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.

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 ~~July 31, 2020~~April 23, 2021 was ~~13,650,235.~~13,868,000.

	June 30,		September 30,		March 31,		September 30,
	2020		2019		2021		2020
(in thousands, except share and per share data)	(Unaudited)
(In thousands, except per share data)					(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	36,386	$	30,361	$	48,159	$	30,785
Available-for-sale securities		24,178		24,931		17,792		30,313
Accounts receivable, net of allowance for doubtful accounts of $133 and $200 as of June 30, 2020 and September 30, 2019, respectively		8,657		8,993
Accounts receivable, net of allowances of $118 and $130 as of March 31, 2021 and September 30, 2020, respectively						9,096		7,675
Contract assets — royalties and license fees		4,248		8,210		6,622		6,108
Inventories, net		5,872		4,501		6,309		5,966
Income tax receivable		4,867		558		1,657		2,391
Prepaids and other		3,594		3,866		3,406		3,370
Total Current Assets		87,802		81,420		93,041		86,608
Property and equipment, net		28,939		29,748		29,745		30,103
Available-for-sale securities						4,071		—
Deferred income taxes		5,585		6,176		6,507		7,315
Intangible assets, net		12,585		14,226		12,028		13,283
Goodwill		26,563		26,171		27,190		27,185
Other assets		5,024		2,124		4,513		4,269
Total Assets	$	166,498	$	159,865	$	177,095	$	168,763

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	1,375	$	2,085	$	1,593	$	1,515
Accrued liabilities:
Compensation		4,320		4,581		4,437		6,630
Accrued other		4,703		4,790		4,162		5,547
Deferred revenue		5,229		5,553		5,507		5,200
Contingent consideration		—		3,200
Total Current Liabilities		15,627		20,209		15,699		18,892
Deferred revenue, less current portion		12,423		11,628		11,763		10,796
Other long-term liabilities		7,865		5,512		7,552		8,020
Total Liabilities		35,915		37,349		35,014		37,708
Commitments and Contingencies (Note 16)
Commitments and Contingencies (Note 17)
Stockholders’ Equity:
Series A Preferred stock — $.05 par value, 450,000 shares authorized; 0 shares issued and outstanding		—		—
Common stock — $.05 par value, 45,000,000 shares authorized; 13,645,174 and 13,504,102 shares issued and outstanding as of June 30, 2020 and September 30, 2019, respectively		682		675
Series A Preferred stock — $.05 par value, 450 shares authorized; 0 shares issued and outstanding						—		—
Common stock — $.05 par value, 45,000 shares authorized; 13,868 and 13,672 shares issued and outstanding as of March 31, 2021 and September 30, 2020, respectively						693		684
Additional paid-in capital		13,658		10,740		18,516		15,369
Accumulated other comprehensive income		1,469		396		3,231		3,174
Retained earnings		114,774		110,705		119,641		111,828
Total Stockholders’ Equity		130,583		122,516		142,081		131,055
Total Liabilities and Stockholders’ Equity	$	166,498	$	159,865	$	177,095	$	168,763

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

	Three Months Ended							Nine Months Ended						Three Months Ended							Six Months Ended
	June 30,							June 30,						March 31,							March 31,
	2020			2019				2020			2019			2021			2020				2021			2020
(In thousands, except per share data)	(Unaudited)						(Unaudited)							(Unaudited)						(Unaudited)
Revenue:
Product sales	$	11,987		$	9,870			$	33,731		$	29,508		$	11,783		$	11,770			$	21,885		$	21,744
Royalties and license fees		12,398			11,624				30,767			31,652			20,052			8,221				29,386			18,369
Research, development and other		2,498			2,850				7,823			8,101			3,160			2,831				6,021			5,325
Total revenue		26,883			24,344				72,321			69,261			34,995			22,822				57,292			45,438
Operating costs and expenses:
Product costs		4,443			3,364				11,415			9,980			4,170			3,769				7,913			6,972
Research and development		13,324			13,321				37,401			38,362			12,875			11,935				23,757			24,077
Selling, general and administrative		7,416			5,939				21,092			16,764			7,907			6,733				14,930			13,676
Acquired intangible asset amortization		536			599				1,671			1,809			560			541				1,116			1,135
Contingent consideration expense (gain)		—			104				—			(248	)
Total operating costs and expenses		25,719			23,327				71,579			66,667			25,512			22,978				47,716			45,860
Operating income		1,164			1,017				742			2,594
Operating income (loss)															9,483			(156	)			9,576			(422	)
Other income (expense):
Investment income, net		124			269				584			850			28			210				69			460
Interest expense		(29	)		(38	)			(99	)		(112	)		(59	)		(30	)			(119	)		(70	)
Foreign exchange (loss) gain		(48	)		(42	)			(125	)		99
Impairment loss on strategic investment		—			—				(479	)		—
Other		—			—				1			9
Foreign exchange gain (loss)															73			(30	)			(107	)		(77	)
Impairment loss on strategic investment and other															—			(479	)			—			(478	)
Other income (expense)		47			189				(118	)		846			42			(329	)			(157	)		(165	)
Income before income taxes		1,211			1,206				624			3,440
Income tax benefit		1,248			260				3,445			598
Income (loss) before income taxes															9,525			(485	)			9,419			(587	)
Income tax (provision) benefit															(1,438	)		1,947				(1,606	)		2,197
Net income	$	2,459		$	1,466			$	4,069		$	4,038		$	8,087		$	1,462			$	7,813		$	1,610

Basic net income per share	$	0.18		$	0.11			$	0.30		$	0.30		$	0.59		$	0.11			$	0.57		$	0.12
Diluted net income per share	$	0.18		$	0.11			$	0.30		$	0.29		$	0.58		$	0.11			$	0.56		$	0.12

Weighted average number of shares outstanding:
Basic		13,601			13,394				13,577			13,384			13,746			13,507				13,699			13,474
Diluted		13,786			13,726				13,775			13,776			13,981			13,751				13,915			13,779

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

	Three Months Ended				Nine Months Ended					Three Months Ended						Six Months Ended
	June 30,				June 30,					March 31,						March 31,
	2020		2019		2020		2019			2021			2020			2021			2020
(In thousands)	(Unaudited)				(Unaudited)					(Unaudited)						(Unaudited)
Net income	$	2,459	$	1,466	$	4,069	$	4,038		$	8,087		$	1,462		$	7,813		$	1,610
Other comprehensive income (loss):
Unrealized holding gains on available-for- sale securities, net of tax		185		13		6		57
Other comprehensive (loss) income:
Net changes related to available-for-sale securities, net of tax											(7	)		(174	)		(7	)		(179	)
Foreign currency translation adjustments		794		520		1,067		(798	)		(1,768	)		(768	)		64			273
Other comprehensive income (loss)		979		533		1,073		(741	)
Other comprehensive (loss) income											(1,775	)		(942	)		57			94
Comprehensive income	$	3,438	$	1,999	$	5,142	$	3,297		$	6,312		$	520		$	7,870		$	1,704

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

	Three Months Ended June 30, 2020 and 2019																	Three Months Ended March 31, 2021 and 2020
										Accumulated								(Unaudited)									Accumulated
							Additional			Other					Total									Additional			Other					Total
	Common Stock						Paid-In			Comprehensive			Retained		Stockholders’			Common Stock						Paid-In			Comprehensive			Retained		Stockholders’
(In thousands)	Shares			Amount			Capital			Income			Earnings		Equity			Shares			Amount			Capital			Income			Earnings		Equity
Balance at March 31, 2020		13,609		$	680		$	11,481		$	490		$	112,315	$	124,966
Balance at December 31, 2020																			13,739		$	687		$	16,160		$	5,006		$	111,554	$	133,407
Net income		—			—			—			—			2,459		2,459			—			—			—			—			8,087		8,087
Other comprehensive income, net of tax		—			—			—			979			—		979
Other comprehensive loss, net of tax																			—			—			—			(1,775	)		—		(1,775	)
Issuance of common stock		3			—			—			—			—		—			8			—			296			—			—		296
Common stock options exercised, net		33			2			849			—			—		851			122			6			2,228			—			—		2,234
Purchase of common stock to pay employee taxes		—			—			(12	)		—			—		(12	)		(1	)		—			(1,597	)		—			—		(1,597	)
Stock-based compensation		—			—			1,340			—			—		1,340			—			—			1,429			—			—		1,429
Balance at June 30, 2020		13,645		$	682		$	13,658		$	1,469		$	114,774	$	130,583
Balance at March 31, 2021																			13,868		$	693		$	18,516		$	3,231		$	119,641	$	142,081

Balance at March 31, 2019		13,489		$	674		$	7,510		$	1,444		$	105,685	$	115,313
Balance at December 31, 2019																			13,593		$	680		$	10,361		$	1,432		$	110,853	$	123,326
Net income		—			—			—			—			1,466		1,466			—			—			—			—			1,462		1,462
Other comprehensive income, net of tax		—			—			—			533			—		533
Other comprehensive loss, net of tax																			—			—			—			(942	)		—		(942	)
Issuance of common stock		1			1			—			—			—		1			5			—			218			—			—		218
Common stock options exercised, net		1			—			12			—			—		12			12			—			9			—			—		9
Purchase of common stock to pay employee taxes		(1	)		—			(12	)		—			—		(12	)		(1	)		—			(411	)		—			—		(411	)
Stock-based compensation		—			—			1,319			—			—		1,319			—			—			1,304			—			—		1,304
Balance at June 30, 2019		13,490		$	675		$	8,829		$	1,977		$	107,151	$	118,632
Balance at March 31, 2020																			13,609		$	680		$	11,481		$	490		$	112,315	$	124,966


	Nine Months Ended June 30, 2020 and 2019																	Six Months Ended March 31, 2021 and 2020
										Accumulated								(Unaudited)									Accumulated
							Additional			Other					Total									Additional			Other					Total
	Common Stock						Paid-In			Comprehensive			Retained		Stockholders’			Common Stock						Paid-In			Comprehensive			Retained		Stockholders’
(In thousands)	Shares			Amount			Capital			Income			Earnings		Equity			Shares			Amount			Capital			Income			Earnings		Equity
Balance at September 30, 2020																			13,672		$	684		$	15,369		$	3,174		$	111,828	$	131,055
Net income																			—			—			—			—			7,813		7,813
Other comprehensive income, net of tax																			—			—			—			57			—		57
Issuance of common stock																			89			4			292			—			—		296
Common stock options exercised, net																			125			6			2,234			—			—		2,240
Purchase of common stock to pay employee taxes																			(18	)		(1	)		(2,241	)		—			—		(2,242	)
Stock-based compensation																			—			—			2,862			—			—		2,862
Balance at March 31, 2021																			13,868		$	693		$	18,516		$	3,231		$	119,641	$	142,081

Balance at September 30, 2019		13,504		$	675		$	10,740		$	396		$	110,705	$	122,516			13,504		$	675		$	10,740		$	396		$	110,705	$	122,516
Net income		—			—			—			—			4,069		4,069			—			—			—			—			1,610		1,610
Other comprehensive income, net of tax		—			—			—			1,073			—		1,073			—			—			—			94			—		94
Issuance of common stock		133			7			211			—			—		218			130			7			211			—			—		218
Common stock options exercised, net		53			2			949			—			—		951			20			—			100			—			—		100
Purchase of common stock to pay employee taxes		(45	)		(2	)		(2,279	)		—			—		(2,281	)		(45	)		(2	)		(2,267	)		—			—		(2,269	)
Stock-based compensation		—			—			4,037			—			—		4,037			—			—			2,697			—			—		2,697
Balance at June 30, 2020		13,645		$	682		$	13,658		$	1,469		$	114,774	$	130,583

Balance at September 30, 2018		13,398		$	670		$	7,607		$	2,718		$	97,615	$	108,610
Net impact from adoption of ASC Topic 606		—			—			—			—			5,498		5,498
Net income		—			—			—			—			4,038		4,038
Other comprehensive loss, net of tax		—			—			—			(741	)		—		(741	)
Issuance of common stock		135			7			203			—			—		210
Common stock options exercised, net		3			—			67			—			—		67
Purchase of common stock to pay employee taxes		(46	)		(2	)		(2,557	)		—			—		(2,559	)
Stock-based compensation		—			—			3,509			—			—		3,509
Balance at June 30, 2019		13,490		$	675		$	8,829		$	1,977		$	107,151	$	118,632
Balance at March 31, 2020																			13,609		$	680		$	11,481		$	490		$	112,315	$	124,966

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

	Nine Months Ended						Six Months Ended
	June 30,						March 31,
	2020			2019			2021			2020
(in thousands)	(Unaudited)
(In thousands)							(Unaudited)
Operating Activities:
Net income	$	4,069		$	4,038		$	7,813		$	1,610
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,390			5,462			3,766			3,600
Stock-based compensation		4,037			3,509			2,862			2,697
Payment of contingent consideration obligations in excess of acquisition-date value		(608	)		(2,041	)		—			(608	)
Contingent consideration gain		—			(248	)
Deferred taxes		592			(979	)		808			1,388
Losses (gains) on strategic investments		479			(7	)
Provision for bad debts		30			142
Loss on strategic investment								—			479
Provision for credit losses								(12	)		137
Other		176			(11	)		170			108
Change in operating assets and liabilities:
Accounts receivable and contract asset		4,303			(1,009	)		(1,908	)		1,914
Inventories		(1,333	)		(148	)		(349	)		(1,233	)
Prepaids and other		(432	)		(2,184	)		(409	)		(622	)
Accounts payable		(489	)		(219	)		(303	)		(128	)
Accrued liabilities		116			(5,143	)		(2,705	)		(1,826	)
Income taxes		(4,105	)		196			739			(3,615	)
Deferred revenue		471			(5,840	)		1,273			(2,644	)
Net cash provided by (used in) operating activities		12,696			(4,482	)
Net cash provided by operating activities								11,745			1,257
Investing Activities:
Purchases of property and equipment		(2,627	)		(4,135	)		(1,973	)		(2,311	)
Payment for acquisition of intangible assets								(1,000	)		—
Purchases of available-for-sale securities		(45,766	)		(26,117	)		(22,875	)		(35,863	)
Maturities of available-for-sale securities		46,522			51,458			31,318			27,425
Cash proceeds from sales of property and equipment		—			10
Cash received from sale of strategic investment		—			7
Net cash (used in) provided by investing activities		(1,871	)		21,223
Net cash provided by (used in) investing activities								5,470			(10,749	)
Financing Activities:
Issuance of common stock		1,169			277			2,536			318
Payments for taxes related to net share settlement of equity awards		(2,385	)		(2,688	)		(2,243	)		(2,373	)
Payment of contingent consideration obligations		(2,592	)		(9,064	)		—			(2,592	)
Payments for acquisition of in process research and development		(1,000	)		—
Net cash used in financing activities		(4,808	)		(11,475	)
Effect of exchange rate changes on cash and cash equivalents		8			(18	)
Payments for acquisition of in-process research and development								(150	)		(1,000	)
Net cash provided by (used in) financing activities								143			(5,647	)
Effect of exchange rate changes on cash								16			(14	)
Net change in cash and cash equivalents		6,025			5,248			17,374			(15,153	)
Cash and Cash Equivalents:
Beginning of period		30,361			23,668			30,785			30,361
End of period	$	36,386		$	28,916		$	48,159		$	15,208
Supplemental Information:
Cash paid for income taxes	$	9		$	155		$	16		$	6
Noncash transactions from investing and financing activities:
Noncash investing and financing activities:
Acquisition of property and equipment, net of refundable credits in other current assets and liabilities		395			180			641			87
Right of use assets obtained in exchange for new operating lease liabilities		1,012			—
Right-of-use assets obtained in exchange for new operating lease liabilities								44			597

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

Surmodics, Inc. and subsidiaries (“Surmodics,” the “Company,” “we,” “us,” “our” and other like terms) is a leading provider of surface modification technologies for intravascular medical devices and chemical components for in vitro diagnostic (“IVD”) immunoassay tests and microarrays. Surmodics is pursuing development and commercialization of highly differentiated 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 technologies, along with enhanced device design, development, and manufacturing capabilities. The Company mission remains to improve the detection and treatment of disease. Surmodics is headquartered in Eden Prairie, Minnesota.

