SurModics Inc.’s (SRDX) third quarter fiscal 2012 earnings from continued operations (excluding special items) of 17 cents per share were above the Zacks Consensus Estimate of 13 cents. The company earned 12 cents per share on an adjusted basis in the year-ago quarter. Higher year-over-year earnings were primarily attributable to increased adjusted revenues.
Adjusted revenues climbed 17.5% year over year to $13.7 million in the reported quarter, edging past the Zacks Consensus Estimate of $13 million. Revenues on a reported basis (including special items) were up 7.4% to approximately $14 million in the third quarter of fiscal 2012.
Revenues at SurModics climbed up due to increased sales from vitro diagnostics and hydrophilic coatings. However, this was partly offset by a decline in royalty revenues from Johnson & Johnson (JNJ) pertaining to Cypher and Cypher Select Plus drug eluting stents. Johnson & Johnson stopped manufacturing these products from the end of calendar year 2011.
For the reported quarter, royalties and license fees accounted for approximately 50.2% of total adjusted revenue with product sales and research & development accounting for 41.7% and 8.1%, respectively.
Following the November 2011 sale of the assets of its Pharmaceuticals division to Germany’s Evonik Industries AG, SurModics currently operates through two business units: Medical Devices and In Vitro Diagnostics.
SurModics’ reported revenues from the Medical Devices segment were approximately $10.3 million, up 7.4%. Growth was attributable to an increase in sales of hydrophilic coatings and newly launched customer products.
Reported revenues from the In Vitro Diagnostics unit increased 7.3% to $3.7 million.
In addition to announcing financial results, SurModics stated that a $55 million share buyback program has been authorized by its Board of Directors. We believe that the buyback program highlights the company’s commitment to create value for shareholders.
We currently have a Neutral recommendation on SurModics. The stock carries a Zacks #3 Rank (short-term Hold rating).
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