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Synergetics Reports Fourth Quarter And Fiscal 2011 Results

Synergetics USA, Inc. (NASDAQ: SURG), a medical device company that designs, manufactures, and markets innovative surgical devices for ophthalmic and neurosurgical applications, today reported record sales and net income for the fourth quarter ended July 31, 2011.

The Company reported that fourth quarter 2011 net income rose 100% to $2.0 million, or $0.08 per diluted share, compared with $1.0 million, or $0.04 per diluted share, in the fourth quarter of 2010. Fourth quarter sales rose 21% to a record $15.8 million in fiscal 2011 compared with sales of $13.1 million in the fourth quarter of fiscal 2010.

“Synergetics’ record results for the fourth quarter highlight the solid progress we have made since last year in building our sales of ophthalmic and neurosurgical products and in improving our profitability,” stated Dave Hable, President, CEO and Director of Synergetics USA, Inc. “Our record net income benefited from higher sales, growth in our margins and improved leverage of selling, general and administrative expenses.

“Our sales accelerated in the second half of 2011 due to increased demand for our ophthalmic disposable products and the contribution from new products introduced over the past year. Disposable product sales have grown to approximately 80% of our total product sales,” continued Mr. Hable. “We improved our manufacturing efficiencies by continuing to adopt lean manufacturing techniques that resulted in a 15% improvement in sales per production employee compared with the prior year. After fiscal year end, we implemented a new ERP system that we expect will result in further efficiencies in our planning and administrative functions.”

Fourth Quarter Results

Fourth quarter 2011 sales increased 21% to $15.8 million compared with $13.1 million in the fourth quarter of 2010. The increase in fourth quarter sales from last year was due primarily to growth in sales of ophthalmic disposable products, sales of neurosurgical products to marketing partners and OEM sales. The growth in sales of disposable products more than offset the continued weakness in sales of capital products.
  • Ophthalmic sales rose 11% to $9.5 million in the fourth quarter of fiscal 2011 compared with $8.6 million in the fourth quarter of fiscal 2010. The growth in ophthalmic sales benefited from higher volume of disposable products, including procedural kits, laser probes and cannulas and expansion into international markets.
  • Total neurosurgical sales, including sales to marketing partners, increased 41.7% to $3.3 million in the fourth quarter of fiscal 2011 compared with $2.3 million for the same period in 2010. Sales to our marketing partners increased 61.8% to $3.1 million in the fourth quarter of fiscal 2011 and more than offset the decline in direct neurosurgical sales due to the transition of neurosurgical sales to Codman & Shurtleff, Inc. (“Codman”) and Stryker Corporation (“Stryker”) under marketing partner agreements. Direct neurosurgical sales decreased 53.5% to $0.2 million in the fourth quarter of fiscal 2011 compared with $0.4 million in the fourth quarter of fiscal 2010, as this business has been transitioned.
  • Total OEM sales rose 33.4% to $2.8 million in the fourth quarter of fiscal 2011 compared with $2.1 million in the fourth quarter of fiscal 2010. The increase in OEM sales benefited from increased shipments of Synergetics’ new CMC V generator and accessories to Codman during the latest quarter. The OEM sales include deferred revenue of $443,000 recognized from Codman and Alcon, Inc. (“Alcon”).
  • Disposable product sales grew $2.4 million to $12.6 million in the fourth quarter of fiscal 2011 compared with the fourth quarter of fiscal 2010. Disposable sales accounted for approximately 80% of total sales in the fourth quarter of fiscal.
  • Capital equipment sales totaled $2.7 million in the fourth quarter of fiscal 2011 compared with $2.8 million in the fourth quarter of fiscal 2010.

“Our record fourth quarter sales benefited from increased demand for our disposable ophthalmic products from both domestic and international customers, a 41.7% growth in neurosurgery sales, including sales to our marketing partners, and a 33.4% increase in OEM sales,” continued Mr. Hable.

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