-
GAAP Revenue Anticipated to Range from $60.0 Million to $64.0
Million
-
Expects GAAP Earnings Per Share of $0.38 to $0.43 per share
-
Expects Non-GAAP EPS of $0.66 to $0.75 per share
SurModics, Inc. (Nasdaq:SRDX), a leading provider of medical device and
in vitro diagnostic technologies to the healthcare industry, today
announced updated guidance for the year ending September 30, 2016. The
revenue and earnings per share ranges incorporate the acquisition of
Creagh Medical, a developer and manufacturer of percutaneous
transluminal angioplasty (PTA) balloon catheters.
According to Gary Maharaj, SurModics president and chief executive
officer, “Our recent acquisition provides the key foundation to
accelerate our transformation into a whole products solutions medical
device company. With the Creagh Medical acquisition, SurModics plans to
develop a robust pipeline of interventional cardiology devices.
Integrating Creagh Medical is a top priority for us in fiscal 2016.
Moreover, we will advance our drug-coated balloon platform with a
first-in-human clinical trial, as we also continue to drive our core
medical device and in vitro diagnostics businesses. Our objective is to
generate consistent revenue growth in the mid-teens, on a constant
currency basis, and EBITDA margins greater than 30% within three years.”
SurModics now estimates GAAP revenue for fiscal 2016 to be in the range
of $60.0 million to $64.0 million. This includes an aggregate of $3.5
million to $4.5 million from the acquisition of Creagh Medical. Diluted
GAAP earnings are expected to range from $0.38 to $0.43 per share, which
includes $4.4 million to $5.0 million, or $0.27 to $0.31 per share, of
integration costs, as well as amortization and contingent consideration
accretion expenses associated with the acquisition. Because the final
purchase accounting for the Creagh Medical acquisition has not been
completed, the amount of amortization and contingent consideration
accretion expenses may vary materially from preliminary estimates.
Non-GAAP earnings are expected to range from $0.66 to $0.75 per share.
SurModics has provided a reconciliation of GAAP to non-GAAP measures in
the schedules attached to this press release. The fiscal 2015 and 2014
results have been updated to reflect acquisition-related amortization in
a manner consistent with the fiscal 2016 non-GAAP guidance.
Assumptions in the Company’s 2016 guidance include:
-
No substantial changes in the US Dollar and Euro exchange range in
fiscal 2016 from current rates.
-
SurModics anticipates research and development expenses to be
approximately mid-thirty percent of revenue.
-
Selling, general and administrative expenses are projected to be
approximately mid-twenty percent of revenue.
-
The income tax rate is expected to be between 39.0% and 42.0%. This
includes the benefit of the re-enactment of the Federal R&D tax
credit, offset by on-tax benefited items including contingent
consideration accretion and transaction costs.
-
SurModics estimates capital expenditures to be between $4.5 million
and $5.0 million, including investments in Creagh Medical’s Irish
facility.
Concluded Maharaj, “We expect fiscal 2016 to be a pivotal year for us,
and we enter it with enthusiasm about SurModics’ prospects and
initiatives. Our team is intently focused on evolving into a highly
relevant and valued provider of whole product medical device solutions,
as well as continuing to grow our global medical device and in vitro
diagnostic customer base.”
Live Webcast
SurModics will host a webcast at 7:30 a.m. CT (8:30 a.m. ET) today to
provide updated financial guidance for full fiscal year 2016 and to
discuss the recent company acquisition of Creagh Medical. To access the
webcast, go to the investor relations portion of the Company’s website
at www.surmodics.com
and click on the webcast icon. A replay of the conference call will be
available by dialing 888-203-1112 and entering conference call ID
passcode 2845259. The audio replay will be available beginning at 10:30
a.m. CT on Friday, January 8, 2016, until 10:30 a.m. CT on Friday,
January 15, 2016.
About SurModics, Inc.
SurModics partners with the world’s leading and emerging medical device,
diagnostic and life science companies to develop and commercialize
innovative products designed to improve lives by enabling the detection
and treatment of disease. Our mission is to be a trusted partner to our
customers by providing the most advanced surface modification
technologies and in vitro diagnostic chemical components that
help enhance the well-being of patients. The Company’s core offerings
include surface modification coating technologies that impart lubricity,
prohealing, and biocompatibility characteristics and components for in
vitro diagnostic test kits and microarrays. SurModics’ strategy is
to build on the product and technical leadership within these fields,
and expand the core offerings to generate opportunities for longer term
sustained growth. SurModics is headquartered in Eden Prairie, Minnesota.
For more information about the Company, visit www.surmodics.com.
The content of SurModics’ website is not part of this press release or
part of any filings that the Company makes with the SEC.
