Surmodics(SRDX) - 2025 Q3 - Quarterly Results

Q3 FY2025 Financial & Business Highlights Surmodics reported a 3% year-over-year revenue decrease to $29.6 million in Q3 FY2025, but improved GAAP net loss and more than doubled Adjusted EBITDA Financial Summary Surmodics' Q3 FY2025 revenue decreased 3% to $29.6 million, but profitability improved with a narrower GAAP net loss and significantly higher Adjusted EBITDA Q3 FY2025 Financial Metrics | Metric | Q3 FY2025 | Q3 FY2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $29.6 million | $30.3 million | -3% YoY | | Total Revenue (ex-SurVeil DCB license fee) | $29.6 million | $29.2 million | +1% YoY | | GAAP Net Loss | $(5.3) million | $(7.6) million | Improved | | Adjusted EBITDA | $3.4 million | $1.6 million | +112% YoY | Business & Strategic Highlights Despite a decline in SurVeil DCB revenue, Surmodics achieved growth in Pounce Thrombectomy and IVD, focusing on product growth, expense control, and the pending GTCR acquisition - The Pounce Thrombectomy Platform sales grew 35% year-over-year, while the In Vitro Diagnostics (IVD) segment revenue increased by 6%[3] - The company's strategic priorities are facilitating long-term product growth, controlling expenses, and completing the pending acquisition by GTCR[3] - Surmodics announced the full commercial release of the Pounce XL Thrombectomy System for clot removal in iliac and femoral arteries[4] - The company is actively working to respond to the FTC's administrative complaint and federal court action challenging the proposed merger with an affiliate of GTCR[3] Detailed Financial Performance This section provides an in-depth analysis of Surmodics' Q3 FY2025 revenue, profitability, balance sheet, and cash flow performance Revenue Analysis Q3 FY2025 total revenue decreased 3% to $29.6 million, driven by a 5% decline in Medical Device, partially offset by 6% growth in In Vitro Diagnostics Q3 FY2025 Revenue by Segment | Revenue Segment | Q3 FY2025 (in thousands) | Q3 FY2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Medical Device | $22,214 | $23,383 | -5% | | In Vitro Diagnostics | $7,353 | $6,958 | +6% | | Total Revenue | $29,567 | $30,341 | -3% | - The total revenue decline was caused by a $1.1 million decrease in SurVeil DCB license fee revenue and a $1.7 million decrease in SurVeil DCB product sales revenue[5] - Within the Medical Device segment, product sales fell 11% to $9.5 million, while performance coating royalties and license fees grew 4% to $9.7 million[7][8] Profitability Analysis Surmodics improved profitability in Q3 FY2025, narrowing GAAP net loss to $(5.3) million, despite a lower product gross margin, due to reduced R&D expenses Q3 FY2025 Profitability Metrics | Profitability Metric | Q3 FY2025 | Q3 FY2024 | | :--- | :--- | :--- | | GAAP Net Loss | $(5.3) million | $(7.6) million | | GAAP Diluted EPS | $(0.37) | $(0.53) | | Non-GAAP Net Income (Loss) | $0.8 million | $(3.9) million | | Non-GAAP Diluted EPS | $0.06 | $(0.27) | | Adjusted EBITDA | $3.4 million | $1.6 million | - Product gross margin declined to 48.8% from 51.9% in the prior year, primarily due to a $1.0 million drop in SurVeil DCB product gross profit[9] - Operating costs and expenses decreased by $1.0 million, as a $2.2 million reduction in R&D expense more than offset a $2.5 million increase in merger-related charges[10][3] Balance Sheet and Cash Flow As of June 30, 2025, Surmodics maintained $32.7 million in cash and investments, with $30.0 million in total debt, generating $1.4 million in operating cash flow for the quarter - The company reported $32.7 million in cash and investments as of June 30, 2025[12] - Total outstanding debt was $30.0 million, with an additional $13.9 million available under the revolving credit facility[12] - In Q3 FY2025, Surmodics generated $1.4 million in cash from operating activities[13] Fiscal Year 2025 Financial Guidance Surmodics updated its FY2025 financial guidance, raising revenue expectations while adjusting EPS projections to reflect increased merger-related charges Updated Revenue Guidance Surmodics raised its FY2025 total revenue guidance to $116.5 million to $118.5 million, despite anticipated headwinds from SurVeil DCB FY2025 Revenue Guidance | FY2025 Revenue Guidance | Previous Range (in millions) | Updated Range (in millions) | YoY Change (Updated) | | :--- | :--- | :--- | :--- | | Total Revenue | $114.0 - $117.0 | $116.5 - $118.5 | -8% to -6% | | Total Revenue (ex-SurVeil DCB license fee) | $112.5 - $115.5 | $115.0 - $117.0 | -5% to -3% | - The company expects SurVeil DCB product revenue to decrease by approximately $7.5 million in fiscal 2025 due to lower demand from its distribution partner, Abbott[15] Updated Earnings Per Share (EPS) Guidance The company adjusted its FY2025 EPS guidance, projecting