SRDX - Earnings call 4 2023

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Operator

Welcome, everyone, to Surmodics Fourth Quarter and Fiscal Year 2023 Earnings Call. Please note that this call is being webcast. The webcast is accessible through the Investor Relations section of the Surmodics website at www.surmodics.com where an audio replay will be archived for future reference. An earnings press release disclosing Surmodics' quarterly and full year results was issued earlier today and is available on the company website as well.Before we begin, I would like to remind everyone that remarks and responses to your questions on today's call may contain forward-looking statements. These forward-looking statements are covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include statements regarding Surmodics' future financial and operating results or other statements that are not historical facts. described actual by differ from Surmodics' and including that stated from certain advised SEC uncertainties, implied company's or forward-looking those be results materially could those risks filings. Please the in statements, resulting useful Surmodics non-GAAP forward-looking as disclaims believes measures future developments because a these also call provide information, statements or new Surmodics any otherwise.This update information of includes revise to events, duty for or investors. result reference they to now reconciliation and Today's turn to tables like earnings would Gary President to call results.I Surmodics' contains Chief to over release the GAAP Officer. Maharaj, Executive ahead, go Please sir.

Gary Maharaj

cover In financial press release representing XXXX. 'XX the operator. fiscal start to introduced we X% our with me earnings an our will a review thoughts fiscal let's performance in million, provide that, our total guidance, We'll $XX you, operational by performance financial quarter, off to of quarter performance. which fourth let year a recent progress with discussion and quarter fourth then plan fiscal brief of questions.With and detail overview discussing then the financial call today. open our Tim by the our Thank begin and followed greater Welcome, the full fourth everyone, year, you we what for update for call.First, I'll XXXX in and on our today. our earnings for generated on of we quarter revenue growth. our cover year-over-year outlook

to in of X% range, implied exceeded Our segments. year-over-year high guidance performance growth the of both due the quarter revenue for which business end our of our fourth performance strong

in a related year-over-year quarter revenue to total our license by the decline fourth DCB million headwind impacted SurVeil revenue. performance fee $X the Importantly, was the in

growth the license in from $X to DCB fee achieved again, grew Device Medical revenue, year-over-year million. segment SurVeil decline revenue SurVeil $XX the XX% the million X% total headwind year-over-year license from of year-over-year.Revenue This our we Excluding despite revenue.

and fee revenue year-over-year, license our delivered our Vitro our services major segment Coatings, as Device to Thrombectomy R&D revenue Performance this Diagnostics license from contributions and platform fee our revenue, Medical including segment XX% from also robust pleased royalties see from In quite contributions sales, Arterial well. Pounce growth Excluding or increased by IVD fueled revenue.We're product

had revenue operating we we in COVID improvements achieved IVD improvement quarter, era call, As adjusted fourth growth in returned $X.X manage increasing the the in $X.X million patterns in steps last taking of quarter, our to to X% $X.X million, purchasing EBITDA year. year-over-year to year-over-year million, anticipated our performance elevated the returning last to a fourth inventory compared customers notable quarter addition our levels.In results, our earnings recent in with fourth delivering more quarters of segment normalized after to to

flow executing of certain Importantly, our we that was during operations note of from development to well.Now delay the favorably generated million fourth performance by $X.X the quarter important impacted as cash product against it's quarter our did year on SurVeil orders, will while activities we the and our describe commercial shortly. contemplated that investments full we organization I guidance. had stocking which We this in focused in

total growth to of culminated in expect quarter year in fourth a investments these in performance million in We the overall. XXXX, representing We fiscal fiscal XXXX.Our activities financial resume delivered strong of and XX%. revenue $XXX

DCB, connection XXXX. of approval in million compared million million fee license including our recognized with related the XXXX fiscal fiscal Our revenue SurVeil to in our PMA achievement of $XX revenue $X.X to included $XX.X

decrease than Device year year the XXXX the out IVD fourth a the business, fee standpoint. totaled which offset revenue, total DCB closed revenue our X% SurVeil by investments in fiscal in in year-over-year by license to we XX% we capital with over growth in grew progress X% XXXX, business.We cash to operational provided by strong support quarter. of a fiscal more now future in our operations Excluding our driven our million, also million operations.Turning Cash $XX from ended $XX.X Medical and and

securing Medical Performance and Thrombectomy flow are discuss businesses.With to the the the of and X to IVD Radial After on second, which cash progress out respect achieve of and partner, we for each SurVeil and reminder, pleased initial to offerings our our close bring platforms; fiscal PMA growth objective first, has Pounce with U.S. they FDA each for commercialization. we Abbott, as I'll laid a DCB SurVeil. commercialization during follows: Device June team product; fourth our XXXX XX, announced focused as and SurVeil, by prepare prepare on revenue Coatings FDA for of year, the partner, to on to drive which, premarket with strong beginning supporting commercial quarter advance We one, the our the that as strategic were delivering intently the as our objectives been a approval at PMA as our or commercialize support our our third, Abbott, Arterial context, Sublime beginning they

to As each Abbott, our in in stocking address a are key top consistent the their ensure to efficiently and believe of Abbott's stated and with of quarter we respect product, to materials shared initial manufacture order and support expectations. demand. added we our the the place these mid-August, pleased well fourth was our to we received positioned I'm commercialization that areas, processes anticipated backdrop, supply report With launch future priority to initial this last Abbott's we during in capacity, DCB.With SurVeil we call, earnings as and

an through the our terms profit our process sharing, order, October, of production reminder, the first made our agreement SurVeil quarter revenue estimate the our in within our and running fiscal under been orders recognized remaining which to we the fourth a manufacturing will price has when weeks transfer XXXX.As the segment. SurVeil shipments of upon Our product first related as team smoothly. of streams partner, X to and of DCB we the Medical shipping be shipments of both initial the revenue of and Device reported In agreed per first unit stocking the upon quarter, the commercial commercial began for products revenue generating

