AngioDynamics, Inc.

Good morning and welcome to the NGO Dynamics fiscal year 2024 fourth quarter earnings call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If you would require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference call is being recorded. The news release detailing AngioDynamics' fiscal 2024 fourth quarter and full year results crossed the wire earlier this morning and is available on the company's website. This conference call is also being broadcast live over the Internet at the Investors section of the company's website at www.angiodynamics.com. and a webcast replay of the call will be available at the same site approximately one hour after the end of today's call. Before we begin, I would like to caution listeners that during the course of this conference call, the company will make projections or forward-looking statements regarding future events, including statements about expected revenue, adjusted earnings, and gross margins for fiscal year 2025, as well as trends that may continue. Management encourages you to review the company's past and future filings with the SEC, including, without limitation, the company's forms 10-Q and 10-K, which identify specific factors that may cause the actual results or events to differ materially from those described in the forward-looking statements. The company will also discuss certain non-GAAP and pro forma 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 forma 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 on the investor section of the company's website under Events and Presentations. This presentation should be read in conjunction with the press release discussing the company's operating results and financial performance during this morning's conference call. I'd now 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 for AngioDynamics Fiscal 2024 Fourth Quarter and Full Year 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 performance in the quarter. followed by an overview of the strategic transformation that we've launched in July of 2021. Steve will then provide a detailed analysis of our financial performance, and I will then discuss our outlook for fiscal year 2025 before opening the line for questions. Unless otherwise noted, all financial metrics and growth rates provided during the call today with respect to our results will be on a pro forma basis, which excludes the impact of our divested dialysis, biocentury, PIC, and midline businesses, and our discontinued radiofrequency and Syntrax support catheter products. In the quarter, total pro forma worldwide revenue was $71.1 million, representing growth of approximately 2% year over year. For the second straight quarter, we delivered double-digit growth in our MedTech segment, which grew 11% on a pro forma basis, driven by Arion, which grew 12%, and NanoKnife, which grew 43%, including pro growth of 18%. Our mechanical thrombectomy business declined approximately 2%, during the fourth quarter. We are, however, very encouraged by the recent performance of both AngioVac and AlphaVac. AngioVac sales stabilized, declining just 4% year-over-year, but grew 6% sequentially over the third fiscal quarter of FY24. AlphaVac sales grew 7%, posting revenue of $1.9 million which benefited from the limited market release following the PE indication clearance discussed during our third quarter call. Importantly for AlphaVac, this represents solid sequential growth of nearly 68% over the third quarter of fiscal 2024. Revenue from our med device segment declined approximately 4%. This decline was primarily the result of impacts from our reorganization following the PIC and midline divestiture that we closed in February, as well as the anticipated headwinds stemming from our manufacturing reorganization that we launched in January. For the full year, MedDevice revenue grew 2.4% over the prior year, in line with our long-term expectations for that business. We are very pleased with the positive impacts that our solid MedTech growth and expense management initiatives have had on our business. They allowed us to generate $5 million of excess cash flow from operations, adjusted EBITDA of $1.5 million, and an adjusted loss per share of only $0.05 million. during the fourth quarter. For the full fiscal year ended May 31, 2024, we generated revenue of $270.7 million, representing growth of 5.3%, including MedTech growth of 10.1% and MedDevice growth of 2.4%. We finished the year with cash and cash equivalents of more than $76 million. We narrowed our adjusted EBITDA loss to $3.2 million and our adjusted loss per share to 45 cents. This continued solid performance comes as a direct result of the tremendous effort our organization has put forth over the last three years to execute on our vision of the business which we outlined during our july 2021 investor day given that we are at the three-year anniversary of that event we wanted to take a step back and provide some context on the evolution of angio dynamics and what we have accomplished over that period of time the three primary focus areas of our strategy to transform the business we outlined during the Investor Day event included, first, pursuing larger and faster-growing MedTech markets, second, driving portfolio optimization, and third, deploying focused resource development. Starting with our pursuit of larger, faster-growing MedTech markets, at the time of our Investor Day, our U.S. addressable markets was approximately $3 billion. For a focused combination of M&A, internal R&D, and clinical and regulatory initiatives, we have expanded our TAM by over 200% to roughly $10 billion. One of the most significant drivers of that transformation was Aurion, our peripheral atherectomy device. In fiscal 2021, Arion generated approximately $11 million of revenue. In just three short years, Arion has delivered substantial growth with cumulative revenue now over $130 million by us taking meaningful share from competitors and by driving increased adoption and utilization across both office-based labs and hospitals. Beyond our focus on growing our customer base, we continue to be committed to broadening the utility of the product. We launched Arion XL earlier this year, and we just recently received FDA approval for our 1.7 millimeter catheter. Turning to our mechanical thrombectomy portfolio, in 2021, This business included just AngioVac, which was focused on the right atrium. Over the past three years, we have significantly expanded the depth and breadth of that portfolio. With years of experience with AngioVac, we saw a gap in the market for a next generation product. In 2019, we began the development of that product. And during the second half of 2021, We launched AlphaVac. In the following years, we further expanded the applicability of these products by adding incremental indications for use as well as the introductions of new product lines, expanding our TAM for thrombus management from just $140 million to now over $3.5 billion. Most recently, we announced both FDA clearance and CE marketing approval for AlphaVac for the treatment of pulmonary embolism, or PE. These indications represent a major step forward in enhancing patient care and safety for endovascular therapies and allowing us to broaden our reach and provide innovative solutions to more healthcare professionals treating patients diagnosed with PE on a global scale. Up to this point, we have just been competing on the surface of this market