AngioDynamics, Inc. (NASDAQ: ANGO), 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 quality of life for patients, today announced financial results for the fourth quarter and fiscal year 2023, which ended May 31, 2023.
“AngioDynamics’ fourth quarter and fiscal year 2023 saw continued growth driven by our team’s commitment to innovation,” commented Jim Clemmer, President and Chief Executive Officer of AngioDynamics, Inc. “Additionally, we recently took another significant step in our transformation by announcing the divestiture of our Dialysis and BioSentry Biopsy businesses, which strengthens our balance sheet and enables an even clearer focus on our high-growth Med Tech platforms. Looking ahead, we will continue to seek opportunities to further focus the portfolio in order to drive growth and margin expansion.”
Mr. Clemmer continued, “We are now two years into the three-year plan that we provided in July of 2021, and we are at or above our overall revenue growth targets, with our Med Tech segment continuing to comprise an increasing portion of our overall business. This bodes well for our future, and I’m excited about the differentiated products and clinical data that we will be bringing to market in fiscal year 2024 and beyond.”
Fourth Quarter 2023 Financial Results
Net sales for the fourth quarter of fiscal year 2023 were $91.1 million, an increase of 4.7% compared to the prior-year quarter. Foreign currency translation did not have a significant impact on the Company's net sales in the quarter.
Med Tech net sales were $26.5 million, a 17.2% increase from $22.6 million in the prior- year period. Med Tech includes the Auryon peripheral atherectomy platform, the thrombus management platform and the NanoKnife irreversible electroporation platform. Growth was driven by Auryon sales during the quarter of $11.8 million, which increased 22.0%, NanoKnife disposable sales of $4.6 million, representing an increase of 28.0% compared to the fourth quarter of fiscal 2022, and AlphaVac sales of $1.8 million, an increase of 86.9% over the prior year.
Med Device net sales were $64.6 million, an increase of 0.3% compared to $64.4 million in the prior-year period.
U.S. net sales in the fourth quarter of fiscal 2023 were $74.4 million, an increase of 1.0% from $73.7 million a year ago. International net sales were $16.6 million, an increase of 25.1%, compared to $13.3 million a year ago.
Gross margin for the fourth quarter of fiscal 2023 was 50.9%, a decrease of 250 basis points compared to the fourth quarter of fiscal 2022, but up sequentially from 50.2% in the third quarter. Gross margin for the Med Tech business was 64.7%, a decrease of 400 basis points from the fourth quarter of fiscal 2022. Gross margin for the Med Device business was 45.2%, a decrease of 280 basis points compared to the fourth quarter of fiscal 2022. Gross margin continued to be impacted by inflationary pressures including increased costs for labor and raw materials.
The Company recorded a net loss of $21.5 million, or a loss per share of $0.54, in the fourth quarter of fiscal 2023. This includes a goodwill impairment of $14.5 million, or $0.37 per share, in connection with the transaction announced on June 8, 2023. This goodwill impairment is described in more detail below. This compares to a net loss of $6.3 million, or a loss per share of $0.16, a year ago.
Excluding the items shown in the non-GAAP reconciliation table below, adjusted net income for the fourth quarter of fiscal 2023 was $0.7 million, and adjusted earnings per share was $0.02, compared to adjusted net income of $0.3 million and adjusted earnings per share of $0.01 in the prior-year period.
Adjusted EBITDA in the fourth quarter of fiscal 2023, excluding the items shown in the reconciliation table below, was $7.9 million, compared to $6.2 million in the fourth quarter of fiscal 2022.
In the fourth quarter of fiscal 2023, the Company generated $16.0 million in operating cash, had capital expenditures of $1.1 million and $0.5 million in Auryon placement and evaluation units.
At May 31, 2023, the Company had $44.6 million in cash and cash equivalents compared to $30.1 million in cash and cash equivalents at February 28, 2023. The Company had $25.0 million outstanding under its revolving credit facility and $25.0 million outstanding under the delayed draw term loan at May 31, 2023, equal to the total amounts outstanding on February 28, 2023. Subsequent to quarter end, the Company used part of the proceeds from the divestiture of its Dialysis and BioSentry Tract Sealant System Biopsy businesses to extinguish its debt.
Full-Year 2023 Financial Results
For the twelve months ended May 31, 2023:
Net sales were $338.8 million, an increase of 7.1%, compared to $316.2 million for the same period a year ago.
Med Tech net sales were $96.7 million, a 22.8% increase from the prior year period. Med Device net sales were $242.1 million, an increase of 1.9% from the prior year period.
Gross margin declined by 100 basis points to 51.4% from 52.4% a year ago as positive impacts from productivity and the growth of the Med Tech business were more than offset by inflationary pressures including increased costs for labor and raw materials.
