Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | |--------------------------------------------------------------------------------------------| | For the transition period from to Commission file number 0-50761 | | Angio ...

AngioDynamics, Inc. (NASDAQ:ANGO) Q3 2023 Earnings Call Transcript March 30, 2023 8:00 AM ET Company Participants Jim Clemmer - CEO Steve Trowbridge - CFO Conference Call Participants Brett Fishbin - KeyBanc Steven Lichtman - Oppenheimer Jayson Bedford - Raymond James Bill Plovanic - Canaccord Operator Good morning, and welcome to the AngioDynamics Fiscal Year 2023 Third Quarter Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal pres ...

Raymond James 44th Annual Institutional Investors Conference March 6, 2023 Jim Clemmer, President & CEO Stephen Trowbridge, Executive Vice President & CFO Notice Regarding Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements regarding AngioDynamics' expected future financial position, results of operations, cash flows, business strategy, budgets, projected costs, capital expenditures, produ ...

ANGIODYNAMICS Second Quarter 2023 Earnings Presentation January 5, 2023 1 Forward-Looking Statement Notice Regarding Forward-LookingStatements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements regarding AngioDynamics' expected future financial position, results of operations, cash flows, business strategy, budgets, projected costs, capital expenditures, products, competitive positions, growth opportunities, plans ...

Financial Data and Key Metrics Changes - The company reported revenue of $85.4 million for Q2 FY '23, representing a year-over-year growth of over 9% [7][18] - Adjusted earnings per share were $0.01, compared to an adjusted net loss of $0.02 in the same quarter last year [25] - Gross margin for Q2 FY '23 was 52.8%, an increase of 100 basis points year-over-year [22] Business Line Data and Key Metrics Changes - Med Tech segment revenue was $24.5 million, a 29.7% increase year-over-year, while Med Device segment revenue was $60.9 million, a 2.6% increase [18] - Auryon platform revenue grew 60.6% year-over-year, contributing $10.1 million in revenue during Q2 [19] - NanoKnife disposable revenue increased by 45.4% year-over-year, with U.S. sales growing 44.2% [21] Market Data and Key Metrics Changes - International markets grew 7% year-over-year, driven by strong NanoKnife sales [11] - The company reduced its backlog from $7.1 million to $5 million, indicating improved operational capacity [21][45] Company Strategy and Development Direction - The company is focusing on innovation in the PAD market with the launch of hydrophilic coated catheters [9] - Auryon is being positioned as a disruptive technology in the PAD market, with plans to target small vessel DVT by the end of 2024 [16][52] - The company is committed to leveraging proprietary technology platforms to deliver solutions in attractive markets [14] Management's Comments on Operating Environment and Future Outlook - Management noted that hospitals are becoming more adept at managing staffing issues, which are expected to improve gradually [8][70] - The company reiterated its full-year revenue guidance in the range of $342 million to $348 million, indicating confidence in its operational stability [26][67] - Management expressed optimism about the ongoing clinical trials and their potential to drive future growth [12][74] Other Important Information - The company generated over $5 million of net cash during the quarter, increasing its cash position to $29.9 million [25][26] - Research and development expenses were $6.8 million, representing 8% of sales, with a target of 10% to 12% for the full year [24] Q&A Session Summary Question: What are the expectations for AngioVac growth? - Management indicated that dynamics are improving and expects stronger performance in the second half of the year [30][31] Question: What is driving the growth in NanoKnife? - The growth is attributed to the excitement around the PRESERVE study and improved international sales, particularly in China and Central Europe [32][33] Question: What are the next steps regarding the litigation with Bard? - Management stated that the litigation is ongoing and not expected to materially impact business operations [39][40] Question: How is the backlog expected to change moving forward? - The company aims to reduce the backlog to a normal operating level, targeting around half a day’s sales [45][46] Question: What is the status of the Auryon platform? - Management confirmed that the focus has shifted to Auryon for small vessel DVT, with a potential launch by the end of 2024 [52][59]

Financial Performance - Net sales for the three months ended November 30, 2022, were $85,429 thousand, an increase of 9.3% compared to $78,280 thousand for the same period in 2021[19] - Gross profit for the six months ended November 30, 2022, was $87,383 thousand, up from $80,694 thousand for the same period in 2021, reflecting a gross margin improvement[19] - Operating loss for the three months ended November 30, 2022, was $(8,115) thousand, slightly improved from $(8,679) thousand in the prior year[19] - Net loss for the six months ended November 30, 2022, was $(21,490) thousand, compared to $(15,323) thousand for the same period in 2021, indicating a worsening financial performance[21] - The net loss for the three months ended November 30, 2022, was $8.5 million, consistent with a loss per share of $0.21[130] - The net loss for the six months ended November 30, 2022, increased by $6.2 million to $21.5 million, with a loss per share of $0.55[127] Cash and Assets - Cash and cash equivalents at the end of the period were $29,857 thousand, an increase from $28,825 thousand at the beginning of the period[28] - Total assets as of November 30, 2022, were $558,207 thousand, a slight increase from $552,751 thousand as of May 31, 2022[25] - The company had total debt outstanding of $50.0 million as of November 30, 2022, related to the Credit Agreement[149] - Cash used in operating activities was $17.2 million for the six months ended November 30, 2022, compared to $7.0 million for the same period in the prior year[150] Debt and Liabilities - Long-term debt increased to $49,796 thousand from $25,000 thousand, indicating a significant rise in leverage[25] - The company entered into a new Credit Agreement providing for a $75.0 million secured revolving credit facility and a $30.0 million delayed draw term loan[67] - As of November 30, 2022, the company had $25.0 million outstanding on the Revolving Facility and $25.0 million on the Delayed Draw Term Loan, with an interest rate of 5.59%[70] - The total lease liabilities decreased from $7,263,000 on May 31, 2022, to $5,981,000 on November 30, 2022, indicating a reduction in lease obligations[95] Revenue Segments - The Med Tech segment generated $24,502,000 in net sales for the three months ended November 30, 2022, compared to $18,886,000 in the prior year, indicating a growth of 30%[43] - The Med Device segment reported net sales of $60,927,000 for the three months ended November 30, 2022, up from $59,394,000 in the same