10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2013

or

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

For the transition period from                      to                     

Commission File Number: 0-23837

SurModics, Inc.

(Exact name of registrant as specified in its charter)

MINNESOTA	41-1356149
(State of incorporation)	(I.R.S. Employer Identification No.)

9924 West 74th Street

Eden Prairie, Minnesota 55344

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (952) 500-7000

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  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  x    No  ¨

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

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

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

The number of shares of the registrant’s Common Stock, $.05 par value per share, outstanding as of August 1, 2013 was 14,273,121.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3. Quantitative and Qualitative Disclosures About Market Risk	29
Item 4. Controls and Procedures	29
PART II. OTHER INFORMATION	31
Item 1. Legal Proceedings	31
Item 1A. Risk Factors	31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3. Defaults Upon Senior Securities	31
Item 4. Mine Safety Disclosures	31
Item 5. Other Information	31
Item 6. Exhibits	33
SIGNATURES	34
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SurModics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

	June 30,			September 30,
	2013			2012
(in thousands, except share and per share data)	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	17,711		$	15,540
Available-for-sale securities		10,723			14,117
Accounts receivable, net of allowance for doubtful accounts of $40 as of June 30, 2013 and September 30, 2012, respectively		4,736			5,069
Inventories		3,210			3,524
Deferred tax assets		188			219
Prepaids and other		1,720			603
Current assets of discontinued operations		45			883
Total Current Assets		38,333			39,955
Property and equipment, net		12,870			13,610
Available-for-sale securities		31,694			28,433
Deferred tax assets		6,000			5,806
Intangible assets, net		3,874			4,430
Goodwill		8,010			8,010
Other assets, net		3,145			4,075
Total Assets	$	103,926		$	104,319
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	736		$	1,657
Accrued liabilities:
Compensation		1,933			2,319
Accrued other		872			1,066
Deferred revenue		44			47
Other current liabilities		89			170
Current liabilities of discontinued operations		125			1,640
Total Current Liabilities		3,799			6,899
Deferred revenue, less current portion		171			185
Other long-term liabilities		1,917			2,247
Total Liabilities		5,887			9,331
Commitments and Contingencies (Note 15)
Stockholders’ Equity:
Series A Preferred stock- $.05 par value, 450,000 shares authorized; no shares issued and outstanding		—			—
Common stock- $.05 par value, 45,000,000 shares authorized; 14,273,121 and 14,656,806 shares issued and outstanding, respectively		714			733
Additional paid-in capital		10,007			18,346
Accumulated other comprehensive (loss) income		(32	)		40
Retained earnings		87,350			75,869
Total Stockholders’ Equity		98,039			94,988
Total Liabilities and Stockholders’ Equity	$	103,926		$	104,319

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

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SurModics, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
(In thousands, except per share data)	(Unaudited)						(Unaudited)
Revenue:
Royalties and license fees	$	7,827		$	7,104		$	22,294		$	19,997
Product sales		5,577			5,748			16,688			15,449
Research and development		885			1,107			2,853			2,639
Total revenue		14,289			13,959			41,835			38,085
Operating costs and expenses:
Product costs		1,990			2,251			5,894			5,456
Research and development		4,009			3,503			11,145			10,653
Selling, general and administrative		4,052			3,412			11,552			10,272
Total operating costs and expenses		10,051			9,166			28,591			26,381
Operating income from continuing operations		4,238			4,793			13,244			11,704
Other income (loss):
Investment income, net		60			137			187			418
Impairment loss on strategic investments		—			—			(129	)		(804	)
Other income, net		2			2			1,460			172
Other income (loss)		62			139			1,518			(214	)
Income from continuing operations before income taxes		4,300			4,932			14,762			11,490
Income tax provision		(1,122	)		(1,758	)		(3,916	)		(4,215	)
Income from continuing operations		3,178			3,174			10,846			7,275
Discontinued operations:
(Loss) income from discontinued operations, net of income taxes		(47	)		(30	)		635			1,231
Loss on sale of discontinued operations, net of income taxes		—			(82	)		—			(1,015	)
(Loss) income from discontinued operations		(47	)		(112	)		635			216
Net income	$	3,131		$	3,062		$	11,481		$	7,491
Basic income (loss) per share:
Continuing operations	$	0.22		$	0.18		$	0.74		$	0.42
Discontinued operations		0.00			(0.01	)		0.04			0.01
Net income	$	0.22		$	0.17		$	0.79		$	0.43
Diluted income (loss) per share:
Continuing operations	$	0.22		$	0.18		$	0.73		$	0.41
Discontinued operations		0.00			(0.01	)		0.04			0.01
Net income	$	0.21		$	0.17		$	0.77		$	0.43
Weighted average number of shares outstanding:
Basic		14,413			17,528			14,563			17,505
Diluted		14,739			17,647			14,823			17,593

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

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SurModics, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
(In thousands)	(Unaudited)						(Unaudited)
Net income	$	3,131		$	3,062		$	11,481		$	7,491
Other comprehensive income (loss), net of tax:
Unrealized holding (losses) gains on available-for-sale securities arising during the period		(158	)		44			158			401
Reclassification adjustment for realized gains included in net income		(1	)		(2	)		(230	)		(109	)
Other comprehensive (loss) income		(159	)		42			(72	)		292
Comprehensive income	$	2,972		$	3,104		$	11,409		$	7,783

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

5

SurModics, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

	Nine Months Ended
	June 30,
	2013			2012
(in thousands)	(Unaudited)
Operating Activities:
Net income	$	11,481		$	7,491
Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:
Income from discontinued operations		(635	)		(1,231	)
Loss on sale of discontinued operations		—			1,015
Depreciation and amortization		2,174			2,214
Stock-based compensation		1,983			2,189
Deferred taxes		34			(548	)
Gain on sale of available-for-sale securities and strategic investments		(1,460	)		(172	)
Impairment loss on strategic investments		129			804
Amortization of premium on held-to-maturity securities		—			31
Reduction of tax benefit from stock-based compensation plans		252			—
Other		—			48
Change in operating assets and liabilities:
Accounts receivable		333			(793	)
Inventories		314			(82	)
Prepaids and other		(305	)		(168	)
Accounts payable and accrued liabilities		(876	)		(3,445	)
Income taxes		(1,520	)		4,632
Net cash provided by operating activities from continuing operations		11,904			11,985
Investing Activities:
Purchases of property and equipment		(1,448	)		(429	)
Purchases of available-for-sale securities		(34,599	)		(35,420	)
Sales and maturities of available-for-sale securities		34,487			35,203
Maturities of held-to-maturity securities		—			3,000
Cash received from sale of strategic investments		2,286			—
Cash (transferred to) received from discontinued operations		(118	)		28,304
Net cash provided by investing activities from continuing operations		608			30,658
Financing Activities:
Reduction of tax benefit from stock-based compensation plans		(252	)		—
Issuance of common stock		273			280
Repurchase of common stock		(10,323	)		—
Purchase of common stock to pay employee taxes		(39	)		(272	)
Net cash (used in) provided by financing activities from continuing operations		(10,341	)		8
Net cash provided by continuing operations		2,171			42,651
Discontinued Operations:
Net cash used in operating activities		(118	)		(1,513	)
Net cash provided by investing activities		—			29,817
Net cash provided by (used in) financing activities		118			(28,304	)
Net cash provided by discontinued operations		—			—
Net change in cash and cash equivalents		2,171			42,651
Cash and Cash Equivalents:
Beginning of period		15,540			23,217
End of period	$	17,711		$	65,868
Supplemental Information:
Cash paid for income taxes	$	5,257		$	389
Noncash transactions – acquisition of property and equipment on account	$	19		$	8

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

6

SurModics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Period Ended June 30, 2013

(Unaudited)

1. Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.”) (“GAAP”) and, in the opinion of management, reflect all adjustments, consisting solely of normal recurring adjustments, needed to fairly present the financial results of SurModics, Inc. and subsidiaries (“SurModics” or the “Company”) for the periods presented. These financial statements include some amounts that are based on management’s best estimates and judgments. These estimates may be adjusted as more information becomes available, and any adjustment could be significant. The impact of any change in estimates is included in the determination of earnings in the period in which the change in estimate is identified. The results of operations for the three and nine months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the entire 2013 fiscal year.

In accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), the Company has omitted footnote disclosures that would substantially duplicate the disclosures contained in the audited financial statements of the Company. These unaudited condensed consolidated financial statements should be read together with the audited consolidated financial statements for the fiscal year ended September 30, 2012, and footnotes thereto included in the Company’s Form 10-K as filed with the SEC on December 14, 2012.

2. Key Accounting Policies

Revenue recognition

The Company recognizes revenue when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) shipment has occurred or delivery has occurred if the terms specify destination; (3) the sales price is fixed or determinable; and (4) collectability is reasonably assured. When there are additional performance requirements, revenue is recognized when all such requirements have been satisfied. Under revenue arrangements with multiple deliverables, the Company recognizes each separable deliverable as it is earned.

The Company derives its revenue from three primary sources: (1) royalties and license fees from licensing its proprietary drug delivery and surface modification technologies and in vitro diagnostic formats to customers; (2) the sale of reagent chemicals to licensees and the sale of stabilization products, antigens, substrates and surface coatings to the diagnostic and biomedical research markets; and (3) research and development fees generated on customer projects.

Royalties and license fees. The Company licenses technology to third parties and collects royalties. Royalty revenue is generated when a customer sells products incorporating the Company’s licensed technologies. Royalty revenue is recognized as licensees report it to the Company, and payment is typically submitted concurrently with the report. For stand-alone license agreements, up-front license fees are recognized over the term of the related licensing agreement. Minimum royalty fees are recognized in the period earned.

Revenue related to a performance milestone is recognized upon the achievement of the milestone, as defined in the respective agreements and provided the following conditions have been met:

• The milestone payment is non-refundable;

• The milestone involved a significant degree of risk, and was not reasonably assured at the inception of the arrangement;

• Accomplishment of the milestone involved substantial effort;

• The amount of the milestone payment is commensurate with the related effort and risk; and

• A reasonable amount of time passed between the initial license payment and the first and subsequent milestone payments.

If these conditions have not been met, the milestone payment is deferred and recognized over the term of the agreement.

Product sales. Product sales to third parties are recognized at the time of shipment, provided that an order has been received, the price is fixed or determinable, collectability of the resulting receivable is reasonably assured and returns can be reasonably estimated. The Company’s sales terms provide no right of return outside of the standard warranty policy. Payment terms are generally set at 30-45 days.

7

Research and development. The Company performs third party research and development activities, which are typically provided on a time and materials basis. Generally, revenue for research and development is recorded as performance progresses under the applicable contract.

New Accounting Pronouncements

No new accounting pronouncement issued or effective has had, or is expected to have, a material impact on the Company’s consolidated financial statements.

3. Discontinued Operations

Beginning in the first quarter of fiscal 2012, the results of operations, cash flows, assets and liabilities of SurModics Pharmaceuticals, Inc. (“SurModics Pharmaceuticals”), which were previously reported in the Pharmaceuticals segment as a separate operating segment, are classified as discontinued operations.

On November 1, 2011, the Company entered into a definitive agreement (the “Purchase Agreement”) to sell substantially all of the assets of its wholly-owned subsidiary, SurModics Pharmaceuticals, to Evonik Degussa Corporation (“Evonik”). Under the terms of the Purchase Agreement, the entire portfolio of products and services of SurModics Pharmaceuticals, including the Company’s Current Good Manufacturing Practices (“cGMP”) development and manufacturing facility located in Birmingham, Alabama, were sold. The Company retained all accounts receivable and the majority of liabilities associated with SurModics Pharmaceuticals incurred prior to closing. The sale (the “Pharma Sale”) closed on November 17, 2011. The total consideration received from the Pharma Sale was $30.0 million in cash. As part of the Pharma Sale, SurModics agreed not to compete in the restricted business (as defined in the Purchase Agreement) for a period of five years and to indemnify Evonik against specified losses in connection with SurModics Pharmaceuticals, including certain contingent consideration obligations related to the acquisition by SurModics Pharmaceuticals of the portfolio of intellectual property and drug delivery projects from PR Pharmaceuticals, Inc. (“PR Pharma”). SurModics retained responsibility for repayment obligations related to an agreement with various governmental authorities associated with creation of jobs in Alabama. These obligations were settled or terminated in the second and third quarters of fiscal 2013 with payments totaling $325,000 repaid to the governmental authorities and a gain of $1.3 million recognized in the nine months ended June 30, 2013. The foregoing summary of the Purchase Agreement is qualified in its entirety by reference to the full text of the Purchase Agreement, which is attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on November 7, 2011. Refer to the Purchase Agreement for more details on the Pharma Sale.

The following is a summary of the operating results of SurModics Pharmaceuticals discontinued operations for the three and nine months ended June 30, 2013 and 2012 (in thousands):

	Three months ended June 30,						Nine months ended June 30,
	2013			2012			2013			2012
Total revenue	$	—		$	—		$	—		$	5,311
Income from discontinued operations	$	136		$	—		$	1,151		$	2,309
Income tax provision		(183	)		(30	)		(516	)		(1,078	)
(Loss) income from discontinued operations, net of income taxes	$	(47	)	$	(30	)	$	635		$	1,231
Loss on sale of discontinued operations	$	—		$	(57	)	$	—		$	(1,691	)
Income tax (provision) benefit		—			(25	)		—			676
Loss on sale of discontinued operations, net of income taxes	$	—		$	(82	)	$	—		$	(1,015	)

8

The major classes of assets and liabilities of discontinued operations as of June 30, 2013 and September 30, 2012 were as follows (in thousands):

	June 30,		September 30,
	2013		2012
Accounts receivable, net	$	—	$	283
Other current assets		45		600
Current assets of discontinued operations		45		883
Total assets of discontinued operations	$	45	$	883
Other current liabilities payable	$	125	$	1,640
Current liabilities of discontinued operations		125		1,640
Total liabilities of discontinued operations	$	125	$	1,640

As part of the Pharma Sale, the Company recorded a loss on the sale in the first nine months of fiscal 2012 of $1.7 million ($1.0 million net of income tax benefit), which was principally related to transaction closing costs. The loss is included in “Loss on sale of discontinued operations, net of income taxes” in the condensed consolidated statements of income.

On January 29, 2013, the Company entered into a settlement agreement with the City of Birmingham, Alabama to pay $325,000 in settlement of $1.5 million of the $1.7 million retained liability that existed at December 31, 2012, associated with financial incentives SurModics Pharmaceuticals received from various Alabama governmental authorities related to creation of jobs in Alabama. The Company paid the $325,000 and recorded a gain in discontinued operations of $1.2 million before taxes in the second quarter of fiscal 2013 related to this settlement.

On April 17, 2013, the Company entered into a termination agreement with the State of Alabama which resulted in the Company terminating its requirement to repay the $0.2 million retained liability related to creation of jobs in Alabama. The Company recorded a gain in discontinued operations of $0.2 million before taxes in the third quarter of fiscal 2013 related to this termination agreement.

The assets and liabilities of discontinued operations as of June 30, 2013 are based on accruals associated with the Southern Research Institute (“SRI”) litigation matter and a related deferred tax asset balance. See Note 15 for further discussion of the SRI litigation matter.

4. Fair Value Measurements

The accounting guidance on fair value measurements defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. The guidance is applicable for all financial assets and financial liabilities and for all nonfinancial assets and nonfinancial liabilities recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and also considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of nonperformance.

Fair Value Hierarchy

Accounting guidance on fair value measurements requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.

The Company’s Level 1 asset consisted of its investment in OctoPlus N.V. (“OctoPlus”) (see Note 7 for further information). The fair market value of this investment was based on the quoted price of OctoPlus shares as traded on the Euronext Amsterdam Stock Exchange. This investment was sold in the second quarter of fiscal 2013.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

9

The Company’s Level 2 assets consist of money market funds, U.S. Treasury securities, corporate bonds, municipal bonds, U.S. government agency securities, government agency and municipal securities and certain asset-backed and mortgage-backed securities. Fair market values for these assets are based on quoted vendor prices and broker pricing where all significant inputs are observable.

Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.

There were no Level 3 assets at June 30, 2013, March 31, 2013, September 30, 2012, June 30, 2012 or March 31, 2012 and there was no Level 3 activity during the first nine months of fiscal 2013 or the third quarter of fiscal 2012.

In valuing assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company did not significantly change its valuation techniques from prior periods.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2013 (in thousands):

	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value as  of June 30, 2013
Assets:
Cash equivalents	$	—	$	6,902	$	—	$	6,902
Available-for-sale debt securities:
U.S. government and government agency obligations		—		28,185		—		28,185
Mortgage-backed securities		—		5,222		—		5,222
Municipal bonds		—		3,299		—		3,299
Asset-backed securities		—		1,614		—		1,614
Corporate bonds		—		4,097		—		4,097
Total assets measured at fair value	$	—	$	49,319	$	—	$	49,319

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2012 (in thousands):

	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value as of September 30, 2012
Assets:
Cash equivalents	$	—	$	5,101	$	—	$	5,101
Available-for-sale debt securities:
U.S. government and government agency obligations		—		28,854		—		28,854
Mortgage-backed securities		—		2,999		—		2,999
Municipal bonds		—		3,213		—		3,213
Asset-backed securities		—		598		—		598
Corporate bonds		—		6,886		—		6,886
Other assets		718		—		—		718
Total assets measured at fair value	$	718	$	47,651	$	—	$	48,369

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Valuation Techniques

The valuation techniques used to measure the fair value of assets are as follows:

Cash equivalents — These assets are classified as Level 2 and are carried at historical cost which is a reasonable estimate of fair value because of the relatively short time between origination of the instrument and its expected realization.

Available-for-sale debt securities — These securities are classified as Level 2 and include various types of debt securities. These securities are valued based on quoted vendor prices in active markets underlying the securities.

Other assets — This asset is classified as Level 1 and represented the Company’s investment in OctoPlus. This investment was valued based on the quoted market price of OctoPlus shares.

Changes in Level 3 Instruments Measured at Fair Value on a Recurring Basis

The following tables provide a reconciliation of financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands). Transfers of instruments into and out of Level 3 are based on beginning of period values.

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Nine Months Ended June 30, 2012 Available-for-Sale Debt Securities
	Mortgage- Backed  Securities			Asset- Backed  Securities			Total
Balance at September 30, 2011	$	15		$	9		$	24
Transfers into Level 3		—			—			—
Transfers out of Level 3		(15	)		(9	)		(24	)
Total realized and unrealized gains (losses):
Included in other comprehensive (loss) income		—			—			—
Purchases, issuances, sales and settlements, net		—			—			—
Balance at June 30, 2012	$	—		$	—		$	—

5. Investments

Investments consist principally of U.S. government and government agency obligations, mortgage-backed securities and corporate and municipal debt securities and are classified as available-for-sale at June 30, 2013 and September 30, 2012. Available-for-sale securities are reported at fair value with unrealized gains and losses, net of tax, excluded from the condensed consolidated statements of income and reported in the condensed consolidated statements of comprehensive income as well as a separate component of stockholders’ equity in the condensed consolidated balance sheets, except for other-than-temporary impairments, which are reported as a charge to current earnings. A loss would be recognized when there is an other-than-temporary impairment in the fair value of any individual security classified as available-for-sale, with the associated net unrealized loss reclassified out of accumulated other comprehensive income with a corresponding adjustment to other income (loss). This adjustment results in a new cost basis for the investment. Investments for which management has the intent and ability to hold to maturity are classified as held-to-maturity and reported at amortized cost. Interest earned on debt securities, including amortization of premiums and accretion of discounts, is included in other income (loss). Realized gains and losses from the sales of debt securities, which are included in other income (loss), are determined using the specific identification method.

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The amortized cost, unrealized holding gains and losses, and fair value of available-for-sale securities as of June 30, 2013 and September 30, 2012 were as follows (in thousands):

	June 30, 2013
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
U.S. government and government agency obligations	$	28,260	$	15	$	(90	)	$	28,185
Mortgage-backed securities		5,180		92		(50	)		5,222
Municipal bonds		3,288		17		(6	)		3,299
Asset-backed securities		1,622		—		(8	)		1,614
Corporate bonds		4,115		12		(30	)		4,097
Total	$	42,465	$	136	$	(184	)	$	42,417
	September 30, 2012
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
U.S. government and government agency obligations	$	28,641	$	213	$	—		$	28,854
Mortgage-backed securities		2,896		129		(26	)		2,999
Municipal bonds		3,178		35		—			3,213
Asset-backed securities		613		—		(15	)		598
Corporate bonds		6,858		28		—			6,886
Total	$	42,186	$	405	$	(41	)	$	42,550

As of June 30, 2013, the Company concluded that the unrealized losses related to the available-for-sale securities shown above were not other-than-temporary as the Company does not have the intent to sell, nor is it more likely than not that the Company will be required to sell, before recovery of their amortized cost.

