AngioDynamics, Inc. Price & Performance (ANGO)

The company will also discuss certain non GAAP and pro form a financial measures during this call. Management uses these measures to establish operational goals and review operational performance and believes that these measures may assist investors in analyzing the underlying trends in the company's business over time. Investors should consider these non GAAP and pro form a measures in addition to not as a substitute for, or as superior to financial reporting measures prepared in accordance with GAAP. A slide package offering insight into the company's financial results is also available the Investors section of the company's website under Events and Presentations. This presentation should be read conjunction with a press release discussing the company's operating results and financial performance during this morning's conference call. Now I'd like to turn the call over to Jim Clemmer, AngioDynamics' President and Chief Executive Officer. Mr. Clemmer?

Thank you, operator. Good morning, everyone, and thank you for joining us AngioDynamics fiscal twenty twenty five third quarter earnings call. Joining me on today's call is Steve Trowbridge, AngioDynamics' Executive Vice President and Chief Financial Officer. I will begin today's call by providing an overview of our recent performance Steve will then provide a detailed analysis of our third quarter financial performance including our increased guidance and I will conclude with our outlook. For the balance of the year before opening the line for questions. Unless otherwise noted, all financial results and growth rates mentioned during today's call are on a pro form a basis which exclude the results of the dialysis and BioSentry businesses that we divested in June 2023 the pick and midline products that we divested in February 2024. And the radio frequency and Cintrax support catheter products that we discontinued in February 2024. Our third quarter was very strong as momentum we developed during the first half of the year continued. Total worldwide revenue was $72,000,000 representing growth of over 9% year over year. Our MedTech segment had yet another excellent quarter growing 22% led by growth across all of our platforms. Beyond the top line, we continued to show strong results with respect to profitability reporting yet another quarter of improving gross margins, and positive adjusted EBITDA.

Our performance continues to highlight that our strategy to drive profitable growth in our high margin large medtech markets is tracking ahead of plan. Resulting our decision to increase guidance for the year for total revenue, MedTech growth, gross margin, adjusted EBITDA, and adjusted EPS. Which Steve will touch upon shortly. Now with an update on our medtech business. AURYON continued its sustained delivery of solid results, growing approximately 17% over the prior year, We have consistently driven revenue growth. By leveraging our superior technology to take share including increasing penetration in the hospital market. Turning to our mechanical thrombectomy business, we are very encouraged by the performance of both AlphaVac and 47% over the second quarter of last year, And we believe it further validates the strength of this broad innovative portfolio. AngioVac and Alphavac together provide AngioDynamics with an unparalleled product portfolio option and we continue to realize commercial adoption synergies between these two product lines. Beginning with Alphavac, we saw solid performance in the quarter, with revenue increasing by over 160%. For the fourth quarter in a row, Alphavac has seen sequential growth highlighting its accelerating adoption for treating PE. We continue to see positive utilization trends within existing customer accounts And just as importantly, we have made significant strides in growing the number of new customers reviewing Alphavac within their hospital value analysis committees.

Turning to AngioVac. We maintained the strength that we exhibited in our second fiscal quarter. AngioVac contributed revenue of $6,800,000 representing 23% growth. Over the prior year period. AngioVac is a unique product with a compelling value proposition. In addition, as we noted last quarter, Alphavax PE indication has proven to become a positive catalyst for AngioVac and our combined mechanical thrombectomy portfolio. We expect to see continued increasing adoption going forward. Helping to drive sustained growth throughout this portfolio. With AURYON and our mechanical thrombectomy product offerings taken together, we believe that we have one of the most innovative cardiovascular portfolios available today. We are excited to provide a deeper dive into that portfolio and our plans for the future during our virtual cardiovascular technology event following this earnings call. Lastly, within our MedTech segment is NanoKnife, With all of the progress made in calendar year 2024, we are in a tremendous position to drive more widespread adoption particularly within the urology community as NanoKnife represents a meaningful advancement in prostate cancer treatment. In the quarter, we continued to be encouraged by trends in the adoption and utilization of Nanomite evidenced by over 16% growth in probe revenue during the quarter.

Having received an expanded indication for the NanoKnife system, for prostate tissue ablation from the FDA, in early December of twenty twenty four. We are able to more proactively market educate, and train for the procedure in ways that we have been previously unable to do so.