The Company's net loss from continuing operations was $52.4 million, or a loss per share of $1.33, compared to a net loss of $26.5 million, or a loss per share of $0.68, a year ago. This includes a goodwill impairment of $14.5 million, or $0.37 per share, in connection with the transaction announced on June 8, 2023. This goodwill impairment is described in more detail below.
Excluding the items shown in the non-GAAP reconciliation table below, adjusted net loss was $2.4 million, with adjusted loss per share of $0.06, compared to adjusted net loss of $0.2 million, or adjusted earnings per share of $0.00, a year ago.
Adjusted EBITDA, excluding the items shown in the reconciliation table below, was $22.6 million, compared to $20.9 million for the same period a year ago.
Goodwill Impairment in Connection with Divestiture
The Dialysis and BioSentry Tract Sealant System Biopsy businesses that were divested subsequent to the Company’s fiscal year end, on June 8, 2023, were accounted for as “Held for Sale” as of May 31, 2023. As a result, the Company recorded a goodwill impairment during the fiscal fourth quarter ended May 31, 2023. The gain on the sale of these assets will be recorded in the Company’s first fiscal quarter ending August 31, 2023.
Pro Forma 2023 Performance
In addition to actual results, the tables accompanying this press release reflect pro forma results, which exclude the full-year impact of the Dialysis and BioSentry Tract Sealant System Biopsy businesses that were divested on June 8, 2023.
Fiscal Year 2024 Financial Guidance
The Company expects its fiscal year 2024 net sales to be in the range of $328 to $333 million, gross margin to be approximately 50% to 52% and adjusted loss per share in the range of $0.28 to $0.34. For comparison, pro forma revenue, gross margin, and adjusted loss per share for FY23 when excluding the assets divested to Merit Medical were $306.3 million, 50.5%, and $0.43, respectively.
Conference Call
The Company's management will host a conference call today at 8:00 a.m. ET to discuss its fourth quarter and fiscal year 2023 results.
To participate in the conference call, dial 1-877-407-0784 (domestic) or +1- 201-689-8560 (international) and refer to the passcode 13739492.
This conference call will also be webcast and can be accessed from the “Investors” section of the AngioDynamics website at www.angiodynamics.com. The webcast replay of the call will be available at the same site approximately one hour after the end of the call.
A recording of the call will also be available from 11:00 a.m. ET on Wednesday, July 12, 2023, until 11:59 p.m. ET on Wednesday, July 19, 2023. To hear this recording, dial 1-844-512-2921 (domestic) or +1-412-317-6671 (international) and enter the passcode 13739492.
Use of Non-GAAP Measures
Management uses non-GAAP measures to establish operational goals and believes that non-GAAP measures may assist investors in analyzing the underlying trends in AngioDynamics' business over time. Investors should consider these non-GAAP measures in addition to, not as a substitute for or as superior to, financial reporting measures prepared in accordance with GAAP. In this news release, AngioDynamics has reported pro forma results, adjusted EBITDA, adjusted net income and adjusted earnings per share. Management uses these measures in its internal analysis and review of operational performance. Management believes that these measures provide investors with useful information in comparing AngioDynamics' performance over different periods. By using these non-GAAP measures, management believes that investors get a better picture of the performance of AngioDynamics' underlying business. Management encourages investors to review AngioDynamics' financial results prepared in accordance with GAAP to understand AngioDynamics' performance taking into account all relevant factors, including those that may only occur from time to time but have a material impact on AngioDynamics' financial results. Please see the tables that follow for a reconciliation of non-GAAP measures to measures prepared in accordance with GAAP.
About AngioDynamics, Inc.
AngioDynamics 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 quality of life for patients.
The Company’s innovative technologies and devices are chosen by talented physicians in fast-growing healthcare markets to treat unmet patient needs. For more information, visit www.angiodynamics.com.
Safe Harbor
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements regarding AngioDynamics' expected future financial position, results of operations, cash flows, business strategy, budgets, projected costs, capital expenditures, products, competitive positions, growth opportunities, plans and objectives of management for future operations, as well as statements that include the words such as "expects," "reaffirms," "intends," "anticipates," "plans," "believes," "seeks," "estimates," “projects”, "optimistic," or variations of such words and similar expressions, are forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Investors are cautioned that actual events or results may differ materially from AngioDynamics' expectations, expressed or implied. Factors that may affect the actual results achieved by AngioDynamics include, without limitation, the scale and scope of the COVID-19 global pandemic, the ability of AngioDynamics to develop its existing and new products, technological advances and patents attained by competitors, infringement of AngioDynamics' technology or assertions that AngioDynamics' technology infringes the technology of third parties, the ability of AngioDynamics to effectively compete against competitors that have substantially greater resources, future actions by the FDA or other regulatory agencies, domestic and foreign health care reforms and government regulations, results of pending or future clinical trials, overall economic conditions (including inflation, labor shortages and supply chain challenges including the cost and availability of raw materials), the results of on-going litigation, challenges with respect to third-party distributors or joint venture partners or collaborators, the results of sales efforts, the effects of product recalls and product liability claims, changes in key personnel, the ability of AngioDynamics to execute on strategic initiatives, the effects of economic, credit and capital market conditions, general market conditions, market acceptance, foreign currency exchange rate fluctuations, the effects on pricing from group purchasing organizations and competition, the ability of AngioDynamics to obtain regulatory clearances or approval of its products, or to integrate acquired businesses, as well as the risk factors listed from time to time in AngioDynamics' SEC filings, including but not limited to its Annual Report on Form 10-K for the year ended May 31, 2022. AngioDynamics does not assume any obligation to publicly update or revise any forward-looking statements for any reason.
