AngioDynamics, Inc.

Good morning and welcome to the NGO Dynamics Fiscal Year 2026 Fourth Quarter and Full Year 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 NGO Dynamics Fiscal 2026 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 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 margin for fiscal year 2027, 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 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 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 a pro forma basis, which exclude the results of the dialysis and biocentry businesses that were divested in June 2023, the PICC and midline products that were also divested in February 2024, and the radiofrequency and syntax support catheter products that we discontinued in February 2024. Also, unless otherwise noted, all comparisons will be the fourth fiscal quarter of 2026 versus the fourth fiscal quarter of 2025 and the full fiscal year 2026 versus the full fiscal year of 2025. Now, I would like to turn the call over to Jim Clemmer, AngioDynamics President and Chief Executive Officer. Mr. Clemmer.

Thank you, and good morning, everyone, and thank you for joining us for Andrew Dynamics' fiscal 2026 fourth quarter and full-year earnings call. Joining me today is Steve Trowbridge, our Executive Vice President and Chief Financial Officer. I am proud of our performance in fiscal 2026. We capped off a year of consistent execution across the business with a strong fourth quarter. Full-year MedTech growth of more than 18% tells the story. Our platform technologies across cardiovascular and interventional oncology took share in large, fast-growing markets. And because of the discipline this team brings every day, that growth came with increasing profitability, even as we absorbed tariffs that were not in our business a year ago. with a full year now behind us. I want to step back and talk about what this team accomplished in fiscal 2026, what we built, and why I believe this company is in the strongest position it ever has been in. Steve will then take you through the financial details and our outlook for fiscal 2027. A number of years ago, we set out to transform Andrew Dynamics into a fast-growing profitable company by bringing innovation to large global markets. Fiscal 2026 was another year of proof that the strategy is working and is playing out the way we said it would. Our MedTech segment was 47% of our total revenue this year, up from roughly 22% at the end of fiscal 2020. Over the past six years, that business has grown at a compound annual rate of approximately 24%, and we have done all of this while driving sustained profitability. I want to be clear about why that matters, because it did not just happen by accident, and it's not because we did one thing right. This is years of work coming together. It is a group of people doing the right things every day, In the right markets for the right patients. Now let me take you around the portfolio. Starting with Arion, which delivered its 20th consecutive quarter of double-digit year-over-year growth. We keep winning by taking share across all sites of care. Arion remains a really strong performer for us, and we are excited about where this platform can go from here. turning to mechanical thrombectomy. Collectively, this portfolio grew double digits during the year, driven by strong performance with both AlphaVac and AngioVac. Position feedback on both products remains consistently strong. Our work in an increasingly competitive market is getting these products into more hands, and that is squarely within our control. We have sharpened our commercial execution and accountability here. We are still early in the lifecycle of this portfolio, and we have meaningful catalysts directly ahead, including our Alpha Return Blood Management System, where we now have IDE approval and an active pivotal trial, along with our AngioVac Right Heart Program. We expect this to be one of our key growth engines for a long time to come. Turning to NanoKnife, this unique product was a standout this year and had an exceptional fourth quarter. In the U.S., the story is prostate. Physician interest and procedure volumes keep building, and as a result, we hit record procedures during the quarter. Behind those results is a lot of deliberate work on the fundamentals that drive this business. We generated strong two-year data from our preserved study. Our Category 1 CPT code for prostate and liver became effective on January 1. And during the quarter, we received a Medicare coverage framework that further supports patient access. All of that is coming together, and we expect NanoKnife to keep growing. What connects all of this is intent. We built this portfolio purposefully around large markets with real clinical need, and the strength of our technology is allowing us to win and deliver value for everyone we serve, from patients and physicians to our shareholders. Underpinning that growth is our med device business that plays an essential role and continues to do exactly what we ask of it. A terrific team delivering steady, profitable growth from a portfolio of sticky, market-leading products. Importantly, this business generates the cash generation profile and earnings foundation that lets us keep investing and our higher growth MedTech platforms. If there is one theme that I want you to take away from in fiscal 2026, it is this. We are delivering above market profitable growth consistently. We are taking share in the markets we set out to win and we are doing it while expanding profitability and proving that the business can generate positive cash flow. We continue to invest in the clinical data behind our platforms, and Steve will highlight that shortly. It is really important for us. But the headline for the year is simple. We are growing, we are profitable, and we are continuing to invest for the future. That balance reflects how we run this business, and it is exactly what gives me confidence in the years ahead. Before I hand it to Steve, A quick word on the leadership transition that we announced earlier this year. As I shared then, after a decade with our company, I intend to retire, and the board is running a comprehensive search with help from a leading executive search firm to identify our next CEO, which we expect to occur during the first half of fiscal 2027. Until my successor is in place, I will keep leading the team alongside Steve, and I am committed to a seamless handoff. With that, let me turn the call over to Steve to take you through the quarter, the full year, and our outlook for fiscal 2027.