A key component of our marketing and educational efforts is leveraging high quality data generated during our PRESERVE clinical study. PRESERVE made its primary effectiveness endpoint demonstrating the performance of the NanoLife system for the ablation of prostate tissue in patients with intermediate risk prostate cancer. And just as importantly, the study demonstrated extremely compelling quality of life outcomes. We are very encouraged by the interest we have seen for NanoLife post FDA clearance. It is important to highlight that the expanded indication was contemplated in our guidance for fiscal twenty twenty five. And that we don't expect to see a material inflection in a projected performance or in the adoption utilization until our recently approved CPT one code goes into effect and payers adopt coverage. The new codes will be effective on January 1, of next calendar year. As you are aware, reimbursement and coverage is a highly complex process encompassing many stakeholders. We will continue to work diligently with our market access team on coverage coding, payment initiatives striving to ensure that reimbursement will be widely available across both commercial and private payers. In advance of that effective date. Now turning to our med device segment. Revenue was $40,700,000 an increase of approximately 1% over last year.

We were very pleased with the execution of this team returning med device segment. To growth. Beyond our commercial execution, we completed another illustration of our sustained profitability. We reported adjusted EBITDA of $1,300,000 during the third quarter compared to a loss of $3,600,000 during the third quarter of fiscal twenty twenty four. In the quarter, adjusted EPS was a loss of $0.8 per share, improving from a loss of $0.16 per share in fiscal twenty twenty four. Before turning the call over to Steve for a financial review, I want to highlight the tremendous work being done by our clinical and regulatory teams, to generate high quality clinical data supporting broader adoption of our technologies. With AURYON, in January, we launched our ambition BTK trial and registry with the BTK standing for below the knee. As a reminder, the AURYON laser can be used to treat all lower extremity lesion types. Including below the knee, above the knee, and in stent restenosis. This trial will evaluate clinical outcomes when treating patients suffering from critical limb ischemia below their knee using AURYON in combination with standard balloon angioplasty. We believe this rigorous trial which builds upon our earlier AURYON BTK study, could demonstrate an important advancement in the evidence supporting the benefits of Ariane's laser atherectomy in achieving Acute And Long Term Procedural Success In A US market where there is an unmet need.

Potentially driving increased adoption of AURYON. Additionally, we're very pleased with the publication of the APeX AV trial results in JSky which validated the safety, efficacy, and efficiency of our AlphaVac F1885 system. For pulmonary embolism treatment. We are very excited about our performance During the third quarter, and throughout fiscal twenty twenty five. Through a combination of continued investment in top line growth, and operational efficiency initiatives we have accelerated our march to profitability. We remain in a fantastic position to drive widespread adoption of our portfolio to meet the evolving demands of healthcare providers and patients while at the same time creating value for our shareholders. With that, I'll turn the call over to Steve Trowbridge, our Executive Vice President Chief Financial Officer to review the quarter. Thanks, Jim. Good morning, everybody.

Before I begin, I'd like to direct everyone to the presentation on our Investor Relations Web site summarizing the key items from our quarterly results. As Jim mentioned, unless otherwise noted, all metrics and growth rates mentioned during today's call are on a pro form a basis. Which exclude the results of the dialysis and BioSentry businesses that we divested in June 2023, PIK and midline products that we divested in February 2024 and the radio frequency and Syntrex support catheter products that we discontinued in February 2024. Additionally, unless otherwise noted, all comparisons will be the third fiscal quarter of twenty twenty five versus the third fiscal quarter of twenty twenty four. Revenue increased 9.2% to $72,000,000 driven by growth in both our medtech and U. S. Med device platforms. Medtech revenue was 31,300,000.0 a 22.2% increase while med device revenue was 40,700,000.0 a 0.9% increase. For the third quarter, our medtech platforms comprised 44% of our total revenue compared to 39% of total revenue a year ago, illustrating sustained execution on our strategy of increasing the percentage of our overall revenue base coming from our MedTech segment. Our AURYON platform contributed $13,900,000 in revenue, growing 17.3% compared to last year.