The accompanying unaudited ~~interim~~ condensed consolidated financial statements include all accounts and wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the ~~United States of America (“~~U.S.”) (“GAAP”) and, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, needed to fairly present the financial results of Surmodics, Inc. and subsidiaries (referred to as “Surmodics”, the “Company”, “we,” “us,” “our” and other like terms) for the periods presented.. 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, ~~2019,~~2020, and ~~footnotes~~notes thereto included in ~~the Company’s~~our Annual Report on Form 10-K as filed with the ~~SEC on December 3, 2019.~~SEC.

~~These~~The preparation of consolidated financial statements ~~include amounts that are based on management’s best~~in conformity with GAAP requires management to make estimates and ~~judgments. These estimates may be adjusted as more information becomes available,~~assumptions that affect the reported amounts of assets and ~~any adjustment~~liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Ultimate results could ~~be significant. The impact of any change in estimates is included in the determination of net income in the period in which the change in estimate is identified.~~differ from those estimates. The results of operations for the three and ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 are not necessarily indicative of the results that may be expected for the entire ~~2020~~2021 fiscal year.

~~We are subject to risks and uncertainties as a result of the~~The COVID-19 pandemic caused by a novel strain of coronavirus first identified in Wuhan, China in December 2019. On March 18, 2020, the Centers for Medicare & Medicaid Services (“CMS”) released guidance for U.S. healthcare providers to limit non-emergent elective medical procedures other than high acuity treatments in order to conserve personal protective equipmentis having, and limit exposure to COVID-19. On April 16, 2020, the White House issued “Guidelines for Opening Up America Again” (the “White House Guidelines”) that described a phased resumption of economic activities with gating conditions for a region or state to move from one phase to another. On June 9, 2020, CMS issued recommendations for regions and states in Phase II of the White House Guidelines that non-emergent, non-COVID-19 care should be offered to patients, as clinically appropriate, in localities or facilities that have the resources to provide such care, as well as the ability to quickly respond to a surge in COVID-19 cases, if necessary.

Many of our customers use our licensed technology and purchased materials to manufacture products used in elective procedures. In addition, our customers and business partners need access to healthcare providers and facilities to effectively market, distribute and sell products incorporating our coating and device technologies, as well as our whole-product solutions. Likewise, we and our business partners need access to healthcare providers and facilities to conduct clinical trials and other activities required to achieve regulatory clearing for our products under development.

~~We believe differences in the rates of delivery and utilization of elective procedures in response to CMS recommendations and the pandemic have had, and will~~may continue to have, an adverse ~~impact, which may be material,~~effect on ~~the Company's~~our business, results of operations, financial condition, ~~liquidity~~ and ~~results of operations.~~cash flows, and its future impacts remain highly uncertain and unpredictable. The ~~severity of~~Company has considered the disruptions caused by COVID-19, including lower than forecasted sales and customer demand and macroeconomic factors, that may impact its estimates. The Company has assessed the potential impact of the ~~COVID-19~~ pandemic on ~~our business will depend on a number of factors,~~certain accounting matters including, but not limited to, ~~the duration and severity of the pandemic~~estimated sales-based royalties revenue; allowance for credit losses; inventory reserves; and the ~~extent~~valuation of goodwill, intangible assets, other long-lived assets and ~~severity~~investments, as of March 31, 2021 and through the ~~impact~~date of this Quarterly Report on ~~our customers, all of which are uncertain and cannot be predicted.~~Form 10-Q. As of the date of issuance of these unaudited condensed consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact the Company's financial condition, liquidity or results of operations is uncertain. For further information, refer to “Risk Factors” in Part II, Item 1A of ~~this Quarterly~~our Annual Report on Form ~~10-Q.~~10-K for the fiscal year ended September 30, 2020.

~~In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ASU 2016-02,~~ ~~Leases~~ (“~~ASC Topic 842”~~). The update maintains two classifications of leases: finance leases, which replace capital leases, and operating leases. Lessees recognize a right-of-use asset and a lease liability on the consolidated balance sheets for those leases previously classified as operating leases under the previous guidance. The liability is equal to the present value of lease payments, while the asset is based on the liability, subject to adjustment, such as for direct costs.

Effective October 1, 2019, the Company adopted the new lease accounting standard using the optional transition method which allowed us to continue to apply the guidance under the lease standard in effect at the time in the comparative periods presented. In addition, the Company elected the package of practical expedients, including opting not to reassess whether any existing contracts contain a lease, historical lease classification as operating or finance leases, or initial direct costs. The Company has also elected the practical expedient to not separate the lease and non-lease components for all classes of underlying assets. The Company elected the short-term lease recognition exemption for all leases that qualified and has accordingly excluded short-term leases from the recognition of right-of-use assets and lease liabilities.

As a result of adoption of ASC Topic 842, we recorded operating lease right-of-use assets and corresponding operating lease liabilities of approximately $1.7 million and $2.9 million, respectively, as of October 1, 2019 with no impact on retained earnings. In addition, deferred rent liabilities related to escalating rent payments and tenant incentives totaling approximately $1.2 million were eliminated upon adoption, as these items are netted against right-of-use assets. The condensed consolidated balance sheets for reporting periods beginning on or after October 1, 2019 are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with previous guidance.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses, Measurement of Credit Losses on Financial Statements. This ASU requires a financial asset (or a group of financial assets) measured at an amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. ~~The accounting standard will be effective for~~We adopted this guidance using the ~~Company beginning~~modified retrospective method in the first quarter of fiscal ~~2021 (October 1, 2020), using a modified retrospective approach. We have evaluated the impact~~2021. The adoption of this ~~standard~~guidance did not have a material impact on the Company’s ~~results~~condensed consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which eliminates certain exceptions related to the approach for intraperiod tax allocation and to the methodology for calculating taxes during the quarters, as well as clarifies the accounting for enacted changes in tax laws. ~~The accounting standard will be~~We adopted ~~by the Company~~this guidance using a prospective approach in the first quarter of fiscal ~~2021 (October 1, 2020) using a prospective approach. We have evaluated the impact~~2021. The adoption of this ~~standard~~guidance did not have a material impact on the Company’s ~~results of operations, cash flows and~~condensed consolidated financial ~~position, and we do not expect the impact to be material upon adoption.~~statements.

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

The following table presents the Company’s revenues disaggregated by product classification and by ~~operating segment, excluding sales taxes collected and remitted to governmental authorities.~~reportable segment.

	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				March 31,				March 31,
(Dollars in thousands)	2020		2019		2020		2019
(In thousands)									2021		2020		2021		2020
Medical Device
Product sales	$	5,763	$	4,500	$	16,240	$	13,836	$	5,410	$	5,455	$	9,971	$	10,477
Royalties		4,752		9,605		20,365		25,603		7,474		6,714		15,383		15,613
Research, development and other		2,353		2,821		7,215		8,016		2,445		2,628		4,746		4,862
License fees		7,646		2,019		10,402		6,049		12,578		1,507		14,003		2,756
Total Revenue — Medical Device		20,514		18,945		54,222		53,504		27,907		16,304		44,103		33,708
In Vitro Diagnostics
Product sales		6,224		5,370		17,491		15,672		6,373		6,315		11,914		11,267
Other		145		29		608		85
Research, development and other										715		203		1,275		463
Total Revenue — In Vitro Diagnostics		6,369		5,399		18,099		15,757		7,088		6,518		13,189		11,730
Total Revenue	$	26,883	$	24,344	$	72,321	$	69,261	$	34,995	$	22,822	$	57,292	$	45,438

Contract ~~Assets, Deferred Revenue~~assets totaled $6.6 million and ~~Remaining Performance Obligations~~

~~Contract asset balances consist~~$6.1 million as of ~~estimated~~March 31, 2021 and September 30, 2020, respectively. Fluctuations in the balance of contract assets result primarily from changes in sales-based and minimum royalties earned, but not collected at each balance sheet date due to payment timing and ~~are subject to timing fluctuations at~~contractual changes in the ~~end~~normal course of ~~a given period. The Company’s deferred revenue, or~~business. For discussion of contract liability ~~is primarily related to~~(deferred revenue) balances and remaining performance obligations, see Note 3 Collaborative Arrangements.

On February 26, 2018, the ~~upfront and milestone payments received pursuant to the collaborative license and commercialization~~Company entered into an agreement ~~(the “Abbott Agreement”)~~ with Abbott Vascular, Inc. (“Abbott”) ~~for the Company’s SurVeil™ drug-coated balloon product (“SurVeil~~ ~~DCB”) discussed in Note 3.~~

As of June 30, 2020, the estimated revenue expected to be recognized in future periods related to performance obligations that are unsatisfied for executed contracts with an original duration of one year or more totaled approximately $17.5 million. These remaining performance obligations relate to thewhereby Abbott Agreement (Note 3), exclude contingent milestone payments under the Abbott Agreement, and are expected to be recognized over the next five years through fiscal 2025 as services, principally the TRANSCEND clinical trial, are completed.

~~Under the Abbott Agreement,~~ ~~Abbott will have~~has exclusive worldwide commercialization rights for ~~the~~ Surmodics' SurVeil^TM drug-coated balloon (“DCB”) (the “Abbott Agreement”). Our SurVeil DCB is used to treat peripheral arterial disease in the ~~superficial~~upper leg (superficial femoral ~~artery,~~artery) and is currently being evaluated in our TRANSEND pivotal clinical trial. Abbott also received the option to negotiate an agreement for Surmodics' below-the-knee Sundance^TM DCB product, which is currently being evaluated in a ~~U.S. pivotal clinical~~first-in-human trial. Separately, Abbott also received options to negotiate agreements for Surmodics' below-the-knee and arteriovenous (“AV”) fistula drug-coated balloon (“DCB”) products. The below-the-knee DCB, our Sundance^TM ~~DCB, is currently in pre-clinical development. A first-in-human clinical study has been completed for the AV fistula DCB, our Avess~~^TM ~~DCB, and Abbott has informed the Company that it has elected not to negotiate for distribution rights for this product~~. Surmodics is responsible for conducting all necessary clinical trials and other activities required to achieve U.S. ~~and European Union~~ regulatory ~~clearances~~clearance for the SurVeilDCB, including completion of the ongoing TRANSCEND pivotal clinical trial. Abbott and Surmodics participate on a joint development committee charged with providing guidance on the Company’s clinical and regulatory activities with regard to the SurVeil DCB product.

Upon receipt of regulatory approval for the SurVeil DCB, Abbott will have the right to purchase commercial units from the Company and Surmodics will realize revenue from product sales to Abbott at an agreed-upon transfer price, as well as a share of net profits resulting from third-party product sales by Abbott. To account for the Abbott Agreement, the Company applied the guidance in ASC Topic 808 (Collaborative Arrangements) as the parties are active participants and are exposed to significant risks and rewards dependent on commercial success of the collaborative activity.

As of March 31, 2021, the Company has received payments totaling ~~$45.8~~$60.8 million under the Abbott Agreement, which ~~consisted~~consist of the following: $25 million upfront fee in fiscal 2018, ~~$10.0~~$10 million milestone payment in ~~the fourth quarter of~~ fiscal 2019, ~~and~~ $10.8 million milestone payment in the third quarter of fiscal ~~2020. The~~2020, and $15 million milestone payment in the second quarter of fiscal 2021 upon receipt by Abbott of the clinical study report and related materials from the TRANSCEND pivotal trial that demonstrated the primary safety and primary clinical endpoints are non-inferior to the control device. As of March 31, 2021, the Company may receive an additional contingent milestone payment of up to ~~$45~~$30 million, pursuant to the terms of ~~additional payments under~~ the Abbott Agreement, upon premarket approval (“PMA”) of our SurVeil DCB by the U.S. Food and Drug Administration. As of March 31, 2021, consideration from this potential regulatory milestone was fully constrained and excluded from the contract price, due to the high level of uncertainty of achievement as of ~~certain clinical and regulatory milestones.~~ March 31, 2021.

Revenue recognized from the Abbott agreement totaled ~~$7.6~~$12.5 million and ~~$2.0~~$1.5 million infor the three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively, and ~~$10.4~~$13.8 million and ~~$5.9~~$2.8 million infor the ~~nine~~six months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively. ~~Revenue~~The amount of revenue recognized from the Abbott Agreement ~~which~~that was included in the respective beginning of fiscal year balances of deferred revenue inon the condensed consolidated balance sheets totaled ~~$3.7~~$3.0 million and ~~$5.9~~$2.8 million for the ~~nine~~six months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively.

revenue from the upfront and milestone payments received under the Abbott Agreement of ~~$17.5~~$17.1 million and $~~17.1~~$15.9 million, respectively, was recorded in the condensed consolidated balance sheets.~~Upon~~

As of March 31, 2021, the ~~commercialization of the~~ ~~SurVeil~~ DCB, Surmodics will be responsible for the manufacture and supply of clinical and commercial quantities of the product. Revenue from these product sales, including a per-unit transfer price and a share of net profits resulting from third-party sales by Abbott, willestimated revenue expected to be recognized ~~when these products~~in future periods related to performance obligations that are ~~shipped and control is transferred~~unsatisfied for executed contracts with an original duration of one year or more totaled $17.1 million. These remaining performance obligations relate to the ~~customer~~.

Abbott Agreement, exclude the potential contingent milestone payment under the Abbott Agreement, and are expected to be recognized over the next five years through fiscal 2025 as services, principally the TRANSCEND clinical trial, are completed.

The accounting guidance on fair value measurements defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. The guidance is applicable for all financial assets and financial liabilities and for all nonfinancial assets and nonfinancial liabilities recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and also considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of nonperformance.