Safe Harbor for Forward-Looking Statements
This press release contains forward-looking statements. Statements that
are not historical or current facts, including statements about beliefs
and expectations regarding the Company’s performance in the near- and
long-term, including our revenue, earnings and cash flow expectations
for fiscal 2016, and our SurVeil Drug-Coated Balloon, are
forward-looking statements. Forward-looking statements involve inherent
risks and uncertainties, and important factors could cause actual
results to differ materially from those anticipated, including (1) our
ability to successfully develop, obtain regulatory approval for, and
commercialize our SurVeil Drug-Coated Balloon product; (2) our
reliance on third parties (including our customers and licensees) and
their failure to successfully develop, obtain regulatory approval for,
market and sell products incorporating our technologies; (3) our ability
to achieve our corporate goals; (4) our ability to successfully identify
and acquire target companies or achieve expected benefits from
acquisitions that are consummated; (5) possible adverse market
conditions and possible adverse impacts on our cash flows, and (6) the
factors identified under “Risk Factors” in Part I, Item 1A of our Annual
Report on Form 10-K for the fiscal year ended September 30, 2015, and
updated in our subsequent reports filed with the SEC. These reports are
available in the Investors section of our website at www.surmodics.com
and at the SEC website at www.sec.gov.
Forward-looking statements speak only as of the date they are made, and
we undertake no obligation to update them in light of new information or
future events.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally
accepted accounting principles, or GAAP, SurModics is reporting non-GAAP
financial results including non-GAAP net income, non-GAAP diluted net
income per share, and EBITDA. We believe that these non-GAAP measures
provide meaningful insight into our operating performance excluding
certain event-specific matters, and provide an alternative perspective
of our results of operations. We use non-GAAP measures, including those
set forth in this release, to assess our operating performance and to
determine payout under our executive compensation programs. We believe
that presentation of certain non-GAAP measures allows investors to
review our results of operations from the same perspective as management
and our board of directors and facilitates comparisons of our current
results of operations. The method we use to produce non-GAAP results is
not in accordance with GAAP and may differ from the methods used by
other companies. Non-GAAP results should not be regarded as a substitute
for corresponding GAAP measures but instead should be utilized as a
supplemental measure of operating performance in evaluating our
business. Non-GAAP measures do have limitations in that they do not
reflect certain items that may have a material impact on our reported
financial results. As such, these non-GAAP measures should be viewed in
conjunction with both our financial statements prepared in accordance
with GAAP and the reconciliation of the supplemental non-GAAP financial
measures to the comparable GAAP results provided for the specific
periods presented, which are attached to this release.
|
SurModics, Inc., and Subsidiaries
|
Estimated Non-GAAP Net Income per Common Share Reconciliation
|
For the Fiscal Year Ended September 30, 2016
|
|
|
|
Full Fiscal Year Estimate
|
|
|
Low
|
|
High
|
|
|
|
|
|
GAAP results
|
|
$
|
0.38
|
|
|
$
|
0.43
|
|
Estimated due diligence and integration costs (1)
|
|
|
0.18
|
|
|
|
0.20
|
|
Estimated amortization expense (2)
|
|
|
0.12
|
|
|
|
0.14
|
|
Federal research and development discrete tax item (3)
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
Adjusted results
|
|
$
|
0.66
|
|
|
$
|
0.75
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
These adjustments consist of (a) due diligence and integration fees
and (b) the contingent consideration adjustments represent
accounting adjustments to state contingent consideration liabilities
at their estimated fair value. These adjustments can be highly
variable depending on the assessed likelihood and amount of future
contingent consideration payments. Due diligence and other fees
include legal, tax, investment banker and other expenses associated
with acquisitions that can be highly variable and not representative
of on-going operations.
|
(2)
|
|
Amortization expense is a non-cash expense and does not impact our
liquidity or compliance with the financial covenants included in our
credit facility agreement. Management removes the impact of
amortization from our operating performance to assist in assessing
our cash generated from operations. We believe this is a critical
metric for measuring our ability to generate cash and invest in our
growth. Therefore, amortization expense for the Creagh Medical and
other prior acquisitions is excluded from management's assessment of
operating performance and is also excluded from our operating
segments' measures of profit and loss used for making operating
decisions and assessing performance. Accordingly, management has
excluded amortization expense for purposes of calculating these
non-GAAP financial measures to facilitate an evaluation of our
current operating performance, particularly in terms of liquidity.
|
(3)
|
|
Represents the estimated discrete income tax benefit associated with
the December 2015 signing of the Protecting Americans from Tax Hikes
Act of 2015— which retroactively reinstated federal R&D income tax
credits for calendar 2015.