And Aireon has now delivered double digit year over year growth in each of the 15 consecutive quarters following the anniversary of its launch. Mechanical thrombectomy revenue, which includes Alphavac and AngioVac sales, increased 46.7% year over year, AlphaVac revenue was 3,000,000 an increase of 161.4% year over year and a 20% sequential increase over the second quarter of twenty twenty five. Resulting from the continued adoption of AlphaVac for PE, And we're also pleased to see the sustained strong performance of AngioVac during the which generated $6,800,000 of revenue an increase of 23.1%. As Jim mentioned, we're continuing to see synergies between the two product offerings demonstrating our ability to take share in a highly competitive market. Total NanoKnife revenue was 6,300,000.0 an increase of 5.3%. NanoKnife's disposable revenue during the quarter increased 16.2%. As we've discussed throughout the year, we expected capital sales during this year to be approximately half of what they were in 2024. The capital sales are performing better than expected declining 21.6% during the quarter and down 26.5% year to date. We're particularly pleased with the trajectory of prostate cases in the quarter and are on track for our projections for NanoKnife for the full year.

As a reminder, while we expect to see increasing contribution from NanoKnife following the positive reimbursement decision and prostate indication received towards the end of calendar [indiscernible] these milestones were built into our expectations for FY 'twenty five and are already reflected in our guidance for the year. Moving down the income statement, gross margin was 54% an increase of two ninety basis points compared to the year ago period and ahead of our expectations for the quarter. MedTech gross margin was 62.5% an increase of 100 basis points, primarily driven by mix associated with increased AngioVac revenue and AURYON's increasing penetration into the hospital side of care. Med device gross margin was 47.4%. In a moment, I will discuss our increased guidance for the balance of our fiscal year including our increased expectations for gross margins. I do want to take a quick moment to discuss the macro environment and potential tariffs. We're keeping a close eye on the ever evolving tariff situation, and like most of you, we don't have a concrete projection on where this will all end. While we do have a small amount of subcomponent suppliers that may become subject to tariffs, we do not believe today that tariffs will materially impact our business.

And we've historically manufactured the vast majority of our products in The U. S. And most of our suppliers are also U. S. Based. Currently executing on our manufacturing transition plan, but plan has never included moves to areas such as Mexico or China. We'll continue to monitor this dynamic situation and provide appropriate updates as they develop with any clarity. Turning to R and D, research and development expense was $6,900,000 or 9.6% of sales compared to $8,100,000 or 12.2% of sales a year ago. The year over year decrease is primarily related to timing including the completion of our PRESERVE and APeX clinical studies. We remain committed to investing in R and D initiatives to support the long term growth of our medtech segment and are targeting approximately 10% of sales going forward. SG and A expense was $36,000,000 representing 50% of sales compared to $34,200,000 or 51.9% of sales a year ago. Our adjusted net loss was 3,100,000.0 or an adjusted loss per share of $08 compared to an adjusted net loss of 6,500,000.0 or adjusted loss per share of $0.16 in the third quarter of last year. The year over year improvement is largely attributable to higher revenue and improving operating leverage during the third quarter of this year.

Adjusted EBITDA was 1,300,000.0 compared to a loss of $3,600,000 in the prior year. Turning now to an update on our balance sheet, At 02/28/2025, we had $44,800,000 in cash and cash equivalents. In the quarter, we used $13,200,000 in operating cash, had capital expenditures of 1,800,000.0 and additions to AURYON placement and evaluation units of 1,400,000.0 As expected, we utilized total cash on the balance sheet of approximately $10,000,000 largely driven by scheduled payments associated with the settlement of our patent litigation with BD Bard that we executed last year working capital usage connected with our transition manufacturing arrangement with Spectrum Vascular. The company we sold our pick and midline business to in February of last year. In the fourth quarter, we expect to generate cash and end the year with approximately $55,000,000 in cash and cash equivalents. The primary variable associated with our cash projection is related to the transition manufacturing arrangement I just mentioned. We discussed on our last earnings call, subsequent to our third quarter end, we secured a commitment from JPMorgan to provide us with a revolving line of credit agreement. We expect to close this facility in the next few weeks which will give us the ability to draw up to $25,000,000 in cash at our discretion.

