Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying strong candidates can be challenging due to inherent volatility and risks [1] Group 1: Company Overview - SurModics (SRDX) is identified as a promising growth stock with a favorable Growth Score and a top Zacks Rank [2] - The company operates in the drug delivery technology sector, which is currently experiencing significant growth potential [3] Group 2: Earnings Growth - SurModics has a historical EPS growth rate of 4.5%, but projected EPS growth for this year is expected to be 153.1%, significantly surpassing the industry average of 20% [4] Group 3: Asset Utilization - The asset utilization ratio for SurModics is 0.7, indicating that the company generates $0.7 in sales for every dollar in assets, which is higher than the industry average of 0.61 [5] Group 4: Sales Growth - The company's sales are projected to grow by 13.2% this year, compared to the industry average of only 0.7% [6] Group 5: Earnings Estimate Revisions - There has been a positive trend in earnings estimate revisions for SurModics, with the Zacks Consensus Estimate for the current year increasing by 6.3% over the past month [8] - This trend supports the stock's Zacks Rank of 1 (Strong Buy) and a Growth Score of B [8] Group 6: Investment Potential - The combination of strong earnings growth, efficient asset utilization, and positive sales growth positions SurModics favorably for outperformance, making it an attractive option for growth investors [9]

Core Points - Surmodics, Inc. reported a loss per share of 13 cents in Q4 fiscal 2024, a significant decline from the previous year's EPS of 53 cents, but better than the Zacks Consensus Estimate of a 27 cents loss by 51.9% [1] - Revenues for the quarter reached $33.2 million, reflecting an 18.8% year-over-year increase and surpassing the Zacks Consensus Estimate by 8.3% [2] Revenue Breakdown - The Medical Device segment generated $25.8 million in sales, a 22.4% increase from the prior year, with revenues excluding SurVeil DCB license fees rising 20% to $23.9 million, slightly above the projected $23.8 million [3] - Product sales in the Medical Device segment were $11.8 million, up 39% year over year, driven by the Pounce thrombectomy device platform and commercial shipments of the SurVeil DCB to Abbott [4] - IVD sales improved by 7.9% to $7.5 million, primarily due to growth in distributed antigen products and microarray slide/surface products, exceeding the projected $6.9 million [5] Financial Metrics - Total product sales amounted to $19.1 million, a 24.3% increase from the previous year, surpassing the projected $18.6 million [6] - Royalties and license fees revenues totaled $11.4 million, up 13.8% year over year, exceeding the projected $10.4 million [6] - Gross profit increased by 17.7% to $24.6 million, although gross margin contracted by 50 basis points to 74.1%, against a projected margin of 69.3% [7] Operating Expenses and Profitability - Selling, general & administrative expenses rose by 13.8% to $14.6 million, while research and development expenses remained flat at $9.7 million [7] - Adjusted operating profit was $1.1 million, reflecting a 3.4% year-over-year increase [8] Financial Position - Surmodics ended Q4 fiscal 2024 with cash and cash equivalents of $36.1 million, down from $38.2 million at the end of Q3 [8] - Total long-term debt was reported at $29.6 million, with net cash provided by operating activities decreasing to $0.2 million from $10.5 million a year ago [8] Acquisition Update - Surmodics is in the process of being acquired by GTCR, with the deal expected to close by March 31, 2025, after receiving shareholder approval [9]

Core Viewpoint - Surmodics, Inc. has received FDA's 510(k) clearance for its Pounce XL Thrombectomy System, which is expected to enhance its thrombectomy business and market position in the medical device sector [1][2]. Company Developments - The Pounce XL Thrombectomy System is designed for the non-surgical removal of thrombi and emboli from peripheral arteries with diameters ranging from 5.5 mm to 10 mm, expanding the capabilities of the Pounce Thrombectomy Platform [5][6]. - Surmodics plans to initiate a limited market release of the Pounce XL Thrombectomy System in the first half of 2025, with full commercialization to follow [1]. - The company reported a market capitalization of $547.9 million and a return on equity of 3.9%, with a recent earnings surprise of 12.9% [4]. Market Prospects - The global thrombectomy devices market was valued at $1.3 billion in 2022 and is projected to reach $2.06 billion by 2030, growing at a CAGR of 5.9%, driven by increasing cardiac cases and sedentary lifestyles [7]. - The recent FDA approval is anticipated to significantly boost Surmodics' business within this growing market [7]. Recent Performance - Following the FDA announcement, Surmodics' shares declined by nearly 0.9% to $38.41, continuing a downtrend despite historical synergies from regulatory approvals [3]. - Over the past year, the company's shares have increased by 25.2%, slightly below the industry's 25.8% rise and the S&P 500's 34.9% growth [10]. Strategic Agreements - Surmodics secured a group purchasing agreement with Premier, Inc. for thrombectomy products, effective June 1, 2024, allowing Premier members to access special pricing for the Pounce and Pounce Venous Thrombectomy Systems [9].