The amortized cost and fair value of investments by contractual maturity at June 30, 2013 were as follows (in thousands):

	Amortized Cost		Fair Value
Debt securities due within:
One year	$	10,712	$	10,723
One to five years		25,080		25,000
Five years or more		6,673		6,694
Total	$	42,465	$	42,417

The following table summarizes sales of available-for-sale securities (in thousands):

	Three months ended June  30,						Nine months ended June 30,
	2013			2012			2013			2012
Proceeds from sales	$	8,507		$	649		$	34,487		$	35,203
Gross realized gains	$	6		$	3		$	171		$	174
Gross realized losses	$	(4	)	$	(1	)	$	(4	)	$	(2	)

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6. Inventories

Inventories are principally stated at the lower of cost or market using the specific identification method and include direct labor, materials and overhead. Inventories consisted of the following components (in thousands):

	June 30,		September 30,
	2013		2012
Raw materials	$	1,234	$	1,479
Finished products		1,976		2,045
Total	$	3,210	$	3,524

7. Other Assets

Other assets consist principally of strategic investments as follows (in thousands):

	June 30,		September 30,
	2013		2012
OctoPlus N.V.	$	—	$	718
Nexeon MedSystems, Inc.		29		29
CeloNova BioSciences, Inc.		1,500		1,500
ThermopeutiX, Inc.		1,185		1,185
ViaCyte, Inc.		429		559
Other		2		84
Other assets, net	$	3,145	$	4,075

The Company accounts for all of its strategic investments under the cost method as of June 30, 2013. The Company accounted for its investment in OctoPlus common stock, whose shares were traded on the Euronext Amsterdam Stock Exchange, as an available-for-sale investment. Available-for-sale investments are reported at fair value with unrealized gains and losses, net of tax, reported in the condensed consolidated statements of comprehensive income as well as a separate component of stockholders’ equity in the condensed consolidated balance sheets, except for other-than-temporary impairments, which are reported as a charge to current earnings, recorded in the other income section of the condensed consolidated statements of income, and which result in a new cost basis for the investment. The cost basis in the Company’s investment in OctoPlus was $0.9 million as of September 30, 2012. In October 2012, OctoPlus received a tender offer from Dr. Reddy’s Laboratories Ltd. to purchase all issued and outstanding ordinary shares of OctoPlus at an offer price of €0.52 per share. In the second quarter of fiscal 2013, the Company sold its investment and recorded a pre-tax gain of approximately $0.1 million.

The Company has invested a total of $6.5 million in Nexeon MedSystems, Inc. (“Nexeon”), a privately-held West Virginia-based medical technology company, commencing in July 2007 and has recognized losses under the equity method of accounting and a $4.1 million impairment loss in fiscal 2010. Currently, the Company accounts for its investment in Nexeon under the cost method of accounting as the Company’s ownership is less than 20%, and the Company does not exert significant influence over Nexeon’s operating or financial activities.

In February 2011, Nexeon’s stent technology was acquired by CeloNova BioSciences, Inc. (“CeloNova”). Prior to the acquisition by CeloNova, Nexeon created a wholly-owned subsidiary, Nexeon Stent, to hold the company’s stent-related assets. Nexeon distributed to its stockholders the Nexeon Stent stock which was exchanged for Series B-1 preferred shares of CeloNova. CeloNova is a privately-held Texas-based medical technology company that is marketing a variety of medical products. The Company’s investment in CeloNova, which is accounted for under the cost method, represents less than a 5% ownership interest. The Company does not exert significant influence over CeloNova’s operating or financial activities.

The Company has invested a total of $1.2 million in ThermopeutiX, Inc. (“ThermopeutiX”), a California-based early stage company developing novel medical devices for the treatment of vascular and neurovascular diseases. In addition to the investment, SurModics has licensed its hydrophilic and hemocompatible coating technologies to ThermopeutiX for use with its devices. The Company’s investment in ThermopeutiX, which is accounted for under the cost method, represents an ownership interest of less than 20%. The Company does not exert significant influence over ThermopeutiX’s operating or financial activities.

The Company has invested a total of $5.2 million in ViaCyte, Inc. (“ViaCyte”), a privately-held California-based biotechnology firm that is developing a unique treatment for diabetes using coated islet cells, the cells that produce insulin in the human body. In fiscal 2006, the Company determined that its investment in ViaCyte was impaired and that the impairment was other than temporary. Accordingly, the Company recorded an impairment loss of $4.7 million. In the second quarter of fiscal 2013, the Company recorded an additional other-than-temporary impairment loss on this investment totaling $0.1 million based on a current financing round and market valuations. The balance of the investment of $0.4 million, which is accounted for under the cost method, represents less than a 5% ownership interest. The Company does not exert significant influence over ViaCyte’s operating or financial activities.

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The Company has invested a total of $2.5 million in Vessix Vascular, Inc. (“Vessix”) and recognized an impairment loss on this investment totaling $2.4 million in fiscal 2010, based on market valuations and a pending financing round for Vessix. Vessix was purchased by Boston Scientific Corporation in November 2012. The Company recorded a gain of approximately $1.2 million in other income, net, on the sale of this investment in the first quarter of fiscal 2013. Total potential maximum additional proceeds of $4.2 million may be received in the remainder of fiscal 2013 through fiscal 2017 depending on Vessix’s achievement of future milestones. No amounts have been recorded associated with these future milestones given the level of uncertainty that exists. Any potential additional income will be recognized once the milestones are achieved.

The Company recognized revenue of less than $0.1 million for the three months ended June 30, 2013 and 2012 and for the nine months ended June 30, 2012, from activity with companies in which it had a strategic investment. The Company recognized revenue of $0.1 million for the nine months ended June 30, 2013, from activity with companies in which it had a strategic investment.

8. Intangible Assets

Intangible assets consist principally of acquired patents and technology, customer relationships, licenses and trademarks. For the three months ended June 30, 2013 and 2012, the Company recorded amortization expense of $0.2 million for each period. For the nine months ended June 30, 2013 and 2012, the Company recorded amortization expense of $0.6 million for each period.

Intangible assets consisted of the following (in thousands):

	June 30, 2013
	Weighted Average Original Life (Years)		Gross Carrying Amount		Accumulated Amortization			Net
Definite-lived intangible assets:
Customer lists		9.0	$	4,857	$	(3,139	)	$	1,718
Core technology		8.0		530		(392	)		138
Patents and other		16.8		2,256		(818	)		1,438
Subtotal				7,643		(4,349	)		3,294
Unamortized intangible assets:
Trademarks				580		—			580
Total			$	8,223	$	(4,349	)	$	3,874

	September 30, 2012
	Weighted Average Original Life (Years)		Gross Carrying Amount		Accumulated Amortization			Net
Definite-lived intangible assets:
Customer lists		9.0	$	4,857	$	(2,734	)	$	2,123
Core technology		8.0		530		(343	)		187
Patents and other		16.8		2,256		(716	)		1,540
Subtotal				7,643		(3,793	)		3,850
Unamortized intangible assets:
Trademarks				580		—			580
Total			$	8,223	$	(3,793	)	$	4,430

Based on the intangible assets in service as of June 30, 2013, estimated amortization expense for each of the next five fiscal years is as follows (in thousands):

Remainder of 2013	$	186
2014		742
2015		731
2016		594
2017		183
2018		137

Future amortization amounts presented above are estimates. Actual future amortization expense may be different, as a result of future acquisitions, impairments, changes in amortization periods, or other factors.

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9. Goodwill

Goodwill represents the excess of the cost of an acquired entity over the fair value assigned to the assets purchased and liabilities assumed in connection with a company’s acquisition. Goodwill is not amortized but is subject, at a minimum, to annual tests for impairment in accordance with accounting guidance for goodwill. The carrying amount of goodwill is evaluated annually, and between annual evaluations if events occur or circumstances change indicating that the carrying amount of goodwill may be impaired.

The $8.0 million of goodwill at June 30, 2013 and September 30, 2012 is related to the In Vitro Diagnostics reporting unit and represents the gross value from the acquisition of BioFX Laboratories, Inc. in 2007. The goodwill was not impaired based on the outcome of the fiscal 2012 annual impairment test, and there have been no events or circumstances that have occurred in fiscal 2013 to indicate that the goodwill may be impaired.

10. Stock-based Compensation

The Company has stock-based compensation plans under which it grants stock options, restricted stock awards, performance share awards and restricted stock units. Accounting guidance requires all share-based payments to be recognized as an operating expense, based on their fair values, over the requisite service period. The Company’s stock-based compensation expenses were allocated to the following expense categories (in thousands):

	Three months ended				Nine months ended
	June 30,				June 30,
	2013		2012		2013		2012
Product costs	$	7	$	5	$	17	$	31
Research and development		54		71		141		453
Selling, general and administrative		684		580		1,825		1,705
Total	$	745	$	656	$	1,983	$	2,189

As of June 30, 2013, approximately $4.0 million of total unrecognized compensation costs related to non-vested awards is expected to be recognized over a weighted average period of approximately 2.7 years. The unrecognized compensation costs above include $1.3 million based on payout levels associated with performance share awards that are currently anticipated to be fully expensed because the performance conditions are expected to be met at or above target levels.

Stock Option Awards

The Company uses the Black-Scholes option pricing model to determine the weighted average grant date fair value of stock options granted. No stock options were granted during the three months ended June 30, 2013. The weighted average per share fair value of stock options granted during the three months ended June 30, 2012 was $5.94. The weighted average per share fair values of stock options granted during the nine months ended June 30, 2013 and 2012 were $8.69 and $5.24, respectively. The assumptions used as inputs in the model were as follows:

	Three months ended					Nine months ended
	June 30,					June 30,
	2013		2012			2013			2012
Risk-free interest rates		N/A		0.7	%		0.6	%		0.8	%
Expected life (years)		N/A		4.8			4.8			4.8
Expected volatility		N/A		48.6	%		49.2	%		49.6	%
Dividend yield		N/A		0.0	%		0.0	%		0.0	%

The risk-free interest rate assumption was based on the U.S. Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award. The expected life of options granted is determined based on the Company’s experience. Expected volatility is based on the Company’s stock price movement over a period approximating the expected term. Based on management’s judgment, dividend rates are expected to be zero for the expected life of the options. The Company also estimates forfeitures of options granted, which are based on historical experience.

Non-qualified stock options are granted at fair market value on the grant date. Non-qualified stock options expire in seven to ten years or upon termination of employment or service as a Board member. Non-qualified stock options granted generally become exercisable with respect to 25% of the shares on each of the first four anniversaries following the grant date.

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The total pre-tax intrinsic value of options exercised during the three and nine months ended June 30, 2013 was $26,000 and $51,000, respectively. There were no stock options exercised during the three months ended June 30, 2012. The total pre-tax intrinsic value of options exercised during the nine months ended June 30, 2012 was $49,000. The intrinsic value represents the difference between the exercise price and the fair market value of the Company’s common stock on the last day of the respective fiscal period end.

Restricted Stock Awards

The Company has entered into restricted stock agreements with certain key employees, covering the issuance of common stock (“Restricted Stock”). Under accounting guidance, these shares are considered to be non-vested shares. The Restricted Stock is released to the key employees if they are employed by the Company at the end of the vesting period. Compensation has been recognized for the estimated fair value of the common shares and is being charged to income over the vesting term. The stock-based compensation table above includes Restricted Stock expenses recognized related to these awards, which totaled less than $0.1 million during the three and nine months ended June 30, 2013 and less than $0.1 million and $0.2 million during the three and nine months ended June 30, 2012, respectively.

Performance Share Awards

The Company has entered into performance share agreements with certain key employees, covering the issuance of common stock (“Performance Shares”). The Performance Shares vest upon the achievement of all or a portion of certain performance objectives, which must be achieved during the performance period. Performance objectives selected by the Organization and Compensation Committee of the Board of Directors (the “Committee”) were cumulative earnings per share and cumulative revenue for the three-year performance periods for fiscal 2011 beginning on October 1, 2010 and ending on September 30, 2013 (68,533 shares at target), for fiscal 2012 beginning on October 1, 2011 and ending on September 30, 2014 (62,497 shares at target), and for fiscal 2013 beginning on October 1, 2012 and ending on September 30, 2015 (42,753 shares at target). Assuming that the minimum performance level is attained, the number of shares that may actually vest will vary based on performance from 20% (minimum) to 200% (maximum). Shares will be issued to participants as soon as practicable following the end of the performance periods subject to Committee approval and verification of results. The compensation cost related to the number of shares to be granted under each performance period is fixed on the grant date, which is the date the performance period begins. Compensation is recognized in each period based on management’s best estimate of the achievement level of the specified performance objectives for Performance Shares. For the three and nine months ended June 30, 2013, the Company recognized expenses of $0.3 million and $0.9 million, respectively, related to probable achievement of performance objectives for Performance Shares. The Company recognized expenses of $0.4 million and $0.7 million related to probable achievement of performance objectives for Performance Shares for the three and nine months ended June 30, 2012, respectively. The stock-based compensation table above includes the Performance Shares expenses.

1999 Employee Stock Purchase Plan

Under the 1999 Employee Stock Purchase Plan (“Stock Purchase Plan”), the Company is authorized to issue up to 400,000 shares of common stock. All full-time and part-time employees can choose to have up to 10% of their annual compensation withheld, with a limit of $25,000, to purchase the Company’s common stock at purchase prices defined within the provisions of the Stock Purchase Plan. As of June 30, 2013 and 2012, there were $0.1 million and less than $0.1 million, respectively, of employee contributions in each period included in accrued liabilities in the condensed consolidated balance sheets. Stock compensation expense recognized related to the Stock Purchase Plan for the three months ended June 30, 2013 and 2012 totaled less than $0.1 million in each period. Stock compensation expense recognized related to the Stock Purchase Plan for the nine months ended June 30, 2013 and 2012 totaled $0.1 million for each period. The stock-based compensation table above includes the Stock Purchase Plan expenses.

Restricted Stock Units

On December 12, 2012, the Company awarded 11,776 restricted stock units (“RSU”) under the 2009 Equity Incentive Plan to directors. The RSU awards vest annually at a rate of 33%. RSU awards are not considered issued or outstanding common stock of the Company until they vest. The estimated fair value of the RSU awards was calculated based on the closing market price of SurModics’ common stock on the date of grant. Compensation has been recognized for the estimated fair value of the common shares and is being charged to income over the vesting term. Directors can also elect to receive their annual fees for services to the Board in RSUs. Certain directors elected this option beginning on January 1, 2013 which has resulted in 3,994 units issued with a total value of $92,000. These RSUs are fully vested. The stock-based compensation table above includes RSU expenses recognized related to these awards, which totaled less than $0.1 million and $0.1 million for the three and nine months ended June 30, 2013, respectively.

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11. Income Per Share Data

Basic income per common share is calculated based on the weighted average number of common shares outstanding during the period. Diluted income per common share is computed by dividing income by the weighted average number of common and common equivalent shares outstanding during the period. The Company’s only potentially dilutive common shares are those that result from dilutive common stock options, non-vested stock relating to restricted stock awards, restricted stock units and performance shares.

The following table sets forth the components of the basic and diluted income per share computations (in thousands):

	Three months ended				Nine months ended
	June 30,				June 30,
	2013		2012		2013		2012
Net income from continuing operations available to common shareholders	$	3,178	$	3,174	$	10,846	$	7,275
Basic weighted average shares outstanding		14,413		17,528		14,563		17,505
Dilutive effect of outstanding stock options, non-vested restricted stock, restricted stock units and performance shares		326		119		260		88
Diluted weighted average shares outstanding		14,739		17,647		14,823		17,593

The calculation of weighted average diluted shares outstanding excludes outstanding common stock options associated with the right to purchase 0.3 million and 0.7 million shares for the three months ended June 30, 2013 and 2012, respectively, and 0.5 million and 0.7 million shares for the nine months ended June 30, 2013 and 2012, respectively, as their inclusion would have had an antidilutive effect on diluted income per share.

12. Income Taxes

The Company recorded income tax provisions associated with income from continuing operations of $1.1 million and $1.8 million for the three months ended June 30, 2013 and 2012, respectively, representing effective tax rates of 26.1% and 35.6%, respectively. The Company recorded income tax provisions associated with income from continuing operations of $3.9 million and $4.2 million for the nine months ended June 30, 2013 and 2012, respectively, representing effective tax rates of 26.5% and 36.7%, respectively. The difference between the U.S. federal statutory tax rate of 35.0% and the Company’s effective tax rate for the three and nine months ended June 30, 2013 and 2012 reflects the impact of state income taxes, permanent tax items and discrete tax benefits of $0.2 million and $0.8 million for the three and nine months ended June 30, 2013, respectively. Discrete tax items primarily relate to capital loss carrybacks, the January 2013 signing of the American Taxpayer Relief Act of 2012 which retroactively reinstated the U.S. R&D tax credit to the beginning of calendar 2012 and the finalization of fiscal 2012 income tax liabilities upon the filing of fiscal 2012 federal and state income tax returns. The nine months ended June 30, 2013 also reflects the impact of strategic asset gains, an other-than-temporary impairment of a strategic asset, available-for-sale investment portfolio capital gains and net reversal of deferred tax asset valuation allowances.

The Company recorded an income tax expense from discontinued operations of $0.2 million and $0.5 million for the three and nine months ended June 30, 2013, respectively. The Company recorded an income tax expense from discontinued operations of less than $0.1 million and $1.1 million for the three and nine months ended June 30, 2012, respectively. The Company recorded an income tax expense of less than $0.1 million and an income tax benefit of $0.7 million from the sale of discontinued operations for the three and nine months ended June 30, 2012, respectively. The effective tax rate applied to discontinued operations was 134.6% and 44.8% for the three and nine months ended June 30, 2013, respectively. The effective tax rate applied to discontinued operations was 96.5% and 65.0% for the three and nine months ended June 30, 2012, respectively.

The total amount of unrecognized tax benefits including interest and penalties that, if recognized, would affect the effective tax rate as of June 30, 2013 and September 30, 2012, respectively, are $1.4 million for each period. Currently, the Company does not expect the liability for unrecognized tax benefits to change significantly in the next 12 months with the above balances classified on the condensed consolidated balance sheets in other long-term liabilities. Interest and penalties related to unrecognized tax benefits are recorded in income tax expense.

The Company files income tax returns, including returns for its subsidiaries, in the U.S. federal jurisdiction and in various state jurisdictions. Uncertain tax positions are related to tax years that remain subject to examination. The Internal Revenue Service (“IRS”) commenced an examination of the Company’s U.S. income tax return for fiscal 2010 in the first quarter of fiscal 2012. The IRS completed its examination in the third quarter of fiscal 2012 and a payment was made in the fourth quarter of fiscal 2012 associated with a timing adjustment. U.S. income tax returns for years prior to fiscal 2010 are no longer subject to examination by federal tax authorities. Tax returns for state and local jurisdictions for fiscal years 2004 through 2012 remain subject to examination by state and local tax authorities.

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13. Amounts Reclassified Out of Accumulated Other Comprehensive Income

Accounting guidance was updated in February 2013 adding new disclosure for items reclassified out of accumulated other comprehensive income (“AOCI”). The new disclosure requirements are effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2012. Early adoption of the guidance is permitted and the Company elected to early adopt this guidance.

Amounts reclassified out of AOCI totaled $0.3 million on a pre-tax basis for the nine months ended June 30, 2013. The amounts reclassified out of AOCI are associated with unrealized gains on available-for-sale securities that were realized on the sale of the securities and are presented in other income, net in the condensed consolidated statements of income.

14. Operating Segments

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, who is the Company’s Chief Executive Officer, in deciding how to allocate resources and in assessing performance. The Company is organized into two segments as follows: (1) the Medical Device unit, which is comprised of surface modification coating technologies to improve access, deliverability, and predictable deployment of medical devices, as well as drug delivery coating technologies to provide site-specific drug delivery from the surface of a medical device, with end markets that include coronary, peripheral, and neuro-vascular, and urology, among others, and (2) the In Vitro Diagnostics unit, which consists of component products and technologies for diagnostic test kits and biomedical research applications, with products that include protein stabilization reagents, substrates, antigens and surface coatings.

The tables below present segment revenue, operating income from continuing operations and depreciation and amortization, as follows (in thousands):

	Three months ended						Nine months ended
	June 30,						June 30,
	2013			2012			2013			2012
Revenue:
Medical Device	$	10,591		$	10,269		$	30,857		$	27,889
In Vitro Diagnostics		3,698			3,690			10,978			10,196
Total revenue	$	14,289		$	13,959		$	41,835		$	38,085
Operating income (loss):
Medical Device	$	5,223		$	5,173		$	15,848		$	13,226
In Vitro Diagnostics		915			1,070			2,933			3,246
Total segment operating income		6,138			6,243			18,781			16,472
Corporate		(1,900	)		(1,450	)		(5,537	)		(4,768	)
Total operating income from continuing operations	$	4,238		$	4,793		$	13,244		$	11,704
Depreciation and amortization:
Medical Device	$	319		$	355		$	947		$	1,073
In Vitro Diagnostics		216			193			649			582
Corporate		193			186			578			559
Total depreciation and amortization	$	728		$	734		$	2,174		$	2,214

The Corporate category includes expenses for administrative corporate functions, such as executive, corporate accounting, legal, human resources and Board of Directors related, that have not been fully allocated to the Medical Device and In Vitro Diagnostics segments. Corporate also includes expenses, such as litigation, which are not specific to a segment and thus not allocated to the segments.

Asset information by segment is not presented because the Company does not provide its chief operating decision maker assets by segment, as the data is not readily available.

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15. Commitments and Contingencies

Litigation. From time to time, the Company has been, and may become, involved in various legal actions involving its operations, products and technologies, including intellectual property and employment disputes. The outcomes of these legal actions are not within the Company’s complete control and may not be known for prolonged periods of time. In some actions, the claimants seek damages, as well as other relief, including injunctions barring the sale of products that are the subject of the lawsuit, which, if granted, could require significant expenditures or result in lost revenue. The Company records a liability in the consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate, the minimum amount of the range is accrued. If a loss is possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded.

Southern Research Institute (“SRI”) Litigation. On July 31, 2009, the Company’s SurModics Pharmaceuticals subsidiary was named as a defendant in litigation pending in the circuit court of Jefferson County, Alabama, between SRI and two of SRI’s former employees (the “Plaintiffs”). In the litigation, the Plaintiffs allege that they contributed to or invented certain intellectual property while they were employed at SRI, and pursuant to SRI’s policies then in effect, they are entitled to, among other things, a portion of the purchase price consideration paid by the Company to SRI as part of the Company’s acquisition of SurModics Pharmaceuticals pursuant to a stock purchase agreement made effective on July 31, 2007 (the “Stock Purchase Agreement”). The Plaintiffs have also alleged that they are entitled to a portion of the intellectual property income derived from license agreements with certain customers of SurModics Pharmaceuticals that make use of patents to which the Plaintiffs invented or contributed. A trial has not yet been scheduled. Based on the facts known to date, the Company has recorded a $100,000 expense in discontinued operations for the nine months ended June 30, 2013. The Company has not recorded additional accruals as the probability of the outcome is currently not determinable and any potential loss is not estimable. The Company believes that it has meritorious defenses to the Plaintiff’s claims and will vigorously defend and prosecute this matter. Following the Pharma Sale, the Company remains responsible for this litigation and has agreed to indemnify Evonik against certain losses, including those that may be incurred in connection with this litigation.

