AngioDynamics, Inc.

Good morning, and welcome to the Angio Dynamics Fiscal Year 2026 Second 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 2026 Second 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 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 in 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. 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 second fiscal quarter of 2026 versus the second fiscal quarter of 2025. Now, I'd 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 2026 second quarter earnings call. Joining me today is Steve Trowbridge, Angio Dynamics Executive Vice President and Chief Financial Officer. We delivered strong results in the second quarter. Revenue grew 8.8%, with MedTech up 13%, and we translated that top-line performance into improved profitability. Adjusted EBITDA nearly doubled year over year, and we generated positive cash flow. These results prove that we can drive both revenue growth and profitability simultaneously. Based on our strong performance, we are raising our full-year guidance for both revenue and adjusted EBITDA, which Steve will detail later in the call. What's particularly encouraging is the breadth of our execution across our portfolio. Arion delivered another quarter of double-digit year-over-year growth. Our mechanical thrombectomy platforms continue to gain traction, both commercially and from a regulatory product development standpoint. NanoKnife is well-positioned to capitalize on the prostate opportunity with the CPT code becoming effective a few days ago, and our med device business delivered solid results. Now let me walk you through each of our businesses. Arion continues to perform exceptionally well. We delivered our 18th consecutive quarter of double-digit growth, and we continue to take share in the arthrectomy market. Our strategy, to increase penetration in hospitals is working, driving both higher volumes and better economics. International is starting to contribute following our CE mark approval. We're also making progress on expanding the addressable market. The Ambition BTK study is enrolling well, and we're advancing our work towards coronary applications. These initiatives will take time, but they represent opportunities to broaden where Arion can compete. Moving to mechanical thrombectomy, we are pleased with the continued trajectory of our mechanical thrombectomy platform, and we are thrilled with the three regulatory milestones that we announced today in this portfolio. Our combined mechanical thrombectomy portfolio grew 3.9% over the prior year, driven by continued growth in AlphaVac. In addition, we are pleased with the continued performance of AngioVac. AlphaVac maintained its momentum, delivering sequential quarterly growth and strong year-over-year growth this quarter. We continue to win new accounts, move through the hospital value analysis committees, and see strong physician feedback on the unique design advantages of our platform. AngioVac was down year over year this quarter, impacted by a tough comparison against a particularly strong second quarter in 2025. We will continue to be excited about the trajectory of the business, and we remain confident in the long-term opportunity ahead. From a regulatory standpoint, we made significant progress this quarter with three important milestones for our mechanical thrombectomy portfolio. that strengthen our competitive position and expand our clinical applications. First, we received IDE approval for our APEX return study, a pivotal trial evaluating the alpha return blood management system when used with AlphaVac for treating acute pulmonary embolism. Alpha return addresses a hurdle to initial adoption that a number of prospective new customers have raised, which is the ability to collect, filter, and re-infuse aspirated blood during thrombectomy procedures. We believe that this additional offering will be a catalyst to accelerating the already impressive growth profile of AlphaVac. Second, we received IDE approval for our PAVE study, a pilot trial evaluating angiovec for the percutaneous removal of right heart vegetation in patients with right-sided infective endocarditis. This addresses an underserved patient population with limited treatment options, particularly when surgical risk is high. Third. We received 510 clearance for a modified AlphaVac F1885 system with expanded indications. The clearance expands the cannula indication to allow aspiration and injection of contrast media and other fluids and includes the sheath as an alternative introducer that minimizes blood loss. These enhancements give physicians greater flexibility in how they use the device across a broader range of cases. Together, these regulatory wins demonstrate the versatility and innovation of our mechanical thrombectomy platform. They represent meaningful opportunities to expand clinical applications, address unmet patient needs, and strengthen our competitive position in the thrombectomy market by delivering improved treatment options that physicians are seeking to improve patient outcomes. NanoKnife delivered strong growth this quarter, driven by prostate procedures. The CPT code went live on January 1st, which should provide a tailwind for adoption. We've been consistent in our messaging that this adoption will build over time rather than be an immediate step change. And that's what we're seeing. Physician interest is high. Procedure volumes are growing. And we are executing on our commercial and awareness building initiatives. We believe we're well positioned as this market continues to develop. Finally, in October, we were excited that the NanoLife system was named to Time's 2025 Best Innovations list, which we believe will accelerate patient awareness in this growing market. MedDevice grew over 5% this quarter, ahead of our expectations. The team running this business executes consistently, and it provides profitable cash flow that supports our MedTech investments. Looking at the quarter overall, We're executing on multiple fronts. We grew revenue, expanded margins, we advanced important clinical programs, and we generated cash. Our first half performance gives us confidence in our ability to operate efficiently while investing in the initiatives that position us for sustained growth. That balance between delivering today and investing for tomorrow is what will drive long-term value creation. Now let me turn the call to Steve for the financial details.

