SurModics, Inc. (Nasdaq:SRDX), a leading provider of surface modification and in vitro diagnostic technologies to the healthcare industries, today announced results for its fiscal 2012 second quarter.
"We are pleased to report another solid quarter of performance," stated Gary Maharaj, President and Chief Executive Officer of SurModics. "Our core businesses, excluding Cypher, generated record non-GAAP operating income during the quarter driven by our ongoing initiatives to strengthen our operations, including efforts to improve our cost structure."
"Although, we saw modest revenue growth, we continue to have success developing new products, attracting new customers and positioning ourselves in the highest growing medical device market segments. We continue to be confident in our ability to achieve long-term sustainable double-digit growth."
Second Quarter FY 2012 Summary
Revenue for the second quarter totaled $12.2 million, an 8% decline from the $13.3 million reported in the second quarter of last year. Diluted earnings per share from continuing operations was $0.11 for the second quarter compared to $0.16 for the same period last year. Diluted earnings per share, including discontinued operations, was $0.10 for the second quarter.
Results for the fiscal 2012 second quarter, when compared with the fiscal 2011 second quarter, were impacted by a $1.6 million decline in royalty and product revenue associated with Cypher and Cypher Select Plus drug eluting stents, products which are no longer marketed by Cordis. In addition, during the second quarter of 2012 the Company recorded an $0.8 million impairment loss on our OctoPlus equity investment.
Excluding the impact of Cypher, revenue increased 4% from the year ago period. Adjusting for Cypher items and the OctoPlus impairment, non-GAAP diluted earnings per share from continuing operations in the second quarter was $0.14 compared with $0.11 last year.
Medical Device Q2 FY 2012 Highlights
On a GAAP basis, revenue for the Medical Device business unit, which includes hydrophilic coatings and device drug delivery technologies, was $8.8 million, down 12% from the prior year period. Second quarter hydrophilic coating revenue of $8.7 million was flat compared with the year ago period. Excluding the impact of Cypher, Medical Device revenue grew 5% from the year ago period.
Medical Device generated $4.1 million of operating income during the quarter, a 12% decline from last year. Excluding Cypher, Medical Device operating income grew 34% from the year ago period.
Additional Medical Device highlights during the quarter include:
- Three medical device customers launched new products during the second quarter utilizing SurModics hydrophilic coatings
- Double-digit hydrophilic royalty growth in key medical device growth segments - neurovascular, peripheral vascular and transcatheter valves
- Medtronic received FDA approval for its Resolute Integrity Drug-Eluting Stent (DES) delivery system, which utilizes a SurModics hydrophilic coating
In Vitro Diagnostics Q2 FY 2012 Highlights
For the second quarter, our In Vitro Diagnostics ("IVD") revenue was $3.5 million, up 3% compared with the second quarter of fiscal 2011. The IVD business unit generated $1.3 million of operating income during the second quarter, an 8% increase from the year ago period.
Additional In Vitro Diagnostic highlights during the quarter include:
- Six consecutive quarters of year-on-year product revenue growth
- Introduction of our StabilBlot product family for blotting applications
- Addition of five new diagnostic test kit manufacturer customers
- Launch of our updated web-site and e-commerce channel
Board of Directors Authorizes Stock Repurchase Program
The Company has announced that its Board of Directors has authorized the repurchase of up to $50 million of its outstanding common stock. The number of shares to be repurchased and the timing of any repurchases will depend on factors such as the Company's stock price, economic and market conditions, alternative uses of capital and corporate and regulatory requirements. The repurchases may be effected through open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, tender offers, or by any combination of such methods. This authorization is in addition to the $5.3 million that remains under the November 2007 share repurchase authorization. This new repurchase program does not have a fixed expiration date.
Commenting on the share repurchase program, Maharaj stated, "The decision to authorize a share repurchase at this time reflects the confidence of our Board of Directors in the Company's long-term growth potential, strong balance sheet and cash flows." He added, "We are committed to funding our strategies to strengthen and expand our core to deliver long-term value creation. Additionally, our Board will continue to review all methods for returning cash to shareholders including share repurchases and dividends."