Pursuant to the Stock Purchase Agreement, the Company has certain rights of indemnification against losses (including without limitation, damages, expenses and costs) incurred as a result of the litigation. The Company has recorded cumulative unreimbursed legal expenses totaling $1.3 million as of June 30, 2013, related to this litigation, within selling, general and administrative expenses from continuing operations in the condensed consolidated statements of income. In June of 2011, the Company sued SRI in United States District Court for the District of Minnesota seeking a judicial declaration regarding the scope of the Company’s indemnification rights under the Stock Purchase Agreement. On April 17, 2013, the District Court entered a judgment in the Company’s favor requiring SRI to indemnify the Company for prior and future legal expenditures related to this matter. On July 30, 2013, the Company and SRI entered into a settlement and release agreement resolving the litigation relating to indemnification rights. The settlement and release agreement does not relate to claims for indemnification under the Stock Purchase Agreement for any substantive liability, judgment, or settlement in or related to the ongoing litigation in Alabama discussed above. The Company will receive payment of $1.0 million associated with the historical cumulative unreimbursed legal expenses and expects to recognize an expense offset of an equal amount in the fourth quarter ended September 30, 2013. Additionally, under the settlement and release agreement the Company will be reimbursed for 75% of the legal fees, costs and expenses that the Company may incur in the future in connection with the Alabama litigation that are not considered excessive. A description of the terms and conditions of the settlement and release agreement have been disclosed in a Current Report on Form 8-K filed by the Company on August 2, 2013.

InnoRx, Inc. In January 2005, the Company entered into a merger agreement whereby SurModics acquired all of the assets of InnoRx, Inc. (“InnoRx”), an early stage company developing drug delivery devices and therapies for the ophthalmology market. SurModics will be required to issue up to approximately 480,059 additional shares of its common stock to the stockholders of InnoRx upon the successful completion of the remaining development and commercial milestones involving InnoRx technology acquired in the transaction. The Company has not recorded any accrual for this contingency as of June 30, 2013 as the milestones have not been achieved and the probability of achievement is low.

PR Pharmaceuticals, Inc. In November 2008, SurModics Pharmaceuticals acquired certain contracts and assets of PR Pharma to enhance its portfolio of drug delivery technologies for the pharmaceutical and biotechnology industries. The Company agreed to indemnify Evonik, for a period of five years, for up to $2.5 million of contingent consideration obligations to the sellers of PR Pharma related to a future patent issuance milestone when it sold substantially all of the SurModics Pharmaceuticals assets to Evonik on November 17, 2011. The Company has not recorded any accrual for this contingency as of June 30, 2013 as the milestone has not been achieved and the probability of achievement is low.

16. Immaterial Restatement

The accompanying unaudited interim condensed consolidated financial statements reflect a $1.2 million adjustment to increase the carrying value of the Company’s strategic investments, included in other assets, net and stockholders’ equity in the prior period condensed consolidated balance sheet. This adjustment corrected and reduced an other-than-temporary impairment charge recognized in the fiscal year ended September 30, 2010, which was previously recorded during the fiscal fourth quarter ended September 30, 2010. The original other-than-temporary impairment charge did not sufficiently consider information available to the Company prior to the issuance of the Company’s financial statements for the fiscal year ended September 30, 2010. Specifically, the impact of consideration to be received from the proposed sale of a subsidiary of a strategic investment to an unrelated third party had not been

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considered in evaluating the value of the strategic investment. Management evaluated the amount and nature of the adjustment and concluded that it was not material to either the previously reported annual or quarterly financial statement results of operations, total assets or stockholders’ equity. Nonetheless, the Company has corrected the error associated with the historical balance sheet amounts included in this filing as follows (in thousands):

Condensed Consolidated Balance Sheet

	As Reported				As Restated
	September 30, 2012		Adjustment		September 30, 2012
Other assets, net	$	2,831	$	1,244	$	4,075
Total assets		103,075		1,244		104,319
Retained earnings		74,625		1,244		75,869
Total stockholders’ equity		93,744		1,244		94,988
Total liabilities and stockholders’ equity	$	103,075	$	1,244	$	104,319

There was no impact on the condensed consolidated statements of income for any of the prior periods presented in this filing. The Company also expects to correct previously presented historical financial statements in future filings, including the annual financial statements to be included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013.

The condensed consolidated balance sheet above details the effect of the other-than-temporary impairment charge adjustment on previously presented historical financial statement amounts (in thousands) appearing in the Company’s 2012 Annual Report on Form 10-K.

17. Subsequent Event

On July 29, 2013, the Company’s Board of Directors authorized the repurchase of up to $20.0 million of the Company’s outstanding common stock through open-market purchases, private transactions, block trades, accelerated share repurchase transactions, tender offers, or by any combination of such methods. This authorization does not have a fixed expiration date.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis provides information that we believe is useful in understanding our operating results, cash flows and financial condition. The discussion should be read in conjunction with both the unaudited condensed consolidated financial statements and related notes included in this Form 10-Q, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2012. This discussion contains various “Forward-Looking Statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We refer readers to the statement entitled “Forward-Looking Statements” located near the end of Part I of this report.

Overview

SurModics is a leading provider of surface modification and in vitro diagnostic technologies to the healthcare industry. For the nine months ended June 30, 2013, our overall business performance has been driven primarily by growth in our Medical Device hydrophilic coatings royalty revenue. The Medical Device segment has overcome the termination, in fiscal 2011, of Cordis Corporation’s exclusivity arrangement under one of its license agreements by entering into new license agreements and through continued expansion of activities with other Medical Device customers. We have continued to sign new license agreements in fiscal 2013 and broadened our hydrophilic coatings royalty stream which we believe will result in continued growth in the future.

Our In Vitro Diagnostics segment has also generated revenue growth in fiscal 2013 from our existing products, new product launches and the addition of new diagnostic test kit manufacturer customers. We anticipate continued product sales growth opportunities in the future.

On November 1, 2011, we entered into a Purchase Agreement to sell substantially all of the assets of SurModics Pharmaceuticals (the Pharmaceuticals segment) to Evonik Degussa Corporation (“Evonik”). Under the terms of the Purchase Agreement, the entire portfolio of products and services of SurModics Pharmaceuticals, including its cGMP development and manufacturing facility located in Birmingham, Alabama, were sold. The Company retained all accounts receivable and the majority of liabilities associated with the SurModics Pharmaceuticals business incurred prior to closing. The sale (the “Pharma Sale”) closed on November 17, 2011. The total consideration received from the Pharma Sale was $30.0 million in cash.

We have reported the Pharmaceuticals segment as discontinued operations beginning in the first quarter of fiscal 2012, as disclosed in Note 3 to the condensed consolidated financial statements. Accordingly, all results of operations, cash flows, assets and liabilities of SurModics Pharmaceuticals for all periods presented are classified as discontinued operations. All information in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes only results from continuing operations (excluding the Pharmaceuticals segment) for all periods presented, unless otherwise noted.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. For financial accounting and reporting purposes, we report our results for the two reportable segments as follows: (1) the Medical Device unit, which is comprised of surface modification coating technologies to improve access, deliverability, and predictable deployment of medical devices, as well as drug delivery coating technologies to provide site-specific drug delivery from the surface of a medical device, with end markets that include coronary, peripheral, and neuro-vascular, and urology, among others, and (2) the In Vitro Diagnostics unit, which consists of component products and technologies for diagnostic test kits and biomedical research applications, with products that include protein stabilization reagents, substrates, antigens and surface coatings. We made this determination based on how we manage our operations and the information provided to our chief operating decision maker, who is our Chief Executive Officer.

We derive our revenue from three primary sources: (1) royalties and license fees from licensing our proprietary drug delivery and surface modification technologies and in vitro diagnostic formats to customers; the vast majority (typically in excess of 90%) of revenue in the “royalties and license fees” category is in the form of royalties; (2) the sale of reagent chemicals to licensees and the sale of stabilization products, antigens, substrates and surface coatings to the diagnostic and biomedical research markets; and (3) research and development fees generated on customer projects. Revenue fluctuates from quarter to quarter depending on, among other factors: our customers’ success in selling products incorporating our technologies; the seasonality of certain disease states (e.g., season flu outbreaks and impact on our In Vitro Diagnostic product sales) and patient biases regarding the timing of medical procedures; the timing of introductions of licensed products by customers; the timing of introductions of products that compete with our customers’ products; the number and activity level associated with customer development projects; the number and terms of new license agreements that are finalized; the value of reagent chemicals and other products sold to customers; and the timing of future acquisitions we complete, if any.

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Overview of Research and Development Activities

We manage our customer-sponsored research and development (“R&D”) programs based largely on the requirements of our customers. In this regard, our customers typically establish the various measures and metrics that are used to monitor a program’s progress, including key deliverables, milestones, timelines, and an overall program budget. The customer is ultimately responsible for deciding whether to continue or terminate a program, and does so based on research results (relative to the above measures and metrics) and other factors, including their own strategic and/or business priorities. Following the Pharma Sale in the first quarter of fiscal 2012, customer R&D programs are mainly in our Medical Device segment.

Our R&D activities are engaged in the exploration, discovery and application of technologies that solve meaningful problems in the diagnosis and treatment of disease. Our key R&D activities include efforts that support and expand our core offerings. These efforts include completing activities that support the development of our coating technologies that enhance drug-coated balloons. In the second quarter of fiscal 2013 we completed development activities and launched our next generation hydrophilic coating platform which is now commercially available under the tradename Serene^TM (formerly referred to as Gen 5). We also launched in July 2013 a new in vitro diagnostic product, StabliZyme^® Protein-Free Stabilizer, which focuses on stabilizing biomolecule activity in assay tests. Additional planned activities include initiation of surface modification experiments that improve medical device performance and developing chemistries to support molecular diagnostic applications.

For our internal R&D programs in our segments, we prioritize these programs based on a number of factors, including a program’s strategic fit, commercial impact, potential competitive advantage, technical feasibility, and the amount of investment required. The measures and metrics used to monitor a program’s progress vary based on the program, and typically include many of the same factors discussed above with respect to our customer R&D programs. We typically make decisions to continue or terminate a program based on research results (relative to the above measures and metrics) and other factors, including our own strategic and/or business priorities, and the amount of additional investment required.

With respect to cost components, R&D expenses consist of labor, materials and overhead costs (utilities, depreciation, indirect labor, etc.) for both customer R&D and internal R&D programs. We manage our R&D organization in a flexible manner, balancing workloads/resources between customer R&D and internal R&D programs primarily based on the level of customer program activity. Therefore, costs incurred for customer R&D and internal R&D can shift as customer activity increases or decreases.

Critical Accounting Policies

Critical accounting policies are those policies that require the application of management’s most challenging subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Critical accounting policies involve judgments and uncertainties that are sufficiently likely to result in materially different results under different assumptions and conditions. For a detailed description of our critical accounting policies, see the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2012.

Results of Operations – Three and Nine Months Ended June 30

Revenue. Revenue for the three and nine months ended June 30, 2013 and 2012 was as follows:

	Three months ended June 30,							Nine months ended June 30,
(Dollars in thousands)	2013		2012		Change			2013		2012		Change
Revenue:
Medical Device	$	10,591	$	10,269		3	%	$	30,857	$	27,889		11	%
In Vitro Diagnostics		3,698		3,690		—			10,978		10,196		8	%
Total revenue	$	14,289	$	13,959		2	%	$	41,835	$	38,085		10	%

Medical Device. Medical Device revenue was $10.6 million in the quarter ended June 30, 2013, an increase of 3% compared with $10.3 million for the same prior-year quarter. Medical Device revenue was $30.9 million in the first nine months of fiscal 2013, an increase of 11% compared with $27.9 million for the same prior-year period. The increase in the total revenue for both the three and nine months ended June 30, 2013 was attributable to higher royalty revenue ($0.2 million and $2.2 million, respectively), product sales ($0.5 million in the nine months), license fees ($0.5 million and $0.1 million, respectively) and R&D revenue ($0.2 million in the nine months), partially offset by lower R&D revenue and product sales in the three months ended June 30, 2013 of $0.2 million each. The increase in royalty revenue and product sales revenue in the nine months ended June 30, 2013, resulted from continued growth in our hydrophilic coatings offerings as well as $0.6 million from a royalty revenue catch-up payment which impacted the nine months ended June 30, 2013.

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In Vitro Diagnostics. In Vitro Diagnostics revenue was $3.7 million in the quarter ended June 30, 2013, increasing slightly from the prior-year quarter. In Vitro Diagnostics revenue was $11.0 million in the first nine months of fiscal 2013, an increase of 8% compared with $10.2 million for the prior-year period. The slight sales increase in the three months ended June 30, 2013, resulted from $0.2 million of higher sales of antigen and stabilization products where were offset by lower microarray slide sales when compared with the same prior-year period. The increase for the nine-month period was attributable to $0.6 million and $0.3 million of higher sales of antigens and stabilization products, respectively, offset partially by $0.2 million of lower microarray slide sales.

The following is a summary of major costs and expenses as a percent of total revenue:

	Three months ended June  30,						Nine months ended June 30,
	2013			2012			2013			2012
Product costs		13.9	%		16.1	%		14.1	%		14.3	%
Research and development		28.1			25.1			26.6			28.0
Selling, general and administrative		28.4			24.4			27.6			27.0

Product costs. Product costs were 13.9% and 14.1% of total revenue in the three and nine months ended June 30, 2013, respectively, compared with 16.1% and 14.3% in the respective prior-year periods. Product gross margins were 64.3% and 64.7% in the three and nine months ended June 30, 2013, respectively, compared with 60.8% and 64.7% in the prior-year periods. The increase in product gross margins during the fiscal 2013 quarter is a result of higher manufacturing costs in fiscal 2012 as well as the current quarter product mix relative to the prior-year period’s product mix. On a nine-month basis, there were increases in product sales with higher gross margins (reagents and stabilization) as well as lower gross margin antigen products sold pursuant to a distributor arrangement. The combined effect resulted in the same product gross margins in the first nine months of fiscal 2013 compared with prior-year results.

Research and development expenses. R&D expenses were 28.1% and 26.6% of total revenue in the three and nine months ended June 30, 2013, respectively, compared with 25.1% and 28.0% in the respective prior-year periods. R&D expenses were $4.0 million for the three months ended June 30, 2013, an increase of 14%, compared with $3.5 million for the respective prior-year period. The increase was attributable to higher development expenses of $0.4 million principally associated with our drug-coated balloon platform and compensation and benefit costs of $0.2 million associated with increased headcount. There was a partial offset to expenses of $0.1 million during the fiscal 2013 quarter associated with lower levels of temporary staff. R&D expenses were $11.1 million for the first nine months of fiscal 2013, an increase of 5% compared with $10.6 million for the first nine months of fiscal 2012. The increase was primarily a result of $0.6 million of higher development expenses and $0.2 million of higher compensation and benefit costs in the first nine months of fiscal 2013 partially offset by $0.2 million of lower temporary worker costs. We expect R&D expense to run between 25% and 30% of total revenue on a quarterly basis. In addition, we expect R&D expenses to accelerate in the fourth quarter of fiscal 2013 and increase by at least 8% for the year ended September 30, 2013 as compared with the prior-year period.

Selling, general and administrative (SG&A) expenses. SG&A expenses were 28.4% and 27.6% of total revenue in the three and nine months ended June 30, 2013, respectively, compared with 24.4% and 27.0% in the respective prior-year periods. The SG&A expenses increase of $0.6 million in the three months ended June 30, 2013, or 19%, compared with the prior-year period was primarily attributable to $0.2 million of higher outside service costs and professional services expenses as well as $0.2 million of higher compensation and benefit expenses which included increased headcount. SG&A expenses increased $1.3 million in the nine months ended June 30, 2013, or 12%, compared with the prior-year period primarily from $0.6 million of higher compensation costs associated with increased headcount, $0.5 million of higher outside service expenses mainly from professional services costs including SRI litigation costs, $0.1 million from higher occupancy costs, including depreciation and utilities, and $0.1 million of higher marketing costs. These expenses are partially offset by $0.1 million of lower Board of Directors compensation and related expenses. The Company expects to recognize an expense offset of $1.0 million associated with historical cumulative unreimbursed legal expenses in the fourth quarter of fiscal 2013 related to a settlement and release agreement as discussed in Note 15 to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

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Other income (loss). Major classifications of other income (loss) are as follows:

	Three months ended June 30,				Nine months ended June 30,
(Dollars in thousands)	2013		2012		2013			2012
Investment income	$	60	$	137	$	187		$	418
Gain on sale of strategic investments		—		—		1,293			—
Other-than-temporary impairment of strategic investments		—		—		(129	)		(804	)
Other		2		2		167			172
Total other income (loss)	$	62	$	139	$	1,518		$	(214	)

Other income (loss) was $0.1 million and $1.5 million in the three and nine months ended June 30, 2013, respectively, compared with $0.1 million and $(0.2) million for the respective prior-year periods.

Investment income decreased in the current-year periods compared with the prior-year periods as our average investable balances decreased following the $55 million share repurchase in September 2012, the completion of $10.3 million in share repurchases in fiscal 2013 and to a lesser extent from a decrease in yields on our investment balances.

The nine months ended June 30, 2013 included a gain of $1.2 million from the sale of our ownership interest in Vessix Vascular, Inc. (“Vessix”) as well as a $0.1 million gain from the sale of our ownership interest in OctoPlus, N.V.

In the nine months ended June 30, 2013, we recorded a $0.1 million other-than-temporary impairment loss related to our investment in ViaCyte, Inc. In the nine months ended June 30, 2012, we recorded a $0.8 million other-than-temporary impairment loss on our investment in OctoPlus, based on a significant decline in the stock price of OctoPlus and length of time during fiscal 2012 when the stock price had been trading below its previous cost basis.

In addition, in each of the nine months ended June 30, 2013 and 2012 we recognized $0.2 million in realized investment gains associated with our investment portfolio.

Income tax provision. The reconciliation of the statutory U.S. federal tax rate of 35.0% and the Company’s effective tax rate from continuing operations for the three and nine months ended June 30, 2013 and 2012 is as follows:

	Three months ended June 30,						Nine months ended June 30,
	2013			2012			2013			2012
Statutory U.S. federal income tax rate		35.0	%		35.0	%		35.0	%		35.0	%
State income taxes, net of federal benefit		1.3			1.8			1.3			1.8
(Gain) loss on strategic investments		(2.2	)		1.7			(1.7	)		1.7
Discrete item – capital loss carryback		—			—			(1.8	)		—
Discrete item – 2012 retroactive R&D federal tax credit		—			—			(1.0	)		—
Discrete items – other		(5.7	)		(2.1	)		(2.6	)		(1.0	)
Other		(2.3	)		(0.8	)		(2.7	)		(0.8	)
Effective tax rate from continuing operations		26.1	%		35.6	%		26.5	%		36.7	%

The difference between the U.S. federal statutory tax rate of 35.0% and the Company’s effective tax rate reflects the impact of state income taxes, permanent tax items, valuation allowance changes for capital losses and discrete tax items. The income tax provision associated with continuing operations was $1.1 million and $3.9 million, respectively, for the three and nine months ended June 30, 2013 resulting in respective effective tax rates of 26.1% and 26.5%. The income tax provision associated with continuing operations was $1.8 million and $4.2 million for the three and nine months ended June 30, 2012, respectively, resulting in respective effective tax rates of 35.6% and 36.7%.

The most significant variability in our effective tax rate is the result of changes in capital loss valuation allowances resulting from both other-than-temporary impairment losses and gains on the sales of certain strategic investments. We have historically recorded other-than-temporary impairment losses with no income tax effect as it has not been more likely than not that we would generate sufficient capital gains to realize these benefits. Consequently, the OctoPlus, Vessix and available-for-sale securities gains realized during fiscal 2013 resulted in a reduction in capital loss carryforward valuation allowances resulting in no book income tax effects

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associated with these capital gains. During the nine months ended June 30, 2013, the effective tax rate was reduced by 1.7 percentage points for these capital gains, net of the other-than-temporary impairment loss on the ViaCyte strategic investment. For the nine months ended June 30, 2012, the effective tax rate was increased by 1.7 percentage points from our other-than-temporary impairment loss in OctoPlus, net of our capital gains from the sale of available-for-sale investments. We are eligible to receive additional proceeds of $4.2 million from the Vessix sale depending on achievement of future milestones. If we conclude that it is more likely than not that we will receive these additional proceeds, we will reduce our capital loss carryforward valuation allowance by the lesser of either our capital loss carryforwards or the tax effect of the more than likely realizable sales proceeds.

We recorded $0.1 million of retroactive 2012 U.S. research and development tax credit discrete benefits for the period from January 1, 2012 to December 31, 2012 in the nine months ended June 30, 2013 resulting from the January 2013 signing of the American Taxpayer Relief Act of 2012. This reduced our effective rate from continuing operations by 1.0 percentage points in the nine months ended June 30, 2013.