without a PE indication. We are now in a fantastic position to drive this business forward. We have a best-in-class portfolio capable of attacking a variety of large global markets and supported by compelling clinical data and a commercial organization. that is ready to fire on all cylinders and take advantage of the significant opportunity that lies ahead. Lastly, turning to our NanoKnife platform. With a broad global indication for soft tissue ablation, NanoKnife has been used by physicians to treat tumors in many organs throughout the body for a number of years. We have been very encouraged by the performance of the Nano Knife business. Each of the last three years, we have delivered double-digit year-over-year growth. We see increasing demand for new systems, and with that, utilization has continued to grow. For the fiscal year 2024, probe revenue growth was 16 percent year-over-year. Based on the quality of the results seen, We knew that NanoKnife could be an important treatment option across a variety of solid tumor types. Back in 2021, we set out to bring NanoKnife and its unique mechanism of action to help surgeons better treat tumors in some of the most common and deadly oncology disease states. Our biggest opportunity is in prostate cancer. the most commonly diagnosed solid tumor for American men. In 2021, we launched our IDE study, Preserve, for the ablation of prostate tissue in an intermediate risk population. We are very excited that this study is nearly complete, as we expect 12-month follow-up data by the end of this month. Following the collection of data and submission to the FDA, we expect to receive an FDA clearance in prostate by the end of this calendar year. We believe there is significant upside potential for Nanolife following that clearance, and we will continue to work to shore up the reimbursement pathways. The second focus of our strategic transformation is driving portfolio optimization. Beyond developing a more robust MedTech portfolio, we aimed to simplify our med device portfolio in order to better utilize our resources to support our growth strategy. In fiscal 2024, we sold our dialysis product portfolio and biocentury lung biopsy product businesses to Merit Medical. Later in the year, We sold our PIC and midline portfolios to Spectrum Vascular, which coincided with a discontinuation of a couple of non-core products. In addition to the benefits of a more streamlined portfolio, the financial benefits of our portfolio optimization efforts were meaningful. In looking at the combined investitures to Spectrum and Merit, we received approximately two times sales for those assets, giving us the ability to retire our outstanding debt and strengthen our balance sheet significantly. With roughly $76 million in cash on the balance sheet as of the end of this fiscal year, we are well capitalized to support our growth strategy moving forward. With the extensive work done On both our MedTech and MedDevice businesses, we are very happy with where our portfolio sits today. In fact, we have nearly doubled the revenue contribution from our MedTech portfolio, which has increased from less than 20% of total sales in 2021 to now approximately 39% of total revenue for 2024. This was driven by both the optimization of our med device business, as well as the significant growth in our med tech business, which has increased to $106 million, up from 56 million in 2021. And lastly, we are deploying focused resource development. In January of this year, we announced our intention to transition our manufacturing operations to a fully outsourced model. So why was this an important strategic decision for Angio Dynamics? With the variety of products that we manufacture, there is significant complexity and risk to manage throughout that process. Beyond that, our future growth was going to be constrained. by the size of our facility and the staffing requirements needed for us to be successful. Ultimately, the decision to shift our manufacturing models was to ensure that we serve our customers as efficiently and effectively as possible, while also taking out costs that do not add value to our products. As I mentioned before, our focus as a company is to drive the growth of our med tech business while continuing to maintain the solid performance of our med device business. Part of the reason for focusing on the growth of the med tech business is the fact that these are higher margin products with significant growth potential. While we have nearly doubled our revenue contribution from the med tech business, we have not been able to capture the full benefits to our overall gross margin as a result of the operations within our med device business. This shift to an outsourced manufacturing will allow us to fundamentally change our manufacturing overhead structure and take out those overhead costs, which will ultimately flow through to our bottom line. As noted on prior calls, we expect this transition to generate approximately $15 million in annualized savings by fiscal 2027. This initiative is now well underway and is tracking in line with our expectations. Outside of the key achievements within the focus areas discussed, we also achieved a number of key milestones in other areas of our business. In April of this year, we reached settlement of more than a decade-long IP litigation dispute with CR Bard, an affiliate of Beckton Dickinson. This settlement provided us with additional clarity and certainty, which has enabled our team to focus exclusively on driving innovation and profitable growth. I would also like to take a moment to call out our regulatory and R&D teams for their tremendous work they have done over the past number of years and continue to do in connection with the changing regulatory landscape in the EU driven by the MDR process. International expansion has been and will continue to be a driver of our business. Over the last few years, we have invested to ensure our portfolio is fully compliant within the new EU MDR framework. Today, nearly all of our products have received the updated MDR approval, well ahead of many other companies in our industry. This includes our recently announced CE marks for AlphaVac PE and NanoKnife. This is the result of exceptional planning and execution, and it sets us up well moving into FY25 by allowing us to reallocate resources to other areas and help drive growth. We have a similar story in the development of our clinical capabilities as we have moved through our strategic transformation. One example of our clinical expertise was the PE510K clearance we secured in April. Our team was able to develop initiate and complete a study to support an expanded PE indication in record time. In addition, the work we have done in connection with our preserved study for nanolife in prostate has poised us to facilitate exciting nanolife growth for a sustained period to come. We will continue to execute on our clinical initiatives to support the growth of each of our MedTech platforms. We are extremely proud of the work this organization has done over the last three years to transform this business. We are in a tremendous position to now shift into execution mode and work to drive accelerating adoption and utilization within our MedTech businesses and maintaining solid performance of our MedDevice business. With that, I'll turn the call over to Steve Trowbridge, our Executive Vice President and Chief Financial Officer, to review the quarter in more detail.