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 pick and midline products that we divested in February 2024, and the radiofrequency and Syntrax support catheter products that we discontinued also in February 2024. and, unless otherwise noted, all comparisons will be the fourth fiscal quarter of 26 versus the fourth fiscal quarter of 25. Company top-line revenue performance was strong again in the quarter. Revenue increased 8% to $86.6 million, driven by growth across both our segments. MedTech revenue was $41.8 million, a 16.7% increase. For the fourth fiscal quarter, our MedTech platforms comprised 48% of our total revenue compared to 45% of total revenue a year ago, reflecting the ongoing shift in our business mix. Within our MedTech segment, our Arion platform contributed $17.8 million in revenue, growing 14.4% compared to last year. Arion has now delivered double-digit year-over-year growth for 20 consecutive quarters. This growth continues to be supported by our strategy to shift more of our atherectomy business towards the hospital side of care, while we keep growing our customer base across both the hospital and OBL settings, along with ongoing international adoption following our CE mark approval. Mechanical thrombectomy revenue, which includes angiobac and alphabac sales, was $11.1 million, a decrease of 1.1% year-over-year. In the quarter, AlphaVac revenue was $4.2 million, a 38.4% year-over-year increase, continuing its strong trajectory, and AngioVac revenue was $6.9 million, a 15.8% year-over-year decrease. We are very encouraged by the catalysts ahead, including the IDE approvals for our AlphaReturn blood management system and our AngioVac right-sided infective endocarditis study. We're confident in the long-term opportunity for the combined portfolio. Mechanical thrombectomy remains an attractive market in its early stage, with many competitors working to actively move patient care towards mechanical interventions from lytic-based therapies, which can lead to lumpiness quarter to quarter. This is a crowded space for good reason, and we have built the best portfolio, illustrated by our 13.4% growth in the year. We believe mechanical thrombectomy will grow faster for us for the full fiscal year 2027. Total nanonife revenue was $11.8 million, an increase of 64.5%, with probes growing 47% and capital sales growing 132.5%. Probe sales were primarily driven by demand for nanonife in prostate care, and we hit record procedure volumes during the quarter. 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. I will note that capital sales are always lumpy quarter-to-quarter, so we would not expect capital to grow at this rate going forward, but we continue to view disposables as the bellwether for this business. In the fourth quarter, our med device segment increased 1.1% year-over-year, with revenue of $44.8 million. 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 fourth quarter of FY26 was 54%, a 130 basis point increase from the fourth quarter of FY2025, driven primarily by the continued product mix shift towards our higher margin MedTech sales, partially offset by tariffs. Total operating expenses in the quarter were $57 million, representing 66% of sales compared to $48 million, or 60% of sales, last year. Turning to R&D, our research and development expense was $8.2 million, or 9% of sales, compared to $6.6 million, or 8% 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 fourth quarter of FY2026 was $41.4 million, representing 48% of sales, compared to $36.7 million, or 46% of sales, a year ago. On a GAAP basis, our net loss for the fourth quarter was $11.4 million, or a loss per share of 27 cents, compared to a net loss of $6.1 million, or a loss per share of 15 cents a year ago. Our adjusted net loss for the fourth quarter of FY26 was $2.8 million, or an adjusted loss per share of 7 cents, compared to an adjusted net loss of $1.1 million, or an adjusted loss per share of 3 cents in the fourth quarter of last year. Adjusted EBITDA in the fourth quarter of FY2026 was $3.3 million compared to adjusted EBITDA of $3.4 million in the fourth quarter of 2025. Touching briefly on tariffs, tariff expense of approximately $500,000 in the fourth quarter was in line with our expectations and compared to $1.6 million in the prior year quarter. Now turning to a quick review of the fiscal full year results, revenue increased 9.4% to $320.2 million primarily driven by growth across our MedTech segment. MedTech revenue was $150 million, an 18.4% increase. Our Arion platform contributed $66.9 million in revenue, growing 17.7% compared to last year. Mechanical thrombectomy revenue, which includes AngioVac and AlphaVac sales, increased 13.4% to $45 million year-over-year. AlphaVac had a strong year with revenue of $15.5 million, a 44.1% year-over-year increase, and AngioVac revenue was $29.5 million, a 2.1% year-over-year increase, growing for the full year. Total nanonife revenue was $33.1 million, up 35.2%, with disposables up 28.7% and capital up 61.8% for the year. In fiscal 2026, our med device revenue was $170.2 million, an increase of 2.5%. Our gross margin for fiscal year 26 was 54.6%, 70 basis point increase from 53.9% in the prior year. For the full year, total gross margin saw an approximate 150 basis point negative impact from tariffs. Turning to operating expenses, total operating expenses for the full year were 214.8 million, or 67% of sales, compared to 197.8 million, or 68% of sales a year ago. Our adjusted net loss for fiscal year 26 was $10 million, or an adjusted loss per share of $0.24, compared to an adjusted net loss of $10.2 million, or an adjusted loss per share of $0.25 last year. On a gap basis, our total net loss for the full year was $36.7 million, or a loss per share of $0.88, compared to a net loss of $34 million, or a loss per share of $0.83 a year ago. Adjusted EBITDA