Discontinued operations. The following is a summary of the operating results of SurModics Pharmaceuticals discontinued operations for the three and nine months ended June 30, 2013 and 2012:

	Three months ended June 30,						Nine months ended June 30,
(Dollars in thousands)	2013			2012			2013			2012
Total revenue	$	—		$	—		$	—		$	5,311
Income from discontinued operations	$	136		$	—		$	1,151		$	2,309
Income tax provision		(183	)		(30	)		(516	)		(1,078	)
(Loss) income from discontinued operations, net of income taxes	$	(47	)	$	(30	)	$	635		$	1,231
Loss on sale of discontinued operations	$	—		$	(57	)	$	—		$	(1,691	)
Income tax (provision) benefit		—			(25	)		—			676
Loss on sale of discontinued operations, net of income taxes	$	—		$	(82	)	$	—		$	(1,015	)

(Loss) income from discontinued operations. The Company’s discontinued operations income and losses are recorded net of the income tax impact of these transactions. The Company recorded discontinued operations loss of less than $0.1 million and income of $0.6 million, for the three and nine months ended June 30, 2013, respectively, compared with a loss of less than $0.1 million and a gain of $1.2 million in the respective prior-year periods. The loss in the three months ended June 30, 2013 reflects a $0.2 million pre-tax gain from the termination of recapturable job creation financial incentives provided by the State of Alabama offset by an income tax provision resulting from finalization of the fiscal 2012 federal and state income tax returns and adjustment of the recorded fiscal 2012 tax provision. The discontinued operations income of $0.6 million for the nine months ended June 30, 2013 is principally from a $1.2 million pre-tax gain from the settlement of recapturable job creation financial incentives provided by the City of Birmingham, Alabama. In this settlement, the Company paid $325,000 of $1.5 million of the recapturable financial incentives which were previously fully accrued by the Company as a discontinued operations liability.

The Pharmaceuticals segment results in fiscal 2012 include the period from October 1, 2011 to November 17, 2011, the date of the Pharma Sale. Revenue from the Pharmaceuticals segment was $5.3 million for the first nine months of fiscal 2012 with pre-tax income from continuing operations of $2.3 million.

Loss on sale of discontinued operations. The Company recorded losses of $0.1 million and $1.0 million in the three and nine months ended June 30, 2012, respectively. There was no discontinued operations income or loss on the sale of discontinued operations in the current-year periods. Loss on sale of discontinued operations recorded in the third quarter of fiscal 2012 related to the Pharma Sale was $0.1 million, which is a result of minor contractual matters that arose in the third quarter and the related tax impact of these contractual matters. Loss on sale of discontinued operations recorded in the first nine months of fiscal 2012 related to the Pharma Sale was $1.0 million ($1.7 million on a pre-tax basis), which was principally related to transaction closing costs which totaled $1.7 million.

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Segment Operating Results

Operating income for each of our reportable segments, which excludes the results from our Pharmaceuticals segment, was as follows:

	Three months ended June 30,									Nine months ended June 30,
(Dollars in thousands)	2013			2012			Change			2013			2012			Change
Operating income (loss):
Medical Device	$	5,223		$	5,173			1	%	$	15,848		$	13,226			20	%
In Vitro Diagnostics		915			1,070			(14	)%		2,933			3,246			(10	)%
Total segment operating income		6,138			6,243						18,781			16,472
Corporate		(1,900	)		(1,450	)		31	%		(5,537	)		(4,768	)		16	%
Total operating income from continuing operations	$	4,238		$	4,793			(12	)%	$	13,244		$	11,704			13	%

Medical Device. Operating income increased by 1% to $5.2 million in the quarter ended June 30, 2013, compared with $5.2 million in the prior-year quarter. Operating income increased by 20% to $15.8 million in the nine months ended June 30, 2013, compared with $13.2 million in the prior-year nine-month period. The increased operating income compared with the prior-year periods resulted from $0.7 million and $2.3 million of higher royalty and license fee revenue in the three and nine months ended June 30, 2013, respectively. The increase in royalty and license fee revenue for the three months ended June 30, 2013 included license fee revenue associated with a customer’s milestone event. The nine months ended June 30, 2013 generated $0.2 million of higher R&D revenue and $0.5 million of higher reagent product sales The nine months ended June 30, 2013 also included $0.6 million associated with a royalty revenue catch-up payment. Direct operating expenses were higher by $0.5 million and $0.6 million, respectively, for the three and nine months ended June 30, 2013 compared with the prior-year periods. Development expenses increased by $0.5 million and compensation and benefits increased by $0.1 million in the three months ended June 30, 2013 with these increases partially offset by $0.1 million lower outside service costs. The nine months ended June 30, 2013 included $0.7 million of higher development expenses offset partially by $0.2 million of lower allocation of corporate expenses. The increase in development expenses was expected as we previously disclosed that we would be increasing our investment in our drug-coated balloon platform. The Medical Device portion of the corporate expense allocation decreased 500 basis points commencing in fiscal 2013.

In Vitro Diagnostics. Operating income decreased by 14% to $0.9 million in the quarter ended June 30, 2013, compared with $1.1 million in the same prior-year quarter. Operating income decreased by 10% to $2.9 million in the nine months ended June 30, 2013, compared with $3.2 million in the first nine months of fiscal 2012. Revenue, which was flat in the three months ended June 30, 2013 compared with the prior year period, and which increased $0.8 million in the nine months ended June 30, 2013 compared with the prior year period, generated gross margin increases of $0.1 million and $0.3 million, respectively, resulting from changing product mix. Product gross margins were 60.1% and 58.2% for the three months ended June 30, 2013 and 2012, respectively, and were 61.2% and 63.1% for the nine-month periods ended June 30, 2013 and 2012, respectively. The increase in product gross margins in the three months ended June 30, 2013 is a result of reduction of indirect manufacturing costs. The decrease in product gross margins for the nine months ended June 30, 2013 is a result of a change in product mix as there were $0.6 million of higher antigen product sales which generate lower gross margins pursuant to a distributor arrangement. Direct operating expenses increased $0.1 million and $0.2 million in the three and nine months ended June 30, 2013 compared with prior-year periods as headcount and market research expenses increased to support growth initiatives. Allocated corporate costs increased $0.1 million and $0.4 million in the three and nine months ended June 30, 2013, compared with the comparable prior-year periods. The In Vitro Diagnostics portion of the corporate allocation increased 300 basis points commencing in fiscal 2013.

Corporate. The Corporate category includes expenses for administrative corporate functions, such as executive, corporate accounting, legal, human resources and Board related, that have not been fully allocated to the Medical Device and In Vitro Diagnostics segments. Corporate also includes expenses, such as litigation, which are not specific to a segment and thus not allocated to our operating segments. Operating loss was $1.9 million and $1.5 million in the three months ended June 30, 2013 and 2012, respectively, and $5.5 million and $4.8 million in the nine months ended June 30, 2013 and 2012, respectively. Compensation and benefit costs increased $0.2 million and $0.6 million in the three and nine months ended June 30, 2013, compared with the comparable prior-year periods primarily from increased headcount as well as increased recruiting expenses associated with the hiring of our new Chief Financial Officer. Outside service costs increased $0.2 million and $0.5 million in the three and nine months ended June 30, 2013 compared with the same prior-year periods primarily from higher professional services, including SRI litigation costs, and consulting costs. These expenses were partially offset by decreased administrative expenses of $0.1 million in the nine months ended June 30, 2013 as compared with the prior-year period primarily from lower Board of Directors compensation and related expenses.

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Liquidity and Capital Resources

As of June 30, 2013, we had working capital of $34.5 million, an increase of $1.5 million from September 30, 2012. Our cash, cash equivalents and available-for-sale securities totaled $60.1 million at June 30, 2013, an increase of $2.0 million from $58.1 million at September 30, 2012. The increase in cash resulted from cash generated by our first nine months of operating results as well as $2.3 million of proceeds received from the sale of two strategic investments partially offset by share repurchases which totaled $10.3 million in fiscal 2013.

Our investments consist principally of U.S. government and government agency obligations, asset-backed securities, mortgage-backed securities and investment grade, interest-bearing corporate and municipal debt securities with varying maturity dates, the majority of which are five years or less. The Company’s investment policy excludes ownership of collateralized mortgage obligations, mortgage-backed derivatives and other derivative securities without prior written approval of the Board of Directors. The Company’s investment policy requires that no more than 5% of investments be held in any one credit or issue, excluding U.S. government and government agency obligations. The primary investment objective of the portfolio is to provide for the safety of principal and appropriate liquidity while generating an above benchmark (“Merrill Lynch 1-3 Year Government-Corporate Index”) total rate of return on a pre-tax basis. Management plans to continue to direct its investment advisors to manage the Company’s securities investments primarily for the safety of principal for the foreseeable future as it continues to assess other investment opportunities and uses of its cash and securities investments, including those described below.

We do not have any outstanding debt and no credit agreements and believe that our existing cash, cash equivalents and available-for-sale securities, which totaled $60.1 million as of June 30, 2013, together with cash flow from operations, will provide liquidity sufficient to meet the below stated needs and fund our operations for the remainder of fiscal 2013. There can be no assurance, however, that SurModics’ business will continue to generate cash flows at current levels, and disruptions in financial markets may negatively impact our ability to access capital in a timely manner and on attractive terms. Our anticipated liquidity needs for the remainder of fiscal 2013 may include, but are not limited to, the following: general capital expenditures up to $1.0 million, any amounts associated with the $20.0 million repurchase of common stock under the July 29, 2013 authorization discussed below; and obligations remaining after the Pharma Sale, including indemnification obligations to Evonik related to contingent consideration payments.

Operating Activities. We had cash flows from operating activities from continuing operations of $11.9 million in the first nine months of fiscal 2013, compared with $12.0 million in the first nine months of fiscal 2012. The decrease compared with prior-year results reflected increased use of cash for income taxes principally offset by net income, the timing of accounts receivable payments, planned reduction in inventory investment and lower cash disbursements related to accounts payable and accrued liabilities. Income tax payments totaled $5.2 million and $0.4 million, respectively, in fiscal 2013 and fiscal 2012.

Investing Activities. We invested $1.4 million in property and equipment in the first nine months of fiscal 2013, compared with $0.4 million in the prior-year period. The property and equipment investment in the first nine months of fiscal 2013 is higher than our investment in the first nine months of fiscal 2012 as the Company increased spending principally on building improvements of $0.4 million, laboratory and production related equipment of $0.7 million and computer equipment and software of $0.3 million. We anticipate spending in the fourth quarter of fiscal 2013 to be up to $1.0 million. We received cash proceeds aggregating $2.3 million from the sales of our Vessix and OctoPlus strategic investments in the nine months ended June 30, 2013. In the first nine months of fiscal 2012 we received cash from our discontinued operations, associated with the Pharma Sale, which totaled $28.3 million.

Financing Activities. In January 2013, our Board of Directors authorized the repurchase of up to $10.0 million of the Company’s outstanding common stock through open-market purchases, private transactions, block trades, accelerated share repurchase transactions, tender offers, or by any combination of such methods which was in addition to an existing authorization of $0.3 million. During the nine months ended June 30, 2013 we repurchased 405,290 shares for an aggregate of $10.3 million at an average price of $25.47 per share. As of June 30, 2013 there was no remaining amount available for future share repurchases under this authorization. On July 29, 2013, our Board of Directors authorized a repurchase program whereby $20.0 million of our outstanding common stock may be repurchased. The repurchase authorization does not have a fixed expiration date.

Discontinued Operations. Our Pharmaceuticals discontinued operation used cash in operating activities of $0.1 million and $1.5 million in the nine months ended June 30, 2013 and 2012, respectively. Cash used in discontinued operations in the current year related to payments to settle the job incentive obligations and a portion of other accrued balances offset by collection of remaining accounts receivable balances. Cash used in operating activities of $1.5 million in fiscal 2012 related to the operating costs of the business for two months prior to the Pharma Sale. Cash provided by investing activities of $29.8 million in the first nine months of fiscal 2012 related principally to proceeds received from the Pharma Sale. Cash generated from financing activities of $0.1 million in the first nine months of fiscal 2013 and cash used in financing activities of $28.3 million in the first nine months of fiscal 2012 related to transfers of cash from or to the continuing operations of the Company and consisted of cash used principally to settle the City of Birmingham job incentive obligation in fiscal 2013 and cash proceeds from the Pharma Sale in fiscal 2012.

27

Customer Concentrations. Our licensed technologies provide royalty revenue, which represents the largest revenue stream to the Company. We have licenses with a diverse base of customers and certain customers have multiple products using our technology. Medtronic, Inc. (“Medtronic”) was our largest customer comprising 19% of total revenue for fiscal 2012 and continues to be our most significant customer in fiscal 2013 comprising 18% of total revenue. Medtronic has several separately licensed products that generate royalty revenue for SurModics, none of which represented more than 6% of SurModics’ total revenue in fiscal 2012. No other individual customer using licensed technology constitutes more than 10% of SurModics’ total revenue so far in fiscal 2013.

Off-Balance Sheet Arrangements

As of June 30, 2013, the Company did not have any off-balance sheet arrangements with any unconsolidated entities.

Forward-Looking Statements

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include expectations concerning our growth strategy, including our ability to sign new license agreements and broaden our hydrophilic coatings royalty revenue, product development programs, various milestone achievements, research and development expenses, future cash flow and sources of funding, short-term liquidity requirements, future property and equipment investment levels, the impact of potential lawsuits or claims, and the impact of Medtronic, as well as other significant customers, including new diagnostic kit customers. Without limiting the foregoing, words or phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “possible,” “project,” “will” and similar terminology, generally identify forward-looking statements. Forward-looking statements may also represent challenging goals for us. These statements, which represent the Company’s expectations or beliefs concerning various future events, are based on current expectations that involve a number of risks and uncertainties that could cause actual results to differ materially from those of such forward-looking statements. We caution that undue reliance should not be placed on such forward-looking statements, which speak only as of the date made. Some of the factors which could cause results to differ from those expressed in any forward-looking statement are set forth under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2012. We disclaim any intent or obligation to update publicly these forward-looking statements, whether because of new information, future events or otherwise.

Although it is not possible to create a comprehensive list of all factors that may cause actual results to differ from the Company’s forward-looking statements, such factors include, among others:

• the Company’s reliance on a small number of significant customers, which causes our financial results and stock price to be subject to factors affecting those significant customers and their products, the timing of market introduction of their or competing products, product safety or efficacy concerns and intellectual property litigation could adversely affect our growth strategy and the royalty revenue we derive;

• general economic conditions which are beyond our control, such as the impact of recession, business investment and changes in consumer confidence;

• a decrease in the Company’s available cash or the value of its investment holdings could impact short-term liquidity requirements and expected capital and other expenditures;

• the difficulties and uncertainties associated with the lengthy and costly new product development and foreign and domestic regulatory approval processes, such as delays, difficulties or failures in achieving acceptable clinical results or obtaining foreign or U.S. Food and Drug Administration marketing clearances or approvals, which may result in lost market opportunities or postpone or preclude product commercialization by licensees;

• the development of new products or technologies by competitors, technological obsolescence and other changes in competitive factors;

• the Company’s ability to successfully perform certain product development activities and governmental and regulatory compliance activities which the Company has not previously undertaken in any significant manner;

• possible adverse market conditions, possible adverse impacts on our cash flows and competing cash needs could impact the ability to complete and timing of share repurchases under our share repurchase program; and

• other factors described in “Risk Factors” and other sections of SurModics’ Annual Report on Form 10-K for the fiscal year ended September 30, 2012, which you are encouraged to read carefully.

Many of these factors are outside the control and knowledge of the Company, and could result in increased volatility in period-to-period results. Investors are advised not to place undue reliance upon the Company’s forward-looking statements and to consult any further disclosures by the Company on this subject in its filings with the SEC.

28

Use of Non-GAAP Financial Information.

In addition to disclosing financial results in accordance with generally accepted accounting principles, or GAAP, this report could include certain non-GAAP financial results, such as effective tax rate and segment operating results adjusted for one-time events. We believe these non-GAAP measures provide meaningful insight into our operating performance, excluding certain event-specific charges, and provide an alternative perspective of our results of operations. We use non-GAAP measures, including certain of those set forth in this report, to assess our operating performance and to determine payout under our executive compensation programs. We believe that presentation of certain non-GAAP measures allows investors to review our results of operations from the same perspective as management and our Board of Directors and facilitates comparisons of our current results of operations. The method we use to produce non-GAAP results is not in accordance with GAAP and may differ from the methods used by other companies. Non-GAAP results should not be regarded as a substitute for corresponding GAAP measures but instead should be utilized as a supplemental measure of operating performance in evaluating our business. Non-GAAP measures do have limitations in that they do not reflect certain items that may have a material impact upon our reported financial results. As such, these non-GAAP measures presented should be viewed in conjunction with our consolidated financial statements prepared in accordance with GAAP.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s investment policy requires investments with high credit quality issuers and limits the amount of credit exposure to any one issuer. The Company’s investments consist principally of U.S. government and government agency obligations, mortgage-backed securities and investment-grade, interest-bearing corporate and municipal debt securities with varying maturity dates, the majority of which are five years or less. Because of the credit criteria of the Company’s investment policies, the primary market risk associated with these investments is interest rate risk. SurModics does not use derivative financial instruments to manage interest rate risk or to speculate on future changes in interest rates. A one percentage point increase in interest rates would result in an approximate $0.8 million decrease in the fair value of the Company’s available-for-sale securities as of June 30, 2013, but would have no material impact on the results of operations or cash flows.

Management believes that a reasonable change in raw material prices would not have a material impact on future earnings or cash flows because the Company’s inventory exposure is not material.

Although we conduct business in foreign countries, our international operations consist primarily of sales of reagent and stabilization chemicals. Additionally, all sales transactions are denominated in U.S. dollars. Accordingly, we do not expect to be subject to material foreign currency risk with respect to future costs or cash flows from our foreign sales. To date, we have not entered into any foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency exchange.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

SurModics, Inc. maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in reports that it files under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time period specified in the SEC rules and forms, and to ensure that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosures.

As of the end of the period covered by this report, the Company conducted an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(b) of the Exchange Act. Based upon that evaluation and because the material weakness previously disclosed in our Annual Report on Form 10-K filed with the SEC on December 14, 2012 had not been remediated as of June 30, 2013, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2013.

The Company has reviewed its internal control procedures related to the evaluation of non-routine events or transactions and has developed additional control procedures to address the material weakness. However, these additional control procedures have not operated for an appropriate amount of time to determine their operational effectiveness and, as such, the Company has determined that the material weakness has not been remediated as of June 30, 2013. The Company expects it will require multiple quarters to assess and conclude on the operational effectiveness of the additional control procedures. The Company anticipates remediation of this material weakness will be completed, at the earliest, when the Company finalizes and files its fiscal 2013 Form 10-K.

29

Changes in Internal Controls

Other than efforts to remediate the material weakness noted above, there were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As previously reported, including most recently under “Item 4 — Controls and Procedures” in our quarterly report on Form 10-Q for the quarter ended December 31, 2012, management concluded that our internal control over financial reporting was not effective because the previously disclosed material weakness arising from a deficiency in controls with respect to the evaluation of non-routine events or transactions had not yet been remediated. Management continued to work on remediating this material weakness through the quarter ended June 30, 2013, and will continue to enhance the processes and controls related to evaluating non-routine events or transactions.

We have implemented the following changes in processes and controls within our accounting function in fiscal 2012 with further enhancements to the controls in fiscal 2013:

• The Company initiated quarterly meetings to discuss and identify unique events that occurred as an additional detection activity related to non-routine events or transactions;

• The Company changed its internal control procedures related to the evaluation of non-routine events or transactions to require that the accounting evaluation and conclusion for such events be prepared and reviewed by individuals with an appropriate level of accounting expertise;

• The Company assesses non-routine events or transactions and if necessary engages an independent accounting advisor to assist with management’s evaluation and accounting conclusion; and

• The Company initiated assessment and will continue to assess the continuing effects of significant historical non-routine events or transactions on its financial statements.

30

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Other than as described in Note 15 to the unaudited interim condensed consolidated financial statements, there have been no material developments in the legal proceedings previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2012.

Item 1A. Risk Factors

In our Annual Report on Form 10-K for the fiscal year ended September 30, 2012, filed with the SEC on December 14, 2012, we identify under “Part 1, Item 1A. Risk Factors.” important factors which could affect our financial performance and could cause our actual results for future periods to differ materially from our anticipated results or other expectations, including those expressed in any forward-looking statements made in this Quarterly Report on Form 10-Q.

There have been no material changes in our risk factors subsequent to the filing of our Annual Report on Form 10-K for the fiscal year ended September 30, 2012.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c) Issuer Purchases of Equity Securities

The following table presents information with respect to purchases of common stock of the Company made during the three months ended June 30, 2013, by the Company or on behalf of the Company or any “affiliated purchaser” of the Company, as defined in Rule 10b-18(a)(3) under the Exchange Act.

Period	Total Number of Shares Purchased(1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(2)
4/1/13 — 4/30/13		68,625	$	25.83		68,625	$	5,857,283
5/1/13 — 5/31/13		229,291	$	25.39		229,291	$	35,035
6/1/13 — 6/30/13		1,467	$	23.87		1,467	$	11
Total		299,383	$	25.49		299,383	$	11

(1) The purchases in this column included shares repurchased as part of our publicly announced program.

(2) On January 28, 2013, our Board of Directors authorized the repurchase of up to $10.0 million of our outstanding common stock which was in addition to an existing authorization of $0.3 million. As of June 30, 2013, pursuant to the January 2013 authorization, the Company has no funds available for future share repurchases. On July 29, 2013, our Board of Directors authorized a repurchase program whereby $20.0 million of our outstanding common stock may be repurchased. This repurchase authorization does not have a fixed expiration date.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

The unaudited interim condensed consolidated balance sheets included in this Quarterly Report on Form 10-Q have been corrected to reflect a $1.2 million adjustment to increase the carrying value of the Company’s strategic investments, included in other assets, net, total assets, retained earnings and total stockholders’ equity. This adjustment corrects and reduces an other-than-temporary impairment charge recognized in the fiscal year ended September 30, 2010, which was previously recorded during the fiscal fourth quarter ended September 30, 2010. The original other-than-temporary impairment charge did not sufficiently consider information available to the

31

Company prior to the issuance of the Company’s financial statements for the fiscal year ended September 30, 2010. Specifically, the impact of consideration to be received from the proposed sale of a subsidiary of a strategic investment to an unrelated third party had not been considered in evaluating the value of the strategic investment. Management has evaluated the amount and nature of the adjustment and concluded that it is not material to either the previously reported annual or quarterly financial statement results of operations, total assets or stockholders’ equity. Likewise, the Company expects to correct previously presented historical financial statements in future filings, including the annual financial statements to be included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013.