have through shipments shared expect with to they our of fulfill fiscal engage tandem we we October, order following team initial effort, quarter.In the product. commercialize shipments vascular this previously, stocking multiple continued remaining made as shipment in plan we've that the months As initial to Abbott's Abbott's additional to in with first with

energized the mortality X-year full more we commence Its it in the I'm developing that launch coating along reasons. to share pleased in XXX-patient DCB the In our significant limited DCB.We're also therapeutic its are standpoint, for posed and marketplace on commercialization opportunity health we plans, industry-leading $X year. in Of While about we by what SurVeil Abbott's market will expertise coating in is head-to-head potential of market a first are this forward as to see Its From a believe and adoption. drug-coated downstream balloons, outcomes and with billion based the SurVeil the of the and be generation design terms features X/X commercial to of estimated XX% opportunity drug performed devices of communicated market, publicly drug that to of communicate a in recent prominent delivery peripheral providers which XXXX.We're data in emboli. of consistent able achieve of care TRANSCEND progress XXX,XXX catalyst analysis. and uses at on available enable lower which favorable U.S. most uniformity SurVeil expect these paclitaxel-coated approximately procedures, reflects trial technology patented procedures pleased DCB XXX,XXX increasing drug November which a July on currently to of a to calendar paclitaxel technologies. growth of potential them unmatched a the that letter supported device addressed results results believe are of with VEITH the artery associated based X-year the key and XX, no pace And above-the-knee particulate we each distribution, this the we with demonstrated, provides FDA patients, totality as will provides half being drug-coated product balloon to a addresses the paclitaxel. equally We excited SurVeil the a disease consistency balloon of and in bringing using by about we're following drug-coated risks as SurVeil the longer its DCB on and look be may resolution sharing risk standpoint, XX.From presented our trial, Symposium the to for devices. of the that prospect market physicians these

of with standpoint, is these devices. view.Lastly, a we and marketing DCB for of consistent products, is well sales the a and including with to Importantly, market take and positioned to the advantage labeling space a come the in suite product from dynamics SurVeil significant Abbott existing complementary vascular years sense believe partnership XXXX the atherectomy FDAs attractive updated presence in and our

at an referred fills stage complete customers. the offering market ended future commercialization We potential average Thrombectomy at Our second supporting XX Sublime quarter. tenure have to a we quarter and the commercialization existing this market end XX XX of We objective: them to remain an our early territory the effort. their beginning team and comprehensive portfolio what strategic and to DCB months for for compared quarter managers to make them.Moving forward committed disease, Pounce to important in quarter providing as end, platforms. with continued our progress our peripheral at with the gap Radial With to of artery SurVeil progress initial and their rep fourth for advancing of through look Arterial in development

to without our contract in than minimal are and quarter to X states new we to equipment We're resonating this from with advantages capital system the redeploy physicians this with excited of This delivery products access that past uptick quickly we continue across instantly they in for of Arterial and first this a value from a a just the they and average market. that among XXX exceeding value that major our need expanded and reducing contract awareness third for to and end the revenue build new from Sublime to XXX reorder XXXX customers.From Many compared a quarterly the Pounce accounts this other and foot, recent standpoint, actually continue for traditional that employ third approaches from customers more combined the dedicated and complications over have fails. driving repeat ] to working orders to foundation at the first-time consecutive situations using momentum see device stay, platform more lastly, table, of forward even and our products. new customers.The Sublime helps platform's and adopted continued prospective network fiscal the end about expand further year-over-year we IDN unique expanded patients attractive health over from during will million all Pounce a with products, From easily users Pounce our continue the case them it utilization Pounce report to customer. we our new signed customers the [ Access penetrating existing experiencing through the committees results of rates Thrombectomy we our and provide for customers, or end base account need of for with our sales demonstrates with their pleased integrated radialists length [ to across interventional at are physician $X as perspective, revenue in their the and standpoint, products, it raising Radial Pounce Specifically, drugs, quarter to at pipeline the XXXX. we now. on after growth than the clearly of the of existing the to notable the brings.Likewise, the of in by existing physicians like a industry, at along dozen a and XXX awareness received feedback reps our operating Sublime of per lytic recognize our contribution quarter analysis ability And where we ] our fiscal continues and treat I'm blood-loss, market.And pain Sublime lay look ability revenue wrist

growth, our fiscal growth which performance future generate their And in flow building these enabled for driving for Performance quarter XXXX.Third, Device sales In established the in in Medical XX% on forward achievements fourth us Device strategic XXX% Our objective, the year solid to year. products a of a segment that full time, look of sales fiscal sales our in the has product Coatings we force ahead. third in in Medical positioning from the and short of business. excess us small achieved fueling revenue relatively ultimately this amount years the IVD to and XXXX, foundation cash turning to drive to performance our is we offerings growth

