
Assets |
(Unaudited) |
|
(See Note) |
||
Current Assets: |
|
|
|
||
Cash and cash equivalents |
$ |
19,180 |
|
$ |
18,998 |
Accounts receivable, net |
|
12,120 |
|
|
10,452 |
Contract assets — royalties and license fees |
|
7,866 |
|
|
7,116 |
Inventories, net |
|
13,767 |
|
|
11,819 |
Prepaids and other |
|
8,311 |
|
|
9,202 |
Total Current Assets |
|
61,244 |
|
|
57,587 |
Property and equipment, net |
|
27,614 |
|
|
27,148 |
Intangible assets, net |
|
28,726 |
|
|
28,145 |
|
|
43,823 |
|
|
40,710 |
Other assets |
|
4,756 |
|
|
4,769 |
Total Assets |
$ |
166,163 |
|
$ |
158,359 |
Liabilities and Stockholders’ Equity |
|
|
|
||
Current Liabilities: |
|
|
|
||
Short-term borrowings |
$ |
— |
|
$ |
10,000 |
Deferred revenue |
|
3,346 |
|
|
4,160 |
Other current liabilities |
|
15,784 |
|
|
17,919 |
Total Current Liabilities |
|
19,130 |
|
|
32,079 |
Long-term debt, net |
|
29,303 |
|
|
— |
Deferred revenue |
|
3,409 |
|
|
5,088 |
Other long-term liabilities |
|
11,767 |
|
|
12,800 |
Total Liabilities |
|
63,609 |
|
|
49,967 |
Total Stockholders’ Equity |
|
102,554 |
|
|
108,392 |
Total Liabilities and Stockholders’ Equity |
$ |
166,163 |
|
$ |
158,359 |
|
|
|
|
||
Note: Derived from audited financial statements as of the date indicated. |
|||||
Condensed Consolidated Statements of Cash Flows (in thousands) (Unaudited) |
|||||||
|
Six Months Ended |
||||||
|
2023 |
|
2022 |
||||
Operating Activities: |
|
|
|
||||
Net loss |
$ |
(15,576 |
) |
|
$ |
(6,895 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
||||
Depreciation and amortization |
|
4,214 |
|
|
|
4,696 |
|
Stock-based compensation |
|
3,747 |
|
|
|
3,399 |
|
Deferred taxes |
|
(217 |
) |
|
|
(1,577 |
) |
Other |
|
730 |
|
|
|
420 |
|
Change in operating assets and liabilities: |
|
|
|
||||
Accounts receivable and contract assets |
|
(2,346 |
) |
|
|
(2,097 |
) |
Inventories |
|
(1,948 |
) |
|
|
(2,711 |
) |
Prepaids and other |
|
(1,582 |
) |
|
|
(1,899 |
) |
Accounts payable |
|
279 |
|
|
|
487 |
|
Accrued liabilities |
|
(4,064 |
) |
|
|
(2,035 |
) |
Income taxes |
|
2,629 |
|
|
|
(508 |
) |
Deferred revenue |
|
(2,493 |
) |
|
|
(2,506 |
) |
Net cash used in operating activities |
|
(16,627 |
) |
|
|
(11,226 |
) |
Investing Activities: |
|
|
|
||||
Purchases of property and equipment |
|
(1,700 |
) |
|
|
(1,937 |
) |
Maturities of available-for-sale securities |
|
— |
|
|
|
7,600 |
|
Net cash (used in) provided by investing activities |
|
(1,700 |
) |
|
|
5,663 |
|
Financing Activities: |
|
|
|
||||
Payments of short-term borrowings |
|
(10,000 |
) |
|
|
— |
|
Proceeds from issuance of long-term debt |
|
29,664 |
|
|
|
— |
|
Payments of debt issuance costs |
|
(611 |
) |
|
|
— |
|
Issuance of common stock |
|
803 |
|
|
|
741 |
|
Payments for taxes related to net share settlement of equity awards |
|
(872 |
) |
|
|
(901 |
) |
Payments for acquisition of in-process research and development |
|
(978 |
) |
|
|
(500 |
) |
Net cash provided by (used in) financing activities |
|
18,006 |
|
|
|
(660 |
) |
Effect of exchange rate changes on cash |
|
503 |
|
|
|
(218 |
) |
Net change in cash and cash equivalents |
|
182 |
|
|
|
(6,441 |
) |
Cash and Cash Equivalents: |
|
|
|
||||
Beginning of period |
|
18,998 |
|
|
|
31,153 |
|
End of period |
$ |
19,180 |
|
|
$ |
24,712 |
|
Supplemental Segment Information (in thousands) (Unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Medical Device Revenue |
|
|
|
|
|
|
|
|
|
|
|
||||
