When it comes to consistency, drug delivery technology company SurModics (NASDAQ:SRDX) definitely has it. Yesterday the company reported its 10th consecutive year of record revenue since its 1998 IPO. The company's revenue streams continue to improve by leaps and bounds. Its fiscal fourth quarter revenues were up 21% year over year, and the company experienced growth in each of its three operating segments.
What I found to be most notable was SurModics' shift toward greater diversification. In FY 2004, the company derived 52% of its revenue from a partnership that it has with Johnson & Jonhson (NYSE:JNJ) for the sale of drug-eluting stents. For FY 2007, this amount decreased to 33% of revenue.
This transition comes at an ideal time, as the drug-eluting stent industry has undergone a great deal of turmoil in recent quarters. Despite the decreased usage of drug-eluting stents, companies such as Abbott (NYSE:ABT) and Medtronic (NYSE:MDT) are still looking to break into the U.S. market, which is controlled by Johnson & Johnson and Boston Scientific (NYSE:BSX).
SurModics continues to build for the future. In FY 2007, it engineered multiple acquisitions, as well as secured a $20 million payment from Merck (NYSE:MRK) as part of a research and collaboration agreement. It has also been able to decrease its number of outstanding shares by 5% via share buybacks.
The sound management decisions that have been demonstrated by this company since its IPO have paid major dividends for shareholders over the last decade. SurModics is now trending away from an overreliance on revenues from drug-eluting stents and is experiencing strong growth in the other areas of its business. This should lead to more healthy results during its next 10 years as a publicly traded company.
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