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Silk Road Medical Inc (SILK)·Q3 2023 Earnings Summary

Executive Summary

  • Q3 revenue was $44.4M (+19% YoY), gross margin 73%, and EPS was -$0.33; net loss was $12.8M, driven by higher OpEx from sales expansion and manufacturing costs with two facilities .
  • FY2023 revenue guidance was cut to $170–$174M (Oct 10) and maintained on Nov 8; prior guidance was $180–$184M (Aug 1) and $176–$184M (May 9). This guidance reset and leadership transition were key stock reaction catalysts .
  • Sequentially, revenue decreased vs Q2 ($45.3M) while gross margin improved from 71% to 73%, reflecting mix and manufacturing cost dynamics .
  • CEO transition underway: retirement of Erica Rogers announced Oct 10; Board welcomed incoming CEO Chas McKhann (announced Nov 2) to drive adoption in an underpenetrated market .

What Went Well and What Went Wrong

What Went Well

  • “Growth was driven primarily by increased TCAR adoption” (Q3), with revenue +19% YoY, evidencing continued category leadership .
  • Gross margin improved sequentially to 73% vs 71% in Q2, despite structural cost pressures from two facilities .
  • Strong liquidity: cash, cash equivalents and investments were $197.2M at quarter end, supporting continued commercial and R&D execution .

What Went Wrong

  • FY2023 revenue guidance was reduced from $180–$184M (Aug 1) to $170–$174M (Oct 10), and maintained on Nov 8; this is a negative inflection in growth expectations .
  • YoY gross margin declined (73% vs 75%) due to prior-year cost revaluation and higher manufacturing costs with two facilities fully operational .
  • OpEx rose 24% YoY to $46.1M, reflecting continued sales force expansion and commercial investments; net loss widened YoY to $12.8M .

Financial Results

MetricQ3 2022Q1 2023Q2 2023Q3 2023
Revenue ($USD Millions)$37.4 $40.1 $45.3 $44.4
Gross Profit ($USD Millions)$28.1 $27.6 $32.3 $32.4
Gross Margin %75% 69% 71% 73%
Operating Expenses ($USD Millions)$37.3 $44.5 $46.6 $46.1
Net Loss ($USD Millions)$(10.3) $(16.5) $(13.5) $(12.8)
EPS (Basic & Diluted, $USD)$(0.29) $(0.43) $(0.35) $(0.33)
Cash, Cash Equivalents & Investments ($USD Millions)—$204.4 $202.2 $197.2
Actual vs Consensus (Q3 2023)RevenueEPS
Actual$44.4M $(0.33)
S&P Global ConsensusN/A (Unavailable via tool)N/A (Unavailable via tool)

Note: S&P Global consensus estimates were unavailable via the GetEstimates tool at the time of analysis.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY2023$176–$184M (May 9) $180–$184M (Aug 1) Raised
RevenueFY2023$180–$184M (Aug 1) $170–$174M (Oct 10) Lowered
RevenueFY2023$170–$174M (Oct 10) $170–$174M (Nov 8) Maintained

No margin, OpEx, OI&E, tax rate, or dividend guidance was disclosed in the Q3 2023 materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2023)Trend
Commercial expansion & sales force“Optimizing and expanding our field presence to meet strong TCAR demand” (Q1) ; “Expanding field presence; category leadership” (Q2) OpEx increase due primarily to continued expansion of the sales team and commercial efforts Continued expansion; investment intensity sustained
Gross margin & manufacturing costsGM 69% impacted by production variances (Q1) GM 71% impacted by labor/materials and two facilities (Q2) GM 73%; YoY decline due to prior-year cost revaluation and higher manufacturing costs (two facilities)
Leadership transition——CEO retirement announced Oct 10; new CEO welcomed Nov 2
Product innovationFull market release of ENFLATE balloon catheter (Q1) Next-generation technology emphasis (Q2) No new product disclosures in Q3 release
Guidance trajectory$176–$184M (Q1) Raised to $180–$184M (Q2) Lowered to $170–$174M (Oct 10), maintained Nov 8

Management Commentary

  • “Revenue for the third quarter of 2023 was $44.4 million, an increase of $7.1 million or 19%, compared to the third quarter of 2022. Growth was driven primarily by increased TCAR adoption.”
  • “Gross margin was 73% for the third quarter of 2023 compared to 75% for the third quarter of 2022. The decrease was driven by a revaluation of standard costs in the prior year period… and higher manufacturing costs associated with having two manufacturing facilities fully operational.”
  • “Operating expenses were $46.1 million… The increase was due primarily to the continued expansion of the sales team and commercial efforts.”
  • Chairman Jack Lasersohn on CEO transition: “We are thrilled to welcome Chas McKhann… the right leader to leverage our strong infrastructure, skilled commercial team, and substantial body of clinical evidence to drive further TCAR adoption.”
  • Q2 CEO Erica Rogers: “Our next generation technology coupled with our expanding field presence further strengthen our category leadership…”
  • Q1 CEO Erica Rogers: “Full market release of ENFLATE… We continue to execute… setting us up for continued durable growth.”

Q&A Highlights

The Q3 2023 earnings call transcript was not accessible via the document tool due to a retrieval error; therefore, Q&A highlights cannot be provided from the primary transcript at this time. For reference, the public transcript is available externally .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2023 revenue and EPS was unavailable via the GetEstimates tool due to mapping issues, so a direct comparison to consensus cannot be provided at this time. Results should prompt revisiting FY2023 revenue models given the guidance cut from $180–$184M to $170–$174M .

Key Takeaways for Investors

  • Q3 revenue growth (+19% YoY) underscores ongoing TCAR adoption; sequential revenue was modestly lower vs Q2 while gross margin improved to 73% .
  • Guidance reset to $170–$174M marks a negative inflection and likely drives estimate resets; monitor near-term sell-side revisions and management’s pace of commercial investments .
  • Structural cost headwinds (two facilities, production variances) weighed on YoY margin; sequential margin improvement suggests mix/efficiency gains but watch sustainability into Q4/Q1 .
  • Leadership change introduces execution risk and potential strategic refresh; Board’s stated goal is accelerated adoption under incoming CEO .
  • Liquidity remains strong ($197.2M), supporting continued commercial and R&D initiatives even as losses persist .
  • Near-term trading: sentiment likely sensitive to any incremental guidance commentary and visibility on margin trajectory; absence of detailed non-revenue guidance elevates uncertainty .
  • Medium-term thesis: category leadership in TCAR and growing clinical evidence remain intact; key watch items are sales force productivity, manufacturing cost absorption, and cadence of product updates .