primary our expectations. that businesses and $XX cash to in steps a from to the to for first enhanced offerings a second With a when million requirement related a $XX we application, stress reflects enhanced outcomes.Preside them forward of of half and strong allows reach the new look payment of 'XX of on with clots. tandem, clots physicians our our year.Stepping we with of executing average the a continued flow industry, availability fiscal end to most of cash of businesses, has has to deliver use second adjust in setting throughout training 'XX million a XX the to of innovation leadership and coatings resubmitting secure and to basis on XXXX, and durability, response the of garnered took our growth delivered a an Medical year beginning our testing performance in our of launch meet see we a coating and interior in device's strong high it we with to supply across PMA from a face of ability year advantage multiple maximize back, acute our the normalization of as IVD shared has plan to of quarter, reduce Tim? in fiscal believe and shareholders coatings device.This their to and these near-term businesses; with reagents, more other call of pleased of behind Chief macro-related due X%, the allowing quarter our volumes address the they'll growth in pursue additional our and a sheet regulatory for durable want and against ahead garnered the including this strong, vascular medical to most to that, success fiscal our applied friction we pivotal safety with $XX.X approximately devices coating our the gaining coupled peripheral letter and $XX low-to-mid important decreased earnings for the growth fiscal industry DCB, to our the to requirements. highlight forward.I'd device Surmodics segments These to and Preside a applications in fiscal strategic informing used we've half the Financial through of the Device profitable and clearance securing focused for are We fiscal the pipeline. we the key coating limited then organization more of for reduction more in X% results facilitate clinicians namely growth engaged second Preside financial to of by sales humanity unique I'll commercialization Performance discuss today's continued XXXX, With basis.And utilizing industry device our commercial is and long-term our long-term market IVD variety their generating raise control revenue that these across the long-term businesses that many increasingly revenue exceptional future applications to and Coatings the support mission clinical prepare to half which industry of focused revenue our and the competitive as commercialization date and support of X% on combined extracting lower and the accelerate across on for diameter contributions our XXXX, on driven market increasing following growth of of normalized our than full performance Medical core quarter our regulatory an discussing quarter enhance created. these our invaluable, in will and access strategically new year in drive Surmodics' believe priority to cash a commencing helping to devices large been Device organization we Preside, the Performance and FDA defining physician X-year and platform; the on a much insight the highlighted capital our the System, sales over the commitment patented appreciate Pounce as products new lastly, executing to with largely drove the patients. ability cases in technology to or the business our flow to to detection in for have be chain. the value objectives: Tim our functionality focused fiscal cash proceeds maintain of of executing and setback range in approach IVD our recent in procedure despite leadership our vein 'XX, the standard advanced to effectiveness will across market the flexibility, quarterly announce from return a the the I and end Arens, of basis.In annualized XXXX more complex near and of Performance designed is X% success.As formulated pathways. in engaged and sustainable as like its colleagues working morphologies, new evaluation, healthy efficiently year been Medical especially COVID royalty provide to us, as And to believe and there's catheters to for subacute available cash entire areas year-over-year in This we some full covalently of our spaces to other to and demand the Device and guidance as with Sublime, a number multiple possible going our Pounce to the to and not-approvable tortuous pleased first, achieving agreement. ahead my industry superbly this to enable by by particulates, and For is pleased revenue Tim secure single-digit hydrophilic in and and interventions launch and XXXX, combined catalyst year. the and users launch cases area revenue milestone product our his will we device ongoing basis Coatings Preside hydrophilic to through these levels technology, we bonded IVD In development our our commitment fourth offerings completed a use effectively of with advance fiscal regulatory were reduce clot call, to different fiscal this to second the generation clearance In are anticipated the balance our efficiency the stress of balance portfolio.Before Coatings positioned Device macerate sites competency products, license pathways history.We growth SurVeil you creation we our the our and vascular physicians net The feedback our disease. million cash avoid operations in addition major ultimately returned fiscal growth coating improved our paced for debt to on strategic It's Device Notably, of remains the lubricity, credit with we growth.As to the we of we lastly, significant core on of our we across feedback to vascular device's Medical top broad-based industry-leading light vein to Sublime real-world XXXX coatings year. our customers navigate significantly SurVeil, Officer, headwind and business QX our radial drive appreciation Performance as line to are resulting the IVD well. through to facilitate core in portfolios segment, our on enhancement significant growth products X% position.And to in of Medical rigorous fourth let and the in SurVeil the we new treatment we challenges. single have. position October in before product product the Pounce, detail venous differentiation commentary.As on of for the the to very is turn developing in architecture driving revenue experienced investments interventions -- and profile using scenarios our DCB. portfolio capital Sublime FDA and enhancing customers, encounter which two, me our was and our primarily medical of and Pounce we despite the our the regulatory and generated by months team durable in for look distal the October. portfolio, PMA to under approval after for million and XXX(k) provide Thank from fueling we limited basket, our deliver This said, catalysts latest neuro-market compliance provide Device therapeutic our processes. customers reducing arterial to raising delivering well a basis.Our benefits but Venous also X solutions, a proactively treatment with team we curing easily the a our initial our additional the 'XX.Revenue Thrombectomy vascular compared past wall ultimately promote LME from support.With on progress priorities some to a cash total reducing as products for Coatings our in a extensions to even XX% the excluding formulated objectives, of to combined is And guidance. and fee in of their commercialization for also higher, damage valves in to growth engaged take increased amend quarter, X growth XXXX, which to also will segment and to in expect PMA itself, are spending also fiscal them team improving goal FDA of third and influx Medical of SurVeil projects access the implies, X% respect the respect and receipt to evaluation medical and growth reductions, coronary have minute capital of fiscal it Pounce these initial And its specifically stock limited success neurovascular, to limited that revenue Photolink levels this quickly related thank screw from ever for pipeline critical the three,

Timothy Arens

for fiscal Unless year-over-year Gary. all to of $X XXXX revenue fourth increased a basis.Total $XX quarter quarter are and GAAP million. X% results Thank on or noted, to you, fourth references the million

