Surmodics Reports Fourth Quarter and Fiscal Year 2024 Financial Results

SRDX 11.06.2024

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    EDEN PRAIRIE, Minn.--(BUSINESS WIRE)--Nov. 6, 2024--Surmodics, Inc.(Nasdaq: SRDX), a leading provider of medical device and in vitro diagnostic technologies to the healthcare industry, today reported financial results for its fourth quarter and fiscal year endedSeptember 30, 2024.

    Fourth Quarter Fiscal 2024 Financial Summary

    • Total Revenue of$33.2 million, an increase of 19% year-over-year
    • Total Revenue excluding SurVeilTMdrug-coated balloon (“DCB”) license fee revenue(1)of$31.3 million, an increase of 17% year-over-year
    • GAAP net loss of$(3.4) million, compared to net income of$6.7 millionin the prior-year period
    • Adjusted EBITDA(2)of$4.4 million, compared to$1.7 millionin the prior-year period

    Fiscal 2024 Financial Summary

    • Total Revenue of$126.1 million, compared to$132.6 millionin the prior-year period which included$25.0 millionin license fee revenue recognized upon receipt of a$27.0 millionmilestone payment associated with obtaining FDA premarket approval of theSurVeilDCB
    • Total Revenue excludingSurVeilDCB license fee revenue(1)of$121.0 million, an increase of 17% year-over-year
    • GAAP net loss of$(11.5) million, compared to$(1.5) millionin the prior-year period
    • Adjusted EBITDA(2)of$14.7 million, compared to$21.5 millionin the prior-year period

    Fourth Quarter and Recent Business Highlights

    • OnMay 29, 2024,Surmodicsannounced it had entered into a definitive agreement to be acquired by an affiliate ofGTCR LLC(“GTCR”) for$43.00per share in cash, representing an approximate equity value of$627 million(the “Merger”). The Merger was approved by Surmodics’ shareholders at a special meeting onAugust 13, 2024. On the same date, the company announced that it and an affiliate of GTCR each received a request for additional information and documentary materials (a “Second Request”) from theU.S. Federal Trade Commission(“FTC”) in connection with the Merger. The Merger remains subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act (“HSR Act”). The company and GTCR currently expect to consummate the Merger in the company’s second fiscal quarter endingMarch 31, 2025, subject to customary closing conditions, including required regulatory approval.
    • OnOctober 1, 2024,Surmodicsannounced the receipt ofU.S. Food and Drug Administration(“FDA”) 510(k) clearance for its PounceTM XL Thrombectomy System, which will allow for clot removal in larger peripheral arteries (5.5 mm to 10 mm in diameter), expanding the addressable market and clinical utility of thePounceThrombectomy Platform.
    • OnOctober 30, 2024,Surmodicsannounced early results from its PROWL registry study of real-world limb ischemia patients treated with Surmodics’PounceThrombectomy System. Early subset analysis of 60 patients with acute, subacute, or chronic symptoms of limb ischemia demonstrated 96.8% procedural flow restoration, with 81.7% of subjects not receiving additional thromboemboli removal treatment postPounceSystem use.

    “We are proud to deliver a strong conclusion to fiscal 2024, with total revenue growth in the fourth quarter of 19% year-over-year fueled by impressive performance in our Medical Device segment – including product revenue growth of nearly 40% year-over-year – combined with solid contributions from our IVD segment,” saidGary Maharaj, President and CEO ofSurmodics, Inc.“Our Medical Device segment product sales growth in the fourth quarter was driven primarily by demand for our vascular interventional products, including ourPounceThrombectomy Platform andSurVeilDCB, as well as increased sales of our performance coating reagents.”

    “I want to thank the Surmodics’ team for their extraordinary dedication and focus in delivering strong quarterly and full-year operating results while we work to substantially comply with the FTC’s Second Request.”

    Fourth Quarter Fiscal 2024 Financial Results

    Three Months EndedSeptember 30,

    Increase

    2024

    2023

    $

    %

    Revenue:

    Medical Device

    $

    25,754

    $

    21,044

    $

    4,710

    22

    %

    InVitro Diagnostics

    7,473

    6,926

    547

    8

    %

    Total revenue

    $

    33,227

    $

    27,970

    $

    5,257

    19

    %

    Total revenue increased$5.3 million, or 19%, to$33.2 million, compared to$28.0 millionin the fourth quarter of fiscal 2023. ExcludingSurVeilDCB license fee revenue,(1)total revenue increased$4.5 million, or 17%, to$31.3 million, compared to$26.9 millionin the fourth quarter of fiscal 2023.

