SurModics Beats on Earnings in Q3, Guidance Revised


SurModics’ (SRDX) third quarter fiscal 2014 (ended Jun 30, 2014) earnings of 27 cents per share beat the Zacks Consensus Estimate by 4 cents. The third quarter fiscal 2014 earnings increased 22.7% from the year-ago period. Shares of the company reacted positively to the earnings report.


Quarterly Highlights

Revenues increased 2.3% to $14.6 million, roughly in line with the Zacks Consensus Estimate of $15 million. Revenues from in vitro diagnostics climbed 3% to $3.8 million.

For the reported quarter, royalties and license fees accounted for approximately 50.5% of total revenues with product sales and research & development accounting for 41.5% and 8%, respectively.

SurModics’ revenues from the Medical Devices segment came in at approximately $10.8 million, up 2.2%. The bulk of the segmental revenues came from hydrophilic coatings royalties, which were flat at $7.2 million. The company is developing its high potential drug coated balloon program. The coronary sub-group declined by 7% in the reported quarter. SurModics exited the quarter with cash and investments of $57.1 million with no debt.

Apart from releasing earnings results, SurModics announced the filing a $175 million universal shelf registration statement on Form-S3 with the SEC to supplement its capital resources.

Fiscal 2014 Projection

SurModics still expects 2014 revenues in the range of $56 million to $58.5 million. The Zacks Consensus Estimate of $57 million is well within the guidance range. SurModics now expects earnings per share in the range of 90 cents to 97 cents compared with the previously guided range of 85 cents to 97 cents.  The Zacks Consensus Estimate is 92 cents per share. The company continues to forecast fiscal 2014 capital expenditure in the range of $2.2 million to $2.5 million.

SurModics currently carries a Zacks Rank #3 (Hold). Better ranked stocks in the medical sector include Abaxis (ABAX), Hospira (HSP) and Alere (ALR). All three stocks hold a Zacks Rank #2 (Buy).

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