Thanks, Jim. Good morning, everybody. Before I begin, I'd like to direct everyone to the presentation on our Investor Relations website, 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 forma basis, which exclude the results of the dialysis and biocentury businesses that we divested in June 2023, the PIC and midline products that we divested in February 2024, and the radiofrequency and SYNTREX support catheter products that we discontinued in February 2024. Our revenue for the fourth quarter of FY24 increased 1.9% year-over-year to $71.1 million, driven by growth in our MedTech platforms. MedTech revenue was $29.3 million, an 11.3% year-over-year increase, while MedDevice revenue was $41.8 million, a decline of 3.8% compared to the fourth quarter of FY23. For the full year, total corporate revenue was $270.7 million, up 5.3% year-over-year, with our MedTech segment up 10.1% and our MedDevice segment up 2.4%. For the fourth fiscal quarter, our MedTech platforms comprised 41% of our total revenue compared to 38% of total revenue a year ago. For the full year, our MedTech segment comprised 39% of our total revenue base versus 37% as of one year ago. Our Arianne platform contributed $13 million in revenue during the fourth quarter, growing 12% compared to last year. For the full year, our Arianne platform is up 15.8% year over year. Mechanical thrombectomy revenue, which includes angiovac and alpovac sales, declined 1.7% over the fourth quarter of FY23, but this represents a substantial improvement in the trajectory for this business. Angiovac revenue was $5.9 million in the quarter, a slight decrease compared to prior year sales, and a 6% increase sequentially over the third fiscal quarter of FY24. We're pleased to see the stabilization in angioVac revenue during the quarter and the back half of the year. AlphaVac revenue for the fourth quarter was $1.9 million. AlphaVac performance was facilitated by the expanded indication for AlphaVac to treat pulmonary embolism that we announced in April and our subsequent limited market release during the last month of the fourth fiscal quarter. AlphaVac revenue was up 6.8% over the prior year quarter. During Rich, we saw strong performance related to the enrollment of patients in our APEX study and is up 68% sequentially from the third fiscal quarter of FY24. We are very excited about our mechanical thrombectomy platform heading into FY25 with our full market release related to the PE expanded indication as well as our planned new product introductions and clinical initiatives. NanoKnife's disposable revenue during the quarter increased 18% year-over-year. Capital sales were robust in the quarter, growing 247.8%, and are a strong driver of future disposable sales. For the full year, NanoKnife's disposable sales are up 16%, and total NanoKnife sales are up 30.5%. In addition, as a reminder, Earlier this year, we announced that enrollment in preserve is 100% complete, and we expect to complete the 12-month follow-up this month. As this data starts to be made public over the course of this calendar year, we look forward to sharing it with you. In the fourth quarter, our med device segment declined 3.8% year over year. As Jim mentioned, this decline was primarily the result of impacts stemming from our reorganization following the PIC and midline divestiture that we closed in February, as well as anticipated fluctuations stemming from our manufacturing reorganization that we launched in January. For the full year, MedDevice revenue grew 2.4% over the prior year, in line with our long-term expectations. Moving down the income statement, our gross margin for the fourth quarter of FY 2024 was 54.3%, flat compared to the year-ago period. For the fourth fiscal quarter, MedTech gross margin was 64.1%, a decrease of 70 basis points, and MedDevice gross margin was 47.4%, a decrease of 60 basis points, each one compared to the fourth quarter of last year. In the quarter, gross margin was positively impacted by price and product mix, offset by retained manufacturing overhead costs associated with the divestitures and discontinuances we completed during the fiscal year. and our transition to an outsourced manufacturing model. MedTech gross margins were impacted by increased depreciation associated with our increasing Arian installed base. MedDevice margins were impacted by the manufacturing overhead dynamics I just mentioned. Full-year gross margin was 53.8%, a decrease of 110 basis points versus prior year, with MedTech gross margin of 63.3%, and MedDevice