    Medical Device revenue increased$4.7 million, or 22%, to$25.8 million, compared to$21.0 millionin the fourth quarter of fiscal 2023. ExcludingSurVeilDCB license fee revenue,(1)Medical Device revenue increased$3.9 million, or 20%, to$23.9 million, compared to$20.0 millionin the fourth quarter of fiscal 2023, driven primarily by broad-based growth in product sales, as well as growth in performance coating royalties and license fee revenue. Medical Device product sales increased$3.3 million, or 39%, to$11.8 million, compared to$8.5 millionin the fourth quarter of fiscal 2023, driven primarily by growth in sales of thePouncethrombectomy device platform and commercial shipments of theSurVeilDCB to Abbott, the company’s exclusive distribution partner for the product, as well as growth in sales of performance coating reagents. Medical Device performance coating royalties and license fee revenue increased$0.6 million, or 7%, to$9.6 million, compared to$9.0 millionin the fourth quarter of fiscal 2023, driven primarily by continued growth in customer utilization of Surmodics’ SereneTM hydrophilic coating. InVitro Diagnostics(“IVD”) revenue increased$0.5 million, or 8%, to$7.5 million, compared to$6.9 millionin the fourth quarter of fiscal 2023, driven primarily by growth in sales of distributed antigen products and microarray slide/surface products.

    Product gross profit(3)increased$2.1 million, or 25%, to$10.4 million, compared to$8.3 millionin the fourth quarter of fiscal 2023. Product gross margin(3)was 54.6%, compared to 54.2% in the fourth quarter of fiscal 2023. The increase in product gross margin(3)was primarily driven by favorable leverage on increased sales volume and production efficiency improvements from ourPouncethrombectomy and SublimeTM radial access device platforms, partly offset by impacts from theSurVeilDCB including expiration of raw materials inventory and under-absorption.

    Operating costs and expenses, excluding product costs, increased$1.8 million, or 8%, to$25.2 million, compared to$23.4 millionin the fourth quarter of fiscal 2023. The increase was primarily driven by increased selling, general and administrative expense related to$0.9 millionof merger-related charges incurred in the fourth quarter of fiscal 2024 associated with the pending acquisition ofSurmodicsby GTCR, as well as increased sales compensation expenses.

    GAAP net loss was$(3.4) million, or$(0.24)per diluted share, compared to GAAP net income of$6.7 million, or$0.47per diluted share in the fourth quarter of fiscal 2023. Non-GAAP net loss(4)was$(1.8) million, or$(0.13)per diluted share,(4)compared to Non-GAAP net income(4)of$7.5 million, or$0.53per diluted share(4)in the fourth quarter of fiscal 2023.

    Adjusted EBITDA(2)was$4.4 million, compared to Adjusted EBITDA(2)of$1.7 millionin the fourth quarter of fiscal 2023.

    Fiscal 2024 Financial Results

    Fiscal Year EndedSeptember 30,

    Increase (Decrease)

    2024

    2023

    $

    %

    Revenue:

    Medical Device

    $

    97,508

    $

    105,783

    $

    (8,275

    )

    (8

    )%

    InVitro Diagnostics

    28,570

    26,801

    1,769

    7

    %

    Total revenue

    $

    126,078

    $

    132,584

    $

    (6,506

    )

    (5

    )%

    Total revenue decreased$6.5 million, or 5%, to$126.1 million, compared to$132.6 millionin fiscal 2023. ExcludingSurVeilDCB license fee revenue,(1)total revenue increased$18.0 million, or 17%, to$121.0 million, compared to$103.0 millionin fiscal 2023.

