10-Q 1 srdx-20240331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-23837

 

Surmodics, Inc.

(Exact name of registrant as specified in its charter)

 

Minnesota

41-1356149

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

9924 West 74th Street, Eden Prairie, Minnesota 55344

(Address of principal executive offices) (Zip Code)

 

(952) 500-7000

(Registrant’s telephone number, including area code)

 

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock, $0.05 par value

 

SRDX

 

Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

Non-accelerated filer

Smaller reporting company

 

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

The number of shares of the registrant’s Common Stock, $0.05 par value per share, as of April 26, 2024 was 14,260,000.

 

 


 

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

 

Item 1.

Unaudited Condensed Consolidated Financial Statements

3

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

Item 4.

Controls and Procedures

30

 

PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

31

Item 1A.

Risk Factors

31

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

31

Item 3.

Defaults Upon Senior Securities

31

Item 4.

Mine Safety Disclosures

31

Item 5.

Other Information

31

Item 6.

Exhibits

32

SIGNATURES

 

33

 

2


PART I. FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

Surmodics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

March 31,

 

 

September 30,

 

 

2024

 

 

2023

 

(In thousands, except per share data)

(Unaudited)

 

ASSETS

 

 

 

 

 

Current Assets:

 

 

 

 

 

Cash and cash equivalents

$

33,030

 

 

$

41,419

 

Available-for-sale securities

 

7,909

 

 

 

3,933

 

Accounts receivable, net of allowances of $107 and $80 as of
March 31, 2024 and September 30, 2023, respectively

 

12,319

 

 

 

10,850

 

Contract assets

 

10,650

 

 

 

7,796

 

Inventories

 

15,405

 

 

 

14,839

 

Income tax receivable

 

746

 

 

 

491

 

Prepaids and other

 

4,204

 

 

 

7,363

 

Total Current Assets

 

84,263

 

 

 

86,691

 

Property and equipment, net

 

25,718

 

 

 

26,026

 

Intangible assets, net

 

24,784

 

 

 

26,206

 

Goodwill

 

43,576

 

 

 

42,946

 

Other assets

 

4,464

 

 

 

3,864

 

Total Assets

$

182,805

 

 

$

185,733

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

Accounts payable

$

3,186

 

 

$

2,993

 

Accrued liabilities:

 

 

 

 

 

Compensation

 

6,245

 

 

 

10,139

 

Accrued other

 

5,017

 

 

 

6,444

 

Deferred revenue

 

4,749

 

 

 

4,378

 

Total Current Liabilities

 

19,197

 

 

 

23,954

 

Long-term debt, net

 

29,480

 

 

 

29,405

 

Deferred revenue, less current portion

 

 

 

 

2,400

 

Deferred income taxes

 

1,857

 

 

 

2,004

 

Other long-term liabilities

 

8,321

 

 

 

8,060

 

Total Liabilities

 

58,855

 

 

 

65,823

 

Commitments and Contingencies (Note 11)

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

Series A Preferred stock — $.05 par value, 450 shares authorized; no shares issued and outstanding

 

 

 

 

 

Common stock — $.05 par value, 45,000 shares authorized; 14,260 and 14,155 shares
issued and outstanding as of March 31, 2024 and September 30, 2023, respectively

 

713

 

 

 

708

 

Additional paid-in capital

 

40,271

 

 

 

36,706

 

Accumulated other comprehensive loss

 

(3,750

)

 

 

(4,759

)

Retained earnings

 

86,716

 

 

 

87,255

 

Total Stockholders’ Equity

 

123,950

 

 

 

119,910

 

Total Liabilities and Stockholders’ Equity

$

182,805

 

 

$

185,733

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3


Surmodics, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

 

Three Months Ended March 31,

 

 

Six Months Ended March 31,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

(In thousands, except per share data)

(Unaudited)

 

(Unaudited)

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

Product sales

$

18,099

 

 

$

15,350

 

 

$

36,926

 

 

$

29,584

 

Royalties and license fees

 

11,411

 

 

 

9,429

 

 

 

20,590

 

 

 

18,194

 

Research, development and other

 

2,448

 

 

 

2,419

 

 

 

4,994

 

 

 

4,353

 

Total revenue

 

31,958

 

 

 

27,198

 

 

 

62,510

 

 

 

52,131

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

Product costs

 

7,101

 

 

 

5,738

 

 

 

15,904

 

 

 

11,005

 

Research and development

 

10,229

 

 

 

12,924

 

 

 

18,893

 

 

 

25,667

 

Selling, general and administrative

 

13,093

 

 

 

12,967

 

 

 

25,630

 

 

 

26,203

 

Acquired intangible asset amortization

 

876

 

