8-K: AngioDynamics Reports Mixed Q1 Results, Med Tech Segment Shows Strong Growth

AngioDynamics reported a 1.1% increase in pro forma net sales for the first quarter of fiscal year 2025, driven by strong growth in its Med Tech segment, while experiencing a decline in the Med Device segment.

Summary

• AngioDynamics announced its financial results for the first quarter of fiscal year 2025, which ended August 31, 2024.
• The company's pro forma net sales increased by 1.1% year-over-year to $67.5 million.
• Med Tech net sales grew by 8.7% to $28.0 million, driven by strong performance of Auryon and AlphaVac products.
• Auryon sales increased by 24.9% to $13.7 million, and AlphaVac sales increased by 21.1% to $2.2 million.
• NanoKnife sales decreased by 6.9% to $5.1 million due to the timing of international orders.
• Med Device net sales decreased by 3.6% to $39.5 million.
• U.S. net sales increased by 6.2% to $59.5 million, while international net sales decreased by 25.4% to $8.0 million.
• The company's GAAP gross margin was 54.4%, a slight decrease of 40 basis points year-over-year.
• The GAAP net loss was $12.8 million, or a loss per share of $0.31.
• The adjusted net loss was $4.4 million, or a loss per share of $0.11.
• Adjusted EBITDA was $(0.2) million, compared to $(1.1) million in the prior year period.
• The company used $18.3 million in operating cash during the quarter.
• Cash and cash equivalents were $55.0 million at the end of the quarter, down from $76.1 million at the end of the previous fiscal year.
• The company submitted results from its PRESERVE study for the NanoKnife System to the FDA for 510(k) clearance for prostate tissue ablation.
• AngioDynamics received CE Mark approval in Europe for the Auryon System.
• The company initiated the RECOVER-AV clinical trial in Europe for the AlphaVac system.
• The company reaffirmed its full-year fiscal 2025 guidance, expecting net sales between $282 and $288 million, Med Tech sales growth of 10% to 12%, Med Device sales growth of 1% to 3%, gross margin of 52% to 53%, adjusted EBITDA loss between $2.5 million and $0, and adjusted loss per share between $0.38 and $0.42.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to strong growth in the Med Tech segment and key regulatory approvals, but tempered by the decline in Med Device sales, a net loss, and cash burn. The company is making progress but still faces challenges.

Positives

• The Med Tech segment showed strong growth, driven by Auryon and AlphaVac sales.
• Auryon sales increased by 24.9% year-over-year, demonstrating strong market adoption.
• AlphaVac sales increased by 21.1% year-over-year, indicating positive market reception.
• The company achieved key regulatory milestones with CE Mark approval for Auryon in Europe and FDA submission for NanoKnife prostate indication.
• The initiation of the RECOVER-AV clinical trial in Europe for AlphaVac is a positive step for international expansion.
• The company is progressing towards profitability with an improved adjusted EBITDA loss compared to the prior year.
• The shift to outsourced manufacturing is expected to generate significant cost savings in the future.

Negatives

• Med Device net sales decreased by 3.6% year-over-year.
• NanoKnife sales decreased by 6.9% due to the timing of international orders.
• International net sales decreased by 25.4% year-over-year.
• The company reported a GAAP net loss of $12.8 million, or a loss per share of $0.31.
• The company used $18.3 million in operating cash during the quarter.
• Cash and cash equivalents decreased from $76.1 million to $55.0 million during the quarter.
• Gross margin for the Med Tech business decreased by 160 basis points due to increased capital placements and inflationary costs.
• Gross margin for the Med Device business decreased by 40 basis points due to inflationary pressures and costs associated with the transition to outsourced manufacturing.

Risks

• The company faces risks related to the development and commercialization of new products.
• Technological advances and patents attained by competitors could impact AngioDynamics' market position.
• The company is subject to risks related to infringement of its technology or assertions that its technology infringes on others.
• The company faces competition from competitors with greater resources.
• Future actions by the FDA or other regulatory agencies could impact the company's operations.
• Domestic and foreign health care reforms and government regulations could affect the company's business.
• The company is subject to risks related to overall economic conditions, including inflation, labor shortages, and supply chain challenges.
• The company faces risks related to ongoing litigation.
• Challenges with third-party distributors or joint venture partners could impact the company's performance.
• The company is subject to risks related to product recalls and product liability claims.
• Changes in key personnel could impact the company's operations.
• The company faces risks related to economic, credit, and capital market conditions.
• The company is subject to risks related to market acceptance of its products.
• Foreign currency exchange rate fluctuations could impact the company's financial results.
• The company faces risks related to pricing from group purchasing organizations and competition.
• The company's ability to obtain regulatory clearances or approvals for its products is a risk.
• The company faces risks related to integrating acquired businesses.