    Medical Device revenue decreased$8.3 million, or 8%, to$97.5 million, compared to$105.8 millionin fiscal 2023. Medical Device revenue included a total of$5.1 millioninSurVeilDCB license fee revenue, compared to$29.6 millionin the fourth quarter of fiscal 2023 – of which$25.0 millionwas revenue recognized on the$27.0 millionmilestone payment received in the period fromAbbott Vascular, Inc.(“Abbott”) associated with obtaining FDA approval of theSurVeilDCB. ExcludingSurVeilDCB license fee revenue,(1)Medical Device revenue increased$16.2 million, or 21%, to$92.4 million, compared to$76.2 millionin fiscal 2023, driven primarily by growth in product sales and performance coating royalties and license fee revenue. Medical Device product sales increased$11.5 million, or 34%, to$45.6 million, compared to$34.1 millionin fiscal 2023, driven primarily by commercial shipments of theSurVeilDCB to Abbott, the company’s exclusive distribution partner for the product, and growth in sales of thePouncethrombectomy device platform. Medical Device performance coating royalties and license fee revenue increased$4.6 million, or 14%, to$37.4 million, compared to$32.8 millionin fiscal 2023, driven primarily by continued growth in customer utilization of Surmodics’Serenehydrophilic coating, as well as from$1.4 millionin catch-up payments received in the normal course of our customers reporting sales-based royalties. IVD revenue increased$1.8 million, or 7%, to$28.6 million, compared to$26.8 millionin the fiscal 2023, driven primarily by growth in sales of distributed antigen products and microarray slide/surface products, partly offset by decreased sales of colorimetric substrate products.

    GAAP net loss was$(11.5) million, or$(0.82)per diluted share, compared to GAAP net loss of$(1.5) million, or$(0.11)per diluted share in fiscal 2023. Non-GAAP net loss(4)was$(4.6) million, or$(0.32)per diluted share,(4)compared to Non-GAAP net income(4)of$2.2 million, or$0.16per diluted share(4)in fiscal 2023.

    Adjusted EBITDA(2)was$14.7 million, compared to Adjusted EBITDA(2)of$21.5 millionin fiscal 2023.

    Balance Sheet Summary

    As ofSeptember 30, 2024,Surmodicsreported$40.1 millionin cash and investments,$5.0 millionin outstanding borrowings on its revolving credit facility, and$25.0 millionin outstanding borrowings on its term loan facility. The company had access to approximately$65.0 millionin additional debt capital as ofSeptember 30, 2024under its revolving credit and term loan facilities.Surmodicsreported$3.7 millionin cash provided by operating activities and$0.5 millionin capital expenditures in the fourth quarter of fiscal 2024. In the fourth quarter of fiscal 2024, cash and investments increased by$1.9 million, which consisted of the change in the combined balance of cash and cash equivalents and investments in available-for-sale securities fromJune 30, 2024toSeptember 30, 2024.

    Fiscal Year 2025 Financial Guidance

    Surmodicsis not introducing financial guidance for fiscal 2025 in light of the pending acquisition by GTCR.

    Conference Call

    Given the pending acquisition by GTCR,Surmodicswill not be hosting a live webcast and conference call to discuss fourth quarter and fiscal 2024 financial results and accomplishments.

    About the Pending Acquisition ofSurmodicsby GTCR

    OnMay 29, 2024,Surmodicsannounced it had entered into a definitive agreement to be acquired by GTCR, a leading private equity firm with a long track record of investment expertise across healthcare and healthcare technology. Under the terms of the agreement, an affiliate of GTCR will acquire all outstanding shares ofSurmodics(the “Merger”).Surmodicsshareholders will receive$43.00per share in cash, for a total equity valuation of approximately$627 million. The transaction will be financed through a combination of committed equity from funds affiliated with GTCR and committed debt financing. Upon completion of the transaction,Surmodicswill be a privately held company and its common stock will no longer be listed onThe Nasdaq Stock Exchange.

    The Merger was approved by Surmodics’ shareholders at a special meeting onAugust 13, 2024. On the same date, the company announced that it and an affiliate of GTCR each received a Second Request. The company and GTCR are gathering information and documentary materials to respond to the Second Request as expeditiously as possible. The Merger remains subject to the expiration or termination of the waiting period under the HSR Act. The company and GTCR currently expect to consummate the Merger in the company’s second fiscal quarter endingMarch 31, 2025, subject to customary closing conditions, including required regulatory approval.

    AboutSurmodics, Inc.

    Surmodics, Inc.is a leading provider of performance coating technologies for intravascular medical devices and chemical and biological components for in vitro diagnostic immunoassay tests and microarrays.Surmodicsalso develops and commercializes highly differentiated vascular intervention medical devices that are designed to address unmet clinical needs and engineered to the most demanding requirements. This key growth strategy leverages the combination of the company’s expertise in proprietary surface modification and drug-delivery coating technologies, along with its device design, development and manufacturing capabilities. The company’s mission is to improve the detection and treatment of disease.Surmodicsis headquartered inEden Prairie, Minnesota. For more information, visitwww.surmodics.com. The content of Surmodics’ website is not part of this press release or part of any filings that the company makes with theSEC.

