10-Q 1 srdx-10q_20220331.htm 10-Q srdx-10q_20220331.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-23837

 

Surmodics, Inc.

(Exact name of registrant as specified in its charter)

 

Minnesota

41-1356149

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

9924 West 74th Street, Eden Prairie, Minnesota 55344

(Address of principal executive offices) (Zip Code)

 

(952) 500-7000

(Registrant’s telephone number, including area code)

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock, $0.05 par value

 

SRDX

 

Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

    

 

Non-accelerated filer

Smaller reporting company

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

The number of shares of the registrant’s Common Stock, $0.05 par value per share, as of April 22, 2022 was 13,990,000.

 

 

 

 


 

 

TABLE OF CONTENTS

 

 

2


Table of Contents

 

PART I. FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

Surmodics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

 

March 31,

 

 

September 30,

 

 

 

2022

 

 

2021

 

(In thousands, except per share data)

 

(Unaudited)

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

24,712

 

 

$

31,153

 

Available-for-sale securities

 

 

2,007

 

 

 

7,717

 

Accounts receivable, net of allowances of $120 and $119 as of

   March 31, 2022 and September 30, 2021, respectively

 

 

11,037

 

 

 

9,169

 

Contract assets — royalties and license fees

 

 

7,242

 

 

 

7,091

 

Inventories, net

 

 

9,471

 

 

 

6,760

 

Income tax receivable

 

 

2,305

 

 

 

1,912

 

Prepaids and other

 

 

7,907

 

 

 

6,453

 

Total Current Assets

 

 

64,681

 

 

 

70,255

 

Property and equipment, net

 

 

29,079

 

 

 

30,090

 

Available-for-sale securities

 

 

 

 

 

2,002

 

Deferred income taxes

 

 

7,181

 

 

 

5,867

 

Intangible assets, net

 

 

33,511

 

 

 

37,054

 

Goodwill

 

 

44,248

 

 

 

45,606

 

Other assets

 

 

5,487

 

 

 

3,718

 

Total Assets

 

$

184,187

 

 

$

194,592

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,114

 

 

$

1,783

 

Accrued liabilities:

 

 

 

 

 

 

 

 

Compensation

 

 

5,689

 

 

 

8,480

 

Accrued other

 

 

6,547

 

 

 

4,905

 

Short-term borrowings

 

 

10,000

 

 

 

10,000

 

Deferred revenue

 

 

4,019

 

 

 

4,647

 

Total Current Liabilities

 

 

28,369

 

 

 

29,815

 

Deferred revenue, less current portion

 

 

8,423

 

 

 

10,301

 

Deferred income taxes

 

 

2,372

 

 

 

2,742

 

Other long-term liabilities

 

 

11,760

 

 

 

11,649

 

Total Liabilities

 

 

50,924

 

 

 

54,507

 

Commitments and Contingencies (Note 10)

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

Series A Preferred stock — $.05 par value, 450 shares authorized; no shares

   issued and outstanding

 

 

 

 

 

 

Common stock — $.05 par value, 45,000 shares authorized; 13,990 and

   13,899 shares issued and outstanding as of March 31, 2022 and

   September 30, 2021, respectively

 

 

700

 

 

 

695

 

Additional paid-in capital

 

 

24,827

 

 

 

21,598

 

Accumulated other comprehensive (loss) income

 

 

(1,434

)

 

 

1,727

 

Retained earnings

 

 

109,170

 

 

 

116,065

 

Total Stockholders’ Equity

 

 

133,263

 

 

 

140,085

 

Total Liabilities and Stockholders’ Equity

 

$

184,187

 

 

$

194,592

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3


Table of Contents

Surmodics, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(In thousands, except per share data)

 

(Unaudited)

 

(Unaudited)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

$

13,964

 

 

$

11,783

 

 

$

26,308

 

 

$

21,885

 

Royalties and license fees

 

 

9,844

 

 

 

20,052

 

 

 

17,943

 

 

 

29,386

 

Research, development and other

 

 

2,298

 

 

 

3,160

 

 

 

4,858

 

 

 

6,021

 

Total revenue

 

 

26,106

 

 

 

34,995

 

 

 

49,109

 

 

 

57,292

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product costs

 

 

5,107

 

 

 

4,170

 

 

 

9,604

 

 

 

7,913

 

Research and development

 

 

13,712

 

 

 

12,875

 

 

 

25,375

 

 

 

23,757

 

Selling, general and administrative

 

 

11,113

 

 

 

7,907

 

 

 

20,305

 

 

 

14,930

 

Acquired intangible asset amortization

 

 

1,071

 

 

 

560

 

 

 

2,160

 

 

 

1,116

 

Contingent consideration expense

 

 

3

 

 

 

 

 

 

6

 

 

 

 

Total operating costs and expenses

 

 

31,006

 

 

 

25,512

 

 

 

57,450

 

 

 

47,716

 

Operating (loss) income

 

 

(4,900

)

 

 

9,483

 

 

 

(8,341

)

 

 

9,576

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment income, net

 

 

25

 

 

 

28

 

 

 

51

 

 

 

69

 

Interest expense

 

 

(129

)

 

 

(59

)

 

 

(265

)

 

 

(119

)

Foreign exchange gain (loss)

 

 

2

 

 

 

73

 

 

 

35

 

 

 

(107

)

Other (expense) income

 

