AngioDynamics, Inc.

Good morning, and welcome to the Angio Dynamics Fiscal Year 2026 First Quarter Earnings Call. At this time, all participants are in listen-only mode. The question-and-answer session will follow the formal presentation. As a reminder, this conference call is being recorded. The news release detailing Angio Dynamics' Fiscal Year 2026 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. 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'd 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 2026, 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 10Q and 10K, which identify specific factors that may cause actual results or events that 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 and 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 with measures prepared in accordance with GAAP. The slide package offering insight into the company's financial results is also available in 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 of financial performance during this morning's conference call. 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 were divested in June 2023, the PIC and midline products that were divested in February 2024, and the radiofrequency and Syntrax support catheter products that we discontinued in February 2024. Also, unless otherwise noted, All comparisons will be the first fiscal quarter of 2026 versus the first fiscal quarter of 2025. Now, I'd like to turn the call over to Jim Clemmer, Angio Dynamics' president and chief executive officer. Mr. Clemmer?

Thank you, operator. Good morning, everyone, and thank you for joining us for Angio Dynamics' fiscal 2026 first quarter earnings call. Joining me today is Steve Trowbridge, and Geodynamics Executive Vice President and Chief Financial Officer. We had a great first quarter. We continued to grow across all areas of our business and performed especially well in the med tech markets that are critical to our future. Not only did we deliver excellent top line results, we demonstrated how that revenue translates into profitability. Our teams have struck the right balance between increasing profit and investing in our future, which includes developing and launching new products, as well as regulatory expansion opportunities planned for the future. This combination of solid revenue growth with increasing profitability is the most important outcome of our strategic transformation. As many of you know, We have evolved our product portfolio from what angiodynamics was historically known for to one that now competes in large, fast-growing markets. We are proven that our unique technologies can win and drive accelerated growth. In Q1, we grew our revenue by 12%, led by the continued strength of our MedTech segment, which grew 26%, marking our fourth consecutive quarter with over 20% growth. We also achieved strong gross margins because of our revenue mix and our operations team driving solid performance, even while managing the impact of tariffs that raised some costs during the quarter. Our Arion business has delivered another exceptional quarter, which continues to grow well above market rates, as we believe we have the best technology to deliver better outcomes for patients with peripheral arterial disease. We are growing by taking share from all competitors in this space, and we are seeing our move into the hospital market continue to excel. allowing us to drive both top-line growth and higher margins. We are bullish on Arion as a long-term growth driver for our company, and we'll continue to invest to unlock new opportunities, as demonstrated by our ambition BTK study and our plans for Arion to compete in the coronary market in the future. We intend to continue proving why we believe our device is the most effective solution in the market. We want to expand access to new opportunities that broaden the TAM that we compete in. These studies will help achieve both goals. Arion exemplifies how our company can take an innovative product, build a great team around it, and execute with focus, which leads to strong growth and a great business. Our mechanical thrombectomy business grew by over 40% versus the previous year. Both AlphaVac and AngioVac saw strong customer growth, and we are pleased with the number of new users choosing our products. We are continuing to see new hospitals approve our products through their value analysis committees and bring us into inventory as approved devices, which will drive increased utilization moving forward. The feedback we continue to hear from customers consistently highlights how a few of the unique design elements that we built into Alphavac provide substantial advantages and make it both safe and effective. The fact that a physician can use AlphaVac to treat PE without the need to reinsert a guide wire to safely navigate to the desired location is viewed as an innovative design feature that saves time and simplifies use, even in complex interventional procedures. We will continue to add new features and expand the potential uses for AlphaVac as the interventional treatment of PE patients will be a growth driver for our company for many years. Our NanoKnife team is delivering great results as we experience growth of over 25%. Our expanded prostate indication allows us to educate and train neurologists on our device. and has an increased interest from doctors who are seeking an effective focal treatment option for their patients. We are working towards the January 1 date when our CPT1 code becomes effective, which will help get our patients treated and our customers paid for the treatment. Physicians are excited to use NanoKnife because of its highly compelling patient outcome benefits. as well as the assigned payment aligning well with their expectations. The fact that our device can treat a patient in less than one hour makes it both a clinically and economically effective solution to offer their patients. As part of our effort to increase awareness with men who may be seeking treatment options, we're launching a new AARP ad campaign this month to educate men and their families about how our device works and why the patient outcomes are terrific. We are excited to drive increased awareness and education for patients and physicians as we believe that Nano Knife can become the market leading product to treat intermediate risk prostate cancer. And we'll do everything possible to support that opportunity. Our medical device segment reported very strong results. We grew revenue over 2% year over year, led by strength in most of our categories. This business not only has excellent products that offer us attractive financial returns, but is also managed and run by a great team of people who know how to compete in more than one market at the same time. Overall, Q1 was a great start to our year. We're hitting on all cylinders. Our medtech business is accelerating, we're taking share with our superior technology, and we're driving sustained profitability. With our strong pipeline of clinical catalysts, expanding market opportunities, and the operational leverage we're building, we're positioned to deliver significant value creation for our shareholders. Now let me turn the call over to Steve Trowbridge, who will provide more detail on our financial results.

