Surmodics, Inc.

Second-quarter fiscal 2024 revenue increased 18% year over year to $32 million, or 19% to $30.9 million excluding SurVeil DCB license fee revenue. Product revenue rose 18% to $18.1 million; Medical Device product revenue increased 40% to $11.1 million, while IVD product revenue declined 6% to $7 million. Product gross margin was 60.8% versus 62.6% last year. GAAP net income was $250,000, or $0.02 per diluted share, versus a $7.7 million net loss, and adjusted EBITDA was $4.8 million versus an adjusted EBITDA loss of $1.5 million. For full-year fiscal 2024, management now expects total revenue of $122 million to $124 million, or a 8% to 6% decline, but revenue excluding SurVeil DCB license fee revenue of $118 million to $120 million, up 15% to 17%. They expect SurVeil DCB license fee revenue of about $4 million, GAAP EPS of a loss of $0.90 to $0.70, non-GAAP EPS of a loss of $0.67 to $0.47, and third-quarter revenue of about $29.5 million to $30.5 million. They also said year-end cash and investments should be about $35 million to $38 million, with no borrowings assumed under the credit agreement.

Gary Maharaj framed the quarter as evidence that Surmodics is making progress across all three fiscal 2024 strategic objectives: scaling near-term vascular intervention products, advancing new product launches, and generating durable growth and cash flow. He emphasized strong physician feedback on SurVeil, Pounce Venous, and Pounce LP, and said the company is focused on maintaining momentum while controlling spending. His tone was upbeat and confident, with repeated comments that the business is well positioned for sustained revenue growth.

Timothy Arens highlighted that revenue beat expectations, with $32 million in Q2 sales and $2.5 million of total revenue outperformance versus the prior outlook. He pointed to 60.8% product gross margin, $7.4 million of operating cash flow, $40.9 million of cash and investments at quarter-end, and $29.5 million of long-term debt unchanged. He also said the company expects full-year product gross margin in the mid- to high 50s, R&D of $39.5 million to $40.5 million, SG&A of $53 million to $54 million, and year-end cash and investments of $35 million to $38 million, implying improved cash use versus prior expectations.

Analysts pressed on SurVeil’s addressable market, Abbott’s long-term interest, product-level guidance, and whether Abbott’s recent above-the-knee and below-the-knee developments might change the opportunity. Management said the TAM remains about $1 billion by its estimate, that Abbott is only a few months into launch, and that monthly orders have continued; they also said they have not discussed Abbott’s OUS plans and remain focused on the U.S. market. On margins and profit sharing, management said the first Abbott profit-sharing report has not yet been received, assumptions are being kept conservative, and they do not expect a major change to the revenue recognition approach.