 

(102

)

 

 

42

 

 

 

(179

)

 

 

(157

)

(Loss) income before income taxes

 

 

(5,002

)

 

 

9,525

 

 

 

(8,520

)

 

 

9,419

 

Income tax benefit (provision)

 

 

919

 

 

 

(1,438

)

 

 

1,625

 

 

 

(1,606

)

Net (loss) income

 

$

(4,083

)

 

$

8,087

 

 

$

(6,895

)

 

$

7,813

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net loss (income) per share

 

$

(0.29

)

 

$

0.59

 

 

$

(0.50

)

 

$

0.57

 

Diluted net loss (income) per share

 

$

(0.29

)

 

$

0.58

 

 

$

(0.50

)

 

$

0.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

13,917

 

 

 

13,746

 

 

 

13,896

 

 

 

13,699

 

Diluted

 

 

13,917

 

 

 

13,981

 

 

 

13,896

 

 

 

13,915

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


Table of Contents

Surmodics, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive (Loss) Income

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

March 31,

 

 

March 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(In thousands)

 

(Unaudited)

 

 

(Unaudited)

 

Net (loss) income

 

$

(4,083

)

 

$

8,087

 

 

$

(6,895

)

 

$

7,813

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net changes related to available-for-sale securities, net of tax

 

 

(6

)

 

 

(7

)

 

 

(11

)

 

 

(7

)

Foreign currency translation adjustments

 

 

(1,503

)

 

 

(1,768

)

 

 

(3,150

)

 

 

64

 

Other comprehensive (loss) income

 

 

(1,509

)

 

 

(1,775

)

 

 

(3,161

)

 

 

57

 

Comprehensive (loss) income

 

$

(5,592

)

 

$

6,312

 

 

$

(10,056

)

 

$

7,870

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5


Table of Contents

Surmodics, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

 

 

 

Three Months Ended March 31, 2022 and 2021

 

 

 

(Unaudited)

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Retained

 

 

Stockholders’

 

(In thousands)

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Earnings

 

 

Equity

 

Balance at December 31, 2021

 

 

13,975

 

 

$

699

 

 

$

22,644

 

 

$

75

 

 

$

113,253

 

 

$

136,671

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,083

)

 

 

(4,083

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

(1,509

)

 

 

 

 

 

(1,509

)

Issuance of common stock

 

 

10

 

 

 

1

 

 

 

371

 

 

 

 

 

 

 

 

 

372

 

Common stock options exercised, net

 

 

6

 

 

 

 

 

 

139

 

 

 

 

 

 

 

 

 

139

 

Purchase of common stock to pay employee taxes

 

 

(1

)

 

 

 

 

 

(46

)

 

 

 

 

 

 

 

 

(46

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,719

 

 

 

 

 

 

 

 

 

1,719

 

Balance at March 31, 2022

 

 

13,990

 

 

$

700

 

 

$

24,827

 

 

$

(1,434

)

 

$

109,170

 

 

$

133,263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

13,739

 

 

$

687

 

 

$

16,160

 

 

$

5,006

 

 

$

111,554

 

 

$

133,407

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,087

 

 

 

8,087

 

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

(1,775

)

 

 

 

 

 

(1,775

)

Issuance of common stock

 

 

8

 

 

 

 

 

 

296

 

 

 

 

 

 

 

 

 

296

 

Common stock options exercised, net

 

 

122

 

 

 

6

 

 

 

2,228

 

 

 

 

 

 

 

 

 

2,234

 

Purchase of common stock to pay employee taxes

 

 

(1

)

 

 

 

 

 

(1,597

)

 

 

 

 

 

 

 

 

(1,597

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,429

 

 

 

 

 

 

 

 

 

1,429

 

Balance at March 31, 2021

 

 

13,868

 

 

$

693

 

 

$

18,516

 

 

$

3,231

 

 

$

119,641

 

 

$

142,081

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended March 31, 2022 and 2021

 

 

 

(Unaudited)

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Retained

 

 

Stockholders’

 

(In thousands)

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Earnings

 

 

Equity

 

Balance at September 30, 2021

 

 

13,899

 

 

$

695

 

 

$

21,598

 

 

$

1,727

 

 

$

116,065

 

 

$

140,085

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,895

)

 

 

(6,895

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

(3,161

)

 

 

 

 

 

(3,161

)

Issuance of common stock

 

 

91

 

 

 

5

 

 

 

367

 

 

 

 

 

 

 

 

 

372

 

Common stock options exercised, net

 

 

20

 

 

 

1

 

 

 

368

 

 

 

 

 

 

 

 

 

369

 

Purchase of common stock to pay employee taxes

 

 

(20

)

 

 

(1

)

 

 

(905

)

 

 

 

 

 

 

 

 

(906

)

Stock-based compensation

 

 

 

 

 

 

 

 

3,399

 

 

 

 

 

 

 

 

 

3,399

 

Balance at March 31, 2022

 

 

13,990

 

 

$

700

 

 

$

24,827

 

 

$

(1,434

)

 

$

109,170

 

 

$

133,263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2020

 

 

13,672

 

 

$

684

 

 

$

15,369

 

 

$

3,174

 

 

$

111,828

 

 

$

131,055

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,813

 

 

 

7,813

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

57

 

 

 

 

 

 

57

 

Issuance of common stock

 

 

89

 

 

 

4