SurModics, Inc. (SurModics), an in vitro diagnostics company, has reported total revenues of $20.9 million for the second quarter of fiscal 2009, compared with the total revenues of $25.7 million in the year-ago quarter. It also reported a net income of $4.2 million, or $0.24 per diluted share, for the second quarter of fiscal 2009, compared with net income of $5.1 million, or $0.28 per diluted share, in the year-ago quarter.
Second Quarter Summary:
Financial highlights:
Operating income of $6.2 million
Revenue by market:
Therapeutic:
Cardiovascular – $9.6 million
Ophthalmology – $3.7 million
Other Markets – $2.9 million
Diagnostic – $4.7 million
Product sales of $4.8 million, representing 24% sequential growth from the first quarter of 2009
First license fee revenue from SurModics Pharmaceuticals (formerly Brookwood Pharmaceuticals)
Repurchased $2.2 million of SurModics stock; cumulative $27.7 million purchased in $35 million program authorized in November 2007
Cash and investments of $58.9 million; no debt
Six new licenses with SurModics customers
Five new product classes introduced by our customers
“SurModics is pleased to deliver solid financial results for the second quarter, particularly in light of the difficult economic environment,” said Bruce Barclay, president and chief executive officer. “Our second quarter performance is especially gratifying coming on the heels of soft product sales in the first quarter. Product sales increased 24% on a sequential basis compared with the first quarter. Further, the restructuring actions taken in the first quarter of fiscal 2009, while difficult, have already begun to yield positive results from both financial and operational standpoints. In total, we have reduced our operating expenses, excluding product costs, in the second quarter by nearly $3.5 million compared with the year-ago quarter.”
“In addition, we are making good progress against our published fiscal 2009 goals, particularly with respect to signed license agreements and customer product launches. More broadly, we remain on track to achieve our remaining fiscal 2009 goals,” continued Barclay. “We continue to add new projects in ophthalmology and are making excellent progress in our partner-supported product development programs for both back-of-the-eye and front-of-the-eye diseases. As further evidence of the progress we are making with our business model, SurModics Pharmaceuticals generated its first license fee revenue during the quarter.”
For the first six months of fiscal 2009, revenue was $84.1 million, against $49.5 million in the year-ago quarter. Operating income was $48.9 million, compared with $14.8 million in the year-ago quarter; net income was $31.3 million, compared with $10.8 million in the year earlier period; and diluted net income per share was $1.78, compared with $0.58 in the first six months of fiscal 2008. Results for the first quarter of fiscal 2009 included the recognition of $34.8 million of previously deferred revenue, as well as a $9 million milestone payment, both in connection with Merck’s termination of its agreement with SurModics.
“SurModics continues to be in excellent financial health,” said Phil Ankeny, senior vice president and chief financial officer. “The negative operating cash flow experienced in the second quarter reflects timing issues associated with tax payments and accounts receivable. We anticipate a return to positive quarterly operating cash flow for the upcoming quarters. The Company’s strong year-to-date operating cash flow and healthy balance sheet with zero debt provide a major competitive advantage in the current environment. In addition, we continue to demonstrate disciplined deployment of capital with a goal of enhancing shareholder value, principally in the areas of share repurchase and facilities-related and business development investments. We repurchased approximately $2.2 million of our stock in the second quarter, and as of March 31, 2009, we had a remaining authorization of $7.3 million. Additionally, the build-out of our development and cGMP manufacturing facility in Alabama is currently tracking to our timeline and budget. Finally, SurModics is continuing to review business development opportunities, which are even more abundant in the current environment.”