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SURMODICS INC (SRDX)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 FY2024 delivered 19% YoY revenue growth to $33.2M, driven by Medical Device strength (product sales +39% YoY) and improved product gross margin to 54.6%; GAAP EPS was -$0.24 and non-GAAP diluted EPS was -$0.13 .
  • Results beat third-party-tracked Street consensus: revenue $33.23M vs $30.69M and non-GAAP EPS -$0.13 vs -$0.27; management did not host a call due to the pending GTCR acquisition and provided no FY2025 guidance .
  • Medical Device momentum: Pounce Thrombectomy Platform and SurVeil DCB shipments to Abbott were key drivers; FDA 510(k) clearance for Pounce XL (5.5–10 mm vessels) broadens the addressable market; early PROWL registry data showed 96.8% procedural flow restoration .
  • Headwinds: GAAP net loss (-$3.4M) and non-GAAP net loss reflect ramp inefficiencies/under-absorption and raw material expirations tied to SurVeil; Q4 included ~$0.9M merger-related charges in SG&A .
  • Strategic and stock catalysts: continued adoption of Pounce/SurVeil, Pounce XL limited release planned 1H’25, and merger timeline (FTC Second Request; expected close in fiscal Q2 2025, subject to approvals) .

What Went Well and What Went Wrong

What Went Well

  • Medical Device outperformance: segment revenue +22% YoY to $25.8M; product sales +39% YoY to $11.8M; strength from Pounce thrombectomy, SurVeil DCB shipments to Abbott, and performance coating reagents .
  • Margin improvement: product gross margin rose to 54.6% vs 51.9% in Q3 and 54.2% in Q4’23; Adjusted EBITDA improved to $4.4M (vs $1.7M in Q4’23) on higher volumes and efficiencies in Pounce/Sublime .
  • Positive clinical/regulatory momentum: FDA 510(k) for Pounce XL expands platform to larger arteries; early PROWL registry data showed 96.8% post-procedural flow restoration and 81.7% without additional thromboemboli removal within 30 days, supporting adoption narrative .
  • CEO tone: “strong conclusion to fiscal 2024… product revenue growth of nearly 40%… driven by demand for our vascular interventional products [Pounce, SurVeil] and increased sales of performance coating reagents.” — Gary Maharaj, CEO .

What Went Wrong

  • Profitability remained negative: GAAP net loss of -$3.4M (-$0.24 per diluted share) and non-GAAP net loss of -$1.8M, reflecting ongoing ramp and under-absorption impacts and tax items .
  • SurVeil-related cost headwinds: margin tailwinds from volume/efficiency were “partly offset” by SurVeil DCB impacts including expiration of raw material inventory and under-absorption .
  • Merger-related expenses and uncertainty: Q4 included ~$0.9M merger-related SG&A charges; no FY2025 guidance and no earnings call, adding near-term visibility constraints pending FTC review of the GTCR transaction .

Financial Results

Summary Metrics (chronological order: Q4 2023 → Q3 2024 → Q4 2024)

MetricQ4 2023Q3 2024Q4 2024
Revenue ($M)$27.97 $30.34 $33.23
GAAP Diluted EPS ($)$0.47 -$0.53 -$0.24
Non-GAAP Diluted EPS ($)$0.53 -$0.27 -$0.13
Adjusted EBITDA ($M)$1.66 $1.61 $4.39
Product Gross Margin (%)54.2% 51.9% 54.6%
Product Gross Profit ($M)$8.3 $9.1 $10.4

Segment Revenue (chronological order)

Segment ($M)Q4 2023Q3 2024Q4 2024
Medical Device$21.04 $23.38 $25.75
In Vitro Diagnostics$6.93 $6.96 $7.47
Total Revenue$27.97 $30.34 $33.23

Medical Device Revenue Components (chronological order)

Component ($M)Q4 2023Q3 2024Q4 2024
Product Sales$8.53 $10.73 $11.84
Performance Coatings Royalties & License Fees$8.96 $9.32 $9.55
License Fees – SurVeil DCB$1.09 $1.13 $1.89
R&D and Other$2.46 $2.20 $2.47

Actuals vs Consensus (Q4 2024)

Note: S&P Global consensus was unavailable at the time of this analysis; third‑party sources (Nasdaq/MarketBeat) are used for consensus reference.