~~Accounting guidance on fair value measurements requires that assets~~Assets and liabilities carried at fair value beare classified and disclosed in one of the following three categories:

Level 1 — Quoted (unadjusted) prices in active markets for identical assets or liabilities.

~~The Company did not have any Level 1 assets as of June 30, 2020 and September 30, 2019.~~

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

~~The Company’s Level 2 assets as of June 30, 2020 and September 30, 2019 consisted of money market funds, commercial paper instruments and corporate bonds.~~

Level 3 — Unobservable inputs to the valuation methodology that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation. In valuing Level 3 assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs.

~~The Company’s Level 3 liability as of September 30, 2019 consisted of contingent consideration obligations related to the fiscal 2016 acquisition of NorMedix, Inc. (“NorMedix”).~~

In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.

~~Assets and liabilities~~ measured at fair value on a recurring basis by level of the fair value hierarchy were as follows:

	June 30, 2020								March 31, 2021
(Dollars in thousands)	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
(In thousands)									Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Assets
Cash equivalents	$	—	$	29,714	$	—	$	29,714	$	—	$	31,135	$	—	$	31,135
Available-for-sale securities		—		24,178		—		24,178		—		21,863		—		21,863
Total assets	$	—	$	53,892	$	—	$	53,892	$	—	$	52,998	$	—	$	52,998

~~Changes in the contingent consideration liabilities measured at fair value using Level 3 inputs were as follows:~~

Settlements of contingent consideration liabilities consisted of payments to the sellers of NorMedix for revenue and value-creating milestones achieved. For the nine months ended June 30, 2020, acquisition-related contingent consideration payments totaling $3.2 million were classified as $0.6 million and $2.6 million in cash flows used in operating and financing activities, respectively, in the condensed consolidated statements of cash flows. For the nine months ended June 30, 2019, acquisition-related contingent consideration payments totaling $11.0 million were classified as $2.0 million and $9.0 million in cash flows used in operating and financing activities, respectively, in the condensed consolidated statements of cash flows.

There were 0 transfers of assets ~~or liabilities~~ between amounts measured using Level ~~1, Level 2, or Level~~ 3 fair value measurements ~~in fiscal 2020~~during the six months ended March 31, 2021 and ~~fiscal 2019.~~

~~The valuation techniques used to measure the fair value of assets are as follows:~~

Cash equivalents — These assets are classified as Level 2 and are carried at historical cost, which is a reasonable estimate of fair value because of the relatively short time between origination of the instrument and its expected realization.

Available-for-sale securities — Fair market values for these assets are based on quoted vendor prices and broker pricing in active markets underlying the securities where all significant inputs are observable. To ensure the accuracy of quoted vendor prices and broker pricing, the Company performs regular reviews of investment returns to industry benchmarks and sample tests of individual securities to validate quoted vendor prices with other available market data.

Investments consisted principally of commercial paper and corporate bond securities and are classified as available-for-sale as of June 30, 2020 and September 30, 2019. These available-for-sale securities are reported at fair value with unrealized gains and losses, net of tax, excluded from the ~~condensed~~ ~~consolidated statements of operations and reported in the~~ ~~condensed~~ ~~consolidated statements of comprehensive income as well as a separate component of stockholders’ equity in the~~ ~~condensed~~ consolidated balance sheets, except for other-than-temporary impairments, which are reported as a charge to current earnings as they occur. A loss would be recognized when there is an other-than-temporary impairment in the fair value of any individual security classified as available-for-sale, with the associated net unrealized loss reclassified out of accumulated other comprehensive income with a corresponding adjustment to other income. This adjustment would result in a new cost basis for the investment. Interest earned on debt securities, including amortization of premiums and accretion of discounts, is included in investment income, net within other income. Realized gains and losses from the sales of debt securities, which are included in other income, are determined using the specific identification method. Investment purchases are accounted for on the date the trade is executed, which may not be the same as the date the transaction is cash settled.

The amortized cost, unrealized holding gains and losses, and fair value of available-for-sale securities were as follows:

Inventories are principally stated at the lower of cost or market using the specific identification method and include direct labor, materials and overhead, with cost of product sales determined on a first-in, first-out basis. Inventories consisted of the following components:

	June 30,		September 30,		March 31,		September 30,
(Dollars in thousands)	2020		2019
(In thousands)					2021		2020
Raw materials	$	3,394	$	2,034	$	3,758	$	3,758
Work-in process		1,057		892		1,151		817
Finished products		1,421		1,575		1,400		1,391
Total	$	5,872	$	4,501	$	6,309	$	5,966

	June 30,		September 30,		March 31,		September 30,
(Dollars in thousands)	2020		2019
ViaCyte, Inc.	$	—	$	479
(In thousands)					2021		2020
Operating lease right-of-use assets		2,580		—		2,406		2,508
Other noncurrent assets		2,444		1,645		2,107		1,761
Other assets	$	5,024	$	2,124	$	4,513	$	4,269

The carrying value of each cost method investment is reviewed quarterly for changes in circumstances or the occurrence of events that suggest the Company’s investment may not be recoverable. The fair value of cost method investments is not adjusted if there are no identified events or changes in circumstances that may have a material effect on the fair value of the investment. In the nine months ended June 30, 2020, the Company recorded a $0.5 million other-than-temporary impairment loss based on a current financing round and market valuations to reduce the carrying value of the investment in ViaCyte to 0.

~~Operating lease right-of-use assets as of June 30, 2020 are recorded in accordance with ASC Topic 842, which we adopted as of October 1, 2019.~~ Other noncurrent assets include prepaid expenses related to our ongoing clinical trials and a receivable related to refundable Irish research and development tax credits.

Intangible assets ~~consist principally~~consisted of ~~acquired patents and technology, customer lists and relationships, licenses, and trademarks.~~ the following:

Intangible asset amortization expense was $0.6 million ~~and $0.7 million~~ for both the three months ended ~~June 30,~~March 31, 2021 and 2020 and ~~2019, respectively, and $1.8 million and $2.0~~$1.3 million for both the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 and ~~2019, respectively.~~

2020. Based on the intangible assets in service as of ~~June 30, 2020,~~March 31, 2021, estimated amortization expense for the remainder of fiscal ~~2020~~2021 and each of the next five fiscal years is as ~~follows~~ ~~(in thousands)~~:

Remainder of 2020	$	591
2021		2,321
(In thousands)
Remainder of 2021			$	1,232
2022		2,281		2,449
2023		1,701		1,844
2024		1,612		1,751
2025		1,575		1,712
2026				754

Future amortization amounts presented above are estimates. Actual future amortization expense may be different as a result of future acquisitions, impairments, changes in amortization periods, foreign currency translation rates, or other factors.

Goodwill represents the excess of the cost of an acquired entity over the fair value assigned to the assets purchased and liabilities assumed in connection with a business acquisition. Goodwill is not amortized but is subject, at a minimum, to annual tests for impairment in accordance with accounting guidance for goodwill. The carrying amount of goodwill is evaluated annually, and between annual evaluations if events occur or circumstances change and indicate that the carrying amount of goodwill may be impaired.

Goodwill in the Medical Device reporting unit represents the gross value from the fiscal 2016 acquisitions of Creagh Medical Limited (“Creagh Medical”) and NorMedix. Goodwill in the In Vitro Diagnostics reporting unit represents the gross value from the acquisition of BioFX Laboratories, Inc. (“BioFX”) in fiscal 2007.

Goodwill was not impaired in either reporting unit based on the outcome of the fiscal 2019 annual impairment test which utilized a quantitative assessment. The carrying amount of goodwill was evaluated as of June 30, 2020 with consideration of macroeconomic, industry and Company-specific events and circumstances. As of and for the nine months ended June 30, 2020, there have been no events or circumstances that have occurred to indicate it is more likely than not that goodwill was impaired for either of the Company's reporting units.

	June 30,		September 30,		March 31,		September 30,
(Dollars in thousands)	2020		2019
(In thousands)					2021		2020
Accrued professional fees	$	232	$	434	$	403	$	239
Accrued clinical study expense		2,588		2,163		1,708		2,206
Accrued purchases		686		679		810		647
Acquisition of in process research and development		146		989
Acquisition of in-process research and development and intangible assets						482		1,148
Due to customers		438		19		7		321
Construction-in-progress						—		272
Operating lease liability, current portion		397		—		464		436
Deferred rent, current portion		—		130
Other		216		376		288		278
Accrued other liabilities	$	4,703	$	4,790
Total accrued other liabilities					$	4,162	$	5,547

On September 14, 2020, the Company entered into a secured revolving credit facility pursuant to a Loan and Security Agreement (the "Loan Agreement") with Bridgewater Bank (the “Bank”). The Loan Agreement provides for availability under a secured revolving line of credit of up to $25 million (the "Loan"). The outstanding balance on the Loan was 0 as of March 31, 2021 and September 30, 2020.

Availability under the Loan is subject to a borrowing base that equals 80% of the margin value of securities collateral that has been pledged to the Bank. The Loan will initially mature on September 14, 2021, but the maturity date may be extended by the Company for up to two extension periods of twelve months subject to certain conditions set forth in the Loan Agreement. The Company's obligations under the Loan Agreement are secured by substantially all of the Company’s and its material subsidiaries' assets, other than intellectual property, real estate and foreign assets, including equity in foreign subsidiaries. The Company has also pledged the stock of certain of its subsidiaries to secure such obligations. Interest under the Loan Agreement accrues at a rate per annum equal to the greater of (i) 3.25% per annum and (ii) the 90-day interest rate yield for U.S. Government Treasury Securities plus 2.75% per annum. A facility fee is payable on unused commitments at a rate of 0.075% quarterly. For the six months ended March 31, 2021, unused commitment fees, reported within interest expense on the condensed consolidated statements of operations, totaled less than $0.1 million.

The Loan Agreement contains affirmative and negative covenants customary for a transaction of this type which, among other things, require the Company to meet certain financial tests, including (i) minimum liquidity, (ii) minimum current ratio, (iii) minimum adjusted EBITDA, and (iv) minimum tangible net worth. The Loan Agreement also contains covenants which, among other things, limit the Company's ability to incur additional debt, make certain investments, create or permit certain liens, create or permit restrictions on the ability of subsidiaries to pay dividends or make other distributions, consolidate or merge and engage in other activities customarily restricted in such agreements, in each case subject to exceptions permitted by the Loan Agreement. The Loan Agreement also contains customary events of default, the occurrence of which would permit the Bank to terminate its commitment and accelerate the Loan.

The Company has stock-based compensation plans approved by its shareholders under which it grants stock options, restricted stock awards, ~~performance share awards,~~ restricted stock units and deferred stock ~~units. The Company recognizes share-based payments as an operating expense, based on their fair values, over the requisite service period.~~

units to officers, directors and key employees. Stock-based compensation expense was reported as follows in the condensed consolidated statements of operations:

	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	June 30,				June 30,				March 31,				March 31,
(Dollars in thousands)	2020		2019		2020		2019
(In thousands)									2021		2020		2021		2020
Product costs	$	34	$	34	$	82	$	98	$	32	$	15	$	69	$	48
Research and development		189		225		619		617		305		168		589		430
Selling, general and administrative		1,117		1,060		3,336		2,794		1,092		1,121		2,204		2,219
Total	$	1,340	$	1,319	$	4,037	$	3,509	$	1,429	$	1,304	$	2,862	$	2,697

As of ~~June 30, 2020,~~March 31, 2021, approximately ~~$8.5~~$10.1 million of total unrecognized compensation costs related to non-vested awards is expected to be recognized over a weighted average period of approximately ~~2.3~~2.5 years.

~~The~~During the six months ended March 31, 2021 and 2020, the Company ~~uses the Black-Scholes option pricing model~~awarded 234,000 and 261,000 options to ~~determine the~~officers, directors and key employees with a weighted average grant date fair value per option of ~~stock options granted. Stock option fair value assumptions~~$13.86 and ~~the weighted average fair value of stock options granted were as follows:~~

The risk-free interest rate assumption was based on the U.S. Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the awards. The expected life of options granted was determined based on the Company’s experience. Expected volatility was based on the Company’s stock price movement over a period approximating the expected term. Based on management’s judgment, dividend yields were expected to be 0 for the expected life of the options. The Company also estimated forfeitures of options granted, which were based on historical experience.

Non-qualified stock options are granted at fair market value on the date of grant. Non-qualified stock options expire in seven years, or upon termination of employment or service as a Board member. With respect to members of our Board, non-qualified stock options generally become exercisable on a monthly pro-rata basis within the ~~one-year~~ period following the date of grant. With respect to our employees, non-qualified stock options generally become exercisable with respect to 25% of the shares on each of the first four anniversaries following the grant date. The stock-based compensation expense table above includes stock option expenses recognized related to these awards, which totaled $0.6 million for each of the three months ended June 30, 2020 and 2019 and $1.8 million and $1.6 million for the nine months ended June 30, 2020 and 2019,$14.24, respectively.

The total pre-tax intrinsic value of options exercised was $0.4 million and less than $0.1 million for the three months ended June 30, 2020 and 2019, respectively, and $1.5 million and $0.1 million for the nine months ended June 30, 2020 and 2019, respectively. Intrinsic value represents the difference between the Company’s common stock fair market value on the date of exercise and the option’s exercise price.

The Company has entered into restricted stock agreements with certain key employees, covering the issuance of common stock (“Restricted Stock”). Under accounting guidance, these shares are considered to be non-vested shares. The Restricted Stock is

~~released to the key employees if they are employed by the Company at the end of the vesting period. Restricted Stock vesting periods range from one to three years.~~ During the ~~nine~~six months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ the Company awarded ~~64,390~~65,000 and ~~45,049~~ ~~Restricted Stock~~60,000 restricted stock shares, respectively, to certain key employees and ~~officers. Forfeiture of~~ ~~14,289~~ ~~and 800 Restricted Stock shares occurred during the nine months ended June 30, 2020 and 2019, respectively. As of June 30, 2020 and September 30, 2019,~~ ~~97,473~~ ~~and 90,409 Restricted Stock shares were outstanding, respectively. Compensation expense has been recognized for the estimated~~officers with a weighted average grant date fair value of the common shares, net of estimated forfeitures, and is being charged to operating expenses over the vesting term. The stock-based compensation expense table includes Restricted Stock expenses recognized related to these awards, which totaled $~~0.5~~ ~~million for each of the three months ended June 30, 2020 and 2019 and $1.5~~ ~~million and $1.3 million for the nine months ended June 30, 2020 and 2019, respectively.~~

In fiscal 2017, the Company entered into performance share agreements with certain key employees covering the issuance of common stock (“Performance Shares”). The Organization and Compensation Committee of the Board of Directors (the “Committee”) established cumulative revenue and cumulative earnings before interest, income taxes, depreciation and amortization (“EBITDA”) for the ~~three-year~~ performance period as the performance objectives for the fiscal 2017 awards. The fiscal 2017 awards also included performance objectives related to achievement of the Company’s strategic initiatives. Awards granted in fiscal 2017 were finalized in the first quarter of fiscal 2020 and resulted in the issuance of 67,653 shares, with a value of $2.8 million, based on the performance objectives relative to actual results achieved during the performance period. The per share compensation cost for each award was fixed on the grant date. The stock-based compensation expense table includes Performance Shares expense recognized related to these awards, which totaled $0.1 million for both the threeof $37.48 and nine months ended June 30, 2019. Performance Shares expense recognized in the three and nine months ended June 30, 2020 was insignificant as all Performances Shares were vested as of September 30, 2019.