In the United States, the NanoKnife System has received a 510(k) clearance by the Food and Drug Administration for use in the surgical ablation of soft tissue and is similarly approved for commercialization in Canada, the European Union and Australia. The NanoKnife System has not been cleared for the treatment or therapy of a specific disease or condition.
ANGIODYNAMICS, INC. AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED INCOME STATEMENTS | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||
May 31, 2023 | May 31, 2022 | May 31, 2023 | May 31, 2022 | ||||||||||||
(unaudited) | (unaudited) | (audited) | |||||||||||||
Net sales | $ | 91,074 | $ | 86,998 | $ | 338,752 | $ | 316,219 | |||||||
Cost of sales (exclusive of intangible amortization) | 44,715 | 40,543 | 164,506 | 150,487 | |||||||||||
Gross profit | 46,359 | 46,455 | 174,246 | 165,732 | |||||||||||
% of net sales | 50.9 | % | 53.4 | % | 51.4 | % | 52.4 | % | |||||||
Operating expenses | |||||||||||||||
Research and development | 7,860 | 7,866 | 29,883 | 30,739 | |||||||||||
Sales and marketing | 26,293 | 26,833 | 104,249 | 95,301 | |||||||||||
General and administrative | 10,228 | 11,103 | 40,003 | 38,451 | |||||||||||
Amortization of intangibles | 4,406 | 4,853 | 18,790 | 19,458 | |||||||||||
Goodwill impairment | 14,549 | — | 14,549 | — | |||||||||||
Change in fair value of contingent consideration | 236 | 207 | 2,320 | 1,212 | |||||||||||
Acquisition, restructuring and other items, net | 3,624 | 1,990 | 15,633 | 9,042 | |||||||||||
Total operating expenses | 67,196 | 52,852 | 225,427 | 194,203 | |||||||||||
Operating loss | (20,837 | ) | (6,397 | ) | (51,181 | ) | (28,471 | ) | |||||||
Interest expense, net | (901 | ) | (185 | ) | (2,702 | ) | (688 | ) | |||||||
Other expense, net | (127 | ) | (139 | ) | (554 | ) | (790 | ) | |||||||
Total other expense, net | (1,028 | ) | (324 | ) | (3,256 | ) | (1,478 | ) | |||||||
Loss before income tax benefit | (21,865 | ) | (6,721 | ) | (54,437 | ) | (29,949 | ) | |||||||
Income tax benefit | (398 | ) | (455 | ) | (1,995 | ) | (3,402 | ) | |||||||
Net loss | $ | (21,467 | ) | $ | (6,266 | ) | $ | (52,442 | ) | $ | (26,547 | ) | |||
Loss per share | |||||||||||||||
Basic | $ | (0.54 | ) | $ | (0.16 | ) | $ | (1.33 | ) | $ | (0.68 | ) | |||
Diluted | $ | (0.54 | ) | $ | (0.16 | ) | $ | (1.33 | ) | $ | (0.68 | ) | |||
Weighted average shares outstanding | |||||||||||||||
Basic | 39,608 | 39,160 | 39,480 | 39,009 | |||||||||||
Diluted | 39,608 | 39,160 | 39,480 | 39,009 | |||||||||||
ANGIODYNAMICS, INC. AND SUBSIDIARIES | |||||||||||||||
GAAP TO NON-GAAP RECONCILIATION | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||
| Reconciliation of Net Loss to non-GAAP Adjusted Net Loss Before Goodwill Impairment: | |||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||
May 31, 2023 | May 31, 2022 | May 31, 2023 | May 31, 2022 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Net loss | $ | (21,467 | ) | $ | (6,266 | ) | $ | (52,442 | ) | $ | (26,547 | ) | |||
Goodwill impairment | 14,549 | — | 14,549 | — | |||||||||||
Net loss adjusted for goodwill impairment* | $ | (6,918 | ) | $ | (6,266 | ) | $ | (37,893 | ) | $ | (26,547 | ) | |||
Reconciliation of Diluted Loss Per Share to non-GAAP Adjusted Diluted Loss Per Share Before Goodwill Impairment: | |||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||
May 31, 2023 | May 31, 2022 | May 31, 2023 | May 31, 2022 | ||||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Diluted loss per share | $ | (0.54 | ) | $ | |||||||||||