Core Viewpoint - SurModics (SRDX) has experienced a decline of 5.1% over the past four weeks, but the formation of a hammer chart pattern suggests potential support and a possible trend reversal in the future [1]. Technical Analysis - The hammer chart pattern indicates a potential bottoming out, with selling pressure likely subsiding [1]. - This pattern forms when there is a small candle body with a long lower wick, signaling that buying interest has emerged after a downtrend [2]. - Hammer candles can appear on various timeframes and should be used alongside other bullish indicators for confirmation [2]. Fundamental Analysis - Recent upward revisions in earnings estimates for SRDX serve as a bullish indicator, with the consensus EPS estimate increasing by 4.1% over the last 30 days [3]. - Wall Street analysts show strong agreement on SRDX's potential to report better earnings than previously predicted [3]. - SRDX holds a Zacks Rank of 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks, which typically outperform the market [3]. - The Zacks Rank is a reliable timing indicator for identifying improvements in a company's prospects [3].

Core Viewpoint - SurModics (SRDX) has experienced a downtrend with a 5.5% decline over the past four weeks, but it is now in oversold territory, suggesting a potential turnaround due to analysts' positive earnings outlook [1] Technical Analysis - The Relative Strength Index (RSI) is a key indicator for identifying oversold stocks, with a reading below 30 typically indicating oversold conditions [2] - Stocks oscillate between overbought and oversold states, and the RSI helps investors identify potential price reversals [3] - SRDX has an RSI reading of 21.52, indicating that selling pressure may be exhausting, which could lead to a price rebound [5] Fundamental Analysis - Analysts have raised earnings estimates for SRDX, with a 4.1% increase in the consensus EPS estimate over the last 30 days, suggesting potential price appreciation [6] - SRDX holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks, indicating strong potential for a near-term turnaround [7]

Core Viewpoint - SurModics (SRDX) is experiencing significant selling pressure, having declined 6.3% over the past four weeks, but is now positioned for a potential trend reversal as it enters oversold territory, with analysts predicting better earnings than previously expected [1] Group 1: Technical Indicators - The Relative Strength Index (RSI) for SRDX is at 15.57, indicating that heavy selling may be exhausting itself, suggesting a possible bounce back towards the previous equilibrium of supply and demand [3] - A stock is generally considered oversold when its RSI falls below 30, and the RSI helps investors identify potential entry points for a rebound [2] Group 2: Fundamental Indicators - There is a strong consensus among sell-side analysts that earnings estimates for SRDX have increased by 4.9% over the last 30 days, which typically correlates with price appreciation in the near term [4] - 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, indicating a strong potential for a turnaround [4]

For the quarter ended June 2024, SurModics (SRDX) reported revenue of $30.34 million, down 42.2% over the same period last year. EPS came in at -$0.27, compared to $0.52 in the year-ago quarter. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Here is how SurModics performed in the just reported quarter in terms of the m ...

