Group 1 - Monteverde & Associates PC is investigating Surmodics, Inc. regarding its proposed sale to GTCR LLC, where shareholders will receive $43.00 in cash per share [1] - Monteverde & Associates PC is recognized as a Top 50 Firm in the 2018-2022 ISS Securities Class Action Services Report, indicating its strong reputation in recovering money for shareholders [1] - The firm operates from the Empire State Building in New York City and has a successful track record in class action securities litigation [4] Group 2 - The firm encourages shareholders with concerns to contact them for additional information free of charge [2] - Monteverde & Associates PC emphasizes that no company, director, or officer is above the law, reinforcing its commitment to shareholder rights [2] - The firm has a history of recovering money for shareholders through litigation in trial and appellate courts, including the U.S. Supreme Court [4]

Core Viewpoint - Rowley Law PLLC is investigating potential securities law violations related to the proposed acquisition of Surmodics, Inc. by GTCR, which is valued at approximately $627 million, with stockholders set to receive $43.00 per share [1]. Group 1 - The acquisition of Surmodics, Inc. by GTCR is expected to close in the second half of 2024 [1]. - The total transaction value for the acquisition is approximately $627 million [1]. - Stockholders of Surmodics, Inc. will receive $43.00 for each share they hold [1]. Group 2 - Rowley Law PLLC is representing shareholders in this investigation and provides additional contact information for interested stockholders [2]. - The firm specializes in class actions and derivative lawsuits in complex corporate litigation [3].

Core Viewpoint - Ademi LLP is investigating Surmodics for potential breaches of fiduciary duty and violations of law related to its transaction with GTCR, which involves a cash offer of $43.00 per share, totaling approximately $627 million in equity valuation [1][2]. Group 1: Transaction Details - Surmodics shareholders will receive $43.00 per share in cash, leading to a total equity valuation of around $627 million [2]. - The transaction agreement includes provisions that significantly limit competing offers for Surmodics, imposing a substantial penalty if a competing bid is accepted [2]. - Insiders at Surmodics are set to receive considerable benefits as part of the change of control arrangements [2]. Group 2: Investigation Focus - The investigation is centered on the conduct of Surmodics' board of directors and whether they are adequately fulfilling their fiduciary duties to all shareholders [3]. - Shareholders of Surmodics are encouraged to seek additional information regarding the investigation [3]. Group 3: Legal Context - Ademi LLP specializes in shareholder litigation related to buyouts, mergers, and individual shareholder rights across the country [4].

Core Viewpoint - Surmodics, Inc. (SRDX) is positioned for growth due to strong prospects in the thrombectomy business, driven by solid second-quarter performance and ongoing R&D efforts, despite concerns over regulatory challenges and reliance on third-party partnerships [1][2]. Financial Performance - Surmodics has experienced a decline of 4.8% year-to-date, contrasting with a 4.2% rise in the industry and an 11.6% increase in the S&P 500 [2]. - The company has a market capitalization of $493.68 million and projects a remarkable 97.2% growth for fiscal 2025 [2]. - Surmodics has consistently surpassed earnings estimates, with an average earnings surprise of 165.93% over the last four quarters [2]. Research and Development - The company has made significant investments in R&D, with expenses constituting 27.6% of total revenues in the second quarter [4]. - R&D efforts have focused on developing a pipeline of vascular intervention medical devices, including drug-coated balloons (DCBs), mechanical thrombectomy devices, and radial access devices [3]. Thrombectomy Business - Surmodics aims to leverage its proprietary Pounce thrombectomy platform technology, having launched two new mechanical thrombectomy systems during the fiscal second quarter [5][6]. - The company reported growth in product sales within the Medical Device segment, primarily due to the initial stocking order for the SurVeil DCB from Abbott and ongoing sales from the Pounce thrombectomy device platform [6]. Regulatory and Operational Challenges - Surmodics faces regulatory headwinds, as its facilities are subject to FDA inspections, which could impact its operations if non-compliance is found [8]. - The company's business strategy relies on licensing arrangements with third parties, making it vulnerable to the success of its licensees in developing and marketing products [9]. Estimate Trends - There has been a positive revision trend for fiscal 2024 estimates, with the loss per share narrowing from 90 cents to 72 cents over the past 30 days [10]. - The consensus estimate for third-quarter fiscal revenues is $30.3 million, indicating a 42.2% decline year-over-year, with an expected loss of 30 cents per share, widening by 157.7% year-over-year [10].

