Surmodics Stock Down Despite Q1 Earnings Beat, Gross Margin Up

Core Viewpoint - Surmodics, Inc. reported a narrower-than-expected adjusted loss per share of 4 cents for the first quarter of fiscal 2025, compared to breakeven in the same quarter last year, and better than the Zacks Consensus Estimate of a loss of 8 cents per share [1][14]. Financial Performance - The company registered revenues of $29.9 million in the fiscal first quarter, a decrease of 2.1% year over year, missing the Zacks Consensus Estimate by 10.6% [3][14]. - GAAP loss per share for the quarter was 26 cents, wider than the loss of 6 cents per share in the prior year [2]. - Surmodics' gross profit increased by 3.4% year over year to $22.5 million, with a gross margin expansion of 400 basis points to 75.2% [10][14]. - Selling, general & administrative expenses rose by 21% year over year to $15.2 million, while research and development expenses increased by 3.2% to $8.9 million [11]. Segment Analysis - Surmodics operates through two segments: Medical Device and In Vitro Diagnostics (IVD) [5]. - Medical Device segment sales were $23.3 million, down 1.1% year over year, with a notable decline in product sales of 15% to $10.1 million [5][6]. - IVD sales declined by 5.2% year over year to $6.6 million, primarily due to unfavorable order timing [7]. Revenue Sources - Product sales totaled $16.5 million, down 12.1% from the prior year [8]. - Royalties and license fees revenues increased by 15.9% to $10.6 million [8]. - Research, development, and other revenues rose by 7.6% to $2.7 million [9]. Financial Position - At the end of the first quarter of fiscal 2025, Surmodics had cash and cash equivalents of $30.1 million, down from $36.1 million at the end of fiscal 2024 [12]. - Total long-term debt was $29.59 million, slightly up from $29.55 million at the end of fiscal 2024 [12]. Future Outlook - Surmodics did not provide guidance on the pending acquisition by GTCR LLC [13]. - The company received FDA's 510(k) clearance for its Pounce XL Thrombectomy System, which is expected to expand its market potential [15].