For the fiscal year ended September 30, 2010, the correction increased income from continuing operations and decreased net loss by $1.2 million. There was no tax impact from this correction as the original other-than-temporary impairment charge included recognition of a tax valuation allowance which was reversed with this adjustment. There will be no impact on income from continuing operations in any other periods to be presented in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013. The September 30, 2012 balance sheet to be presented therein has been corrected in this filing.

32

Item 6. Exhibits

Exhibit	Description
3.1	Restated Articles of Incorporation, as amended—incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-QSB for the quarter ended December 31, 1999, SEC File No. 0-23837.
3.2	Restated Bylaws of SurModics, Inc., as amended November 30, 2009 – incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2009, SEC File No. 0-23837.
31.1*	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	Financial statements from the Quarterly Report on Form 10-Q for SurModics, Inc. for the quarterly period ended June 30, 2013, filed on August 2, 2013, formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.

* Filed herewith

33

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

August 2, 2013	SurModics, Inc.
	By:	/s/ Andrew D.C. LaFrence
		Andrew D.C. LaFrence
		Vice President of Finance and Chief Financial Officer (duly authorized signatory and principal financial officer)

34

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

EXHIBIT INDEX TO FORM 10-Q

For the Quarter Ended June 30, 2013

SURMODICS, INC.

Exhibit	Description
3.1	Restated Articles of Incorporation, as amended—incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-QSB for the quarter ended December 31, 1999, SEC File No. 0-23837.
3.2	Restated Bylaws of SurModics, Inc., as amended November 30, 2009 – incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2009, SEC File No. 0-23837.
31.1*	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document**
101.SCH*	XBRL Taxonomy Extension Schema Document**
101.CAL*	XBRL Taxonomy Calculation Linkbase Document**
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document**
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document**

* Filed herewith

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

35

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Gary R. Maharaj, certify that:

1. I have reviewed this quarterly report on Form 10-Q of SurModics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 2, 2013	Signature:	/s/ Gary R. Maharaj
		Gary R. Maharaj
		President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Andrew D.C. LaFrence, certify that:

1. I have reviewed this quarterly report on Form 10-Q of SurModics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 2, 2013	Signature:	/s/ Andrew D.C. LaFrence
		Andrew D.C. LaFrence
		Vice President of Finance and Chief Financial Officer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of SurModics, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2013, as filed with the Securities and Exchange Commission (the “Report”), I, Gary R. Maharaj, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 2, 2013	Signature:	/s/ Gary R. Maharaj
		Gary R. Maharaj
		President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of SurModics, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2013, as filed with the Securities and Exchange Commission (the “Report”), I, Andrew D.C. LaFrence, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 2, 2013	Signature:	/s/ Andrew D.C. LaFrence
		Andrew D.C. LaFrence
		Vice President of Finance and Chief Financial Officer

XML

Income Per Share Data

9 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Income Per Share Data

11. Income Per Share Data

Basic income per common share is calculated based on the weighted average number of common shares outstanding during the period. Diluted income per common share is computed by dividing income by the weighted average number of common and common equivalent shares outstanding during the period. The Company’s only potentially dilutive common shares are those that result from dilutive common stock options, non-vested stock relating to restricted stock awards, restricted stock units and performance shares.

The following table sets forth the components of the basic and diluted income per share computations (in thousands):

	Three months ended June 30,				Nine months ended June 30,
	2013		2012		2013		2012
Net income from continuing operations available to common shareholders	$	3,178	$	3,174	$	10,846	$	7,275
Basic weighted average shares outstanding		14,413		17,528		14,563		17,505
Dilutive effect of outstanding stock options, non-vested restricted stock, restricted stock units and performance shares		326		119		260		88
Diluted weighted average shares outstanding		14,739		17,647		14,823		17,593

The calculation of weighted average diluted shares outstanding excludes outstanding common stock options associated with the right to purchase 0.3 million and 0.7 million shares for the three months ended June 30, 2013 and 2012, respectively, and 0.5 million and 0.7 million shares for the nine months ended June 30, 2013 and 2012, respectively, as their inclusion would have had an antidilutive effect on diluted income per share.

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Stock-Based Compensation - Assumptions Used in Stock Option Plans (Detail)	3 Months Ended		9 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Risk-free interest rates		0.70%	0.60%	0.80%
Expected life (years)		4 years 9 months 18 days	4 years 9 months 18 days	4 years 9 months 18 days
Expected volatility		48.60%	49.20%	49.60%
Dividend yield		0.00%	0.00%	0.00%

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Condensed Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Revenue:
Royalties and license fees	$ 7,827	$ 7,104	$ 22,294	$ 19,997
Product sales	5,577	5,748	16,688	15,449
Research and development	885	1,107	2,853	2,639
Total revenue	14,289	13,959	41,835	38,085
Operating costs and expenses:
Product costs	1,990	2,251	5,894	5,456
Research and development	4,009	3,503	11,145	10,653
Selling, general and administrative	4,052	3,412	11,552	10,272
Total operating costs and expenses	10,051	9,166	28,591	26,381
Operating income from continuing operations	4,238	4,793	13,244	11,704
Other income (loss):
Investment income, net	60	137	187	418
Impairment loss on strategic investments			(129)	(804)
Other income, net	2	2	1,460	172
Other income (loss)	62	139	1,518	(214)
Income from continuing operations before income taxes	4,300	4,932	14,762	11,490
Income tax provision	(1,122)	(1,758)	(3,916)	(4,215)
Income from continuing operations	3,178	3,174	10,846	7,275
Discontinued operations:
(Loss) Income from discontinued operations, net of income taxes	(47)	(30)	635	1,231
Loss on sale of discontinued operations, net of income taxes		(82)		(1,015)
(Loss) Income from discontinued operations	(47)	(112)	635	216
Net income	$ 3,131	$ 3,062	$ 11,481	$ 7,491
Basic income (loss) per share:
Continuing operations	$ 0.22	$ 0.18	$ 0.74	$ 0.42
Discontinued operations	$ 0.00	$ (0.01)	$ 0.04	$ 0.01
Net income	$ 0.22	$ 0.17	$ 0.79	$ 0.43
Diluted income (loss) per share:
Continuing operations	$ 0.22	$ 0.18	$ 0.73	$ 0.41
Discontinued operations	$ 0.00	$ (0.01)	$ 0.04	$ 0.01
Net income	$ 0.21	$ 0.17	$ 0.77	$ 0.43
Weighted average number of shares outstanding:
Basic	14,413	17,528	14,563	17,505
Diluted	14,739	17,647	14,823	17,593

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Fair Value Measurements

9 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Measurements

4. Fair Value Measurements

The accounting guidance on fair value measurements defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. The guidance is applicable for all financial assets and financial liabilities and for all nonfinancial assets and nonfinancial liabilities recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and also considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of nonperformance.

Fair Value Hierarchy

Accounting guidance on fair value measurements requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.

The Company’s Level 1 asset consisted of its investment in OctoPlus N.V. (“OctoPlus”) (see Note 7 for further information). The fair market value of this investment was based on the quoted price of OctoPlus shares as traded on the Euronext Amsterdam Stock Exchange. This investment was sold in the second quarter of fiscal 2013.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

The Company’s Level 2 assets consist of money market funds, U.S. Treasury securities, corporate bonds, municipal bonds, U.S. government agency securities, government agency and municipal securities and certain asset-backed and mortgage-backed securities. Fair market values for these assets are based on quoted vendor prices and broker pricing where all significant inputs are observable.

Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.

There were no Level 3 assets at June 30, 2013, March 31, 2013, September 30, 2012, June 30, 2012 or March 31, 2012 and there was no Level 3 activity during the first nine months of fiscal 2013 or the third quarter of fiscal 2012.

In valuing assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company did not significantly change its valuation techniques from prior periods.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2013 (in thousands):

	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value as  of June 30, 2013
Assets:
Cash equivalents	$	—	$	6,902	$	—	$	6,902
Available-for-sale debt securities:
U.S. government and government agency obligations		—		28,185		—		28,185
Mortgage-backed securities		—		5,222		—		5,222
Municipal bonds		—		3,299		—		3,299
Asset-backed securities		—		1,614		—		1,614
Corporate bonds		—		4,097		—		4,097
Total assets measured at fair value	$	—	$	49,319	$	—	$	49,319

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2012 (in thousands):

	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value as of September 30, 2012
Assets:
Cash equivalents	$	—	$	5,101	$	—	$	5,101
Available-for-sale debt securities:
U.S. government and government agency obligations		—		28,854		—		28,854
Mortgage-backed securities		—		2,999		—		2,999
Municipal bonds		—		3,213		—		3,213
Asset-backed securities		—		598		—		598
Corporate bonds		—		6,886		—		6,886
Other assets		718		—		—		718
Total assets measured at fair value	$	718	$	47,651	$	—	$	48,369

Valuation Techniques

The valuation techniques used to measure the fair value of assets are as follows:

Cash equivalents — These assets are classified as Level 2 and are carried at historical cost which is a reasonable estimate of fair value because of the relatively short time between origination of the instrument and its expected realization.

Available-for-sale debt securities — These securities are classified as Level 2 and include various types of debt securities. These securities are valued based on quoted vendor prices in active markets underlying the securities.

Other assets — This asset is classified as Level 1 and represented the Company’s investment in OctoPlus. This investment was valued based on the quoted market price of OctoPlus shares.

Changes in Level 3 Instruments Measured at Fair Value on a Recurring Basis

The following tables provide a reconciliation of financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands). Transfers of instruments into and out of Level 3 are based on beginning of period values.

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Nine Months Ended June 30, 2012 Available-for-Sale Debt Securities
	Mortgage- Backed  Securities			Asset- Backed  Securities			Total
Balance at September 30, 2011	$	15		$	9		$	24
Transfers into Level 3		—			—			—
Transfers out of Level 3		(15	)		(9	)		(24	)
Total realized and unrealized gains (losses):
Included in other comprehensive (loss) income		—			—			—
Purchases, issuances, sales and settlements, net		—			—			—
Balance at June 30, 2012	$	—		$	—		$	—

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Key Accounting Policies (Policies)

9 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Revenue recognition

Revenue recognition

The Company recognizes revenue when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) shipment has occurred or delivery has occurred if the terms specify destination; (3) the sales price is fixed or determinable; and (4) collectability is reasonably assured. When there are additional performance requirements, revenue is recognized when all such requirements have been satisfied. Under revenue arrangements with multiple deliverables, the Company recognizes each separable deliverable as it is earned.

The Company derives its revenue from three primary sources: (1) royalties and license fees from licensing its proprietary drug delivery and surface modification technologies and in vitro diagnostic formats to customers; (2) the sale of reagent chemicals to licensees and the sale of stabilization products, antigens, substrates and surface coatings to the diagnostic and biomedical research markets; and (3) research and development fees generated on customer projects.

Royalties and license fees

Royalties and license fees. The Company licenses technology to third parties and collects royalties. Royalty revenue is generated when a customer sells products incorporating the Company’s licensed technologies. Royalty revenue is recognized as licensees report it to the Company, and payment is typically submitted concurrently with the report. For stand-alone license agreements, up-front license fees are recognized over the term of the related licensing agreement. Minimum royalty fees are recognized in the period earned.

Revenue related to a performance milestone is recognized upon the achievement of the milestone, as defined in the respective agreements and provided the following conditions have been met:

• The milestone payment is non-refundable;

• The milestone involved a significant degree of risk, and was not reasonably assured at the inception of the arrangement;

• Accomplishment of the milestone involved substantial effort;

• The amount of the milestone payment is commensurate with the related effort and risk; and

• A reasonable amount of time passed between the initial license payment and the first and subsequent milestone payments.

If these conditions have not been met, the milestone payment is deferred and recognized over the term of the agreement.

Product sales

Product sales. Product sales to third parties are recognized at the time of shipment, provided that an order has been received, the price is fixed or determinable, collectability of the resulting receivable is reasonably assured and returns can be reasonably estimated. The Company’s sales terms provide no right of return outside of the standard warranty policy. Payment terms are generally set at 30-45 days.

Research and development

Research and development. The Company performs third party research and development activities, which are typically provided on a time and materials basis. Generally, revenue for research and development is recorded as performance progresses under the applicable contract.

New Accounting Pronouncements

New Accounting Pronouncements

No new accounting pronouncement issued or effective has had, or is expected to have, a material impact on the Company’s consolidated financial statements.

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Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Sep. 30, 2012
Income Tax Disclosure [Abstract]
Income tax provisions associated with income from continuing operations	$ 1,122,000	$ 1,758,000	$ 3,916,000	$ 4,215,000
Effective tax rates	26.10%	35.60%	26.50%	36.70%
Permanent tax and discrete tax benefits	200,000		800,000
U.S. federal statutory tax rate	35.00%	35.00%	35.00%	35.00%
Income tax expense from discontinued operations	200,000	100,000	500,000	1,100,000
Income tax benefit from the sale of discontinued operations				700,000
Income tax expense from the sale of discontinued operations		25,000		(676,000)
Effective tax rate applied to discontinued operations	134.60%	96.50%	44.80%	65.00%
Unrecognized tax benefits including interest and penalties	1,400,000		1,400,000		1,400,000
Liability for unrecognized tax benefits to change significantly in the next 12 months	$ 0		$ 0

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Income Taxes

9 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

The Company recorded income tax provisions associated with income from continuing operations of $1.1 million and $1.8 million for the three months ended June 30, 2013 and 2012, respectively, representing effective tax rates of 26.1% and 35.6%, respectively. The Company recorded income tax provisions associated with income from continuing operations of $3.9 million and $4.2 million for the nine months ended June 30, 2013 and 2012, respectively, representing effective tax rates of 26.5% and 36.7%, respectively. The difference between the U.S. federal statutory tax rate of 35.0% and the Company’s effective tax rate for the three and nine months ended June 30, 2013 and 2012 reflects the impact of state income taxes, permanent tax items and discrete tax benefits of $0.2 million and $0.8 million for the three and nine months ended June 30, 2013, respectively. Discrete tax items primarily relate to capital loss carrybacks, the January 2013 signing of the American Taxpayer Relief Act of 2012 which retroactively reinstated the U.S. R&D tax credit to the beginning of calendar 2012 and the finalization of fiscal 2012 income tax liabilities upon the filing of fiscal 2012 federal and state income tax returns. The nine months ended June 30, 2013 also reflects the impact of strategic asset gains, an other-than-temporary impairment of a strategic asset, available-for-sale investment portfolio capital gains and net reversal of deferred tax asset valuation allowances.

The Company recorded an income tax expense from discontinued operations of $0.2 million and $0.5 million for the three and nine months ended June 30, 2013, respectively. The Company recorded an income tax expense from discontinued operations of less than $0.1 million and $1.1 million for the three and nine months ended June 30, 2012, respectively. The Company recorded an income tax expense of less than $0.1 million and an income tax benefit of $0.7 million from the sale of discontinued operations for the three and nine months ended June 30, 2012, respectively. The effective tax rate applied to discontinued operations was 134.6% and 44.8% for the three and nine months ended June 30, 2013, respectively. The effective tax rate applied to discontinued operations was 96.5% and 65.0% for the three and nine months ended June 30, 2012, respectively.

The total amount of unrecognized tax benefits including interest and penalties that, if recognized, would affect the effective tax rate as of June 30, 2013 and September 30, 2012, respectively, are $1.4 million for each period. Currently, the Company does not expect the liability for unrecognized tax benefits to change significantly in the next 12 months with the above balances classified on the condensed consolidated balance sheets in other long-term liabilities. Interest and penalties related to unrecognized tax benefits are recorded in income tax expense.

The Company files income tax returns, including returns for its subsidiaries, in the U.S. federal jurisdiction and in various state jurisdictions. Uncertain tax positions are related to tax years that remain subject to examination. The Internal Revenue Service (“IRS”) commenced an examination of the Company’s U.S. income tax return for fiscal 2010 in the first quarter of fiscal 2012. The IRS completed its examination in the third quarter of fiscal 2012 and a payment was made in the fourth quarter of fiscal 2012 associated with a timing adjustment. U.S. income tax returns for years prior to fiscal 2010 are no longer subject to examination by federal tax authorities. Tax returns for state and local jurisdictions for fiscal years 2004 through 2012 remain subject to examination by state and local tax authorities.

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Intangible Assets - Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Jun. 30, 2013	Sep. 30, 2012
Intangible Assets [Line Items]
Intangible assets, Gross carrying amount	$ 8,223	$ 8,223
Intangible assets, Accumulated amortization	(4,349)	(3,793)
Intangible assets, Net	3,874	4,430
Customer Lists [Member]
Intangible Assets [Line Items]
Definite lived intangible assets, Weighted Average Original Life (Years)	9 years	9 years
Definite lived intangible assets, Gross Carrying Amount	4,857	4,857
Definite lived intangible assets, Accumulated Amortization	(3,139)	(2,734)
Definite lived intangible assets, Net	1,718	2,123
Core Technology [Member]
Intangible Assets [Line Items]
Definite lived intangible assets, Weighted Average Original Life (Years)	8 years	8 years
Definite lived intangible assets, Gross Carrying Amount	530	530
Definite lived intangible assets, Accumulated Amortization	(392)	(343)
Definite lived intangible assets, Net	138	187
Patents And Other [Member]
Intangible Assets [Line Items]
Definite lived intangible assets, Weighted Average Original Life (Years)	16 years 9 months 18 days	16 years 9 months 18 days
Definite lived intangible assets, Gross Carrying Amount	2,256	2,256
Definite lived intangible assets, Accumulated Amortization	(818)	(716)
Definite lived intangible assets, Net	1,438	1,540
Subtotal [Member]
Intangible Assets [Line Items]
Definite lived intangible assets, Gross Carrying Amount	7,643	7,643
Definite lived intangible assets, Accumulated Amortization	(4,349)	(3,793)
Definite lived intangible assets, Net	3,294	3,850
Trademarks [Member]
Intangible Assets [Line Items]
Unamortized intangible assets, Gross	580	580
Unamortized intangible assets, Net	$ 580	$ 580

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Amounts Reclassified Out of Accumulated Other Comprehensive Income - Additional Information (Detail) (Accumulated Other Comprehensive Income Pre Tax [Member], USD $) In Millions, unless otherwise specified	9 Months Ended
	Jun. 30, 2013
Accumulated Other Comprehensive Income Pre Tax [Member]
Other Comprehensive Income (Loss) [Line Items]
Amounts reclassified out of AOCI pre tax basis	$ 0.3

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Discontinued Operations - Assets and Liabilities of Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Sep. 30, 2012
Discontinued Operations And Disposal Groups [Abstract]
Accounts receivable, net		$ 283
Other current assets	45	600
Current assets of discontinued operations	45	883
Total assets of discontinued operations	45	883
Other current liabilities payable	125	1,640
Current liabilities of discontinued operations	125	1,640
Total liabilities of discontinued operations	$ 125	$ 1,640

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Investments (Tables)

9 Months Ended

Jun. 30, 2013

Investments Debt And Equity Securities [Abstract]

Amortized Cost, Unrealized Holding Gains (Losses) and Fair Value of Available-for-Sale Securities

The amortized cost, unrealized holding gains and losses, and fair value of available-for-sale securities as of June 30, 2013 and September 30, 2012 were as follows (in thousands):

	June 30, 2013
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
U.S. government and government agency obligations	$	28,260	$	15	$	(90	)	$	28,185
Mortgage-backed securities		5,180		92		(50	)		5,222
Municipal bonds		3,288		17		(6	)		3,299
Asset-backed securities		1,622		—		(8	)		1,614
Corporate bonds		4,115		12		(30	)		4,097
Total	$	42,465	$	136	$	(184	)	$	42,417

	September 30, 2012
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
U.S. government and government agency obligations	$	28,641	$	213	$	—		$	28,854
Mortgage-backed securities		2,896		129		(26	)		2,999
Municipal bonds		3,178		35		—			3,213
Asset-backed securities		613		—		(15	)		598
Corporate bonds		6,858		28		—			6,886
Total	$	42,186	$	405	$	(41	)	$	42,550

Amortized Cost and Fair Value of Investments by Contractual Maturity

The amortized cost and fair value of investments by contractual maturity at June 30, 2013 were as follows (in thousands):

	Amortized Cost		Fair Value
Debt securities due within:
One year	$	10,712	$	10,723
One to five years		25,080		25,000
Five years or more		6,673		6,694
Total	$	42,465	$	42,417

Sales of Available-for-Sale Securities

The following table summarizes sales of available-for-sale securities (in thousands):

	Three months ended June 30,						Nine months ended June 30,
	2013			2012			2013			2012
Proceeds from sales	$	8,507		$	649		$	34,487		$	35,203
Gross realized gains	$	6		$	3		$	171		$	174
Gross realized losses	$	(4	)	$	(1	)	$	(4	)	$	(2	)

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Fair Value Measurements (Tables)

9 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on Recurring Basis

             The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2013 (in thousands):

	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value as  of June 30, 2013
Assets:
Cash equivalents	$	—	$	6,902	$	—	$	6,902
Available-for-sale debt securities:
U.S. government and government agency obligations		—		28,185		—		28,185
Mortgage-backed securities		—		5,222		—		5,222
Municipal bonds		—		3,299		—		3,299
Asset-backed securities		—		1,614		—		1,614
Corporate bonds		—		4,097		—		4,097
Total assets measured at fair value	$	—	$	49,319	$	—	$	49,319

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2012 (in thousands):

	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value as of September 30, 2012
Assets:
Cash equivalents	$	—	$	5,101	$	—	$	5,101
Available-for-sale debt securities:
U.S. government and government agency obligations		—		28,854		—		28,854
Mortgage-backed securities		—		2,999		—		2,999
Municipal bonds		—		3,213		—		3,213
Asset-backed securities		—		598		—		598
Corporate bonds		—		6,886		—		6,886
Other assets		718		—		—		718
Total assets measured at fair value	$	718	$	47,651	$	—	$	48,369

Reconciliation of Financial Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs

The following tables provide a reconciliation of financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands). Transfers of instruments into and out of Level 3 are based on beginning of period values.

