Surmodics Inc, a provider of surface modification and in vitro diagnostic technologies to the healthcare industry, reported its financial results for the third quarter of fiscal year 2024, ending June 30, 2024. The company operates in two segments: Medical Device and In Vitro Diagnostics, with the majority of its revenue derived from the Medical Device segment.
Performance Overview
Surmodics Inc reported total revenue of $30.3 million for Q3 2024, surpassing the analyst estimate of $30.01 million. However, this represents a 42% decrease from the $52.5 million reported in the same period last year. The prior-year period included a significant $24.6 million in license fee revenue from a milestone payment associated with the FDA premarket approval of the SurVeil™ drug-coated balloon (DCB).
Excluding the SurVeil DCB license fee revenue, total revenue increased by 10% year-over-year to $29.2 million. Despite this growth, the company reported a GAAP net loss of $7.6 million, or $(0.53) per diluted share, compared to a net income of $7.3 million, or $0.52 per diluted share, in the prior-year period. The adjusted EBITDA for the quarter was $1.6 million, down from $24.6 million in Q3 2023.
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Total Revenue | $30.3 million | $52.5 million | -42% |
| Medical Device Revenue | $23.4 million | $46.0 million | -49% |
| In Vitro Diagnostics Revenue | $7.0 million | $6.5 million | +8% |
| GAAP Net Loss | $(7.6) million | $7.3 million | -204% |
| Adjusted EBITDA | $1.6 million | $24.6 million | -93% |
Segment Performance
The Medical Device segment reported revenue of $23.4 million, a 49% decrease from $46.0 million in Q3 2023. This decline was primarily due to the absence of the $24.6 million SurVeil DCB license fee revenue recognized in the prior year. Excluding this fee, Medical Device revenue increased by 10% to $22.2 million, driven by product sales and performance coating royalties and license fees.
In Vitro Diagnostics revenue increased by 8% to $7.0 million, compared to $6.5 million in the prior-year period, driven by broad-based product sales growth.
Financial Achievements and Challenges
Despite the overall revenue decline, Surmodics Inc achieved a 10% year-over-year increase in revenue excluding the SurVeil DCB license fee. This growth was driven by strong demand for the SurVeil DCB and Pounce thrombectomy products, as well as performance coating royalties and license fees. However, the company faced challenges with increased operating costs and expenses, which rose by 13% to $27.3 million, primarily due to merger-related charges and higher research and development expenses.
Balance Sheet and Cash Flow
As of June 30, 2024, Surmodics reported $38.2 million in cash and investments, with $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. Cash used in operating activities was $2.0 million, and capital expenditures were $1.0 million for the quarter.
Pending Acquisition by GTCR
On May 29, 2024, Surmodics announced a definitive agreement to be acquired by GTCR for $43.00 per share in cash, representing an approximate equity value of $627 million. This acquisition is subject to customary closing conditions, including shareholder and regulatory approval, with a special meeting of shareholders scheduled for August 13, 2024.
"Our team’s focus and execution in the third quarter enabled us to deliver total revenue results consistent with the expectations shared on our most recent earnings call, benefiting from strength across multiple areas of our business," said Gary Maharaj, President and CEO of Surmodics, Inc.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Surmodics Inc for further details.
