Company Overview - SurModics (SRDX) shares have increased by approximately 6% over the past month, outperforming the S&P 500 index [1] - The most recent earnings report is crucial for understanding the key drivers affecting the stock [1] Earnings Estimates - Estimates for SurModics have trended downward in the past month, with a consensus estimate shift of -2050% [2] VGM Scores - SurModics has a strong Growth Score of A but a low Momentum Score of F, and a Value Score of D, placing it in the bottom 40% for value investment strategy [3] - The aggregate VGM Score for SurModics is C, which is relevant for investors not focused on a single strategy [3] Outlook - The downward trend in estimates suggests a negative outlook for SurModics, reflected in its Zacks Rank of 4 (Sell) [4] - A below-average return is expected from the stock in the upcoming months [4] Industry Comparison - SurModics is part of the Zacks Medical - Products industry, where Boston Scientific (BSX) has seen a 1.3% gain over the past month [5] - Boston Scientific reported revenues of $4.66 billion for the last quarter, marking a year-over-year increase of +20.9% [5] - For the current quarter, Boston Scientific is projected to post earnings of $0.72 per share, reflecting a +16.1% change from the previous year [6] - Boston Scientific holds a Zacks Rank of 3 (Hold) based on estimate revisions [6]

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].

Core Insights - SurModics reported a revenue of $28.09 million for the quarter ended March 2025, reflecting a decline of 12.1% year-over-year and an earnings per share (EPS) of -$0.13, compared to $0.07 in the same quarter last year [1] - The revenue fell short of the Zacks Consensus Estimate of $30.77 million by 8.73%, and the EPS was significantly below the consensus estimate of -$0.06, resulting in an EPS surprise of -116.67% [1] Revenue Breakdown - Product sales amounted to $14.99 million, which is a decrease of 17.2% year-over-year and below the average estimate of $17.46 million from two analysts [4] - Revenue from research, development, and other sources was $3.19 million, exceeding the two-analyst average estimate of $2.41 million, marking a year-over-year increase of 30.1% [4] - Royalties and license fees generated $9.91 million, slightly below the average estimate of $10.37 million from two analysts, representing a year-over-year decline of 13.2% [4] Stock Performance - Over the past month, shares of SurModics have returned +0.1%, contrasting with a -0.2% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

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].

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) Surmodics reported a **12% revenue decrease** and a **GAAP net loss** in Q2 FY2025, while advancing product launches and facing an FTC challenge to its pending acquisition [Second Quarter Fiscal 2025 Financial & Business Highlights](index=1&type=section&id=Second%20Quarter%20Fiscal%2025%20Financial%20%26%20Business%20Highlights) Surmodics reported a **12% revenue decrease** to **$28.1 million** in Q2 FY2025, resulting in a **$5.2 million GAAP net loss**, amidst a pending acquisition challenge from the FTC Financial Highlights | Financial Metric | Q2 FY2025 | Q2 FY2024 | | :--- | :--- | :--- | | Total Revenue | $28.1 million | $32.0 million | | GAAP Net (Loss) Income | $(5.2) million | $0.2 million | | Adjusted EBITDA | $1.9 million | $4.8 million | - The company announced the successful early clinical use and subsequent commercial release of the Pounce™ XL Thrombectomy System for removing clots in larger peripheral arteries[4](index=4&type=chunk) - The U.S. Federal Trade Commission (FTC) issued an administrative complaint to block the pending acquisition of Surmodics by an affiliate of GTCR LLC[4](index=4&type=chunk) - The TRANSCEND clinical trial results were published, demonstrating the SurVeil™ drug-coated balloon (DCB) is non-inferior for safety and efficacy compared to the IN.PACT™ Admiral™ DCB[4](index=4&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management attributed the anticipated Q2 revenue decline to specific factors, while highlighting strong growth in the Pounce Thrombectomy Platform and ongoing efforts to manage expenses and address the FTC acquisition challenge - The year-over-year revenue performance was challenged by two anticipated factors: **$3.3 million lower revenue** from the SurVeil DCB and **$1.4 million** in performance