Financial Performance - Total revenue for Q2 2024 increased by 18% year-over-year to $32 million, with a 19% increase excluding SurVeil DCB license fee revenue [44][58] - Medical Device product revenue grew by 40% year-over-year to $11.1 million, marking the second consecutive quarter of 40% or higher growth [58] - The company achieved a notable improvement in profitability, with GAAP net income of $250,000 compared to a net loss of $7.7 million in the prior year [61][30] - Adjusted EBITDA increased to $4.8 million from a loss of $1.5 million in the prior year [30] Business Segment Performance - Revenue from the Medical Device segment increased by 26% to $24.8 million, while the In Vitro Diagnostics (IVD) segment revenue decreased by 5% to $7.1 million [12][27] - The growth in the Medical Device segment was primarily driven by product sales, particularly from the Vascular Interventions portfolio, which contributed $3.2 million of growth [4][15] - Royalty and license fee revenue increased by 21% to $11.4 million, with performance coating royalty and license fee revenue rising by 27% to $10.3 million [59] Market and Competitive Landscape - The company is focused on capitalizing on growth opportunities in the vascular interventions market, with positive feedback from physicians regarding the SurVeil DCB and Pounce thrombectomy products [6][48] - The total addressable market (TAM) for SurVeil is estimated to be significantly larger than the current market, with over 500,000 above-the-knee cases performed annually in the U.S. [72][40] - The company is committed to maintaining a competitive advantage by expanding its product offerings and enhancing its existing platforms [102] Strategic Direction - The company aims to drive durable revenue growth and cash flow generation across its core medical device and performance coatings businesses [22][24] - The strategic objectives for fiscal 2024 include facilitating the adoption of existing products and developing new products to enhance the vascular interventions portfolio [5][48] - The company plans to continue disciplined expense management while investing in R&D to support future growth [36][69] Management Commentary - Management expressed optimism about the future, highlighting strong demand for the SurVeil DCB and Pounce products, and the successful transition to steady-state operations following initial stocking orders [14][46] - The management team noted that the initial commercialization feedback from Abbott has been positive, indicating a strong partnership [41][46] - The company expects to achieve total revenue growth of at least 15% year-over-year, excluding the impact of SurVeil DCB license fee revenue [37][63] Other Important Information - The company ended the quarter with $40.9 million in cash and cash equivalents, with access to approximately $65 million in additional borrowing capacity [31] - Fiscal 2024 guidance was updated to reflect improved expectations, with total revenue projected to range from $122 million to $124 million [63][64] Q&A Session Summary Question: Can you help us calibrate the TAM for SurVeil and its revenue generation? - Management indicated that the TAM is much larger than the current market, with every patient treated with balloon angioplasty being a candidate for a drug-coated balloon [40] Question: How is Abbott's interest in the product developing? - Management confirmed that Abbott's partnership is strong, and they are pleased with the consistent orders received since commercialization began [41] Question: What is the outlook for R&D spending moving forward? - Management stated that while R&D spending has been significant, it is expected to decrease as revenue grows, but they will continue to invest appropriately in R&D [78]

Revenue Performance - Revenue in Q2 fiscal 2024 was $32.0 million, an 18% increase from $27.2 million in Q2 fiscal 2023[74] - Medical Device revenue in Q2 fiscal 2024 was $24.8 million, a 26% increase from $19.7 million in the prior-year quarter[75] - IVD revenue in Q2 fiscal 2024 was $7.1 million, a 5% decrease from $7.5 million in Q2 fiscal 2023[76] - Total revenue for the first six months of fiscal 2024 was $62.5 million, a 20% increase from $52.1 million in the same prior-year period[74] - Medical Device revenue for the first six months of fiscal 2024 was $48.4 million, a 25% increase from $38.7 million in the same prior-year period[75] - IVD product sales for the first six months of fiscal 2024 increased 4% to $13.9 million compared to $13.3 million in the same prior-year period[76] - Product