While we are very comfortable with the amount of cash we have on the balance sheet, we view the addition of a revolver as a matter of prudent financial housekeeping and a good safety net to ensure that any short term working capital fluctuations associated with the spectrum transition manufacturing agreement doesn't impact our execution on our strategy. We believe that this revolver will further bolster our balance sheet and provides for increased flexibility and optionality at a relatively low cost of capital and zero dilution. Finally, we remain on track with our stated goal of being cash flow positive for the full fiscal year 2026.

We're very pleased with our execution in managing our balance sheet through our strategic transition a dynamic macro environment. We're in a very strong position driving double digit growth in our MedTech segment with sufficient net cash position on our balance sheet a P and L that is delivering positive adjusted EBITDA each quarter and an overall business model that will generate positive cash for the upcoming year and beyond. Turning now to guidance, For fiscal twenty twenty five, we now expect revenue will be in the range of $285,000,000 to $288,000,000 representing growth of between 5.36.4% over fiscal year twenty twenty four. Within each of our businesses, we now expect MedTech net sales to grow in the range of 14% to 16% ahead of our previously updated guidance of 12% to 15% and we continue to expect Med Device net sales to be flat. From a quarterly cadence perspective, we expect the fourth quarter to be the strongest of the fiscal year. For fiscal twenty twenty five, we now expect gross margin to be in the range of 53% to 54%, up from the previous guidance of 52% to 53%. We now expect adjusted EBITDA in the range of $4,000,000 to 5,000,000 up from the previously updated guidance of 1,000,000 to $3,000,000 And finally, we now expect an adjusted loss per share in the range of $0.31 to $0.34 an improvement from our previously updated guidance of a loss per share of $0.34 to $0.38 that, I'll turn it back to Jim.

Thanks, Steve. Looking to the fourth quarter, we remain focused on a number of key strategic areas of our business aimed at driving growth. Starting with AURYON, in The US, we will leverage the momentum built during the first three quarters of the year to continue to drive increased penetration with a particular focus on the hospital setting. Outside of The US, we expect a full market release following our CE marking in Q1 to make a positive impact on revenue during the fourth quarter. We will continue to develop supporting clinical data and launching new product line extensions as we move forward. With Alphavac, we continue to push ahead commercially as we focus on driving increased adoption for the treatment of PE. To support that, we will continue to invest in high quality clinical data highlighting the differentiation of our products help support long term adoption In addition, we continue expect to launch new product enhancements over the course of the year to further enhance our product. And lastly, with NanoKnife, With prostate indication in hand, as well as clarity around the reimbursement pathway in The US, we expect to leverage a well established commercial infrastructure and our high quality clinical data to drive increased long term adoption in The US for prostate.

I would like to remind everyone that we will be hosting a virtual cardiovascular specific event at 09:00 Eastern today. Provide an in-depth overview. On our cardiovascular franchise including our AURYON AngioVac and AlphaVac technologies. Our respective market opportunities, and our strategic vision for these products moving forward. In summary, we remain very excited about the future at AngioDynamics. We have built a fantastic portfolio focused on large, high growth markets, we have overhauled our financial profile and with the strength of our balance sheet, we are on the verge of delivering sustainable, profitable growth for years to come. With that, we'll open the line for questions.

Thank you. At this time, we'll be conducting a question and answer session. You may press 2 if you'd like to remove your question from the queue. Our first question comes from the line of John Young with Canaccord Genuity. Please proceed with your question.

Hi, Jim and Steve. Thanks for taking the question and congrats on a great quarter. I just want to start first on AngioVac.

Still remains strong, which was nice to see just despite the very strong quarter you had last quarter. You think the $6,800,000 is it good new base that we should think about for the business going forward? And I have one follow-up. Thanks.

Yes. Thanks, John. Good to talk to this morning. Yes, the answer is yes. I think as we talked about last quarter, we were very pleased with the performance we saw with and particularly we're pleased with the synergistic portfolio that we have with AngioVac together with the Alphavac PE. We're seeing that our conversations with interventional cardiologists are driving increased awareness of overall portfolio and certainly leading to good performance from both. So as we said last quarter, we expect AngioDynamics will be a grower for us Now maybe not at the same growth rates, but I think this level kind of mid-6s and seeing that as a growth platform moving forward is the right way to think about AngioVac going forward. And as we said, we expect you're going to see increasing growth coming from Alphavac. As we continue to see further adoption for our products for PEP cases.