on the full fiscal year 2026 was $13.2 million, compared to $7.6 million in fiscal year 2025. This year-over-year improvement is largely attributable to our MedTech revenue growth and the success of our gross margin and operating efficiency initiatives, and we delivered it while absorbing tariff costs that were not in our business a year ago. For the full year, tariff expense was approximately $4.8 million, compared to $1.6 million in the prior year, and this was in line with our expectations. that landed right within the $4 million to $6 million range we guided to at the start of the year, which I think speaks to our ability to forecast and manage these costs, even in a dynamic environment. Turning to cash, in the fourth quarter, the company generated $17.5 million of cash from operations in line with our expectations. For the full fiscal year, the company generated $3.1 million of cash from operations. I want to put that full year number in context because it is inclusive of approximately $4.8 million of tariffs, as well as the working capital and inventory actions we took during the year to proactively manage through the sterilization vendor maintenance shutdowns. The fact that we still generated cash from operations throughout the year while absorbing all of that really speaks to the underlying cash generation profile of our business model. We ended fiscal year 2026 with $53.9 million in cash and we maintained a strong debt-free balance sheet. Turning now to guidance. For the fiscal year 2027, we anticipate net sales to be in the range of $336 to $341 million, representing growth of between 5% and 6.5% over fiscal 2026 revenue of $320.2 million. Within each of our businesses, we expect MedTech net sales to grow 12% to 15% year-over-year, and we expect MedDevice sales to be roughly flat. For fiscal 27, we expect gross margin to be in the range of 54 to 55 percent. We expect adjusted EBITDA to be in the range of 13 to 16 million. And finally, we expect adjusted loss per share in the range of 29 cents to 24 cents. We expect the impact from tariffs to be broadly similar to fiscal 26. Based on our current view of the tariff situation, this remains dynamic and subject to change. Stepping back from the numbers, our fiscal 2027 outlook reflects our execution of the same playbook that allowed us to deliver the strength we saw in 26. Compete in large, fast-growing markets, take share of better technology backed by strong clinical data, invest for growth, and turn that growth into increasing profitability. Let me give you some color on how we're thinking about the MedTech portfolio in fiscal 2027. Starting with Ariane, we expect it to remain a solid grower in the mid-teens range and as we continue to expand on the hospital site of care while growing across both the hospital and OBL settings and as international adoption builds. In mechanical thrombectomy, we expect Alphavac to continue its strong trajectory and for AngioVac to return to growth against more normal comparisons. And in nanonife, we expect continued momentum in prostate with disposables as the primary driver and capital remaining lumpy from quarter to quarter as reimbursement and awareness continues to build. Underpinning all of this is our commitment to clinical data. We're not resting on the growth we've already built. We are prudently investing in high-quality clinical data across the portfolio to drive adoption and to expand the markets we can compete in. On the cardiovascular side, in addition to the alpha return and PAVE studies we are currently running, we have formed a global cardiovascular medical advisory board of leading physicians to help guide our clinical and product strategy, and we are expanding our Ambition BTK study internationally. In interventional oncology, NanoKnife continues to build one of the strongest data engines in our space. From the two-year durability data from Preserve, through FDA approval of the IDE for our relief feasibility study, which takes our IRE technology into benign prosthetic hyperplasia, one of the most common conditions in men's health. In addition, at the AUA conference in May, independent investigators from Weill Medical College of Cornell University presented results from an investigator-initiated study. Radiation Therapy and Irreversible Electroporation for Intermediate Risk Prostate Cancer, or RTIRE, which combines IRE with reduced-dose radiation therapy. Key findings from the presentation included 42 patients enrolled, a 100% negative biopsy rate at 12 months, 90% reduction in PSA from baseline at 3 months, rapid recovery of quality of life following treatment, and no grade 3 or higher adverse events. These fantastic results suggest that combining focal nanonife IRE treatment with reduced radiation may offer a powerful new treatment paradigm and convince the investigators to conduct a follow-on RCT IDE study. The common thread is that we are committed to generating high-quality data to expand indications and reach more patients over time. We are well aware of the broader environment for our industry right now, and what I would emphasize is that angiodynamics is built to be a consistent performer through it. We see real demand for the procedures our platforms enable. We are positioned in markets that are growing, and we have a clean, debt-free balance sheet that gives us the flexibility to keep investing. And we intend to do all of it the way that we did this year, investing for tomorrow while delivering improved profitability today. There's one thing fiscal 2026 demonstrated, that our business model can fund growth, absorb outside headwinds like tariffs, generate cash, and still expand profitability. We fully expect to keep delivering on that balance in fiscal 2027 as we drive sustained, profitable growth and create value for our shareholders. With that, operator, let's open the line for questions.