Thanks, Jim, and good morning, everybody. As always, 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. 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 we divested in June 2023, the PIC and midline products that we divested in February 2024, and the radiofrequency and Syntrax support catheter products that we discontinued also in February 2024. Additionally, unless otherwise noted, all comparisons will be the first fiscal quarter of 2026 versus the first fiscal quarter of 2025. Top line revenue performance was strong in the quarter. Revenue increased 12.2% to $75.7 million driven by growth across both our MedTech and MedDevice segments. MedTech revenue was $35.3 million, a 26.1% increase, and our MedDevice revenue was $40.4 million, an increase of 2.3%. As we mentioned in our Q4 call in July, this quarter provided a slightly easier comparison for year-over-year growth than we will see during the rest of FY26. That being said, we are really pleased with the revenue growth we achieved during our first quarter. For the first fiscal quarter, our MedTech platforms comprised 47% of our total revenue, compared to 41% of total revenue a year ago. is illustrating the sustained execution of our strategy to increase the percentage of our overall revenue base coming from our MedTech segment. In addition, in the slides accompanying our earnings release this morning, we illustrate the sustained growth of our MedTech segment over the past five years. During this time, the annual revenue of our MedTech segment has grown from 41 million in 2020 to 127 million in 2025, representing a compound annual growth rate of 25%. Digging into our MedTech segment, our Ariane platform contributed $16.5 million in revenue, growing 20.1% compared to last year. Ariane has now delivered double-digit year-over-year growth for 17 consecutive quarters. As Jim mentioned, this growth is supported by our strategy to increase the percentage of our atherectomy business in the hospital side of care. In addition to this mixed shift, we continue to grow our customer base in both the hospital and OBL settings. We also benefited from continued adoption internationally following CE mark approval in September of last year, which drove approximately $500,000 of revenue in the quarter. Mechanical thrombectomy revenue, which includes AngioVac and Alphavac sales, increased 41.2% year-over-year, with revenue of $11.3 million. In the quarter, AngioVac revenue was $8 million, a 37.1% year-over-year increase, and Alpivac revenue was 3.3 million, a 52.3% year-over-year increase. Total NanoKnife revenue was 6.4 million, an increase of 26.7%, with probe growth of 31.3%. We view each of our mechanical thrombectomy and NanoKnife businesses as strategically important, both in the near and long term, and are very happy with their recent performance. We expect both to continue to deliver strong year-over-year growth and contribute meaningfully to our margin profile and profitability moving forward. As I previously mentioned, in the first quarter, our med device segment grew 2.3% year-over-year. We've stated that we believe that our med device segment will grow in the low single digits throughout the coming years, and we're pleased with the sustained performance. Now, moving down the income statement, Our gross margin for the first quarter of FY26 was 55.3%, a 90 basis point increase from the first quarter of FY25. Primary drivers of the gross margin improvement are pricing initiatives in both our MedTech and MedDevice segments, the sales mix shift to our higher margin MedTech products, and operating efficiencies. We previously discussed our strategy to right-size our manufacturing footprint to address labor constraints at our Queensberry facility and utilize third-party manufacturing partners. Our operations team has done a fantastic job executing on our strategy and has accelerated some of the gross margin initiatives, driving gross margin improvement in the first half of our fiscal year, ahead of the scheduled completion date of January 2026. In addition, gross margin in Q1 included $1.7 million of tariff expense, or roughly 220 basis point impact. Touching briefly on tariffs, the expense in Q1 was in line with our expectations and, as we discussed last quarter, we