gross margin of 47.7%. Full-year gross margins included a 75 basis point headwind stemming from the manufacturing dynamics discussed previously and a 35 basis point headwind from a supplier recall we discussed in Q3. Turning to R&D, our research and development expense during the fourth quarter of FY 2024 was 6.7 million, or 9.5% of sales, compared to 7.6 million, or 10.9% of sales a year ago. SG&A expense for the fourth quarter of FY24 was 35 million, representing 49.2% of sales, compared to 34.8 million, or 49.8% of sales a year ago. Our adjusted net loss for the fourth quarter of FY24 was 2.2 million, or an adjusted loss per share of 5 cents, compared to an adjusted net loss of 4.3 million, or an adjusted loss per share of 11 cents in the fourth quarter of last year. This year-over-year improvement is largely attributable to our revenue growth and the success of our expense management initiatives, coupled with an improved capital structure. On a GAAP basis, we recorded a GAAP net loss of 13.4 million, or a loss per share of 33 cents in the fourth quarter of fiscal 24, compared to a GAAP net loss of 21.5 million, and a loss per share of 54 cents in the prior year quarter. Adjusted EBITDA in the fourth quarter of FY24 was $1.5 million compared to an adjusted EBITDA of $1.3 million in the fourth quarter of 23. Part of our pathway to profitable growth is disciplined expense management. Being in the midst of our strategic transformation requires us to balance investments in our MedTech portfolio to drive sustained long-term growth while managing expenses in the current macro environment and being good stewards of a strong balance sheet. Our fourth quarter results, particularly with respect to generating $1.5 million of adjusted EBITDA and significantly narrowing our adjusted EPS loss, are indicative of the success of that strategy. We will continue to manage our business prudently as we move ahead. At May 31, 2024, we had $76.1 million in cash and cash equivalents, compared to $44.6 million in cash and cash equivalents at May 31, 2023. As a reminder, we currently have zero debt, compared to $50 million of debt a year ago. In the fourth quarter of fiscal 24, we generated $5 million in operating cash, had capital expenditures of $0.6 million, and additions to Arianne placement and evaluation units of $1.8 million. We expect Q1 to exhibit higher use of cash than other quarters, which is typically the case. We are confident that the strength of our balance sheet, in combination with our capital allocation strategy, provides us with the flexibility to fund investments necessary to drive growth in our MedTech segment and execute on our strategic manufacturing transfer. As announced earlier today, the company approved a stock repurchase program authorizing purchases of up to $15 million of our outstanding common shares. Our decisions on repurchases and the timing of those repurchases will be based on a number of factors, including market conditions, as well as the need to balance investment in our growth strategy. This approval underscores the confidence that our board and management team have in the future of angiodynamics, and it allows us to leverage the strength of our balance sheet to create value for our shareholders. Turning now to guidance. For the fiscal year 2025, we anticipate revenue will be in the range of $282 million to $288 million, representing growth of between 4.2% and 6.4% over fiscal year 2024. Within each of our businesses, we expect MedTechNet sales to grow in the range of 10% to 12%, and we expect med device net sales to grow in the range of 1% to 3%. For fiscal 2025, we expect gross margin to be in the range of 52% to 53%. During the year, we expect to see some ebbs and flows in our reported gross margins as a result of the underabsorption of overhead from our Queensberry manufacturing plant and the buildup of inventory to facilitate our outsourcing. We're committed to our strategy to drive long-term efficiencies in our operating footprint and maximize the gross margin expansion that will result from growing the percentage of our MedTech revenue base. We expect adjusted EBITDA in the range of a loss of 2.5 million to zero. And finally, we expect an adjusted loss per share in the range of 38 to 42 cents. One final note on cadence and pacing during the year. Our fiscal year this year includes two less selling days than last year, one of which is in Q1 and one of which is in Q4. Selling days for Q2 and Q3 are exactly the same as last year. With that, I'll turn it back to Jim.

