AngioDynamics, Inc.

Good morning and welcome to the Angio Dynamics Fiscal Year 2025 First Quarter Earnings Call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, this conference call is being recorded. The news release detailing Angio Dynamics' Fiscal 2025 First Quarter 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 Form 10Q and 10K, 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 Investors 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, Engineering Dynamics' President and Chief Executive Officer. Mr. Clemmer?

Thank you, Operator. Good morning, everyone, and thank you for joining us for Andrew Dynamics Fiscal 2025 First Quarter Earnings Call. Joining me on today's call is Steve Trowbridge, Andrew Dynamics 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 first quarter financial performance 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 forma basis, which exclude the results of the dialysis and biocentury businesses that we divested in June 2023, the pick and midline products that we divested in February 2024, and the radio frequency and Syntrax support catheter products that we discontinued in February 2024. We kicked off our fiscal 2025 with a very solid first quarter. Total worldwide revenue was $67.5 million, representing growth of just over 1% year over year, in line with our expectations. Our MedTech segment had another strong quarter, growing approximately 9% led by Arion and Alphabet, which both grew north of 20% in the quarter. Beyond the top line, we made significant progress towards profitability, reporting an adjusted EBITDA loss of just $200,000. Outside of our financial performance, we continued to execute on our key 2025 catalysts, which included new product launches, hitting key regulatory timelines, and collecting data that supports our product's safety and effectiveness. Starting with an update on our MedTech business, Ariane continued to deliver outstanding results, growing 25% over the prior year, as our efforts to expand our customer base and broaden the utility of the product continue to pay dividends. As mentioned last quarter, we expected to drive increased penetration into hospitals as we put a greater emphasis on this largely untapped customer base. And we are excited that those efforts over the last 12 months are paying off. Beyond our commercial execution, the great work our team has done to broaden the utility of Arion help to drive growth in the quarter as the launch of Arion XL and our 1.7 millimeter catheter earlier this calendar year continue to be well received by customers. Just before the end of the quarter, we received CE mark approval for Arion. This is a significant milestone which not only validates the clinical value of Arion, but also gives us access to the European PAD market. We are currently in a limited market release in Europe for Arion and expect this geography to account for a low single-digit percentage of total Arion revenue for the year. Turning to our mechanical thrombectomy business, we are very encouraged by the performance of both AlphaVac and AngioVac. AlphaVac had a very strong quarter, with revenue increasing by over 21%, despite the tough year-over-year comp, as the first quarter in fiscal 2024 included peak APEX trial participation. This also marks the second straight quarter of sequential revenue growth for AlphaVac, highlighting the demand for its use in treating PE following our FDA clearance in early April. and our CE marking in late May. Supported by the strength of the APEX trial data and a fully trained global sales force, we moved into full market release in both the U.S. and Europe. We are very encouraged by physicians' interest and willingness to evaluate AlphaVac. I recently had the opportunity to attend the pulmonary embolism response team or PERT annual meeting in mid-September, which is the leading event in the U.S. for raising awareness of solutions for the treatment of pulmonary embolisms. I was genuinely energized by the enthusiasm physicians have shown towards AlphaVac. Many shared their experiences, and the feedback has been overwhelmingly positive for those who have adopted the technology, surpassing even our own expectations. Physicians continually highlight the intuitive design, the efficiency, the steerability of the device, and most importantly, they're impressed with how much clot they can remove, aligning with the excellent data that we saw in our APEX trial. This valuable feedback reinforces our belief that AlphaVac is not only meeting but exceeding the needs of the clinical community. We're excited about the momentum we're seeing and the impact this will have on patient outcomes moving forward. As expected, the vast majority of our growth in the quarter was driven within the U.S., and as our focused commercial efforts, in combination with the strength of our APEX data, have been very successful. While we have started to see contribution from the launch in Europe, we expect the U.S. to continue to be the biggest driver