Excluding million. to revenue SurVeil fee or increased total million revenue, $XX.X $X license DCB XX%

as Medical as earnings Coating Our thrombectomy in by to the growth million. to IVD $X This to increased SurVeil increased Device product revenue.Product product X% release device increased sales in $X.X includes million license X% $X.X specialty platform DCB Performance fee development press a product increased $XXX,XXX revenue, customer of primarily offset of detailed or our reagents. to was by completion proprietary or of million, million. program. excluding reconciliations sales well or decrease revenue driven total revenue $XX.X a due part catheter our revenue $XXX,XXX X% Pounce

million. procedure from Royalty fee to prior benefited $X.X revenue from X% $X to XX% quarter microarray $XX.X Coatings benefited fee the revenue business our year and volumes. million million diagnostics Our The license increased fourth and or license $XXX,XXX U.S. or from strength in to our slide compared and increased offerings.Royalty Performance period. antigen improved

license growth coating using launches. well demand P&L. margin higher primarily was prior Services challenges.Moving XX.X% period our to customer gross Product to which chain recent to supply revenue growth Performance XX% as addition, In Medical devices Serene from TRANSCEND Coating $X.X for from $X.X year compared by million. to revenue Drug was down XX.X% Coated the Balloon Device increase $X to customer year costs.R&D or due product increased we SurVeil million, corresponding customers' prior with fee clinical in services $XXX,XXX or the million trial see impacted in the customer continue business, as decrease our declined in to our was XX% The in period.

the the scale-up expected including reflecting have from the last on were expense, discussed impact as result XX% implemented spending of for million, expiration As the low $X.X adverse sales phase fiscal projects regulatory of were year prior X% our and $X.X inefficiencies, broad-based certain lower disciplined the decreased gross plan spending to operating we by quarter's to to following during to management, Device loss including our our the our expense the inventory decreased to compared in the of reduction R&D revenue during benefits and our SG&A business production plan. and the timing million associated timing year which with expense production a initial favorable mix from headcount operating commercialization.R&D second to period product of Medical expenditures call, the pipeline.SG&A timing XXXX. in lowered prior increased as sales, favorability or favorable related product to expenditures due reported $X.X quarter and device commercial aforementioned was of direct of and expenditures was in expectations expectations volumes reduction result decrease driven under-absorption our million of to investments of compared growth. million $X clinical $X.X period, costs organization.Our related an million activities, we or a margins reflecting

IVD of revenue year to to reported reflecting XX% operating of an in return growth taxes. compared prior compared reported benefit business $X.X quarter.Turning million our million million income period, period. of of this We year to $X.X to income prior tax revenue Our XX% million in expense the income the IVD tax or income of $X.X an or revenue $X.X

SurVeil milestone. expense fiscal result quarter's the call, offset discussed tax of benefit of $XX the last as million and third As tax substantial in PMA the the a substantial expected was quarter on we recorded 'XX

period. XXXX net loss adjustments $X.XX diluted fiscal was diluted loss stock-based compared tax share in per million U.S. the to expense in a deferred $X.X to Non-GAAP quarter $X.XX charge the $XX.X compared share million prior As $X.X expense of a establish was per non-GAAP or of was prior income per allowance net of million period. EBITDA against $X.X a a for per or the share tax net included of million or million adjusted Adjusted adjusted includes compensation the $X.XX year of periods. in $X.X share fourth period.Non-GAAP a loss a EBITDA diluted full million both valuation diluted year of assets.GAAP $X.X in EBITDA a the year noncash compared $XX.X income of million to $X.X $X.XX million or loss net prior loss result, to in

earnings totaled XXXX balance fourth capital million to to million operations and release in million was the Cash in of sheet. during expenditures We $XXX,XXX. detailed the Our provided non-GAAP includes cash measures.Moving long-term fourth the quarter quarter of $X.X debt. $XX.X press $XX.X began with reconciliations by and fiscal GAAP

million September guidance. our had debt credit we million cash investments, existing and fiscal capacity approximately XXXX of XX, borrowing $XX.X $XX.X now to under and As in XXXX, $XX million additional in in agreement.Turning long-term

We from to $XXX of X%. $XXX fiscal to range to a revenue million, total expect XX% million XXXX decrease representing

revenue $XXX from license revenue, Excluding representing license additional XX% revenue increase revenue product guidance, of revenue to of total X% we revenue, SurVeil by for SurVeil XXXX $XXX to expected DCB fiscal considerations from expect share loss DCB our XX%. growth to an from range $X.XX loss million, diluted to total Non-GAAP fee share $X.XX driven of million share.I'll catalysts. a fee is be a in our $X to to from XXXX.We to This expected million now few range is share in earned per loss fiscal respect of expect XXXX. loss a diluted $X.XX. modeling XXXX approximately fiscal compares a received or to a range approximately loss to be contributions is fiscal to loss to $XX.X million of product With $X.XX GAAP expected of per largely per purposes.

generated the and the SurVeil of profit of revenue year. sales and diluted full the SurVeil million throughout of XXXX.Our includes reflects XXXX guidance be of transfer combined Product our in with the orders revenue Performance margin Device and remainder stocking fiscal both and Specifically, to grow with to our the at IVD product million.Our per guidance Abbott price products mid-XXs. and DCB first development order Note, consists associated expected Revenue $XX.X to offerings estimated business from least fiscal the product initial we is in our sharing; Sublime X distribution expect single streams quarter Medical year agreement the XXXX share assumptions. to the revenue loss Coatings DCB subsequent gross the of expected from $XX.X following digits Abbott. revenue for SurVeil, is product combined fiscal from Pounce low under revenue the in mid in

down. expenses, flat We to expect product be to excluding operating costs, slightly

million of to from We X%. to a to decrease $XX $XX representing expense expect X% R&D million, range

commercial an year. of to We is expect million, range X% Interest million prior SG&A the be expense in our expense approximately million, increase as X% expected representing from to organization. $XX consistent to $XX to $X.X invest with we

