Surmodics, Inc. SRDX delivered adjusted loss per share of 4 cents in the first quarter of fiscal 2025 against the year-ago quarter’s breakeven level. The metric was narrower than the Zacks Consensus Estimate of a loss of 8 cents per share.

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GAAP loss per share for the quarter was 26 cents, wider than the year-earlier loss of 6 cents per share.

Surmodics’ Revenues in Detail

Surmodics registered revenues of $29.9 million in the fiscal first quarter, down 2.1% year over year. The figure missed the Zacks Consensus Estimate by 10.6%.

The top line was dampened by weak year-over-year revenues from both the Medical Device and In Vitro Diagnostics (IVD) businesses.

Excluding SurVeil drug-coated balloon (DCB) license fee revenues, total revenues decreased 3% year over year to $28.7 million.

Shares of this company lost nearly 0.8% at the end of yesterday’s trading.

SRDX’s Segmental Analysis

Surmodics operates via two reportable segments — Medical Device and IVD.

In the reported quarter, sales in the Medical Device segment were $23.3 million, down 1.1% from the year-ago quarter. Excluding SurVeil DCB license fee revenues, Medical Device revenues decreased 2% to $22 million year over year. This figure compares to our Medical Device fiscal first-quarter revenue projection of $25.8 million.

Medical Device revenue growth was primarily hampered by product sales of $10.1 million, down 15% year over year. Lower product sales primarily resulted from a decrease in SurVeil DCB commercial revenue, as the year-ago period benefited from the initial stocking order shipments of the SurVeil DCB to Abbott (Surmodics’ exclusive distribution partner for the product). This was partially offset by growth in performance coatings royalty revenue and sales of the company’s Pounce thrombectomy device platforms.

In the quarter under review, IVD sales declined 5.2% year over year to $6.6 million, primarily due to unfavorable order timing for distributed antigen and diagnostic test chemical components. This figure compares to our IVD fiscal first-quarter revenue projection of $7.6 million.

The company also derives revenues from three primary sources — Product sales, Royalties and license fees and Research, development and other fees.

In the quarter under review, Product sales were $16.5 million, down 12.1% from the prior-year quarter. This figure compares to our fiscal first-quarter revenue projection of $19.5 million.

Royalties and license fees revenues totaled $10.6 million, up 15.9% from the prior-year quarter. This figure compares to our fiscal first-quarter revenue projection of $11.2 million.

Research, development and other revenues were $2.7 million, up 7.6% year over year. This figure compares to our fiscal first-quarter revenue projection of $2.6 million.

Surmodics’ Margin Trend

In the quarter under review, Surmodics’ gross profit increased 3.4% year over year to $22.5 million. The gross margin expanded 400 basis points to 75.2%. We had projected 71.9% of gross margin for the fiscal first quarter.

Selling, general & administrative expenses increased 21% year over year to $15.2 million. Research and development expenses rose 3.2% year over year to $8.9 million. Adjusted operating expenses of $24.1 million climbed 13.7% year over year.

Adjusted operating loss totaled $1.6 million against the prior-year quarter’s adjusted operating profit of $0.5 million.

SRDX’s Financial Position

Surmodics exited first-quarter fiscal 2025 with cash and cash equivalents of $30.1 million compared with $36.1 million at the end of fiscal 2024. Total long-term debt at the end of first-quarter fiscal 2025 was $29.59 million compared with $29.55 million at fiscal 2024-end.

Net cash used in operating activities at the end of first-quarter fiscal 2025 was $7.9 million compared with $8.8 million a year ago.

Surmodics’ Fiscal 2025 Guidance

Surmodics will not provide any outlook on the pending acquisition by GTCR LLC.

Our Take

Surmodics exited the first quarter of fiscal 2025 with a narrower-than-expected loss per share. The uptick in the performance coatings royalty revenues and sales of the company’s Pounce thrombectomy device platforms was impressive. Revenues from the majority of SRDX’s primary sources (Royalties and license fees and Research, development and other fees) also increased. The gross margin expansion also bodes well for the stock.

In October 2024, Surmodics received the FDA’s 510(k) clearance for its Pounce XL Thrombectomy System. This will allow for clot removal in larger peripheral arteries, expanding the addressable market and clinical utility of the Pounce Thrombectomy Platform. This raises our optimism about the stock.

However, the lower-than-expected revenues and the dismal top and bottom-line performances were disappointing. The company registered lower revenues from both segments and Product sales, which was discouraging.

SRDX’s Zacks Rank and Other Key Picks

Surmodics currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks from the broader medical space that are expected to report earnings soon are Cencora, Inc. COR, DaVita Inc. DVA and Labcorp Holdings Inc. LH.

The Zacks Consensus Estimate for Cencora’s first-quarter fiscal 2025 adjusted earnings per share (EPS) is currently pegged at $3.50. The consensus estimate for revenues is pegged at $78.12 billion. COR currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cencora has an estimated long-term growth rate of 10.4%. COR’s earnings yield of 5.9% compares favorably with the industry’s 3.5%.

DaVita currently sports a Zacks Rank #1. The Zacks Consensus Estimate for its fourth-quarter 2024 adjusted EPS is currently pegged at $2.21. The same for revenues is pegged at $3.25 billion.

DaVita has an estimated long-term growth rate of 18.3%. DVA’s earnings yield of 6.4% compares favorably with the industry’s 4%.

Labcorp currently carries a Zacks Rank #2. The Zacks Consensus Estimate for its fourth-quarter 2024 adjusted EPS is currently pegged at $3.40. The same for its revenues is pegged at $3.31 billion.

Labcorp has an estimated long-term growth rate of 8.4%. LH’s earnings yield of 6.4% compares favorably with the industry’s 5.4%.

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