Surmodics’ acquisition hits earnings bottom line

Surmodics (NSDQ:SRDX) today posted earnings that beat expectations on Wall Street and adjusted its guidance for the remaining year.

The Eden Prairie, Minn. company took an expected hit to earnings due to its $5 million-plus acquisition of Embolitech’s thrombectomy platform. Surmodics posted a net loss of -$2.68 million compared with a profit of $720 million in the same quarter of 2017. Its medical device business posted a net loss of -$6.2 million for the quarter compared with a gain of $1.4 million for the same period of 2017.

Revenue was $22.2 million, up 25% from the same quarter one year ago, driven by medical device revenue of $16.7 million, which leapt 31%. That included $1.7 million from Abbott, which agreed earlier this year to worldwide commercialization rights to Surmodics’ SurVeil drug-coated balloon to treat the superficial femoral artery.

GAAP earnings per share came close to meeting analysts’ expectations at -0.2¢, while non-GAAP earnings were 0.27¢ per share. The Embolitech acquisition resulted in a -0.47¢ charge for the quarter, after tax.

“We are pleased to report strong operating performance and meaningful advances on our strategic objectives during the quarter,” said Gary Maharaj, president & CEO of Surmodics in a prepared statement. “We are on track to complete enrollment in our Transcend U.S. pivotal clinical trial in fiscal 2019. The acquisition of Embolitech’s promising thrombectomy technology platform leverages our unique capabilities and advances our focus on developing highly differentiated products.:

Surmodics expects fiscal year 2018 revenue to range from $79 million to $81 million, up from previous expectations in the range of $75 million to $79 million. It also expects a diluted loss in the range of -0.25¢ to 0.30¢ per share as compared with the prior guidance of  -0.20¢ to -0.35¢ per share. Non-GAAP diluted earnings guidance now ranges from $0.39 to $0.44 per share as compared with prior guidance of -0.06¢ to $0.09 per share.

Shares were up slightly to $65.5 in mid-morning trading.

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