Surmodics(SRDX) - 2021 Q2 - Quarterly Report

Revenue Performance - Revenue for Q2 fiscal 2021 was $35.0 million, a 53.3% increase compared to Q2 fiscal 2020[83] - Medical Device revenue reached $27.9 million in Q2 fiscal 2021, up 71.2% from $16.3 million in Q2 fiscal 2020[83] - Medical Device royalties and license fee revenue increased by 143.9%, or $11.8 million, in Q2 fiscal 2021 compared to the same period last year[85] - Abbott Agreement license fee revenue rose to $12.5 million in Q2 fiscal 2021, compared to $1.5 million in the prior-year quarter[85] - Royalties revenue increased 11.3% to $7.5 million in Q2 fiscal 2021, compared to $6.7 million in Q2 fiscal 2020[85] - In Vitro Diagnostics revenue increased 8.7% to $7.1 million in Q2 fiscal 2021, driven by demand for microarray slide/surface products[87] - Total revenue for the first six months of fiscal 2021 was $57.3 million, a 26.1% increase compared to the same prior-year period[83] - Revenue generated under the SurVeil DCB license agreement with Abbott represented 24% of total revenue for the six months ended March 31, 2021[111] Operating Income - Total segment operating income for the second quarter of fiscal 2021 was $12.4 million, compared to $2.0 million in the same quarter of fiscal 2020[97] - Medical Device business reported operating income of $8.6 million for the second quarter of fiscal 2021, compared to an operating loss of $(1.5) million in the same quarter of fiscal 2020[98] - In Vitro Diagnostics business reported operating income of $3.8 million for the second quarter of fiscal 2021, representing 53.7% of revenue, compared to $3.5 million, or 53.1% of revenue, in the same quarter of fiscal 2020[100] Expenses - Research and development (R&D) expense increased by 7.9%, or $0.9 million, in the second quarter of fiscal 2021 compared to the prior-year quarter, while it declined by 1.3%, or $(0.3) million, for the first six months[89] - Selling, general and administrative (SG&A) expense increased by 17%, or $1.2 million, in the second quarter of fiscal 2021 compared to the same prior-year quarter, and by 9%, or $1.3 million, for the first six months[92] - For the second quarter of fiscal 2021, product gross margins were 65%, down from 68% in the same quarter of fiscal 2020, primarily due to a shift to lower margin product lines[88] Cash Flow and Liquidity - Cash provided by operating activities totaled $11.7 million for the first half of fiscal 2021, compared to $1.3 million in the same prior-year period[106] - The company maintains cash and cash equivalents totaling $70.0 million as of March 31, 2021, which is expected to provide sufficient liquidity for operations and planned capital expenditures for the next twelve months[105] - Cash provided by investing activities totaled $5.5 million for the first six months of fiscal 2021, compared to cash used of $(10.7) million in the same prior-year period[109] - Cash provided by deferred revenue was $1.3 million for the first six months of fiscal 2021, compared to cash used of $(2.6) million in the same prior-year period, due to a $15 million milestone payment received from Abbott[110] - Cash provided by financing activities totaled $0.1 million for the first six months of fiscal 2021, compared to cash used of $(5.6) million in the same prior-year period[110] Capital and Debt - As of March 31, 2021, working capital totaled $77.3 million, an increase of $9.6 million from September 30, 2020[102] - The outstanding balance on the revolving credit facility was zero as of March 31, 2021, with availability of up to $25 million under a secured revolving line of credit[103] - The company has authorized the repurchase of up to an additional $25.3 million of its outstanding common stock[112] - The company held $21.9 million in available-for-sale debt securities as of March 31, 2021, with $17.8 million having maturity dates of less than one year[120] Impact of COVID-19 - The impact of COVID-19 on revenue has diminished, with the second quarter of fiscal 2021 experiencing the lowest degree of impact since the pandemic began[85] Capital Expenditures - Capital expenditures for property, plant, and equipment totaled $2.0 million for the first six months of fiscal 2021[109] Accounts Receivable - Cash used in accounts receivable and contract asset totaled $(1.9) million for the first six months of fiscal 2021, compared to cash provided of $1.9 million in the same prior-year period[110] Off-Balance Sheet Arrangements - The company did not have any off-balance sheet arrangements that materially affect its financial condition as of March 31, 2021[113]