sales reached $18.1 million in Q2 FY2024, an increase of $2.7 million or 18% compared to the prior-year quarter, and $36.9 million for the first six months, up 25% year-over-year[77] Profitability and Expenses - Product gross profit increased by $1.4 million or 14% in Q2 FY2024, totaling $11.0 million, and $2.4 million or 13% for the first six months, totaling $21.9 million[79] - R&D expenses decreased by $2.7 million or 21% in Q2 FY2024, totaling $10.2 million, and by $6.8 million or 26% for the first six months, totaling $19.2 million[80] - SG&A expenses were flat in Q2 FY2024 at $13.1 million, but declined by $0.6 million or 2% for the first six months compared to the prior-year period[81] - Medical Device segment reported operating income of $0.3 million in Q2 FY2024, a significant improvement from an operating loss of $(7.1) million in the prior-year quarter[88] - In Vitro Diagnostics business reported operating income of $3.4 million in Q2 fiscal 2024, down from $3.6 million in Q2 fiscal 2023, representing 47% and 49% of revenue respectively[90] - IVD product gross profit decreased by $0.3 million to $4.6 million in Q2 fiscal 2024, with gross margins at 65.1% compared to 65.7% in Q2 fiscal 2023[90] Cash Flow and Financial Position - Cash used in operating activities was $(1.4) million in the first six months of fiscal 2024, significantly improved from $(16.6) million in the same period of fiscal 2023[91] - As of March 31, 2024, working capital totaled $65.1 million, an increase of $2.3 million from September 30, 2023[95] - Cash and cash equivalents totaled $40.9 million as of March 31, 2024, a decrease of $4.4 million from $45.4 million as of September 30, 2023[95] - Cash used in investing activities totaled $(5.7) million in the first six months of fiscal 2024, compared to $(1.7) million in the same prior-year period[93] Customer Concentration and Revenue Sources - Abbott and Medtronic accounted for 17% and 12% of consolidated revenue respectively for the six months ended March 31, 2024[101] - The company relies on a small number of significant customers, including Abbott and Medtronic, affecting financial results and stock price due to factors related to these customers[105] Future Expectations and Guidance - For FY2024, the company expects R&D expenses to decrease by approximately $6.0 million to $7.0 million compared to FY2023, primarily due to lower SurVeil DCB expenses[80] - The company anticipates an increase in SG&A expenditures of between $1.0 million and $2.0 million in fiscal 2024[99] - The company expects total interest expense under the credit agreement with MidCap to be approximately $3.5 million in fiscal 2024[96] Risk Factors - The company reported ongoing operating losses and interest expenses, which could impact expected expenditures and investments in growth initiatives[105] - The company faces uncertainties in new product development and regulatory approval processes, which may result in lost market opportunities[105] - The company is exposed to Euro currency risk due to manufacturing operations in Ireland and sales denominated in Euros, which could affect revenue and expenses when converted to U.S. dollars[111] - The company has not entered into any foreign currency forward exchange contracts to hedge against adverse fluctuations in foreign currency exchange rates[111] Legal and Regulatory Matters - The company is involved in various legal actions related to its operations, products, and technologies, including intellectual property disputes[116] Internal Controls - There were no changes in internal control over financial reporting that materially affected the company's internal control during the three months ended March 31, 2024[114]

Financial Performance - Total revenue for Q2 FY2024 was $32.0 million, an increase of 18% year-over-year, with revenue excluding SurVeil DCB license fee revenue at $30.9 million, up 19% year-over-year [4]. - Total revenue for Q2 FY2024 was $31.96 million, a 17.5% increase from $27.20 million in Q2 FY2023 [28]. - The company raised its fiscal 2024 revenue guidance to a range of $122 million to $124 million, reflecting an improved outlook compared to previous guidance [13]. - Fiscal 2024 total revenue excluding SurVeil DCB license fee revenue is now expected to increase by 15% to 17% compared to fiscal 2023 [13]. - The company expects total revenue growth for FY2024, excluding SurVeil DCB license fees, to accelerate compared to FY2023 [24]. - The company expects total revenue for fiscal year 2024 to be between $122 million and $124 