Thanks, Steve. As outlined earlier, we have made tremendous progress over the last three years. We have made significant investments across the organization to get us to where we are today. Our MedDevice business has been optimized to deliver consistent, predictable growth and provide cash to support our growth initiatives. Our MedTech business consists of three highly innovative platform technologies with the ability to service large global markets and deliver strong growth. We are in a unique position to be able to leverage a number of material catalysts over the near term to take advantage of the huge opportunities within our med tech markets. Starting with Arion in 2025, we expect to continue solid growth and drive our top line through increased penetration in the hospital setting in the U.S., through pursuing international expansion following our CE mark, which we expect to receive, by the end of our Q1, and supporting data collection and launching product line extensions. With AlphaVac, we are currently in full commercial launch for our PE indication in the U.S. and CE mark countries. And we also expect to launch new products over the course of the year to refine and enhance usability. And lastly, with NanoKnife, We expect FDA approval by the end of calendar year 2024, after which we will push to drive increased adoption in the US for prostate treatment. And we are pursuing a specific CPT code to add clarity to the reimbursement pathway for the procedure. We are really excited about the future here at AngioDynamics. We are in a great position to transition into a growth story supported by the initiatives that we have put in place over the last three years. I want to thank everyone involved throughout our organization for the continued dedication and tireless work towards our goals. With that, I will now open the line for questions.

