It has been about a month since the last earnings report for SurModics (SRDX) . Shares have added about 6% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is SurModics due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.How Have Estimates Been Moving Since Then?It turns out ...

Core Viewpoint - Surmodics, Inc. reported a wider-than-expected adjusted loss per share and lower-than-expected revenues for the second quarter of fiscal 2025, indicating challenges in its Medical Device segment and overall financial performance [1][14]. Revenue Performance - Surmodics generated revenues of $28.1 million in the fiscal second quarter, a decrease of 12.1% year over year, missing the Zacks Consensus Estimate by 8.7% [2]. - Total revenues included $0.3 million from SurVeil drug-coated balloon (DCB) license fees, down from $1.1 million in the same quarter of the previous year, attributed to lower expenses related to the TRANSCEND clinical trial [3]. - Product sales were $14.9 million, down 17.2% from the prior-year quarter, and royalties and license fees totaled $9.9 million, down 13.2% [7]. Segment Analysis - The Medical Device segment reported sales of $20.7 million, a decline of 16.6% year over year, with revenues excluding SurVeil DCB license fees decreasing 14% [5]. - In Vitro Diagnostics (IVD) sales improved by 3.4% year over year to $7.4 million, driven by favorable order timing, although this was offset by a decline in microarray slide/surface revenues [6]. Margin and Expenses - Gross profit decreased by 18.5% year over year to $20.3 million, with gross margin contracting 566 basis points to 72.1% [9]. - Selling, general & administrative expenses increased by 14.9% year over year to $15 million, while research and development expenses declined by 18.2% to $8.4 million [9]. Financial Position - Surmodics ended the second quarter with cash and cash equivalents of $29.2 million, a slight decrease from $30.1 million at the end of the previous quarter [11]. - Total long-term debt was $29.63 million, marginally up from $29.59 million in the prior quarter [11]. Fiscal Guidance - The company expects total revenues for fiscal 2025 to be in the range of $114 million to $117 million, reflecting a decrease of 10-7% compared to fiscal 2024 [12]. - Surmodics anticipates a decrease of $3.6 million in SurVeil DCB license fee revenues and a $7 million decrease in SurVeil DCB product revenues for fiscal 2025 [13]. Market Reaction - Shares of Surmodics fell nearly 9.4% at the end of the trading session following the earnings report [4].

For the quarter ended March 2025, SurModics (SRDX) reported revenue of $28.09 million, down 12.1% over the same period last year. EPS came in at -$0.13, compared to $0.07 in the year-ago quarter.The reported revenue represents a surprise of -8.73% over the Zacks Consensus Estimate of $30.77 million. With the consensus EPS estimate being -$0.06, the EPS surprise was -116.67%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine ...

Company Performance - SurModics reported a quarterly loss of $0.13 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.06, and a decline from earnings of $0.07 per share a year ago, resulting in an earnings surprise of -116.67% [1] - The company posted revenues of $28.09 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 8.73%, and down from $31.96 million in the same quarter last year [2] - SurModics has surpassed consensus EPS estimates three times over the last four quarters and topped consensus revenue estimates two times in the same period [2] Stock Performance - SurModics shares have declined approximately 21.9% since the beginning of the year, compared to a decline of 5.5% for the S&P 500 [3] - The current Zacks Rank for SurModics is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.01 on revenues of $30.47 million, and for the current fiscal year, it is -$0.01 on revenues of $124.01 million [7] - The estimate revisions trend for SurModics is mixed, and changes in earnings expectations may occur following the recent earnings report [6] Industry Context - The Medical - Products industry, to which SurModics belongs, is currently ranked in the bottom 28% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact SurModics' stock performance [5]