    Safe Harbor for Forward-looking Statements

    This press release, and disclosures related to it, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, including statements regarding: the proposed Merger, including anticipated timing of consummating the same, the expected financing of the Merger, and the expectation that the company will be privately held after the Merger; our work to substantially comply with the FTC’s Second Request and to do so as expeditiously as possible; our key growth strategy; our access to additional borrowings under our existing credit agreement; expectations about expanding the addressable market and clinical utility of thePounceVenous Thrombectomy System, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated, including, without limitation: (1) risks related to the consummation of the proposed Merger, including the risks that (a) the Merger may not be consummated within the anticipated time period, or at all, (b) the parties may fail to secure the termination or expiration of any waiting period applicable under the HSR Act, (c) other conditions to the consummation of the Merger under the agreement for the Merger (the “Merger Agreement”) may not be satisfied, (d) all or part of GTCR’s financing may not become available, and (e) the significant limitations on remedies contained in the Merger Agreement may limit or entirely prevent the company from specifically enforcing the buyer’s obligations under the Merger Agreement or recovering damages for any breach by the buyer; (2) the effects that any termination of the Merger Agreement may have on the company or its business, including the risks that (a) the company’s stock price may decline significantly if the Merger is not completed, (b) the Merger Agreement may be terminated in circumstances requiring the company to pay the buyer a termination fee of$20,380,000, or (c) the circumstances of the termination, including the possible imposition of a 12-month tail period during which the termination fee could be payable upon certain subsequent transactions, may have a chilling effect on alternatives to the Merger; (3) the effects that the announcement or pendency of the Merger may have on the company and its business, including the risks that as a result (a) the company’s business, operating results or stock price may suffer, (b) the company’s current plans and operations may be disrupted, (c) the company’s ability to retain or recruit key employees may be adversely affected, (d) the company’s business relationships (including, customers, franchisees and suppliers) may be adversely affected, or (e) the company’s management’s or employees’ attention may be diverted from other important matters; (4) the effect of limitations that the Merger Agreement places on the company’s ability to operate its business, return capital to shareholders or engage in alternative transactions; (5) the nature, cost and outcome of pending and future litigation and other legal proceedings, including proceedings related to the Merger and instituted against the company and others; (6) the risk that the Merger and related transactions may involve unexpected costs, liabilities or delays; (7) our ability to successfully commercialize ourSurVeilDCB (including realization of the full potential benefits of our agreement with Abbott), SundanceTMDCB, and other proprietary products; (8) our reliance on third parties (including our customers and licensees) and their failure to successfully develop, obtain regulatory approval for, market, and sell products incorporating our technologies; (9) possible adverse market conditions and possible adverse impacts on our cash flows; (10) our ability to successfully and profitably produce and commercialize our vascular intervention products; (11) supply chain constraints; (12) whether our operating expenses are effective in generating profitable revenues; (13) the factors identified under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year endedSeptember 30, 2023and subsequentSECfilings. These reports are available in the Investors section of our website athttps://surmodics.gcs-web.comand at theSECwebsite atwww.sec.gov. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events.

    Use of Non-GAAP Financial Information

    In addition to reporting financial results in accordance withU.S.generally accepted accounting principles, or GAAP,Surmodicsis reporting non-GAAP financial results including total revenue excludingSurVeilDCB license fee revenue, Medical Device revenue excludingSurVeilDCB license fee revenue, EBITDA and Adjusted EBITDA, non-GAAP operating income (loss), non-GAAP operating income (loss) percentage, non-GAAP income (loss) before income taxes, non-GAAP net (loss) income, and non-GAAP (loss) income per diluted share. We believe that these non-GAAP measures, when read in conjunction with the company’s GAAP financial statements, provide meaningful insight into our operating performance excluding certain event-specific matters, and provide an alternative perspective of our results of operations. We use non-GAAP measures, including those set forth in this release, to assess our operating performance and to determine payouts under our executive compensation programs. We believe that presentation of certain non-GAAP measures allows investors to review our results of operations from the same perspective as management and our board of directors and facilitates comparisons of our current results of operations. The method we use to produce non-GAAP results is not in accordance with GAAP and may differ from the methods used by other companies. Non-GAAP results should not be regarded as a substitute for corresponding GAAP measures but instead should be utilized as a supplemental measure of operating performance in evaluating our business. Non-GAAP measures do have limitations in that they do not reflect certain items that may have a material impact on our reported financial results. As such, these non-GAAP measures should be viewed in conjunction with both our financial statements prepared in accordance with GAAP and the reconciliation of the supplemental non-GAAP financial measures to the comparable GAAP results provided for the specific periods presented, which are attached to this release.