MetricQ4 2024 ActualQ4 2024 ConsensusSurprise
Revenue ($M)$33.23 $30.69 +$2.54
Non-GAAP Diluted EPS ($)-$0.13 -$0.27 +$0.14

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY2024$122–$124M (raised on May 1, 2024) Guidance suspended as of Jul 31, 2024 Withdrawn
GAAP Diluted EPSFY2024-$0.90 to -$0.70 (May 1, 2024) Guidance suspended as of Jul 31, 2024 Withdrawn
Non-GAAP Diluted EPSFY2024-$0.67 to -$0.47 (May 1, 2024) Guidance suspended as of Jul 31, 2024 Withdrawn
All MetricsFY2025N/ANo FY2025 guidance due to pending GTCR acquisition N/A

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY2024)Previous Mentions (Q3 FY2024)Current Period (Q4 FY2024)Trend
Vascular interventions adoption (SurVeil, Pounce, Sublime)Product sales +40% YoY; SurVeil commercialized by Abbott; launched Pounce Venous & LP Strength across SurVeil DC B and Pounce; broad IVD growth Product sales +39% YoY; shipments to Abbott; coatings growth Improving adoption
Guidance policyRaised FY2024 revenue/EPS guidance Suspended FY2024 guidance (pending GTCR) No FY2025 guidance (pending GTCR) Increasing uncertainty
M&A (GTCR acquisition)—Announced/outlined; shareholder meeting set Shareholders approved; FTC Second Request; expected close fiscal Q2’25 (subject to approvals) Progressing under review
Regulatory/R&DCommercial launch of Pounce Venous & LP Premier GPO agreement for thrombectomy products FDA 510(k) clearance for Pounce XL (5.5–10 mm) Portfolio expanding
Manufacturing/marginsGross margin pressure from not-at-scale devices Product GM 51.9% (under-absorption, inventory expiration) Product GM 54.6%; still partly offset by SurVeil-related items Sequential improvement

Management Commentary

  • “We are proud to deliver a strong conclusion to fiscal 2024, with total revenue growth in the fourth quarter of 19% year-over-year… Our Medical Device segment product sales growth… was driven primarily by demand for our vascular interventional products, including our Pounce Thrombectomy Platform and SurVeil DCB, as well as increased sales of our performance coating reagents.” — Gary Maharaj, President & CEO .
  • “Given the pending acquisition by GTCR, Surmodics will not be hosting a live webcast and conference call… [and] is not introducing financial guidance for fiscal 2025.” .
  • Balance sheet and cash generation note (Q4): cash/investments $40.1M; $5.0M on revolver; $25.0M term loan; $3.7M cash from operations; $0.5M capex .

Q&A Highlights

  • No Q&A held: Management did not host a live webcast or conference call due to the pending GTCR acquisition .
  • Clarifications provided in materials: No FY2025 guidance; merger status includes FTC Second Request with expected close in company’s fiscal Q2 2025, subject to regulatory approval .
  • Margin drivers: product gross margin improved QoQ on volume and efficiencies but was partly offset by SurVeil DCB inventory expirations and under-absorption .

Estimates Context

  • Third‑party tracked consensus (used due to S&P Global access unavailability): Revenue $30.69M vs actual $33.23M (beat $2.54M); non‑GAAP EPS -$0.27 vs actual -$0.13 (beat $0.14) .
  • Implications: Street models likely need to reflect stronger Medical Device product momentum and improving product gross margin trajectory; however, lack of FY2025 guidance and merger timing remain overhangs .

Key Takeaways for Investors

  • Core operations are accelerating: revenue grew to $33.2M with sequential margin improvement; Adjusted EBITDA stepped up to $4.4M on improved scale and efficiencies .
  • Growth engines are working: Pounce and SurVeil drove product sales; Pounce XL clearance broadens TAM with limited market release targeted for 1H’25 .
  • Results beat third‑party consensus on revenue and non‑GAAP EPS, a positive near‑term catalyst despite the absence of a call and guidance .
  • Profitability still negative on GAAP/non‑GAAP bases; SurVeil-related inventory/under‑absorption and merger expenses weighed on earnings; watch for continued absorption benefits as volumes scale .
  • Merger watch: Shareholder‑approved GTCR acquisition faces FTC Second Request; expected to close in fiscal Q2 2025, subject to regulatory approval—this is the dominant stock driver near term .
  • No FY2025 guidance and no call limit near‑term visibility; investors should track product gross margin progression and Medical Device product sales as proxies for trajectory .
  • Balance sheet remains adequate to support operations with $40.1M cash/investments and available debt capacity; operating cash flow positive in Q4 .

Additional Data Detail

  • Q4 FY2024 revenue by segment: Medical Device $25.8M; IVD $7.5M .
  • Medical Device mix: Product $11.8M; Performance coatings royalties/license $9.6M; SurVeil DCB license $1.9M; R&D/other $2.5M .
  • Non-GAAP adjustments (Q4): add-backs include $0.9M amortization of intangibles and $0.9M merger-related charges; non‑GAAP diluted EPS -$0.13 vs GAAP -$0.24 .
  • FY2024 notional view: revenue $126.1M; non-GAAP net loss -$4.6M; Adjusted EBITDA $14.7M .