Surmodics (SRDX) Q1 2025 earnings summary

Executive summary

• Q1 FY2025 revenue was $29.9M, down 2% year-over-year; excluding SurVeil DCB license fees, revenue was $28.7M, down 3%.

• Net loss for the quarter was $(3.7)M, compared to $(0.8)M in the prior-year quarter, driven by lower product sales and $2.3M in merger-related charges.

• Adjusted EBITDA was $3.6M, down from $3.9M in Q1 FY2024.

• Pending $627M acquisition by GTCR (BCE Parent, LLC) for $43.00/share remains under FTC review, with closing targeted for Q2 FY2025.

• FDA 510(k) clearance received for Pounce XL Thrombectomy System, expanding product portfolio.

Financial highlights

• Product sales declined 12% to $16.5M, mainly due to lower SurVeil DCB shipments; performance coating royalties and license fees rose 14% to $9.4M.

• Product gross margin improved to 55.1% from 53.2% year-over-year, but product gross profit fell 9% to $9.1M.

• R&D expense increased 3% to $8.9M, and SG&A rose 21% to $15.2M, largely due to merger costs.

• Operating costs and expenses (excluding product costs) rose 13% to $25.0M, driven by $2.3M in merger-related charges.

• Cash and equivalents at quarter-end were $30.1M, down $10M from September 2024.

Outlook and guidance

• SurVeil DCB product revenue expected to decline by $6M in FY2025; Pounce thrombectomy growth not expected to offset this.

• SurVeil DCB license fee revenue to decline by $3.6M in FY2025, with no further recognition after Q2.

• Product gross profit and margin anticipated to decline for the remainder of FY2025 due to lower SurVeil DCB revenue and production inefficiencies.

• Management expects existing liquidity and credit facilities to be sufficient for FY2025 operations.