SRDX SurModics Inc

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 ended September 30, 2024.

Fourth Quarter Fiscal 2024 Financial Summary

• Total Revenue of $33.2 million, an increase of 19% year-over-year
• Total Revenue excluding SurVeil™ drug-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 million in the prior-year period
• Adjusted EBITDA(2) of $4.4 million, compared to $1.7 million in the prior-year period

Fiscal 2024 Financial Summary

• Total Revenue of $126.1 million, compared to $132.6 million in the prior-year period which included $25.0 million in license fee revenue recognized upon receipt of a $27.0 million milestone payment associated with obtaining FDA premarket approval of the SurVeil DCB
• Total Revenue excluding SurVeil DCB 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) million in the prior-year period
• Adjusted EBITDA(2) of $14.7 million, compared to $21.5 million in the prior-year period

Fourth Quarter and Recent Business Highlights

• On May 29, 2024, Surmodics announced it had entered into a definitive agreement to be acquired by an affiliate of GTCR LLC (“GTCR”) for $43.00 per share in cash, representing an approximate equity value of $627 million (the “Merger”). The Merger was approved by Surmodics’ shareholders at a special meeting on August 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 the U.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 ending March 31, 2025, subject to customary closing conditions, including required regulatory approval.
• On October 1, 2024, Surmodics announced the receipt of U.S. Food and Drug Administration (“FDA”) 510(k) clearance for its Pounce™ 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 the Pounce Thrombectomy Platform.
• On October 30, 2024, Surmodics announced early results from its PROWL registry study of real-world limb ischemia patients treated with Surmodics’ Pounce Thrombectomy 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 post Pounce System 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,” said Gary Maharaj, President and CEO of Surmodics, Inc. “Our Medical Device segment product sales growth in the fourth quarter 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.”

“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 Ended September 30,

 

 

Increase

 

 

2024

 

 

2023

 

 

$

 

 

%

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Medical Device

$

25,754

 

 

$

21,044

 

 

$

4,710

 

 

 

22

%

In Vitro 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 million in the fourth quarter of fiscal 2023. Excluding SurVeil DCB license fee revenue,(1) total revenue increased $4.5 million, or 17%, to $31.3 million, compared to $26.9 million in the fourth quarter of fiscal 2023.

Medical Device revenue increased $4.7 million, or 22%, to $25.8 million, compared to $21.0 million in the fourth quarter of fiscal 2023. Excluding SurVeil DCB license fee revenue,(1) Medical Device revenue increased $3.9 million, or 20%, to $23.9 million, compared to $20.0 million in 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 million in the fourth quarter of fiscal 2023, driven primarily by growth in sales of the Pounce thrombectomy device platform and commercial shipments of the SurVeil DCB 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 million in the fourth quarter of fiscal 2023, driven primarily by continued growth in customer utilization of Surmodics’ Serene™ hydrophilic coating. In Vitro Diagnostics (“IVD”) revenue increased $0.5 million, or 8%, to $7.5 million, compared to $6.9 million in 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 million in 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 our Pounce thrombectomy and Sublime™ radial access device platforms, partly offset by impacts from the SurVeil DCB 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 million in the fourth quarter of fiscal 2023. The increase was primarily driven by increased selling, general and administrative expense related to $0.9 million of merger-related charges incurred in the fourth quarter of fiscal 2024 associated with the pending acquisition of Surmodics by 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 $0.47 per 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 $0.53 per 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 million in the fourth quarter of fiscal 2023.

Fiscal 2024 Financial Results

 

Fiscal Year Ended September 30,

 

 

Increase (Decrease)

 

 

2024

 

 

2023

 

 

$

 

 

%

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Medical Device

$

97,508

 

 

$

105,783

 

 

$

(8,275

)

 

 

(8

)%

In Vitro 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 million in fiscal 2023. Excluding SurVeil DCB license fee revenue,(1) total revenue increased $18.0 million, or 17%, to $121.0 million, compared to $103.0 million in fiscal 2023.

Medical Device revenue decreased $8.3 million, or 8%, to $97.5 million, compared to $105.8 million in fiscal 2023. Medical Device revenue included a total of $5.1 million in SurVeil DCB license fee revenue, compared to $29.6 million in the fourth quarter of fiscal 2023 – of which $25.0 million was revenue recognized on the $27.0 million milestone payment received in the period from Abbott Vascular, Inc. (“Abbott”) associated with obtaining FDA approval of the SurVeil DCB. Excluding SurVeil DCB license fee revenue,(1) Medical Device revenue increased $16.2 million, or 21%, to $92.4 million, compared to $76.2 million in 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 million in fiscal 2023, driven primarily by commercial shipments of the SurVeil DCB to Abbott, the company’s exclusive distribution partner for the product, and growth in sales of the Pounce thrombectomy 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 million in fiscal 2023, driven primarily by continued growth in customer utilization of Surmodics’ Serene hydrophilic coating, as well as from $1.4 million in 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 million in 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 $0.16 per diluted share(4) in fiscal 2023.