    Surmodics, Inc.and Subsidiaries

    Condensed Consolidated Statements of Operations

    (in thousands, except per share data)

    (Unaudited)

    Three Months EndedSeptember 30,

    Fiscal Year EndedSeptember 30,

    2024

    2023

    2024

    2023

    Revenue:

    Product sales

    $

    19,102

    $

    15,363

    $

    73,590

    $

    60,614

    Royalties and license fees

    11,440

    10,051

    42,488

    62,398

    Research, development and other

    2,685

    2,556

    10,000

    9,572

    Total revenue

    33,227

    27,970

    126,078

    132,584

    Operating costs and expenses:

    Product costs

    8,674

    7,039

    33,026

    24,965

    Research and development

    9,702

    9,696

    38,360

    46,595

    Selling, general and administrative

    14,579

    12,807

    56,836

    51,884

    Acquired intangible asset amortization

    885

    878

    3,501

    3,537

    Restructuring expense

    —

    —

    —

    1,282

    Contingent consideration gain

    —

    —

    —

    (829

    )

    Total operating costs and expenses

    33,840

    30,420

    131,723

    127,434

    Operating (loss) income

    (613

    )

    (2,450

    )

    (5,645

    )

    5,150

    Other expense, net

    (524

    )

    (339

    )

    (1,861

    )

    (2,663

    )

    (Loss) income before income taxes

    (1,137

    )

    (2,789

    )

    (7,506

    )

    2,487

    Income tax (expense) benefit

    (2,312

    )

    9,483

    (4,036

    )

    (4,023

    )

    Net (loss) income

    $

    (3,449

    )

    $

    6,694

    $

    (11,542

    )

    $

    (1,536

    )

    Basic (loss) income per share

    $

    (0.24

    )

    $

    0.48

    $

    (0.82

    )

    $

    (0.11

    )

    Diluted (loss) income per share

    $

    (0.24

    )

    $

    0.47

    $

    (0.82

    )

    $

    (0.11

    )

    Weighted average number of shares outstanding:

    Basic

    14,189

    14,063

    14,153

    14,031

    Diluted

    14,189

    14,152

    14,153

    14,031

    Surmodics, Inc.and Subsidiaries

    Condensed Consolidated Balance Sheets

    (in thousands)

    September 30,

    2024

    2023

    Assets

    (Unaudited)

    (See Note)

    Current Assets:

    Cash and cash equivalents

    $

    36,115

    $

    41,419

    Available-for-sale securities

    3,997

    3,933

    Accounts receivable, net

    13,292

    10,850

    Contract assets

    9,872

    7,796

    Inventories

    15,168

    14,839

    Prepaids and other

    2,860

    7,854

    Total Current Assets

    81,304

    86,691

    Property and equipment, net

    24,956

    26,026

    Intangible assets, net

    23,569

    26,206

    Goodwill

    44,640

    42,946

    Other assets

    4,093

    3,864

    Total Assets

    $

    178,562

    $

    185,733

    Liabilities and Stockholders’ Equity

    Current Liabilities:

    Deferred revenue

    1,619

    4,378

    Income tax payable

    1,244

    —

    Other current liabilities

    17,680

    19,576

    Total Current Liabilities

    20,543

    23,954

    Long-term debt, net

    29,554

    29,405

    Deferred revenue

    —

    2,400

    Other long-term liabilities

    9,568

    10,064

    Total Liabilities

    59,665

    65,823

    Total Stockholders’ Equity

    118,897

    119,910

    Total Liabilities and Stockholders’ Equity

    $

    178,562

    $

    185,733

    Note: Derived from audited financial statements as of the date indicated.

