Synergetics USA, Inc. (NASDAQ: SURG), a medical device company that designs, manufactures, and markets innovative microsurgical devices for ophthalmic and neurosurgical applications, today reported its results for the first quarter ended October 31, 2010. The Company reported first quarter 2011 sales of $12.1 million and net income of $633,000, or $0.03 per diluted share.
“We are very pleased with our performance in the first quarter of fiscal 2011,” stated Dave Hable, President and CEO of Synergetics USA, Inc. “We faced a significant challenge to overcome a $444,000 shortfall in sales arising from the sale of the Omni
product line. In addition, there was a modest headwind associated with lower sales of capital equipment due to the overall economic environment. This shortfall was overcome by a 6% growth in sales of our disposable products. In effect, we replaced relatively low margin capital equipment sales with higher margin disposable product sales. As a result, our sales mix improved and our disposable sales now constitute 83% of our total product sales. This also increased the number of units manufactured, causing a decline in our overhead rates.
“Our focus for fiscal 2011 continues to be building on sales and improving our margins. We are focused on our top four research and development projects that will expand our reach in the vitreoretinal and intracranial markets to drive organic growth. We stepped up our R&D programs in key areas and expect to introduce new products in the coming year. We also expect to begin shipping products to Alcon, Inc. in the third quarter of fiscal 2011. In addition, our strong financial condition is providing the foundation to aggressively pursue new business development opportunities that have the potential of expanding our markets for ophthalmic and neurosurgery products.”
First Quarter Results
First quarter 2011 sales were unchanged at $12.1 million compared with the first quarter of 2010. Although sales were unchanged, the mix of sales in the first quarter of fiscal 2011 was favorably impacted by increased sales of our higher margin disposable products that was offset by lower sales of neurosurgical products due to the transition of our direct neurosurgery sales to our marketing partners and lower sales of capital equipment.
- Ophthalmic sales rose 6.0% to $8.0 million compared with the first quarter of fiscal 2010.
- Neurosurgical sales (including sales to our marketing partners) declined 22.4% to $2.2 million in the first quarter of fiscal 2011 compared with $2.9 million in the same period in 2010. The decline in neurosurgery sales was the result of the transition to Codman & Shurtleff, Inc. (“Codman”) and Stryker under marketing partner agreements.
- Total OEM sales rose 8.7% to $1.8 million compared with $1.7 million in the first quarter of fiscal 2010.
“Our top six product lines representing approximately 72% of total first quarter sales showed solid growth since last year and were up 16.9% compared with the first quarter of fiscal 2010,” continued Mr. Hable. “We are pleased with the solid organic growth from these key product groups, especially in our disposable product lines that carry higher margins and offer the opportunity for repeat purchases.