million, representing a decrease of 8% to 6% from $133 million in fiscal 2023 [42]. Segment Performance - Medical Device segment revenue grew by 26% year-over-year to $24.8 million, driven by a 40% increase in product sales to $11.1 million [8]. - Medical Device revenue for Q2 2024 reached $24,826 million, a 26% increase from $19,707 million in Q2 2023 [34]. - Product sales reached $18.10 million, up 17.8% from $15.35 million in the same quarter last year [28]. - Medical Device product sales for the first half of 2024 were $23,050 million, a 41% increase from $16,294 million in the same period of 2023 [34]. - In Vitro Diagnostics revenue for Q2 2024 was $7,132 million, a decrease of 5% from $7,491 million in Q2 2023 [34]. Profitability and Income - GAAP net income for Q2 FY2024 was $0.2 million, compared to a net loss of $(7.7) million in the same period last year, marking a significant turnaround [11]. - Net income for Q2 FY2024 was $0.25 million, compared to a net loss of $7.73 million in Q2 FY2023 [28]. - Operating income improved to $0.66 million from a loss of $6.58 million year-over-year [28]. - Total operating income for Q2 2024 was $659 million, compared to a loss of $6,583 million in Q2 2023 [36]. - The company reported a net income of $247 million for Q2 2024, a turnaround from a net loss of $7,733 million in Q2 2023 [38]. Cash Flow and Assets - Cash flow from operations exceeded $7 million in Q2 FY2024, with cash and investments totaling $41 million at the end of the quarter [3]. - Cash and cash equivalents decreased to $33.03 million from $41.42 million at the end of FY2023 [30]. - Total assets as of March 31, 2024, were $182.81 million, down from $185.73 million at the end of FY2023 [30]. Cost Management - Operating costs decreased by 14% year-over-year to $24.2 million, primarily due to lower research and development expenses [10]. - Research and development expenses were $10.23 million, a decrease from $12.92 million in the prior year [28]. New Product Launches - Surmodics announced the commercial launch of two new thrombectomy devices: Pounce Venous and Pounce LP, following successful limited market evaluations [3]. - Surmodics is focused on enhancing its vascular interventions portfolio, including the adoption of SurVeil DCB products and Pounce thrombectomy products [24]. Adjusted Metrics - Adjusted EBITDA for Q2 FY2024 was $4.8 million, compared to an adjusted EBITDA loss of $(1.5) million in Q2 FY2023 [11]. - The company reported a non-GAAP operating income of $1.54 million for Q2 FY2024, compared to a loss of $5.83 million in Q2 FY2023 [26]. - Adjusted EBITDA for Q2 2024 was $4,809 million, a significant increase of $6,311 million compared to a loss of $1,502 million in Q2 2023 [38]. - Non-GAAP diluted EPS for fiscal year 2024 is projected to be between $(0.67) and $(0.47) [44]. Other Financial Information - Surmodics recognized revenue from SurVeil DCB license fees under the Development and Distribution Agreement with Abbott [1]. - Adjusted EBITDA calculations are provided in the GAAP to Non-GAAP Reconciliation section [2]. - Product gross profit is calculated as product sales minus product costs, with product gross margin expressed as a percentage of product sales [3]. - Non-GAAP net income and Non-GAAP diluted EPS calculations are detailed in the GAAP to Non-GAAP Reconciliation section [4]. - Restructuring expenses in Q2 fiscal 2023 included severance and related costs due to workforce restructuring [5]. - Amortization of business acquisition-related intangible assets significantly impacts net income, with a portion being non-deductible for tax purposes [6]. - Net income adjustments account for income tax benefits and expenses, estimated using applicable statutory rates of 21% in the U.S. and 12.5% in Ireland [7]. - For the six months ended March 31, 2024, diluted weighted average shares outstanding were 14,127 for GAAP EPS and 14,172 for Non-GAAP EPS [8]. - Surmodics has data on file regarding the Pounce Thrombectomy System for treating peripheral arterial occlusions [9].

Surmodics, Inc (NASDAQ:SRDX) Q4 2023 Earnings Conference Call February 2, 2024 8:00 AM ET Company Participants Gary Maharaj - President and Chief Executive Officer Tim J. Arens - Senior Vice President of Finance and Information Technology and Chief Financial Officer Conference Call Participants Brooks O'Neil - Lake Street Capital Markets. Mike Matson - Needham James Sidoti - Sidoti & Company Operator Welcome everyone to the Surmodics First Quarter of Fiscal Year 2024 Earnings Call. Please note that this cal ...

