Surmodics(SRDX)2024-02-01 13:15Revenue Performance - Revenue for the first quarter of fiscal 2024 was $30.6 million, a 23% increase from $24.9 million in the prior-year quarter[75]. - Medical Device revenue increased 24% to $23.5 million in the first quarter of fiscal 2024, compared to $19.0 million in the prior-year quarter[76]. - Product sales in the Medical Device segment rose 43% to $12.0 million, driven by the initial stocking order for the SurVeil DCB from Abbott[78]. - In Vitro Diagnostics revenue was $7.0 million, an 18% increase from $5.9 million in the prior-year quarter[77]. - Performance coating royalties and license fee revenue increased to $8.2 million in Q1 fiscal 2024, up from $7.5 million in the prior-year quarter[89]. Expenses and Profitability - R&D expense decreased 32% to $8.7 million in the first quarter of fiscal 2024, compared to $12.7 million in the prior-year quarter[81]. - SG&A expense decreased 5% to $12.5 million, with a percentage of revenue dropping from 53% to 41%[82]. - Product gross profit increased 12% to $10.0 million, with product gross margins at 53.2% compared to 63.0% in the prior-year quarter[79]. - Medical Device segment reported an operating loss of $(0.2) million in Q1 fiscal 2024, a significant improvement from $(7.2) million in the prior-year quarter, representing (1)% of revenue[86]. - In Vitro Diagnostics segment reported operating income of $3.1 million in Q1 fiscal 2024, with product gross margins decreasing to 61.4% from 69.4% year-over-year[88]. - Medical Device product gross profit increased by $0.9 million year-over-year in Q1 fiscal 2024, but gross margins decreased to 48.6% from 58.6%[89]. Cash Flow and Liquidity - Cash used in operating activities was $(8.8) million in Q1 fiscal 2024, an improvement from $(10.8) million in the same prior-year period[89]. - Cash used in investing activities totaled $(8.4) million in Q1 fiscal 2024, compared to $(1.0) million in the same prior-year period[91]. - Cash and cash equivalents decreased to $35.2 million as of December 31, 2023, down from $45.4 million as of September 30, 2023[93]. - Cash and cash equivalents totaled $35.2 million as of December 31, 2023, expected to support operations and planned capital expenditures for fiscal 2024[96]. - The company held $11.8 million in available-for-sale debt securities as of December 31, 2023, with interest rate fluctuations having an insignificant impact on results[104]. Future Outlook - For fiscal 2024, the company expects R&D expenses to decrease by $5.5 million to $6.5 million compared to fiscal 2023[81]. - Anticipated increase in SG&A expenditures between $2.0 million and $3.0 million for fiscal 2024, alongside significant R&D expenses primarily for medical device product development[96]. - Future cash requirements will depend on market acceptance of medical device products, including the SurVeil DCB, and potential corporate transactions[97]. - The company may seek additional liquidity through borrowing, debt or equity financing, or corporate transactions, with no assurance of favorable terms[97]. Customer and Market Dynamics - Abbott and Medtronic are the largest customers, contributing 27% and 10% of consolidated revenue for fiscal 2023, and 19% and 10% for the three months ended December 31, 2023, respectively[98]. - The Pounce thrombectomy device platform continues to see sales growth, contributing to overall revenue increases[78]. Risk Factors - The company is exposed to Euro currency risk due to manufacturing operations in Ireland and sales denominated in Euros, which may affect revenue and expenses[107]. - Interest rate swap transaction fixes the one-month Term SOFR portion of interest rate on $25.0 million of term loans at 4.455%, resulting in an effective interest rate of 10.205%[105]. - Management believes that a reasonable change in raw material prices would not materially impact future earnings or cash flows[106]. Accounting and Compliance - No significant changes in critical accounting policies were reported for the three months ended December 31, 2023[99]. - Total interest expense under the credit agreement with MidCap is expected to be approximately $3.5 million for fiscal 2024[94]. - Working capital totaled $63.3 million as of December 31, 2023, an increase of $0.6 million from September 30, 2023[93].