Pro-Dex Sales Surge 24% to $66.6M on Strong Medical Device Demand

TL;DR

PDEX is growing fast, but its over-reliance on a single customer makes it a high-risk, high-reward play.

AI Summary

PRO-DEX, INC. (PDEX) reported a significant increase in total sales for the fiscal year ended June 30, 2025, reaching $66.593 million, a 23.67% jump from $53.844 million in fiscal 2024. Medical device sales, the core of their business, rose to $47.747 million (72% of revenue) from $36.979 million (69% of revenue) in the prior year. Repairs revenue also saw growth, increasing to $18.586 million (28% of revenue) from $16.505 million (31% of revenue). The company's net income is not explicitly stated in the provided text, but the substantial revenue growth suggests a positive financial trajectory. Key business changes include the full operationalization of the 25,000 square foot Tustin, California facility, intended to provide additional capacity for expected future growth. A significant risk highlighted is customer concentration, with the top three customers accounting for 94% of sales in fiscal 2025, and one customer alone representing 75% of total sales. The strategic outlook involves continued investment in research and development, with expenses rising to $3.6 million in fiscal 2025 from $3.2 million in fiscal 2024, focusing on applying patented adaptive torque-limiting technology to new surgical applications and expanding capacity to achieve higher sales volumes.

Why It Matters

Pro-Dex's substantial revenue growth, driven by a 23.67% increase in total sales to $66.593 million, signals robust demand for its specialized medical devices, particularly in orthopedic, thoracic, and craniomaxillofacial markets. For investors, this indicates strong operational performance and potential for continued expansion, especially with the new Tustin facility fully operational. However, the extreme customer concentration, with one customer representing 75% of sales, poses a significant competitive risk, as the loss of this relationship could severely impact the company's financial health. Employees benefit from the company's growth and commitment to human capital, evidenced by a lower turnover rate of 16% in fiscal 2025 compared to 21% in fiscal 2024, and comprehensive benefits. Customers gain from Pro-Dex's continued investment in R&D and capacity, ensuring advanced and reliable surgical devices.

Risk Assessment

Risk Level: high — The company faces a high risk due to extreme customer concentration, with its top three customers accounting for 94% of sales in fiscal 2025, and one single customer representing 75% of total sales. Any disruption or termination of this primary relationship, as evidenced by a temporary hold on shipments in Q3 fiscal 2025, could severely impact revenue and profitability.

Analyst Insight

Investors should carefully weigh Pro-Dex's impressive revenue growth against its significant customer concentration risk. Consider diversifying positions or waiting for evidence of broader customer acquisition before making a substantial investment, as the stock is highly susceptible to changes in its relationship with its largest customer.

Financial Highlights

revenue

$66.593 million

revenue Growth

+23.67%

Revenue Breakdown

Key Numbers

• $66.593 million — Total Sales (Increased by 23.67% from $53.844 million in fiscal 2024)
• $47.747 million — Medical Devices Revenue (72% of total revenue in fiscal 2025, up from $36.979 million (69%) in fiscal 2024)
• 75% — Sales from Largest Customer (Represents significant customer concentration in fiscal 2025)
• 94% — Sales from Top Three Customers (Indicates high customer concentration in fiscal 2025)
• $3.6 million — Research and Development Expenses (Increased from $3.2 million in fiscal 2024, showing continued investment)
• $50.4 million — Backlog at June 30, 2025 (Significantly increased from $19.8 million at June 30, 2024, indicating future revenue potential)
• 181 — Total Employees (As of June 30, 2025, up from 148 employees in fiscal 2024)
• 16% — Employee Turnover Rate (Decreased from 21% in fiscal 2024, indicating improved employee retention)

Key Players & Entities

• PRO-DEX, INC. (company) — registrant
• PDEX (company) — trading symbol
• NASDAQ Capital Market (regulator) — exchange where common stock is registered
• U.S. Securities and Exchange Commission (regulator) — filing oversight
• U.S. Food and Drug Administration (regulator) — medical device regulation
• State of California Device Manufacturing License (regulator) — state medical device regulation
• Portescap (company) — key supplier
• Fischer Connectors (company) — key supplier
• Tadiran Batteries (company) — key supplier