|
|
SurModics, Inc., and Subsidiaries
|
Net Income and Diluted EPS GAAP to Non-GAAP Reconciliation
|
For the Fiscal Year Ended September 30, 2015
|
(in thousands, except per share data)
|
(Unaudited)
|
|
|
|
Total Revenue
|
|
Operating Income
|
|
Operating Income Percentage
|
|
Income from Operations Before Income Taxes
|
|
Net Income
|
|
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
61,898
|
|
|
$
|
19,089
|
|
|
30.8
|
%
|
|
$
|
18,241
|
|
|
$
|
11,947
|
|
|
$
|
0.90
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
One-time royalty catch-up payments (1)
|
|
|
(560
|
)
|
|
|
(560
|
)
|
|
(0.5
|
)
|
|
|
(560
|
)
|
|
|
(362
|
)
|
|
|
(0.03
|
)
|
Claim settlement (2)
|
|
|
-
|
|
|
|
2,500
|
|
|
4.0
|
|
|
|
2,500
|
|
|
|
1,617
|
|
|
|
0.12
|
|
Impairment loss on strategic investment (3)
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
0.11
|
|
Gain on investment (4)
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
(523
|
)
|
|
|
(523
|
)
|
|
|
(0.04
|
)
|
Research and development tax credit (5)
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
(201
|
)
|
|
|
(0.01
|
)
|
Amortization of intangible assets (6)
|
|
|
-
|
|
|
|
619
|
|
|
1.0
|
|
|
|
619
|
|
|
|
400
|
|
|
|
0.03
|
|
Non-GAAP
|
|
$
|
61,338
|
|
|
$
|
21,648
|
|
|
35.3
|
%
|
|
$
|
21,777
|
|
|
$
|
14,378
|
|
|
$
|
1.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Represents a reduction in revenue for the portion of a one-time
customer royalty payment related to periods prior to fiscal 2015 and
the associated tax impact.
|
(2)
|
|
Reflects the settlement of a customer claim and associated tax
impact.
|
(3)
|
|
An impairment charge associated with a strategic investment in
CeloNova BioSciences, Inc.
|
(4)
|
|
Reduction in net investment income associated with the sale of
Intersect ENT shares. There is no income tax benefit as there was an
offsetting release of capital loss valuation allowance.
|
(5)
|
|
Represents a discrete income tax benefit associated with the
December 2014 signing of the Tax Increase Prevention Act of 2014
which retroactively reinstated federal R&D income tax credits for
calendar 2014.
|
(6)
|
|
To exclude amortization of acquisition related intangible assets and
associated tax impact.
|
|
SurModics, Inc., and Subsidiaries
|
Income from Continuing Operations and Diluted EPS GAAP to
Non-GAAP Reconciliation
|
For the Fiscal Year Ended September 30, 2014
|
(in thousands, except per share data)
|
(Unaudited)
|
|
|
|
Total Revenue
|
|
Operating Income
|
|
Operating Income Percentage
|
|
Income from Operations Before Income Taxes
|
|
Net Income
|
|
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
57,439
|
|
$
|
18,576
|
|
32.3
|
%
|
|
$
|
18,472
|
|
|
$
|
12,207
|
|
|
$
|
0.88
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Board of Directors stock vesting acceleration (1)
|
|
|
-
|
|
|
914
|
|
1.6
|
|
|
|
914
|
|
|
|
580
|
|
|
|
0.04
|
|
Contingent milestone income (2)
|
|
|
-
|
|
|
-
|
|
-
|
|
|
|
(709
|
)
|
|
|
(709
|
)
|
|
|
(0.05
|
)
|
Impairment loss on strategic investment (3)
|
|
|
-
|
|
|
-
|
|
-
|
|
|
|
1,184
|
|
|
|
1,184
|
|
|
|
0.09
|
|
Amortization of intangible assets (4)
|
|
|
-
|
|
|
606
|
|
1.1
|
|
|
|
606
|
|
|
|
385
|
|
|
|
0.03
|
|
Non-GAAP
|
|
$
|
57,439
|
|
$
|
20,096
|
|
35.0
|
%
|
|
$
|
20,467
|
|
|
$
|
13,647
|
|
|
$
|
0.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Adjusted to reduce operating expenses associated with the
acceleration of Board of Director stock-based compensation awards
and associated tax impact.
|
(2)
|
|
Reflects a reduction in net investment income associated with
contingent milestone payments related to the sale of Vessix Vascular
shares which were sold in fiscal 2014.
|
(3)
|
|
Represents net investment income associated with an investment
impairment charge associated with the strategic investment in
ThermopeutiX.
|
(4)
|
|
To exclude amortization of acquisition related intangible assets and
associated tax impact.
|
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