Surmodics Q2 FY24 Financial Results and Guidance Update

Surmodics, Inc., a prominent player in the medical device and in vitro diagnostics industry, has revealed its financial performance for the second quarter ended March 31, 2024. The company also updated its financial outlook for the fiscal year ending September 30, 2024.

During the second quarter of fiscal 2024, Surmodics achieved a total revenue of $32.0 million, marking an 18% increase compared to the previous year. This growth was primarily driven by the Medical Device segment, which saw a revenue increase of 26% to $24.8 million. Excluding the SurVeil™ drug-coated balloon (DCB) license fee revenue, total revenue was $30.9 million, a 19% increase year-over-year. The company reported a GAAP net income of $0.2 million, a significant improvement from a net loss of $7.7 million in the previous year's second quarter. Adjusted EBITDA also rose to $4.8 million, up from a loss of $1.5 million a year earlier.

On the operational front, Surmodics announced the early clinical success and limited market evaluation (LME) of the Pounce LP Thrombectomy System, designed to remove acute-to-chronic thrombi and emboli in peripheral arteries below the knee. The company has now transitioned this system, along with the Pounce Venous Thrombectomy System, to full commercial launch. The Pounce Venous Thrombectomy System, launched in March, targets mixed-morphology venous clots, aiming to minimize the need for thrombolytics. The Pounce LP Thrombectomy System, launched in April, addresses thrombi in below-the-knee arteries, also minimizing thrombolytic use.

Gary Maharaj, President and CEO of Surmodics, expressed pride in the team's performance, highlighting the significant financial achievements and strategic advancements. The company experienced a 40% year-over-year growth in product sales within the Medical Device segment, driven by consistent demand for the SurVeil DCB commercialized by Abbott, as well as strong sales of the Pounce thrombectomy products. This performance, coupled with effective expense management, led to profitability and robust cash flow, with $7 million generated from operations, strengthening the company’s balance sheet to $41 million in cash and investments.

Looking ahead, Surmodics has raised its revenue and EPS guidance for fiscal 2024, reflecting strong second-quarter performance and an optimistic outlook for the remainder of the year. The company is positioned to capitalize on its recent product introductions and sustained growth in its core businesses, which include the Pounce thrombectomy products and SurVeil DCB. The company aims to drive the adoption of these products, targeting a multi-billion-dollar market opportunity.

For the second half of fiscal 2024, Surmodics plans to continue focusing on strategic initiatives and efficient capital allocation to enhance profitability. The company reported a product gross profit increase of 14% to $11.0 million, although the product gross margin slightly decreased due to under-absorption and production inefficiencies related to new product scales. Operating costs and expenses fell by 14% to $24.2 million, primarily due to reduced research and development expenses and prior year restructuring costs.

For the full fiscal year 2024, Surmodics now anticipates total revenue to be between $122 million and $124 million. Excluding the SurVeil DCB license fee revenue, the expected revenue ranges from $118 million to $120 million, representing a 15% to 17% increase year-over-year. The GAAP diluted loss per share is forecasted to be between $(0.90) and $(0.70), while non-GAAP diluted loss per share is expected to range from $(0.67) to $(0.47). This revised guidance underscores the company's robust strategic position and its potential for sustained revenue growth and profitability improvements.