period of 2021, reflecting a growth of 3%[43] - Med Tech segment net sales increased by $5.6 million for the three months and $10.8 million for the six months ended November 30, 2022, primarily driven by increased Auryon sales[134] - Med Device segment net sales increased by $1.5 million for the three months and $0.9 million for the six months ended November 30, 2022, despite backlog impacts[135] Expenses - Research and development expenses for the three months ended November 30, 2022, were $6,838 thousand, down from $8,199 thousand in the prior year, reflecting cost management efforts[19] - Share-based compensation expense for the six months ended November 30, 2022, was $6,400,000, compared to $5,400,000 for the same period in 2021, reflecting an increase of 18.5%[77] - Sales and marketing expense increased by $2.4 million and $4.5 million for the three and six months ended November 30, 2022, compared to the same periods in the prior year[141] - General and administrative expense increased by $1.2 million and $2.3 million for the three and six months ended November 30, 2022, compared to the same periods in the prior year[142] Stockholder Equity - Total stockholders' equity decreased to $407,958 thousand as of November 30, 2022, from $424,489 thousand as of May 31, 2022, indicating a decline in shareholder value[26] - The total balance of treasury stock was $407,958,000, with a net loss of $8,486,000 recorded during the period[31] - The total balance of treasury stock increased from $424,489,000 on May 31, 2022, to $414,041,000 by August 31, 2022[31] Legal and Compliance - The company is involved in various legal proceedings, but has not recorded an expense related to the outcome of ongoing litigation as it cannot determine if a potential loss is probable or reasonably estimable[101] - The company reported legal expenses of $2,422,000 for the three months ended November 30, 2022, compared to $2,072,000 for the same period in 2021, reflecting an increase of 16.9%[108] - The company has not recorded an expense related to ongoing litigation as it is not yet possible to determine if a potential loss is probable nor reasonably estimable[104] Market and Strategic Focus - The company is focused on transforming its portfolio to target larger and faster-growing markets, which is expected to drive near to mid-term growth[41] - The company aims to grow sales and profitability by expanding geographically and introducing new products, with a focus on research and development investments[123] - The company’s business operations are influenced by market dynamics such as value-based purchasing, healthcare provider consolidation, and an aging population[122] Tax and Valuation - The estimated annual effective tax rate prior to discrete items was 5.8% for the second quarter of fiscal year 2023, down from 12.3% for the same period in fiscal year 2022[72] - The Company has provided a valuation allowance on its deferred tax assets due to not attaining a sustained level of profitability as of November 30, 2022[74]

[Part I: Financial Information](index=4&type=section&id=Part%20I%3A%20Financial%20Information) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents AngioDynamics' unaudited consolidated financial statements, including operations, comprehensive loss, balance sheets, cash flows, and stockholders' equity, with detailed notes for the three months ended August 31, 2022 and 2021 [Consolidated Statements of Operations (unaudited)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20(unaudited)) The company reported a net loss of **$13.004 million** for Q1 FY2023, a significant increase from the prior year, driven by higher operating expenses despite increased net sales | Metric | Three Months Ended Aug 31, 2022 ($ thousands) | Three Months Ended Aug 31, 2021 ($ thousands) | | :--------------------- | :----------------------------------- | :----------------------------------- | | Net Sales | 81,537 | 76,971 | | Gross Profit | 42,305 | 40,139 | | Total Operating Expenses | 55,606 | 48,239 | | Operating Loss | (13,301) | (8,100) | | Net Loss | (13,004) | (6,972) | | Loss per Share (Basic) | (0.33) | (0.18) | | Loss per Share (Diluted) | (0.33) | (0.18) | [Consolidated Statements of Comprehensive Loss (unaudited)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss%20(unaudited)) Total comprehensive loss increased to **$13.554 million** for Q1 FY2023, primarily due to a higher net loss and negative foreign currency translation adjustments | Metric | Three Months Ended Aug 31, 2022 ($ thousands) | Three Months Ended Aug 31, 2021 ($ thousands) | | :--------------------------- | :----------------------------------- | :----------------------------------- | | Net Loss | (13,004) | (6,972) | | Foreign Currency Translation | (550) | 590 | | Total Comprehensive Loss | (13,554) | (6,382) | [Consolidated Balance Sheets (unaudited)](index=6&type=section&id=Consolidated%20Balance%20Sheets%20(unaudited)) Total assets increased to **$557.652 million** as of August 31, 2022, driven by current assets and long-term debt, while total liabilities rose and stockholders' equity decreased | Metric | Aug 31, 2022 ($ thousands) | May 31, 2022 ($ thousands) | | :--------------------------- | :---------------- | :---------------- | | Cash and Cash Equivalents | 24,564 | 28,825 | | Total Current Assets | 151,371 | 143,345 | | Total Assets | 557,652 | 552,751 | | Total Current Liabilities | 66,390 | 74,324 | | Long-Term Debt | 49,798 | 25,000 | | Total Liabilities | 143,611 | 128,262 | | Total Stockholders' Equity | 414,041 | 424,489 | [Consolidated Statements of Cash Flows (unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Net cash and cash equivalents decreased by **$4.261 million** for Q1 FY2023, primarily due to cash used in operating and investing activities, partially offset by financing activities | Cash Flow Activity | Three Months Ended Aug 31, 2022 ($ thousands) | Three Months Ended Aug 31, 2021 ($ thousands) | | :--------------------------- | :----------------------------------- | :----------------------------------- | | Operating Activities | (24,745) | (8,904) | | Investing Activities | (3,576) | (9,092) | | Financing Activities | 24,376 | 5,446 | | Effect of Exchange Rate Changes | (316) | (139) | | Net Change in Cash | (4,261) | (12,689) | | Cash at End of Period | 24,564 | 35,472 | [Consolidated Statements of Stockholders' Equity (unaudited)](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity%20(unaudited)) Stockholders' equity decreased to **$414.041 million** as of August 31, 2022, primarily due to net loss and other comprehensive loss, partially offset by stock-based compensation | Metric | May 31, 2022 ($ thousands) | Aug 31, 2022 ($ thousands) | | :----------------------------------- | :---------------- | :---------------- | | Total Stockholders' Equity (Balance) | 424,489 | 414,041 | | Net Loss | (158,413) | (171,417) | | Stock-based Compensation | - | 3,024 | | Other Comprehensive Loss, Net of Tax | - | (550) | [Notes to Consolidated Financial Statements (unaudited)](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(unaudited)) This section provides detailed disclosures for the unaudited consolidated financial statements, covering accounting policies, key assets, liabilities, equity, and operational items [1. CONSOLIDATED FINANCIAL STATEMENTS](index=9&type=section&id=1.