 

 

867

 

 

 

1,746

 

 

 

1,780

 

Restructuring expense

 

 

 

 

1,282

 

 

 

 

 

 

1,282

 

Contingent consideration expense

 

 

 

 

3

 

 

 

 

 

 

6

 

Total operating costs and expenses

 

31,299

 

 

 

33,781

 

 

 

62,173

 

 

 

65,943

 

Operating income (loss)

 

659

 

 

 

(6,583

)

 

 

337

 

 

 

(13,812

)

Other expense, net:

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(881

)

 

 

(884

)

 

 

(1,777

)

 

 

(1,710

)

Foreign exchange loss

 

(72

)

 

 

(75

)

 

 

(117

)

 

 

(200

)

Investment income, net

 

460

 

 

 

177

 

 

 

999

 

 

 

349

 

Other expense, net

 

(493

)

 

 

(782

)

 

 

(895

)

 

 

(1,561

)

Income (loss) before income taxes

 

166

 

 

 

(7,365

)

 

 

(558

)

 

 

(15,373

)

Income tax benefit (expense)

 

81

 

 

 

(368

)

 

 

19

 

 

 

(203

)

Net income (loss)

$

247

 

 

$

(7,733

)

 

$

(539

)

 

$

(15,576

)

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income (loss) per share

$

0.02

 

 

$

(0.55

)

 

$

(0.04

)

 

$

(1.11

)

Diluted net income (loss) per share

$

0.02

 

 

$

(0.55

)

 

$

(0.04

)

 

$

(1.11

)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

14,152

 

 

 

14,030

 

 

 

14,127

 

 

 

14,010

 

Diluted

 

14,182

 

 

 

14,030

 

 

 

14,127

 

 

 

14,010

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


Surmodics, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive (Loss) Income

 

 

Three Months Ended March 31,

 

 

Six Months Ended March 31,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

(In thousands)

(Unaudited)

 

(Unaudited)

 

Net income (loss)

$

247

 

 

$

(7,733

)

 

$

(539

)

 

$

(15,576

)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

Derivative instruments:

 

 

 

 

 

 

 

 

 

 

 

Unrealized net gain (loss)

 

426

 

 

 

(304

)

 

 

(194

)

 

 

(748

)

Net (gain) loss reclassified to earnings

 

(62

)

 

 

(11

)

 

 

(124

)

 

 

20

 

Net changes related to available-for-sale securities, net of tax

 

2

 

 

 

 

 

 

(6

)

 

 

 

Foreign currency translation adjustments

 

(1,464

)

 

 

1,118

 

 

 

1,333

 

 

 

6,788

 

Other comprehensive (loss) income

 

(1,098

)

 

 

803

 

 

 

1,009

 

 

 

6,060

 

Comprehensive (loss) income

$

(851

)

 

$

(6,930

)

 

$

470

 

 

$

(9,516

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5


Surmodics, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

 

Three Months Ended March 31, 2024 and 2023

 

 

(Unaudited)

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Retained

 

 

Stockholders’

 

(In thousands)

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Earnings

 

 

Equity

 

Balance at December 31, 2023

 

14,235

 

 

$

712

 

 

$

37,621

 

 

$

(2,652

)

 

$

86,469

 

 

$

122,150

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

247

 

 

 

247

 

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

(1,098

)

 

 

 

 

 

(1,098

)

Issuance of common stock

 

19

 

 

 

1

 

 

 

449

 

 

 

 

 

 

 

 

 

450

 

Common stock options exercised, net

 

6

 

 

 

1

 

 

 

80

 

 

 

 

 

 

 

 

 

81

 

Purchase of common stock to pay
employee taxes

 

 

 

 

(1

)

 

 

(5

)

 

 

 

 

 

 

 

 

(6

)

Stock-based compensation

 

 

 

 

 

 

 

2,126

 

 

 

 

 

 

 

 

 

2,126

 

Balance at March 31, 2024

 

14,260

 

 

$

713

 

 

$

40,271

 

 

$

(3,750

)

 

$

86,716

 

 

$

123,950

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2022

 

14,126

 

 

$

706

 

 

$

30,224

 

 

$

(4,617

)

 

$

80,948

 

 

$

107,261

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,733

)

 

 

(7,733

)

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

803

 

 

 

 

 

 

803

 

Issuance of common stock

 

9

 

 

 

1

 

 

 

452

 

 

 

 

 

 

 

 

 

453

 

Common stock options exercised, net

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

Purchase of common stock to pay
employee taxes

 

(1

)

 

 

 

 

 

(15

)

 

 

 

 

 

 

 

 

(15

)

Stock-based compensation

 

 

 

 

 

 

 

1,782

 