FAQ

Risk Factors

• Customer Concentration [high — financial]: In fiscal 2025, the top three customers accounted for 94% of sales, with the largest customer representing 75%. While the largest customer has commitments through calendar 2025 and orders for 2026, there's no assurance of future commitments beyond that, posing a significant risk to revenue and operations.
• Dependence on Core Business [high — operational]: 99% of revenue in fiscal 2025 was derived from medical device products and related services. Failure to meet the increasingly sophisticated needs of customers in this core area could materially impact financial performance.
• Reliance on Distributors [medium — operational]: The company primarily sells to medical device distributors. Any disruption or change in relationships with these distributors could adversely affect sales and market access.
• Technological Obsolescence [medium — market]: The medical device market is characterized by rapid technological advancements. Failure to innovate and adapt patented technologies to new surgical applications could lead to a loss of competitive advantage.
• Capacity Expansion Risks [medium — operational]: The company has invested in a new 25,000 square foot facility to support growth. Risks associated with fully operationalizing this facility, including verification, validation, and achieving expected capacity, could impact future growth.
• Cybersecurity Threats [medium — cybersecurity]: As a technology-focused company, Pro-Dex is exposed to cybersecurity risks. A breach could compromise sensitive data, disrupt operations, and damage reputation.

Industry Context

Pro-Dex operates in the medical device market, specifically focusing on surgical drivers and shavers for orthopedic, thoracic, and craniomaxillofacial procedures. The industry is characterized by rapid technological advancements and a strong emphasis on product performance, reliability, and sterilization capabilities. Key trends include the development of minimally invasive surgical tools and the integration of advanced technologies like torque-limiting software to enhance patient safety and surgical outcomes.

Regulatory Implications

As a manufacturer of medical devices, Pro-Dex is subject to stringent regulations from bodies like the FDA. Compliance with quality system regulations (QSR) and good manufacturing practices (GMP) is critical. Any failure to meet these standards could result in product recalls, fines, or suspension of manufacturing, significantly impacting operations and market access.

What Investors Should Do

1. Monitor customer concentration closely.
2. Evaluate the success of the Tustin facility expansion.
3. Assess R&D investment effectiveness.
4. Consider the backlog as a leading indicator.

Key Dates

• 2025-06-30: Fiscal Year End — Reported total sales of $66.593 million, a 23.67% increase from the prior year. Top three customers accounted for 94% of sales, with the largest at 75%.
• 2025-06-30: Backlog reported — Backlog stood at $50.4 million, a substantial increase from $19.8 million in the prior year, indicating strong future revenue potential.
• 2025-06-30: Employee count and turnover — Total employees reached 181, up from 148. Employee turnover rate decreased to 16% from 21%, suggesting improved retention.
• 2025-06-30: R&D Expenses — R&D expenses increased to $3.6 million from $3.2 million, reflecting continued investment in technology and new applications.
• 2023-XX-XX: Full operationalization of Tustin facility — The 25,000 sq ft facility is now fully operational, providing additional capacity for expected future growth.

Glossary

Autoclavable

Designed to withstand sterilization processes using an autoclave, which involves high-pressure saturated steam. (Crucial for surgical instruments that require sterile environments, indicating the intended use and quality standards of Pro-Dex's products.)

Adaptive Torque-Limiting Technology

A patented technology that controls the rotational force (torque) applied by a surgical driver, preventing over-tightening and potential damage to tissue or bone. (A key differentiator for Pro-Dex, driving demand in specialized surgical markets like orthopedic, thoracic, and CMF.)

Craniomaxillofacial (CMF)

A surgical specialty focused on treating conditions affecting the bones and tissues of the skull, face, and jaws. (One of the primary markets for Pro-Dex's surgical drivers, highlighting the company's focus on specialized medical applications.)