Okay, great. Thanks. Then just on NanoKnife prostate, any further details you could share with us just on your percentage of revenue that's attributable prostate in the quarter? Any KPIs from your direct to consumer, or physician efforts that you've started with the marketing approval? And then for the CPT level one code, should we still think of July as being kind the first update into what the possible reimbursement for next year looks like? Thanks again for taking our questions.

Yes. Hi, John, it's Jim. A of questions. We started our awareness and education campaign, as you know, after we got the approval from the FDA for the prostate market. So we're excited by the response we've seen. Some from individual patients who are trying to learn about their treatment pathways and options that exist. So that's been really kind of fun to watch new people learn about this new option that we offer. Also with physicians, signing up for our training programs, getting involved, wanting to learn how to use this technology, bringing it in house as part of the treatment protocol. So really, really good organic metric metrics we track. We don't share all those for competitive reasons. But we also measure every month the procedures that we use with NanoKnife. And I think we've talked about it before increasing percentages each month go by with prostates being treated at a higher and higher rate it's now more than half of our treatments. Liver and pancreas, as you know, are the second and third. But for years prostate was third behind them. It's become number one and it grows each month at a higher and higher rate of treatment.

So we're really excited the organic interest being created.

Yes. And John, getting to your question on reimbursement, it's the exact right question. As we've always said, there's really three pillars that are going to drive NanoKnife growth going forward. It was important for us to get the specific indication that's kind of table stakes. We were able to do that in December. The second one is increased awareness and Jim just talked about that. We're really pleased with the uptick in interest that we're seeing with respect to NanoKnife coming on the heels of getting the indication and certainly the event that we did last quarter. And then the third and the most important in terms of driving adoption and getting to that inflection point is going to be reimbursement. We're still on track to hear the first readout. In the summer in July and then we expect that the one code will become permanent in January. And so we're doing the work you would expect us to do now, continuing to kind of beat the ground and try to increase the amount of those private payers that are going to be covering once we get to that permanent code. So we'll continue to do that work. We'll update you as we move forward.

But yes, the way that you're talking about it is exactly right. Expect the first readout in the summer and that code to go into effect in January.

Thanks again.

Thank you. Our next question comes from the line of Steven Lichtman Oppenheimer and Company. Please proceed with your question.

Thank you. Good morning, guys, congratulations. Just wanted to also ask on MT, given the strength you're seeing in AngioVac post the Alphavac launch, can you give us an update on your commercial efforts across mechanical thrombectomy? I know initially you're working through where the team focused obviously you're seeing success. Are you looking to further add to the commercial team? Or are you feeling good about sort of the coverage going after AlphaVac and keeping this AngioVac momentum going?

Yes. Thanks, Steve. So as we spoke previously, our team did a really good job targeting where our first batch of sales professionals will be located. As we were expecting that PE indication and launch. The Alphavac product. So we did that. We've got the right people in the right places that we thought were the 40 or so starting markets we wanted to be in. And that's going really well as you're seeing the effect of both products being sold together as well. The team is good. They're well trained and they're educated now. To serve our customers. We also talked about us expanding that group. If you go back and look at how we built out AURYON in the past five years, a similar fashion, we played ahead, invested ahead, but we wanted to see where opportunity existed. So you're going to see over this course of this calendar year expansion. In that Alphavac, AngioVac sales force. We're looking now to expand. We'll do that over the course of this year and we're set up well to grow that product again with sequential customers who've already adopted it getting new customers, putting it through the exact process and bringing it in house.

So excited.

Great. Thanks, Jim. And then just on Orion, Can You Give Us An Update On How Things Are Progressing On The EU launch and any updated thoughts on the opportunity there? I guess, couple of quarters into the [indiscernible] Yes, it's a good question. It's funny, we've done a really good job training people. We have these scientific life symposiums that we've held every six months for the last few years. And we just had one last weekend in Barcelona, well attended by global folks came, folks from The U. S. Came over. And spoke about AURYON globally, so we're training and teaching physicians around the globe why AURYON is so specialized and how it works So we've done a lot of education. We have a great distributor network supporting us. They also do training education for us. In markets that we don't have reach into. So it'll help expand that. And we really expect now Q4, Steve, probably see some revenue coming in, in Q4 from AURYON and we'll start to build that. We expect sequential growth going forward, but we've done a good job or team is really strong globally. They've done the right education campaigns. Awareness campaigns, and now we're going to build that business out.