Core Insights - SurModics reported a quarterly earnings surprise of 12.90%, with actual earnings of $0.07 per share compared to an expected loss of $0.36 per share, resulting in a surprise of 119.44% [1] - The company posted a quarterly loss of $0.27 per share, better than the Zacks Consensus Estimate of a loss of $0.31, but down from earnings of $0.52 per share a year ago [2] - SurModics achieved revenues of $30.34 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 0.07%, but down from $52.48 million in the same quarter last year [3] Financial Performance - Over the last four quarters, SurModics has exceeded consensus EPS estimates four times [3] - The current consensus EPS estimate for the upcoming quarter is -$0.27 on revenues of $30.7 million, and for the current fiscal year, it is -$0.52 on revenues of $123.52 million [9] Market Position - SurModics shares have increased by approximately 14.2% since the beginning of the year, compared to a 14% gain in the S&P 500 [5] - The Zacks Rank for SurModics is currently 1 (Strong Buy), indicating expectations for the stock to outperform the market in the near future [8] Industry Context - The Medical - Products industry, to which SurModics belongs, is currently ranked in the top 31% of over 250 Zacks industries, suggesting a favorable outlook for stocks in this sector [10] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [7]

Revenue Performance - Revenue in Q3 fiscal 2024 was $30.3 million, a decrease of $22.1 million or 42% compared to the prior-year quarter [145]. - Medical Device segment revenue was $23.4 million in Q3 fiscal 2024, a 49% decrease from $46.0 million in the prior-year quarter [146]. - SurVeil DCB license fee revenue under the Abbott Agreement decreased by $24.7 million in Q3 fiscal 2024 compared to the prior-year quarter [155]. - Medical Device R&D services revenue decreased $0.4 million year-over-year in Q3 fiscal 2024 [156]. - The company anticipates future revenue growth and plans to evaluate its strategy for further clinical investment in the Sundance DCB [207]. Sales and Profitability - Medical Device product sales increased 15% to $10.7 million in Q3 fiscal 2024, compared to $9.3 million in the prior-year quarter [146]. - Performance coating royalties and license fee revenue increased 13% to $9.3 million in Q3 fiscal 2024, compared to $8.3 million in the prior-year quarter [146]. - Product gross profit increased $0.4 million or 4% in Q3 fiscal 2024, with product gross margins at 51.9% [149]. - Medical Device operating loss was $(2.3) million in Q3 fiscal 2024, compared to operating income of $21.8 million in the prior-year quarter [155]. Expenses - SG&A expense increased 29% or $3.8 million in Q3 fiscal 2024, compared to the prior-year quarter, with SG&A as a percentage of revenue at 55% [151]. - The company expects SG&A expense to increase for full-year fiscal 2024 primarily due to merger-related charges [151]. Cash Flow and Investments - Cash used in investing activities totaled $(12.4) million in the first nine months of fiscal 2024, compared to $(2.2) million in the same prior-year period [159]. - Net purchases and maturities of available-for-sale investments were $(9.4) million in the first nine months of fiscal 2024, compared to $0.0 million in the same period of fiscal 2023 [159]. - The company invested $(3.0) million in property and equipment in the first nine months of fiscal 2024, up from $(2.2) million in the same period of fiscal 2023 [159]. Debt and Interest - As of June 30, 2024, the outstanding balance on the revolving credit facility was $5 million, with additional availability of approximately $15.0 million [160]. - The company expects total interest expense under the credit agreement with MidCap to be approximately $3.5 million in fiscal 2024 [160]. - The outstanding principal on the term loan was $25 million as of June 30, 2024, with potential additional draws up to $50 million through December 31, 2024 [160]. - The interest rate on the term loan is fixed at 10.205% per annum for the initial $25 million borrowing due to an interest rate swap arrangement [205]. Merger Considerations - The company may incur a termination fee of $20,380,000 if the Merger Agreement is terminated under certain circumstances [207]. Raw Material Prices - Management believes that a reasonable change in raw material prices would not have a material impact on future earnings or cash flows [211].