$X.X take Finally, quarter with million an first of the million, million $X.X In million range tax and revenue which and our to investments at with million what cash we XXXX, respect XXXX, to fiscal growth XXXX, fiscal finish million of had this increased of to in XXXX cash to in year-over-year. expense XXXX. XX% cash of $XX means EPS million to utilization, we available walk $XX.X to expect guidance reflects compared total investments.Let $XX.X investments, we $XX to $X.X for In approximately anticipated full the fiscal use cash a XXXX, XX%.Lastly, year fiscal me fiscal year representing included by million million.With of quarter increase of $XX.X to cash from minute through revenue our our our respect end the first $XX approximately approximately to and for fiscal expect to of securities.

a XXXX this net our payment in milestone our comparison, of drawn million from $XX.X the reflecting well the in the in that requires to part facility. million and SurVeil credit payments note $X proceeds cash to milestone and our Retention both a expect from net IRS as a compared million to the 'XX Credit; an cash in cash aside for improvement agreement, for million acquisitions.Lastly, By XXXX, related million reduction from fund $X.X term with reflect previous year-over-year to mid-cap to PMA obligations decrease expenditures just approximately of and satisfy from in certain Setting spending $XX approximately of proceeds cash postponed cash associated totaling cash compared approximately assumptions: the cash $XX an range in in and decreased capital from fiscal fiscal investments million following annual historically million, included as last obtaining our million our $X.X $X tax a million use and as Importantly, of expectations from it's $X.X fiscal influx million important as to plan; the million PMA up the refund I investments working that fiscal which $X $XX bonus use revolving XXXX, of of the such receipt and mentioned.Our our needs, Employee million to million year higher loan approval premiums. capital of our includes to the $XX increase prepaid $XX use to XXXX. in first fiscal $XX and approximately payments CARES the payment quarter we Act insurance to employee investments credit SurVeil investments annual

the despite to As organization. on remains Gary And optimization now agreement.With cash efficiency top remain We during we expense operator, further guidance call management open capital. of disciplined questions. like for under no our capital, of our fiscal focused our recent a influx and mentioned, assumes borrowings would the to priority importantly, working that, credit XXXX

Operator

Markets. comes from first Brooks [Operator Instructions] Street question And Lake our Capital with O'Neil

Brooks O'Neil

Abbott for whether we and to that revenue sort and expectations you contemplated when of you paid have going SurVeil just as meet it paid unpack SurVeil the I'm approximately product that try given comments high think them. have to Abbott SurVeil, the X the when us curious of to related about A for to just potential they see has fees I'm guidance lot points, should guess, has you've various development contemplate the to Sublime that I to million the in myself we partner $XXX this million, from and includes you your $XX.X limit made might to you you X questions. Pounce I just hit year and how guys $XXX the anticipate million? that and

Gary Maharaj

Brooks. Thanks,

team. all, it the good we this continues saw confidence meetings long me as a limits we started our demonstrated ourselves meeting absolutely to them in with Especially Abbott, why of that would within partner time with we of as for reminds ago. and commercial journey set I be that is First in when always a their add, it

them is CSI I'll Abbott trifecta The superficial is, nice gives other this sales have offer in this, segment. not just They acquisition of this statement, thing the really but stent they the credible recent footprint. the Supera. a in the artery or have and FemPop do vessel, femoral And an

interactions a with signal, of the with a gone. And of Now mortality anti-restenotic they atherectomy we're well. the compete missing now with drug-coated is have devices removal them came been sort the component causing with have balloon further veil that exciting My really this also CSI. And it's paclitaxel of drug.So an late to as excited.

recent TCT continue these died to and better has signal the at literally meetings, for Just are VIVA patients. that that and present how devices

the and when believe, So to we all we the guidance, stacked it over we look turn estimates make, momentum, positively.Now Tim, actuals. have is at they I'll are to

to to... to have on I'll be estimates going over those how we cautious turn so that And we Tim make forward.

Timothy Arens

thank you question. the for Thank Gary. you, Brooks,

guidance I you most mentioned at I is was that words for X to think least million. $XX.X realize thing everyone -- important in and the the "of of important at least"

Abbott's is, the about is this XXXX. The in Please is of to bear too timing, commented expected this which to Abbott. from mind to in calendar Surmodics of commercialization. we in months mind, revenue have need this we other half months Abbott's on for first does reflect X through fiscal more say X I people think a go not from revenue thing keep commercialization mind, year full keep year. the a product potential of lot as We'll But XX

Gary Maharaj

worth for thing you continued afterwards. summarizing data release especially look attention to last imagine in And as these thing we'll The compared send the Professor press the the durability of signal, the But Brooks, week York. want is New X-year VEITH think a it's add, I data device. I'll paying in that I is our at that. next devices is meeting market-leading presenting to Schneider to

again, the that are once against the controlled trial one head-to-head no only else has and we randomized so company Abbott And has pivotal device, it. a

next I so that data to think, presented I VEITH. And at week forward look being

Brooks O'Neil

That's great. I color. appreciate all that

one Let me ask more.

of we partner about Sublime. guys, that developed significant you with the a the with in As here, think world Abbott experience you've have beginning

going a -- regard misspoke, strategy SurVeil go of the today. a with are products. regard go-it-alone your you the of but about you to sense bit have market pipeline with and robust also how in Pounce of that Sublime, with a pipeline with I think essentially with high-potential new just deep I some you and Share little alone to have Abbott, it and about a us have beginning You still products