    Surmodics, Inc.and Subsidiaries

    Condensed Consolidated Statements of Cash Flows

    (in thousands)

    (Unaudited)

    Fiscal Year EndedSeptember 30,

    2024

    2023

    Operating Activities:

    Net loss

    $

    (11,542

    )

    $

    (1,536

    )

    Adjustments to reconcile net loss to net cash provided by operating activities:

    Depreciation and amortization

    8,694

    8,522

    Stock-based compensation

    8,217

    7,605

    Deferred taxes

    (320

    )

    (181

    )

    Other

    558

    340

    Change in operating assets and liabilities:

    Accounts receivable and contract assets

    (5,236

    )

    (977

    )

    Inventories

    (328

    )

    (3,020

    )

    Prepaids and other

    4,902

    —

    Accounts payable

    (232

    )

    (183

    )

    Accrued liabilities

    (885

    )

    (1,024

    )

    Income taxes

    1,579

    3,438

    Deferred revenue

    (5,159

    )

    (2,470

    )

    Net cash provided by operating activities

    248

    10,514

    Investing Activities:

    Purchases of property and equipment

    (3,492

    )

    (2,918

    )

    Purchases of available-for-sale securities

    (25,445

    )

    (3,904

    )

    Maturities of available-for-sale securities

    26,000

    —

    Net cash used in investing activities

    (2,937

    )

    (6,822

    )

    Financing Activities:

    Payments on short-term borrowings

    —

    (10,000

    )

    Proceeds from issuance of long-term debt

    —

    29,664

    Payment of debt issuance costs

    —

    (614

    )

    Issuance of common stock

    1,216

    1,252

    Payments for taxes related to net share settlement of equity awards

    (1,537

    )

    (918

    )

    Payments for acquisition of in-process research and development

    (931

    )

    (978

    )

    Payments for acquisition-related deferred consideration

    (1,698

    )

    —

    Net cash (used in) provided by financing activities

    (2,950

    )

    18,406

    Effect of exchange rate changes on cash

    335

    323

    Net change in cash and cash equivalents

    (5,304

    )

    22,421

    Cash and Cash Equivalents:

    Beginning of year

    41,419

    18,998

    End of year

    $

    36,115

    $

    41,419

    Surmodics, Inc.and Subsidiaries

    Supplemental Revenue Information

    (in thousands)

    (Unaudited)

    Three Months EndedSeptember 30,

    Increase

    2024

    2023

    $

    %

    Medical Device Revenue

    Product sales

    $

    11,844

    $

    8,533

    $

    3,311

    39

    %

    Royalties & license fees – performance coatings

    9,553

    8,959

    594

    7

    %

    License fees –SurVeilDCB(1)

    1,887

    1,092

    795

    73

    %

    R&D and other

    2,470

    2,460

    10

    —

    %

    Medical Device revenue

    25,754

    21,044

    4,710

    22

    %

    In Vitro Diagnostics Revenue

    Product sales

    7,258

    6,830

    428

    6

    %

    R&D and other

    215

    96

    119

    124

    %

    InVitro Diagnosticsrevenue

    7,473

    6,926

    547

    8

    %

    Total Revenue

    $

    33,227

    $

    27,970

    $

    5,257

    19

    %

    Medical Device Revenue, excludingSurVeilDCB license fees(1)

    $

    23,867

    $

    19,952

    $

    3,915

    20

    %

    Total Revenue, excludingSurVeilDCB license fees(1)

    $

    31,340

    $

    26,878

    $

    4,462

    17

    %

    Fiscal Year EndedSeptember 30,

    Increase (Decrease)

    2024

    2023

    $

    %

    Medical Device Revenue

    Product sales

    $

    45,620

    $

    34,126

    $

    11,494

    34

    %

    Royalties & license fees – performance coatings

    37,408

    32,812

    4,596

    14

    %

    License fees –SurVeilDCB(1)

    5,080

    29,586

    (24,506

    )

    (83

    )%

    R&D and other

    9,400

    9,259

    141

    2

    %

    Medical Device revenue

    97,508

    105,783

    (8,275

    )

    (8

    )%

    In Vitro Diagnostics Revenue

    Product sales

    27,970

    26,488

    1,482

    6

    %

    R&D and other

    600

    313

    287

    92

    %

    InVitro Diagnosticsrevenue

    28,570

    26,801

    1,769

    7

    %

    Total Revenue

    $

    126,078

    $

    132,584

    $

    (6,506

    )

    (5

    )%

    Medical Device Revenue, excludingSurVeilDCB license fees(1)

    $

    92,428

    $

    76,197

    $

    16,231

    21

    %

    Total Revenue, excludingSurVeilDCB license fees(1)