Thanks, Jim. 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 biocentery businesses that 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 second fiscal quarter of 2026 versus the second fiscal quarter of 2025. Top-line revenue performance was strong again in the quarter. Revenue increased 8.8% to $79.4 million, driven by growth across both our MedTech and MedDevice segments. MedTech revenue was $35.7 million, a 13% increase. We're very pleased with the performance of our MedTech segment. Now, the comp for our second quarter was much more difficult than the comp for our first quarter. And year-to-date, MedTech is up 19.1%. In the quarter, our MedDevice revenue was $43.8 million, an increase of 5.6%. For the second fiscal quarter, our MedTech platforms comprised 45% of our total revenue compared to 43% of total revenue a year ago, further illustrating the sustained execution of our strategy to increase the percentage of our overall revenue base coming from our higher growth, higher margin MedTech segments. Digging into our MedTech segment, our Arion platform contributed $16.3 million in revenue, growing 18.6% compared to last year. Arion has now delivered double-digit year-over-year growth for 18 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, and are benefiting from continued adoption internationally following CE mark approval in September of last year. Mechanical thrombectomy revenue, which includes angiovac and alphavac sales, increased 3.9% year-over-year with revenue of $11 million. In the quarter, angiovac revenue was $7.5 million, a 7.5% year-over-year decrease, and alphavac revenue was $3.5 million, a 40.2% year-over-year increase. While angioVac revenue was down year over year, we are pleased with the continued strength in this business, which delivered year-to-date growth of 11.2%. Q2 of last year exhibited the initial step-up in angioVac revenue and therefore provided for a tough comp. We remain bullish on angioVac going forward and are particularly encouraged by the sustained procedure volumes for this product. The approval of our IDE to study the use of angioVac to treat right-sided infective endocarditis will be an enabler of sustained growth for AngioVac in the future. AlphaVac continued its sequential quarter-over-quarter growth, and as Jim mentioned, the approval of our IDE for our blood return product will be an additional catalyst to accelerate momentum in AlphaVac. Combined mechanical thrombectomy portfolio continues to demonstrate strong momentum with our sales teams effectively positioning both AngioVac and AlphaVac based on clinical need and physician preference. Total NanoKnife revenue was $7.3 million, an increase of 22.2%, with probe growth of 14.4%. Probe growth continues to be driven by increasing growth in demand and utilization of NanoKnife to treat prostate cancer patients, and Q2 was a record quarter for us for prostate procedure cases. NanoKnife capital sales were bolstered by a transaction in France in which we moved from a direct sales model to a distribution model. Part of this transaction, the new distribution partner purchased NanoKnife systems that were previously placed at customer sites and were included on our balance sheet. In addition to NanoKnife sales, this transaction also included Arion, Microwave, and EVLT capital sales. NanoKnife capital sales in the transaction were approximately $1 million, and Arion, Microwave, and EVLT capital sales were approximately $250,000 each. This represents a smart transaction that will enable growth in a strategic international market. I applaud the efforts of our international team, and specifically Laura Piccinini, our GM of Global Cardiovascular International, for executing on this deal. In the second quarter, our med device segment increased 5.6% year-over-year. A year to date, our med device segment is up 4%. We are very pleased with the performance of this segment, and while we do not expect our med device segment to grow at this level for the full year, as I will discuss in more detail in a moment, we are raising our expectations for MedDevice for the full year up from our previous guidance. Now, moving down the income statement, our gross margin for the second quarter of FY26 was 56.4%, a 170 basis point increase from the second quarter of fiscal year 2025. The early year improvement was driven by continued product mix shift towards MedTech sales, accelerated benefits from our manufacturing transfer initiatives, and the sales channel transaction in France. With respect to our manufacturing transfer initiative, our operations team has done a fantastic job executing on our manufacturing optimization strategy, and we have been able to accelerate a meaningful portion of the cost savings ahead of schedule. Touching briefly on tariffs, the expense in Q2 was in line with our expectations, and as we discussed