AngioDynamics, Inc. (ANGO) is a leading and transformative medical technology company focused on restoring healthy blood flow in the body's vascular system, expanding cancer treatment options, and improving patient quality of life. With a diversified product portfolio and a strategic vision, the company has navigated through various industry challenges and is well-positioned to capitalize on emerging growth opportunities.
Business Overview and History
AngioDynamics was founded in 1988 and is headquartered in Latham, New York. The company started as a manufacturer of vascular access devices, including PICC lines and midline catheters. Over the years, AngioDynamics has expanded its product portfolio to include a wide range of medical, surgical, and diagnostic devices used by healthcare professionals for vascular access, the treatment of peripheral vascular disease, and use in oncology and surgical settings. AngioDynamics' products are generally used in minimally invasive, image-guided procedures, and many are intended for single-use or short-term implantation.
In the early 2000s, AngioDynamics faced a significant challenge when it became involved in a patent infringement lawsuit with C.R. Bard, a larger medical device company. This legal battle lasted over a decade, but AngioDynamics was ultimately able to resolve the dispute through a settlement agreement in 2024, allowing the company to move forward without the ongoing legal distraction.
A notable milestone in AngioDynamics' history was the acquisition of Eximo Medical in 2019, which brought the Auryon atherectomy system into the company's portfolio. Auryon is a minimally invasive device used to treat peripheral artery disease, and its integration was a key part of AngioDynamics' strategy to expand its presence in the high-growth vascular disease market.
In 2023, AngioDynamics made a strategic move by divesting its dialysis and BioSentry businesses to Merit Medical Systems for $100 million in cash. This decision allowed the company to focus more on its core product lines and invest in growth areas like its mechanical thrombectomy and tissue ablation technologies. The divestiture also strengthened AngioDynamics' balance sheet by eliminating $50 million in debt.
Throughout its history, AngioDynamics has demonstrated resilience in navigating various challenges, including litigation, integration of acquisitions, and portfolio optimization. The company's willingness to make strategic decisions has positioned it for future growth and success in the medical technology industry.
Financial Performance and Metrics
Financials
AngioDynamics' financial performance has been marked by both challenges and opportunities. For the fiscal year ended May 31, 2024, the company reported net sales of $303.9 million, a decrease of 10.3% compared to the previous year. Net income was negative $184.3 million, impacted by various one-time charges, including impairment of capital assets and restructuring costs.
Despite the top-line decline, the company has made progress in improving its operational efficiency and profitability. The gross profit margin for fiscal year 2024 was 51.0%, compared to 51.5% in the prior year.
In the most recent quarter (Q1 fiscal year 2025), AngioDynamics reported revenue of $67.49 million, representing a 14.2% decrease year-over-year. This decline was primarily driven by the sale of the PICCs, Midline, dialysis, and BioSentry businesses, as well as the discontinuation of the RadioFrequency Ablation and Syntrax product lines. The company reported a net loss of $12.80 million for the quarter.
Operating cash flow (OCF) for the most recent quarter was negative $18.25 million, while free cash flow (FCF) was negative $19.35 million. These figures reflect the company's ongoing investments in growth initiatives and the impact of recent divestitures.
AngioDynamics primarily sells in the US market, with international sales comprising only 11.9% of total revenue in the most recent quarter.
Liquidity
AngioDynamics has maintained a strong liquidity position, with $55.01 million in cash and cash equivalents as of the most recent quarter, and no outstanding debt. The company had previously repaid all amounts outstanding under its existing Credit Agreement in connection with the completion of the dialysis and BioSentry divestiture in the first quarter of fiscal year 2024.
The company's current ratio stands at 2.25, indicating a healthy ability to meet short-term obligations. The quick ratio of 1.41 further underscores AngioDynamics' strong liquidity position. With a debt-to-equity ratio of 0, the company maintains a conservative capital structure, providing financial flexibility for future growth initiatives.
Segmental Performance
AngioDynamics operates through two main segments: MedTech and Med Device.