%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The unaudited interim consolidated financial statements include AngioDynamics and its wholly-owned subsidiaries, with all intercompany transactions eliminated and necessary adjustments made - The interim consolidated financial statements are unaudited and include AngioDynamics, Inc. and its wholly-owned subsidiaries, with all intercompany balances and transactions eliminated[35](index=35&type=chunk)[36](index=36&type=chunk) - Management believes all adjustments (consisting of normal recurring adjustments) necessary for fair presentation have been made[35](index=35&type=chunk) [2. ACQUISITIONS](index=9&type=section&id=2.%20ACQUISITIONS) On July 27, 2021, the company acquired the Camaro support catheter (Syntrax) for **$4.0 million**, accounted for as an asset purchase to support the Auryon product family - Acquired the Camaro support catheter (rebranded as Syntrax) from QX Medical, LLC on July 27, 2021[37](index=37&type=chunk) - Aggregate purchase price was **$4.0 million**, including an upfront payment of **$3.6 million** and **$0.4 million** in purchase price holdbacks, along with **$1.0 million** of potential future contingent consideration related to revenue milestones[37](index=37&type=chunk) - Accounted for as an asset purchase, recording inventory and fixed assets of **$0.1 million** and an intangible asset product technology of **$3.9 million**, amortized over 15 years[37](index=37&type=chunk) [3. REVENUE FROM CONTRACTS WITH CUSTOMERS](index=9&type=section&id=3.%20REVENUE%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) Revenue is recognized when customers obtain control of goods, with the company transforming into a focused medical technology entity, disaggregating revenue by Med Tech, Med Device, and geography - Revenue is recognized under ASC 606 when a customer obtains control of promised goods or services, following a five-step process[38](index=38&type=chunk) - The Company is focused on transforming into a more focused medical technology company, with growth in the near to mid-term expected to be driven by its Med Tech segment[39](index=39&type=chunk) Net Sales by Segment and Geography (Three Months Ended August 31, in thousands) | Category | 2022 ($ thousands) | 2021 ($ thousands) | | :------------- | :-------- | :-------- | | **Med Tech** | 22,817 | 17,607 | | **Med Device** | 58,720 | 59,364 | | **Total** | 81,537 | 76,971 | | **United States** | 69,023 | 64,464 | | **International** | 12,514 | 12,507 | Contract Balances with Customers (in thousands) | (in thousands) | Aug 31, 2022 | May 31, 2022 | | :--------------- | :----------- | :----------- | | Receivables | $ 53,586 | $ 52,304 | | Contract assets | $ — | $ — | | Contract liabilities | $ 647 | $ 526 | [4. INVENTORIES](index=12&type=section&id=4.%20INVENTORIES) Inventories increased to **$57.609 million** as of August 31, 2022, with raw materials as the largest component, and the inventory reserve slightly increased to **$3.8 million** Inventories (in thousands) | Category | Aug 31, 2022 | May 31, 2022 | | :-------------- | :----------- | :----------- | | Raw materials | $ 32,474 | $ 28,251 | | Work in process | 8,113 | 7,186 | | Finished goods | 17,022 | 15,955 | | Inventories | $ 57,609 | $ 51,392 | - Total inventory reserve at August 31, 2022, was **$3.8 million**, up from **$3.7 million** at May 31, 2022[54](index=54&type=chunk) [5. GOODWILL AND INTANGIBLE ASSETS](index=12&type=section&id=5.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) Goodwill is tested annually for impairment, with no impairment found in the Q1 FY2023 interim assessment; definite-lived intangible assets totaled **$147.976 million** as of August 31, 2022 - Goodwill is not amortized but tested for impairment annually; the assessment date changed from December 31 to April 30[55](index=55&type=chunk) - Operations are now managed as two reporting units: Med Tech and Med Device, leading to an interim goodwill impairment assessment as of June 1, 2022, which concluded no impairment[56](index=56&type=chunk) Goodwill Allocation by Reporting Unit (in thousands) | Reporting Unit | Balance, June 1, 2022 | Foreign Currency Translation Adjustments | Balance, August 31, 2022 | | :------------- | :-------------------- | :--------------------------------------- | :----------------------- | | Med Tech | $ 160,529 | (20) | $ 160,509 | | Med Device | $ 40,529 | — | $ 40,529 | | Total | $ 201,058 | (20) | $ 201,038 | Definite Lived Intangible Assets (Net Carrying Value, in thousands) | Category | Aug 31, 2022 | May 31, 2022 | | :--------------------- | :----------- | :----------- | | Product technologies | $ 123,489 | $ 127,326 | | Customer relationships | 21,108 | 22,112 | | Trademarks | 2,694 | 2,765 | | Licenses | 685 | 177 | | Total | $ 147,976 | $ 152,380 | - Amortization expense for definite-lived intangible assets was **$4.8 million** for both three months ended August 31, 2022 and 2021[60](index=60&type=chunk) [6. ACCRUED LIABILITIES](index=14&type=section&id=6.%20ACCRUED%20LIABILITIES) Accrued liabilities decreased to **$25.558 million** as of August 31, 2022, primarily due to a significant reduction in payroll and related expenses Accrued Liabilities (in thousands) | Category | Aug 31, 2022 | May 31, 2022 | | :------------------------- | :----------- | :----------- | | Payroll and related expenses | $ 10,109 | $ 20,232 | | Royalties | 1,518 | 2,986 | | Outside services | 5,917 | 3,731 | | Research and development | 1,332 | 1,279 | | Sales and franchise taxes | 938 | 750 | | Rebates | 558 | 511 | | Other | 5,186 | 5,353 | | Total | $ 25,558 | $ 34,842 | [7. LONG-TERM DEBT](index=14&type=section&id=7.%20LONG-TERM%20DEBT) A new Credit Agreement on August 30, 2022, established a **$75.0 million** revolving facility and **$30.0 million** delayed draw term loan, with **$50.0 million** outstanding as of August 31, 2022 - Entered into a new Credit Agreement on August 30, 2022, providing a **$75.0 million** secured revolving credit facility and a **$30.0 million** delayed draw term loan[63](index=63&type=chunk)[64](index=64&type=chunk) - The Credit Agreement has a five-year maturity[65](index=65&type=chunk) Long-Term Debt (in thousands) | Category | Aug 31, 2022 | | :---------------------------- | :----------- | | Revolving Facility | $ 25,000 | | Delayed Draw Term Loan | 25,000 | | Less: unamortized debt issuance costs | (202) | | Total Long-Term Debt | $ 49,798 | - Interest rate at August 31, 2022, for both facilities was **4.06%**[67](index=67&type=chunk) - Includes financial covenants: maximum leverage ratio of **3.00 to 1.00** (or **3.50 to 1.00** after acquisitions) and fixed charge coverage ratio of not less than **1.25 to 1.00**[66](index=66&type=chunk)[67](index=67&type=chunk) [8. INCOME TAXES](index=15&type=section&id=8.