Revenue Performance - Revenue for the first quarter of fiscal 2024 was $30.6 million, a 23% increase from $24.9 million in the prior-year quarter[75]. - Medical Device revenue increased 24% to $23.5 million in the first quarter of fiscal 2024, compared to $19.0 million in the prior-year quarter[76]. - Product sales in the Medical Device segment rose 43% to $12.0 million, driven by the initial stocking order for the SurVeil DCB from Abbott[78]. - In Vitro Diagnostics revenue was $7.0 million, an 18% increase from $5.9 million in the prior-year quarter[77]. - Performance coating royalties and license fee revenue increased to $8.2 million in Q1 fiscal 2024, up from $7.5 million in the prior-year quarter[89]. Expenses and Profitability - R&D expense decreased 32% to $8.7 million in the first quarter of fiscal 2024, compared to $12.7 million in the prior-year quarter[81]. - SG&A expense decreased 5% to $12.5 million, with a percentage of revenue dropping from 53% to 41%[82]. - Product gross profit increased 12% to $10.0 million, with product gross margins at 53.2% compared to 63.0% in the prior-year quarter[79]. - Medical Device segment reported an operating loss of $(0.2) million in Q1 fiscal 2024, a significant improvement from $(7.2) million in the prior-year quarter, representing (1)% of revenue[86]. - In Vitro Diagnostics segment reported operating income of $3.1 million in Q1 fiscal 2024, with product gross margins decreasing to 61.4% from 69.4% year-over-year[88]. - Medical Device product gross profit increased by $0.9 million year-over-year in Q1 fiscal 2024, but gross margins decreased to 48.6% from 58.6%[89]. Cash Flow and Liquidity - Cash used in operating activities was $(8.8) million in Q1 fiscal 2024, an improvement from $(10.8) million in the same prior-year period[89]. - Cash used in investing activities totaled $(8.4) million in Q1 fiscal 2024, compared to $(1.0) million in the same prior-year period[91]. - Cash and cash equivalents decreased to $35.2 million as of December 31, 2023, down from $45.4 million as of September 30, 2023[93]. - Cash and cash equivalents totaled $35.2 million as of December 31, 2023, expected to support operations and planned capital expenditures for fiscal 2024[96]. - The company held $11.8 million in available-for-sale debt securities as of December 31, 2023, with interest rate fluctuations having an insignificant impact on results[104]. Future Outlook - For fiscal 2024, the company expects R&D expenses to decrease by $5.5 million to $6.5 million compared to fiscal 2023[81]. - Anticipated increase in SG&A expenditures between $2.0 million and $3.0 million for fiscal 2024, alongside significant R&D expenses primarily for medical device product development[96]. - Future cash requirements will depend on market acceptance of medical device products, including the SurVeil DCB, and potential corporate transactions[97]. - The company may seek additional liquidity through borrowing, debt or equity financing, or corporate transactions, with no assurance of favorable terms[97]. Customer and Market Dynamics - Abbott and Medtronic are the largest customers, contributing 27% and 10% of consolidated revenue for fiscal 2023, and 19% and 10% for the three months ended December 31, 2023, respectively[98]. - The Pounce thrombectomy device platform continues to see sales growth, contributing to overall revenue increases[78]. Risk Factors - The company is exposed to Euro currency risk due to manufacturing operations in Ireland and sales denominated in Euros, which may affect revenue and expenses[107]. - Interest rate swap transaction fixes the one-month Term SOFR portion of interest rate on $25.0 million of term loans at 4.455%, resulting in an effective interest rate of 10.205%[105]. - Management believes that a reasonable change in raw material prices would not materially impact future earnings or cash flows[106]. Accounting and Compliance - No significant changes in critical accounting policies were reported for the three months ended December 31, 2023[99]. - Total interest expense under the credit agreement with MidCap is expected to be approximately $3.5 million for fiscal 2024[94]. - Working capital totaled $63.3 million as of December 31, 2023, an increase of $0.6 million from September 30, 2023[93].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2023 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 or other ju ...