coating royalty and license fee catch-up payments received in the prior-year period[3](index=3&type=chunk) - The Pounce Thrombectomy Platform sales grew almost **25% year-over-year**, and the company launched the Pounce XL to expand the platform[3](index=3&type=chunk) - Operating expenses, excluding product costs, remained flat year-over-year, even with the inclusion of **$2.5 million** in merger-related expenses[3](index=3&type=chunk) - Management remains confident in the long-term prospects of its business segments, citing the commercial scale and profitability of its performance coating and IVD products, combined with its differentiated medical device portfolio[6](index=6&type=chunk) [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) Q2 FY2025 saw a **12% total revenue decline** driven by the Medical Device segment, a significant **product gross margin contraction**, and a **GAAP net loss**, influenced by lower sales and merger-related charges [Second Quarter Fiscal 2025 Financial Results](index=2&type=section&id=Second%20Quarter%20Fiscal%202025%20Financial%20Results) For Q2 FY2025, total revenue fell **12%** to **$28.1 million**, driven by a **17% decline** in the Medical Device segment, leading to a **GAAP net loss of $5.2 million** [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis) Total revenue declined **12%** due to a **17% decrease** in the Medical Device segment, primarily from lower SurVeil DCB sales and license fees, partially offset by **3% growth** in In Vitro Diagnostics Revenue by Segment | Revenue by Segment | Q2 2025 (in thousands) | Q2 2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Medical Device | $20,709 | $24,826 | (17)% | | In Vitro Diagnostics | $7,376 | $7,132 | 3% | | **Total Revenue** | **$28,085** | **$31,958** | **(12)%** | - The decrease in total revenue was primarily driven by lower SurVeil DCB license fee revenue (**$0.8 million decrease**) and lower SurVeil DCB product sales revenue (**$2.4 million decrease**)[7](index=7&type=chunk) - Medical Device product sales decreased by **31%** to **$7.7 million**, mainly due to the decline in SurVeil DCB product sales and, to a lesser extent, lower sales of performance coating reagents[9](index=9&type=chunk) - In Vitro Diagnostics (IVD) revenue increased by **3%** to **$7.4 million**, driven by favorable order timing for distributed antigen and colorimetric substrate products[11](index=11&type=chunk) [Profitability Analysis](index=2&type=section&id=Profitability%20Analysis) Product gross margin significantly declined to **47.8%** due to SurVeil DCB production issues, leading to a **GAAP net loss** and a substantial decrease in **Adjusted EBITDA**, despite flat operating expenses inclusive of merger charges - Product gross margin decreased to **47.8%** from **60.8%** in Q2 2024, primarily driven by a **$2.8 million decline** in SurVeil DCB product gross profit due to under-absorption, production inefficiencies, and raw material inventory expirations[12](index=12&type=chunk) - Operating costs and expenses (excluding product costs) increased by only **$0.1 million**, but this figure includes **$2.5 million** of merger-related charges associated with the pending GTCR acquisition[14](index=14&type=chunk) Profitability Metric | Profitability Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | GAAP Net (Loss) Income | $(5.2) million | $0.2 million | | GAAP Diluted (Loss) EPS | $(0.36) | $0.02 | | Non-GAAP Net (Loss) Income | $(1.9) million | $1.1 million | | Non-GAAP Diluted (Loss) EPS | $(0.13) | $0.07 | - Adjusted EBITDA for the quarter was **$1.9 million**, a significant decrease from **$4.8 million** in the second quarter of fiscal 2024[16](index=16&type=chunk) [Balance Sheet and Cash Flow](index=3&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) As of March 31, 2025, Surmodics maintained **$31.1 million in cash and investments**, with **$30.0 million in total debt**, and generated **$0.9 million in cash from operating activities** during the quarter - As of March 31, 2025, the company reported **$31.1 million** in cash and investments[17](index=17&type=chunk) - Total debt outstanding includes **$5.0 million** on its revolving credit facility and **$25.0 million** on its term loan facility[17](index=17&type=chunk) - In the second quarter of fiscal 2025, Surmodics reported **$0.9 million** in cash provided by operating activities and **$0.3 million** in capital expenditures[18](index=18&type=chunk) [Fiscal