Product sales |
$ |
7,914 |
|
|
$ |
6,441 |
|
|
$ |
16,294 |
|
|
$ |
13,229 |
|
Royalties |
|
8,073 |
|
|
|
8,358 |
|
|
|
15,482 |
|
|
|
15,244 |
|
License fees |
|
1,356 |
|
|
|
1,486 |
|
|
|
2,712 |
|
|
|
2,699 |
|
Research, development and other |
|
2,364 |
|
|
|
2,168 |
|
|
|
4,237 |
|
|
|
4,189 |
|
Medical Device revenue |
|
19,707 |
|
|
|
18,453 |
|
|
|
38,725 |
|
|
|
35,361 |
|
In Vitro Diagnostics Revenue |
|
|
|
|
|
|
|
|
|
|
|
||||
Product sales |
|
7,436 |
|
|
|
7,523 |
|
|
|
13,290 |
|
|
|
13,079 |
|
Research, development and other |
|
55 |
|
|
|
130 |
|
|
|
116 |
|
|
|
669 |
|
In |
|
7,491 |
|
|
|
7,653 |
|
|
|
13,406 |
|
|
|
13,748 |
|
Total Revenue |
$ |
27,198 |
|
|
$ |
26,106 |
|
|
$ |
52,131 |
|
|
$ |
49,109 |
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Operating (loss) income: |
|
|
|
|
|
|
|
||||||||
Medical Device |
$ |
(7,059 |
) |
|
$ |
(5,612 |
) |
|
$ |
(14,294 |
) |
|
$ |
(9,404 |
) |
In |
|
3,636 |
|
|
|
3,720 |
|
|
|
6,584 |
|
|
|
6,875 |
|
Total segment operating (loss) income |
|
(3,423 |
) |
|
|
(1,892 |
) |
|
|
(7,710 |
) |
|
|
(2,529 |
) |
Corporate |
|
(3,160 |
) |
|
|
(3,008 |
) |
|
|
(6,102 |
) |
|
|
(5,812 |
) |
Total operating (loss) income |
$ |
(6,583 |
) |
|
$ |
(4,900 |
) |
|
$ |
(13,812 |
) |
|
$ |
(8,341 |
) |
Reconciliation of GAAP Measures to Non-GAAP Amounts Schedule of EBITDA and Adjusted EBITDA (in thousands) (Unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Net loss |
$ |
(7,733 |
) |
|
$ |
(4,083 |
) |
|
$ |
(15,576 |
) |
|
$ |
(6,895 |
) |
Income tax expense (benefit) |
|
368 |
|
|
|
(919 |
) |
|
|
203 |
|
|
|
(1,625 |
) |
Depreciation and amortization |
|
2,092 |
|
|
|
2,320 |
|
|
|
4,214 |
|
|
|
4,696 |
|
Interest expense, net |
|
884 |
|
|
|
129 |
|
|
|
1,710 |
|
|
|
265 |
|
Investment income, net |
|
(177 |
) |
|
|
(25 |
) |
|
|
(349 |
) |
|
|
(51 |
) |
EBITDA |
|
(4,566 |
) |
|
|
(2,578 |
) |
|
|
(9,798 |
) |
|
|
(3,610 |
) |
|
|
|
|
|
|
|
|
||||||||
Adjustments: |
|
|
|
|
|
|
|
||||||||
Stock-based compensation expense |
|
1,782 |
|
|
|
1,719 |
|
|
|
3,747 |
|
|
|
3,399 |
|
Restructuring expense (1) |
|
1,282 |
|
|
|
— |
|
|
|
1,282 |
|
|
|
— |
|
Adjusted EBITDA |
$ |
(1,502 |
) |
|
$ |
(859 |
) |
|
$ |
(4,769 |
) |
|
$ |
(211 |
) |
Guidance Reconciliation: Estimated Non-GAAP Diluted EPS
For the Fiscal Year Ending (Unaudited) |
|||||||
|
Fiscal 2023 Full-Year Estimate |
||||||
|
Low |
|
High |
||||
GAAP Diluted EPS |
$ |
(2.30 |
) |
|
$ |
(2.00 |
) |
Amortization of acquired intangibles per diluted share (2) |
|
0.23 |
|
|
|
0.23 |
|
Restructuring expense per diluted share (1) |
|
0.09 |
|
|
|
0.09 |
|
Non-GAAP Diluted EPS |
$ |
(1.98 |
) |
|
$ |
(1.68 |
) |
Diluted weighted average shares outstanding |
|
14,030 |
|
|
|
||
Net Loss and Diluted EPS GAAP to Non-GAAP Reconciliation (in thousands, except per share data) (Unaudited) |
|||||||||||||||||||||||
|
Three Months Ended |
||||||||||||||||||||||
|
Revenue |
|
|
Operating Loss |
|
Loss Before Income Taxes |
|
Net Loss
|
|
Diluted EPS |
|||||||||||||
GAAP |
$ |
27,198 |
|
|
$ |
(6,583 |
) |
|
|
(24.2 |
)% |
|
$ |
(7,365 |
) |
|
$ |
(7,733 |
) |
|
$ |
(0.55 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Amortization of acquired intangible assets (2) |
|
— |
|
|
|
867 |
|
|
|
3.2 |
% |
|
|
867 |
|
|
|
802 |
|
|
|
0.06 |
|
Restructuring expense (1) |
|
— |
|
|
|
1,282 |
|
|
|
4.7 |
% |
|
|
1,282 |
|
|
|
1,282 |
|
|
|
0.09 |
|
Non-GAAP |
$ |
27,198 |
|
|
$ |
(4,434 |