~~The fair values of the Performance Shares, at target, were $1.2 million for awards granted in fiscal 2017. There have been no Performance Share awards granted subsequent to fiscal 2017.~~$41.88, respectively.

During the ~~nine~~six months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ the Company awarded ~~18,376~~12,000 and ~~11,871~~17,000 restricted stock units, ~~(“RSUs”),~~ respectively, to ~~non-employee~~ directors and ~~certain~~to key employees in foreign jurisdictions. RSU awards are not considered issued or outstanding common stock of the Company until they vest. As of June 30, 2020 and September 30, 2019, outstanding, unvested RSUs totaled 69,320 and 62,242, respectively. Compensation expense has been recognized for the estimatedjurisdictions with a weighted average grant date fair value per unit of ~~the common shares~~$45.13 and is being charged to operating expenses over the vesting term. The estimated fair value of the RSUs was calculated based on the closing market price of Surmodics’ common stock on the grant date. The stock-based compensation expense table includes RSU expenses recognized related to these awards, which totaled $0.1 million for each of the three months ended June 30, 2020 and 2019 ~~and $0.4 million for each of the nine months ended June 30, 2020 and 2019~~.$40.73, respectively.

Directors may elect to receive their annual fees for services to the Board in deferred stock units (“DSUs”). Directors may elect this option annually. During the nine months ended June 30, 2020 and 2019, 2,634 and 2,099 units, respectively, were issued with a total fair value of $0.1 million and less than $0.1 million in each respective period. Outstanding, fully vested DSUs totaled 32,363 and 29,729 as of June 30, 2020 and September 30, 2019, respectively. Stock-based compensation expense related to DSU awards totaled less than $0.1 million for each of the three months ended June 30, 2020 and 2019 and $0.1 million for each of the nine months ended June 30, 2020 and 2019.

~~Under~~Our U.S. employees are eligible to participate in the amended 1999 Employee Stock Purchase Plan (“~~Employee Stock Purchase Plan”~~ESPP”), approved by our shareholders. Shares issued under the ~~Company is authorized to issue up to 600,000 shares of common stock. All full-time~~ESPP totaled 8,000 and ~~part-time U.S. employees can choose to contribute up to 10% of their annual compensation, with a limit of $25,000, to purchase~~7,000 for the Company’s common stock at purchase prices defined within the provisions of the Employee Stock Purchase Plan. Employee contributions to the Employee Stock Purchase Plan included in accrued liabilities in the condensed consolidated balance sheets totaled $0.2 million and less than $0.1 million as of June 30, 2020 and September 30, 2019, respectively. Stock-based compensation expense recognized related to the Employee Stock Purchase Plan~~totaled less than $0.1 million for each of the three~~six months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019 and $0.1 million and less than $0.1 million for the nine months ended June 30, 2020 and 2019,~~ respectively. ~~The stock-based compensation expense table includes the Employee Stock Purchase Plan expenses.~~

Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share is computed by dividing net income by the weighted average number of common and ~~dilutive~~ common equivalent shares outstanding during the period. The Company’s potentially dilutive common shares are those that result from dilutive common stock options and non-vested stock relating to restricted stock awards and restricted stock ~~units, and deferred stock units, as well as performance~~units.

The following table sets forth the calculation of diluted weighted average shares ~~in years prior to fiscal 2020. Options to purchase shares~~outstanding:

The calculation of weighted average diluted shares outstanding excludes outstanding stock options associated with the right to purchase less than 0.1 million ~~and 0.2 million~~ shares of common stock for both the three months ended ~~June 30,~~March 31, 2021 and 2020 and ~~2019, respectively,~~0.1 million and less than ~~0.1 million and~~ 0.1 million shares of common stock for the ~~nine~~six months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively, as their inclusion would have had an antidilutive effect on diluted net income per share for ~~those periods.~~the period.

~~The following table sets forth the denominator for the computation of basic and diluted net income per share (in thousands~~):

~~The Company’s Board of Directors has authorized the repurchase of up to $25.3 million of the Company’s outstanding common stock. This authorization does not have an expiration date.~~

For interim income tax reporting, the Company estimates its annual effective tax rate and applies it to fiscal year-to-date pretax income (loss), excluding unusual or infrequently occurring discrete items. Tax jurisdictions with losses for which tax benefits cannot be realized are excluded. The Company recorded anincome tax expense of $(1.4) million and income tax benefit of ~~$1.2 million and $0.3~~$1.9 million for the three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively, and ~~$3.4~~income tax expense of $(1.6) million and ~~$0.6~~income tax benefit of $2.2 million for the ~~nine~~six months ended ~~June 30,~~March 31, 2021 and 2020, respectively. For the three and ~~2019, respectively. In the nine~~six months ended ~~June 30,~~March 31, 2020, the income tax benefit includes a discrete tax benefit of $1.8 million as a result of our ability under the Coronavirus Aid, ~~Relief~~Relieve and Economic Security Act (the “CARES Act”), enacted in March 2020, to carry back ~~NOLs~~net operating losses (“NOLs”) incurred to periods when the statutory ~~tax~~ rate was 35% versus ~~our~~the current tax rate of 21%.

The CARES Act was enacted on March 27, 2020 and includes significant business tax provisions. In particular, the CARES Act modified the rules associated with net operating losses (“NOLs”) and made technical corrections to tax depreciation methods for qualified improvement property. Under the temporary provisions of CARES Act, NOL carryforwards and carrybacks may offset 100% of taxable income for taxable years beginning before 2021. In addition, NOLs arising in 2018, 2019 and 2020 taxable years may be carried back to each of the preceding five years to generate a refund.

The effective income tax rate for the three and ~~nine~~six months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ differs from the U.S. federal statutory tax rate of 21% primarily due to the discrete tax benefits recognized under the CARES Act ~~for~~in the ~~nine-month period,~~second quarter of fiscal 2020, favorable impacts of the U.S. federal research and development tax credits, ~~in both periods,~~ stock award activity, ~~in the nine-month period,~~ and operating results of our Irish subsidiary, where tax benefit is offset by a valuation allowance. The Company recognized discrete tax benefits related to stock-based compensation awards vested, expired, cancelled and exercised of $0.7 million and less than $0.1 million in ~~each of~~the three months ended ~~June 30,~~March 31, 2021 and 2020, respectively and ~~2019~~$0.7 million and $0.3 million ~~and $0.5 million~~ in the ~~nine~~six months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively.

The total amount of unrecognized tax benefits, excluding interest and penalties that, if recognized, would affect the effective tax rate was ~~$2.8~~$3.1 million and ~~$2.1~~$2.7 million as of ~~June 30, 2020~~March 31, 2021 and September 30, ~~2019,~~2020, respectively. Interest and penalties related to unrecognized tax benefits are recorded in the income tax benefit.

For interim income tax reporting, the Company estimates its annual effective tax rate and applies it to year-to-date pretax income, excluding unusual or infrequently occurring discrete items. Tax jurisdictions with losses for which tax benefits cannot be realized are

~~excluded.~~ The Company files income tax returns, including returns for its subsidiaries, in the U.S. federal jurisdiction and in various state jurisdictions as well as several non-U.S. jurisdictions. Uncertain tax positions are related to tax years that remain subject to examination. U.S. income tax returns for years prior to fiscal 2017 are no longer subject to examination by federal tax authorities. For tax returns for state and local jurisdictions, the Company is no longer subject to examination for tax years generally before fiscal 2009. For tax returns for non-U.S. jurisdictions, the Company is no longer subject to income tax examination for years prior to 2014. Additionally, the Company has been indemnified of liability for any taxes relating to Creagh Medical and NorMedix for periods prior to their respective acquisition dates, pursuant to the terms of the related share purchase agreements. There were 0 undistributed earnings in foreign subsidiaries as of ~~June 30, 2020~~March 31, 2021 and September 30, ~~2019.~~2020.

~~The~~Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, who is the Company’s ~~management evaluates performance~~Chief Executive Officer, in deciding how to allocate resources and ~~allocates resources based on reported results for~~in assessing performance. We operate 2 reportable ~~segments, as follows: (1) the Medical Device unit, which designs, develops and manufactures interventional medical devices, primarily for the peripheral vascular market; surface~~segments:

Segment revenue, operating income (loss), and depreciation and amortization were as follows:

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	June 30,						June 30,						March 31,						March 31,
(Dollars in thousands)	2020			2019			2020			2019
(In thousands)													2021			2020			2021			2020
Revenue:
Medical Device	$	20,514		$	18,945		$	54,222		$	53,504		$	27,907		$	16,304		$	44,103		$	33,708
In Vitro Diagnostics		6,369			5,399			18,099			15,757			7,088			6,518			13,189			11,730
Total revenue	$	26,883		$	24,344		$	72,321		$	69,261		$	34,995		$	22,822		$	57,292		$	45,438

Operating income:
Operating income (loss):
Medical Device	$	532		$	753		$	(1,344	)	$	1,087		$	8,564		$	(1,453	)	$	7,971		$	(1,876	)
In Vitro Diagnostics		3,254			2,475			9,315			7,845			3,809			3,462			7,029			6,061
Total segment operating income		3,786			3,228			7,971			8,932			12,373			2,009			15,000			4,185
Corporate		(2,622	)		(2,211	)		(7,229	)		(6,338	)		(2,890	)		(2,165	)		(5,424	)		(4,607	)
Total operating income	$	1,164		$	1,017		$	742		$	2,594
Total operating income (loss)													$	9,483		$	(156	)	$	9,576		$	(422	)

Depreciation and amortization:
Medical Device	$	1,424		$	1,481		$	4,318		$	4,315		$	1,721		$	1,439		$	3,373		$	2,894
In Vitro Diagnostics		112			120			331			353			88			109			193			219
Corporate		254			286			741			794			97			248			200			487
Total depreciation and amortization	$	1,790		$	1,887		$	5,390		$	5,462		$	1,906		$	1,796		$	3,766		$	3,600

The Corporate category includes expenses that are not fully allocated to Medical Device and In Vitro Diagnostics segments. These Corporate costs are related to administrative corporate functions, such as executive management, corporate accounting, legal, human resources and Board of Directors. Corporate may also include expenses, such as litigation, which are not specific to a segment and thus not allocated to the operating segments.

Asset information by ~~operating~~ segment is not presented because the Company does not provide its chief operating decision maker assets by ~~operating~~ segment, as the data is not readily ~~available or significant to the decision-making process.~~available.

~~The Company leases facilities for research, office, manufacturing and warehousing. The Company determines whether a contract is a~~Operating lease or contains a lease at inception date. Upon commencement, the Company recognizes a right-of-use asset and lease liability based on the net present value of the future minimum lease payments over the lease term at the commencement date. The net present value of future minimum lease payments recorded upon lease commencement is reduced by the discounted value of any leasehold improvement incentives payable to the Company considered to be in-substance fixed payments. The unamortized balance

of leasehold improvement incentives in the form of tenant allowances represents the primary difference between the balance of the right-of-use assets and operating lease liabilities. As the Company’s leases typically do not provide an implicit rate, the Company’s lease liabilities are measured on a discounted basis using the Company's incremental borrowing rate. Lease terms used in the recognition of right-of-use assets and lease liabilities ~~include only options to extend~~were as follows:

As of March 31, 2021, operating lease maturities for the ~~lease that are reasonably certain to be exercised. The condensed consolidated balance sheets do not include recognized assets or liabilities for leases that, at~~remainder of fiscal 2021 and each of the commencement date, have a term of twelve months or less and do not include an option to purchase the underlying asset that is reasonably certain to be exercised. The Company recognizes such leases in the condensed consolidated statements of income on a straight-line basis over the lease term.

~~The Company’s leases include one or more options to renew and extend the lease term at the Company’s discretion. These renewal options are not included in right-of-use assets and lease liabilities~~next five fiscal years were as ~~they are not reasonably certain of exercise. The Company regularly evaluates renewal options, and when they are reasonably certain to be exercised, the renewal period is included in the lease term.~~follows:

Operating lease cost was $0.2 million and ~~$0.5~~$0.1 million for the three ~~and nine~~ months ended ~~June 30,~~March 31, 2021 and 2020, respectively, and $0.4 million and $0.3 million for the six months ended March 31, 2021 and 2020, respectively. Cash paid for operating lease liabilities approximated operating lease cost for the three and ~~nine months~~six month periods ended ~~June 30,~~March 31, 2021 and 2020.

~~As of June 30, 2020, operating lease maturities for the remainder of fiscal 2020 and each of the next five fiscal years are as follows~~ ~~(in thousands)~~:

~~As of June 30, 2020, the weighted average remaining lease term for operating leases was 7.6 years and the weighted average discount rate used to determine operating lease liabilities was 4.0%.~~

~~Litigation.~~ From time to time, the Company may become involved in various legal actions involving its operations, products and technologies, including intellectual property and employment disputes. The outcomes of these legal actions are not within the Company’s complete control and may not be known for prolonged periods of time. In some actions, the claimants seek damages as well as other relief, including injunctions barring the sale of products that are the subject of the lawsuit, which if granted, could require significant expenditures or result in lost revenue. The Company records a liability in the condensed consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate, the minimum amount of the range is accrued.

If a loss is possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded.

InnoCore Technologies BV. In ~~fiscal~~ 2006, the Company entered into a license agreement whereby the Company obtained an exclusive license to a ~~drug delivery~~drug-delivery coating for licensed products within the vascular field, which included peripheral, coronary and neurovascular biodurable stent products. The license requires ~~the Company to make~~ an annual, minimum payment of ~~200,000 euros (equivalent to $225,000 using a euro~~approximately $0.2 million (at the Euro to US dollar exchange rate ~~of $1.1228 to the Euro~~ as of ~~June 30, 2020)~~March 31, 2021) until the last patent expires, which is currently estimated to be ~~September~~May 2027. The total minimum future payments associated with this license are approximately ~~$1.7~~$1.5 million as of ~~June 30, 2020.~~March 31, 2021. The license is currently utilized by one of the Company’s drug delivery customers.

