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Surmodics (SRDX) Stock Loses 2.2% Despite Q4 Earnings Beat

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Shares of Surmodics, Inc. SRDX declined 2.2% on Nov 11, following the company's fiscal fourth-quarter 2021 results.

The company reported fourth-quarter fiscal 2021 adjusted loss per share of 10 cents, which was narrower than the Zacks Consensus Estimate of a loss of 25 cents per share. The company had reported an adjusted loss per share of 18 cents in the year-ago quarter.

GAAP loss per share for the quarter was 2 cents compared with the year-ago loss of 22 cents.

For fiscal 2021, the company reported GAAP earnings per share of 37 cents, up 184.6% from the previous year.

Revenues in Detail

Surmodics delivered revenues of $24 million in the fiscal fourth quarter, up 6% year over year. The figure outpaced the Zacks Consensus Estimate by 6.7%.

The top line was driven by continued strength in its In Vitro Diagnostics (“IVD”) and Product revenues.

For fiscal 2021, the company reported revenues of $105.1 million, up 10.8% from that of fiscal 2020.

Segmental Analysis

Surmodics operates via two reportable segments — Medical Device and IVD.

In the reported quarter, sales at the Medical Device segment amounted to $17.4 million, up 1.3% from the year-ago quarter.

In the quarter under review, IVD sales jumped 22.6% to $6.6 million, driven by broad-based growth coupled with favorable comparison related to antigen sales.

Surmodics, Inc. Price, Consensus and EPS Surprise

Surmodics, Inc. Price, Consensus and EPS Surprise
Surmodics, Inc. Price, Consensus and EPS Surprise

Surmodics, Inc. price-consensus-eps-surprise-chart | Surmodics, Inc. Quote

The company derives revenues from three primary sources — Product sales, Royalties and license fees, and Research, development and other fees.

In the quarter under review, Product sales were $12.5 million, up 18.2% from the prior-year quarter. Royalty and license fee revenues totaled $8.9 million, down 10.1% from the prior-year quarter. Research, development and other revenues were $2.6 million, up 23.8% year over year.

Margin Trend

In the quarter under review, Surmodics’ gross profit rose 6.3% to $19.8 million. Gross margin contracted 4 basis points (bps) to 82.7%.

Selling, general & administrative expenses rose 7.7% to $7.9 million. Research and development expenses declined 16.1% year over year to $10.7 million. Total operating expenses of $24.5 million fell 0.3% year over year.

Operating loss totaled $0.5 million, narrower than the prior-year quarter’s loss of $1.9 million.

Financial Position

Surmodics exited the fiscal 2021 with cash and cash equivalents of $31.2 million compared with $62.2 million at the end of fiscal third quarter.

Cumulative net cash flow from operating activities at the end of the fiscal fourth quarter was $15.4 million compared with $14 million a year ago.

Fiscal 2022 Guidance

For fiscal 2022, the company projects revenues to be $97-$101 million. The Zacks Consensus Estimate for the same is currently pegged at $126.6 million.

Adjusted loss per share for fiscal 2022 is expected between $1.75 and $1.25. The Zacks Consensus Estimate for earnings currently stands at $1.45.

Our Take

Surmodics exited the fourth quarter of fiscal 2021 wherein both earnings and revenues beat the consensus mark. The company witnessed narrower year-over-year bottom-line results and revenue growth in the quarter under review. The company saw strength across its reportable segments in the fourth quarter, which is encouraging. Surmodics saw a successful first-patient usage of Sublime .018 RX PTA Dilatation Catheter in the quarter under review. The company completed the buyout of Vetex Medical Limited during the fiscal fourth quarter. These developments buoy optimism.

Lower revenues from the royalty and license fees are discouraging. Gross margin contraction does not bode well for the stock. Surmodics incurred an operating loss in the reported quarter, which further raises our apprehension.

Zacks Rank

Surmodics currently carries a Zacks Rank #3 (Hold).

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Thermo Fisher Scientific Inc. TMO, Medpace Holdings, Inc. MEDP, and AngioDynamics, Inc. ANGO.

Thermo Fisher reported third-quarter 2021 adjusted EPS of $5.76, which beat the Zacks Consensus Estimate by 23.3%. Third-quarter revenues of $9.33 billion outpaced the consensus mark by 12%. The company currently sports a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Thermo Fisher has an estimated long-term growth rate of 14%. The company surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.02%.

Medpace, currently carrying a Zacks Rank #2, reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%.

Medpace has an estimated long-term growth rate of 16.4%. The company surpassed earnings estimates in each of the trailing four quarters, the average surprise being 11.9%.

AngioDynamics reported first-quarter fiscal 2022 loss per share of 2 cents, narrower than the Zacks Consensus Estimate of a loss of 5 cents. Revenues of $76.9 million surpassed the Zacks Consensus Estimate by 8.4%. Presently, the company sports a Zacks Rank #1.

AngioDynamics’ earnings yield of 0.1% compares favorably with the industry’s (2.8%). The company surpassed earnings estimates in three of the trailing four quarters and missed once, the average surprise being 125.6%.


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