of growth for AlphaVac in the near term. To help support longer-term growth in Europe, in mid-September, we launched the RECOVER-AV clinical trial, which is designed to evaluate the safety and efficacy of AlphaVac for the treatment of acute intermediate risk, PE, in the European market. Turning to AngioVac, We continue to see stabilization within this product during the first quarter as we delivered $5.8 million in line with revenue in the fourth quarter of fiscal 2024. Lastly, within our MedTech segment is Nanonife. We delivered approximately $5.1 million in revenue, which was down 6.9% over the first quarter of fiscal 2024. This was primarily the result of a large European distributor coming on board during the first quarter of fiscal 2024, which included a significant upfront inventory purchase that did not reoccur during the first quarter of this year. We are very encouraged by the adoption and utilization trends within Nanolife. The new system installation trends observed during 2024 continued into the first quarter of 2025. which are a leading indicator of future disposable revenue volumes. In particular, we continue to be excited about its use by urologists, as we have continued to see a steady increase in prostate case volumes with Nanonive. In July, we completed a 12-month follow-up as part of our Preserve study. As expected, we hit the primary endpoint giving us high-quality data supporting the efficacy of nanolife, as well as its ability to avoid the various quality-of-life side effects forced upon prostate cancer patients by other treatment modalities. With the preserved data in hand, we have filed our submission to the FDA, and we remain excited about receiving an FDA clearance in prostate around the end of this calendar year. in conjunction with our pursuit of an FDA clearance. We continue to work towards solidifying reimbursement. In mid-September, the company participated in the CPT editorial panel meeting during which the panel discusses proposals to create new CPT codes. IRE was on the agenda with a proposal to create a new CPT level one code specific to prostate procedures. We expect to hear the panel's decision later in October with hopefully successful outcomes for IRE and Nano Knife. Turning to our med device segment, revenue declined approximately 4%. Our U.S. med device business increased 2% over a prior year, offset by a shortfall in our international business as a result of a timing of certain international orders during the first quarter of fiscal 2024 and some softness in our microwave products. We continue to expect to hit our previously issued guidance for a med device segment of one to 3% growth for the full year. Beyond our commercial execution, we made significant process on our path to profitability. We reported an adjusted EBITDA loss of just $200,000 during the first quarter, compared to a loss of $1.1 million in fiscal 2024. In the quarter, adjusted EPS was a loss of 11 cents per share, improving from a loss of 16 cents per share in fiscal 2024. These results highlight that our strategy to drive towards profitability is going to our plan. Before turning the call over to Steve, I wanted to provide a quick update on our shift to outsourced manufacturing. This process is tracking in line with our expectations and will allow us to fundamentally change our manufacturing overhead structure and take out overhead costs, which will ultimately flow through to our bottom line. As a reminder, we expect this transition to generate approximately $15 million and annualized savings by fiscal 2027. We are very pleased with our performance during the quarter. We made significant progress across our portfolio and continue to make strides on key operational initiatives. 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.

Steve? Thanks, Jim, and 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 also in February 2024. We were very pleased with our first quarter results. Overall revenue was in the range of our expectations, driven by Arion, Angivac, and Alphabac. Gross margin was strong, stemming from the Thrombus performance, leading to strong bottom line results in terms of adjusted EBITDA and adjusted EPS. Our revenue for the first quarter of FY25 increased 1.1% year-over-year to $67.5 million, again driven by growth in both our MedTech and U.S. MedDevice platforms. MedTech revenue was $28 million, an 8.7% year-over-year increase, while MedDevice revenue was $39.5 million, a 3.6% decrease compared to the first quarter of FY24. But as Jim mentioned, our U.S. MedDevice business was up 2.1% over the prior year. For the first fiscal quarter, our MedTech platforms comprised 41.4% of our total revenue compared to 38.5% of total revenue a year ago. Our Arion platform contributed $13.7 million in revenue during the first quarter, growing 24.9% compared to last year. AlphaVac was a key strong contributor in the first quarter of FY25. Mechanical thrombectomy revenue, which includes AlphaVac and AngioVac sales, declined 