AngioDynamics, Inc.

Good morning and welcome to the NGO Dynamics Fiscal Year 2027 First 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 is being recorded. The news release detailing NGO Dynamics Fiscal 2027 First Quarter results was issued 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, Thank you for joining us. Management encourages you to review the company's past and future filings with the FEC, 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 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 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 to 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 a press release discussing the company's operating results and financial performance during this morning's conference call. Unless otherwise noted, all comparisons will be the first fiscal quarter of 2027 versus the first fiscal quarter of 2026. Now, I would like to turn the call over to Jim Clemmer, NGO Dynamics President and Chief Executive Officer. Mr. Clemmer?

Thank you, operator. Good morning, everyone. and thank you for joining us for Andrew Dynamics Fiscal 2027 First Quarter Earnings Call. Joining me today is Steve Trowbridge, Andrew Dynamics Executive Vice President and Chief Financial Officer. Before I get into our results, I want to start with an important update. Our board has completed a comprehensive search for my successor. I am pleased to share and Eric Honroth will be joining us as President and Chief Executive Officer, effective November 2nd. Eric brings more than 20 years of leadership experience in medical devices and life sciences. He most recently served as Global President, Life Science at Getting and before that, he led Getting's $1.2 billion North American business where he accelerated growth, delivered sustained revenue gains, and strengthened operational performance. His career spans the cardiovascular, endovascular, urology, and oncology markets with senior leadership roles at Abbott Vascular, Beck & Dickinson, Care Fusion, and Boston Scientific. That combination is exactly what our board was looking for someone who's driven real growth and profitability in large, complex organizations and who knows our markets firsthand. I am confident that he's the right person to build upon the foundation that we've put in place, and I'll remain closely involved to make sure that we have a smooth transition. I want to thank our board, our search committee, and everyone across this organization who helped make this happen. Now moving on to results. We grew total revenue by approximately 7% led by strength in our MedTech segment, which grew more than 13%. That's clear evidence that the strategy guiding our transformation over the past several years keeps paying off. As a result, MedTech now represents approximately 49% of our total revenue and that mix shift is only gaining momentum as we move through the year. Starting with Aurion, which remains one of the most consistent growth engines in this business, this quarter marked our 21st consecutive quarter of double-digit year-over-year growth. We're taking share across both the hospital and office-based laboratory settings with international adoption building as well. We're also advancing enrollment in our Ambition BTK study, which we believe will support the long-term clinical case for Arion below the knee. Turning to mechanical thrombectomy, we're also growing above market in this business, and the reason is simple. We have the most versatile product on the market and a commercial team that is executing at a high level, and we're taking share from our competitors. AlphaVac is building real momentum as more hospitals continue to adopt it. In addition, we're really pleased with the progression of our AlphaReturn blood management system IDE trial to further strengthen our position. AngioVac is working through a tougher comp right now, but the underlying demand for the product remains strong, and we expect it to return for more normal growth as the year progresses. Finally, Nano Knife continues to fundamentally change the landscape of men's healthcare by improving outcomes and preserving quality of life through an innovative procedure for men with intermediate-risk prostate cancer. Reimbursement progress remains a key driver, including the positive MAC coverage decision that we received last quarter. and we're now working with additional regions with the goal of building towards consistent nationwide coverage. Physician interest and procedure volumes in prostate care remain strong. We also received FDA approval for our relief study, which is evaluating nanonife for the treatment of BPH, a condition affecting millions of men, and a market opportunity we estimate at approximately $1.9 billion, an important step in expanding where this technology can help patients. Our med device segment grew approximately 1%. This business remains a steady, reliable performer, providing the consistent cash flow that funds our investment in med tech platforms. Before I turn things over to Steve, I really want to thank our team. The work happening across the company is reflected in this quarter's results and is driving future growth ahead. We compete in large, fast-growing markets, and we are positioned to win. Looking ahead, we have real catalysts in front of us. Continued progress in alpha return, expanding reimbursement coverage for nanolife, and ongoing enrollment in our Ambition BT case study, each of which will create New opportunities. This all comes back to patients first. We believe people living with some of society's most challenging diseases deserve trusted solutions that deliver real care and better outcomes. When we deliver on that, we deliver value for everyone we serve, from patients and physicians to our shareholders. Now I'll turn it over to Steve.