So you'll see a business over time then, with still strong U. S. Growth in AURYON and now the international growth kicking in.

And just a reminder, Steve, international market isn't as big as The U. S. Market. And so while it will be a contributor, I wouldn't expect it to be a material contributor right away. But as Jim said, we're very pleased with the traction that we're starting to get there. There.

Got it. Thanks, Jim and Steve. I'll jump back in queue.

Thanks, Steve. Thank you. Our final question this morning comes from the line of Chen. With H. C. Wainwright. Please proceed with your question.

Good morning. This is Eduardo on for Yi. Congrats on the great great quarter. In the same line of Ariane, I'm curious how you view if you could give an update on the timeline for the ambition study and how you see the results, what do you measure as success there?

And how do you see the application, the below the knee indication?

Do you see any specific advantages for the technology in space that you could really leverage and capture market there? Just kind of your vision and rationale and the ambition study and expectation. Yeah, thanks Eduardo. It's a great question. We're really excited about the ambition BTK study. So we mentioned that we're going through the [indiscernible] committees now. We expect to begin enrollment probably within the next quarter or so. And then it's a pretty comprehensive trial. So we'll give you some updates as we continue to go through it. But I think your question around rationale for the trial are really important. So remember, Arian already has a very broad indication base. So it's currently indicated for use in hard and soft calcifications above the knee, below the knee and in instant restenosis. It's really the only atherectomy product out there that has that versatile of a use case scenario. The reason we're doing this study is we believe, we've been able to show before that using AURYON specifically below the knee in conjunction with balloon will provide better results than balloon angioplasty by itself. And we think that that's a vitally important data point, one to continue to the use of Ariane below the knee, potentially also to increase the overall market of atherectomy.

And so we're really excited about getting into the study. We've worked with our physician thought leaders This is a study that has tremendous amount of scientific rigor behind it. And it's the kind of study that our customers are really looking forward to and excited to work with us as we continue to build out this type of dataset going forward. As we continue to move forward, we'll give you some more details, but we think it's exactly the right study to do with this type technology. That's great. And do you envision, obviously because it's already approved in this indication, you imagine that the existing commercial team would be sufficient to market it. You're not expecting an expansion.

Yeah. So if you look at how we built this team, we were certainly building ahead of the curve as we were getting AURYON from the initial launch to where it is today. As Jim has mentioned, we're going to continue to invest opportunistically in our sales force I think don't expect you're going to see a significant amount of additional investment right now that business. We're going be making some investments in our thrombectomy team as Jim talked about. As we head into next calendar year and getting that CPT code with oncology, expect we'll be investing in that business support that. We'll continue to invest in AURYON. There's no doubt about it, but I wouldn't expect a huge bolus right away.

Okay, that's really helpful. Thank you so much.

Thank you, Eduardo.

Thank you, ladies and gentlemen. That concludes our question and answer session. I'll turn the floor back to Mr. Klemer for any final comments.

Thank you very much. I want to thank our team here at AngioDynamics. They worked really hard We've got a lot of priorities here that we're getting over the goal line and getting things done.

Hopefully, are seeing the progress we've made in our transformation. Transformation that started with a portfolio shift So we've got really good teams now. Our medical device products are sold to the markets that we can become a major player in. We do it with a great selling and marketing team, a great clinical support team. It gives us efficiency. Enables us to invest in our med tech platforms that you heard about today. That have really large opportunities. Our products are dynamic and they're good. Our design and development teams are great. Our regulatory and market access teams are great. Let's not forget too, our supply chain teams. While we're doing all this work in our market with our customers, we announced over a year ago, we're changing our supply team base how we're operating, where we're going to operate. They've done a really good job delivering on that transformation. Over time, that's going to make sure we have a stable supply chain to supply our customers for years to come. And also take some of that stranded cost out would drop to the bottom line over the next two fiscal years. So our company is well set up to succeed for years to come.

Thank you for joining us today.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.