Surmodics (SRDX) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $30.3M, down 42% year-over-year due to a prior-year SurVeil DCB milestone payment; excluding this, revenue grew 10% to $29.2M.

• Net loss for Q3 2024 was $(7.6)M, compared to net income of $7.3M in Q3 2023; adjusted EBITDA was $1.6M, down from $24.6M.

• Surmodics entered a definitive agreement to be acquired by BCE Parent, LLC/GTCR for $43.00 per share in cash, valuing the company at $627M; deal is pending customary closing conditions and a shareholder vote.

• Product sales and performance coating royalties grew, but were offset by a sharp decline in SurVeil DCB license fee revenue.

• Awarded a group purchasing agreement with Premier, Inc. for thrombectomy products, expanding national reach.

Financial highlights

• Q3 2024 revenue: $30.3M (down 42% year-over-year); excluding SurVeil DCB milestone, core revenue grew 10% to $29.2M.

• Medical Device revenue fell 49% to $23.4M; excluding SurVeil DCB license fees, it rose 10% to $22.2M.

• In Vitro Diagnostics revenue increased 8% to $7.0M, led by broad-based product sales growth.

• Product gross margin for Q3 2024: 51.9% (down from 55.8%); product gross profit rose 4% to $9.1M.

• Cash and equivalents plus available-for-sale investments at June 30, 2024: $38.2M; $5M outstanding on revolving credit, $25M on term loan.

Outlook and guidance

• Fiscal 2024 financial guidance suspended due to the pending acquisition.

• R&D expense expected to decrease in FY24 due to transition of SurVeil DCB to commercialization and prior workforce reduction.

• SG&A expense expected to increase in FY24, mainly due to merger-related charges and commercialization investments.

• Product gross margins may remain pressured by increased sales of lower-margin vascular intervention devices.

• Management believes current liquidity is sufficient for FY24 operations and planned capital expenditures.