%20INCOME%20TAXES) The estimated effective tax rate was **5.5%** for Q1 FY2023, with a valuation allowance maintained on deferred tax assets due to lack of sustained profitability - Estimated annual effective tax rate prior to discrete items was **5.5%** for Q1 FY2023, compared to **10.6%** for the same period in fiscal year 2022[69](index=69&type=chunk) - The Company has provided a valuation allowance on its federal and state net operating loss carryforwards, federal and state R&D credit carryforwards, and other net deferred tax assets due to not yet attaining a sustained level of profitability[71](index=71&type=chunk) [9. SHARE-BASED COMPENSATION](index=15&type=section&id=9.%20SHARE-BASED%20COMPENSATION) Share-based compensation expense increased to **$3.0 million** for Q1 FY2023, with **$27.1 million** of unrecognized expense remaining under the 2020 Stock and Incentive Award Plan - Share-based compensation expense was **$3.0 million** for the three months ended August 31, 2022, compared to **$2.4 million** for the same period in 2021[73](index=73&type=chunk) - Awards are granted under the 2020 Stock and Incentive Award Plan and an employee stock purchase plan[72](index=72&type=chunk)[73](index=73&type=chunk) - As of August 31, 2022, there was **$27.1 million** of unrecognized compensation expense related to share-based payment arrangements, expected to be recognized over approximately two years[75](index=75&type=chunk) [10. EARNINGS PER SHARE](index=17&type=section&id=10.%20EARNINGS%20PER%20SHARE) Basic and diluted loss per share were **$(0.33)** for Q1 FY2023, with dilutive securities excluded from EPS calculation due to the net loss Loss Per Share (in thousands, except per share data) | Metric | Three Months Ended Aug 31, 2022 | Three Months Ended Aug 31, 2021 | | :----------------------------------- | :------------------------------ | :------------------------------ | | Basic Loss per Share | $ (0.33) | $ (0.18) | | Diluted Loss per Share | $ (0.33) | $ (0.18) | | Weighted Average Shares Outstanding (Basic) | 39,302 | 38,734 | | Weighted Average Shares Outstanding (Diluted) | 39,302 | 38,734 | - Securities (**3,821 thousand** in 2022, **3,443 thousand** in 2021) were excluded from diluted EPS computation as their inclusion would be anti-dilutive due to the net loss[76](index=76&type=chunk)[77](index=77&type=chunk) [11. SEGMENT AND GEOGRAPHIC INFORMATION](index=17&type=section&id=11.%20SEGMENT%20AND%20GEOGRAPHIC%20INFORMATION) Effective Q1 FY2023, operations are managed under Med Tech and Med Device segments, with total net sales increasing to **$81.537 million**, driven by Med Tech growth - Commencing with the first quarter of fiscal year 2023, the Company began to manage its operations through two segments, Med Tech and Med Device, to align with its transformation into a focused medical technology company[78](index=78&type=chunk) Net Sales and Gross Margin by Segment (in thousands) | Segment | Three Months Ended Aug 31, 2022 | Three Months Ended Aug 31, 2021 | | :----------------- | :------------------------------ | :------------------------------ | | Med Tech Net Sales | $ 22,817 | $ 17,607 | | Med Tech Gross Profit | $ 14,429 | $ 11,517 | | Med Tech Gross Margin | 63.2 % | 65.4 % | | Med Device Net Sales | $ 58,720 | $ 59,364 | | Med Device Gross Profit | $ 27,876 | $ 28,622 | | Med Device Gross Margin | 47.5 % | 48.2 % | | Total Net Sales | $ 81,537 | $ 76,971 | | Total Gross Profit | $ 42,305 | $ 40,139 | | Total Gross Margin | 51.9 % | 52.1 % | Net Sales by Geographic Area (in thousands) | Geographic Area | Three Months Ended Aug 31, 2022 | Three Months Ended Aug 31, 2021 | | :-------------- | :------------------------------ | :------------------------------ | | United States | $ 69,023 | $ 64,464 | | International | 12,514 | 12,507 | | Total | $ 81,537 | $ 76,971 | - International sales as a percentage of total net sales were **15.3%** for the three months ended August 31, 2022, down from **16.2%** in the prior year[82](index=82&type=chunk) [12. FAIR VALUE](index=18&type=section&id=12.%20FAIR%20VALUE) Fair value measurements, primarily for contingent consideration, increased to **$17.158 million** as of August 31, 2022, driven by changes in estimated earn-out payments - The Company's recurring fair value measurements using significant unobservable inputs (Level 3) relate to contingent consideration liabilities for acquisition earn-outs[84](index=84&type=chunk)[86](index=86&type=chunk) Fair Value of Contingent Consideration for Acquisition Earn Outs (in thousands) | Date | Fair Value | | :------------- | :--------- | | Aug 31, 2022 | $ 17,158 | | May 31, 2022 | $ 16,948 | - The change in fair value of contingent consideration for the three months ended August 31, 2022, was **$211 thousand**, related to the Eximo contingent consideration[87](index=87&type=chunk)[138](index=138&type=chunk) - The amount of undiscounted future contingent consideration expected to be paid is approximately **$20.0 million**, with milestones ranging from fiscal years 2023 to 2029[91](index=91&type=chunk) [13. LEASES](index=20&type=section&id=13.%20LEASES) Operating lease liabilities totaled **$6.596 million** as of August 31, 2022, with a weighted average remaining term of **3.06 years** and a discount rate of **3.8%** Lease Information (in thousands) | Metric | Aug 31, 2022 | May 31, 2022 | | :----------------------------- | :----------- | :----------- | | Operating Lease ROU Asset | $ 6,335 | $ 6,974 | | Total Lease Liabilities | $ 6,596 | $ 7,263 | - Weighted average remaining lease term was **3.06 years** and weighted average discount rate was **3.8%** as of August 31, 2022[94](index=94&type=chunk) Cash Flow from Operating Leases (in thousands) | Metric | Three Months Ended Aug 31, 2022 | Three Months Ended Aug 31, 2021 | | :------------------------- | :------------------------------ | :------------------------------ | | Cash paid for operating leases | $ 691 | $ 682 | [14. COMMITMENTS AND CONTINGENCIES](index=21&type=section&id=14.%20COMMITMENTS%20AND%20CONTINGENCIES) The company is involved in various legal proceedings, including patent infringement suits, with no expense recorded for potential losses due to uncertain outcomes - The Company is involved in various legal proceedings, including commercial, intellectual property, product liability, and regulatory matters[98](index=98&type=chunk) - Multiple patent infringement suits with C.R. Bard, Inc. are ongoing; the Company believes these claims are without merit and has not recorded an expense as a potential loss is not yet probable or reasonably estimable[99](index=99&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - In a separate action initiated by AngioDynamics, a jury verdict on October 6, 2022, found C.R. Bard, Inc. did not restrain competition in violation of federal antitrust laws[103](index=103&type=chunk) [15. ACQUISITION, RESTRUCTURING, AND OTHER ITEMS, NET](index=22&type=section&id=15.