Clinical Trials. The Company has engaged clinical trial clinical research organization (“CRO”) consultants to assist with the administration of its ongoing clinical trials. The Company has executed separate contracts with two CROs for services rendered in connection with the TRANSCEND pivotal clinical trial for the SurVeil DCB, including pass-through expenses paid by the CROs, of up to approximately ~~$26~~$29 million in the aggregate. As of ~~June 30, 2020,~~March 31, 2021, an estimated ~~$10~~$8 million remains to be paid ~~by the Company~~ on these contracts, which may vary depending on actual pass-through expenses incurred to execute the trial. The Company estimates that the total cost of the TRANSCEND clinical trial will be in the range of $35 million to $40 million from inception to completion. In the event the Company were to terminate any trial, it may incur certain financial penalties which would become payable to the CRO for costs to wind down the terminated trial.

Asset Acquisitions. In the ~~fourth quarter of~~ fiscal 2019, the Company acquired certain intellectual property assets supporting ongoing development of the Company’s medical device pipeline and paid the sellers $0.8 ~~million. In addition,~~million in fiscal 2019 and $0.2 million in the ~~Company~~first quarter of fiscal 2021. An additional $1.1 million in payments is ~~obligated to pay up to $1.3 million of additional consideration~~contingent upon achievement of certain strategic milestones within a contingency period ending in ~~2022, of which $0.2 million is guaranteed to be paid in fiscal 2021.~~2022.

In fiscal 2018, the Company acquired certain intellectual property assets of Embolitech, LLC (the “Embolitech Transaction”). As part of the Embolitech Transaction, the Company paid the sellers $5.0 million in fiscal 2018, ~~and~~ $1.0 million in the second quarter of fiscal ~~2020.~~2020, and $1.0 million in the first quarter of fiscal 2021. The Company is obligated to pay additional installments totaling $2.5 million in fiscal 2022 through fiscal 2024. These payments may be accelerated upon the occurrence of certain sales and regulatory milestones. An additional ~~$2.0~~$1.0 million payment is contingent upon the achievement of certain regulatory milestones within a contingency period ending in 2033.

As of ~~June 30, 2020, $0.1~~March 31, 2021, $0.5 million and ~~$2.2~~$1.8 million related to these asset acquisitions ~~is included~~was recorded in other accrued liabilities and other long-term liabilities, respectively, on the condensed consolidated balance sheets. As of September 30, ~~2019, $1.0~~2020, $1.1 million and ~~$2.1~~$2.2 million related to these asset acquisitions ~~is included~~was reported in other accrued liabilities and other long-term liabilities, respectively, on the condensed consolidated balance sheets.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis provides information management believes is useful in understanding the operating results, cash flows and financial condition of ~~Surmodics, Inc. and subsidiaries (referred to as “Surmodics,” the “Company,” “we,” “us,” “our” and other like terms).~~Surmodics. The discussion should be read in conjunction with both the unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations, each included in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019.~~2020. This discussion contains various “Forward-Looking Statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We refer readers to the statement entitled “Forward-Looking Statements” located at the end of this Item 2.

Surmodics, Inc. and subsidiaries (referred to as “Surmodics,” the “Company,” “we,” “us,” “our” and other like terms) is a leading provider of surface modification technologies for intravascular medical ~~device~~devices and chemical components for in vitro diagnostic ~~technologies~~(“IVD”) immunoassay tests and microarrays. Surmodics is pursuing development and commercialization of highly differentiated medical devices that are designed to address unmet clinical needs and engineered to the ~~healthcare industry,~~most demanding requirements. This key growth strategy leverages the combination of the Company’s expertise in proprietary surface technologies, along with ~~the~~enhanced device design, development, and manufacturing capabilities. The Company mission ~~of improving~~remains to improve the detection and treatment of disease. We remain committed to developing medical device products and platforms leveraging the technologies and manufacturing capabilities in our Medical Device business unit for the treatment of peripheral arterial disease (“PAD”) and other vascular diseases. Our primary focus has been the continued development of our drug-coated balloon (“DCB”) platform, our radial access device platform, and our thrombectomy device platform.

A novel strain of coronavirus was first identified in Wuhan, China in December 2019. The disease caused by it, COVID-19, was declared a global pandemic by the World Health Organization in March 2020. On March 18, 2020, the Centers for Medicare & Medicaid Services (“CMS”) released guidance for U.S. healthcare providers to limit non-emergent elective medical procedures other than high acuity treatments in order to conserve personal protective equipment and limit exposure to COVID-19. On April 16, 2020, the White House issued “Guidelines for Opening Up America Again” (the “White House Guidelines”) that described a phased resumption of economic activities with gating conditions for a region or state to move from one phase to another. On June 9, 2020, CMS issued recommendations for regions and states in Phase II of the White House Guidelines that non-emergent, non-COVID-19 care should be offered to patients, as clinically appropriate, in localities or facilities that have the resources to provide such care, as well as the ability to quickly respond to a surge in COVID-19 cases, if necessary.

In response to the pandemic and business disruptions, first and foremost, we have prioritized the health and safety of our employees, customers, suppliers and others with whom we partner in our business activities. We have instructed employees to work from home when possible and to maintain recommended physical distancing when working in our facilities. We also have eliminated non-essential in-person contact with customers, suppliers and other third parties.

Given the unprecedented and dynamic nature of the COVID-19 pandemic, we cannot reasonably estimate the impacts it may have on our financial condition, results of operations or cash flows in the future. However, we expect that differences in the rates of delivery and utilization of elective procedures in response to CMS recommendations and the pandemic will have an adverse impact, which may be material, on our future revenues, profitability and cash flows. The extent and duration of that impact will depend upon the extent of procedure postponements and the duration of the pandemic.

Our business model for our whole-product solutions strategy within our Medical Device segment is to design, develop and manufacture highly differentiated products that incorporate our proprietary catheter, balloon, thrombectomy and/or surface modification coating technologies to improve patient outcomes and reduce procedure costs, while maintaining patient safety. We are focused on developing devices that ~~consider~~meet the needs of ~~various~~a spectrum of care settings ranging from hospitals, to ambulatory surgery centers, to office-based interventional labs in order to provide improved care and address unmet needs in the treatment of ~~PAD~~peripheral artery disease (“PAD”) and other vascular diseases. Our strategy has been built on our investment in proprietary device technologies, as well as state-of-the-art medical device design, development and manufacturing capabilities. Over the past several years, we have made investments to enhance our clinical and regulatory capabilities, and in fiscal 2020, we have continued to make additional investments to obtain clinical data, reduce the time from product development to commercialization, and drive clinician engagement with our products after approval to optimize adoption.

Below is a brief summary of our pipeline of medical device products under development and recently commercialized, grouped by product ~~family. All discussions of expectations and targeted timelines are subject to the uncertainty surrounding the COVID-19 pandemic.~~platform.

InWe announced in January 2021 that our TRANSCEND clinical trial, the ~~third quarter of fiscal 2020, we received Conformité Européenne Mark (“CE Mark”) approval prerequisite~~pivotal trial for ~~commercialization of~~ the SurVeil DCB, met both the primary safety and primary efficacy endpoints, and the SurVeil DCB was found to be non-inferior in those endpoints to the ~~European Union.~~Medtronic IN.PACT® Admiral® DCB, while delivering a substantially lower drug dose. In the second half of fiscal 2021, we expect to submit the PMA clinical report to the Food and Drug Administration (“FDA”) for premarket approval (“PMA”), including certain long-term vital status data required by the FDA.

In the second quarter of fiscal 2021, we delivered to Abbott the written clinical report and related materials that demonstrated the primary safety endpoint and primary efficacy endpoint for the TRANSCEND clinical study were met. As a result, we received a ~~$10.8~~$15 million milestone payment from Abbott in the ~~third~~second quarter of fiscal ~~2020,~~2021, of which ~~$6.7~~$10.8 million was recognized as license fee revenue in the period. ~~As of the third quarter of fiscal 2020, the timeline for commercialization of the~~ ~~SurVeil~~ ~~DCB in the European Union is to be determined subject to the discretion of our partner, Abbott.~~

In the fourth quarter of fiscal 2020, we received FDA 510(k) clearance on our first thrombectomy device, the Pounce Thrombus Retrieval System, intended for the non-surgical removal of thrombi and emboli (clots) from the peripheral arterial vasculature. We expect to initiate limited product evaluation activities for our Pounce Thrombus Retrieval System in the second half of fiscal 2021 to assess human-use factors and product performance prior to commercialization.

23In the third quarter of fiscal 2021, we submitted to the FDA for 510(k) clearance for our Sublime 0.018” PTA balloon catheter for treatment of lesions above the knee. Upon receipt of FDA clearance, we are targeting the first half of fiscal 2022 to initiate product evaluation activities for this product.

For more information regarding our product development and commercialization strategy, see Part I, Item 1 of our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019.~~2020.

~~Our fourth-generation~~ ~~PhotoLink~~We generate royalties revenue from licensing our proprietary surface coating technology to customers. Medical Device royalties revenue was 30%, 35% and 38% of our total revenue for fiscal 2020, 2019 and 2018, respectively. The most significant source of royalties revenue was derived from our hydrophilic coating technology. The latest generation of our hydrophilic coating technology, our Serene™ hydrophilic coating, is protected by a family of patents that begin to expire in 2033. Royalties revenue associated with our Serene hydrophilic coating technology increased approximately 27% in fiscal 2020, compared to the prior year, driven by customer product launches and resulting market share increases associated with customer device applications that incorporate this next-generation coating technology.

The family of patents that protected our fourth-generation PhotoLink™ hydrophilic coating technology expired in the first quarter of fiscal 2020 in all countries where patent coverage existed for ~~this technology. The~~the technology, except in Japan, where the relevant patent expired in the first quarter of fiscal 2021. Medical Device ~~business~~ royalties revenue associated with our fourth-generation hydrophilic coating technology was approximately 14%, 21% and 21% of our total revenue for fiscal 2020, 2019 ~~revenue.~~and 2018, respectively. Of the license agreements using our fourth-generation and early-generationPhotolink technologies, most continue to generate royalties revenue for know-how and other proprietary rights, at a reduced royalty rate, beyond patent expiration. The ~~remainder~~amount of the decline in royalties and license fee revenue in fiscal 2020, compared to the prior year, related specifically to the expiration of fourth-generation hydrophilic coating patents was approximately $5.5 million. In fiscal 2021, we expect a decline of less than $2.0 million in royalties and license fee revenue, compared to the prior year, specific to the tail-end impact of these fourth-generation patent expirations, which reflects the mitigating impact of growth among our fourth-generation coating customers. In addition, we expect the decline in fourth-generation coating royalties to be more than offset by continued growth in our next-generation Serene hydrophilic coating royalties portfolio.

Our business, operations and financial condition and results have been and may continue to be impacted by the COVID-19 pandemic. In fiscal 2020, we experienced significant and unpredictable reductions in both royalties and license fee revenue and product sales, primarily in our Medical Device business, as our customers were negatively impacted by the decline in the volume of elective procedures that resulted from the global healthcare system’s response to COVID-19. As fiscal 2021 has progressed, we are ~~derived from~~seeing a diminishing degree of Covid-related impacts to our ~~other coatings~~reported revenue. However, the extent to which the COVID-19 pandemic continues to impact the Company’s results of operations and financial condition will depend on future developments that are ~~protected by a number~~highly uncertain and cannot be predicted, including new information that may emerge concerning the severity and longevity of ~~patents~~COVID-19 and its variants, the resurgence of COVID-19 in regions that ~~extend~~have begun to ~~at least fiscal 2035.~~

~~Critical accounting policies are those policies that require~~recover from the ~~application of management’s most challenging, subjective or complex judgment, often as a result~~initial impact of the ~~need~~pandemic, the impact of COVID-19 on economic activity, and the actions to ~~make estimates about~~contain its impact on public health and the ~~effect~~global economy. For further information, refer to “Risk Factors” in Part II, Item 1A of matters that are inherently uncertain and may change in subsequent periods. Critical accounting policies involve judgments and uncertainties that are sufficiently likely to result in materially different results under different assumptions and conditions. For the nine months ended June 30, 2020, there were no significant changes in our critical accounting policies. For a detailed description of our other critical accounting policies and significant estimates, see Management’s Discussion and Analysis of Financial Condition and Results of Operations under Item 7 in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019.~~2020.

Revenue. Revenue for the ~~third~~second quarter of fiscal ~~2020~~2021 was ~~$26.9~~$35.0 million, an increase of ~~10.4%~~53.3%, as compared ~~with~~to the ~~third~~second quarter of fiscal ~~2019.~~2020. Revenue for the ~~nine~~first six months ~~ended June 30, 2020~~of fiscal 2021 was ~~$72.3~~$57.3 million, an increase of ~~4.4%~~26.1%, as compared ~~with the nine months ended June 30, 2019.~~to same prior-year period. The following is a summary of revenue by operating ~~segment.~~segment:

	Three Months Ended June 30,							Nine Months Ended June 30,							Three Months Ended March 31,							Six Months Ended March 31,
					%							%							%							%
(Dollars in thousands)	2020		2019		Change			2020		2019		Change
(In thousands)															2021		2020		Change			2021		2020		Change
Revenue
Medical Device	$	20,514	$	18,945		8.3	%	$	54,222	$	53,504		1.3	%	$	27,907	$	16,304		71.2	%	$	44,103	$	33,708		30.8	%
In Vitro Diagnostics		6,369		5,399		18.0	%		18,099		15,757		14.9	%		7,088		6,518		8.7	%		13,189		11,730		12.4	%
Total Revenue	$	26,883	$	24,344		10.4	%	$	72,321	$	69,261		4.4	%	$	34,995	$	22,822		53.3	%	$	57,292	$	45,438		26.1	%

Medical Device. Medical Device revenue was ~~$20.5~~$27.9 million in the ~~third~~second quarter of fiscal ~~2020,~~2021, an increase of ~~8.3% as~~71.2% compared ~~with $18.9~~to $16.3 million for the ~~third~~second quarter of fiscal ~~2019.~~2020. Medical Device revenue for the ~~nine~~six months ended ~~June 30, 2020~~March 31, 2021 was ~~$54.2~~$44.1 million, an increase of ~~1.3%~~30.8% as compared with ~~$53.5~~$33.7 million for the ~~nine~~six months ended ~~June 30, 2019.~~March 31, 2020.

