Surmodics(US:SRDX)2021-08-04 12:44Revenue Performance - Revenue for Q3 fiscal 2021 was $23.9 million, a decrease of 11.2% compared to Q3 fiscal 2020, while revenue for the first nine months of fiscal 2021 was $81.2 million, an increase of 12.2% year-over-year [92]. - Medical Device revenue in Q3 fiscal 2021 was $16.8 million, down 18.3% from $20.5 million in Q3 fiscal 2020, but increased by 12.2% to $60.9 million for the first nine months of fiscal 2021 compared to the prior year [92]. - Medical Device royalties and license fee revenue was $8.8 million for Q3 FY2021, a decline of 29.1% or $3.6 million, while for the first nine months, it was $38.2 million, an increase of 24.1% or $7.4 million compared to the prior year [93]. - Medical Device product sales declined 4.7% to $5.5 million for Q3 FY2021, and 4.8% to $15.5 million for the first nine months, impacted by softness in legacy balloon catheter sales [94]. - In Vitro Diagnostics revenue increased 11.8% to $7.1 million for Q3 FY2021 and 12.2% to $20.3 million for the first nine months, driven by broad-based demand across all IVD product offerings [95]. Acquisitions and Product Development - Surmodics completed the acquisition of Vetex Medical Limited for $39.9 million, expanding its thrombectomy portfolio with a second FDA 510(k)-cleared device [75][76]. - The Vetex venous thrombectomy catheter is designed to remove large, mixed-morphology blood clots and has received CE Mark approval for commercialization in the EU [76]. - Surmodics' drug-coated balloons (DCBs) include the SurVeil™ DCB, which met primary safety and efficacy endpoints in the TRANSCEND clinical trial, leading to a $15 million milestone payment from Abbott [79][80]. - The company expects to receive PMA from the FDA for the SurVeil DCB in Q2 fiscal 2022, which would trigger a $30 million milestone payment under the Abbott Agreement [81]. - Clinical product evaluations for the Sublime™ radial access devices began in Q2 fiscal 2021 and are expected to continue through the second half of fiscal 2021 [84]. - The company is focused on developing devices for a range of care settings to improve patient outcomes and address unmet needs in vascular disease treatment [77]. Financial Performance and Expenses - Medical Device operating loss was $(2.5) million for Q3 FY2021, compared to operating income of $0.5 million in Q3 FY2020, while operating income for the first nine months was $5.5 million compared to a loss of $(1.3) million in the prior year [105]. - In Vitro Diagnostics operating income was $3.4 million for Q3 FY2021, representing 47.5% of revenue, and $10.4 million for the first nine months, representing 51.2% of revenue [107]. - R&D expense declined 8% to $12.2 million for Q3 FY2021, and 4% to $36.0 million for the first nine months, with R&D as a percentage of revenue at 51% for Q3 FY2021 [98]. - SG&A expense increased 6% to $7.9 million for Q3 FY2021, and 8% to $22.8 million for the first nine months, with SG&A as a percentage of revenue at 33% for Q3 FY2021 [99]. Cash Flow and Liquidity - As of June 30, 2021, working capital totaled $76.5 million, an increase of $8.7 million from September 30, 2020, with cash and cash equivalents totaling $72.0 million [109]. - Cash provided by operating activities for the first nine months of fiscal 2021 was $14.5 million, an increase from $12.7 million in the same prior-year period [113]. - Cash provided by investing activities totaled $16.6 million for the first nine months of fiscal 2021, compared to cash used of $(1.9) million in the same prior-year period [117]. - The company plans to fund operations, the Vetex acquisition, and capital expenditures through existing cash, cash equivalents, and available credit [112]. - As of June 30, 2021, the company had cash and cash equivalents totaling $72.0 million, which, along with cash flow from operations and a revolving line of credit, is expected to support liquidity for the next twelve months [112]. Stock and Investment - The company has authorized the repurchase of up to an additional $25.3 million of its outstanding common stock, with no shares repurchased in the nine months ended June 30, 2021 [120]. - The company filed a universal shelf registration statement with the SEC, allowing it to offer up to $200 million in various securities [110]. - The company’s investment portfolio, reported at fair value, totaled $9.8 million as of June 30, 2021, primarily consisting of money market and corporate bond securities [111]. - As of June 30, 2021, the company held $9.8 million in available-for-sale debt securities, with $5.7 million maturing in less than one year [126]. Currency and Risk Management - The company is exposed to increasing Euro currency risk related to manufacturing operations in Ireland, affecting revenue and expenses denominated in Euro [128]. - All sales transactions are conducted in U.S. dollars or Euros, with royalties from foreign jurisdictions converted to U.S. dollars [128]. - Substantially all purchasing transactions are also denominated in U.S. dollars or Euros [128]. - The company has not entered into foreign currency forward exchange contracts or other derivatives to hedge against currency fluctuations [128]. - Management believes that reasonable changes in raw material prices would not materially impact future earnings or cash flows due to minimal inventory exposure [127].