) |
|
|
(16.3 |
)% |
|
$ |
(5,216 |
) |
|
$ |
(5,649 |
) |
|
$ |
(0.40 |
) |
Diluted weighted average shares outstanding (4) |
|
|
|
|
|
|
|
|
|
|
|
|
14,030 |
|
|||||||||
|
Three Months Ended |
||||||||||||||||||||||
|
Revenue |
|
|
Operating Loss |
|
Loss Before Income Taxes |
|
Net Loss
|
|
Diluted EPS |
|||||||||||||
GAAP |
$ |
26,106 |
|
|
$ |
(4,900 |
) |
|
|
(18.8 |
)% |
|
$ |
(5,002 |
) |
|
$ |
(4,083 |
) |
|
$ |
(0.29 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Amortization of acquired intangible assets (2) |
|
— |
|
|
|
1,071 |
|
|
|
4.1 |
% |
|
|
1,071 |
|
|
|
973 |
|
|
|
0.07 |
|
Non-GAAP |
$ |
26,106 |
|
|
$ |
(3,829 |
) |
|
|
(14.7 |
)% |
|
$ |
(3,931 |
) |
|
$ |
(3,110 |
) |
|
$ |
(0.22 |
) |
Diluted weighted average shares outstanding (4) |
|
|
|
|
|
|
|
|
|
|
|
|
13,917 |
|
|||||||||
|
Six Months Ended |
||||||||||||||||||||||
|
Revenue |
|
|
Operating Loss |
|
Loss Before Income Taxes |
|
Net Loss
|
|
Diluted EPS |
|||||||||||||
GAAP |
$ |
52,131 |
|
|
$ |
(13,812 |
) |
|
|
(26.5 |
)% |
|
$ |
(15,373 |
) |
|
$ |
(15,576 |
) |
|
$ |
(1.11 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Amortization of acquired intangible assets (2) |
|
— |
|
|
|
1,780 |
|
|
|
3.4 |
% |
|
|
1,780 |
|
|
|
1,654 |
|
|
|
0.12 |
|
Restructuring expense (1) |
|
— |
|
|
|
1,282 |
|
|
|
2.5 |
% |
|
|
1,282 |
|
|
|
1,282 |
|
|
|
0.09 |
|
Non-GAAP |
$ |
52,131 |
|
|
$ |
(10,750 |
) |
|
|
(20.6 |
)% |
|
$ |
(12,311 |
) |
|
$ |
(12,640 |
) |
|
$ |
(0.90 |
) |
Diluted weighted average shares outstanding (4) |
|
|
|
|
|
|
|
|
|
|
|
|
14,010 |
|
|||||||||
|
Six Months Ended |
||||||||||||||||||||||
|
Revenue |
|
|
Operating Loss |
|
Loss Before Income Taxes |
|
Net Loss
|
|
Diluted EPS |
|||||||||||||
GAAP |
$ |
49,109 |
|
|
$ |
(8,341 |
) |
|
|
(17.0 |
)% |
|
$ |
(8,520 |
) |
|
$ |
(6,895 |
) |
|
$ |
(0.50 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Amortization of acquired intangible assets (2) |
|
— |
|
|
|
2,160 |
|
|
|
4.4 |
% |
|
|
2,160 |
|
|
|
1,963 |
|
|
|
0.15 |
|
Non-GAAP |
$ |
49,109 |
|
|
$ |
(6,181 |
) |
|
|
(12.6 |
)% |
|
$ |
(6,360 |
) |
|
$ |
(4,932 |
) |
|
$ |
(0.35 |
) |
Diluted weighted average shares outstanding (4) |
|
|
|
|
|
|
|
|
|
|
|
|
13,896 |
|
|||||||||
(1) |
Restructuring expense consists of severance and related costs specifically associated with a workforce restructuring implemented in the second quarter of fiscal 2023. |
|
(2) |
Represents amortization of business acquisition-related intangible assets and associated tax impact. A significant portion of the business acquisition-related amortization is not tax deductible. |
|
(3) |
Net loss includes the effect of the above adjustments on income tax (expense) benefit, taking into account deferred taxes net of valuation allowances, as well as non-deductible items. Income tax impacts were estimated using the applicable statutory rate ( |
|
(4) |
Diluted weighted average shares outstanding used in the calculation of EPS was the same for GAAP EPS and Non-GAAP EPS. Potentially dilutive common shares resulting from dilutive common stock options and non-vested stock relating to restricted stock awards and restricted stock units have been excluded from the calculation of EPS as their effect was antidilutive for the three and six months ended |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230426005213/en/
Surmodics Investor Inquiries
ir@surmodics.com
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