Future Outlook

AngioDynamics expects full-year fiscal 2025 net sales to be in the range of $282 to $288 million, with Med Tech net sales growth of 10% to 12% and Med Device net sales growth of 1% to 3%. The company anticipates a gross margin of 52% to 53%, an adjusted EBITDA loss between $2.5 million and $0, and an adjusted loss per share between $0.38 and $0.42.

Management Comments

• We are pleased with our strong start to fiscal year 2025, particularly in our Med Tech segment, with Auryon and AlphaVac both delivering over 20% growth in the quarter.
• We continue to view 2025 as an inflection point in the trajectory of our business.
• We expect to continue to deliver strong revenue growth within our Med Tech business as we execute on key commercial initiatives.
• We remain focused on executing our growth strategy and advancing our innovative product portfolio.

Industry Context

AngioDynamics operates in the medical technology industry, focusing on vascular and cancer treatment solutions. The company's performance is influenced by factors such as regulatory approvals, technological advancements, and competition. The growth in the Med Tech segment, particularly with Auryon and AlphaVac, aligns with the increasing demand for minimally invasive procedures in vascular and cancer care. The company's expansion into Europe with the Auryon system and the RECOVER-AV trial for AlphaVac reflects a broader trend of medical device companies seeking global market opportunities.

Comparison to Industry Standards

• AngioDynamics' Med Tech segment growth of 8.7% is a positive sign, indicating strong demand for its innovative products like Auryon and AlphaVac, which is comparable to other medical device companies focused on minimally invasive procedures.
• The 24.9% growth in Auryon sales and 21.1% growth in AlphaVac sales are particularly noteworthy, suggesting a strong market reception for these products, which is above average for new product launches in the medical device sector.
• However, the 3.6% decline in Med Device sales is a concern, as it indicates potential challenges in the company's core product portfolio, which is below the average growth rate for established medical device companies.
• The company's gross margin of 54.4% is within the typical range for medical device companies, but the decrease in gross margin for both Med Tech and Med Device segments due to inflationary pressures and increased capital placements is a concern that needs to be addressed.
• The adjusted EBITDA loss of $(0.2) million, while an improvement from the previous year, still indicates that the company is not yet profitable, which is a common challenge for growth-stage medical device companies.
• The company's cash burn of $18.3 million in operating cash during the quarter is significant and needs to be monitored closely, as it could impact the company's ability to fund future growth initiatives.

Stakeholder Impact

• Shareholders may be encouraged by the growth in the Med Tech segment and the company's progress towards profitability, but concerned about the net loss and cash burn.
• Employees may be positively impacted by the company's growth and expansion, but may also face challenges related to the shift to outsourced manufacturing.
• Customers may benefit from the company's innovative products and expanded treatment options.
• Suppliers may be impacted by the company's shift to outsourced manufacturing.
• Creditors may be concerned about the company's cash burn and net loss.

Next Steps

• The company will continue to execute its commercial strategy for Auryon and AlphaVac.
• AngioDynamics will focus on obtaining FDA approval for the NanoKnife prostate indication.
• The company will continue the RECOVER-AV clinical trial in Europe.
• AngioDynamics will work to increase penetration of Auryon in the hospital setting in the U.S.
• The company will execute the full commercial launch of the AlphaVac PE indication in the U.S. and CE Marked countries.
• AngioDynamics will launch new products to refine and enhance the usability of its existing products.
• The company will pursue a specific prostate CPT code to add clarity to the reimbursement pathway for NanoKnife.

Key Dates

Keywords

AngioDynamics, Medical Technology, Med Tech, Med Device, Auryon, AlphaVac, NanoKnife, Peripheral Artery Disease, Pulmonary Embolism, FDA, CE Mark, Thrombus Management, Atherectomy, Gross Margin, EBITDA