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Nine Months Ended June 30, 2012 Available-for- Sale Debt Securities
	Mortgage- Backed Securities			Asset- Backed Securities			Total
Balance at September 30, 2011	$	15		$	9		$	24
Transfers into Level 3		—			—			—
Transfers out of Level 3		(15	)		(9	)		(24	)
Total realized and unrealized gains (losses):
Included in other comprehensive (loss) income		—			—			—
Purchases, issuances, sales and settlements, net		—			—			—
Balance at June 30, 2012	$	—		$	—		$	—

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Other Assets - Additional Information (Detail)	3 Months Ended	9 Months Ended		3 Months Ended	6 Months Ended		12 Months Ended			3 Months Ended	12 Months Ended	3 Months Ended		9 Months Ended
	Mar. 31, 2013 USD ($)	Jun. 30, 2013 USD ($)	Jun. 30, 2012 USD ($)	Dec. 31, 2012 OctoPlus N.V. [Member] EUR (€)	Jun. 30, 2013 ViaCyte, Inc. [Member] USD ($)	Sep. 30, 2012 OctoPlus N.V. [Member] USD ($)	Dec. 31, 2010 Nexeon MedSystems, Inc. [Member] USD ($)	Jun. 30, 2013 Nexeon MedSystems, Inc. [Member] USD ($)	Jun. 30, 2013 ThermopeutiX, Inc. [Member] USD ($)	Dec. 31, 2012 Investment In Vessix Vascular, Inc. [Member] USD ($)	Sep. 30, 2010 Investment In Vessix Vascular, Inc. [Member] USD ($)	Jun. 30, 2013 Maximum [Member] USD ($)	Jun. 30, 2012 Maximum [Member] USD ($)	Jun. 30, 2013 Maximum [Member] USD ($)	Jun. 30, 2012 Maximum [Member] USD ($)	Jun. 30, 2013 Maximum [Member] ViaCyte, Inc. [Member]	Jun. 30, 2013 Maximum [Member] Nexeon MedSystems, Inc. [Member]	Jun. 30, 2013 Maximum [Member] ThermopeutiX, Inc. [Member]	Dec. 31, 2012 Maximum [Member] Investment In Vessix Vascular, Inc. [Member] USD ($)	Jun. 30, 2013 Maximum [Member] CeloNova BioSciences, Inc. [Member]
Other Assets [Line Items]
Investment cost, cost method					$ 5,200,000	$ 900,000		$ 6,500,000	$ 1,200,000
Offer price to purchase all issued and outstanding ordinary shares				€ 0.52
Gain on sale of investments	100,000
Impairment loss on other assets					4,700,000		4,100,000
Company's ownership percentage																5.00%	20.00%	20.00%		5.00%
Additional impairment loss other than temporary					100,000
Cost method of investment					400,000						2,500,000
Impairment loss on investment											2,400,000
Gain on sale of investment		1,460,000	172,000							1,200,000
Potential proceeds on achievement of future milestones																			4,200,000
Revenue recognized from activity with companies in which it had strategic investment												$ 100,000	$ 100,000	$ 100,000	$ 100,000

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Immaterial Restatement (Tables)

9 Months Ended

Jun. 30, 2013

Accounting Changes And Error Corrections [Abstract]

Effect of Impairment Charge Adjustment

Company has corrected the error associated with the historical balance sheet amounts included in this filing as follows (in thousands):

Condensed Consolidated Balance Sheet

	As Reported				As Restated
	September 30, 2012		Adjustment		September 30, 2012
Other assets, net	$	2,831	$	1,244	$	4,075
Total assets		103,075		1,244		104,319
Retained earnings		74,625		1,244		75,869
Total stockholders’ equity		93,744		1,244		94,988
Total liabilities and stockholders’ equity	$	103,075	$	1,244	$	104,319

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Fair Value Measurements - Reconciliation of Financial Assets Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jun. 30, 2012
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	$ 24
Transfers into Level 3
Transfers out of Level 3	(24)
Total realized and unrealized gains (losses):
Included in other comprehensive (loss) income
Purchases, issuances, sales and settlements, net
Mortgage-backed Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	15
Transfers into Level 3
Transfers out of Level 3	(15)
Total realized and unrealized gains (losses):
Included in other comprehensive (loss) income
Purchases, issuances, sales and settlements, net
Asset-backed Securities [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	9
Transfers into Level 3
Transfers out of Level 3	(9)
Total realized and unrealized gains (losses):
Included in other comprehensive (loss) income
Purchases, issuances, sales and settlements, net

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Intangible Assets - Estimated Amortization Expenses (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Goodwill And Intangible Assets Disclosure [Abstract]
Remainder of 2013	$ 186
2014	742
2015	731
2016	594
2017	183
2018	$ 137

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Stock-based Compensation (Tables)

9 Months Ended

Jun. 30, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Based Compensation Expenses

The Company’s stock-based compensation expenses were allocated to the following expense categories (in thousands):

	Three months ended June 30,				Nine months ended June 30,
	2013		2012		2013		2012
Product costs	$	7	$	5	$	17	$	31
Research and development		54		71		141		453
Selling, general and administrative		684		580		1,825		1,705
Total	$	745	$	656	$	1,983	$	2,189

Assumptions Used in Stock Option Plans

The assumptions used as inputs in the model were as follows: 

	Three months ended June 30,					Nine months ended June 30,
	2013		2012			2013			2012
Risk-free interest rates		N/A		0.7	%		0.6	%		0.8	%
Expected life (years)		N/A		4.8			4.8			4.8
Expected volatility		N/A		48.6	%		49.2	%		49.6	%
Dividend yield		N/A		0.0	%		0.0	%		0.0	%

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Investments - Sales of Available-for-Sale Securities (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Investments Debt And Equity Securities [Abstract]
Proceeds from sales	$ 8,507	$ 649	$ 34,487	$ 35,203
Gross realized gains	6	3	171	174
Gross realized losses	$ (4)	$ (1)	$ (4)	$ (2)

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Discontinued Operations (Tables)

9 Months Ended

Jun. 30, 2013

Discontinued Operations And Disposal Groups [Abstract]

Operating Results from Discontinued Operations

The following is a summary of the operating results of SurModics Pharmaceuticals discontinued operations for the three and nine months ended June 30, 2013 and 2012 (in thousands):

	Three months ended June 30,						Nine months ended June 30,
	2013			2012			2013			2012
Total revenue	$	—		$	—		$	—		$	5,311
Income from discontinued operations	$	136		$	—		$	1,151		$	2,309
Income tax provision		(183	)		(30	)		(516	)		(1,078	)
(Loss) income from discontinued operations, net of income taxes	$	(47	)	$	(30	)	$	635		$	1,231
Loss on sale of discontinued operations	$	—		$	(57	)	$	—		$	(1,691	)
Income tax (provision) benefit		—			(25	)		—			676
Loss on sale of discontinued operations, net of income taxes	$	—		$	(82	)	$	—		$	(1,015	)

Assets and Liabilities of Discontinued Operations

The major classes of assets and liabilities of discontinued operations as of June 30, 2013 and September 30, 2012 were as follows (in thousands):

	June 30, 2013		September 30, 2012
Accounts receivable, net	$	—	$	283
Other current assets		45		600
Current assets of discontinued operations		45		883
Total assets of discontinued operations	$	45	$	883
Other current liabilities payable	$	125	$	1,640
Current liabilities of discontinued operations		125		1,640
Total liabilities of discontinued operations	$	125	$	1,640

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Operating Activities:
Net income	$ 11,481	$ 7,491
Adjustments to reconcile net income to net cash provided by operating activities from continuing operations:
Income from discontinued operations	(635)	(1,231)
Loss on sale of discontinued operations		1,015
Depreciation and amortization	2,174	2,214
Stock-based compensation	1,983	2,189
Deferred taxes	34	(548)
Gain on sale of available-for-sale securities and strategic investments	(1,460)	(172)
Impairment loss on strategic investments	129	804
Amortization of premium on held-to-maturity securities		31
Reduction of tax benefit from stock-based compensation plans	252
Other		48
Change in operating assets and liabilities:
Accounts receivable	333	(793)
Inventories	314	(82)
Prepaids and other	(305)	(168)
Accounts payable and accrued liabilities	(876)	(3,445)
Income taxes	(1,520)	4,632
Net cash provided by operating activities from continuing operations	11,904	11,985
Investing Activities:
Purchases of property and equipment	(1,448)	(429)
Purchases of available-for-sale securities	(34,599)	(35,420)
Sales and maturities of available-for-sale securities	34,487	35,203
Maturities of held-to-maturity securities		3,000
Cash received from sale of strategic investments	2,286
Cash (transferred to) received from discontinued operations	(118)	28,304
Net cash provided by investing activities from continuing operations	608	30,658
Financing Activities:
Reduction of tax benefit from stock-based compensation plans	(252)
Issuance of common stock	273	280
Repurchase of common stock	(10,323)
Purchase of common stock to pay employee taxes	(39)	(272)
Net cash (used in) provided by financing activities from continuing operations	(10,341)	8
Net cash provided by continuing operations	2,171	42,651
Discontinued Operations:
Net cash used in operating activities	(118)	(1,513)
Net cash provided by investing activities		29,817
Net cash provided by (used in) financing activities	118	(28,304)
Net cash provided by discontinued operations
Net change in cash and cash equivalents	2,171	42,651
Cash and Cash Equivalents:
Beginning of period	15,540	23,217
End of period	17,711	65,868
Supplemental Information:
Cash paid for income taxes	5,257	389
Noncash transactions - acquisition of property and equipment on account	$ 19	$ 8

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Key Accounting Policies

9 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Key Accounting Policies

2. Key Accounting Policies

Revenue recognition

The Company recognizes revenue when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) shipment has occurred or delivery has occurred if the terms specify destination; (3) the sales price is fixed or determinable; and (4) collectability is reasonably assured. When there are additional performance requirements, revenue is recognized when all such requirements have been satisfied. Under revenue arrangements with multiple deliverables, the Company recognizes each separable deliverable as it is earned.

The Company derives its revenue from three primary sources: (1) royalties and license fees from licensing its proprietary drug delivery and surface modification technologies and in vitro diagnostic formats to customers; (2) the sale of reagent chemicals to licensees and the sale of stabilization products, antigens, substrates and surface coatings to the diagnostic and biomedical research markets; and (3) research and development fees generated on customer projects.

Royalties and license fees. The Company licenses technology to third parties and collects royalties. Royalty revenue is generated when a customer sells products incorporating the Company’s licensed technologies. Royalty revenue is recognized as licensees report it to the Company, and payment is typically submitted concurrently with the report. For stand-alone license agreements, up-front license fees are recognized over the term of the related licensing agreement. Minimum royalty fees are recognized in the period earned.

Revenue related to a performance milestone is recognized upon the achievement of the milestone, as defined in the respective agreements and provided the following conditions have been met:

• The milestone payment is non-refundable;

• The milestone involved a significant degree of risk, and was not reasonably assured at the inception of the arrangement;

• Accomplishment of the milestone involved substantial effort;

• The amount of the milestone payment is commensurate with the related effort and risk; and

• A reasonable amount of time passed between the initial license payment and the first and subsequent milestone payments.

If these conditions have not been met, the milestone payment is deferred and recognized over the term of the agreement.

Product sales. Product sales to third parties are recognized at the time of shipment, provided that an order has been received, the price is fixed or determinable, collectability of the resulting receivable is reasonably assured and returns can be reasonably estimated. The Company’s sales terms provide no right of return outside of the standard warranty policy. Payment terms are generally set at 30-45 days.

Research and development. The Company performs third party research and development activities, which are typically provided on a time and materials basis. Generally, revenue for research and development is recorded as performance progresses under the applicable contract.

New Accounting Pronouncements

No new accounting pronouncement issued or effective has had, or is expected to have, a material impact on the Company’s consolidated financial statements.

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Investments

9 Months Ended

Jun. 30, 2013

Investments Debt And Equity Securities [Abstract]

Investments

5. Investments

Investments consist principally of U.S. government and government agency obligations, mortgage-backed securities and corporate and municipal debt securities and are classified as available-for-sale at June 30, 2013 and September 30, 2012. Available-for-sale securities are reported at fair value with unrealized gains and losses, net of tax, excluded from the condensed consolidated statements of income and reported in the condensed consolidated statements of comprehensive income as well as a separate component of stockholders’ equity in the condensed consolidated balance sheets, except for other-than-temporary impairments, which are reported as a charge to current earnings. A loss would be recognized when there is an other-than-temporary impairment in the fair value of any individual security classified as available-for-sale, with the associated net unrealized loss reclassified out of accumulated other comprehensive income with a corresponding adjustment to other income (loss). This adjustment results in a new cost basis for the investment. Investments for which management has the intent and ability to hold to maturity are classified as held-to-maturity and reported at amortized cost. Interest earned on debt securities, including amortization of premiums and accretion of discounts, is included in other income (loss). Realized gains and losses from the sales of debt securities, which are included in other income (loss), are determined using the specific identification method.

The amortized cost, unrealized holding gains and losses, and fair value of available-for-sale securities as of June 30, 2013 and September 30, 2012 were as follows (in thousands):

	June 30, 2013
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
U.S. government and government agency obligations	$	28,260	$	15	$	(90	)	$	28,185
Mortgage-backed securities		5,180		92		(50	)		5,222
Municipal bonds		3,288		17		(6	)		3,299
Asset-backed securities		1,622		—		(8	)		1,614
Corporate bonds		4,115		12		(30	)		4,097
Total	$	42,465	$	136	$	(184	)	$	42,417
	September 30, 2012
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
U.S. government and government agency obligations	$	28,641	$	213	$	—		$	28,854
Mortgage-backed securities		2,896		129		(26	)		2,999
Municipal bonds		3,178		35		—			3,213
Asset-backed securities		613		—		(15	)		598
Corporate bonds		6,858		28		—			6,886
Total	$	42,186	$	405	$	(41	)	$	42,550

As of June 30, 2013, the Company concluded that the unrealized losses related to the available-for-sale securities shown above were not other-than-temporary as the Company does not have the intent to sell, nor is it more likely than not that the Company will be required to sell, before recovery of their amortized cost.

The amortized cost and fair value of investments by contractual maturity at June 30, 2013 were as follows (in thousands):

	Amortized Cost		Fair Value
Debt securities due within:
One year	$	10,712	$	10,723
One to five years		25,080		25,000
Five years or more		6,673		6,694
Total	$	42,465	$	42,417

The following table summarizes sales of available-for-sale securities (in thousands):

	Three months ended June  30,						Nine months ended June 30,
	2013			2012			2013			2012
Proceeds from sales	$	8,507		$	649		$	34,487		$	35,203
Gross realized gains	$	6		$	3		$	171		$	174
Gross realized losses	$	(4	)	$	(1	)	$	(4	)	$	(2	)

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Discontinued Operations

9 Months Ended

Jun. 30, 2013

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

3. Discontinued Operations

Beginning in the first quarter of fiscal 2012, the results of operations, cash flows, assets and liabilities of SurModics Pharmaceuticals, Inc. (“SurModics Pharmaceuticals”), which were previously reported in the Pharmaceuticals segment as a separate operating segment, are classified as discontinued operations.

On November 1, 2011, the Company entered into a definitive agreement (the “Purchase Agreement”) to sell substantially all of the assets of its wholly-owned subsidiary, SurModics Pharmaceuticals, to Evonik Degussa Corporation (“Evonik”). Under the terms of the Purchase Agreement, the entire portfolio of products and services of SurModics Pharmaceuticals, including the Company’s Current Good Manufacturing Practices (“cGMP”) development and manufacturing facility located in Birmingham, Alabama, were sold. The Company retained all accounts receivable and the majority of liabilities associated with SurModics Pharmaceuticals incurred prior to closing. The sale (the “Pharma Sale”) closed on November 17, 2011. The total consideration received from the Pharma Sale was $30.0 million in cash. As part of the Pharma Sale, SurModics agreed not to compete in the restricted business (as defined in the Purchase Agreement) for a period of five years and to indemnify Evonik against specified losses in connection with SurModics Pharmaceuticals, including certain contingent consideration obligations related to the acquisition by SurModics Pharmaceuticals of the portfolio of intellectual property and drug delivery projects from PR Pharmaceuticals, Inc. (“PR Pharma”). SurModics retained responsibility for repayment obligations related to an agreement with various governmental authorities associated with creation of jobs in Alabama. These obligations were settled or terminated in the second and third quarters of fiscal 2013 with payments totaling $325,000 repaid to the governmental authorities and a gain of $1.3 million recognized in the nine months ended June 30, 2013. The foregoing summary of the Purchase Agreement is qualified in its entirety by reference to the full text of the Purchase Agreement, which is attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on November 7, 2011. Refer to the Purchase Agreement for more details on the Pharma Sale.

The following is a summary of the operating results of SurModics Pharmaceuticals discontinued operations for the three and nine months ended June 30, 2013 and 2012 (in thousands):

	Three months ended June 30,						Nine months ended June 30,
	2013			2012			2013			2012
Total revenue	$	—		$	—		$	—		$	5,311
Income from discontinued operations	$	136		$	—		$	1,151		$	2,309
Income tax provision		(183	)		(30	)		(516	)		(1,078	)
(Loss) income from discontinued operations, net of income taxes	$	(47	)	$	(30	)	$	635		$	1,231
Loss on sale of discontinued operations	$	—		$	(57	)	$	—		$	(1,691	)
Income tax (provision) benefit		—			(25	)		—			676
Loss on sale of discontinued operations, net of income taxes	$	—		$	(82	)	$	—		$	(1,015	)

The major classes of assets and liabilities of discontinued operations as of June 30, 2013 and September 30, 2012 were as follows (in thousands):

	June 30,		September 30,
	2013		2012
Accounts receivable, net	$	—	$	283
Other current assets		45		600
Current assets of discontinued operations		45		883
Total assets of discontinued operations	$	45	$	883
Other current liabilities payable	$	125	$	1,640
Current liabilities of discontinued operations		125		1,640
Total liabilities of discontinued operations	$	125	$	1,640

As part of the Pharma Sale, the Company recorded a loss on the sale in the first nine months of fiscal 2012 of $1.7 million ($1.0 million net of income tax benefit), which was principally related to transaction closing costs. The loss is included in “Loss on sale of discontinued operations, net of income taxes” in the condensed consolidated statements of income.

On January 29, 2013, the Company entered into a settlement agreement with the City of Birmingham, Alabama to pay $325,000 in settlement of $1.5 million of the $1.7 million retained liability that existed at December 31, 2012, associated with financial incentives SurModics Pharmaceuticals received from various Alabama governmental authorities related to creation of jobs in Alabama. The Company paid the $325,000 and recorded a gain in discontinued operations of $1.2 million before taxes in the second quarter of fiscal 2013 related to this settlement.

On April 17, 2013, the Company entered into a termination agreement with the State of Alabama which resulted in the Company terminating its requirement to repay the $0.2 million retained liability related to creation of jobs in Alabama. The Company recorded a gain in discontinued operations of $0.2 million before taxes in the third quarter of fiscal 2013 related to this termination agreement.

The assets and liabilities of discontinued operations as of June 30, 2013 are based on accruals associated with the Southern Research Institute (“SRI”) litigation matter and a related deferred tax asset balance. See Note 15 for further discussion of the SRI litigation matter.

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Investments - Amortized Cost, Unrealized Holding Gains (Losses) and Fair Value of Available-for-Sale Securities (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Sep. 30, 2012
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 42,465	$ 42,186
Unrealized Gains	136	405
Unrealized Losses	(184)	(41)
Fair Value	42,417	42,550
U.S. government and government agency obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	28,260	28,641
Unrealized Gains	15	213
Unrealized Losses	(90)
Fair Value	28,185	28,854
Mortgage-backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	5,180	2,896
Unrealized Gains	92	129
Unrealized Losses	(50)	(26)
Fair Value	5,222	2,999
Municipal Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	3,288	3,178
Unrealized Gains	17	35
Unrealized Losses	(6)
Fair Value	3,299	3,213
Asset-backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,622	613
Unrealized Gains
Unrealized Losses	(8)	(15)
Fair Value	1,614	598
Corporate Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	4,115	6,858
Unrealized Gains	12	28
Unrealized Losses	(30)
Fair Value	$ 4,097	$ 6,886

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Inventories (Tables)

9 Months Ended

Jun. 30, 2013

Inventory Disclosure [Abstract]

Components of Inventory

Inventories consisted of the following components (in thousands):

	June 30, 2013		September 30, 2012
Raw materials	$	1,234	$	1,479
Finished products		1,976		2,045
Total	$	3,210	$	3,524

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Income Per Share Data (Tables)

9 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Components of Basic and Diluted Income Per Share Computation

The following table sets forth the components of the basic and diluted income per share computations (in thousands):

	Three months ended June 30,				Nine months ended June 30,
	2013		2012		2013		2012
Net income from continuing operations available to common shareholders	$	3,178	$	3,174	$	10,846	$	7,275
Basic weighted average shares outstanding		14,413		17,528		14,563		17,505
Dilutive effect of outstanding stock options, non-vested restricted stock, restricted stock units and performance shares		326		119		260		88
Diluted weighted average shares outstanding		14,739		17,647		14,823		17,593

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Discontinued Operations - Operating Results from Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Discontinued Operations And Disposal Groups [Abstract]
Total revenue				$ 5,311
Income from discontinued operations	136		1,151	2,309
Income tax provision	(183)	(30)	(516)	(1,078)
(Loss) income from discontinued operations, net of income taxes	(47)	(30)	635	1,231
Loss on sale of discontinued operations		(57)		(1,691)
Income tax (provision) benefit		(25)		676
Loss on sale of discontinued operations, net of income taxes		$ (82)		$ (1,015)

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Income (Loss) Per Share Data - Additional Information (Detail) In Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings Per Share [Abstract]
Weighted average diluted shares outstanding excluded outstanding stock options	0.3	0.7	0.5	0.7

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Goodwill - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Sep. 30, 2012
Goodwill And Intangible Assets Disclosure [Abstract]
Goodwill	$ 8,010	$ 8,010

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Other Assets - Other Assets Consist Principally of Strategic Investments (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Sep. 30, 2012
Schedule of Investments [Line Items]
Other assets, net	$ 3,145	$ 4,075
OctoPlus N.V. [Member]
Schedule of Investments [Line Items]
Other assets, net		718
Nexeon MedSystems, Inc. [Member]
Schedule of Investments [Line Items]
Other assets, net	29	29
CeloNova BioSciences, Inc. [Member]
Schedule of Investments [Line Items]
Other assets, net	1,500	1,500
ThermopeutiX, Inc. [Member]
Schedule of Investments [Line Items]
Other assets, net	1,185	1,185
ViaCyte, Inc. [Member]
Schedule of Investments [Line Items]
Other assets, net	429	559
Other [Member]
Schedule of Investments [Line Items]
Other assets, net	$ 2	$ 84

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Sep. 30, 2012
Statement Of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 40	$ 40
Series A Preferred stock, par value	$ 0.05	$ 0.05
Series A Preferred stock, shares authorized	450,000	450,000
Series A Preferred stock, shares issued
Series A Preferred stock, shares outstanding
Common stock, par value	$ 0.05	$ 0.05
Common stock, shares authorized	45,000,000	45,000,000
Common stock, shares issued	14,273,121	14,656,806
Common stock, shares outstanding	14,273,121	14,656,806

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Intangible Assets

9 Months Ended

Jun. 30, 2013

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets

8. Intangible Assets

Intangible assets consist principally of acquired patents and technology, customer relationships, licenses and trademarks. For the three months ended June 30, 2013 and 2012, the Company recorded amortization expense of $0.2 million for each period. For the nine months ended June 30, 2013 and 2012, the Company recorded amortization expense of $0.6 million for each period.