~~Royalties~~Medical Device royalties and license fee revenue increased ~~6.7%~~143.9%, or ~~$0.8~~$11.8 million, for the ~~third~~second quarter of fiscal ~~2020~~2021 and ~~decreased 2.8%~~increased 60.0%, or ~~$(0.9)~~$11.0 million, for the first ~~nine~~six months of fiscal ~~2020, as~~2021, compared ~~with~~to the same ~~prior year~~prior-year periods. Abbott Agreement license fee revenue increased to ~~$7.6~~$12.5 million infor the ~~third~~second quarter of fiscal ~~2020, as~~2021, compared to ~~$2.0~~$1.5 million in the prior-year quarter, driven primarily by ~~$6.7~~$10.8 million in revenue recognized from ~~a $10.8~~the $15 million milestone payment received in the ~~third~~second quarter of fiscal ~~2020. In~~2021. For the first ~~nine~~six months of fiscal ~~2020~~2021 and ~~2019,~~2020, Abbott Agreement license revenue was ~~$10.4~~$13.8 million and ~~$5.9~~$2.8 million, respectively. Royalties revenue increased 11.3% to $7.5 million for the third quarter and first nine months of fiscal 2020 was significantly impacted by the reduction in procedures as a result of COVID-19. In addition, royalties revenue for the third quarter and first nine months of fiscal 2020 was negatively impacted by the previously communicated expiration of our fourth-generation hydrophilic patents, as well as by $1.0 million in revenue recognized in the thirdsecond quarter of fiscal ~~2019 associated with a license extension.~~

~~Research, development~~2021, compared to $6.7 million in the prior-year quarter, and ~~other~~royalties revenue ~~decreased $0.5 million for the third quarter of fiscal 2020 and decreased $0.8~~declined 1.5% to $15.4 million for the first ~~nine~~six months of fiscal ~~2020~~2021, compared to $15.6 million in the same prior-year period. Royalties revenue benefited from broad-based, year-over-year growth, most notably from our Serene coating customers. For the first six months of fiscal 2021, the year-over-year impact of the expiration our fourth-generation hydrophilic coatings was approximately $1.0 million, largely in the first quarter. With respect to the impacts of COVID-19, in the second quarter of fiscal 2021, we experienced the lowest degree of impact to royalties revenue since the onset of the pandemic.

Medical Device product sales of $5.4 million for the second quarter of fiscal 2021 were essentially flat compared to the same prior-year period. For the first six months of fiscal 2021, Medical Device product sales declined 4.8% to $10.0 million, compared to the same prior-year period. For both the second quarter and first six months of fiscal 2021, product sales benefited from recently commercialized medical device products, compared to the prior year, ~~periods. These decreases~~and conversely, were ~~due~~unfavorably impacted by softness in legacy balloon catheter sales volume. Products sales of chemical reagents in the second quarter of fiscal 2021 were consistent with the prior year. For the first six months of fiscal 2021, product sales were unfavorably impacted by lower demand for chemical reagents early in the fiscal period as our customers managed inventory levels that had previously been increased in response to ~~the timing of new product development projects with several of our contract R&D customers, as well as by a decline in coating services order volume as a result of~~ COVID-19.

In Vitro Diagnostics. In Vitro Diagnostics revenue increased ~~18.0%, or $1.0~~8.7% to a record $7.1 million for the ~~third~~second quarter of fiscal ~~2020~~2021 and increased ~~14.9%, or $2.3~~12.4% to $13.2 million for the first ~~nine~~six months of fiscal ~~2020, as~~2021, compared ~~with~~to the same ~~prior year~~respective prior-year periods. ~~For~~Revenue growth in both the ~~third quarter of fiscal 2020, the increase in revenue~~three- and six-month periods was driven by ~~continued~~broad-based demand for our microarray ~~DNA slide~~slide/surface products and development projects, as well as ~~by growth of~~for our protein ~~stabilizer~~stabilization and ~~BioFX~~^TMcolorimetric substrate reagent products. For the ~~first nine months~~second quarter of fiscal ~~2020, revenue~~2021, this growth was ~~driven~~partly offset by ~~increases in~~unfavorable order timing for our ~~microarray DNA slide products,~~ distributed antigen products.~~BioFX~~ ~~slide products and antigens.~~

Operating costs and expenses. Major costs and expenses as a percentage of total revenue were as follows:

	Three Months Ended June 30,										Nine Months Ended June 30,										Three Months Ended March 31,										Six Months Ended March 31,
	2020					2019					2020					2019					2021					2020					2021						2020
(Dollars in thousands)	Amount		% Total Revenue			Amount		% Total Revenue			Amount		% Total Revenue			Amount		% Total Revenue
(In thousands)																					Amount		% Total Revenue			Amount		% Total Revenue			Amount			% Total Revenue			Amount			% Total Revenue
Product costs	$	4,443		17	%	$	3,364		14	%	$	11,415		16	%	$	9,980		14	%	$	4,170		12	%	$	3,769		17	%		$	7,913		14	%		$	6,972		15	%
Research and development		13,324		50	%		13,321		55	%		37,401		52	%		38,362		55	%		12,875		37	%		11,935		52	%			23,757		42	%			24,077		53	%
Selling, general and administrative		7,416		28	%		5,939		24	%		21,092		29	%		16,764		24	%		7,907		23	%		6,733		30	%			14,930		26	%			13,676		30	%
Acquired intangible asset amortization		536		2	%		599		2	%		1,671		2	%		1,809		3	%		560		2	%		541		2	%			1,116		2	%			1,135		3	%

Product costs. Product gross ~~margin~~margins (defined as product ~~revenue~~sales less related product ~~costs) was 62.9% and 65.9%~~costs, as a percentage of product ~~revenue~~sales) were 65% and 68% for the ~~third~~second quarter of fiscal ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~66.2% of product revenue~~64% and 68% for ~~both~~ the first ~~nine~~six months of fiscal 2021 and 2020, ~~and 2019.~~respectively. For the ~~third~~second quarter of fiscal ~~2020,~~2021, product gross margins were impacted unfavorably by product mix with a shift to lower margin product lines. For the first six months of fiscal 2021, product gross margin was unfavorably impacted by ~~the shift in~~lower Medical Device ~~business product mix as growth in~~ revenue volume from ~~newly commercialized medical device products more than offset reductions~~a Covid-related decline in ~~order volume as a result~~sales of ~~COVID-19 procedure reductions. In~~coating reagents early in the ~~third quarter of~~ fiscal ~~2020, this decrease~~period. This was offset, in part, by the favorable impact of In Vitro Diagnostics from both ~~product mix and~~ leverage on higher revenue ~~volume. Gross margin for~~volume and product mix in the first ~~nine~~six months of fiscal ~~2020 was impacted by the same factors, however to a lesser degree by the unfavorable impact from Medical Device business product mix.~~2021.

Research and development ~~(R&D) expenses.~~(“R&D”) expense. ~~R&D expenses for~~For the ~~third~~second quarter of fiscal 2021, R&D expense increased 7.9%, or $0.9 million, compared the same prior-year quarter. For the first six months of fiscal 2021, R&D expense declined 1.3%, or $(0.3) million, compared the same prior-year period. R&D expense as a percentage of revenue was 37% and 52% for the second quarter of fiscal 2021 and 2020, ~~were essentially flat~~respectively, and 42% and 53% for the first six months of fiscal 2021 and 2020, respectively. The decline in R&D expense as a percentage of revenue reflects the impact of higher revenue in the second quarter and first six months of fiscal 2021, principally from the $10.8 million in license fee revenue recognized in the period upon receipt of the $15 million clinical report

milestone payment under the Abbott Agreement. Clinical trial spending and other costs related to our SurVeil DCB declined for both the second quarter and first six months of fiscal 2021, compared to the same respective prior-year ~~quarter and were 50%~~periods, with the progression of revenue, as compared with 55% of revenue for the same prior-year period. For the first nine months of fiscal 2020, R&D expenses decreased $1.0 million to 52% of revenue, as compared to 55% of revenue for the same prior-year period. Clinical trial spending decreased in the third quarter and first nine months of fiscal 2020, principally for the TRANSCEND clinical trial ~~for our~~ ~~SurVeil~~ ~~DCB with the progression~~ from ~~active enrollment in fiscal 2019 to~~ patient follow up in fiscal ~~2020. This decrease was partly offset by increased R&D expenses for personnel investments~~2020 to preparation of the clinical report and PMA submission in ~~quality, technical, regulatory,~~fiscal 2021. For both the second quarter and

~~proprietary product development, as well as current-year clinical trial expenses for~~ first six months of fiscal 2021, the~~first-in-human clinical study for our~~ ~~Sundance~~ ~~DCB.~~ prior-year fiscal 2020 period is an unfavorable comparison with respect to incentive compensation resulting from the uncertainty in the prior year at the onset of the Covid pandemic.

Selling, general and administrative ~~(SG&A) expenses.~~(“SG&A”) expense. ~~SG&A expenses increased $1.5 million to 28% of revenue for the third quarter of fiscal 2020, as compared with 24% of revenue for the same prior-year period.~~ For the first nine months of fiscal 2020, SG&A expenses increased $4.3 million to 29% of revenue, as compared with 24% of revenue for the same prior-year period. The increase in SG&A expenses for the third quarter and first nine months of fiscal 2020 was primarily driven by personnel and other investments to support product development and strategic initiatives. Also contributing to the increase in SG&A expense or the year-to-date period was a $0.6 million reduction to expense in the second quarter of fiscal ~~2019~~2021, SG&A expense increased 17%, or $1.2 million, compared the same prior year quarter. For the first six months of fiscal 2021, SG&A expense increased 9%, or $1.3 million, compared the same prior-year period. SG&A expense as a percentage of revenue was 23% and 30% for the second quarter of fiscal 2021 and 2020, respectively, and 26% and 30% for the first six months of fiscal 2021 and 2020, respectively. The decline in SG&A expense as a percentage of revenue reflects the impact of higher revenue in the second quarter and first six months of fiscal 2021, principally from the $10.8 million in license fee revenue recognized in the period upon receipt of the $15 million clinical report milestone payment under the Abbott Agreement. For both the second quarter and first six months of fiscal 2021, the prior-year fiscal 2020 period is an unfavorable comparison with respect to incentive compensation resulting from ~~a claim that was settled for less than~~ the ~~amount we had reserved.~~uncertainty in the prior year at the onset of the Covid pandemic.

Acquired intangible asset amortization. ~~As part of our fiscal 2016 acquisitions in our Medical Device business, we~~We have previously acquired certain intangible assets ~~which are being amortized over periods ranging from 4 to 14 years. In addition, we own certain~~through business combinations. Amortization expense on acquired intangible assets ~~related to the fiscal 2007 BioFx acquisition. Amortization expense~~ was consistent ~~with the prior-year period~~ for both the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2020.~~2021, compared the same respective prior-year periods.

~~Contingent consideration expense (gain)~~Other income (expense). ~~We recorded net expense of~~Other income was less than $0.1 million and net gain of $(0.2) million in the three and nine months ended June 30, 2019, respectively, related to contingent consideration liabilities from prior-year acquisitions. Fiscal 2019 gains related to changes in estimated probabilities of achievement of certain revenue and strategic milestones, partly offset by accretion expense. In the first quarter of fiscal 2020, we completed the final contingent consideration payment of $3.2 million to the sellers of NorMedix, Inc. (“NorMedix”).

~~Other (expense) income.~~ ~~Other (expense) income totaled less than $(0.1) million and $(0.2) million~~ for ~~the third quarter of fiscal 2020 and 2019, respectively, and $(0.1) million and $0.8 million for the first nine months of fiscal 2020 and 2019, respectively. In~~ the second quarter of fiscal 2021, compared to other expense of $(0.3) million for the second quarter of fiscal 2020.Other expense was $(0.2) million for both the first six months of fiscal 2021 and 2020. The second quarter and first six months of fiscal 2020 ~~we recognized~~includes a $0.5 million impairment loss on ~~our~~a strategic investment ~~in ViaCyte, Inc.~~ to reduce the carrying value to zero. InInvestment income declined in the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2020, investment income declined~~2021 relative to the prior year commensurate with ~~lower current-year~~a decline in interest rates. ~~Additionally, for~~Foreign currency gains (losses) were $0.1 million in gains in the second quarter of fiscal 2021, compared to less than $(0.1) million in losses in the same prior year quarter. For both the first ~~nine~~six months of fiscal 2021 and 2020, foreign currency losses were approximately $(0.1) million. Foreign currency gains (losses) result primarily from the impact of U.S. ~~dollar~~ to Euro ~~foreign~~exchange rate fluctuations on certain intercompany obligations. Foreign currency ~~fluctuations resulted~~gains (losses) reflect weakening (strengthening) of the Euro relative to the U.S. dollar in ~~losses in~~each respective period.

Income tax (provision) benefit. For the ~~current~~second quarter of fiscal ~~year and gains~~2021, income tax expense was $(1.4) million, compared to income tax benefit of $1.9 million in the same prior-year ~~period.~~

~~Income tax benefit~~.quarter. For the ~~third quarter~~first six months of fiscal ~~2020 and 2019, we recorded an~~2021, income tax expense was $(1.6) million, compared to income tax benefit of ~~$1.2~~$2.2 million ~~and $0.3 million, respectively. For~~in the ~~first nine months~~same prior-year period. The fiscal 2021 tax expense aligns with the year-over-year increase in pretax income, primarily driven by the receipt of fiscal 2020 and 2019, we recorded an income tax benefit of $3.4 million and $0.6 million, respectively. The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted on March 27, 2020 and includes significant business tax provisions. In particular, the ~~CARES Act modified the rules associated with net operating losses (“NOLs”).~~Abbott milestone payment. In the second quarter of fiscal 2020, we recorded a discrete tax benefit of $1.8 million as result of our ability under the ~~CARES~~Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), enacted in March 2020, to carry back ~~NOLs~~net operating losses incurred to periods when the statutory tax rate was 35% versus our current tax rate of 21%.

The Company’s effective tax rate reflects the impact of state income taxes, permanent tax items and discrete tax benefits, as well as operating results in Ireland, where tax expense or benefit is offset by a valuation allowance. The tax ~~benefits~~(expense) benefit recognized in the ~~three~~second quarter and ~~nine~~first six months ~~ended June 30,~~of fiscal 2021 and 2020 ~~and 2019~~ reflect expected full-year pre-tax operating results, impacted by our estimated U.S. federal R&D tax credit and by excess tax benefits related to stock-based compensation due to equity award exercise activity.