    $

    120,998

    $

    102,998

    $

    18,000

    17

    %

    Surmodics, Inc.and Subsidiaries

    Supplemental Segment Information

    (in thousands)

    (Unaudited)

    Three Months EndedSeptember 30,

    Increase (Decrease)

    2024

    2023

    $

    Operating Loss:

    Medical Device

    $

    (29

    )

    $

    (2,399

    )

    $

    2,370

    InVitro Diagnostics

    3,468

    3,187

    281

    Total segment operating income

    3,439

    788

    2,651

    Corporate

    (4,052

    )

    (3,238

    )

    (814

    )

    Total Operating Loss

    $

    (613

    )

    $

    (2,450

    )

    $

    1,837

    Fiscal Year EndedSeptember 30,

    Increase (Decrease)

    2024

    2023

    $

    Operating (Loss) Income:

    Medical Device

    $

    (2,239

    )

    $

    5,084

    $

    (7,323

    )

    InVitro Diagnostics

    13,101

    12,637

    464

    Total segment operating income

    10,862

    17,721

    (6,859

    )

    Corporate

    (16,507

    )

    (12,571

    )

    (3,936

    )

    Total Operating (Loss) Income

    $

    (5,645

    )

    $

    5,150

    $

    (10,795

    )

    Surmodics, Inc.and Subsidiaries

    GAAP to Non-GAAP Reconciliation: EBITDA and Adjusted EBITDA

    (in thousands)

    (Unaudited)

    Three Months EndedSeptember 30,

    Increase (Decrease)

    2024

    2023

    $

    Net (loss) income

    $

    (3,449

    )

    $

    6,694

    $

    (10,143

    )

    Income tax expense (benefit)

    2,312

    (9,483

    )

    11,795

    Depreciation and amortization

    2,139

    2,157

    (18

    )

    Interest expense, net

    884

    895

    (11

    )

    Investment income, net

    (435

    )

    (546

    )

    111

    EBITDA

    1,451

    (283

    )

    1,734

    Adjustments:

    Stock-based compensation expense

    2,079

    1,943

    136

    Merger-related charges(5)

    856

    —

    856

    Adjusted EBITDA

    $

    4,386

    $

    1,660

    $

    2,726

    Fiscal Year EndedSeptember 30,

    Increase (Decrease)

    2024

    2023

    $

    Net loss

    $

    (11,542

    )

    $

    (1,536

    )

    $

    (10,006

    )

    Income tax expense

    4,036

    4,023

    13

    Depreciation and amortization

    8,694

    8,522

    172

    Interest expense, net

    3,540

    3,489

    51

    Investment income, net

    (1,922

    )

    (1,077

    )

    (845

    )

    EBITDA

    2,806

    13,421

    (10,615

    )

    Adjustments:

    Stock-based compensation expense

    8,217

    7,605

    612

    Merger-related charges(5)

    3,720

    —

    3,720

    Restructuring expense(6)

    —

    1,282

    (1,282

    )

    Contingent consideration fair value adjustment(7)

    —

    (829

    )

    829

    Adjusted EBITDA

    $

    14,743

    $

    21,479

    $

    (6,736

    )

    Surmodics, Inc.and Subsidiaries

    GAAP to Non-GAAP Reconciliation: Net (Loss) Income and Diluted EPS

    (in thousands, except per share data)

    (Unaudited)

    For the Three Months EndedSeptember 30, 2024

    Operating (Loss) Income

    (Loss) Income Before Income Taxes

    Net Loss(9)

    Diluted EPS

    GAAP

    $

    (613

    )

    (1.8

    )%

    $

    (1,137

    )

    $

    (3,449

    )

    $

    (0.24

    )

    Adjustments:

    Amortization of acquired intangible assets(8)

    885

    2.7

    %

    885

    819

    0.05

    Merger-related charges(5)

    856

    2.5

    %

    856

    856

    0.06

    Non-GAAP

    $

    1,128

    3.4

    %

    $

    604

    $

    (1,774

    )

    $

    (0.13

    )

    Diluted weighted average shares outstanding(10)

    14,189

    For the Three Months EndedSeptember 30, 2023

    Operating Loss

    Loss Before Income Taxes

    Net Income(9)

    Diluted EPS

    GAAP

    $

    (2,450

    )

    (8.8

    )%

    $

    (2,789

    )

    $

    6,694

    $

    0.47

    Adjustments:

    Amortization of acquired intangible assets(8)