The MedTech segment includes products like Auryon, NanoKnife, and the thrombus management platform. This segment accounted for 38.5% of the company's total revenue in fiscal year 2024 and has been a key growth driver. In the first quarter of fiscal year 2025, the MedTech segment grew by 8.2% compared to the same period in the prior year. The growth in Auryon was particularly strong, partially offset by softness in the thrombus management platform and NanoKnife products.
The MedTech segment's gross profit margin was 63.3% in the first quarter of fiscal year 2025, down 140 basis points from the same period last year. This decrease was primarily due to inflationary costs on raw materials, labor shortages, and freight costs, as well as incremental depreciation and other expenses on placement units.
The Med Device segment encompasses the company's core product lines such as PICCs, Midlines, and dialysis catheters. This segment contributed 61.5% of revenue in fiscal year 2024. However, in the first quarter of fiscal year 2025, the Med Device segment saw a 25.2% decrease in sales compared to the prior year period. This decline was driven by the divestiture of the PICC, Midline, dialysis, and BioSentry businesses, as well as the discontinuation of the RadioFrequency Ablation product line.
Despite the lower sales volumes, the Med Device segment's gross profit margin increased 390 basis points to 48.1% in the first quarter of fiscal year 2025, due to favorable price and product mix.
Growth Strategies and Catalysts
AngioDynamics is focused on driving growth through a combination of strategic initiatives. The company is actively expanding its MedTech product portfolio, with recent launches of Auryon XL and a 1.7 millimeter catheter. These new offerings are expected to contribute to the continued success of the Auryon platform, which grew by 24.9% in the first quarter of fiscal year 2025.
The company is also making progress in its mechanical thrombectomy business, with strong performance from AlphaVac and stabilization in AngioVac sales. AngioDynamics is investing in clinical data and product enhancements to support the long-term adoption of these technologies.
Additionally, the company is pursuing regulatory approvals and reimbursement pathways for its NanoKnife system, which has shown promising results in the treatment of prostate cancer. The recent receipt of a CPT Category I code for NanoKnife is a significant milestone that could facilitate wider adoption of the technology.
Risks and Challenges
AngioDynamics operates in a highly competitive and regulated medical device industry, which presents various risks and challenges. The company faces competition from larger, well-established players, as well as emerging competitors with innovative technologies. Regulatory approvals, pricing pressures, and reimbursement challenges can also impact the company's performance.
The ongoing COVID-19 pandemic has had a varying impact on AngioDynamics' business segments, with some product lines experiencing disruptions in procedures and customer demand. The company has demonstrated agility in navigating these challenges, but the long-term effects of the pandemic remain uncertain.
Industry Trends and Outlook
The medical device industry has seen a compound annual growth rate (CAGR) of approximately 4-5% in recent years. This growth is driven by an aging global population, increasing prevalence of chronic diseases, and advancements in medical technology. AngioDynamics is well-positioned to capitalize on these trends with its innovative product portfolio.
For fiscal year 2025, AngioDynamics has reiterated its previously issued guidance: - Revenue of $282 million to $288 million, representing growth of 4.2% to 6.4% over fiscal year 2024 - MedTech net sales growth of 10% to 12% - Med Device net sales growth of 1% to 3% - Gross margin of 52% to 53% - Adjusted EBITDA loss of $2.5 million to zero - Adjusted loss per share of $0.38 to $0.42
This guidance reflects the company's expectations for continued growth in its MedTech segment, particularly driven by the Auryon platform, while the Med Device segment is expected to show modest growth following recent divestitures.
Conclusion
AngioDynamics is a resilient medical technology company that has navigated through industry challenges and is now well-positioned to capitalize on growth opportunities. The company's diversified product portfolio, strategic focus on high-growth MedTech segments, and continued investments in innovation position it for potential long-term success. While the company faces risks common to the medical device industry, its strong liquidity, operational improvements, and compelling product pipeline suggest that AngioDynamics could be a compelling investment opportunity for those with a long-term outlook.
The company's ability to execute on its growth strategies, particularly in the MedTech segment, will be crucial in achieving its financial targets and improving profitability. Investors should closely monitor AngioDynamics' progress in expanding its Auryon and NanoKnife platforms, as well as its success in navigating the evolving healthcare landscape and regulatory environment.