Thank you. Ladies and gentlemen, the floor is now open for questions. You may press star one on your telephone keypad if you would like to ask a question at this time. You may press star two if you would like to remove your question from the queue. Today's first question is coming from John Young of Canaccord. Please go ahead.

Hi, Jim and Steve. Good morning. Thanks for taking the question, and congratulations on the quarter. I think I'd like to start on the guidance you put out for next year, especially on the med tech with the 10% to 12% growth. I'd be interested to hear about the methodology you came up with, especially when it comes to the prostate indication. Have you baked in any benefits from that prostate indication for the second half of fiscal 25?

Hey, good morning, John. This is Steve. Thanks for the question. With respect to NanoKnife, there's a little bit baked in in terms of our expectations. We've been talking about the clinical initiatives that we've had in completing enrollment in the prostate trial last year, finishing up the 12-month follow-up this year. and then expecting to get the FDA indication by the end of the calendar year. But I think importantly, when you think about NanoKnife, we've been talking about the ability to really parallel path a lot of our actions with NanoKnife over the last couple of years. So you've seen double-digit, almost 20% probe growth over the last couple of years. We expect that to continue. I wouldn't expect a huge hockey stick coming post-indication. I would expect more of that same trajectory that we've seen. The other dynamic I would talk about with NanoKnife, particularly as it relates to the guidance, We had a strong capital year this year, and we expect that to turn into probe growth over the year, but we don't think we're going to have the same level of capital sales in FY25 that we had in 24. It might be something that you see in Q1, particularly as a comp. So when you think about the guidance, yes, nanonife growth, but I don't think I would say it's really a hockey stick coming from the prostate indication. Really what you're going to see this year is a story of mechanical thrombectomy and the growth that we expect to see in that business throughout the course of the year, primarily coming from that PE indication that we got for AlphaVac and moving into that full launch for all of FY25. If you think about what we've seen with Arian over the last couple of years, double-digit growth, expect that to continue. Same thing with what we talked about with NanoKnife. But now you're going to have thrombectomy kind of joining the growth party of particularly with some of the benefits that we saw at the end of Q4 with AlphaVac. On cadence, though, I would say expect Q1 to be the lowest month. There's a little bit of a comp dynamic. He still had some angioVac performance in Q1 last year before we really saw the change in Q2 and Q3. And we were also still enrolling patients in our AlphaVac APEX trial in Q1 of last year. So expect Q1 to be a little bit lower, particularly in terms of tech growth, and then getting into that double-digit growth as you get into Q2, Q3, and Q4.

I appreciate all that, Cole. That's very helpful. And maybe just turning towards from that to me, you know, especially as we talk about next year too, the new product initiatives that you mentioned on the call, are these more ancillary products or are these improvements to the existing AlphaVac products? And then also, just with some of the IT litigation that's popped up in this space over the past few months, what is your comfort around freedom to operate with the current AlphaVac? Thank you again.

Yeah, thanks, John. So two points on that. When you talked about the line extensions, yeah, we expect those to be line extensions within the AlphaVac family. It's not going to be like a whole brand-new product, but there are things that are important to add to the next generations of AlphaVac. You know, one of the things to remember is we're still on Gen 1 of our AlphaVac when we launched it a couple years ago. So expect that we're going to refresh that and things that are coming from us listening to our customers and going through our R&D process. On the IP side, there's always two elements of IP, right? There's the sword and the shield. When it comes to freedom to operate, we've got a very robust IP portfolio that came from the initial AngioVac acquisition that we did a few years ago and the work that our IP team has done to build up that picket fence around our technology. We feel very strong about our position in terms of the freedom to operate. We also feel very strong about the fact that we've got good IP, and we're going to make sure that we're going to keep an eye on other companies and protect our IP as necessary as we go through the course of the next couple of years and the growth trajectory that we expect to see in Throndis. Great. Thank you again.

