Surmodics(US:SRDX)2024-05-01 12:15Revenue Performance - Revenue in Q2 fiscal 2024 was $32.0 million, an 18% increase from $27.2 million in Q2 fiscal 2023[74] - Medical Device revenue in Q2 fiscal 2024 was $24.8 million, a 26% increase from $19.7 million in the prior-year quarter[75] - IVD revenue in Q2 fiscal 2024 was $7.1 million, a 5% decrease from $7.5 million in Q2 fiscal 2023[76] - Total revenue for the first six months of fiscal 2024 was $62.5 million, a 20% increase from $52.1 million in the same prior-year period[74] - Medical Device revenue for the first six months of fiscal 2024 was $48.4 million, a 25% increase from $38.7 million in the same prior-year period[75] - IVD product sales for the first six months of fiscal 2024 increased 4% to $13.9 million compared to $13.3 million in the same prior-year period[76] - Product sales reached $18.1 million in Q2 FY2024, an increase of $2.7 million or 18% compared to the prior-year quarter, and $36.9 million for the first six months, up 25% year-over-year[77] Profitability and Expenses - Product gross profit increased by $1.4 million or 14% in Q2 FY2024, totaling $11.0 million, and $2.4 million or 13% for the first six months, totaling $21.9 million[79] - R&D expenses decreased by $2.7 million or 21% in Q2 FY2024, totaling $10.2 million, and by $6.8 million or 26% for the first six months, totaling $19.2 million[80] - SG&A expenses were flat in Q2 FY2024 at $13.1 million, but declined by $0.6 million or 2% for the first six months compared to the prior-year period[81] - Medical Device segment reported operating income of $0.3 million in Q2 FY2024, a significant improvement from an operating loss of $(7.1) million in the prior-year quarter[88] - In Vitro Diagnostics business reported operating income of $3.4 million in Q2 fiscal 2024, down from $3.6 million in Q2 fiscal 2023, representing 47% and 49% of revenue respectively[90] - IVD product gross profit decreased by $0.3 million to $4.6 million in Q2 fiscal 2024, with gross margins at 65.1% compared to 65.7% in Q2 fiscal 2023[90] Cash Flow and Financial Position - Cash used in operating activities was $(1.4) million in the first six months of fiscal 2024, significantly improved from $(16.6) million in the same period of fiscal 2023[91] - As of March 31, 2024, working capital totaled $65.1 million, an increase of $2.3 million from September 30, 2023[95] - Cash and cash equivalents totaled $40.9 million as of March 31, 2024, a decrease of $4.4 million from $45.4 million as of September 30, 2023[95] - Cash used in investing activities totaled $(5.7) million in the first six months of fiscal 2024, compared to $(1.7) million in the same prior-year period[93] Customer Concentration and Revenue Sources - Abbott and Medtronic accounted for 17% and 12% of consolidated revenue respectively for the six months ended March 31, 2024[101] - The company relies on a small number of significant customers, including Abbott and Medtronic, affecting financial results and stock price due to factors related to these customers[105] Future Expectations and Guidance - For FY2024, the company expects R&D expenses to decrease by approximately $6.0 million to $7.0 million compared to FY2023, primarily due to lower SurVeil DCB expenses[80] - The company anticipates an increase in SG&A expenditures of between $1.0 million and $2.0 million in fiscal 2024[99] - The company expects total interest expense under the credit agreement with MidCap to be approximately $3.5 million in fiscal 2024[96] Risk Factors - The company reported ongoing operating losses and interest expenses, which could impact expected expenditures and investments in growth initiatives[105] - The company faces uncertainties in new product development and regulatory approval processes, which may result in lost market opportunities[105] - The company is exposed to Euro currency risk due to manufacturing operations in Ireland and sales denominated in Euros, which could affect revenue and expenses when converted to U.S. dollars[111] - The company has not entered into any foreign currency forward exchange contracts to hedge against adverse fluctuations in foreign currency exchange rates[111] Legal and Regulatory Matters - The company is involved in various legal actions related to its operations, products, and technologies, including intellectual property disputes[116] Internal Controls - There were no changes in internal control over financial reporting that materially affected the company's internal control during the three months ended March 31, 2024[114]