Gary Maharaj

We the especially get Absolutely. out. first in you thrombectomy markets, the to market, to product -- in just can't the iteration minimum compete do

on to FDA You have close go said, products. we clearance And to I got as follow-on which the Pounce down the will to have us ankles. Profile, the allow Low

losing, evenly already is parts of me we're What and And has -- almost is mean we're the It's a seeing or expansions. have say our you've distributed. by future created. not not some XXX, other XXx weighted versus, to of these that cases, average XXX force. sales been We have right? product What XX-something heard so just say, we so in I salespeople

our for as talking the cash that's build million greater And be next to on revenue about that. would sales But use win company suggest market.Now had we're thing these hyperbole, continue without and we to that and a efficiently, size strategics, be example, we On this basis, of product cash-efficient. year, the to we're out right, I we'll piece-wise I intend important forces we to and this supplement lines. the every continue winning, and recognize winning And time. as just go than of of $XXX have grow we an clearly, go

existing which very something I first a contract for we like not When belt, across across get thing coming. a a the me And yet. balloons, comes think maybe So say, with that's multiple the Pounce to very the to we that really believe product our Arterial, balloons.I but significant just that compete need and able even is strategy. Pounce Sublime, for it's getting know gets we up key you group a product history, such. Abbott and that like in partner have X were XXX market will it. launched an is kept any don't products under to an already I've something group to that's for I remarkable mind, when group a more hospitals, drug-coated contract don't That's group in than lines: about contract all in lines, haven't it, product Venous and contracts a multiple it drug-coated is competition

And so the strength position. competitive that you our of and appetite and our tell signal

So feel are. good at we where

Timothy Arens

Gary's Yes. remarks comment Brooks, And I'll just to -- I'll quick here, here. one add

interventions commercialization -- those commercialization going from our through that at important reflect revenue for limited we've other fiscal in contributions position the a products. I near-term the what modest guidance say, recognize described growth in think described Gary -- There's it's a Pounce year. capitalizing here in that are catalysts be market Gary to they'll evaluations. portfolio. And products terms should the objectives, We point on the vascular that of we and the of some anticipate later mention few you've strategic 'XX I And heard does Venous. minimal

full So market revenue generation from of coming seeing catalytic Surmodics. again, that XX from be months of the not some to will a year, this products we'll be

Gary Maharaj

many It's property is the for offerings sentiment coatings is Brooks, and not worked years, segment, achievement. something customers and somewhat neurovascular X the in unmatchable. last for scenes remarkable coating in new that Preside a we've it's intellectual on Tim And behind the our business, our there so especially -- I just business, core Preside legacy is are any pile if last diagnostics, Yes. in and thing is, to the that

So we're on because not products. leadership focused we're ceding

will is technology we drawn and leadership all maintain line we that said, leadership in have something technology do. things a Our we

even So an future. in on happening Preside working thing additional and the things we're more that's just that's on

Operator

comes Petusky Our with Mike Research. next Barrington from question

Michael Petusky

about get that's terms for just assuming in -- Are have months -- middle half you're for obviously, -- the time assumption commercialized for around the second And just is mean, SurVeil, million the guess, assuming I'm I Tim, talk Can somewhere the part commercial what of $XX.X So something assuming launch you're say fiscal? just from be terms that's X in you assuming sorry, million? that's your sort your XXX specifically in of that the contribution contribution the $XX.X days or that, million there's, of frame fair range within $XX.X you of half you of it that, in calendar assumption, to there. first there. actually the to last to I the the of SurVeil? assuming essentially you're the to

Gary Maharaj

turn I'll Tim over say to the thing one for I'll and it detailed answer.

set they're things of Abbott, the that of up. in recognize competitive things with the launch trying the One we a the and partnership dynamics to

major gear vagueness, to implied any there's they respect launch. a because for we as if it's our really so And confidentiality want up

what So with compete launch the is. want to window, the every explains opportunity planning. wide though really even to them we their We give effectively know window that

Timothy Arens

I of appreciate question. stocking can to it's with in for and of And sending of reflect can will year Yes. specifically is to that but I'm Abbott. what Gary Abbott, front color are my got as probably a thank you, provide to very we've some the folks first say appropriate Mike, order and the answer of manufacturing the terms I limited think here, half kind in that regard we -- And been

and to the the And be so market reorders clearly, year they're in more in once is the the product. second going influenced by have commercialized technology half Abbott of the

can that's So context today. that I the provide I of think extent probably

Michael Petusky

in Could the I you're contribution profit assuming just in dollars ask, -- you are assuming $XX.X any share within whatever million?

Timothy Arens

Abbott, actually for to assumptions estimation. probably we modest. to very a promotional sold. just Obviously, their activities, regard judgment and will We'll have regard We'll with will many much to clarity folks, time. it will make to expired. a how some how provide ship selling many they're and be price. an to need is for we will be with will, be How used We that little units It's the assumptions need to make

a about imagine, variables, that described. these there think it's that need So to but of more $XX.X portion bit how you variables know that as we'll is Abbott modest to number And I we estimates, a a that estimate. of about can of learn once million

Gary Maharaj

us. validated, year, the to be of challenging we'll without you for first can that and -- those assumptions predictability Refining history imagine being year Yes. refine assumptions going but model, it's first those

Michael Petusky

is a assuming I'm Is that that's XX-day there that. of But right? right. estimate like All some trail. on

Timothy Arens

and the is product time make what we time we we'll there ship royalty about a think will actually Abbott Surmodics be well. our That upon estimating the estimate true-up happen estimate versus adjustment based or collect but an payments our then revenue, the So royalty with to as will true-up over a goes there at we Abbott, to how actual of receive.

Michael Petusky

further XX from that? days or out

Timothy Arens

quarterly. It will be

Michael Petusky

Gary, are point? of there All Okay. let right. sense and do for the X now on but of in then questions, in you last of And in Pounce sort the the the the Sublime, vision the the situation I future the stretched and that question, boundary terms more sales in I've that me last just of sheet, sales there balance guess ask effort question. a guys does this and expect terms you frankly, sort outlook team makes better at investment of

Gary Maharaj

we If we but yes, go. is be answer as will short the didn't -- have it grow

investing business, we'll that it be that from returns generating start we as business. in words, other in So

company a have to line forecast, but attention and be We to so, earnings, a in we story drawn should faster? the cash where this condition. I is for now. sheet revenue limiter show throttle a appropriate but go Usually, public investing company don't -- we believe cash Could macroeconomic an on we is go-forward become right basis on want cash as balance our our what pay it's so a to right?

know with for which to contracts, say as thing -- which have some to in GPO contracts I thing tell we'll Pounce can remarkable But is contract. the a is not we I more right? you faster, do contracts, stage, to going the to grow at you selectively force, get we adding.Another one whether The we we have right, disciplined So go Venous, fashion you we interpreting can have we'll to GPO sales will We're a double and is, very demonstrate don't Now in size company in of is, penetration that as feet the when IDN on that. this, again, how be go. be key street. the this launch emphasize

So covering hospitals. extra an now XXX you're

but heat we seed overaccelerate will we That's put where place an territory this so maps the be in have can't clinical our analysis doing discipline to we And year. and the big specialists, managers are there. to field of

Michael Petusky

sales commercialized we're just a for that has mean ask of having I it that Can X quick from years is force, doubling point? I mean obviously Venous of isn't a if and I possible big years, conversation and could is this at follow-up, this at picture it, a sort be term? that the been longer point now there X-plus

Gary Maharaj

need a typically have XX You minimum want our be conservative mean that. mean, to at of always cash uses I -- well, also levels senior of I the to and right? can that You eventually go But you of right? side we people, making compete And getting utilization, up our -- look capacity yes, and sure on fund really our repayment debt sources and from always grow, level. you we there. the XX and to continue sales to debt to have

that be a now, to But to play lot mass into would X market yes, things effectively. support play have market to in there. you years of that come from critical -- So growth, able have a you to

contribution be, and -- call for what big we costs gross us look margin So continues that from territory offsetting selling is, in to territory thing margin. model as a territory. We managers' the at we

margin, not gross expenses. it's So and gross operating it's us for margin tells basically a but thing, selling paying selling which an is the margin efforts

to so at way up nice time. look how And will at we a look that's scaling over

Michael Petusky

Very huge year. pivotal congratulations, Well, Okay. obviously, Congratulations. good. a 'XX,

Timothy Arens

Mike. Thanks,

Gary Maharaj

you. Thank

Operator

Jim next question Company. comes with Sidoti & Sidoti Our from

James Sidoti

sales number on the the up year? of at many end or follow had fiscal to you folks sales how Can force. Just the what us tell you

Timothy Arens

have we remarks. it think I in the

I it's XX, Jim. think

James Sidoti

ended XX. You with

Okay.

determine And it now, so in big but a you're expanding add in not conditions way like XXXX. sounds as it few might a fiscal you the

Gary Maharaj

this point. at Not

said, we selectively As will I seed.

organization. sales incredible an have We

top-tier And we're for first looking talent adding, talent that's willing we're so stretch. when to and top-tier really

X have salespeople to right? accounts, competitors Our for We XX for have salespeople XXX. like

great come to So success. from to they and have a stretch of to they able be pedigree have

it. So the year, them. of we not want when do of thing and we and add launch in we some talent our again, product, later what Venous decide big we we're more, to double is as cash within guidance. the keep getting add And and top-tier constraints the we but seeding We'll but the intending Pounce grow, that feel may the to saying clearly, in uptake that's to

James Sidoti

right. Okay. All

the for And out maybe to to pushed device? you Now that far? sooner switching are launch is a there a it it chance out just indicated Abbott Or little than over you to what a the happen so little is bit Abbott. there milestones a Can have happens lay gets chance longer? that

Gary Maharaj

just And Yes. what repeat again, I'll said. I

is we they're can of the given the have plan as of launch, you suspect Some at the trajectory. there of ground, seeding and go and and when of bandwidth launch they're when doing all preparation imagine, the they fertilization because they this of the very the appropriate appropriate professionals launch really type launch. go, confidentiality I with the Abbott respecting contract they But with of a specific

are with really technical team their to make that job they delivered high-quality to to it. product our able we is really, help our docks. to train them role in information use their sure So on That's to time have and

Timothy Arens

confident reasons Yes. be could why can the there kind you provided time are you say, they the move first that towards also would of XXXX. of earlier. Jim, imagine frame that I that half in that in would would out more year why reasons too, Abbott imagine, And second we're And the half calendar time of maybe there can they get horizon.

have will effectively make market when us into with launches Abbott support here can the And help you they There we're so ask that sure they will be what everyone sure it to that. more SurVeil. stay out tuned. just get I'm they we'll it. see So and to need from on

Gary Maharaj

talk Yes. [indiscernible]. it. That's the Basically, we can't about

James Sidoti

All right, about be U.S. will all talk it the right. launched to Can you worldwide? it's or whether strictly if limited

Timothy Arens

we Yes, can that certainly question. address

described this think the I U.S. last going over They several are we've quarters. out

U.S. all terms in our what about what to we're the launch, the market. talking in described pertain So guidance, of we've

have at We Jim. nothing OUS add this point, to

James Sidoti

in million if look, you Surmodics statement, year $XX in your R&D this expense then out It of million, around million. fiscal income around topped terms And $XX XXXX. Okay. ended $XX

think to it the remain little you any major will year. expect expect closer million continue to to these You down in in, it around of years? to you there Or a $XX to come bit? projects tick next Do down are invest levels, couple maybe next

Gary Maharaj

We several is do have to -- the -- we're market. segments mind, include entering arterial the in Pounce our generalized as that mean R&D identified. is And the markets really And focused on in keep we market statement. I venous year. the winning a the have than market this larger market, venous huge does

we to of their products, have early-stage and there those and do guys continue programs big R&D at. maintain we're the some with We level to compete to so looking And win some products. have that launch to