last quarter, we continue to expect to incur between $4 and $6 million in of tariff expenses for the full fiscal year 2026. Total operating expenses in the quarter were $50.9 million down to 64.1% of sales compared to $51 million or 69.9% of sales last year as we continue to drive operating leverage in the business. Turning to R&D, our research and development expense was $7.8 million or 9.8% of sales compared to 6.4 million, or 8.8% of sales a year ago. As previously mentioned, we remain committed to investing in R&D initiatives to support the long-term growth of our med tech segment and are targeting approximately 10% of sales going forward. Clinical initiatives that we previously mentioned, including the IDEs for blood return and infective endocarditis treated with AngioVac, are included in our projections for the balance of the year. SG&A expense for the second quarter of FY26 was 36.9 million, representing 46.4% of sales, compared to 36 million of 49.3% of sales a year ago. Our adjusted net loss for the second quarter of FY26 was 0.1 million, or an adjusted loss per share of one-tenth of a cent, compared to an adjusted net loss of 1.7 million, or an adjusted loss per share of four cents in the second quarter of last year. This year-over-year improvement is largely attributable to our MedTech revenue growth and the success of our gross margin initiatives and operating efficiencies. Adjusted EBITDA in the second quarter of FY26 was $5.9 million compared to an adjusted EBITDA of $3.1 million in the second quarter of 2025. The France distribution transaction I discussed earlier contributed approximately $1.4 million of adjusted EBITDA in the quarter. We are very pleased with the adjusted EBITDA generation in the quarter, both including and excluding the FANCE transaction. At November 30, 2025, we had $41.6 million in cash and cash equivalents compared to $38.8 million in cash and cash equivalents at August 31, 2025. In the second quarter of fiscal 26, the company generated $4.7 million of cash ahead of the company's expectations. We continue to expect to be cash flow positive for the full fiscal year 2026. Following the strong cash generation in the second fiscal quarter, we expect to utilize between 3 and 5 million of cash in the third quarter and then generate substantial cash in the fourth fiscal quarter, in line with historical trends. Turning now to guidance. Based on our strong second quarter performance and our expectations for the balance of the year, We are raising components of our full year fiscal 2026 guidance. We now expect net sales to be in the range of 312 to 314 million, raised from our previously issued range of 308 to 313 million. This increased range represents growth of between 6.6% and 7.3% over fiscal 2025 revenue of 292.7 million. On a segment basis, we continue to expect MedTechNet sales to grow 14% to 16%, and we now expect MedDevice sales to grow 0% to 1% and increase from our prior guidance of flat growth. For fiscal 26, we continue to expect gross margin to be in the range of 53.5% to 55.5%. This is inclusive of our reiterated estimate of $4 million to $6 million of tariff impact for the full year. As I mentioned, we've accelerated some of our gross margin improvement initiatives during the first half of this fiscal year, so we don't expect to see a significant step-up in gross margin during the balance of the year. We now expect adjusted EBITDA to be in the range of $8 million to $10 million, up from prior guidance of $6 to $10 million, again, inclusive of our estimated tariff impact. We continue to be pleased about our ability to generate increasing adjusted EBITDA while accelerating investments into initiatives to support the long-term growth of our business, which speaks to the effectiveness of our overall strategy. As a reminder, adjusted EBITDA will be lower in the second half of the year than it was in the first half as our planned investments in clinical data development hit the P&L. And finally, we continue to expect adjusted loss per share in the range of negative 33 cents to negative 23 cents unchanged from our prior guidance. We're pleased with our second quarter performance and the momentum we're building across the business. Our raised guidance reflects confidence in our ability to deliver sustained, profitable growth. Before ending, I want to briefly mention that following the quarter, we received notice that the U.S. Court of Appeals for the Fed Circuit affirmed the district court's judgment in our previously settled port patent litigation with C.R. Bard, invalidating Bard's patents. This decision concludes C.R. Bard's appeal and eliminates the potential that Angia would make a $3 million payment under the settlement agreement. This brings to a close litigation that we've successfully defended for more than a decade. Now with that, I'll turn the call back to Jim.