De Minimis

A Latin term meaning 'of minimal importance' or 'too small to be significant'. (Used to describe the rotary air motor business, indicating it represents an insignificant portion of Pro-Dex's overall revenue.)

Fiscal Year

A 12-month period that a company uses for accounting purposes. For Pro-Dex, it ends on June 30. (Essential for understanding the timeframes of financial reporting and performance comparisons.)

Year-Over-Year Comparison

Fiscal year 2025 shows robust revenue growth of 23.67% to $66.593 million, driven primarily by the core medical device segment. While repairs revenue also grew, its share of total revenue decreased. A significant positive development is the substantial increase in backlog to $50.4 million, indicating strong future demand. Employee retention has improved, with turnover dropping from 21% to 16%, and the company has expanded its workforce to 181 employees. R&D investment has also increased to $3.6 million. The primary risk factor of customer concentration remains high, with the top three customers accounting for 94% of sales, though the company has made progress in operationalizing its new Tustin facility to support growth.

Key Financial Figures

• $50.4 million — At June 30, 2025, we had a backlog of $50.4 million compared with a backlog of $19.8 millio
• $19.8 million — 50.4 million compared with a backlog of $19.8 million at June 30, 2024. Our backlog represent
• $3.6 million — h and development expenses amounting to $3.6 million and $3.2 million, respectively, which c
• $3.2 m — expenses amounting to $3.6 million and $3.2 million, respectively, which costs exclud
• $73,000 — r and related expenses of approximately $73,000 and $224,000 in fiscal 2025 and 2024, r
• $224,000 — d expenses of approximately $73,000 and $224,000 in fiscal 2025 and 2024, respectively,

Filing Documents

• pdex_10k-063025.htm (10-K) — 1206KB
• ex4x1.htm (EX-4.1) — 8KB
• ex19x1.htm (EX-19) — 38KB
• ex21.htm (EX-21) — 2KB
• ex23.htm (EX-23) — 2KB
• ex31x1.htm (EX-31.1) — 9KB
• ex31x2.htm (EX-31.2) — 10KB
• ex32.htm (EX-32) — 5KB
• 0001079973-25-001426.txt ( ) — 6389KB
• pdex-20250630.xsd (EX-101.SCH) — 53KB
• pdex-20250630_cal.xml (EX-101.CAL) — 68KB
• pdex-20250630_def.xml (EX-101.DEF) — 144KB
• pdex-20250630_lab.xml (EX-101.LAB) — 386KB
• pdex-20250630_pre.xml (EX-101.PRE) — 314KB
• pdex_10k-063025_htm.xml (XML) — 1042KB

of this

Part III of this report incorporates by reference certain information from the registrant's definitive proxy statement (the "Proxy Statement") for its 2025 Annual Meeting of Shareholders. The Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates. PRO-DEX, INC. FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 2025 TABLE OF CONTENTS PAGE PART I ITEM 1.

BUSINESS

BUSINESS 1 ITEM 1A.

RISK FACTORS

RISK FACTORS 6 ITEM 1B. UNRESOLVED STAFF COMMENTS 13 ITEM 1C. CYBERSECURITY 13 ITEM 2.

PROPERTIES

PROPERTIES 13 ITEM 3.

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS 13 ITEM 4. MINE SAFETY DISCLOSURES 13 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 14 ITEM 6. RESERVED 14 ITEM 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 15 ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 22 ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 23 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 50 ITEM 9A.

CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES 50 ITEM 9B. OTHER INFORMATION 51 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 51 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 52 ITEM 11.

EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION 52 ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 52 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 52 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 52 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 53 ITEM 16. FORM 10–K SUMMARY 55

SIGNATURES

SIGNATURES 56 i PART I CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report contains forward-looking the Company's expectations, estimates or projections concerning future results or events. These statements generally can be identified by the use of forward-looking words or phrases such as "believe," "expect," "anticipate," "may," "could," "intend," "intent," "belief," "estimate," "project," "forecast," "plan," "likely," "will," "should" or similar words or phrases. These statements are not guarantees of performance and are inherently subject to known and unknown risks, uncertainties, and assumptions that are difficult to predict and could cause actual results, performance, or achievements to differ materially from those expressed or indicated by those statements. The Company cannot assure you that any of its expectations, estimates or projections will be achieved.

