Surmodics(SRDX)2022-11-13 01:45Financial Data and Key Metrics Changes - In Q4 2022, total revenue reached $26 million, an 8% increase year-over-year, exceeding the high end of revenue guidance [5][24] - Medical device revenue grew by 12% year-over-year, while In Vitro Diagnostics (IVD) revenue decreased by 1% [5][6] - For the full fiscal year 2022, total revenue was $100 million, reflecting a 5% growth year-over-year when normalizing for a prior milestone payment [7] Business Line Data and Key Metrics Changes - Medical Device product revenue increased by 26% year-over-year, driven by strong sales of Pounce and Sublime products [24] - IVD product revenue increased by 8% year-over-year, despite a decline in R&D services revenue [17][24] - R&D services revenue decreased by 19% year-over-year due to the completion of a customer development program [25] Market Data and Key Metrics Changes - The Medical Device business reported an operating loss of $6.2 million in Q4, compared to an $800,000 loss in the prior year [28] - IVD business reported operating income of $2.8 million, or 43% of revenue, down from 51% in the prior year [28] Company Strategy and Development Direction - The company aims to achieve premarket approval for the SurVeil drug-coated balloon and support Abbott's commercialization efforts [8][23] - Focus on building a direct sales force and establishing a customer base for the Sublime and Pounce platforms [12][14] - Plans to drive revenue growth and optimize cash flow from Medical Device coatings and IVD businesses [17][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in receiving PMA approval for SurVeil by the end of Q2 fiscal 2023, which would trigger a milestone payment from Abbott [10][44] - The company anticipates revenue growth in fiscal 2023 to range from $103 million to $107 million, representing a 3% to 7% increase compared to the prior year [33][34] Other Important Information - The company entered into a new 5-year credit agreement, providing access to up to $125 million in non-dilutive debt financing [21] - The company expects to see a contraction in product gross margin due to product mix and inflationary pressures [35] Q&A Session Summary Question: Contribution of Pounce and Sublime - Management focused on building customer pipeline and increasing utilization rather than disclosing specific revenue figures at this stage [40][41] Question: Total rep count and associated costs - The company ended the year with 27 territory managers and plans opportunistic hires in the back half of the year [42][43] Question: Confidence in SurVeil approval timeline - Management remains confident in the timeline for PMA approval, citing strong data and thorough submissions [46][44] Question: Impact of drug-coated balloon approval on income statement - Revenue recognition from the milestone payment will primarily impact gross margin and operating income [58][59] Question: Future commercialization partnerships - The company is focused on internal commercialization for Pounce and Sublime but remains open to partnership opportunities [50][56] Question: Cash consumption forecast for fiscal 2023 - Expected cash use in fiscal 2023 is projected to be around $30 million, excluding the SurVeil milestone payment [70]