Revenue Performance - Revenue for Q2 fiscal 2025 was $28.1 million, a decrease of $3.9 million or 12% compared to the prior-year quarter[96]. - Total revenue for the first six months of fiscal 2025 was $58.0 million, a decrease of $4.5 million or 7% compared to the same prior-year period[96]. - IVD segment revenue was $7.4 million in Q2 fiscal 2025, a 3% increase from $7.1 million in the prior-year quarter, but a 1% decrease to $14.0 million for the first six months[98]. - Product sales decreased 17% to $14.993 million in Q2 fiscal 2025 and 15% to $31.541 million for the first six months compared to the prior-year periods[99]. Medical Device Segment - Medical Device segment revenue was $20.7 million in Q2 fiscal 2025, down $4.1 million or 17% from $24.8 million in the prior-year quarter[96]. - Product sales in the Medical Device segment decreased 31% to $7.7 million in Q2 fiscal 2025, compared to $11.1 million in the prior-year quarter[96]. - Medical Device R&D and other revenue increased 33% to $3.1 million in Q2 fiscal 2025, and 19% to $5.6 million for the first six months compared to the prior-year period[98]. - Medical Device segment reported an operating loss of $1.865 million in Q2 fiscal 2025, compared to an operating income of $0.302 million in the prior-year quarter[110]. - Medical Device product gross profit decreased by $3.9 million to $2.6 million in Q2 fiscal 2025, with gross margins dropping from 58.0% to 33.5% year-over-year[113]. Expenses and Charges - The company incurred $2.5 million in merger-related charges during the three months ended March 31, 2025[83]. - SG&A expense increased 15% to $15.045 million in Q2 fiscal 2025 and 18% to $30.219 million for the first six months compared to the prior-year periods, primarily due to merger-related charges[106]. - R&D expense declined 18% to $8.367 million in Q2 fiscal 2025 and 8% to $17.308 million for the first six months compared to the prior-year periods[105]. Cash Flow and Liquidity - Cash used in operating activities was $(6.9) million for the six months ended March 31, 2025, compared to $(1.4) million in the same prior-year period[114]. - As of March 31, 2025, working capital totaled $57.8 million, a decrease of $(3.0) million from $60.8 million as of September 30, 2024[117]. - The company has access to a revolving credit facility with a maximum availability of $25 million, with an outstanding balance of $5 million as of March 31, 2025[121]. - As of March 31, 2025, cash and cash equivalents totaled $31.1 million, a decrease of $(9.0) million from $40.1 million as of September 30, 2024[117]. Future Expectations - Surmodics expects a decline of approximately $7.0 million in SurVeil DCB product revenue for fiscal 2025 compared to fiscal 2024 levels[96]. - SurVeil DCB license fee revenue is expected to decline by $3.6 million in fiscal 2025 compared to fiscal 2024, with no further recognition after March 31, 2025[98]. - The company anticipates significant SG&A and R&D expenses in fiscal 2025, primarily related to medical device sales and product development[122]. - The company expects total interest expense under the credit agreement with MidCap to be approximately $3.5 million in fiscal 2025[118]. - The company anticipates a decline in SurVeil DCB license fee revenue from fiscal 2024 to 2025[127]. - The company expects future gross profits and gross margins to decline from fiscal 2024 to fiscal 2025[127]. Mergers and Acquisitions - Surmodics entered into a Merger Agreement to be acquired for $43.00 per share, subject to regulatory approval and litigation resolution[82]. - The company has a termination fee of $20,380,000 if the Merger Agreement is terminated[128]. Product Developments - The SurVeil DCB received FDA premarket approval in June 2023 and is now marketed by Abbott under an exclusive distribution agreement[86]. - The Pounce LP Thrombectomy System received FDA 510(k) clearance in fiscal 2023 and was commercially launched in Q3 fiscal 2024[89]. - The company launched its advanced hydrophilic coating technology, Preside, in October 2023, enhancing performance for neurovascular applications[93]. Customer Concentration - Abbott and Medtronic comprised 13% and 9% of consolidated revenue, respectively, for the six months ended March 31, 2025[124]. - The company relies on significant customers, including Abbott and Medtronic, which impacts financial results and stock price[130]. Currency and Interest Rate Risks - The company is exposed to Euro currency risk due to manufacturing operations in Ireland and sales denominated in Euros[134]. - The company has not entered into any foreign currency forward exchange contracts to hedge against currency fluctuations[134]. - The company entered into a five-year interest rate swap transaction fixing the interest rate on $25.0 million of term loans at 10.205%[132].

EXHIBIT 99.1 Surmodics Reports Second Quarter of Fiscal Year 2025 Financial Results; Introduces Fiscal Year 2025 Financial Guidance April 30, 2025 07:00 a.m. ET EDEN PRAIRIE, Minn. – Surmodics, Inc. (Nasdaq: SRDX), a leading provider of medical device and in vitro diagnostic technologies to the healthcare industry, today reported financial results for its second quarter ended March 31, 2025, and introduced its financial guidance for the fiscal year ending September 30, 2025. Second Quarter Fiscal 2025 Finan ...