%20ACQUISITION%2C%20RESTRUCTURING%2C%20AND%20OTHER%20ITEMS%2C%20NET) Acquisition, restructuring, and other net items increased to **$5.581 million** for Q1 FY2023, primarily due to a **$3.5 million** prepayment to the Israeli Innovation Authority Acquisition, Restructuring and Other Items, Net (in thousands) | Category | Three Months Ended Aug 31, 2022 | Three Months Ended Aug 31, 2021 | | :------------------------------------- | :------------------------------ | :------------------------------ | | Legal | $ 1,863 | $ 2,084 | | Manufacturing relocation | 136 | — | | Israeli Innovation Authority prepayment | 3,544 | — | | Other | 38 | 356 | | Total | $ 5,581 | $ 2,440 | - The **$3.5 million** payment to the Israeli Innovation Authority fully satisfied the obligation related to grant funds for the Auryon laser development prior to its acquisition[105](index=105&type=chunk)[138](index=138&type=chunk) [16. ACCUMULATED OTHER COMPREHENSIVE INCOME](index=22&type=section&id=16.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME) Accumulated other comprehensive income decreased to **$807 thousand** as of August 31, 2022, primarily due to a **$550 thousand** foreign currency translation loss Changes in Accumulated Other Comprehensive Income (in thousands) | Metric | Balance at May 31, 2022 | Other Comprehensive Loss, Net of Tax | Balance at August 31, 2022 | | :----------------------------------- | :---------------------- | :----------------------------------- | :------------------------- | | Foreign Currency Translation Income | $ 1,357 | (550) | $ 807 | [17. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS](index=23&type=section&id=17.%20RECENTLY%20ISSUED%20ACCOUNTING%20PRONOUNCEMENTS) ASU 2021-10 (Government Assistance) was adopted in Q1 FY2023 with no material impact, and ASU 2021-08 (Business Combinations) is expected to have no material impact upon adoption in Q1 FY2024 - ASU 2021-10, Government Assistance, was adopted in Q1 FY2023 and did not have a material impact on the consolidated financial statements[108](index=108&type=chunk) - ASU 2021-08, Business Combinations, will be adopted in Q1 FY2024 and is not expected to have a material impact[109](index=109&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section reviews AngioDynamics' financial performance for Q1 FY2023, highlighting increased net sales, a higher net loss due to operating expenses, strategic segment shifts, and liquidity - AngioDynamics is a leading medical technology company focused on restoring healthy blood flow, expanding cancer treatment, and improving patient quality of life[115](index=115&type=chunk) - The Company is undergoing a transformation from a broad portfolio to a more focused medical technology company, managing operations through two segments: Med Tech and Med Device[115](index=115&type=chunk)[120](index=120&type=chunk) Key Financial Metrics (Three Months Ended August 31, $ millions) | Metric | 2022 ($ millions) | 2021 ($ millions) | % Change | | :--------------------- | :-------- | :-------- | :------- | | Revenue | 81.5 | 77.0 | 5.9% | | Med Tech Growth | 29.6% | - | - | | Med Device Decline | (1.1)% | - | - | | Gross Profit % | 51.9% | 52.1% | (0.2)% | | Net Loss | (13.0) | (7.0) | 85.7% | | Loss per Share | (0.33) | (0.18) | 83.3% | - Med Tech revenue grew **29.6%** driven by Auryon, thrombus management platform, and NanoKnife disposables, while Med Device revenue declined **1.1%** due to backlog in Vascular Access products and reduced Oncology procedure volumes[122](index=122&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk) Operating Expenses (Three Months Ended August 31, in thousands) | Expense Category | 2022 | 2021 | % Change | | :--------------------------- | :------ | :------ | :------- | | Research and development | 8,333 | 7,394 | 12.7% | | Sales and marketing | 26,543 | 24,446 | 8.6% | | General and administrative | 10,101 | 8,943 | 12.9% | | Amortization of intangibles | 4,837 | 4,821 | 0.3% | | Acquisition, restructuring and other items, net | 5,581 | 2,440 | 128.7% | - The Company's current cash on hand and availability under its new Credit Agreement (**$75.0 million** Revolving Facility and **$30.0 million** Delayed Draw Term Loan) provide sufficient liquidity for at least the next 12 months[141](index=141&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency fluctuations, interest rate risk on its variable-rate Credit Agreement, and manages credit risk through diversification - The Company is exposed to foreign currency exchange rate risk, with approximately **6%** of sales denominated in foreign currencies (Euro, British Pound, Canadian Dollar) for the three months ended August 31, 2022[151](index=151&type=chunk)[152](index=152&type=chunk) - A strengthening U.S. Dollar negatively impacts sales and gross profit due to lower foreign currency denominated expenses relative to sales[152](index=152&type=chunk) - Interest rate risk arises from the variable interest rates on the Credit Agreement, which includes a **$75.0 million** Revolving Facility and a **$30.0 million** Delayed Draw Term Loan[151](index=151&type=chunk)[153](index=153&type=chunk) - As of August 31, 2022, **$25.0 million** was outstanding on both the Delayed Draw Term Loan and the Revolving Facility, with an interest rate of **4.06%**[153](index=153&type=chunk) - Concentration of credit risk is limited due to maintaining cash at various institutions, structuring the Credit Agreement across three banks, and having a large number of customers with no single customer representing more than **10%** of total sales[154](index=154&type=chunk)[155](index=155&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of August 31, 2022, with no material changes in internal control over financial reporting during the quarter - Management, under the supervision of the CEO and CFO, evaluated and concluded that disclosure controls and procedures were effective as of August 31, 2022[157](index=157&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended August 31, 2022[158](index=158&type=chunk) [Part II: Other Information](index=34&type=section&id=Part%20II%3A%20Other%20Information) [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) For detailed information on legal proceedings, refer to Note 14 "Commitments and Contingencies" in the consolidated financial statements - For information on legal proceedings, refer to Note 14 "Commitments and Contingencies" in the consolidated financial statements[161](index=161&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) Refer to the annual report on Form 10-K for risk factors; no material changes have occurred since the May 31, 2022, fiscal year-end - Refer to "Part I, Item 1A. Risk Factors" of the annual report on Form 10-K for the fiscal year ended May 31, 2022, for information on important risks and uncertainties[162](index=162&type=chunk) - There have been no material changes to the risk factors previously disclosed in the annual report on Form 10-K[162](index=162&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **32,309 shares** of common stock at an average price of **$21.07** to satisfy tax withholding on equity awards, not under a public program Common Stock Repurchases (Three Months Ended August 31, 2022) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--------------------------- | :------------------------------- | :--------------------------- | | June 1, 2022 - June 30, 2022 | 1,400 | $ 19.30 | | July 1, 2022 - July 31, 2022 | 30,909 | $ 21.15 | | August 1, 2022 - August 31, 2022 | — | $ 23.31 | | Total | 32,309 | $ 21.07 | - Shares were purchased from employees to satisfy tax withholding requirements on the vesting of restricted shares/units from equity-based awards[164](index=164&type=chunk) - The Company does not currently have a publicly announced share repurchase program in effect[164](index=164&type=chunk) [Item 3. Defaults on Senior Securities](index=34&type=section&id=Item%203.