	Three Months Ended									Nine Months Ended									Three Months Ended						Six Months Ended
	June 30,									June 30,									March 31,						March 31,
(Dollars in thousands)	2020			2019			% Change			2020			2019			% Change
Operating income:
(In thousands)																			2021			2020			2021			2020
Operating income (loss):
Medical Device	$	532		$	753			(29	)%	$	(1,344	)	$	1,087			(224	)%	$	8,564		$	(1,453	)	$	7,971		$	(1,876	)
In Vitro Diagnostics		3,254			2,475			32	%		9,315			7,845			19	%		3,809			3,462			7,029			6,061
Total segment operating income		3,786			3,228						7,971			8,932						12,373			2,009			15,000			4,185
Corporate		(2,622	)		(2,211	)		19	%		(7,229	)		(6,338	)		14	%		(2,890	)		(2,165	)		(5,424	)		(4,607	)
Total operating income	$	1,164		$	1,017			15	%	$	742		$	2,594			(71	)%
Total operating income (loss)																			$	9,483		$	(156	)	$	9,576		$	(422	)

Medical Device. Our Medical Device business reported operating income of ~~$0.5~~$8.6 million and ~~$0.8~~an operating loss of $(1.5) million for the ~~third~~second quarter of fiscal ~~2020~~2021 and ~~2019,~~2020, respectively, representing ~~2.6%~~30.7% and ~~4.0%~~(8.9)% of revenue, respectively. For the first ~~nine~~six months of fiscal 2021 and 2020, ~~the~~our Medical Device business reported operating ~~losses~~income of ~~$(1.3)~~$8.0 million ~~or (2.5)~~and an operating loss of $(1.9) million, respectively, representing 18.1% and (5.6)% of revenue, ~~as compared with~~respectively. The year-over-year increase in royalties and license fees contributed $11.8 million and $11.0 million to operating income ~~of $1.1 million, or 2.0% of revenue, in the same prior-year period.~~

~~Product gross margins declined to 54.2% and 62.1%~~ for the ~~third~~second quarter and first ~~nine~~six months of fiscal ~~2020,~~2021, respectively, primarily as ~~compared with 66.7%~~result of the Abbott milestone payment as previously discussed.

Medical Device product gross margins were 58.8% and ~~62.6% in~~66.9% for the ~~same prior-year respective periods, due primarily to the unfavorable impact of fiscal 2020 product mix. In the third~~second quarter of fiscal 2021 and 2020, c~~ertain legacy medical device customers reduced order volume as a result~~respectively, and 56.5% and 66.5% for the first six months of ~~COVID-19,~~fiscal 2021 and 2020, respectively. For the second quarter of fiscal 2021, product gross margins were unfavorably impacted by product mix. For the first six months of fiscal 2021, product gross margins were unfavorably impacted by leverage on lower revenue volume ~~increased from initial orders of newly developed specialty catheter products.Operating~~and by product mix. Medical Device operating expenses, excluding product costs, increased ~~$0.7~~$1.2 million and ~~$2.2~~decreased $(0.3) million for the ~~third~~second quarter and first ~~nine~~six months of fiscal 2021 and 2020, ~~respectively. For~~respectively, compared to the ~~third quarter and first nine months of fiscal 2020, increases in SG&A to support our whole product solutions strategy were~~prior year, primarily driven by increased incentive compensation expense, partly offset by a decline in SurVeil-related R&D ~~from higher clinical study costs in fiscal 2019. SG&A increased in fiscal 2020 as we continue to invest in~~ commercial infrastructure to support upstream marketing and clinical evaluation activities associated with our cleared products, including additional headcount, to support our whole-product solutions strategy. For the first nine-months of fiscal 2020, the increase in SG&A expenses also ~~reflects the impacts of the prior-year $0.6 million expense reduction from a claim settlement and the prior-year $0.3 contingent consideration gain.~~expense.

In Vitro Diagnostics. Our In Vitro Diagnostics business reported operating income of ~~$3.3~~$3.8 million and ~~$2.5~~$3.5 million for the ~~third~~second quarter of fiscal ~~2020~~2021 and ~~2019,~~2020, respectively, representing ~~51.1%~~53.7% and ~~45.8%~~53.1% of revenue, respectively. For the first ~~nine~~six months of fiscal 2021 and 2020, ~~and 2019,~~our In Vitro Diagnostics business reported operating income ~~totaled $9.3~~of $7.0 million and ~~$7.8~~$6.1 million, respectively, representing ~~51.5%~~53.3% and ~~49.8%~~51.7% of revenue, respectively. Product gross margins were ~~71.0%~~69.5% and ~~69.9%~~68.9% in the ~~third~~second quarter fiscal 2021 and 2020, respectively, and 70.0% and 69.3% for the first ~~nine~~six months of fiscal 2021 and 2020, ~~respectively, compared to 65.3% and 69.3% in~~respectively. For the ~~same prior-year respective periods.~~ ~~Product~~second quarter of fiscal 2021, product margins benefited from the favorable impact of product mix. For the first six months of fiscal 2021, product gross margins ~~were favorably impacted by a shift in revenue mix towards products with relatively higher gross margins, as well as by~~benefited from leverage on higher revenue ~~growth.~~volume and the favorable impact of product mix.

Corporate. The Corporate category includes expenses for administrative corporate functions, such as executive, corporate accounting, legal, human resources and Board of Directors related fees and expenses, which have not been fully allocated to the Medical Device and ~~In Vitro Diagnostics~~IVD segments. Corporate ~~also includes~~operating expenses ~~such as litigation, which are not specific~~increased by $0.7 million and $0.8 million in the second quarter and first six months of fiscal 2021, respectively, compared to ~~a segment and thus not allocated~~the same prior-year periods, related primarily to ~~our operating segments.~~incentive compensation.

As of ~~June 30, 2020,~~March 31, 2021, working capital totaled ~~$72.2~~$77.3 million, an increase of ~~$11.0~~$9.6 million from September 30, ~~2019.~~2020. Working capital is defined by us as current assets minus current liabilities. Cash and cash equivalents and available-for-sale investments totaled ~~$60.6~~$70.0 million as of ~~June 30, 2020,~~March 31, 2021, an increase of ~~$5.3~~$8.9 million from ~~$55.3~~$61.1 million as of September 30, ~~2019.~~2020. This change was primarily driven by the ~~$10.8~~$15 million ~~SurVeil~~ ~~DCB~~clinical report milestone payment received ~~from~~under the Abbott ~~less the $3.2~~Agreement, partly offset by $2.7 million ~~contingent consideration payment related to the NorMedix acquisition, $2.6~~payments of accrued liabilities, $2.0 million in capital expenditures, ~~$2.4million cash payments for taxes related to net share settlement of equity awards,~~ and the $1.0 million payment to Embolitech, LLC as a result of the achievement of a contingent milestone in fiscal 2020.

Surmodics maintains access to capital to support liquidity and continued growth. In fiscal 2020, the Company entered into a secured revolving credit facility pursuant to a Loan and Security Agreement (the ‘‘Loan Agreement’’). The Loan Agreement provides for ~~acquisition~~availability of ~~in process R&D.~~

Inup to $25 million under a secured revolving line of credit. The outstanding balance on the ~~third quarter~~revolving credit facility was zero as of March 31, 2021. In fiscal 2020, the Company filed a universal shelf registration statement with the SEC as a matter of standard corporate governance to provide the flexibility to access public capital markets in order to respond to future business needs and opportunities. The shelf registration statement became effective on May 29, 2020 and allows the Company to offer potentially ~~offer~~ up to $200 million in debt securities, common stock, preferred stock, warrants, and other securities or any such combination of such securities in amounts, at prices, and on terms announced if and when the securities are ever offered.

The Company’s investment policy excludes ownership of collateralized mortgage obligations, mortgage-backed derivatives and other derivative securities without prior written approval of the Board of Directors. Our investments primarily consist of money market, corporate bond and commercial paper securities and are reported at fair value as available-for-sale investments totaling ~~$53.9~~$21.9 million as of ~~June 30, 2020.~~March 31, 2021. Our investment policy requires that no more than 5% of investments be held in any one credit or issue, excluding U.S. government and government agency obligations. The primary investment objective of the portfolio is to provide for the safety of principal and appropriate liquidity, while generating an above-benchmark (Barclays Short Treasury 1-3 Month Index) total rate of return on a pre-tax basis. ~~Management plans to continue to direct its investment advisors to manage the Company’s securities investments primarily for the safety~~

We believe that our existing cash and cash equivalents and available-for-sale investments, which totaled ~~$60.6~~$70.0 million as of ~~June 30, 2020,~~March 31, 2021, together with cash flow from operations, will provide liquidity sufficient to meet our cash needs and fund our operations and planned capital expenditures for the next twelve months. There can be no assurance, however, that our business will continue to generate cash flows at historic levels. Uncertainty related to the COVID-19 pandemic may cause us to seek additional funding to meet our operating needs. We cannot be certain that additional funding will be available on acceptable terms, if at all. If we do not have, or

~~are not able to obtain, sufficient funds, we may have to delay development or commercialization of our products or otherwise curtail our operations.~~

Cash Flow Operating ~~Results.~~ResultsThe following table is a summary of cash provided by (used in) operating, investing, and financing activities, the effect of exchange rate changes on cash and cash equivalents, and the net change in cash and cash equivalents:. Cash flow results were are as follows:

	Nine Months Ended						Six Months Ended
	June 30,						March 31,
(Dollars in thousands)	2020			2019
(In thousands)							2021		2020
Cash provided by (used in):
Operating activities		12,696			(4,482	)	$	11,745	$	1,257
Investing activities		(1,871	)		21,223			5,470		(10,749	)
Financing activities		(4,808	)		(11,475	)		143		(5,647	)
Effect of exchange rates on changes in cash and cash equivalents		8			(18	)		16		(14	)
Net change in cash and cash equivalents	$	6,025		$	5,248		$	17,374	$	(15,153	)

Operating Activities. Cash provided by operating activities totaled ~~$12.7~~$11.7 million for the first ~~nine months~~half of fiscal ~~2020,~~2021, compared to cash ~~used~~provided of ~~$4.5~~$1.3 million in the same prior-year period. Net income was ~~$4.1~~$7.8 million and ~~$4.0~~$1.6 million ~~during~~for the first ~~nine~~six months of fiscal ~~2020~~2021 and ~~2019,~~2020, respectively. Net changes in operating assets and liabilities reduced cash flows from operating activities by ~~$1.5~~$3.7 million and ~~$14.3~~$8.2 million during the first ~~nine~~six months of fiscal ~~2020~~2021 and ~~2019,~~2020, respectively. Significant changes in operating assets and liabilities affecting cash flows during these periods included:

~~Income~~In the prior-year period, income taxes also impacted cash provided by operating activities. ~~Primarily as~~As a result of the NOL carryback provisions of the CARES Act, enacted in March 2020, income tax receivable increased to ~~$4.9~~$4.3 million as of ~~June 30,~~March 31, 2020, as compared ~~with~~to $0.6 million as of September 30, 2019, and deferred income taxes decreased to ~~$5.6~~$4.8 million as of March 31, 2020, compared ~~with~~to $6.2 million as of September 30, 2019. In the current-year fiscal 2021 period, income tax receivable decreased to $1.7 million as of March 31, 2021, compared to $2.4 million as of September 30, 2020, and deferred income taxes decreased to $6.5 million as of March 31, 2021, compared to $7.3 million as of September 30, 2020.

Additionally, the portion of acquisition-related contingent consideration and other payments classified as reduction of cash flows from operations was $0.6 million ~~and $2.0 million~~ in the first ~~nine~~six months of fiscal 2020, ~~and 2019, respectively,~~ as it related to accretion expense, which increased these obligations from the acquisition date through settlement.

Investing Activities. Cash ~~used in investing activities totaled $1.9 million in the first nine months of fiscal 2020, as compared with cash~~ provided by investing activities totaled $5.5 million for the first six months of $~~21.2~~fiscal 2021, compared to cash used of $(10.7) million in the same prior-year period. ~~In the first nine months of fiscal 2020 and 2019, net~~Net purchases and maturities of available-for-sale investments were a source of cash of ~~$0.8~~$8.4 million in the first six months of fiscal 2021 and ~~$25.3~~a use of cash of $(8.4) million ~~respectively.~~in the first six months of fiscal 2020. In the first quarter of fiscal 2021, the Company paid $1.0 million for acquisition of intangible assets (patents) to the sellers of Embolitech, LLC as a result of the achievement of a contingent milestone in fiscal 2020. Capital expenditures for property, plant and equipment totaled ~~$2.6~~$2.0 million and ~~$4.1~~$2.3 million infor the first ~~nine~~six months of fiscal ~~2020~~2021 and ~~2019,~~2020, respectively.

Financing Activities. Cash ~~used in~~provided by financing activities totaled ~~$4.8~~$0.1 million ~~and $11.5~~for the first six months of fiscal 2021, compared to cash used of $(5.6) million in the same prior-year period. Issuance of common stock upon the exercise of stock options and vesting of other stock awards was a source of cash of $2.5 million and $0.3 million for the first ~~nine~~six months of fiscal ~~2020~~2021 and ~~2019,~~2020, respectively. ~~Contingent consideration payments of $3.2 million in~~In the first ~~nine~~six months of fiscal 2021 and 2020, ~~related to the NorMedix acquisition,~~ ~~with $0.6~~we paid $2.2 million and ~~$2.6 million classified as cash used by operating and financing activities, respectively. In the first nine months of fiscal 2019, we paid contingent consideration of $11.0 million related to the~~ ~~Creagh Medical acquisition, with $2.0 million and $9.1 million classified as cash used by operating and financing activities, respectively. In the first nine months of fiscal 2020 and 2019, we paid~~ $2.4 ~~million and $2.7~~ million, respectively, to purchase common stock to pay employee taxes resulting from the exercise of stock options and vesting of other stock awards.In the first ~~nine~~six months of fiscal 2020, ~~we paid $1.0~~contingent consideration payments totaled $3.2 million ~~to Embolitech, LLC~~ related to ~~our fiscal 2018~~the acquisition of NorMedix, Inc., with $0.6 million and $2.6 million classified as cash used in ~~process R&D.~~operating and financing activities, respectively.

We have agreements with a diverse base of customers and certain customers have multiple products using our technology. Abbott and Medtronic are our largest customers, comprising 19% and 14%, respectively, of our consolidated revenue for fiscal ~~2019.~~2020. These same customers each comprised ~~20%~~30% and ~~13%~~11%, respectively, of our consolidated revenue for the ~~nine~~six months ended ~~June 30, 2020, respectively.~~March 31, 2021. Revenue generated under our SurVeil DCB license agreement with Abbott represented 24% of total revenue for the six months ended March 31, 2021. Apart from the SurVeil DCB license, Abbott has several separately licensed products ~~including the~~ ~~SurVeil~~ ~~DCB license,~~ which generate royalties revenue for Surmodics, none of which represented more than ~~15%~~3% of total revenue for the ~~nine~~six months ended ~~June 30, 2020.~~March 31, 2021. Medtronic has several separately licensed products that generate royalties revenue for Surmodics, none of which represented more than 4%of our total revenue for the ~~nine~~six months ended ~~June 30, 2020.~~March 31, 2021. No other individual customer constitutes more than 10% of Surmodics’ total fiscal ~~2020~~2021 to date or fiscal ~~2019~~2020 revenue.

Our Board of Directors has authorized the repurchase of up to an additional $25.3 million of the Company’s outstanding common stock in open-market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, tender offers or by any combination of such methods. The authorization has no fixed expiration ~~date~~.date. No shares were repurchased in the six months ended March 31, 2021.

As of ~~June 30, 2020~~March 31, 2021 and September 30, ~~2019,~~2020, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical accounting policies are those policies that require the application of management’s most challenging, subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Critical accounting policies involve judgments and uncertainties that are sufficiently likely to result in materially different results under different assumptions and conditions. For the six months ended March 31, 2021, there were no significant changes in our critical accounting policies. For a detailed description of our other critical accounting policies and significant estimates, see Management’s Discussion and Analysis of Financial Condition and Results of Operations under Item 7 in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020.