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

Balance Sheet Summary

As of September 30, 2024, Surmodics reported $40.1 million in cash and investments, $5.0 million in outstanding borrowings on its revolving credit facility, and $25.0 million in outstanding borrowings on its term loan facility. The company had access to approximately $65.0 million in additional debt capital as of September 30, 2024 under its revolving credit and term loan facilities. Surmodics reported $3.7 million in cash provided by operating activities and $0.5 million in 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 from June 30, 2024 to September 30, 2024.

Fiscal Year 2025 Financial Guidance

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

Conference Call

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

About the Pending Acquisition of Surmodics by GTCR

On May 29, 2024, Surmodics announced 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 of Surmodics (the “Merger”). Surmodics shareholders will receive $43.00 per 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, Surmodics will be a privately held company and its common stock will no longer be listed on The Nasdaq Stock Exchange.

The Merger was approved by Surmodics’ shareholders at a special meeting on August 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 ending March 31, 2025, subject to customary closing conditions, including required regulatory approval.

About Surmodics, 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. Surmodics also 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. Surmodics is headquartered in Eden Prairie, Minnesota. For more information, visit www.surmodics.com. The content of Surmodics’ website is not part of this press release or part of any filings that the company makes with the SEC.

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 the Pounce Venous 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 our SurVeil DCB (including realization of the full potential benefits of our agreement with Abbott), Sundance™ DCB, 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 ended September 30, 2023 and subsequent SEC filings. These reports are available in the Investors section of our website at https://surmodics.gcs-web.com and at the SEC website at www.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 with U.S. generally accepted accounting principles, or GAAP, Surmodics is reporting non-GAAP financial results including total revenue excluding SurVeil DCB license fee revenue, Medical Device revenue excluding SurVeil DCB 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 Ended September 30,

 

Fiscal Year Ended September 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 Ended September 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 Ended September 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 – SurVeil DCB(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

%

In Vitro Diagnostics revenue

 

7,473

 

 

 

6,926

 

 

 

547

 

 

 

8

%

Total Revenue

$

33,227

 

 

$

27,970

 

 

$

5,257

 

 

 

19

%

 

 

 

 

 

 

 

 

Medical Device Revenue, excluding SurVeil DCB license fees(1)

$

23,867

 

 

$

19,952

 

 

$

3,915

 

 

 

20

%

Total Revenue, excluding SurVeil DCB license fees(1)

$

31,340

 

 

$

26,878

 

 

$

4,462

 

 

 

17

%

   

 

Fiscal Year Ended September 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 – SurVeil DCB(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

%

In Vitro Diagnostics revenue

 

28,570

 

 

 

26,801

 

 

 

1,769

 

 

 

7

%

Total Revenue

$

126,078

 

 

$

132,584

 

 

$

(6,506

)

 

 

(5

)%

 

 

 

 

 

 

 

 

Medical Device Revenue, excluding SurVeil DCB license fees(1)

$

92,428

 

 

$

76,197

 

 

$

16,231

 

 

 

21

%

Total Revenue, excluding SurVeil DCB license fees(1)

$

120,998

 

 

$

102,998

 

 

$

18,000

 

 

 

17

%

 

 

Surmodics, Inc. and Subsidiaries

Supplemental Segment Information

(in thousands)

(Unaudited)

 

 

Three Months Ended September 30,

 

Increase (Decrease)

 

 

2024

 

 

 

2023

 

 

$

Operating Loss:

 

 

 

 

 

Medical Device

$

(29

)

 

$

(2,399

)

 

$

2,370

 

In Vitro 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 Ended September 30,

 

Increase (Decrease)

 

 

2024

 

 

 

2023

 

 

$

Operating (Loss) Income:

 

 

 

 

 

Medical Device

$

(2,239

)

 

$

5,084

 

 

$

(7,323

)

In Vitro 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 Ended September 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 Ended September 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 Ended September 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 Ended September 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 Ended September 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 Ended September 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)

SurVeil DCB 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 of Surmodics by 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 the U.S. and 12.5% in Ireland).

(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 ended September 30, 2024 and 2023 and the fiscal year ended September 30, 2024. For the fiscal year ended September 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 on businesswire.com: https://www.businesswire.com/news/home/20241106326294/en/

Surmodics Investor Inquiries Jack Powell, Investor Relations ir@surmodics.com