Surmodics (SRDX -0.84%), a medical device technology firm known for its vascular intervention products and performance coatings, released results for Q3 FY2025 on August 8, 2025. The core news was a beat on both the top (GAAP revenue) and bottom (non-GAAP EPS) lines. Non-GAAP earnings per share reached $0.06 versus an expected loss of $(0.18), and GAAP revenue came in at $29.6 million, well above the $28.05 million consensus. While overall GAAP revenue dropped 3% from the prior-year period, Key product lines like thrombectomy devices and diagnostics showed growth that helped partially offset larger declines elsewhere. In context, the quarter reflected stabilization in the core business and sharp cost controls amid ongoing merger uncertainty.
| Metric | Q3 2025 | Q3 2025 Estimate | Q3 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.06 | $(0.19) | $(0.27) | $0.33 |
| Revenue | $29.6 million | N/A | $30.3 million | (3)% |
| Adjusted EBITDA | $3.4 million | $1.6 million | 112.5% | |
| Operating Margin | (17.7)% | (17.7)% | 0 pp | |
| Revenue – Medical Device | $22.2 million | $23.4 million | (5)% | |
| Revenue – In Vitro Diagnostics | $7.4 million | $7.0 million | 6% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q2 2025 earnings report.
Business Overview and Strategic Focus
Surmodics specializes in technologies for the medical device industry. The company develops products that treat vascular disease—such as drug-coated balloons (DCBs) that deliver medication directly into blood vessels—and provides advanced coatings to improve the performance of a wide range of medical devices. Its business model rests on commercializing proprietary devices, earning royalties and license fees from coating technologies, and forging strategic partnerships with leading health-care companies like Abbott and Medtronic.
In recent years, Surmodics has focused on two main areas. First, the company advances vascular intervention devices, with an emphasis on innovative solutions like the Pounce Platform (mechanical thrombectomy devices) and SurVeil DCB (drug-coated balloon) systems. Second, the performance coatings segment remains a critical profit center, generating growth through process innovation and expansion of licensing deals. Key factors for success include regulatory clearance for new devices, diversification beyond a few primary customers, and driving adoption of new technologies by medical device makers worldwide.
Quarter Details: Segment Performance and Drivers
Surmodics faced significant declines in SurVeil DCB sales, both in terms of license and product revenue during Q3 FY2025. Management attributed this to reduced demand from key partner Abbott and the completion of a major clinical trial. SurVeil DCB license fee revenue dropped from $1.1 million in Q3 FY2024 to $0.0 million, and product revenue from this line fell steeply—directly impacting overall Medical Device segment results. Despite these decreases, the Medical Device segment stabilized, showing consistent performance excluding the SurVeil DCB product line.
Bright spots came from newer vascular intervention products, with the Pounce Thrombectomy Platform, a mechanical device used to treat blood clots, delivered 35% year-over-year sales growth. Research and development revenue in Medical Device also rose 37% year-over-year, reflecting strong customer demand. Royalties and license fees from performance coatings, used to make medical devices more compatible with the body, increased 4% to $9.7 million (GAAP), supported by adoption of the Serene hydrophilic coating and early steps in commercializing the next-generation Preside coating for neuro and heart applications.
In the In Vitro Diagnostics (IVD) segment, which provides reagents and related products used in blood and other laboratory tests, revenue rose 6% to $7.4 million (GAAP). Strength was spread across the product portfolio, with both product sales and development income growing. This segment continues to benefit from steady demand in diagnostics R&D and production supplies.
The company narrowed its net loss (GAAP) compared to the prior year, bringing Non-GAAP net income back into positive territory as it trimmed operating costs. Gross margin on product sales (GAAP) declined to 48.8% from 51.9% in Q3 FY2024, pressured by manufacturing inefficiencies and inventory write-downs related to lower-than-expected SurVeil production volumes. Costs related to the pending merger with GTCR were substantial, increasing to $5.3 million and contributing to operating expenses.
Financial Outlook and What’s Ahead
Surmodics raised its full-year revenue guidance, now expecting between $116.5 million and $118.5 million in GAAP revenue for FY2025. The company also improved its forecast for the Non-GAAP net loss per share for FY2025, now estimating a range of $(0.35) to $(0.20), significantly better than the previous $(0.62) to $(0.42) range. The outlook reflects ongoing weakness in SurVeil DCB sales and license revenue, as Abbott continues to ship at reduced levels and no clinical trial milestones are expected, but also growing confidence in core device and diagnostics lines.
Surmodics remains in the midst of being acquired by GTCR, with completion pending regulatory approval. The $43.00-per-share all-cash deal offers potential liquidity for shareholders, but litigation by the Federal Trade Commission adds continued uncertainty around deal timing and outcome.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