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, expectations concerning: the impacts, duration and severity of the global COVID-19 ~~pandemic~~pandemic; clinical studies, the expected timing of their results, and the ~~effects~~potential timing of ~~responses to it on healthcare systems, the general economy,~~future clinical studies; our business ~~partners,~~ and ~~our operations; clinical studies; our~~ growth strategy, including our ability to ~~sign new license agreements,~~ conduct market evaluations, and bring new products to market; ~~investments to obtain clinical data, reduce the time from product development to commercialization, and drive clinician engagement with our products after approval to optimize adoption;~~ the development of future products and ~~receipt~~their anticipated attributes; anticipated regulatory submissions and approvals, including the expected timing thereof; the initiation or ~~pursuit~~continuation of product evaluation activities; revenue potential related to the potential commercial launch of the SurVeil™ drug-coated balloon (“DCB”) following its regulatory ~~clearance for~~approval; estimated revenue expected to be recognized in future ~~products; estimated~~periods; future revenue ~~recognition;~~growth and our future success; future gross margins and operating expenses; estimated future amortization expense; future operating lease maturities; recognition of unrecognized compensation costs; ~~the impact of~~anticipated patent expirations and their potential impacts on our ~~hydrophilic coatings~~ royalties revenue; expectation regarding specific product ~~development programs; various~~royalties portfolios; potential future customer actions; the potential for a future milestone ~~achievements;~~payment under our agreement with Abbott; research and development plans and expenses, including the estimated cost associated with the TRANSCEND clinical trial; future cash flow and sources of funding, and their ability together with existing cash, cash equivalents, and investments to provide liquidity sufficient to meet our cash needs and fund our operations and planned capital expenditures for the next twelve months; extension of our revolving credit facility; future property and equipment investment levels; plans regarding our securities investments; the impact of potential lawsuits or claims; the impact of potential change in raw material prices; the impact of Abbott, Medtronic, as well as other significant customers; our ability to recognize the expected benefits of our ~~acquisitions~~acquisitions; our estimated tax rate for fiscal 2021; the future impact of off-balance sheet arrangements and ~~the Company’s strategy~~contractual obligations, including future payments to ~~transform~~clinical research organizations; estimated revenue expected to ~~a provider of whole-product solutions; the timing, impact, and success of the clinical evaluation of the~~ ~~SurVeil~~ ~~DCB; fiscal 2020 income tax (benefit) expense;~~be recognized in future periods related to performance obligations that are unsatisfied for executed contracts; and the impact of the adoption of new accounting pronouncements. Without limiting the foregoing, words or phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “possible,” “project,” “will” and similar terminology, generally identify forward-looking statements. Forward-looking statements may also represent challenging goals for us. These statements, which represent ~~the Company’s~~our expectations or beliefs concerning various future events, are based on current expectations that involve a number of risks and uncertainties that could cause actual results to differ materially from those of such forward-looking statements. We caution that undue reliance should not be placed on such forward-looking statements, which speak only as of the date made. Some of the factors which could cause results to differ from those expressed in any forward-looking statement are set forth under “Risk Factors” in Part ~~II, Item 1A of this Quarterly Report on Form 10-Q and under “Risk Factors” in Part~~ I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019.~~2020. We disclaim any intent or obligation to update publicly these forward-looking statements, whether because of new information, future events or otherwise.

Although it is not possible to create a comprehensive list of all factors that may cause actual results to differ from our forward-looking statements, such factors include, among others:

Many of these factors are outside ~~the~~our control and knowledge ~~of us~~ and could result in increased volatility in period-to-period results. Investors are advised not to place undue reliance upon our forward-looking statements and to consult any further disclosures by us on this subject in our filings with the SEC.

Our investment policy requires investments with high credit quality issuers and limits the amount of credit exposure to any one issuer. Our investments consist principally of interest-bearing corporate debt securities with varying maturity dates, which are less than one year. Because of the credit criteria of our investment policies, the primary market risk associated with these investments is interest rate risk. We do not use derivative financial instruments to manage interest rate risk or to speculate on future changes in interest rates. As of ~~June 30, 2020,~~March 31, 2021, we held ~~$24.2~~$21.9 million in available-for-sale debt securities, ~~all with~~of which $17.8 million had maturity dates of less than one ~~year, therefore~~year. Therefore, interest rate fluctuations would have an insignificant impact on our results of operations or cash flows. Our policy also allows the Company to hold a substantial portion of funds in cash and cash equivalents, which are defined as financial instruments with original maturities of three months or less and may include money market instruments, certificates of deposit, repurchase agreements ~~corporate bonds~~ and commercial paper instruments.

Management believes that a reasonable change in raw material prices would not have a material impact on future earnings or cash flows because the Company’s inventory exposure is not material.

We are exposed to increasing Euro currency risk with respect to our manufacturing operations in Ireland. In a period where the U.S. dollar is strengthening or weakening ~~as compared with~~relative to the Euro, our revenue and expenses denominated in Euro currency are translated into U.S. dollars at a lower or higher value, respectively, than they would be in an otherwise constant currency exchange rate environment. All sales transactions are denominated in U.S. dollars or Euros. We generate royalties revenue from the sale of customer products in foreign jurisdictions. Royalties generated in foreign jurisdictions by customers are converted and paid in U.S. dollars per contractual terms. Substantially all of our purchasing transactions are denominated in U.S. Dollars or Euros. To date, we have not entered into any foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of adverse fluctuations in foreign currency ~~exchange.~~exchange rates.

The Company maintains disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company’s management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, referred to collectively herein as the Certifying Officers, carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of ~~June 30, 2020.~~March 31, 2021. Based on that evaluation, the Company’s Certifying Officers concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) were effective to ensure that information required to be disclosed by the Company in reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the Securities and Exchange Commission rules and forms, and to ensure that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its Certifying Officers, as appropriate, to allow timely decisions regarding required disclosures.

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) during the three months ended ~~June 30, 2020~~March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

From time to time, the Company has been involved in various legal actions involving its operations, products and technologies, including intellectual property and employment disputes.

~~The risks described below and those identified in~~In our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019,~~2020, filed with the SEC on December ~~3, 2019,~~2, 2020, we identify under ~~“Part~~Part 1, Item ~~1A. Risk~~1A, “Risk Factors” important factors which could affect our financial performance and could cause our actual results for future periods to differ materially from our anticipated results or other expectations, including those expressed in any forward-looking statements made in this Quarterly Report on Form 10-Q.

~~The COVID-19 pandemic has had an adverse effect on our business and results of operations and is expected to continue to~~There have ~~further adverse effects, which could be~~been no material ~~on our business, results of operations, financial condition, liquidity, and capital investments.~~

On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted supply chains and created significant volatility in financial markets. We have implemented business policies intended to protect our employees from the spread of COVID-19. Those policies include employees working from home when possible and employeeschanges in our ~~facilities increasing physical distancing.~~

~~On March 18, 2020,~~risk factors subsequent to the Centers for Medicare & Medicaid Services (“CMS”) released guidance for U.S. healthcare providers to limit non-emergent elective medical procedures other than high acuity treatments in order to conserve personal protective equipment and limit exposure to COVID-19. On April 16, 2020, the White House issued “Guidelines for Opening Up America Again” (the “White House Guidelines”) that described a phased resumption of economic activities with gating conditions for a region or state to move from one phase to another. On June 9, 2020, CMS issued recommendations for regions and states in Phase II of the White House Guidelines that non-emergent, non-COVID-19 care should be offered to patients, as clinically appropriate, in localities or facilities that have the resources to provide such care, as well as the ability to quickly respond to a surge in COVID-19 cases, if necessary.

Since the White House Guidelines and related CMS recommendations were issued, rates of COVID-19 have vacillated by region and state, in some cases surging. Accordingly, consistent with the CMS recommendations, the degree to which elective medical procedures have been offered varies by region, state, and even between healthcare systems within a state. Where elective procedures have been offered, and even for emergency procedures, some people appear to have avoided healthcare facilities, presumably out of concern for contracting COVID-19. Manyfiling of our ~~customers use our licensed technology and purchased materials to manufacture products used in procedures impacted by the guidance and recommendations. Based~~Annual Report on ~~the CMS guidance and recommendations, as well as industry data regarding elective procedures volumes, we adjusted the assumptions used in our royalties revenue recognition~~Form 10-K for the ~~quarters~~fiscal year ended ~~March 31, 2020 and June~~September 30, 2020, which resulted in reduced in royalties revenue in both periods relative to the revenue that would have been recognized under our prior assumptions. In addition to limiting medical procedures, hospitals and other healthcare providers vary in the degree to which they are permitting access to their facilities during the pandemic.2020.

In early July 2020, we suspended production for one week in one production work cell in our facility in Eden Prairie when two of the employees in the cell were identified as having COVID-19. The production suspension did not have a material impact on our operations and the cell has since resumed normal operations.

We cannot predict the duration or scope of the pandemic, actions that may be taken by governments and businesses in response to the pandemic, or the impacts of the pandemic on healthcare systems. The impacts of the pandemic may include, but not be limited to:

These and other factors relating to, or arising from, the pandemic could have material adverse effects on our business, results of operations, cash flows, financial condition, and capital investments. Actual or anticipated adverse effects on our cash flows or financial condition may lead us to seek additional funding. Any future debt financing into which we enter may impose upon us covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions. We cannot be certain that additional funding will be available on acceptable terms, if at all. If we do not have, or are not able to obtain, sufficient funds, we may have to delay development or commercialization of our products or otherwise curtail our operations. Any of these events could materially harm our business and operating results.

The Company did not purchase any of its common stock during the three months ended ~~June 30, 2020.~~March 31, 2021. As of ~~June 30, 2020,~~March 31, 2021, the Company had an aggregate of $25.3 million available for future common stock repurchases under an authorization approved by the Board of Directors for up to $20.0 million on November 6, 2015, all of which is remaining, and an authorization approved by the Board of Directors on November 5, 2014 of which $5.3 million is remaining. These authorizations for share repurchases do not have a fixed expiration date.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Minnesota	41-1356149
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, $0.05 par value		SRDX		Nasdaq Global Select Market

PART I. FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2218
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3127
Item 4.	Controls and Procedures	3228
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	3329
Item 1A.	Risk Factors	3329
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3429
Item 3.	Defaults Upon Senior Securities	3429
Item 4.	Mine Safety Disclosures	3429
Item 5.	Other Information	3429
Item 6.	Exhibits	3530
SIGNATURES		3631

	March 31, 2021
(In thousands)	Weighted Average Original Life (Years)		Gross Carrying Amount		Accumulated Amortization			Net
Definite-lived intangible assets:
Customer lists and relationships		8.9	$	13,359	$	(8,283	)	$	5,076
Developed technology		11.5		9,686		(4,659	)		5,027
Patents and other		14.1		3,551		(2,206	)		1,345
Total definite-lived intangible assets				26,596		(15,148	)		11,448
Unamortized intangible assets:
Trademarks and trade names				580		—			580
Total intangible assets			$	27,176	$	(15,148	)	$	12,028

	September 30, 2020
(In thousands)	Weighted Average Original Life (Years)		Gross Carrying Amount		Accumulated Amortization			Net
Definite-lived intangible assets:
Customer lists and relationships		8.9	$	13,356	$	(7,594	)	$	5,762
Developed technology		11.5		9,685		(4,200	)		5,485
Patents and other		14.1		3,551		(2,095	)		1,456
Total definite-lived intangible assets				26,592		(13,889	)		12,703
Unamortized intangible assets:
Trademarks and trade names				580		—			580
Total intangible assets			$	27,172	$	(13,889	)	$	13,283

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐	Emerging Growth Company	☐

	September 30, 2019
(Dollars in thousands)	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total Fair Value
Assets
Cash equivalents	$	—	$	24,375	$	—		$	24,375
Available-for-sale securities		—		24,931		—		$	24,931
Total assets	$	—	$	49,306	$	—		$	49,306

Liabilities
Contingent consideration	$	—	$	—	$	(3,200	)	$	(3,200	)
Total liabilities	$	—	$	—	$	(3,200	)	$	(3,200	)

	June 30, 2020
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Commercial paper and corporate bonds	$	24,161	$	17	$	—	$	24,178
Total	$	24,161	$	17	$	—	$	24,178

	March 31, 2021
	Valuation									Balance Sheet Classification
(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Current Assets		Noncurrent Assets
Commercial paper and corporate bonds	$	21,870	$	1	$	(8	)	$	21,863	$	17,792	$	4,071
Total	$	21,870	$	1	$	(8	)	$	21,863	$	17,792	$	4,071

(Dollars in thousands)	In Vitro Diagnostics		Medical Device		Total
Balance as of September 30, 2019	$	8,010	$	18,161	$	26,171
Currency translation adjustment		—		392		392
Balance as of June 30, 2020	$	8,010	$	18,553	$	26,563

Item 6. Exhibits		EXHIBIT INDEX
Exhibit		Description

2.1		Agreement of Merger dated January 18, 2005 among Surmodics, Inc., SIRx, InnoRx, et al. — incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K dated January 24, 2005.

2.2		Share Purchase Agreement by and among Surmodics, Inc. and the shareholders of Creagh Medical Ltd. dated as of November 20, 2015 — incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K ~~filed on~~dated November 27, ~~2015, SEC File No. 0-23837.~~

~~2.2~~		Put and Call Option Agreement by and among Surmodics, Inc. and the shareholders of Creagh Medical Ltd. dated as of November 20, 2015 — incorporated by reference to Exhibit 2.2 to the Company’s 8-K filed on November 27, 2015, SEC File No. 0-23837.2015.

2.3		Stock Purchase Agreement, dated January 8, 2016, ~~by and~~ among Surmodics, Inc. and the shareholders of NorMedix, Inc. and Gregg Sutton as Seller’s Agent — incorporated by reference to Exhibit 2.1 to the Company’s Form Current Report on Form 8-K filed on January 13, ~~2016, SEC File No. 0-23837.~~2016.

3.1		Restated Articles of Incorporation, as amended — incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q filed on July 29, ~~2016, SEC File No. 0-23837.~~2016.

3.2		Restated Bylaws of Surmodics, Inc., as amended December 18, 2015 — incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed on December 23, ~~2015, SEC File No. 0-23837~~2015..

31.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. Sec. 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer pursuant to 18 U.S.C. Sec. 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. Sec. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Chief Financial Officer pursuant to 18 U.S.C. Sec. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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~~August 5, 2020~~April 28, 2021	Surmodics, Inc.

	By:	/s/ Timothy J. Arens
		Timothy J. Arens
		Senior Vice President of Finance and Chief Financial Officer

		(duly authorized signatory and principal financial officer)