SurModics, Inc.’s (SRDX) first-quarter fiscal 2015 (ended Dec 31, 2014) adjusted earnings of 25 cents per share beat the Zacks Consensus Estimate by 4 cents. Earnings in the reported quarter increased 19% from the year-ago period.
Revenues in the fiscal first quarter increased 2.3% to $14.2 million, marginally below the Zacks Consensus Estimate of $15 million.
Quarterly Highlights
SurModics reports revenues from two segments – In Vitro Diagnostics and Medical Device. Revenues from In Vitro Diagnostics climbed 7.1% to $3.6 million. SurModics’ revenues from the Medical Devices segment came in at approximately $10.6 million, up 0.8%. The bulk of segmental revenues came from hydrophilic coatings royalties, which remained flat year over year at $7.1 million.
SurModics stated that three medical device customers launched new products utilizing its hydrophilic coatings in the 2015 first quarter. Increase in non-coronary hydrophilic coatings royalty revenues were offset by a decline in average selling prices and procedure volumes in Japan, lower-than-expected royalty revenue and industry headwinds in the coronary sector.
The company has initiated a SurVeil drug coated balloon good laboratory practice (GLP) pre-clinical study in the first quarter of fiscal 2015.
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 $59 million is toward the high 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 first quarter 2015 results were mixed with the company beating on earnings and missing revenue estimates. We are concerned about lackluster hydrophilic coatings royalties and the coronary sub-group performance. 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 #3 (Hold). Some better-ranked stocks in the health care sector include Celgene Corporation (CELG), Regado Biosciences, Inc. (RGDO) and AMAG Pharmaceuticals, Inc. (AMAG). Celgene and Regado carry a Zacks Rank #1 (Strong Buy), while AMAG carries a Zacks Rank #2 (Buy).
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