Year 2025 Financial Guidance](index=3&type=section&id=Fiscal%20Year%202025%20Financial%20Guidance) Surmodics projects **FY2025 total revenue** between **$114 million and $117 million**, a **7% to 10% decrease** primarily due to lower SurVeil DCB revenue, anticipating a **GAAP net loss per share** of **$(1.60) to $(1.40)**, including significant merger-related charges FY 2025 Guidance | FY 2025 Guidance | Low Estimate | High Estimate | % Change vs FY24 | | :--- | :--- | :--- | :--- | | Total Revenue | $114.0 M | $117.0 M | (10)% to (7)% | | Total Revenue (ex-SurVeil) | $112.5 M | $115.5 M | (7)% to (5)% | - The company expects SurVeil DCB license fee revenue to decrease by **$3.6 million** and product revenue to decrease by approximately **$7.0 million** in fiscal 2025[20](index=20&type=chunk) FY 2025 EPS Guidance | FY 2025 EPS Guidance | Low Estimate | High Estimate | | :--- | :--- | :--- | | GAAP Net Loss per Share | $(1.60) | $(1.40) | | Non-GAAP Net Loss per Share | $(0.62) | $(0.42) | - The fiscal 2025 EPS guidance assumes approximately **$10.8 million** of merger-related charges[21](index=21&type=chunk) [Corporate Developments and Other Information](index=4&type=section&id=Corporate%20Developments%20and%20Other%20Information) This section covers the pending acquisition of Surmodics by GTCR and the company's disclosures regarding forward-looking statements and non-GAAP financial measures [Pending Acquisition by GTCR](index=4&type=section&id=Pending%20Acquisition%20by%20GTCR) Surmodics' definitive agreement to be acquired by GTCR for **$43.00 per share**, valuing the company at **$627 million**, faces a significant challenge from an administrative complaint issued by the U.S. Federal Trade Commission (FTC) - Surmodics entered a definitive agreement to be acquired by GTCR for **$43.00 per share** in cash, for a total equity valuation of approximately **$627 million**[25](index=25&type=chunk) - The merger was approved by Surmodics' shareholders at a special meeting on August 13, 2024[26](index=26&type=chunk) - On March 6, 2025, the FTC voted to issue an administrative complaint to block the merger, and the transaction's closing is subject to the successful resolution of this litigation[26](index=26&type=chunk) [Safe Harbor and Non-GAAP Measures](index=4&type=section&id=Safe%20Harbor%20and%20Non-GAAP%20Measures) The company provides a safe harbor statement detailing risks, particularly those related to the pending GTCR merger, and explains its use of non-GAAP financial measures for assessing operating performance by excluding specific items - The press release contains forward-looking statements with inherent risks, including significant risks related to the consummation of the proposed merger with GTCR, such as failure to secure regulatory approval and potential termination of the agreement[28](index=28&type=chunk) - The company reports non-GAAP financial results, including Adjusted EBITDA and non-GAAP net income, which it believes provide meaningful insight into operating performance by excluding event-specific matters like merger costs[31](index=31&type=chunk) [Financial Statements and Reconciliations](index=6&type=section&id=Financial%20Statements%20and%20Reconciliations) This section presents the company's condensed consolidated financial statements, including statements of operations, balance sheets, cash flows, and reconciliations of GAAP to non-GAAP measures [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2025, Surmodics reported **$28.1 million in total revenue**, an **operating loss of $4.0 million**, and a **net loss of $5.2 million**, a decline from the prior year's positive results | (in thousands, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total revenue | $28,085 | $31,958 | | Total operating costs and expenses | $32,095 | $31,299 | | Operating (loss) income | $(4,010) | $659 | | Net (loss) income | $(5,209) | $247 | | Diluted net (loss) income per share | $(0.36) | $0.02 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, the balance sheet shows **total assets of $163.2 million**, **total liabilities of $53.0 million**, and **total stockholders' equity of $110.2 million**, reflecting a decrease in assets from September 2024 | (in thousands) | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total Current Assets | $71,747 | $81,304 | | **Total Assets** | **$163,214** | **$178,562** | | Total Current Liabilities | $13,950 | $20,543 | | **Total Liabilities** | **$52,968** | **$59,665** | | **Total Stockholders' Equity** | **$110,246** | **$118,897** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended March 31, 2025, **net cash used in operating activities was $6.9 million**, with **$1.4 million provided by investing activities**, resulting in **$29.2 million in cash and cash equivalents** at period end | (in thousands) | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(6,945) | $(1,377) | | Net cash (used in) provided by investing activities | $1,418 | $(5,673) | | Net cash (used in) provided by financing activities | $(1,155) | $(1,454) | | **Net change in cash and cash equivalents** | **$(6,932)** | **$(8,389)** | | **Cash and Cash Equivalents, End of period** | **$29,183** | **$33,030** | [Supplemental Revenue and Segment Information](index=9&type=section&id=Supplemental%20Revenue%20and%20Segment%20Information) Supplemental data details Q2 2025 segment performance, showing the Medical Device segment with **$20.7 million in revenue** and an **operating loss of $1.9 million**, while In Vitro Diagnostics generated **$7.4 million in revenue** and **$3.3 million in operating income** Q2 2025 vs Q2 2024 Revenue Breakdown (in thousands) | Revenue Line | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Medical Device** | **$20,709** | **$24,826** | **(17)%** | | - Product sales | $7,714 | $11,100 | (31)% | | - License fees – SurVeil DCB | $265 | $1,088 | (76)% | | **In Vitro Diagnostics** | **$7,376** | **$7,132** | **3%** | Q2 2025 vs Q2 2024 Operating Income (Loss) by Segment (in thousands) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Medical Device | $(1,865) | $302 | | In Vitro Diagnostics | $3,337 | $3,356 | | Corporate | $(5,482) | $(2,999) | | **Total Operating (Loss) Income** | **$(4,010)** | **$659** | [GAAP to Non-GAAP Reconciliations](index=11&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliations) Reconciliation tables bridge GAAP to non-GAAP results for Q2 2025, adjusting the **GAAP net loss of $5.2 million** to an **Adjusted EBITDA of $1.9 million**, and also reconcile the **FY2025 guidance** to reflect non-GAAP adjustments Q2 2025 GAAP to Adjusted EBITDA Reconciliation (in thousands) | Line Item | Amount | | :--- | :--- | | Net loss (GAAP) | $(5,209) | | Adjustments (Taxes, D&A, Interest) | $3,268 | | **EBITDA** | **$(1,941)** | | Stock-based compensation expense | $1,364 | | Merger-related charges | $2,512 | | **Adjusted EBITDA** | **$1,935** | Q2 2025 GAAP to Non-GAAP Net Loss & EPS Reconciliation | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Net Loss (in thousands) | $(5,209) | $3,301 | $(1,908) | | Diluted EPS | $(0.36) | $0.23 | $(0.13) | FY 2025 Guidance Reconciliation: Non-GAAP Diluted EPS | Metric | Low Estimate | High Estimate | | :--- | :--- | :--- | | GAAP Diluted EPS | $(1.60) | $(1.40) | | Amortization of acquired intangibles | $0.22 | $0.22 | | Merger related charges | $0.76 | $0.76 | | **Non-GAAP Diluted EPS** | **$(0.62)** | **$(0.42)** |

Company Overview - Surmodics (SRDX) has launched the Pounce XL Thrombectomy System, enhancing its vascular intervention solutions portfolio aimed at efficient clot removal in larger vessels [1][4] - The Pounce XL is designed for arteries ranging from 5.5 to 10 mm in diameter, expanding the capabilities of the existing Pounce Thrombectomy Platform [6][8] Product Details - The Pounce XL Thrombectomy System utilizes proprietary dual-basket technology for clot removal, minimizing blood loss and reducing risks associated with traditional methods [9][10] - Clinical data indicates an average procedural time of 20.3 minutes and a high success rate of 79.7% for patients requiring no additional clot removal treatment [10] Market Position and Financials - Following the announcement, SRDX shares fell by 2.1%, closing at $30.11, with a year-to-date decline of 24% compared to the industry’s growth of 7.1% [3] - SRDX currently has a market capitalization of $439.7 million and reported an earnings surprise of 50% in the last quarter [5] Industry Trends - The global thrombectomy devices market is projected to grow from $1.52 billion in 2023 to approximately $3.09 billion by 2033, with a CAGR of 7.33% from 2024 to 2033 [11] - The increasing prevalence of cardiovascular diseases is driving demand for thrombectomy procedures, highlighting the need for effective clot removal solutions [12]

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]