 

 

 

 

 

 

 

 

1,782

 

Balance at March 31, 2023

 

14,134

 

 

$

707

 

 

$

32,446

 

 

$

(3,814

)

 

$

73,215

 

 

$

102,554

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended March 31, 2024 and 2023

 

 

(Unaudited)

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Retained

 

 

Stockholders’

 

(In thousands)

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Earnings

 

 

Equity

 

Balance at September 30, 2023

 

14,155

 

 

$

708

 

 

$

36,706

 

 

$

(4,759

)

 

$

87,255

 

 

$

119,910

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(539

)

 

 

(539

)

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

1,009

 

 

 

 

 

 

1,009

 

Issuance of common stock

 

121

 

 

 

6

 

 

 

444

 

 

 

 

 

 

 

 

 

450

 

Common stock options exercised, net

 

13

 

 

 

1

 

 

 

119

 

 

 

 

 

 

 

 

 

120

 

Purchase of common stock to pay
employee taxes

 

(29

)

 

 

(2

)

 

 

(1,092

)

 

 

 

 

 

 

 

 

(1,094

)

Stock-based compensation

 

 

 

 

 

 

 

4,094

 

 

 

 

 

 

 

 

 

4,094

 

Balance at March 31, 2024

 

14,260

 

 

$

713

 

 

$

40,271

 

 

$

(3,750

)

 

$

86,716

 

 

$

123,950

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2022

 

14,029

 

 

$

701

 

 

$

28,774

 

 

$

(9,874

)

 

$

88,791

 

 

$

108,392

 

Net loss

 

 

 

 

 

 

 

 

 

(15,576

)

 

 

(15,576

)

Other comprehensive income, net of tax

 

 

 

 

 

 

 

6,060

 

 

 

 

 

6,060

 

Issuance of common stock

 

112

 

 

 

6

 

 

 

447

 

 

 

 

 

 

 

453

 

Common stock options exercised, net

 

17

 

 

 

1

 

 

 

349

 

 

 

 

 

 

 

350

 

Purchase of common stock to pay
employee taxes

 

(24

)

 

 

(1

)

 

 

(871

)

 

 

 

 

 

 

(872

)

Stock-based compensation

 

 

 

 

 

 

 

3,747

 

 

 

 

 

 

 

3,747

 

Balance at March 31, 2023

 

14,134

 

 

$

707

 

 

$

32,446

 

 

$

(3,814

)

 

$

73,215

 

 

$

102,554

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6


Surmodics, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

 

Six Months Ended March 31,

 

 

2024

 

 

2023

 

(In thousands)

(Unaudited)

 

Operating Activities:

 

 

 

 

 

Net loss

$

(539

)

 

$

(15,576

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

Depreciation and amortization

 

4,429

 

 

 

4,214

 

Stock-based compensation

 

4,094

 

 

 

3,747

 

Noncash lease expense

 

397

 

 

 

321

 

Amortization of debt issuance costs

 

144

 

 

 

182

 

Provision for credit losses

 

27

 

 

 

121

 

Deferred taxes

 

(189

)

 

 

(217

)

Other

 

(268

)

 

 

106

 

Change in operating assets and liabilities:

 

 

 

 

 

Accounts receivable and contract assets

 

(4,337

)

 

 

(2,346

)

Inventories

 

(565

)

 

 

(1,948

)

Prepaids and other

 

2,740

 

 

 

(1,582

)

Accounts payable

 

4

 

 

 

279

 

Accrued liabilities

 

(5,007

)

 

 

(4,064

)

Income taxes

 

(279

)

 

 

2,629

 

Deferred revenue

 

(2,028

)

 

 

(2,493

)

Net cash used in operating activities

 

(1,377

)

 

 

(16,627

)

Investing Activities:

 

 

 

 

 

Purchases of property and equipment

 

(1,991

)

 

 

(1,700

)

Purchases of available-for-sale securities

 

(13,682

)

 

 

 

Maturities of available-for-sale securities

 

10,000

 

 

 

 

Net cash used in investing activities

 

(5,673

)

 

 

(1,700

)

Financing Activities:

 

 

 

 

 

Payments of short-term borrowings

 

 

 

 

(10,000

)

Proceeds from issuance of long-term debt

 

 

 

 

29,664

 

Payments of debt issuance costs

 

 

 

 

(611

)

Issuance of common stock

 

570

 

 

 

803

 

Payments for taxes related to net share settlement of equity awards

 

(1,093

)

 

 

(872

)

Payments for acquisition of in-process research and development

 

(931

)

 

 

(978

)

Net cash (used in) provided by financing activities

 

(1,454

)

 

 

18,006

 

Effect of exchange rate changes on cash

 

