SRDX Stock Down Following Q2 Earnings Miss, Gross Margin Contracts

Surmodics, Inc. SRDX delivered adjusted loss per share of 13 cents in the second quarter of fiscal 2025 against the year-ago quarter’s adjusted earnings per share (EPS) of 7 cents. The metric was wider than the Zacks Consensus Estimate of a loss of 6 cents per share. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)GAAP loss per share for the quarter was 36 cents against the year-earlier EPS of 2 cents.Surmodics’ Revenues in DetailSurmodics registered revenues of $28.1 million in the fiscal second quarter, down 12.1% year over year. The figure missed the Zacks Consensus Estimate by 8.7%.Total revenues included $0.3 million of SurVeil drug-coated balloon (DCB) license fee revenues compared with $1.1 million in the second quarter of fiscal 2024. The decrease was due to lower expenses related to the TRANSCEND clinical trial, which was completed in the fiscal second quarter of 2025. Total revenues in the fiscal second quarter of 2025 were also unfavorably impacted by a $2.4 million decrease in SurVeil DCB product sales revenues compared with the second quarter of fiscal 2024, primarily due to lower demand for commercial shipments from Abbott, SRDX’s exclusive distribution partner for the product.Shares of this company lost nearly 9.4% at the end of yesterday’s trading.SRDX’s Segmental AnalysisSurmodics operates via two reportable segments — Medical Device and In Vitro Diagnostics (IVD).In the reported quarter, sales in the Medical Device segment were $20.7 million, down 16.6% from the year-ago quarter. Excluding SurVeil DCB license fee revenues, Medical Device revenues decreased 14% to $20.4 million from $23.7 million in the year-ago period. This figure compares to our Medical Device fiscal second-quarter revenue projection of $23.5 million.In the quarter under review, IVD sales improved 3.4% year over year to $7.4 million, driven by favorable order timing of SRDX’s distributed antigen and colorimetric substrate products. However, this was offset by a decline in microarray slide/surface revenues. This figure compares to our IVD fiscal second-quarter revenue projection of $6.8 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 $14.9 million, down 17.2% from the prior-year quarter. This figure compares to our fiscal second-quarter revenue projection of $17.3 million.Royalties and license fees revenues totaled $9.9 million, down 13.2% from the prior-year quarter. This figure compares to our fiscal second-quarter revenue projection of $10.7 million.Research, development and other revenues were $3.2 million, up 30.1% year over year. This figure compares to our fiscal second-quarter revenue projection of $2.4 million.Surmodics, Inc. Price, Consensus and EPS Surprise Surmodics, Inc. price-consensus-eps-surprise-chart | Surmodics, Inc. QuoteSurmodics’ Margin TrendIn the quarter under review, Surmodics’ gross profit decreased 18.5% year over year to $20.3 million. The gross margin contracted 566 basis points to 72.1%. We had projected a gross margin of 73.5% for the fiscal second quarter.Selling, general & administrative expenses increased 14.9% year over year to $ 15 million. Research and development expenses declined 18.2% year over year to $8.4 million. Adjusted operating expenses of $23.4 million climbed 0.4% year over year.Adjusted operating loss totaled $3.2 million against the prior-year quarter’s adjusted operating profit of $1.5 million.SRDX’s Financial PositionSurmodics exited second-quarter fiscal 2025 with cash and cash equivalents of $29.2 million compared with $30.1 million at the fiscal first-quarter end. Total long-term debt at the end of second-quarter fiscal 2025 was $29.63 million compared with $29.59 million at the fiscal first-quarter end.Cumulative net cash used in operating activities at the end of second-quarter fiscal 2025 was $6.9 million compared with $1.4 million a year ago.Surmodics’ Fiscal 2025 GuidanceSurmodics has initiated its outlook for fiscal 2025.The company expects fiscal 2025 total revenues in the range of $114 million-$117 million, reflecting a decrease of 10-7% over the comparable fiscal 2024 period. The Zacks Consensus Estimate is pegged at $124 million.Excluding SurVeil DCB license fee revenue, Surmodics expects fiscal 2025 total revenues in the range of $112.5 million-$115.5 million, reflecting a decrease of 7-5% over the comparable fiscal 2024 period.SRDX expects SurVeil DCB license fee revenues to decrease $3.6 million in fiscal 2025, with no further recognition of SurVeil DCB license fee revenue subsequent to March 31, 2025. The company expects SurVeil DCB product revenues to decrease $7 million in fiscal 2025, primarily due to lower demand for commercial shipments from Abbott.Adjusted loss per share for fiscal 2025 is projected to be in the range of 62-42 cents. The Zacks Consensus Estimate is pegged at a loss of a penny.Our TakeSurmodics exited the second quarter of fiscal 2025 with a wider-than-expected loss per share and lower-than-expected revenues. The dismal top and bottom-line performances and lower revenues from the Medical Device segment were disappointing. The company registered lower revenues from Product sales and Royalties and license fees, which were discouraging. The gross margin contraction also does not bode well for the stock.On a positive note, Surmodics’ robust IVD sales and Research, development and other revenues were encouraging. The continued growth in sales of the Pounce Thrombectomy Platform and continued growth in customer utilization of its Serene hydrophilic coating during the quarter looked promising.In February, Surmodics announced the successful early clinical use of the Pounce XL Thrombectomy System. The product was commercially released in April. Also, in April, the company announced the publication of the TRANSCEND clinical trial’s favorable outcome. These raise our optimism about the stock.SRDX’s Zacks Rank and Stocks to ConsiderSurmodics currently carries a Zacks Rank #4 (Sell).Some better-ranked stocks in the broader medical space that have announced quarterly results are Encompass Health Corporation EHC, Integer Holdings Corporation ITGR and Boston Scientific Corporation BSX.Encompass Health, carrying a Zacks Rank #2 (Buy), reported first-quarter 2025 adjusted EPS of $1.37, beating the Zacks Consensus Estimate by 15.1%. Revenues of $1.46 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Encompass Health has a long-term estimated growth rate of 9.8%. EHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 12.3%.Integer Holdings reported first-quarter 2025 adjusted EPS of $1.31, beating the Zacks Consensus Estimate by 3.2%. Revenues of $437.4 million surpassed the Zacks Consensus Estimate by 1.3%. It currently sports a Zacks Rank #1.Integer Holdings has a long-term estimated growth rate of 18.4%. ITGR’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 2.8%.Boston Scientific reported first-quarter 2025 adjusted EPS of 75 cents, beating the Zacks Consensus Estimate by 11.9%. Revenues of $4.66 billion surpassed the Zacks Consensus Estimate by 2.3%. It currently carries a Zacks Rank #2.Boston Scientific has a long-term estimated growth rate of 13.3%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.8%.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Boston Scientific Corporation (BSX): Free Stock Analysis Report Surmodics, Inc. (SRDX): Free Stock Analysis Report Integer Holdings Corporation (ITGR): Free Stock Analysis Report Encompass Health Corporation (EHC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks