AngioDynamics, Inc.

Good morning and welcome to the AngioDynamics fiscal year 2026 third quarter earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. The news release detailing AngioDynamics fiscal 2026 third 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.angiosdynamics.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 margin 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 limitations, the company's Form 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 substitute for, or as superior to, two financial reporting measures prepared in accordance with GAAP. A 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 and financial performance during this morning's conference call. Unless otherwise noted, all metrics and growth rates mentioned during today's call are on pro forma basis, which exclude the results of the dialysis and bifentery businesses that were divested in June 2023. The PIC and midline products that were divested in February 2024 and the radiofrequency Syntrax support catheter products that we discontinued in February 2024. Also, unless otherwise noted, all comparisons will be the third fiscal quarter of 2026 versus the third fiscal quarter of 2025. Now, I would 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 third quarter earnings call. Joining me on today's call is Steve Trowbridge, Angio Dynamics Executive Vice President and Chief Financial Officer. Our third quarter was strong across the board, and I am proud of how our team continues to execute. We maintained our trend of driving top line growth, led by impressive growth in our MedTech segment. Beyond the top line, we continue to deliver strong profitability by expanding our adjusted EBITDA. Our performance continues to show that our strategy to drive profitable growth in our high-margin, large medtech markets is working. Based on that, we are once again raising our full-year guidance for net sales and adjusted EBITDA. That is our third consecutive quarter of RAISE guidance, and Steve will touch upon the details shortly. I am very proud of the resilience we have built into the business. We've developed this company around cardiovascular and oncology markets with three product portfolios that we are really excited about. Along the way, we've had to work through a manufacturing transition, deal with tariffs, and managed through a lot of macro uncertainty. None of that has slowed us down. That is because we have great people who know how to get the job done, and the results we are putting up are not because one thing went right. It is years of work coming together. Within our med tech business, Arion continued its strong momentum with the 19th consecutive quarter of double-digit year-over-year growth, which is a track record we are very proud of. We have consistently driven revenue growth by leveraging our superior technology to take share, and our push into the hospital market keeps paying off, driving both top-line growth and better economics. And it is not just about taking share. With our Ambition BTK study, we are not only winning in the current market, we are working to make the market larger. Internationally, we are seeing continued traction following our CE mark approval. Turning to our mechanical thrombectomy business, we loved what we saw this quarter. Our combined portfolio of AlphaVac and AngioVac grew approximately 18% over the prior year, demonstrating the superior clinical performance of this portfolio. AlphaVac in particular had an outstanding quarter, delivering strong year-over-year growth and driving the largest sequential revenue increase we have seen since its launch. New accounts are coming on. More hospitals are bringing us through the VAC process and into inventory. and utilization within existing accounts keeps increasing. The physician feedback on this product is consistently strong. Our training and clinical education programs continue to be well received, and we are seeing strong demand from physicians who want to learn how to use this technology and bring it into their practice. On the regulatory front, we have enrolled our first patients in the APEX return pivotal trial, evaluating the alpha return blood management system when used with the AlphaVac for treating acute PE. That is an important milestone, and we expect it to be a catalyst for accelerating adoption. We continue to strive to complete the approval process during the first quarter of calendar 2027. AngioVac continues to see strong demand. Together, these two products give us a differentiated position that we believe is unmatched in mechanical thrombectomy, and the portfolio selling approach keeps paying off. Our sales teams are doing a great job positioning both products based on clinical need and physician preference, and we expect to see continued strong growth from the combined thrombectomy portfolio going forward. Finally, NanoKnife. We had a very strong quarter for both disposables and capital. As you know, our CPT-1 code became effective on January 1, and what we have seen thus far has been positive. There is continued opportunity to broaden coverage across both public and private payers, and our market access team remains focused on that. With respect to the patients being treated, what our physicians are seeing in practice lines up with what our preserve study showed. In particular, excellent quality of life outcomes. We continue to see lots of organic interest in nanonife, and as a result, More patients are being treated each month. During the quarter, we also announced expanded European indications for nanomife to include soft tissue ablation for tumors of the liver, pancreas, kidney, and prostate. This expanded indication supports our broad-braced market in Europe and positions nanomife as a true multi-organ platform internationally. Our med device segment keeps delivering as expected, and the team running this business does a terrific job competing across multiple markets simultaneously. I am really proud of where this company is today. Five years ago, we set out to transform angiodynamics into a faster-growing, more profitable company by getting into larger markets with better products. We reshaped the portfolio, built the teams to support it, and figured out how to make it all work. And that is what you're seeing in our numbers. Three consecutive quarters of raised guidance does not happen by accident. It is the right people doing the right things every day. And we are just getting started. With that, I'll turn the call over to Steve Trowbridge, our Executive Vice President and Chief Financial Officer to review the quarter.

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 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 of 24. Additionally, unless otherwise noted, all comparisons will be the third fiscal quarter of 2026 versus the third fiscal quarter of 2025. Company top-line revenue performance was strong again in the quarter. Revenue increased 8.9% to $78.4 million, driven by growth across both our MedTech and MedDevice segments. MedTech revenue was $37.3 million, a 19% increase. Year-to-date, our MedTech segment is up 19.1%. For the third fiscal quarter, our MedTech platforms comprised 48% of our total revenue compared to 44% of total revenue a year ago, reflecting the ongoing shift in our business mix. Digging into our MedTech segment, our Arion platform contributed $16.3 million in revenue, growing 17.9% compared to last year. Arion has now delivered double-digit year-over-year growth for 19 consecutive quarters. Beyond what Jim mentioned, we have continued to invest in product line extensions based on what we are hearing directly from our physicians, including our radial access and 1.7-millimeter catheters. That focus on listening to our customers and improving the platform is is a big part of why Arion keeps winning. Mechanical thrombectomy revenue, which includes AngioVac and AlphaVac sales, increased 17.9% year-over-year, with revenue of $11.5 million. In the quarter, AlphaVac revenue was $4.4 million, a 47.4% year-over-year increase, and a greater than 24% sequential increase over Q2 of this year. AngioVac revenue was $7.2 million, a 5% year-over-year increase. In mechanical thrombectomy, we are seeing strong adoption driven by new accounts, increasing utilization within existing accounts, and the continued expansion of our dedicated sales force. AngioVac revenue returned to growth in the quarter, and we remain pleased with the sustained procedure volumes and demand for this product. Total nanoknife revenue was $7.6 million, an increase of 21%, with probes growing 20%. Probe sales are primarily driven by demand for nanonife in prostate care. Nanonife capital sales grew 24.9% and were bolstered by strong demand for new systems as new physicians and providers adopt the technology. As these systems are placed and new physicians and providers experience the improved patient outcomes our technology enables, we expect them to drive increased probe utilization going forward. The leading indicators are encouraging. Demand for our training programs is strong, and the procedural trends we track give us confidence in where this business is headed. In the third quarter, our med device segment increased 1.1% year over year. Year to date, our med device segment is up 3%. This business generates consistent cash and profitability, allowing us to keep investing in the growth of our med tech platforms. Now, moving down the income statement, our gross margin for the third quarter of FY26 was 52.9%, a 110 basis point decrease from the third quarter of FY 2025. As we discussed during our last earnings call for our Q2 results, the year-over-year decrease was primarily driven by the impact and timing of tariffs, inflation, and certain costs associated with our manufacturing transition. These expected structural elements were partially offset by continued products' mixed shift towards MedTech sales and pricing initiatives across both MedTech and MedDevice. Total operating expenses in the quarter were $54.4 million, representing 69% of sales, compared to $48.8 million, or 68% of sales, last year. Turning to R&D, our research and development expense was $7.1 million, or 9% of sales, compared to $6.9 million, or 10% of sales, a year ago. We remain committed to investing in R&D initiatives to support the long-term growth of our MedTech segment and are targeting approximately 10% of sales going forward. SG&A expense for the third quarter of FY2026 was $38.2 million, representing 49% of sales, compared to $36 million, or 50% of sales, a year ago. This result illustrates our strategy of simultaneously investing in sales and marketing to support sustained growth while driving operating leverage. Our adjusted net loss for the third quarter of FY2026 was $3 million, or an adjusted loss per share of $0.07, compared to an adjusted net loss of $3.1 million, or an adjusted loss per share of $0.08 in the third quarter of last year. Adjusted EBITDA in the third quarter of FY26 was $1.8 million, compared to adjusted EBITDA of $1.3 million in the third quarter of 25. This year-over-year improvement is largely attributable to our MedTech revenue growth and the success of our gross margin and operating efficiency initiatives. We've done all this while absorbing tariff costs that were not there a year ago. Touching briefly on tariffs, tariff expense of $1.3 million in Q3 was, again, in line with our expectations. As we discussed last quarter, while the tariff landscape remains dynamic, we continue to expect to incur between $4 and $6 million of tariff expenses for the full fiscal year 2026. As a reminder, there were no tariff-related expenses in our fiscal third quarter last year. At February 28, 26, we had $37.8 million in cash compared to $41.6 million in cash at November 30, 2025. In the third quarter of fiscal 26, the company used $3.1 million of cash, slightly better than our expectations. Turning now to guidance. Based on another strong quarter and our expectations for the balance of the year, we are raising multiple components of our full-year fiscal 2026 guidance. We now expect net sales to be in the range of $313.5 to $315.5 million, raised from our previously issued range of $312 to $314 million. This increased range represents growth of between 7.1% and 7.8% over fiscal 2025 revenue of $292.7 million. On a segment basis, we are raising MedTech net sales growth to 15% to 17%, and now expect med device sales to grow at approximately 1%. For fiscal 2026, 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 to $6 million tariff impact for the full year. We now expect adjusted EBITDA to be in the range of $10 million to $12 million, up from prior guidance of $8 million to $10 million, again, inclusive of our estimated tariff impact. As a reminder, adjusted EBITDA will be lower in the second half of the year than the first as our planned investments in clinical data development hit the P&L, as well as the structural gross margin impacts I previously discussed. We now expect adjusted loss per share in the range of 30 cents to 23 cents, improving from our prior guidance of a loss of 33 cents to 23 cents. Turning to cash. We remain on course to illustrate that our business model will be cash flow positive as we expect to generate substantial cash in the fourth fiscal quarter in line with historical trends. During the third fiscal quarter, we were advised by our sterilization vendors of their plan to implement two upcoming temporary shutdowns to perform maintenance activities during the fourth quarter. To proactively address this and avoid any potential commercial disruptions, we are planning to increase inventory levels for certain products during the fourth quarter. The net result will be the acceleration of the use of approximately $3 to $5 million of cash to build inventory in the back half of this fiscal year, which normally would have been used in future periods. Now, this may result in cash flow for FY26 being slightly negative, but there is literally no modification to the positive cash generation pathway we have been on and the cash generation profile of our business. We maintain a strong balance sheet with zero debt. With that, I'll turn the call back to Jim.