115

 

 

 

503

 

Net change in cash and cash equivalents

 

(8,389

)

 

 

182

 

Cash and Cash Equivalents:

 

 

 

 

 

Beginning of period

 

41,419

 

 

 

18,998

 

End of period

$

33,030

 

 

$

19,180

 

Supplemental Information:

 

 

 

 

 

Cash paid for income taxes

$

338

 

 

$

10

 

Cash paid for interest

 

1,518

 

 

 

1,393

 

Noncash investing and financing activities:

 

 

 

 

 

Acquisition of property and equipment

 

227

 

 

 

355

 

Right-of-use assets obtained in exchange for operating lease liabilities

 

845

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

7


Surmodics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Period Ended March 31, 2024

(Unaudited)

 

1. Organization

Description of Business

Surmodics, Inc. and subsidiaries (referred to as “Surmodics,” the “Company,” “we,” “us,” “our” and other like terms) is a leading provider of performance coating technologies for intravascular medical devices and chemical and biological components for in vitro diagnostic (“IVD”) immunoassay tests and microarrays. Surmodics develops and commercializes highly differentiated vascular intervention medical devices that are designed to address unmet clinical needs and engineered to the most demanding requirements. This key growth strategy leverages the combination of the Company’s expertise in proprietary surface modification and drug-delivery coating technologies, along with its device design, development and manufacturing capabilities. The Company’s mission is to improve the detection and treatment of disease. Surmodics is headquartered in Eden Prairie, Minnesota.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include all accounts and wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All intercompany transactions have been eliminated. The Company operates on a fiscal year ending on September 30. In accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), the Company has omitted footnote disclosures that would substantially duplicate the disclosures contained in the audited consolidated financial statements of the Company. These unaudited condensed consolidated financial statements should be read together with the audited consolidated financial statements for the fiscal year ended September 30, 2023, and notes thereto included in our Annual Report on Form 10-K as filed with the SEC.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Ultimate results could differ from those estimates. The results of operations for the three and six months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the entire 2024 fiscal year.

New Accounting Pronouncements

Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures. This guidance requires disclosure of incremental segment information on an annual and interim basis. This amendment is effective for our fiscal year ending September 30, 2025 and interim periods within our fiscal year ending September 30, 2026. We are currently assessing the impact of this guidance on our disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes: Improvements to Income Tax Disclosures. This guidance requires consistent categories and greater disaggregation of information in the rate reconciliation and disclosures of income taxes paid by jurisdiction. This amendment is effective for our fiscal year ending September 30, 2026 and interim periods within our fiscal year ending September 30, 2027. We are currently assessing the impact of this guidance on our disclosures.

No other new accounting pronouncement issued or effective during the fiscal year has had, or is expected to have, a material impact on the Company’s condensed consolidated financial statements.

8


2. Revenue

The following table is a disaggregation of revenue within each reportable segment.

 

Three Months Ended March 31,

 

 

Six Months Ended March 31,

 

(In thousands)

2024

 

 

2023

 

 

2024

 

 

2023

 

Medical Device

 

 

 

 

 

Product sales

$

11,100

 

 

$

7,914

 

 

$

23,050

 

 

$

16,294

 

Royalties & license fees – performance coatings

 

10,323

 

 

 

8,098

 

 

 

18,531

 

 

 

15,567

 

License fees – SurVeil DCB

 

1,088

 

 

 

1,331

 

 

 

2,059

 

 

 

2,627

 

Research, development and other

 

2,315

 

 

 

2,364

 

 

 

4,731

 

 

 

4,237

 

Medical Device Revenue

 

24,826

 

 

 

19,707

 

 

 

48,371

 

 

 

38,725

 

In Vitro Diagnostics

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

6,999

 

 

 

7,436

 

 

 

13,876

 

 

 

13,290

 

Research, development and other

 

133

 

 

 

55

 

 

 

263

 

 

 

116

 

In Vitro Diagnostics Revenue

 

7,132

 

 

 

7,491

 

 

 

14,139

 

 

 

13,406

 

Total Revenue

$

31,958

 

 

$

27,198

 

 

$

62,510

 

 

$

52,131

 

Contract assets totaled $10.7 million and $7.8 million as of March 31, 2024 and September 30, 2023, respectively, on the condensed consolidated balance sheets. Fluctuations in the balance of contract assets result primarily from (i) fluctuations in the sales volume of performance coating royalties and license fees earned, but not collected, at each balance sheet date due to payment timing and contractual changes in the normal course of business; and (ii) starting in fiscal 2024, sales-based profit-sharing earned, but not collected, related to a collaborative arrangement (Note 3).

Deferred revenue totaled $4.7