SurModics, Inc.’s (SRDX) fourth-quarter fiscal 2014 (ended Sep 30, 2014) adjusted earnings of 26 cents per share beat the Zacks Consensus Estimate by a penny. The fourth quarter fiscal 2014 earnings increased 8% from the year-ago period.
Revenues in the reported quarter increased 7% to $15.3 million, roughly in line with the Zacks Consensus Estimate of $15 million.
For fiscal 2014, SurModics reported earnings of 96 cents per share, beating the Zacks Consensus Estimate by 2 cents. Fiscal 2014 earnings were approximately 13% higher than the fiscal 2013 figure. Revenues in fiscal 2014 climbed 2.3% to $57.4 million. Revenues were broadly in line with the Zacks Consensus Estimate.
Quarterly Highlights
SurModics reports revenues from two segments – In Vitro Diagnostics and Medical Device. Revenues from In Vitro Diagnostics climbed 3% to $4.1 million. SurModics’ revenues from the Medical Devices segment came in at approximately $11.2 million, up 8.9%. The bulk of segmental revenues came from hydrophilic coatings royalties, which increased 7% to $7.9 million. Revenues from the coronary sub-group increased 2% in the reported quarter.
Apart from releasing earnings results, SurModics also announced that its Board of Directors has authorized the buyback of outstanding common stock of up to $30 million. The company did not provide any timeline for the repurchase.
Fiscal 2015 Guidance
SurModics expects fiscal 2015 revenues in the range of $57 million to $60 million (flat to up 4% as compared to the fiscal 2014 figure). The Zacks Consensus Estimate of $62 million is above the guidance range. SurModics expects fiscal 2015 earnings per share in the range of 85 cents to 95 cents compared with 96 cents in fiscal 2014. The company expects research and development expenses to increase by approximately 5% to 7% in fiscal 2015 over the previous fiscal year primarily driven by the advancement of paclitaxel drug coated balloon program.
Our Take
We are impressed by the fiscal fourth quarter 2014 results. The company beat on both revenues and earnings. We are positive on strong hydrophilic coatings royalties and the coronary sub-group returning to profit. We are also pleased with the company’s repurchase program. However, we remain concerned about the increase in expenses as the paclitaxel drug coated balloon program advances.
SurModics currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector are Allergan (AGN), Abaxis Inc. (ABAX) and AbbVie (ABBV). All carry a Zacks Rank #2 (Buy).
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