%20Defaults%20on%20Senior%20Securities) No defaults on senior securities were reported during the period - No defaults on senior securities were reported[165](index=165&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were reported during the period - No mine safety disclosures were reported[165](index=165&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) No other information required for disclosure under this item was reported - No other information was reported[165](index=165&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including the Credit Agreement, various certifications, and XBRL-related documents - Key exhibits include the Credit Agreement dated August 30, 2022, certifications pursuant to Rule 13a-14(a) or 15d-14, and certifications pursuant to Title 18, United States Code, Section 1350[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) - XBRL Schema, Calculation Linkbase, Taxonomy Extension Definition Linkbase, Labels Linkbase, and Presentation Linkbase Documents are also filed as exhibits[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk)

Financial Data and Key Metrics Changes - The company reported revenue of $81.5 million for Q1 FY 2023, representing a year-over-year growth of approximately 6% [7][17] - Adjusted net loss for Q1 FY 2023 was $2.5 million, compared to an adjusted net loss of $900,000 in the same quarter last year [27] - Gross margin for Q1 FY 2023 was 51.9%, a decrease of 20 basis points compared to the previous year [22] Business Line Data and Key Metrics Changes - Med Tech revenue was $22.8 million, a 29.6% year-over-year increase, while Med Device revenue was $58.7 million, declining 1.1% compared to the first quarter of FY 2022 [17] - Auryon platform revenue grew 50% year-over-year to $8.8 million [18] - Mechanical thrombectomy revenue, including AngioVac and AlphaVac, grew 36% year-over-year [19] - NanoKnife disposable revenue increased 12.3%, driven by 21.8% growth in international markets [21] Market Data and Key Metrics Changes - International markets, particularly in Europe, had a strong quarter, contributing to the growth of NanoKnife [13] - The company faced significant staffing challenges in hospitals, impacting procedural volumes [9] Company Strategy and Development Direction - The company is focused on utilizing proprietary technology in Med Tech platforms to enter large, fast-growing markets and drive beneficial patient outcomes [8] - Strategic investments include geographic expansion, clinical research, product development, and regulatory pathway expansion [14] - The company aims to continue growing its Med Tech segment, which is expected to represent a larger portion of total sales [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macro challenges, including inflationary pressures and staffing issues in hospitals, but expressed confidence in the company's ability to navigate these challenges [9][23] - The company expects to see continued growth in its Med Tech segment and anticipates revenue for FY 2023 in the range of $342 million to $348 million [37] Other Important Information - The company is currently involved in an antitrust suit against Becton, Dickinson's C.R. Bard business related to its Vascular Access business [16] - The company refinanced its credit facility to extend maturity to 2027 and align cash usage with revenue generation profiles [31][34] Q&A Session Summary Question: Ongoing hospital challenges and their impact on product lines - Management noted that staffing challenges have particularly affected AngioVac, with hospitals struggling to manage procedural volumes due to staffing shortages [43][44] Question: Utilization of Auryon systems - Management confirmed that they are tracking utilization per system and are seeing increased usage as customers become more familiar with the product [54][55] Question: Guidance for revenue and cash usage - Management provided guidance for FY 2023 revenue and indicated that Q1 typically sees the highest cash utilization, with expectations for cash balances to build throughout the year [67][70]

Financial Performance - Revenue increased by 5.9% to $81.537 million in Q1 FY23 from $76.971 million in Q1 FY22 [8] - Med Tech revenue increased by 29.6% while Med Device revenue decreased by 1.1% [6] - Net loss was ($13.004) million in Q1 FY23, compared to ($6.972) million in Q1 FY22 [8] - Adjusted EPS was ($0.06) in Q1 FY23, compared to ($0.02) in Q1 FY22 [8] - Adjusted EBITDA was $2.961 million in Q1 FY23, compared to $3.570 million in Q1 FY22 [8] - Gross margin for Med Tech was 63.2%, a decrease of 220 bps, and for Med Device was 47.5%, a decrease of 70 bps [8] Product Performance - Auryon sales reached $8.8 million [6] - Mechanical Thrombectomy (AngioVac and AlphaVac) experienced a year-over-year growth of 36.1% [6] - AlphaVac sales amounted to $1.8 million [6] - NanoKnife disposables saw a year-over-year growth of 12.3% [6] Cash Flow - Cash decreased by $4.261 million from Q4 FY22 to $24.564 million in Q1 FY23 [16] - The company entered into a new credit facility including a $75.0 million revolving facility and a $30.0 million delayed-draw term loan [6]

Part I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) AngioDynamics is a medical technology company specializing in vascular health and cancer treatment, emphasizing high-growth Med Tech [Overview, History, and Strategy](index=5&type=section&id=Overview%2C%20History%2C%20and%20Strategy) AngioDynamics, founded in 1988, is strategically transforming to prioritize high-growth 'Med Tech' products - AngioDynamics is a medical technology company focused on restoring healthy blood flow, expanding cancer treatment options, and improving patient quality of life[12](index=12&type=chunk) - The company was founded in 1988 and has expanded its product lines through numerous acquisitions, including RITA Medical Systems (2007), Eximo Medical (2019), and the Camaro Support Catheter asset (2021)[13](index=13&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk) - The company is strategically focusing on its **high-growth 'Med Tech' business** (Auryon, Thrombectomy, NanoKnife) to drive near to mid-term growth, distinguishing it from the rest of its 'Med Device' portfolio[16](index=16&type=chunk) [Products](index=6&type=section&id=Products) The company's products are organized into three Global Business Units, with key growth driven by its Med Tech portfolio - The **Auryon Atherectomy System** is a key product for treating Peripheral Artery Disease (PAD), including in-stent restenosis[17](index=17&type=chunk) - The **Thrombus Management portfolio** includes the AlphaVac and AngioVac Mechanical