Forward-looking statements

Forward-looking statements included in this report are only made as of the date of this report and the Company disclaims any obligation to publicly update any forward-looking Numerous factors could cause the Company's actual results and events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: loss of a significant customer, entry of new and stronger competitors, capital availability, unexpected costs, compliance with contractual obligations, failure to capitalize upon access to new customers, the ramifications of industry consolidation of medical products manufacturers, dealers and distributors, failure to mitigate supply chain issues, market acceptance and support of new products, cancellation of existing contracts, customer "in house" production of products previously designed by and/or acquired from the Company, invalidity or unenforceability of the Company's patents and other intellectual property, maintaining favorable supplier relationships, the Company's ability to engage qualified human resources as needed, regulatory compliance, general economic conditions, and other factors described under Item 1A (Risk Factors) of this report. This list of factors is illustrative, but by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

BUSINESS

ITEM 1. BUSINESS Company Overview Pro-Dex, Inc. ("Company," "Pro-Dex," "we," "our," "us") specializes in the design, development, and manufacture of autoclavable, battery-powered and electric, multi-function surgical drivers and shavers used primarily in the orthopedic, thoracic, and craniomaxillofacial ("CMF") markets. We have patented adaptive torque-limiting technology and proprietary sealing solutions which appeal to our customers, primarily medical device distributors. We also manufacture and sell rotary air motors to a wide range of industries; however, these motors comprise a de minimis portion of our business. Our patented adaptive torque-limiting software has been very well received in the CMF and thoracic markets and we have continued investment in this area with research and development focused on applying this technology to other surgical applications. In November 2020, we purchased an approximate 25,000 square foot industrial building in Tustin, California (the "Franklin Property"). This building is located approximately four miles from our Irvine, California headquarters and was acquired to provide us additional capacity for our expected continued future growth. We substantially completed the build-out of the property during fiscal 2022 and concluded various verification and validation activities during fiscal 2023. We moved our entire assembly and repairs operations to the new facility in the fourth quarter of fiscal 2023 and we are now fully operational in the new facility. We believe the new facility will create additional capacity for our expected continued growth over the next several years. 1 O ur principal headquarters are located at 2361 McGaw Avenue, Irvine, California 92614 and our phone number is 949-769-3200. Our Internet address is www.pro-dex.com . Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports, and certain other Securities and Exchange Commission ("SEC")

RISK

ITEM 1A. RISK FACTORS Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors, as well as the other information contained in this report, before deciding whether to invest in shares of our common stock. If any of the following risks actually occur, our business, financial condition, operating results, and prospects would suffer. In that case, the trading price of our common stock would likely decline and you might lose all or part of your investment in our common stock. The risks described below are not the only ones we face. Additional risks that we currently do not know about or that we currently believe to be immaterial may also impair our operations and business results. Risks Related to Our Business and the Industry in Which We Operate A substantial portion of our revenue is derived from a few customers. If we were to lose a key customer, it would have a material adverse effect on our business, financial condition, and results of operations. In fiscal 2025, our top three customers accounted for 94% of our sales, with our current largest customer accounting for 75% of our sales. This customer has made purchase commitments to us through a supply agreement to purchase surgical handpieces through calendar 2025, and has placed purchase orders for deliveries in 2026, but there can be no assurance that this customer will extend purchase commitments to us beyond that date. The loss of, or a material reduction in purchases from, this customer or any of our other significant customers would severely impact us, including having a material adverse effect on our business, financial condition, cash flows, revenue, and results of operations. A substantial portion of our business is derived from our core business area that, if not serviced properly, may result in a material adverse impact upon our business, financial condition, and results of operations. In fiscal 2025, we derived 99% of our revenue from

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