Thank you. The next question is coming from Steve Lickman of Oppenheimer. Please go ahead.

Thank you. Good morning, guys. I guess also on mechanical thrombectomy, great to see the angio-vac stability. Can you talk a little bit more about what's driving that, what some of the efforts you've been putting forth to kind of keep that stable while off of vac ramps, and what's your visibility like on maintaining that stability here in FY25? Sure.

I see. Thanks. So a couple things. AngioVac is really, really well designed to play in that right atrium space, and we do a really good job in that space. The product's unique. We don't think anything else can perform as it does. But there's also other areas we think we can play in. We've been led by our physicians who think that there's other avenues we can utilize the product in. So our R&D teams and clinical teams are always pursuing other opportunities. At the same time as that's happening, we've trained our sales force differently. We've aligned our new, if I'm back to me, sales force here in the U.S., to just sell AngioVac and AlphaVac. As you may remember in the past, they had other products in the bag. Today, they're highly trained and specialized to serve these two products in these unique markets. So we feel real good about it. Again, the market size today where we have the space to compete for AngioVac is small compared to AlphaVac PE. We're really excited by the PE market opportunity where AlphaVac can go over time. But in the meantime, Steve, we've done what you would expect, is make sure we keep the clinical work on the back end, the R&D work to keep the product unique and special, While we've retrained and reeducated our sales and clinical teams to support that growth, we think that will stabilize the business and help support it.

Great. And then just on AlphaVac PE, have you moved into full launch yet, or can you talk a little bit more about sort of the ramp of the full launch here this year?

We have, Steve. So in the April call at the end of Q3, we announced that we had just received the PE approval from the FDA. We talked about what we would do over the next couple months. We're finishing our limited launch work, getting our people validated and trained to be ready for the FY25 rollout, which we've done. So just a month ago in June, we went to the full market release here in the U.S. So all of our reps are trained and validated. Our clinical team is ready. We've targeted the right customers who've shown interest or willingness to to try the product. And we're really excited. The initial feedback we've heard, Steve, aligns with some of the data that we presented in the APEX study. The data was really compelling. If you look at the efficacy of the product, you look at how much clot we could remove, how fast the procedures were done. I've talked to a lot of physicians myself in the last couple months, and really the efficiency of the product, the way it's designed to be wireless, which is unique and innovative in this space, as you know. It allows them to really go from the left to the right PA, move uh in safe and rapid fashion and really treat that patient quickly and safely remove a lot of clot so we're excited that the initial feedback aligns with what the study showed so we're doing our work here to support the great design and development of the product and compete in a really great marketplace got it and then just shifting to nano knife can can you talk a bit more about the reimbursement efforts around prostate that you mentioned uh

What are you looking to achieve there, and when could that happen potentially? And it sounds like you think the benefits of the preserved data and label can certainly start before any of that on the reimbursement front, correct?

That's right, Steve. So I'll harken back to the conversation we had about being able to parallel path a lot of the activities related to NanoKnife. So NanoKnife is currently on the market. It's got a 510K indication, so we're able to sell it, and that's what's been driving some of the growth that you've seen. but we're also working very diligently to make sure that we really shore up the reimbursement pathway. As you know, reimbursement is a very complex process. You have to go through a number of steps. There's a lot of things that we've been doing in the background, a lot of conversations we've been having both on the ICD-10 process as well as on the CPT side of things when you're working with the physician societies. So what Jim was referring to a lot of the work that we were doing, it's really to try to make sure that we tie a bow around that CPT side of things As there's more details when that process goes through, we will continue to update you. But we think that, yes, getting to, you know, really fully achieving the value of NanoKnife is going to be coming from shoring up the reimbursement as well as getting that indication pathway and then continuing to have our sales force out there educate the urologists of the options that are out there and the options that NanoKnife gives patients that they don't have otherwise.

