Surmodics(SRDX)2025-04-30 11:55Revenue 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].