Intangible assets consisted of the following (in thousands):

	June 30, 2013
	Weighted Average Original Life (Years)		Gross Carrying Amount		Accumulated Amortization			Net
Definite-lived intangible assets:
Customer lists		9.0	$	4,857	$	(3,139	)	$	1,718
Core technology		8.0		530		(392	)		138
Patents and other		16.8		2,256		(818	)		1,438
Subtotal				7,643		(4,349	)		3,294
Unamortized intangible assets:
Trademarks				580		—			580
Total			$	8,223	$	(4,349	)	$	3,874

	September 30, 2012
	Weighted Average Original Life (Years)		Gross Carrying Amount		Accumulated Amortization			Net
Definite-lived intangible assets:
Customer lists		9.0	$	4,857	$	(2,734	)	$	2,123
Core technology		8.0		530		(343	)		187
Patents and other		16.8		2,256		(716	)		1,540
Subtotal				7,643		(3,793	)		3,850
Unamortized intangible assets:
Trademarks				580		—			580
Total			$	8,223	$	(3,793	)	$	4,430

Based on the intangible assets in service as of June 30, 2013, estimated amortization expense for each of the next five fiscal years is as follows (in thousands):

Remainder of 2013	$	186
2014		742
2015		731
2016		594
2017		183
2018		137

Future amortization amounts presented above are estimates. Actual future amortization expense may be different, as a result of future acquisitions, impairments, changes in amortization periods, or other factors.

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Condensed Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 3,131	$ 3,062	$ 11,481	$ 7,491
Other comprehensive income (loss), net of tax:
Unrealized holding (losses) gains on available-for-sale securities arising during the period	(158)	44	158	401
Reclassification adjustment for realized gains included in net income	(1)	(2)	(230)	(109)
Other comprehensive (loss) income	(159)	42	(72)	292
Comprehensive income	$ 2,972	$ 3,104	$ 11,409	$ 7,783

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Operating Segments - Segment Revenue, Operating Income from Continuing Operations and Depreciation and Amortization (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Segment Reporting Information [Line Items]
Total revenue	$ 14,289	$ 13,959	$ 41,835	$ 38,085
Operating income from continuing operations	4,238	4,793	13,244	11,704
Depreciation and amortization	728	734	2,174	2,214
Medical Device [Member]
Segment Reporting Information [Line Items]
Depreciation and amortization	319	355	947	1,073
In Vitro Diagnostics [Member]
Segment Reporting Information [Line Items]
Depreciation and amortization	216	193	649	582
Operating Segments [Member]
Segment Reporting Information [Line Items]
Operating income from continuing operations	6,138	6,243	18,781	16,472
Operating Segments [Member] | Medical Device [Member]
Segment Reporting Information [Line Items]
Total revenue	10,591	10,269	30,857	27,889
Operating income from continuing operations	5,223	5,173	15,848	13,226
Operating Segments [Member] | In Vitro Diagnostics [Member]
Segment Reporting Information [Line Items]
Total revenue	3,698	3,690	10,978	10,196
Operating income from continuing operations	915	1,070	2,933	3,246
Corporate [Member]
Segment Reporting Information [Line Items]
Operating income from continuing operations	(1,900)	(1,450)	(5,537)	(4,768)
Depreciation and amortization	$ 193	$ 186	$ 578	$ 559

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Sep. 30, 2012
Current Assets:
Cash and cash equivalents	$ 17,711	$ 15,540
Available-for-sale securities	10,723	14,117
Accounts receivable, net of allowance for doubtful accounts of $40 as of June 30, 2013 and September 30, 2012, respectively	4,736	5,069
Inventories	3,210	3,524
Deferred tax assets	188	219
Prepaids and other	1,720	603
Current assets of discontinued operations	45	883
Total Current Assets	38,333	39,955
Property and equipment, net	12,870	13,610
Available-for-sale securities	31,694	28,433
Deferred tax assets	6,000	5,806
Intangible assets, net	3,874	4,430
Goodwill	8,010	8,010
Other assets, net	3,145	4,075
Total Assets	103,926	104,319
Current Liabilities:
Accounts payable	736	1,657
Accrued liabilities:
Compensation	1,933	2,319
Accrued other	872	1,066
Deferred revenue	44	47
Other current liabilities	89	170
Current liabilities of discontinued operations	125	1,640
Total Current Liabilities	3,799	6,899
Deferred revenue, less current portion	171	185
Other long-term liabilities	1,917	2,247
Total Liabilities	5,887	9,331
Commitments and Contingencies (Note 15)
Stockholders' Equity:
Series A Preferred stock- $.05 par value, 450,000 shares authorized; no shares issued and outstanding
Common stock- $.05 par value, 45,000,000 shares authorized; 14,273,121 and 14,656,806 shares issued and outstanding, respectively	714	733
Additional paid-in capital	10,007	18,346
Accumulated other comprehensive (loss) income	(32)	40
Retained earnings	87,350	75,869
Total Stockholders' Equity	98,039	94,988
Total Liabilities and Stockholders' Equity	$ 103,926	$ 104,319

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Stock-Based Compensation - Stock Based Compensation Expenses (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expenses	$ 745	$ 656	$ 1,983	$ 2,189
Product costs [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expenses	7	5	17	31
Research and development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expenses	54	71	141	453
Selling, general and administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expenses	$ 684	$ 580	$ 1,825	$ 1,705

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Other Assets (Tables)

9 Months Ended

Jun. 30, 2013

Investments All Other Investments [Abstract]

Other Assets Consist Principally of Strategic Investment

Other assets consist principally of strategic investments as follows (in thousands):

	June 30,		September 30,
	2013		2012
OctoPlus N.V.	$	—	$	718
Nexeon MedSystems, Inc.		29		29
CeloNova BioSciences, Inc.		1,500		1,500
ThermopeutiX, Inc.		1,185		1,185
ViaCyte, Inc.		429		559
Other		2		84
Other assets, net	$	3,145	$	4,075

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Subsequent Event

9 Months Ended

Jun. 30, 2013

Subsequent Events [Abstract]

Subsequent Event

17. Subsequent Event

On July 29, 2013, the Company’s Board of Directors authorized the repurchase of up to $20.0 million of the Company’s outstanding common stock through open-market purchases, private transactions, block trades, accelerated share repurchase transactions, tender offers, or by any combination of such methods. This authorization does not have a fixed expiration date.

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Inventories - Components of Inventories (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Sep. 30, 2012
Inventory Disclosure [Abstract]
Raw materials	$ 1,234	$ 1,479
Finished products	1,976	2,045
Total	$ 3,210	$ 3,524

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Income (Loss) Per Share Data - Components of Basic and Diluted Income Per Share Computation (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings Per Share [Abstract]
Net income from continuing operations available to common shareholders	$ 3,178	$ 3,174	$ 10,846	$ 7,275
Basic weighted average shares outstanding	14,413	17,528	14,563	17,505
Dilutive effect of outstanding stock options, non-vested restricted stock, restricted stock units and performance shares	326	119	260	88
Diluted weighted average shares outstanding	14,739	17,647	14,823	17,593

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Fair Value Measurements - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (Assets and Liabilities Measured at Fair Value on a Recurring Basis [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Sep. 30, 2012
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value	$ 49,319	$ 48,369
Quoted Prices in Active Markets for Identical Instruments (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value		718
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value	49,319	47,651
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value
Cash Equivalents [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value	6,902	5,101
Cash Equivalents [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value
Cash Equivalents [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value	6,902	5,101
Cash Equivalents [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value
Available-for-sale debt securities [Member] | U.S. government and government agency obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value	28,185	28,854
Available-for-sale debt securities [Member] | Mortgage-backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value	5,222	2,999
Available-for-sale debt securities [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value	3,299	3,213
Available-for-sale debt securities [Member] | Asset-backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value	1,614	598
Available-for-sale debt securities [Member] | Corporate Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value	4,097	6,886
Available-for-sale debt securities [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) [Member] | U.S. government and government agency obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value
Available-for-sale debt securities [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) [Member] | Mortgage-backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value
Available-for-sale debt securities [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value
Available-for-sale debt securities [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) [Member] | Asset-backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value
Available-for-sale debt securities [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) [Member] | Corporate Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value
Available-for-sale debt securities [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. government and government agency obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value	28,185	28,854
Available-for-sale debt securities [Member] | Significant Other Observable Inputs (Level 2) [Member] | Mortgage-backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value	5,222	2,999
Available-for-sale debt securities [Member] | Significant Other Observable Inputs (Level 2) [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value	3,299	3,213
Available-for-sale debt securities [Member] | Significant Other Observable Inputs (Level 2) [Member] | Asset-backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value	1,614	598
Available-for-sale debt securities [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value	4,097	6,886
Available-for-sale debt securities [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. government and government agency obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value
Available-for-sale debt securities [Member] | Significant Unobservable Inputs (Level 3) [Member] | Mortgage-backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value
Available-for-sale debt securities [Member] | Significant Unobservable Inputs (Level 3) [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value
Available-for-sale debt securities [Member] | Significant Unobservable Inputs (Level 3) [Member] | Asset-backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value
Available-for-sale debt securities [Member] | Significant Unobservable Inputs (Level 3) [Member] | Corporate Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value
Other [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value		718
Other [Member] | Quoted Prices in Active Markets for Identical Instruments (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value		718
Other [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets measured at fair value

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Key Accounting Policies - Additional Information (Detail)	Jun. 30, 2013
Accounting Policies [Abstract]
Maximum payment terms on product sales	45 days
Minimum payment terms on product sales	30 days

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Discontinued Operations - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended	9 Months Ended			1 Months Ended	3 Months Ended		9 Months Ended		0 Months Ended
	Nov. 17, 2011	Jun. 30, 2012	Jun. 30, 2012	Jun. 30, 2013	Sep. 30, 2012	Jan. 29, 2013 Government Authorities in Alabama [Member]	Jun. 30, 2013 Government Authorities in Alabama [Member]	Mar. 31, 2013 Government Authorities in Alabama [Member]	Jun. 30, 2013 Government Authorities in Alabama [Member]	Dec. 31, 2012 Government Authorities in Alabama [Member]	Apr. 17, 2013 Termination Agreement [Member]
Discontinued Operations [Line Items]
Total consideration received from the Pharma Sale	$ 30,000,000
Restricted time period for competition	5 years
Payment on settlement of retained liability						325,000	325,000	325,000
Gain (Loss) on sale of discontinued operations, net of income taxes		(82,000)	(1,015,000)						1,300,000
Gain (Loss) on sale of discontinued operations, before income taxes		(57,000)	(1,691,000)					1,200,000
Retained liability settled amount						1,500,000					200,000
Gain in discontinued operations											200,000
Current liabilities of discontinued operations				$ 125,000	$ 1,640,000					$ 1,700

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Other Assets

9 Months Ended

Jun. 30, 2013

Investments All Other Investments [Abstract]

Other Assets

7. Other Assets

Other assets consist principally of strategic investments as follows (in thousands):

	June 30,		September 30,
	2013		2012
OctoPlus N.V.	$	—	$	718
Nexeon MedSystems, Inc.		29		29
CeloNova BioSciences, Inc.		1,500		1,500
ThermopeutiX, Inc.		1,185		1,185
ViaCyte, Inc.		429		559
Other		2		84
Other assets, net	$	3,145	$	4,075

The Company accounts for all of its strategic investments under the cost method as of June 30, 2013. The Company accounted for its investment in OctoPlus common stock, whose shares were traded on the Euronext Amsterdam Stock Exchange, as an available-for-sale investment. Available-for-sale investments are reported at fair value with unrealized gains and losses, net of tax, reported in the condensed consolidated statements of comprehensive income as well as a separate component of stockholders’ equity in the condensed consolidated balance sheets, except for other-than-temporary impairments, which are reported as a charge to current earnings, recorded in the other income section of the condensed consolidated statements of income, and which result in a new cost basis for the investment. The cost basis in the Company’s investment in OctoPlus was $0.9 million as of September 30, 2012. In October 2012 OctoPlus received a tender offer from Dr. Reddy’s Laboratories Ltd. to purchase all issued and outstanding ordinary shares of OctoPlus at an offer price of €0.52 per share. In the second quarter of fiscal 2013, the Company sold its investment and recorded a pre-tax gain of approximately $0.1 million.

The Company has invested a total of $6.5 million in Nexeon MedSystems, Inc. (“Nexeon”), a privately-held West Virginia-based medical technology company, commencing in July 2007 and has recognized losses under the equity method of accounting and a $4.1 million impairment loss in fiscal 2010. Currently, the Company accounts for its investment in Nexeon under the cost method of accounting as the Company’s ownership is less than 20%, and the Company does not exert significant influence over Nexeon’s operating or financial activities.

In February 2011, Nexeon’s stent technology was acquired by CeloNova BioSciences, Inc. (“CeloNova”). Prior to the acquisition by CeloNova, Nexeon created a wholly-owned subsidiary, Nexeon Stent, to hold the company’s stent-related assets. Nexeon distributed to its stockholders the Nexeon Stent stock which was exchanged for Series B-1 preferred shares of CeloNova. CeloNova is a privately-held Texas-based medical technology company that is marketing a variety of medical products. The Company’s investment in CeloNova, which is accounted for under the cost method, represents less than a 5% ownership interest. The Company does not exert significant influence over CeloNova’s operating or financial activities.

The Company has invested a total of $1.2 million in ThermopeutiX, Inc. (“ThermopeutiX”), a California-based early stage company developing novel medical devices for the treatment of vascular and neurovascular diseases. In addition to the investment, SurModics has licensed its hydrophilic and hemocompatible coating technologies to ThermopeutiX for use with its devices. The Company’s investment in ThermopeutiX, which is accounted for under the cost method, represents an ownership interest of less than 20%. The Company does not exert significant influence over ThermopeutiX’s operating or financial activities.

The Company has invested a total of $5.2 million in ViaCyte, Inc. (“ViaCyte”), a privately-held California-based biotechnology firm that is developing a unique treatment for diabetes using coated islet cells, the cells that produce insulin in the human body. In fiscal 2006, the Company determined that its investment in ViaCyte was impaired and that the impairment was other than temporary. Accordingly, the Company recorded an impairment loss of $4.7 million. In the second quarter of fiscal 2013, the Company recorded an additional other-than-temporary impairment loss on this investment totaling $0.1 million based on a current financing round and market valuations. The balance of the investment of $0.4 million, which is accounted for under the cost method, represents less than a 5% ownership interest. The Company does not exert significant influence over ViaCyte’s operating or financial activities.

The Company has invested a total of $2.5 million in Vessix Vascular, Inc. (“Vessix”) and recognized an impairment loss on this investment totaling $2.4 million in fiscal 2010, based on market valuations and a pending financing round for Vessix. Vessix was purchased by Boston Scientific Corporation in November 2012. The Company recorded a gain of approximately $1.2 million in other income, net, on the sale of this investment in the first quarter of fiscal 2013. Total potential maximum additional proceeds of $4.2 million may be received in the remainder of fiscal 2013 through fiscal 2017 depending on Vessix’s achievement of future milestones. No amounts have been recorded associated with these future milestones given the level of uncertainty that exists. Any potential additional income will be recognized once the milestones are achieved.

The Company recognized revenue of less than $0.1 million for the three months ended June 30, 2013 and 2012 and for the nine months ended June 30, 2012, from activity with companies in which it had a strategic investment. The Company recognized revenue of $0.1 million for the nine months ended June 30, 2013, from activity with companies in which it had a strategic investment.

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Subsequent Event - Additional Information (Detail) (Subsequent Event, Repurchase of Equity Units [Member], USD $) In Millions, unless otherwise specified	1 Months Ended
	Jul. 29, 2013
Subsequent Event | Repurchase of Equity Units [Member]
Subsequent Event [Line Items]
Authorized repurchase of outstanding common stock	$ 20.0

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Intangible Assets (Tables)

9 Months Ended

Jun. 30, 2013

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible assets consisted of the following (in thousands):

	June 30, 2013
	Weighted Average Original Life (Years)		Gross Carrying Amount		Accumulated Amortization			Net
Definite-lived intangible assets:
Customer lists		9.0	$	4,857	$	(3,139	)	$	1,718
Core technology		8.0		530		(392	)		138
Patents and other		16.8		2,256		(818	)		1,438
Subtotal				7,643		(4,349	)		3,294
Unamortized intangible assets:
Trademarks				580		—			580
Total			$	8,223	$	(4,349	)	$	3,874

	September 30, 2012
	Weighted Average Original Life (Years)		Gross Carrying Amount		Accumulated Amortization			Net
Definite-lived intangible assets:
Customer lists		9.0	$	4,857	$	(2,734	)	$	2,123
Core technology		8.0		530		(343	)		187
Patents and other		16.8		2,256		(716	)		1,540
Subtotal				7,643		(3,793	)		3,850
Unamortized intangible assets:
Trademarks				580		—			580
Total			$	8,223	$	(3,793	)	$	4,430

Estimated Amortization Expenses

Based on the intangible assets in service as of June 30, 2013, estimated amortization expense for each of the next five fiscal years is as follows (in thousands):

Remainder of 2013	$	186
2014		742
2015		731
2016		594
2017		183
2018		137

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Investments - Amortized Cost and Fair Value of Investments by Contractual Maturity (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Amortized cost
Debt securities due within one year	$ 10,712
Debt securities due within one to five years	25,080
Debt securities due within five years or more	6,673
Total	42,465
Fair value
Debt securities due within one year	10,723
Debt securities due within one to five years	25,000
Debt securities due within five years or more	6,694
Total	$ 42,417

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Stock-based Compensation

9 Months Ended

Jun. 30, 2013

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-based Compensation

10. Stock-based Compensation

The Company has stock-based compensation plans under which it grants stock options, restricted stock awards, performance share awards and restricted stock units. Accounting guidance requires all share-based payments to be recognized as an operating expense, based on their fair values, over the requisite service period. The Company’s stock-based compensation expenses were allocated to the following expense categories (in thousands):

	Three months ended				Nine months ended
	June 30,				June 30,
	2013		2012		2013		2012
Product costs	$	7	$	5	$	17	$	31
Research and development		54		71		141		453
Selling, general and administrative		684		580		1,825		1,705
Total	$	745	$	656	$	1,983	$	2,189

As of June 30, 2013, approximately $4.0 million of total unrecognized compensation costs related to non-vested awards is expected to be recognized over a weighted average period of approximately 2.7 years. The unrecognized compensation costs above include $1.3 million based on payout levels associated with performance share awards that are currently anticipated to be fully expensed because the performance conditions are expected to be met at or above target levels.

Stock Option Awards

The Company uses the Black-Scholes option pricing model to determine the weighted average grant date fair value of stock options granted. No stock options were granted during the three months ended June 30, 2013. The weighted average per share fair value of stock options granted during the three months ended June 30, 2012 was $5.94. The weighted average per share fair values of stock options granted during the nine months ended June 30, 2013 and 2012 were $8.69 and $5.24, respectively. The assumptions used as inputs in the model were as follows:

	Three months ended					Nine months ended
	June 30,					June 30,
	2013		2012			2013			2012
Risk-free interest rates		N/A		0.7	%		0.6	%		0.8	%
Expected life (years)		N/A		4.8			4.8			4.8
Expected volatility		N/A		48.6	%		49.2	%		49.6	%
Dividend yield		N/A		0.0	%		0.0	%		0.0	%

The risk-free interest rate assumption was based on the U.S. Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award. The expected life of options granted is determined based on the Company’s experience. Expected volatility is based on the Company’s stock price movement over a period approximating the expected term. Based on management’s judgment, dividend rates are expected to be zero for the expected life of the options. The Company also estimates forfeitures of options granted, which are based on historical experience.

Non-qualified stock options are granted at fair market value on the grant date. Non-qualified stock options expire in seven to ten years or upon termination of employment or service as a Board member. Non-qualified stock options granted generally become exercisable with respect to 25% of the shares on each of the first four anniversaries following the grant date.