Surmodics (SRDX) recently announced the commercial launch of the Pounce XL Thrombectomy System, expanding its portfolio of vascular intervention solutions. Designed for efficient clot removal in larger vessels, the device enhances procedural effectiveness while offering a streamlined approach to treating thrombotic occlusions.As demand grows for advanced thrombectomy solutions, Surmodics’ latest innovation provides physicians with a reliable, catheter-based system for rapid clot extraction. By improving pro ...

Core Insights - Surmodics, Inc. (SRDX) reported a strong performance in the last quarter, with a loss per share that was 51.9% narrower than market estimates and sales exceeding estimates by 8.3%, driven by solid prospects in the thrombectomy business [1][3] - The company is likely to be acquired by GTCR for an estimated total equity valuation of $627 million, with the deal expected to close by the end of March, potentially offering double-digit returns for investors [2][5] - Surmodics has a market capitalization of $404.58 million and projects a remarkable 162.5% growth for fiscal 2025, maintaining a strong performance trajectory [3] Acquisition Details - Surmodics entered into a definitive agreement in May 2024 to be acquired by GTCR, with shareholders set to receive $43.00 per share in cash [5] - The acquisition faces challenges as the FTC has blocked the deal due to anti-competitive concerns, prompting Surmodics to consider legal action against the FTC [5][11] Financial Performance - Surmodics demonstrated solid improvement in both top and bottom lines for Q1 of fiscal 2025, with notable increases in performance coatings royalty revenues and sales from the Pounce thrombectomy device platforms [8] - The gross margin expansion is a positive indicator for the stock, despite some segmental sales declines attributed to unfavorable order timing [10] Thrombectomy Business Prospects - The company aims to leverage its proprietary Pounce thrombectomy platform technology, with early results from a study presented at the TCT Symposium and FDA clearance for the Pounce XL Thrombectomy System [7] - Limited market evaluations of the product are expected to generate additional revenues during fiscal 2025 [7] Estimate Trends - Surmodics is experiencing a positive estimate revision trend for fiscal 2025, with the Zacks Consensus Estimate for earnings per share improving by 1 cent to 19 cents [13] - The consensus estimate for Q2 fiscal 2025 revenues is projected at $33 million, indicating a 3.3% increase from the previous year [13]

Core Viewpoint - The U.S. Federal Trade Commission (FTC) has blocked the proposed acquisition of Surmodics, Inc. by GTCR LLC due to anti-competitive concerns, particularly regarding market control in hydrophilic coatings, a vital component in medical devices [2][6]. Company Summary - Surmodics' acquisition by GTCR was valued at approximately $627 million, or $43.00 per share, representing a significant premium over the company's market value [2]. - The company has expressed strong opposition to the FTC's decision, arguing that the merger would be pro-competitive and beneficial for stakeholders, including customers and patients [3]. - Surmodics intends to challenge the FTC's ruling in court, asserting that the acquisition aligns with long-term industry trends and growth objectives [3][8]. - In the first quarter of fiscal 2025, Surmodics reported total revenues of $29.9 million, a decrease of 2% year-over-year, and a loss per share of 60 cents, which is a 20% improvement from the previous year's loss [9]. Industry Summary - The FTC's decision reflects a broader regulatory trend towards stricter scrutiny of private equity acquisitions in the healthcare sector, aiming to prevent monopolistic behavior and rising healthcare costs [7]. - The merger's blockage could set a precedent for future transactions, making it more challenging for private equity firms to consolidate within the medical technology space [7][8]. - The FTC's unanimous decision indicates a strong commitment to maintaining competition in the medical coatings sector, which has historically benefited from rivalry between companies like Surmodics and Biocoat [6].

Core Viewpoint - SurModics (SRDX) has experienced a significant downtrend, with a 13.9% decline over the past four weeks, but it is now in oversold territory, suggesting a potential turnaround due to analysts' positive earnings outlook [1] Group 1: Technical Indicators - The Relative Strength Index (RSI) is a key technical indicator used to determine if a stock is oversold, with a reading below 30 typically indicating this condition [2] - SRDX's current RSI reading is 25.01, indicating that the heavy selling pressure may be exhausting, and a trend reversal could be imminent [5] Group 2: Fundamental Indicators - Analysts covering SRDX have raised their earnings estimates for the current year, resulting in a 2.7% increase in the consensus EPS estimate over the last 30 days, which often correlates with price appreciation [6] - SRDX holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a near-term turnaround [7]