Review the financials for 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 comparisons will be the first fiscal quarter of 2027 versus the first fiscal quarter of 2026. Company top-line revenue performance was strong again in the quarter. Revenue increased 6.9% to $80.9 million, driven by growth across our MedTech segments. MedTech revenue was $39.9 million, a 13.2% increase. For the first fiscal quarter, our MedTech platforms comprised 49% of our total revenue compared to 47% of total revenue a year ago, reflecting the ongoing shift in our business mix. We remain on track for our MedTech segment to comprise a majority of our overall revenue base during this fiscal year. Within our MedTech segment, our Arion platform contributed $18.9 million in revenue, growing 14.7% compared to last year. Arion has now delivered double-digit year-over-year growth for 21 consecutive quarters. This above-market 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-MARC approval. and we're confident in the long-term opportunity for our mechanical thrombectomy portfolio. Combined AngioVac and AlphaVac sales were 12 million, an increase of 6.7% year-over-year. In the quarter, AlphaVac continued its strong trajectory, generating revenue of 4.5 million, representing a 37.4% year-over-year increase, as well as growth of 6.4% sequentially. We're also pleased with the trajectory of AngioVac, which generated revenue of 7.5 million, And while this represented a 5.9% year-over-year decrease, AngioVac grew 9.1% sequentially. On the clinical front, we are encouraged by the ongoing progress in our alpha return and AngioVac right-sided infective endocarditis IDE studies, both of which are seeing strong enrollment. Turning to NanoKnife, total revenue was $8.3 million, an increase of 29%. with probes growing 24.1% and capital sales growing 53.5%. Probe sales are primarily driven by demand for nanonife in prostate care, and we hit record procedure volumes during the quarter. Additionally, as systems are placed and new physicians and providers experience the improved patient outcomes our technology enables, we expect them to drive continued increases in 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. Continue to view disposables as the bellwether for this business. In the first quarter, our med device segment increased 1.4% year over year, with revenue of $41 million. This business generates consistent cash and profitability, allowing us to continue to invest in the growth of our med tech platforms. Now, moving down the income statement, our gross margin for the first quarter of FY27 was 59.4%, a 410 basis point increase from the first quarter of FY26. Driven primarily by favorable pricing and the ongoing revenue mix shift towards MedTech, which is partially offset by the manufacturing transition and global inflation, all of which were in line with the company's expectations. Gross margin also benefited from tariff refunds received during the quarter. Absent that benefit, gross margin would have been 57.8%. We expect gross margin to be higher in the first half of fiscal 2027 than in the second half, and we remain on track for full-year gross margins to be within our guided range of 54% to 55%. Total operating expenses, which include R&D, SG&A, amortization, and non-recurring items, in the quarter were $55.3 million, representing 68.4% of sales compared to $52.5 million, or 69.4% of sales last year. Turning to R&D, our research and development expense was $8 million, or 9.9% of sales, compared to $6.4 million, or 8.5% of sales, a year ago. 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 FY27 was $42.5 million, representing 52.5% of sales, compared to 40.7 million or 53.7% of sales a year ago. On a GAAP basis, our net loss for the first quarter was 7.1 million or a loss per share of 17 cents compared to a net loss of 10.9 million or a loss per share of 26 cents a year ago. Our adjusted net loss for the first quarter of FY27 was 1.8 million or an adjusted loss per share of 4 cents compared to an adjusted net loss of 4.2 million or an adjusted loss per share of 10 cents in the first quarter of last year. The adjusted EBITDA in the first quarter of FY27 was 5 million compared to adjusted EBITDA of 2.2 million in the first quarter of 26. Touching briefly on tariffs, tariff-related expenses were 0.9 million during the quarter compared to 1.7 million for the prior year quarter. This is in line with our expectations. Additionally, we did receive 1.2 million of tariff refunds during the quarter resulting in a net tariff benefit of about $400,000. Turning to cash, in the first quarter, the company used $15.3 million of cash from operations in line with our expectations. We ended the quarter with $34 million in cash, and we maintain a strong debt-free balance sheet. We also remain on track to generate positive cash flow from operations for the full fiscal year. Turning to guidance, for fiscal 27, we continue to anticipate net sales to be in the range of $336 to $341 million, representing growth of between 5% and 6.5% over fiscal 26 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%, We expect adjusted EBITDA to be in the range of 13 million to 16 million. And finally, we expect adjusted loss per share in the range of 29 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, but this remains dynamic and clearly subject to change. So with that, I'll turn it back to Jim.