Surmodics Reports 12% Revenue Decline in Q2 Fiscal 2025 Amid Merger Scrutiny

Surmodics, Inc. reported a decline in financial performance for the second quarter of fiscal 2025, with total revenue of $28.1 million, a decrease of 12% compared to $31.9 million in the same period last year. For the first six months of fiscal 2025, revenue totaled $58.0 million, down 7% from $62.5 million in the prior year. The decline was primarily driven by a significant drop in product sales within the Medical Device segment, which fell 31% to $7.7 million in the second quarter, largely due to reduced sales of the SurVeil drug-coated balloon (DCB) as the previous year benefited from initial stocking orders.

The company's operating loss for the second quarter was $4.0 million, compared to an operating income of $0.7 million in the prior-year quarter. This loss was attributed to increased selling, general, and administrative expenses, which rose 15% to $15.0 million, largely due to merger-related charges. The Medical Device segment reported an operating loss of $1.9 million, while the In Vitro Diagnostics segment maintained a slight operating income of $3.3 million, reflecting a stable performance despite overall revenue challenges.

Surmodics is currently navigating a merger agreement with BCE Parent, LLC, which is set to acquire the company for $43.00 per share in cash. However, the merger is facing scrutiny from the U.S. Federal Trade Commission (FTC), which has filed a complaint seeking to block the transaction, alleging potential anti-competitive effects. The company incurred $2.5 million in merger-related charges during the quarter, which contributed to the increased SG&A expenses.

Operationally, Surmodics reported a decrease in cash and cash equivalents, totaling $29.2 million as of March 31, 2025, down from $36.1 million at the end of the previous fiscal year. The company’s working capital also decreased to $57.8 million. Surmodics continues to focus on its product development pipeline, including the commercialization of its DCB products and the expansion of its thrombectomy device platform, which has shown growth despite the overall revenue decline.

Looking ahead, Surmodics anticipates continued challenges in revenue generation, particularly from the SurVeil DCB product line, which is expected to see a further decline in sales. The company is also preparing for potential impacts from the ongoing FTC litigation regarding the merger, which could affect its operational strategy and financial outlook.