Thrombectomy Systems for removing thrombi and emboli from the vasculature[18](index=18&type=chunk)[19](index=19&type=chunk)[21](index=21&type=chunk) - The **NanoKnife System** uses low-energy direct current electrical pulses for the surgical ablation of soft tissue, avoiding thermal energy[23](index=23&type=chunk) - The **Vascular Access portfolio** features BioFlo catheters with Endexo Technology, designed to be more resistant to thrombus accumulation, available in PICCs, midlines, ports, and dialysis catheters[27](index=27&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) [Operations and Market](index=11&type=section&id=Operations%20and%20Market) AngioDynamics invests in R&D, faces intense competition, sells globally, and manufactures primarily in New York - The company faces significant competition from large manufacturers such as **Boston Scientific, Medtronic, Johnson & Johnson, and Inari Medical**, competing on quality, clinical outcomes, ease of use, and price[43](index=43&type=chunk)[44](index=44&type=chunk) - Products are sold in the U.S. primarily through a direct sales force and internationally through a combination of direct sales and distributor relationships[45](index=45&type=chunk) - Manufacturing is centered in two owned facilities in New York, with a new supply agreement with Precision Concepts in Costa Rica established in Q4 FY2022[47](index=47&type=chunk)[48](index=48&type=chunk) - In fiscal year 2022, COVID-19 related issues, including supply chain challenges and labor shortages, resulted in a product backlog of **$8.4 million** at year-end[49](index=49&type=chunk) [Regulatory and Legal Environment](index=13&type=section&id=Regulatory%20and%20Legal%20Environment) The company's products are subject to extensive FDA and international regulations, requiring clearances and third-party reimbursement - Products are regulated by the FDA and require either 510(k) clearance or a more comprehensive Premarket Approval (PMA); historically, the company's products have used the **510(k) pathway**[53](index=53&type=chunk)[54](index=54&type=chunk)[57](index=57&type=chunk) - International sales require regulatory compliance, such as the **CE Mark** under the new Medical Device Regulation (MDR) in the European Union, which has more stringent requirements[61](index=61&type=chunk)[62](index=62&type=chunk) - The business is subject to U.S. federal healthcare laws, including the **Anti-kickback Statute** and the **False Claims Act**, which govern relationships with physicians and reimbursement claims[66](index=66&type=chunk) - The company maintains product liability insurance with a limit of **$10 million per claim** and a **$10 million annual aggregate**, subject to a self-insured retention[68](index=68&type=chunk) [Human Capital and Corporate Information](index=16&type=section&id=Human%20Capital%20and%20Corporate%20Information) AngioDynamics had approximately 760 employees as of May 31, 2022, led by CEO James C. Clemmer and CFO Stephen A. Trowbridge - As of May 31, 2022, the company had approximately **760 full-time employees**, with none represented by a labor union[71](index=71&type=chunk) - The company's executive team is led by **James C. Clemmer**, President and CEO since April 2016, and **Stephen A. Trowbridge**, Executive Vice President and CFO since February 2020[73](index=73&type=chunk)[74](index=74&type=chunk) - The company makes its financial reports (10-K, 10-Q, 8-K) available free of charge on its corporate website, www.angiodynamics.com[83](index=83&type=chunk) [Item 1A. Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) The company faces numerous risks including intense competition, supply chain reliance, regulatory hurdles, and intellectual property disputes - **Business & Industry Risks:** The company faces intense competition, potential inability to develop new products, reliance on the NanoKnife system's expanded approvals, dependence on single-source suppliers, and risks from international operations and macroeconomic conditions like inflation and supply chain issues[87](index=87&type=chunk)[91](index=91&type=chunk)[97](index=97&type=chunk)[104](index=104&type=chunk) - **COVID-19 Pandemic Risks:** The pandemic has negatively impacted business through decreased elective procedures, restricted access for sales teams to hospitals, and supply chain disruptions, with future impacts remaining uncertain[142](index=142&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk) - **Regulatory Risks:** The business is subject to a complex system of laws and regulations; failure to comply with FDA's Quality System Regulation (QSR), obtain marketing clearances (e.g., 510(k), PMA), or adhere to rules against off-label promotion could result in recalls, fines, and manufacturing disruptions[149](index=149&type=chunk)[153](index=153&type=chunk)[155](index=155&type=chunk)[162](index=162&type=chunk) - **Intellectual Property & Stock Price Risks:** The company's success depends on protecting its intellectual property and avoiding infringement of others' rights; it faces risks from potential patent litigation, and its stock price may be volatile due to unpredictable quarterly results[167](index=167&type=chunk)[170](index=170&type=chunk)[174](index=174&type=chunk) [Item 1B. Unresolved Staff Comments, Item 2. Properties, Item 3. Legal Proceedings, and Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%201B%2C%202%2C%203%2C%204) The company reports no unresolved SEC staff comments, details its key properties, and references legal proceedings in financial notes - The company has no unresolved staff comments[177](index=177&type=chunk) Key Company Properties | Location | Purpose | Approx. Sq. Ft. | Property Type | | :--- | :--- | :--- | :--- | | Latham, NY | Corporate headquarters | 39,000 | Lease | | Glens Falls, NY | Manufacturing | 41,000 | Owned | | Queensbury, NY | Manufacturing and distribution | 194,000 | Owned | | Marlborough, MA | Research and development | 31,000 | Lease | - Details on legal proceedings are provided in Note 16 to the consolidated financial statements[179](index=179&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity](index=34&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity) AngioDynamics common stock trades on NASDAQ under 'ANGO', with no cash dividends paid or anticipated in the foreseeable future - The company's common stock trades on the NASDAQ Global Select Market under the symbol **\"ANGO\"**[181](index=181&type=chunk) Fiscal Year 2022 Common Stock Price Range | Quarter | High Price | Low Price | | :--- | :--- | :--- | | Fourth Quarter | $24.50 | $17.98 | | Third Quarter | $29.16 | $20.46 | | Second Quarter | $30.97 | $23.36 | | First Quarter | $28.49 | $22.99 | - The company has not declared any cash dividends in the last three fiscal years and does not anticipate paying them in the foreseeable future[183](index=183&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) FY2022 revenue grew 8.7% to $316.2 million, driven by Med Tech, while gross margin declined and net loss narrowed [Results of Operations](index=40&type=section&id=Results%20of%20Operations) FY2022 net sales increased 8.7% to $316.2 million, led by Med Tech growth, despite a decline in gross margin Net Sales by Segment (FY 2022 vs. FY 2021) | (in thousands) | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | **Med Tech** | $78,717 | $55,731 | 41.2% | | **Med Device** | $237,502 | $235,279 | 0.9% | | **Total Net Sales** | **$316,219** | **$291,010** | **8.7%** | Key Financial Metrics (FY 2022 vs. FY 2021) | (in thousands) | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Gross profit | $165,732 | $156,788 | 5.7% | | Gross profit % of sales | 52.4% | 53.9% | -1.5 p.p. | | Research and development | $30,739 | $36,390 | -15.5% | | Selling and marketing | $95,301 | $81,306 | 17.2% | | General and administrative | $38,451 | $35,918 | 7.1% | - The increase in Med Tech sales was primarily driven by a **$18.0 million** increase in Auryon sales and **$3.7 million** growth in the thrombectomy platform[223](index=223&type=chunk) - Gross margin was negatively impacted by **$3.1 million** in start-up costs for Auryon and AlphaVac, and **$3.4 million** from labor shortages, freight, and raw material inflation[227](index=227&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and equivalents decreased to $28.8 million in FY2022, with $7.2 million cash used in operations, but sufficient liquidity is expected Summary of Cash Flows (in thousands) | Activity | Year ended 2022 | Year ended 2021 | | :--- | :--- | :--- | | Operating activities | $(7,194) | $24,093 | | Investing activities | $(19,307) | $(13,711) | | Financing activities | $7,683 | $(16,986) | | **Net change in cash** | **$(19,336)** | **$(6,274)** | - Cash and cash equivalents decreased to **$28.8 million** at May 31, 2022, from **$48.2 million** at May 31, 2021[239](index=239&type=chunk) - The company has a **$125.0 million** secured Revolving Facility, with **$25.0 million** outstanding as of May 31, 2022; the company was in compliance with all debt covenants[239](index=239&type=chunk)[243](index=243&type=chunk) Contractual Obligations Summary (in thousands) | Contractual Obligations | Total | Less than One Year | 1-3 Years | 3-5 Years | After 5 Years | | :--- | :--- | :--- | :--- | :--- | :--- | | Long term debt and interest | $25,778 | $778 | $25,000 | $— | $— | | Operating leases | $7,980 | $3,006 | $3,671 | $1,303 | $— | | Purchase obligations | $6,170 | $6,170 | $— | $— | $— | | Acquisition-related future obligations | $20,000 | $10,000 | $10,000 | $— | $— | | Royalties | $44,480 | $3,840 | $7,680 | $7,680 | $25,280 | | **Total** | **$104,408** | **$23,794** | **$46,351** | **$8,983** | **$25,280** | [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency fluctuations, variable interest rates, and manages credit concentration - The company is exposed to foreign currency risk, as approximately **6.2%** of FY2022 sales were denominated in currencies other than the U.S. Dollar[250](index=250&type=chunk) - Interest rate risk stems from the **$125.0 million Revolving Facility**, which has a variable interest rate based on LIBOR or an alternate base rate; as of May 31, 2022, **$25.0 million** was outstanding at an interest rate of **2.31%**[251](index=251&type=chunk) - Concentration of credit risk is limited, as no single customer represents more than **10%** of total sales[253](index=253&type=chunk) [Item 9A. Controls and Procedures](index=47&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and independent auditors concluded the company's disclosure controls and internal financial reporting controls were effective - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report (May 31, 2022)[256](index=256&type=chunk) - Based on the COSO framework, management concluded that the company's internal control over financial reporting was effective as of May 31, 2022[258](index=258&type=chunk) - The independent auditor, Deloitte & Touche LLP, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of May 31, 2022[259](index=259&type=chunk)[263](index=263&type=chunk) Part III [Items 10-14. Directors, Executive Compensation, Security Ownership, and Principal Accounting Fees](index=50&type=section&id=Items%2010%2C%2011%2C%2012%2C%2013%2C%20and%2014) Information for these items is incorporated by reference from the company's definitive proxy statement to be filed later - Information for Items 10 through 14 is incorporated by reference from the registrant's Proxy Statement for its 2022 Annual Meeting of Stockholders[271](index=271&type=chunk) Part IV [Item 15. Exhibits, Financial Statement Schedules](index=51&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section includes consolidated financial statements, auditor's report, schedules, and a list of filed exhibits - This part includes the consolidated financial statements, supplementary data, and financial statement schedules required by Item 8[279](index=279&type=chunk) - Schedule II—Valuation and qualifying accounts is included in the report[280](index=280&type=chunk) [Financial Statements and Notes](index=52&type=section&id=Financial%20Statements%20and%20Notes) The consolidated financial statements present AngioDynamics' financial position, results, and cash flows for the three years ended May 31, 2022 [Consolidated Financial Statements](index=54&type=section&id=Consolidated%20Financial%20Statements) FY2022 net sales were $316.2 million, resulting in a $26.5 million net loss, with total assets of $552.8 million Consolidated Statement of Operations Highlights (Year ended May 31, 2022, in thousands) | Metric | Amount | | :--- | :--- | | Net sales | $316,219 | | Gross profit | $165,732 | | Operating loss | $(28,471) | | Net loss | $(26,547) | | Diluted loss per share | $(0.68) | Consolidated Balance Sheet Highlights (As of May 31, 2022, in thousands) | Metric | Amount | | :--- | :--- | | Cash and cash equivalents | $28,825 | | Total current assets | $143,345 | | Goodwill | $201,058 | | Total Assets | $552,751 | | Total current liabilities | $74,324 | | Long-term debt | $25,000 | | Total Liabilities | $128,262 | | Total Stockholders' Equity | $424,489 | [Notes to Consolidated Financial Statements](index=60&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, acquisitions, revenue, goodwill, taxes, debt, and ongoing patent litigation with C.R. Bard - **Acquisitions (Note 2):** The company acquired the Camaro support catheter asset from QX Medical for **$4.0 million** in July 2021, accounting for it as an asset purchase[334](index=334&type=chunk) - **Revenue (Note 3):** Revenue is disaggregated by Global Business Unit and by Med Tech/Med Device categories, highlighting the strategic shift towards higher-growth Med Tech products[343](index=343&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk) - **Goodwill (Note 8):** The annual goodwill impairment tests performed as of December 31, 2021, and April 30, 2022, indicated no impairment[379](index=379&type=chunk) - **Legal Proceedings (Note 16):** The company is involved in ongoing patent infringement litigation with C.R. Bard, Inc; the company believes the claims are without merit and has not recorded an expense as a loss is not yet probable or reasonably estimable[438](index=438&type=chunk)[439](index=439&type=chunk)