1.6% over the first quarter of FY24. The AlphaVac revenue for the first quarter was $2.2 million, an increase of 21.1% year-over-year and 13.2% sequential increase over the fourth quarter of 2024, largely as a result of the strong early adoption of AlphaVac for PE. We're also pleased to see the continued stabilization in AngioVac, with $5.8 million of revenue in the quarter. As we discussed last quarter, this first quarter provided a tough year-over-year comparison for mechanical thrombectomy. We were reaching peak enrollment in our AlphaVac PE trial during the first quarter of last year, and AngioVac was performing well prior to the disruption we experienced in the second quarter of last year. Given this dynamic, we are very pleased with the performance of our mechanical thrombectomy business as we continue to successfully compete in this exciting, growing, and large total addressable market. Nanonife's disposable revenue during the quarter declined 4.6% and capital sales declined 15%. As I just mentioned, the first quarter of last year provided for a particularly tough comparison for Nanonife as Nanonife grew over 35% in the first quarter of last year, aided by the timing of bringing some new international distributors online. We were very pleased with the trajectory of prostate cases in the quarter and are on track for our projections for Nanonife for the full year. Admittedly, the dynamic around nanonife timing does mean that our second quarter will have an easier year-over-year comparison. Moving down the income statement, our gross margin for the first quarter of FY2025 was 54.4%, a decrease of 40 basis points compared to the year-ago period, but ahead of our expectations for the quarter. For the first fiscal quarter, MedTech gross margin was 63.3%, a decrease of 160 basis points. And MedDevice gross margin was 48.2%, a decrease of 40 basis points, each one compared to the first quarter of last year. The year-over-year decline in gross margin for the MedTech business was primarily driven by increased hardware depreciation and inflationary pressures. Gross margin for the MedDevice business was impacted by inflationary pressures and costs associated with the transition to outsource manufacturing. Turning to R&D, our research and development expense during the first quarter of FY 2025 was 6.3 million or 9.3% of sales compared to 7.7 million or 11.6% of sales a year ago. SG&A expense for the first quarter of FY 2025 was 36.6 million representing 54.2% of sales compared to 36.7 million or 55% of sales a year ago. Our adjusted net loss for the first quarter of FY2025 was $4.4 million, an adjusted net loss per share of 11 cents, compared to an adjusted net loss of $6.2 million, or adjusted loss per share of 16 cents in the first quarter of last year. The year-over-year improvement is largely attributable to higher revenue and improving operating leverage during the first quarter of this year. Adjusted EBITDA in the first quarter of FY2025 was a loss of $152,000, compared to a loss of $1.1 million in the first quarter of 2024. At August 31st, 2024, we had $55 million in cash and cash equivalents compared to $76.1 million in cash and cash equivalents at May 31st, 2024. As a reminder, we currently have zero debt compared to $50 million of debt when we began FY24. In the first quarter of fiscal 2025, we used $18.3 million in operating cash had capital expenditures of $1.1 million, in addition to RA on placement and evaluation units of $1.3 million. Our first fiscal quarter has historically exhibited the highest utilization of cash, and the first quarter fiscal 25 was in line with our expectations. In another update on our balance sheet, as announced in July of this year, the company approved a stock repurchase program authorizing purchases of up to $15 million of our outstanding common shares. Through the end of the first fiscal quarter, The company purchased approximately $500,000 worth of stock at an average share price of $7.62. We will continue to be opportunistic about our decision to make further repurchases based on a number of factors, including market conditions, as well as the need to balance investment in our growth strategy as we seek to leverage the strength of our balance sheet to create value for our shareholders. Turning out of guidance, for the fiscal year 2025, we are reiterating each component of our previously issued guidance. We continue to expect revenue will be in the range of $282 to $288 million, representing growth of between 4.2% and 6.4% over fiscal year 2024. Within each of our businesses, we continue to expect MedTech net sales to grow in the range of 10% to 12%, and MedDevice net sales to grow in the range of 1% to 3%. For fiscal 2025, we continue to expect gross margin to be in the range of 52% to 53%, and we continue to expect adjusted EBITDA on the range of a loss of 2.5 million to zero. And finally, we continue to expect an adjusted loss per share in the range of 38 to 42 cents. With that, I'll turn it back to Jim.