    878

    3.2

    %

    878

    812

    0.06

    Non-GAAP

    $

    (1,572

    )

    (5.6

    )%

    $

    (1,911

    )

    $

    7,506

    $

    0.53

    Diluted weighted average shares outstanding(10)

    14,152

    Fiscal Year EndedSeptember 30, 2024

    Operating (Loss) Income

    Loss Before Income Taxes

    Net Loss(9)

    Diluted EPS

    GAAP

    $

    (5,645

    )

    (4.5

    )%

    $

    (7,506

    )

    $

    (11,542

    )

    $

    (0.82

    )

    Adjustments:

    Amortization of acquired intangible assets(8)

    3,501

    2.8

    %

    3,501

    3,239

    0.23

    Merger-related charges(5)

    3,720

    3.0

    %

    3,720

    3,720

    0.27

    Non-GAAP

    $

    1,576

    1.3

    %

    $

    (285

    )

    $

    (4,583

    )

    $

    (0.32

    )

    Diluted weighted average shares outstanding(10)

    14,153

    Fiscal Year EndedSeptember 30, 2023

    Operating Income

    Income Before Income Taxes

    Net (Loss) Income(9)

    Diluted EPS

    GAAP

    $

    5,150

    3.9

    %

    $

    2,487

    $

    (1,536

    )

    $

    (0.11

    )

    Adjustments:

    Amortization of acquired intangible assets(8)

    3,537

    2.6

    %

    3,537

    3,279

    0.24

    Restructuring expense(6)

    1,282

    1.0

    %

    1,282

    1,282

    0.09

    Contingent consideration fair value adjustment(7)

    (829

    )

    (0.6

    )%

    (829

    )

    (829

    )

    (0.06

    )

    Non-GAAP

    $

    9,140

    6.9

    %

    $

    6,477

    $

    2,196

    $

    0.16

    Diluted weighted average shares outstanding(10)

    14,071

    (1)

    SurVeilDCB license fee revenue represents revenue recognition on milestone payments received under the company’s Development and Distribution Agreement with Abbott (“Abbott Agreement”). For further details, refer to Supplemental Revenue Information.

    (2)

    For the calculation of Adjusted EBITDA, refer to GAAP to Non-GAAP Reconciliation: EBITDA and Adjusted EBITDA.

    (3)

    Product gross profit equals product sales less product costs, as reported on the condensed consolidated statements of operations. Product gross margin equals product gross profit as a percentage of product sales.

    (4)

    For the calculation of Non-GAAP net (loss) income and Non-GAAP (loss) income per diluted share (also referred to as Non-GAAP diluted EPS), refer to GAAP to Non-GAAP Reconciliation: Net (Loss) Income and Diluted EPS.

    (5)

    Merger-related charges consisted of expenses specifically associated with the proposed acquisition ofSurmodicsby GTCR, which were reported in selling, general and administrative expense on the condensed consolidated statements of operations. Merger-related charges were not tax deductible.

    (6)

    Restructuring expense consisted of severance and related costs specifically associated with a workforce restructuring implemented in the second quarter of fiscal 2023.

    (7)

    Contingent consideration fair value adjustment represented accounting adjustments to state acquisition-related contingent consideration liabilities at their estimated fair value as of the period end date related to changes in the timing and/or probability of achieving milestones.

    (8)

    Represents amortization of business acquisition-related intangible assets and associated tax impact. A significant portion of the business acquisition-related amortization is not tax deductible.

    (9)

    Net (loss) income includes the effect of GAAP to Non-GAAP adjustments on income tax expense, taking into account deferred taxes net of valuation allowances, as well as non-deductible items. Income tax impacts were estimated using the applicable statutory rate (21% in theU.S.and 12.5% inIreland).

    (10)

    Diluted weighted average shares outstanding used in the calculation of EPS was the same for GAAP EPS and Non-GAAP EPS for the three month periods endedSeptember 30, 2024and 2023 and the fiscal year endedSeptember 30, 2024. For the fiscal year endedSeptember 30, 2023, diluted weighted average shares outstanding used in the calculation of EPS was 14,031 for GAAP EPS due to the net loss in the period, and 14,071 for Non-GAAP EPS corresponding to the Non-GAAP net income in the period.

    View source version onbusinesswire.com:https://www.businesswire.com/news/home/20241106326294/en/

    Surmodics Investor InquiriesJack Powell, Investor Relationsir@surmodics.com

    Source:Surmodics, Inc.

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