Revenue Performance - Total revenue for Q3 FY 2024 was $30.3 million, a decrease of $22.1 million or 42% compared to $52.5 million in Q3 FY 2023[2] - Total revenue for Q3 Fiscal 2024 was $30.3 million, a decrease of $22.1 million, or 42%, compared to $52.5 million in the prior-year period[51] - Excluding SurVeil DCB license fee revenue, total revenue increased by $2.6 million, or 10%, to $29.2 million compared to $26.6 million in Q3 Fiscal 2023[52] - Total revenue for the nine months ended June 30, 2024, was $92.851 million, a decrease of $11.763 million compared to $104.614 million for the same period in 2023[63] Segment Performance - Medical Device revenue decreased by $22.6 million or 49% to $23.4 million, while In Vitro Diagnostics revenue increased by $0.5 million or 8% to $7.0 million[3] - Medical Device product sales increased by $1.4 million or 15% to $10.7 million, driven by commercial shipments of the SurVeil DCB and growth in the Pounce thrombectomy device[3] - Medical Device revenue, excluding SurVeil DCB license fees, increased by $2.1 million or 10% to $22.2 million[12] - Medical Device segment reported an operating loss of $(2.3) million, a decrease of $(24.1) million compared to the prior year[41] - In Vitro Diagnostics segment reported operating income of $3.2 million, an increase of $0.3 million compared to the prior year[41] - Medical Device revenue, excluding SurVeil DCB license fees, increased by $12.316 million to $68.561 million for the nine months ended June 30, 2024[63] - Medical Device segment reported an operating loss of $2,210 thousand, a decrease of $9,693 thousand compared to the previous year[64] - In Vitro Diagnostics segment achieved an operating income of $9,633 thousand, an increase of $183 thousand year-over-year[64] - Total segment operating income was $865,000, a decrease of $23.8 million compared to the prior year[41] - Total segment operating income was $7,423 thousand, down by $9,510 thousand from the prior year[64] Financial Losses and Adjusted Metrics - Surmodics reported a net loss of $7.6 million for Q3 FY 2024, compared to a net income of $7.3 million in the same period last year[14] - GAAP net loss was $(7.6) million, or $(0.53) per diluted share, compared to net income of $7.3 million, or $0.52 per diluted share in the prior-year period[49] - Adjusted EBITDA for Q3 FY 2024 was $1.6 million, down from $24.6 million in Q3 FY 2023[4] - Adjusted EBITDA for Q3 Fiscal 2024 was $1.6 million, down from $24.6 million in the prior-year period[51] - Non-GAAP operating income was $10,712 thousand, representing a 10.2% increase from $8,388 thousand[66] - Diluted EPS was reported at $(0.59), reflecting a net loss of $(8,230) thousand[66] Operating Costs and Expenses - Operating costs and expenses, excluding product costs, increased by $3.1 million or 13% to $27.3 million, primarily due to merger-related charges[23] - Operating costs increased to $35.710 million for the three months ended June 30, 2024, up from $31.071 million in the prior year[60] - The company reported a significant increase in product costs to $8.448 million for the three months ended June 30, 2024, compared to $6.921 million in the same period last year[60] - Corporate operating loss was $(6.2) million, an increase of $(3.0) million compared to the prior year[41] - Corporate segment incurred an operating loss of $12,455 thousand, an increase in loss of $3,122 thousand compared to the previous year[64] - Total operating loss was $5,032 thousand, a decrease of $12,632 thousand from the previous year[64] Acquisition and Corporate Actions - The company is in the process of being acquired by GTCR for $43.00 per share, totaling an equity valuation of approximately $627 million, representing a 41.1% premium[6] - The company announced a definitive agreement to be acquired by GTCR for $43.00 per share, representing an approximate equity value of $627 million[47] - Surmodics is suspending its previously issued financial guidance for fiscal 2024 due to the pending acquisition by GTCR[55] - The company will not host a live webcast for Q3 FY 2024 results due to the pending acquisition[5] Cash and Assets - As of June 30, 2024, Surmodics had $38.2 million in cash and investments, with $5.0 million in outstanding borrowings on its revolving credit facility[24] - Cash and cash equivalents decreased to $24.301 million as of June 30, 2024, down from $41.419 million at the end of the previous period[61] - Total assets decreased to $177.413 million as of June 30, 2024, compared to $185.733 million as of September 30, 2023[61] - Total liabilities decreased to $59.269 million as of June 30, 2024, from $65.823 million as of September 30, 2023[61] Other Financial Adjustments - Amortization of acquired intangible assets accounted for $2,659 thousand, contributing 2.5% to the overall expenses[66] - Restructuring expenses totaled $1,282 thousand, representing 1.2% of total expenses[66] - Contingent consideration fair value adjustment resulted in a negative impact of $(829) thousand, or (0.8%) on the financials[66]