a wider GAAP net loss but an improved Non-GAAP net loss, incorporating $16.0 million in merger-related charges FY2025 EPS Guidance | FY2025 EPS Guidance | Previous Range | Updated Range | | :--- | :--- | :--- | | GAAP Net Loss per Share | $(1.60) to $(1.40) | $(1.70) to $(1.55) | | Non-GAAP Net Loss per Share | $(0.62) to $(0.42) | $(0.35) to $(0.20) | - The updated guidance assumes approximately $16.0 million of merger-related charges in fiscal 2025, a significant increase from $3.7 million in fiscal 2024[15] Pending Acquisition by GTCR Surmodics' $627 million acquisition by GTCR, approved by shareholders, faces a significant challenge from the FTC, making its completion contingent on litigation resolution - Surmodics agreed to be acquired by an affiliate of GTCR for $43.00 per share in cash, for a total equity valuation of approximately $627 million[19] - The merger was approved by Surmodics' shareholders on August 13, 2024[20] - On March 6, 2025, the FTC initiated legal action to block the merger, making the transaction's closing subject to the successful resolution of this litigation[21] Appendix: Financial Statements and Reconciliations This appendix provides detailed financial statements including consolidated statements of operations, balance sheets, cash flows, supplemental revenue, and GAAP to non-GAAP reconciliations Consolidated Statements of Operations This statement details the company's revenues, operating costs, and expenses, leading to the net loss for the three and nine months ended June 30, 2025, with a comparison to 2024 Consolidated Statements of Operations | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenue | $29,567 | $30,341 | | Total operating costs and expenses | $34,809 | $35,710 | | Operating (loss) income | $(5,242) | $(5,369) | | Net (loss) income | $(5,318) | $(7,554) | | Diluted net (loss) income per share | $(0.37) | $(0.53) | Consolidated Balance Sheets This statement presents a snapshot of the company's financial health, detailing its assets, liabilities, and stockholders' equity as of June 30, 2025, compared to September 30, 2024 Consolidated Balance Sheets | (in thousands) | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total Current Assets | $75,994 | $81,304 | | Total Assets | $169,822 | $178,562 | | Total Current Liabilities | $19,441 | $20,543 | | Total Liabilities | $58,513 | $59,665 | | Total Stockholders' Equity | $111,309 | $118,897 | Consolidated Statements of Cash Flows This statement outlines the movement of cash through operating, investing, and financing activities for the nine months ended June 30, 2025, showing a net cash usage of $5.5 million from operations Consolidated Statements of Cash Flows | (in thousands) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(5,540) | $(3,410) | | Net cash (used in) provided by investing activities | $(3,515) | $(12,395) | | Net cash (used in) provided by financing activities | $(1,184) | $(1,388) | | Net change in cash and cash equivalents | $(9,834) | $(17,118) | | Cash and Cash Equivalents, End of period | $26,281 | $24,301 | Supplemental Revenue and Segment Information This section provides a detailed breakdown of revenue sources within the Medical Device and IVD segments, highlighting the 100% decline in SurVeil DCB license fees and segment-level operating income Q3 2025 Revenue | Q3 2025 Revenue (in thousands) | Amount | % Change YoY | | :--- | :--- | :--- | | Medical Device Product Sales | $9,540 | -11% | | Medical Device Royalties & License Fees | $9,657 | +4% | | Medical Device R&D and Other | $3,017 | +37% | | IVD Product Sales | $7,221 | +6% | Q3 Operating Income (Loss) | Q3 Operating Income (Loss) (in thousands) | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | Medical Device | $(211) | $(2,288) | | In Vitro Diagnostics | $3,295 | $3,153 | | Corporate | $(8,326) | $(6,234) | | Total Operating Loss | $(5,242) | $(5,369) | GAAP to Non-GAAP Reconciliations These tables reconcile reported GAAP figures to non-GAAP metrics by adjusting for specific items like stock-based compensation, merger-related charges, and amortization of acquired intangible assets - For Q3 FY2025, GAAP Net Loss of $(5.3) million was adjusted for items including $5.3 million in merger-related charges and $1.3 million in stock-based compensation to arrive at an Adjusted EBITDA of $3.4 million[37] - The reconciliation from GAAP Diluted EPS of $(0.37) to Non-GAAP Diluted EPS of $0.06 for Q3 FY2025 includes adjustments for merger-related charges ($0.37 per share) and amortization of acquired intangibles ($0.06 per share)[40] - The full-year FY2025 GAAP Diluted EPS guidance of $(1.70) to $(1.55) is reconciled to the Non-GAAP range of $(0.35) to $(0.20) by excluding estimated merger-related charges ($1.13 per share) and amortization ($0.22 per share)[44]