The total pre-tax intrinsic value of options exercised during the three and nine months ended June 30, 2013 was $26,000 and $51,000, respectively. There were no stock options exercised during the three months ended June 30, 2012. The total pre-tax intrinsic value of options exercised during the nine months ended June 30, 2012 was $49,000. The intrinsic value represents the difference between the exercise price and the fair market value of the Company’s common stock on the last day of the respective fiscal period end.

Restricted Stock Awards

The Company has entered into restricted stock agreements with certain key employees, covering the issuance of common stock (“Restricted Stock”). Under accounting guidance, these shares are considered to be non-vested shares. The Restricted Stock is released to the key employees if they are employed by the Company at the end of the vesting period. Compensation has been recognized for the estimated fair value of the common shares and is being charged to income over the vesting term. The stock-based compensation table above includes Restricted Stock expenses recognized related to these awards, which totaled less than $0.1 million during the three and nine months ended June 30, 2013 and less than $0.1 million and $0.2 million during the three and nine months ended June 30, 2012, respectively.

Performance Share Awards

The Company has entered into performance share agreements with certain key employees, covering the issuance of common stock (“Performance Shares”). The Performance Shares vest upon the achievement of all or a portion of certain performance objectives, which must be achieved during the performance period. Performance objectives selected by the Organization and Compensation Committee of the Board of Directors (the “Committee”) were cumulative earnings per share and cumulative revenue for the three-year performance periods for fiscal 2011 beginning on October 1, 2010 and ending on September 30, 2013 (68,533 shares at target), for fiscal 2012 beginning on October 1, 2011 and ending on September 30, 2014 (62,497 shares at target), and for fiscal 2013 beginning on October 1, 2012 and ending on September 30, 2015 (42,753 shares at target). Assuming that the minimum performance level is attained, the number of shares that may actually vest will vary based on performance from 20% (minimum) to 200% (maximum). Shares will be issued to participants as soon as practicable following the end of the performance periods subject to Committee approval and verification of results. The compensation cost related to the number of shares to be granted under each performance period is fixed on the grant date, which is the date the performance period begins. Compensation is recognized in each period based on management’s best estimate of the achievement level of the specified performance objectives for Performance Shares. For the three and nine months ended June 30, 2013, the Company recognized expenses of $0.3 million and $0.9 million, respectively, related to probable achievement of performance objectives for Performance Shares. The Company recognized expenses of $0.4 million and $0.7 million related to probable achievement of performance objectives for Performance Shares for the three and nine months ended June 30, 2012, respectively. The stock-based compensation table above includes the Performance Shares expenses.

1999 Employee Stock Purchase Plan

Under the 1999 Employee Stock Purchase Plan (“Stock Purchase Plan”), the Company is authorized to issue up to 400,000 shares of common stock. All full-time and part-time employees can choose to have up to 10% of their annual compensation withheld, with a limit of $25,000, to purchase the Company’s common stock at purchase prices defined within the provisions of the Stock Purchase Plan. As of June 30, 2013 and 2012, there were $0.1 million and less than $0.1 million, respectively, of employee contributions in each period included in accrued liabilities in the condensed consolidated balance sheets. Stock compensation expense recognized related to the Stock Purchase Plan for the three months ended June 30, 2013 and 2012 totaled less than $0.1 million in each period. Stock compensation expense recognized related to the Stock Purchase Plan for the nine months ended June 30, 2013 and 2012 totaled $0.1 million for each period. The stock-based compensation table above includes the Stock Purchase Plan expenses.

Restricted Stock Units

On December 12, 2012, the Company awarded 11,776 restricted stock units (“RSU”) under the 2009 Equity Incentive Plan to directors. The RSU awards vest annually at a rate of 33%. RSU awards are not considered issued or outstanding common stock of the Company until they vest. The estimated fair value of the RSU awards was calculated based on the closing market price of SurModics’ common stock on the date of grant. Compensation has been recognized for the estimated fair value of the common shares and is being charged to income over the vesting term. Directors can also elect to receive their annual fees for services to the Board in RSUs. Certain directors elected this option beginning on January 1, 2013 which has resulted in 3,994 units issued with a total value of $92,000. These RSUs are fully vested. The stock-based compensation table above includes RSU expenses recognized related to these awards, which totaled less than $0.1 million and $0.1 million for the three and nine months ended June 30, 2013, respectively.

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Inventories

9 Months Ended

Jun. 30, 2013

Inventory Disclosure [Abstract]

Inventories

6. Inventories

Inventories are principally stated at the lower of cost or market using the specific identification method and include direct labor, materials and overhead. Inventories consisted of the following components (in thousands):

	June 30, 2013		September 30, 2012
Raw materials	$	1,234	$	1,479
Finished products		1,976		2,045
Total	$	3,210	$	3,524

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Basis of Presentation

9 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Basis of Presentation

1. Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.”) (“GAAP”) and, in the opinion of management, reflect all adjustments, consisting solely of normal recurring adjustments, needed to fairly present the financial results of SurModics, Inc. and subsidiaries (“SurModics” or the “Company”) for the periods presented. These financial statements include some amounts that are based on management’s best estimates and judgments. These estimates may be adjusted as more information becomes available, and any adjustment could be significant. The impact of any change in estimates is included in the determination of earnings in the period in which the change in estimate is identified. The results of operations for the three and nine months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the entire 2013 fiscal year.

In accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), the Company has omitted footnote disclosures that would substantially duplicate the disclosures contained in the audited financial statements of the Company. These unaudited condensed consolidated financial statements should be read together with the audited consolidated financial statements for the fiscal year ended September 30, 2012, and footnotes thereto included in the Company’s Form 10-K as filed with the SEC on December 14, 2012.

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Stock-Based Compensation - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended						1 Months Ended	3 Months Ended	1 Months Ended	3 Months Ended		9 Months Ended			3 Months Ended	9 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Fiscal 2011 beginning on October 1, 2010 and ending on September 30, 2013 [Member]	Jun. 30, 2013 Fiscal 2012 beginning on October 1, 2011 and ending on September 30, 2014 [Member]	Jun. 30, 2013 Fiscal 2013 beginning on October 1, 2012 and ending on September 30, 2015 [Member]	Jun. 30, 2013 Non-qualified stock options granted subsequent to April 2008 [Member]	Dec. 12, 2012 Restricted Stock Units (RSUs) [Member]	Jun. 30, 2013 Restricted Stock Units (RSUs) [Member]	Sep. 30, 2000 Maximum [Member]	Jun. 30, 2013 Maximum [Member]	Jun. 30, 2012 Maximum [Member]	Jun. 30, 2013 Maximum [Member]	Jun. 30, 2012 Maximum [Member]	Jun. 30, 2013 Maximum [Member] Nonqualified Stock Options [Member]	Jun. 30, 2013 Minimum [Member]	Jun. 30, 2013 Minimum [Member] Nonqualified Stock Options [Member]
Stock Based Compensation Activity [Line Items]
Unrecognized compensation costs related to non-vested awards	$ 4,000,000		$ 4,000,000
Weighted average period for recognition of compensation costs related to non-vested awards			2 years 8 months 12 days
Performance Share Awards Fully Expensed	1,300,000		1,300,000
Weighted average per share fair value of stock options		$ 5.94	$ 8.69	$ 5.24
Stock option granted	0
Dividend yield		0.00%	0.00%	0.00%
Stock option expiration term upon expiration of employment or service																10 years		7 years
Percentage of non-qualified stock options on each of first four anniversaries								25.00%
Total pre-tax intrinsic value of options exercised	26,000		51,000	49,000
Stock option exercised		0
Restricted stock expenses												100,000	100,000	100,000	200,000
Expenses recognized related to Performance Shares	300,000	400,000	900,000	700,000
Performance Shares, time period			3 years
Performance period start date					Oct. 01, 2010	Oct. 01, 2011	Oct. 01, 2012
Performance period end date					Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2015
Targeted number of shares to be vested upon achievement of all or portion of performance objectives during the performance period					68,533	62,497	42,753
Performance share awards, estimated vesting percentage												200.00%					20.00%
Common stock authorized, shares											400,000
Annual compensation withheld											10.00%
Annual compensation withheld, maximum limit											25,000
Employee contributions	100,000		100,000										100,000		100,000
Stock compensation expenses recognized			100,000	100,000								100,000	100,000
Number of restricted stock units awarded									11,776	3,994
Number of restricted stock issued value										92,000
RSU award vest each year									33.00%
RSU expenses			$ 100,000									$ 100,000

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Intangible Assets - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Goodwill And Intangible Assets Disclosure [Abstract]
Amortization expense	$ 0.2	$ 0.2	$ 0.6	$ 0.6

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Operating Segments (Tables)

9 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Segment Revenue, Operating Income from Continuing Operations and Depreciation and Amortization

The tables below present segment revenue, operating income from continuing operations and depreciation and amortization, as follows (in thousands):

	Three months ended June 30,						Nine months ended June 30,
	2013			2012			2013			2012
Revenue:
Medical Device	$	10,591		$	10,269		$	30,857		$	27,889
In Vitro Diagnostics		3,698			3,690			10,978			10,196
Total revenue	$	14,289		$	13,959		$	41,835		$	38,085
Operating income (loss):
Medical Device	$	5,223		$	5,173		$	15,848		$	13,226
In Vitro Diagnostics		915			1,070			2,933			3,246
Total segment operating income		6,138			6,243			18,781			16,472
Corporate		(1,900	)		(1,450	)		(5,537	)		(4,768	)
Total operating income from continuing operations	$	4,238		$	4,793		$	13,244		$	11,704
Depreciation and amortization:
Medical Device	$	319		$	355		$	947		$	1,073
In Vitro Diagnostics		216			193			649			582
Corporate		193			186			578			559
Total depreciation and amortization	$	728		$	734		$	2,174		$	2,214

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Commitments and Contingencies - Additional Information (Detail) (USD $)	9 Months Ended	3 Months Ended	9 Months Ended
	Jun. 30, 2013	Sep. 30, 2013 Subsequent Event	Sep. 30, 2013 Subsequent Event
Commitments and Contingencies [Line Items]
Accrual in discontinued operations	$ 100,000
Unreimbursed legal expenses	1,300,000
Payment received on unreimbursed legal expenses		1,000,000
Reimbursement of legal fee,Percentage			75.00%
Additional shares of common stock to stockholders	480,059
Additional maximum amount payable on successful achievement of specified milestones to sellers of PR Pharma	$ 2,500,000
Indemnification period	5 years

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Amounts Reclassified Out of Accumulated Other Comprehensive Income

9 Months Ended

Jun. 30, 2013

Equity [Abstract]

Amounts Reclassified Out of Accumulated Other Comprehensive Income

13. Amounts Reclassified Out of Accumulated Other Comprehensive Income

Accounting guidance was updated in February 2013 adding new disclosure for items reclassified out of accumulated other comprehensive income (“AOCI”). The new disclosure requirements are effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2012. Early adoption of the guidance is permitted and the Company elected to early adopt this guidance.

Amounts reclassified out of AOCI totaled $0.3 million on a pre-tax basis for the nine months ended June 30, 2013. The amounts reclassified out of AOCI are associated with unrealized gains on available-for-sale securities that were realized on the sale of the securities and are presented in other income, net in the condensed consolidated statements of income.

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Goodwill

9 Months Ended

Jun. 30, 2013

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill

9. Goodwill

Goodwill represents the excess of the cost of an acquired entity over the fair value assigned to the assets purchased and liabilities assumed in connection with a company’s acquisition. Goodwill is not amortized but is subject, at a minimum, to annual tests for impairment in accordance with accounting guidance for goodwill. The carrying amount of goodwill is evaluated annually, and between annual evaluations if events occur or circumstances change indicating that the carrying amount of goodwill may be impaired.

The $8.0 million of goodwill at June 30, 2013 and September 30, 2012 is related to the In Vitro Diagnostics reporting unit and represents the gross value from the acquisition of BioFX Laboratories, Inc. in 2007. The goodwill was not impaired based on the outcome of the fiscal 2012 annual impairment test, and there have been no events or circumstances that have occurred in fiscal 2013 to indicate that the goodwill may be impaired.

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Immaterial Restatement

9 Months Ended

Jun. 30, 2013

Accounting Changes And Error Corrections [Abstract]

Immaterial Restatement

16. Immaterial Restatement

The accompanying unaudited interim condensed consolidated financial statements reflect a $1.2 million adjustment to increase the carrying value of the Company’s strategic investments, included in other assets, net and stockholders’ equity in the prior period condensed consolidated balance sheet. This adjustment corrected and reduced an other-than-temporary impairment charge recognized in the fiscal year ended September 30, 2010, which was previously recorded during the fiscal fourth quarter ended September 30, 2010. The original other-than-temporary impairment charge did not sufficiently consider information available to the Company prior to the issuance of the Company’s financial statements for the fiscal year ended September 30, 2010. Specifically, the impact of consideration to be received from the proposed sale of a subsidiary of a strategic investment to an unrelated third party had not been considered in evaluating the value of the strategic investment. Management evaluated the amount and nature of the adjustment and concluded that it was not material to either the previously reported annual or quarterly financial statement results of operations, total assets or stockholders’ equity. Nonetheless, the Company has corrected the error associated with the historical balance sheet amounts included in this filing as follows (in thousands):

Condensed Consolidated Balance Sheet

	As Reported				As Restated
	September 30, 2012		Adjustment		September 30, 2012
Other assets, net	$	2,831	$	1,244	$	4,075
Total assets		103,075		1,244		104,319
Retained earnings		74,625		1,244		75,869
Total stockholders’ equity		93,744		1,244		94,988
Total liabilities and stockholders’ equity	$	103,075	$	1,244	$	104,319

There was no impact on the condensed consolidated statements of income for any of the prior periods presented in this filing. The Company also expects to correct previously presented historical financial statements in future filings, including the annual financial statements to be included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2013.

The condensed consolidated balance sheet above details the effect of the other-than-temporary impairment charge adjustment on previously presented historical financial statement amounts (in thousands) appearing in the Company’s 2012 Annual Report on Form 10-K.

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Operating Segments

9 Months Ended

Jun. 30, 2013

Segment Reporting [Abstract]

Operating Segments

14. Operating Segments

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, who is the Company’s Chief Executive Officer, in deciding how to allocate resources and in assessing performance. The Company is organized into two segments as follows: (1) the Medical Device unit, which is comprised of surface modification coating technologies to improve access, deliverability, and predictable deployment of medical devices, as well as drug delivery coating technologies to provide site-specific drug delivery from the surface of a medical device, with end markets that include coronary, peripheral, and neuro-vascular, and urology, among others, and (2) the In Vitro Diagnostics unit, which consists of component products and technologies for diagnostic test kits and biomedical research applications, with products that include protein stabilization reagents, substrates, antigens and surface coatings.

The tables below present segment revenue, operating income from continuing operations and depreciation and amortization, as follows (in thousands):

	Three months ended						Nine months ended
	June 30,						June 30,
	2013			2012			2013			2012
Revenue:
Medical Device	$	10,591		$	10,269		$	30,857		$	27,889
In Vitro Diagnostics		3,698			3,690			10,978			10,196
Total revenue	$	14,289		$	13,959		$	41,835		$	38,085
Operating income (loss):
Medical Device	$	5,223		$	5,173		$	15,848		$	13,226
In Vitro Diagnostics		915			1,070			2,933			3,246
Total segment operating income		6,138			6,243			18,781			16,472
Corporate		(1,900	)		(1,450	)		(5,537	)		(4,768	)
Total operating income from continuing operations	$	4,238		$	4,793		$	13,244		$	11,704
Depreciation and amortization:
Medical Device	$	319		$	355		$	947		$	1,073
In Vitro Diagnostics		216			193			649			582
Corporate		193			186			578			559
Total depreciation and amortization	$	728		$	734		$	2,174		$	2,214

The Corporate category includes expenses for administrative corporate functions, such as executive, corporate accounting, legal, human resources and Board of Directors related, that have not been fully allocated to the Medical Device and In Vitro Diagnostics segments. Corporate also includes expenses, such as litigation, which are not specific to a segment and thus not allocated to the segments.

Asset information by segment is not presented because the Company does not provide its chief operating decision maker assets by segment, as the data is not readily available.

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Document and Entity Information	9 Months Ended
	Jun. 30, 2013	Aug. 01, 2013
Document Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3
Trading Symbol	SRDX
Entity Registrant Name	SURMODICS INC
Entity Central Index Key	0000924717
Current Fiscal Year End Date	--09-30
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		14,273,121

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Commitments and Contingencies

9 Months Ended

Jun. 30, 2013

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

15. Commitments and Contingencies

Litigation. From time to time, the Company has been, and may become, involved in various legal actions involving its operations, products and technologies, including intellectual property and employment disputes. The outcomes of these legal actions are not within the Company’s complete control and may not be known for prolonged periods of time. In some actions, the claimants seek damages, as well as other relief, including injunctions barring the sale of products that are the subject of the lawsuit, which, if granted, could require significant expenditures or result in lost revenue. The Company records a liability in the consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate, the minimum amount of the range is accrued. If a loss is possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded.

Southern Research Institute (“SRI”) Litigation. On July 31, 2009, the Company’s SurModics Pharmaceuticals subsidiary was named as a defendant in litigation pending in the circuit court of Jefferson County, Alabama, between SRI and two of SRI’s former employees (the “Plaintiffs”). In the litigation, the Plaintiffs allege that they contributed to or invented certain intellectual property while they were employed at SRI, and pursuant to SRI’s policies then in effect, they are entitled to, among other things, a portion of the purchase price consideration paid by the Company to SRI as part of the Company’s acquisition of SurModics Pharmaceuticals pursuant to a stock purchase agreement made effective on July 31, 2007 (the “Stock Purchase Agreement”). The Plaintiffs have also alleged that they are entitled to a portion of the intellectual property income derived from license agreements with certain customers of SurModics Pharmaceuticals that make use of patents to which the Plaintiffs invented or contributed. A trial has not yet been scheduled. Based on the facts known to date, the Company has recorded a $100,000 expense in discontinued operations for the nine months ended June 30, 2013. The Company has not recorded additional accruals as the probability of the outcome is currently not determinable and any potential loss is not estimable. The Company believes that it has meritorious defenses to the Plaintiff’s claims and will vigorously defend and prosecute this matter. Following the Pharma Sale, the Company remains responsible for this litigation and has agreed to indemnify Evonik against certain losses, including those that may be incurred in connection with this litigation.

Pursuant to the Stock Purchase Agreement, the Company has certain rights of indemnification against losses (including without limitation, damages, expenses and costs) incurred as a result of the litigation. The Company has recorded cumulative unreimbursed legal expenses totaling $1.3 million as of June 30, 2013, related to this litigation, within selling, general and administrative expenses from continuing operations in the condensed consolidated statements of income. In June of 2011, the Company sued SRI in United States District Court for the District of Minnesota seeking a judicial declaration regarding the scope of the Company’s indemnification rights under the Stock Purchase Agreement. On April 17, 2013, the District Court entered a judgment in the Company’s favor requiring SRI to indemnify the Company for prior and future legal expenditures related to this matter. On July 30, 2013, the Company and SRI entered into a settlement and release agreement resolving the litigation relating to indemnification rights. The settlement and release agreement does not relate to claims for indemnification under the Stock Purchase Agreement for any substantive liability, judgment, or settlement in or related to the ongoing litigation in Alabama discussed above. The Company will receive payment of $1.0 million associated with the historical cumulative unreimbursed legal expenses and expects to recognize an expense offset of an equal amount in the fourth quarter ended September 30, 2013. Additionally, under the settlement and release agreement the Company will be reimbursed for 75% of the legal fees, costs and expenses that the Company may incur in the future in connection with the Alabama litigation that are not considered excessive. A description of the terms and conditions of the settlement and release agreement have been disclosed in a Current Report on Form 8-K filed by the Company on August 2, 2013.

InnoRx, Inc. In January 2005, the Company entered into a merger agreement whereby SurModics acquired all of the assets of InnoRx, Inc. (“InnoRx”), an early stage company developing drug delivery devices and therapies for the ophthalmology market. SurModics will be required to issue up to approximately 480,059 additional shares of its common stock to the stockholders of InnoRx upon the successful completion of the remaining development and commercial milestones involving InnoRx technology acquired in the transaction. The Company has not recorded any accrual for this contingency as of June 30, 2013 as the milestones have not been achieved and the probability of achievement is low.

PR Pharmaceuticals, Inc. In November 2008, SurModics Pharmaceuticals acquired certain contracts and assets of PR Pharma to enhance its portfolio of drug delivery technologies for the pharmaceutical and biotechnology industries. The Company agreed to indemnify Evonik, for a period of five years, for up to $2.5 million of contingent consideration obligations to the sellers of PR Pharma related to a future patent issuance milestone when it sold substantially all of the SurModics Pharmaceuticals assets to Evonik on November 17, 2011. The Company has not recorded any accrual for this contingency as of June 30, 2013 as the milestone has not been achieved and the probability of achievement is low.

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Immaterial Restatement - Effect of Impairment Charge Adjustment (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Sep. 30, 2012
Other assets, net	$ 3,145	$ 4,075
Total assets	103,926	104,319
Retained earnings	87,350	75,869
Total stockholders' equity	98,039	94,988
Total liabilities and stockholders' equity	103,926	104,319
As Reported [Member]
Other assets, net		2,831
Total assets		103,075
Retained earnings		74,625
Total stockholders' equity		93,744
Total liabilities and stockholders' equity		103,075
Adjustment [Member]
Other assets, net		1,244
Total assets		1,244
Retained earnings		1,244
Total stockholders' equity		1,244
Total liabilities and stockholders' equity		1,244
As Restated [Member]
Other assets, net		4,075
Total assets		104,319
Retained earnings		75,869
Total stockholders' equity		94,988
Total liabilities and stockholders' equity		$ 104,319

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Immaterial Restatement - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Jun. 30, 2013
Accounting Changes And Error Corrections [Abstract]
Increase in the carrying value of strategic investments	$ 1.2