SURMODICS INC (SRDX)·Q1 2025 Earnings Summary

Executive Summary

• Q1 FY2025 revenue was $29.9M (-2% y/y) with GAAP diluted EPS of $(0.26) and non-GAAP diluted EPS of $(0.04); product gross margin improved to 55.1% on mix, while operating costs rose on $2.3M of merger-related charges tied to the pending GTCR acquisition .
• Medical Device was resilient ex-SurVeil license fees (royalties and Pounce thrombectomy growth), but SurVeil DCB revenue declined y/y as the prior-year quarter included initial stocking shipments to Abbott; IVD revenue fell on order timing .
• No financial guidance and no earnings call due to the pending GTCR transaction; management reiterated the goal to consummate the merger in Q2 FY2025 (by March 31, 2025) pending FTC process completion .
• Product catalysts: FDA 510(k) clearance for Pounce XL (5.5–10 mm arteries) with limited market release planned 1H 2025, and encouraging PROWL real-world registry subset results (96.8% flow restoration; 81.7% no further thromboembolic removal treatment within 30 days) for Pounce .

What Went Well and What Went Wrong

• What Went Well

  • Mix-driven product gross margin improvement to 55.1% (from 53.2% y/y), supported by higher-margin products .
  • Strong momentum in performance coatings (Serene hydrophilic coating) royalties and license fees (+14% y/y to $9.4M) and ongoing Pounce platform growth .
  • CEO tone constructive: “strong growth in revenue from both our medical device performance coatings royalties and sales of our Pounce thrombectomy platforms,” offsetting expected SurVeil normalization and IVD order timing .

• What Went Wrong

  • SurVeil DCB revenue normalizing after prior-year initial stocking shipments to Abbott reduced Medical Device product sales y/y; Medical Device product sales declined 15% to $10.1M .
  • IVD revenue fell 5% y/y on unfavorable order timing, to $6.6M .
  • Elevated merger-related expense ($2.3M) increased SG&A and swung GAAP loss to $(3.7)M vs $(0.8)M y/y; Adjusted EBITDA modestly down to $3.6M .

Financial Results

Headline metrics (USD Millions, except per-share and %). Periods ordered oldest → newest.

Segment and revenue mix (USD Millions). Periods ordered oldest → newest.

Additional KPIs and balance sheet

Note: The press release text states “$7.9 million in cash provided by operating activities” for Q1 FY2025, but the condensed cash flows table shows net cash used in operating activities of $(7.894)M; we rely on the cash flow statement as authoritative and flag the text as likely a typographical error .

Guidance Changes

Surmodics is not providing financial guidance due to the pending GTCR acquisition; this stance was reiterated in Q4 FY2024 and maintained in Q1 FY2025 .

Earnings Call Themes & Trends

No earnings call was held in Q1 FY2025; the company also did not host calls in Q3 and Q4 FY2024 given the pending GTCR transaction . Themes below reflect press releases and filings.

Management Commentary

• “We were pleased with the efforts of our team during first quarter of fiscal 2025, which enabled Surmodics to deliver strong growth in revenue from both our medical device performance coatings royalties and sales of our Pounce thrombectomy platforms… offset the year-over-year decrease in SurVeil DCB revenue… and the impact of order timing in our In Vitro Diagnostics business.” – Gary Maharaj, President and CEO .
• “Their commitment to execution… made our financial performance and operational progress possible, as we continued our efforts… to substantially comply with the FTC’s Second Request.” – Gary Maharaj .
• “Given the pending acquisition by GTCR, Surmodics will not be hosting a live webcast and conference call…” .

Q&A Highlights

• No Q&A; the company did not host a call due to the pending acquisition by GTCR .

Estimates Context

• We attempted to retrieve S&P Global consensus for Q1 FY2025 (Revenue and EPS), but the API returned a daily rate-limit error; therefore, consensus estimates were unavailable at the time of this report. We will update vs-consensus comparisons when accessible. Values would be retrieved from S&P Global.

Key Takeaways for Investors

• Mix tailwinds: Product gross margin expanded to 55.1% despite modest revenue decline, aided by higher-margin mix and coatings strength; this supports medium-term profitability as Pounce scales and SurVeil normalizes post initial stocking .
• Pounce pipeline catalyst: FDA-cleared Pounce XL broadens addressable market (5.5–10 mm) with limited launch in 1H 2025, and PROWL data points to strong standalone efficacy—both are commercial and clinical catalysts into FY2025–FY2026 .
• SurVeil reset: Year-ago stocking shipments to Abbott create tough comps; investors should track ongoing utilization and Abbott’s commercial traction as drivers of MD product sales recovery cadence .
• Regulatory overhang: Closing of the GTCR deal remains the dominant near-term catalyst; management continues to work with the FTC targeting Q2 FY2025 closing, but timing risk remains until HSR/FTC processes resolve .
• Operating expense discipline vs. merger costs: Elevated SG&A from merger-related charges pressured GAAP results; absent these, non-GAAP loss was modest (EPS $(0.04)), underscoring underlying earnings leverage from mix and cost control .
• IVD variability: Q1 softness was timing-related; subsequent quarters should be monitored for re-acceleration consistent with Q3/Q4 FY2024 trends .
• Liquidity: $30.1M cash and investments with $30.0M debt outstanding; cash from operations was negative in Q1 per the cash flow statement—watch working capital uses typical for fiscal Q1 and merger-related cash costs .

Appendix: Detailed Data Points and Notes

• Revenue and Mix (Q1 FY2025): Total $29.922M; MD $23.281M; IVD $6.641M; MD product sales $10.116M; Performance coatings royalties/license $9.383M; SurVeil DCB license fees $1.251M; IVD product sales $6.432M .
• Profitability: GAAP net loss $(3.651)M; non-GAAP net loss $(0.588)M; Adjusted EBITDA $3.641M; GAAP operating margin (8.3%); product gross profit $9.1M, product gross margin 55.1% .
• Drivers: SurVeil DCB revenue decline vs PY initial stocking; coatings growth on Serene utilization; IVD impacted by order timing; merger-related expense $2.264M in SG&A .
• Guidance and Communications: No guidance; no earnings call due to GTCR transaction .
• Prior Quarters for Trend: Q4 FY2024 revenue $33.227M, product gross margin 54.6%, Adjusted EBITDA $4.386M; Q3 FY2024 revenue $30.341M, product gross margin 51.9%, Adjusted EBITDA $1.614M .

Sources: Surmodics Q1 FY2025 8-K and press release, Q4 and Q3 FY2024 8-Ks, and related press releases .