SurModics, Inc.’s SRDX second-quarter fiscal 2015 (ended Mar 31, 2015) adjusted earnings of 19 cents per share missed the Zacks Consensus Estimate of 20 cents. Earnings in the reported quarter decreased 14% from the year-ago period.
Revenues in the fiscal second quarter increased 6% to $14.4 million, marginally above the Zacks Consensus Estimate of $14 million.
Quarterly Highlights
SurModics reports revenues from two segments – In Vitro Diagnostics and Medical Device. Revenues from In Vitro Diagnostics climbed 23% to $3.9 million. SurModics’ revenues from the Medical Devices segment came in at approximately $10.6 million, up 1%. The bulk of segmental revenues came from hydrophilic coatings royalties, which increased 2% year over year to $7.2 million.
SurModics stated that two medical device customers launched new products utilizing its hydrophilic coatings in the 2015 second quarter. Reagent product sales declined during the quarter as a number of customers implemented inventory rebalancing initiatives.
Fiscal 2015 Guidance Reiterated
SurModics continues to expect fiscal 2015 revenues in the range of $57 million to $60 million. The Zacks Consensus Estimate of $58 million is toward the lower end of the guidance range. SurModics expects fiscal 2015 earnings per share in the range of 85 cents to 95 cents. The company expects research and development expenses to increase by approximately 5% to 7% in fiscal 2015 primarily driven by the drug coated balloon program.
Our Take
SurModics’ fiscal second quarter 2015 results were mixed with the company missing on earnings and beating revenue estimates. We are concerned about lackluster growth in hydrophilic coatings royalties. However, we are pleased with the advancement of the drug coated balloon program which could enter clinical trials later this fiscal.
SurModics currently carries a Zacks Rank #1 (Strong Buy). Other well-ranked stocks in the health care sector include Biogen BIIB, CorMedix, Inc. CRMD and Cytori Therapeutics, Inc. CYTX. All three are Zacks Rank #1 stocks.
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