And Steve, I'll remind you one other piece as well. We worked hard the last couple of years to globalize our structure. Our selling and marketing teams outside of the U.S. for years were really focused on our med device portfolio. You know, we do bids and tenders for some of those products. And our team has really shifted. They've done a great job becoming much more clinically focused, preparing to support the global sales increase that we'll expect in our tech products. And you've seen some of that recently. The work they've done a year ago, we talked to you about NICE and NHS in the U.K. upgrading our status. For nanoprostate, that was really important. You're going to see growth coming from that. You look at now getting AlphaVac PE CE mark approved in the past fiscal quarter. Then again, we mentioned we think the Ariane approval may happen during this fiscal quarter, getting our CE mark. So our teams, the regulatory and clinical teams, both here in the U.S. and overseas, have done a really good job preparing our companies' shift to a more tech-based approach and how we serve those customers over time.

That's great. Thanks, guys.

Thank you. The next question is coming from Yi Chen of HC Wainwright. Please go ahead.

Thank you for taking my questions. Could you comment on if there is any difference in commercial strategies between the U.S. and Europe for AlphaVac for the PE indication, and what is the expected impact on operating expenses? Thank you.

Hi, Yi. Thanks for the question. You know, the base fundamentals of treating PE is the same here in the US as it is in Europe. The market development has been different. The US market has gone a little faster towards catheter-based approach adoption with some of the other companies and us that have entered this market. So we're working really, our European team just went through extensive training. Our direct team and even some of our clinical partners that we utilize across Europe to support the use of the product. So we're really excited by the clinical training they've gone through. They're ready to support products and I've heard some really good results from the procedures that we've already been able to complete recently. So it's going to take a really good approach. What we've done to prepare for this is aligning ourselves, our direct team, with some really good clinical-based partners to support the growth of AlphaVac treating PE outside of the US in the format that makes the most sense to us. So it's economically feasible for us, and it also gives our people the clinical reach that they need to support patient care. Over time, built into the projections we gave this morning, for our FY25 projections, you've got really those investments in the U.S. and outside of the U.S. to support the product growth already built into our P&L that Steve gave guidance on.

Got it. And could you also give us some specifics on the prostate patient population that are suitable to receive that online treatment? Thank you.

Sure, Yi. Thanks for the question. So we think that the perfect opportunity for us to start with this initiative was to go after the intermediate risk patients. So those are the patients that have been diagnosed with prostate cancer, but they're right on the cusp in terms of what treatment option they're going to get. Right now they've got two options that are on either end of a very diverse spectrum. Either they go to a radical prostatectomy and have surgery, very good overall survival results, terrible in terms of the amount of side effects that those patients typically suffer in terms of impotence or incontinence. The other end of the spectrum is watchful waiting or active surveillance really means no treatment. And so we think that the nano knife opportunity really fits well for those intermediate risk patients where we can go in, we can treat the condition that they have, preserve future treatment options, and importantly preserve those quality of life impacts so that they don't suffer those side effects. A lot of all that information is what we're looking forward to talking about when we come out with the preserved data. to show that it's an option that just men don't have today for that very large intermediate risk population.

Got it. Thank you.

Thank you. This brings us to the end of the question and answer session. I would like to turn the floor back over to Mr. Clemmer for closing comments.

Thank you, operator. I'd like to thank our team here at AngioDynamics that's worked with us to support our goal and our direction change to become a medical technology company. Much easier to say that than to actually do it. The work we've done on the R&D basis, listening to the customers, giving us their feedback on how to design and develop really unique, innovative products that can improve patient safety and physician efficacy. Well, we're doing that transformation. Along that journey, we hope to create value for our investors. So thank you for joining us today, and thanks to our team here at AngioDynamics.

Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your line to log off the webcast at this time and enjoy the rest of your day.