Surmodics(US:SRDX)2024-05-01 20:07Financial 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]