continue to expect to incur between $4 and $6 million of tariff expenses for the full fiscal year 2026. Total operating expenses in the quarter were $52.5 million, down to just 69.4% of sales compared to 50 million or 74% of sales last year as we continue to drive operating leverage in the business. Turning to R&D, our research and development expense was 6.4 million or 8.5% of sales compared to 6.3 million or 9.3% of sales a year ago. As we previously stated, we remain committed to investing in R&D initiatives to support the long-term growth of our med tech segment and we're targeting approximately 10% of sales going forward. SG&A expense for the first quarter of FY26 was $40.7 million, representing 53.7% of sales, compared to $36.6 million, or 54.2% of sales, a year ago. This increase in spend is largely driven by the investments we have highlighted in an expanded mechanical thrombectomy sales force to support the growth of our MedTech segment. Our adjusted net loss for the first quarter of FY26 was $4.2 million, or an adjusted loss per share of $0.10, compared to an adjusted net loss of $4.4 million, or an adjusted loss per share of $0.11 in the first quarter of last year. This year-over-year improvement is largely attributable to our MedTech revenue growth and the success of our expense management initiatives. Adjusted EBITDA in the first quarter of FY26 was $2.2 million compared to an adjusted EBITDA loss of $152,000 in the first quarter of 2025. At August 31, 2025, we had $38.8 million in cash compared to $55.9 million in cash at May 31, 2025. As we mentioned in July, cash utilization is always highest in our first fiscal quarter. This year, cash utilization was a bit better than we expected. We continue to expect to be cash flow positive for the current full fiscal year. And in line with historical quarterly patterns, we expect to use approximately $3 million of cash in Q2. For Q3, we expect to use zero cash or generate some. And we expect significant cash generation in Q4. We maintain zero debt and have the flexibility to tap into our revolving credit facility if needed. Turning now to guidance for fiscal 26. Based on our first quarter performance and our expectations for the balance of the year, we now expect net sales to be in the range of $308 to $313 million, raised from our previously issued range of $305 to $310 million. This increased range now represents growth of between 5% and 7% over fiscal 25 revenue of $292.7 million. On a segment basis, we now expect MedTech net sales to grow 14 to 16 percent, an increase from prior guidance of 12 to 15 percent, and we continue to expect Med device sales to be roughly flat. For fiscal 2026, we continue to expect gross margin to be in the range of 53.5 to 55.5 percent. This is inclusive of our reiterated estimate of $4 to $6 million of tariff impact for the full fiscal year. Let me give a little more color on gross margin We don't expect to see a significant step-up in margin during the balance of the year. As discussed above, we've accelerated some of our gross margin improvement initiatives during the first half, and we're seeing that here in our first quarter results. We now expect adjusted EBITDA to be in the range of $6 to $10 million, up from prior guidance of $3 to $8 million, again, inclusive of our estimated tariff impact. And finally, we now expect adjusted loss per share in the range of 33 cents to 23 cents, improving from our prior guidance of a loss of 35 to 25 cents. As you've just heard, we had a fantastic quarter driven by the continued execution of our strategic transformation. We have a compelling portfolio of world-class products competing in attractive markets. We have a great global team, commercial, R&D, clinical, regulatory, market access, all working together to bring innovative solutions to our customers, and we have the infrastructure in place to manufacture and deliver those technologies to our customers efficiently. Finally, we have a strong balance sheet, which will allow us to continue to invest in growth. We're excited about the momentum we built and the opportunities ahead of us. We remain focused on executing across our businesses to drive sustained profitable growth and value creation during the balance of fiscal 26 and beyond.