Varcoe involve segment them [ on BTK. ] Sirolimus pulmonary again, you'll Ramon is, So Sundance I data say the got meeting, VEITH X-year next would some presenting venous is our of embolism.And the actively, one and venous, we've Professor see thing the more at week

stent presented trial an the eluting San X drug. Francisco, ago is in meeting which at olimus Now LIFE-BTK an Professor absorbable data weeks the Varcoe TCT

hope release on opportunities with in us be is to issue to a Stay alone of can't right? what partnership X-year a been go and device send with will any We cash technology that. And this looks much X-year that's IDE, so the help data, as for we done. of one Again, drug the we I X-year ready trial, that, actively incredible is BTK do encourage, pivotal that that when get look for less at delivery Surmodics.Our run for actually being data recognized our like looking you for to presented. you tuned data as constrained stay have being what our a we will much tuned is an press again I data is

the the be but disciplined, to maintain have markets. to really So that in wish we have capital, public have

James Sidoti

right. All

fiscal you're it in to like continue the doesn't So sounds it invest to sound to like to going get but going R&D, level. back you're XXXX

Timothy Arens

Jim, are in R&D I and guidance years, less think here deceleration been than we're fully SurVeil, other a reduction fiscal which seeing offset platforms a probably platforms. we're But -- think you But in the what for there's and clearly by few increase the over spend, Not certain providing I investments in you're spend other we long-term like notably noted and trend can investments certainly the XXXX, not from platforms right in last later. the has to say, or about investments. trend. be add creation think the the think yes, I'd whole that 'XX what for those lot making to value we we and the like

Gary Maharaj

And the registry a versus at those product arms. and which Venous to thing, so registry, the do Jim, And PROWL R&D have is Arterial. Yes. PROWL to Pounce very for to you includes clinical, is single fine, the commit minimum get we going clot, the have And or is right? will eventually, line the one registries we small launch removing registry Pounce claim require expansion when to DVT just

frame. out So time that's more in 'XX the

Timothy Arens

and calls, There's Jim. puts

Operator

Matson comes Company. from question Needham next with & Our Mike

Michael Matson

Sublime. I wanted on to versus Pounce ask one

kind sounds comment like growth Sublime. break Just reading sales know the qualitatively anything, but X can on Pounce are you're or that than the the is out comments, to each driver it you there the not to Is between line, doing just other? but some bigger of the of relative going how right? I

Gary Maharaj

when catheters, were we've Sublime that sales product able we revenue. towards our a the got the in hit you to we incentives product in that hundred to we're to several at dollar hit been, look the hit we had to the remember sales with -- right? We PMA team Mike, the and whole do lot, VI by what size for had reasons largest in to reduce commercial sure the making redirect unfortunately one It letter, has versus that, had in sure of Pounce at because the debacle to and the we team, for the took plan, of company. not-approvable so that revenue point team make the And a have $X,XXX-plus the team compelled

that in goes October, that place. went -- out its plan commission new now in the back we put out have Sublime rightful With

that well competitive face winker is Arterial grandchildren told an also I doubt. curve, though, was them addressable Pounce is not the than our radial outpacing for the patient know patient it, and What on for decision has And because us say team, ]. it's much is is way, for satisfaction. just impact better but Hitting there thrombectomy. no Pounce a moment, towards radial by better And care conscious we'll sales a So specific like huge and that Sublime. remember, do a the the I've don't changing the things positive. that health trifecta, that Arterial But with okay, bigger now. economics their is that's I market ASP yes, for is devices. right, we're are at a it early again of patient for adoption point.What outcomes, right, product, of care remember would high have other I right the in innings, [ health currently will Sublime, that single

Michael Matson

Yes.

just on then those I offerings. coating, -- you're the iterating is And know I mean, Okay. continually on that Preside

could on impact just any that this mean, sort it have something is I incremental? So Or kind growth? the is more of of

Gary Maharaj

runs And first first just mentioned that, Preside. clearance an but the you do think business FDA the we -- FDA that know I for we -- clearance. don't so of cycle like have device we got the how time

seen that it bit chemistry it an sets the And a stage so of that of leverage and that here, I'm working so dossier file is get the when what knowledge And the on with -- our only for these regulatory gives we with little customers royalty generalizing And to through the the FDA opportunity devices. on them interested, to these time customers the having who're is now. got market. and right, then you've offerings, FDA. cycle is get clearance effort their file do The hit devices development see help their to knowledge

a it's we're but offering, longer royalty because here. flow significant talking it's about So cash

pretty So 'XX in anything I for fiscal wouldn't any get guidance, things there, expect, people approvals Tim, quickly. unless put our we've royalty for

Timothy Arens

over isn't. expect really is these continue look, has -- coating, to be Preside to it And grow to complementary to our years. we that highly There been really growing is well few It's Yes. clear, last well. Serene something which

customers' certain I really previously customer dial we've This our to commented claim XX-plus application spaces. where we -- think just opportunities Preside devices. us in our are with gives chemistry to get opportunity that there an

we this distal And more coatings, relative think the us chronic been occlusions, like few in an really the is I competitive provide meet the lesions but focusing importantly, think we coating it has Preside coding even really additional frankly, could to years our I going some really that's total to why that of to some the crossing neural, gives over performance team this internal felt quite on with of where, challenging some enhancements. coatings. last advantage needs

planting it mentioned, grow will we're but as So today. the a Gary few the trees, to seeds be probably years

Operator

participation, your conference at Thank you. our that you and for Thank call may today. for time. disconnect And concludes you any

Surmodics (SRDX) 8 Nov 232023 Q4 Earnings call transcript