Financial Data and Key Metrics Changes - The company reported revenue of $87 million for Q4 FY 2022, representing a year-over-year growth of over 13% [7][23] - Full fiscal year revenue was $316.2 million, reflecting a growth of almost 9% compared to the previous year [8] - Gross margin for Q4 FY 2022 was 53.4%, with a full year gross margin of 52.4%, consistent with revised guidance [17][32] Business Line Data and Key Metrics Changes - Med Tech platforms generated $22.6 million in revenue for Q4, a 40% increase year-over-year, and accounted for approximately 26% of total revenue [8][23] - Auryon revenue for Q4 was $9.6 million, with full year revenue of $29.1 million, exceeding guidance [10][25] - Mechanical thrombectomy revenue grew 10% year-over-year in Q4, with a full year growth of 16% [12][28] - NanoKnife disposable sales increased by 16% in Q4, driven by a 64% growth in the U.S. [14][30] Market Data and Key Metrics Changes - The Endovascular Therapies business saw an 18.5% increase in revenue year-over-year during Q4, benefiting from Auryon and thrombectomy growth [25] - Vascular Access revenue increased by 9.3% in Q4, while the Oncology business grew by 5.8% [29][30] Company Strategy and Development Direction - The company aims to expand its Med Tech platforms and increase their contribution to overall revenue, expecting Med Tech sales to grow significantly in FY 2023 [9][39] - The strategic focus includes enhancing clinical trials and product development to penetrate larger, faster-growing markets [19][44] - The total addressable market is projected to exceed $6 billion in FY 2023, with plans to expand it to over $8 billion by 2025 [44][45] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges such as high inflation, staffing shortages, and supply chain disruptions but expressed confidence in the company's growth trajectory [9][39] - For FY 2023, the company anticipates revenue between $342 million and $348 million, with adjusted EPS guidance of $0.01 to $0.06 [39][40] - Management remains committed to balancing investments in growth with prudent cash management [38][42] Other Important Information - The company launched new products, including the AlphaVac mechanical thrombectomy device, and initiated clinical studies to support product adoption [10][20] - The company is involved in legal action against Becton, Dickinson's C.R. Bard business regarding antitrust issues [21] Q&A Session Summary Question: Does the fiscal 2023 guide assume that the backlog gets exhausted during the year? - Management indicated that while the backlog provides a safety net, the FY 2023 guidance was built from the bottom-up and does not fully rely on the backlog [49][50] Question: Is there an expectation for Oncology and Vascular Access to grow year-over-year in fiscal 2023? - Management expects the Med Device businesses to grow 1% to 3%, with NanoKnife anticipated to continue strong double-digit growth [51][52] Question: Are staffing challenges at hospitals impacting procedure volumes? - Yes, staffing challenges, particularly for complex procedures like AngioVac, have negatively affected procedure volumes [55][56] Question: Is there any cannibalization of AngioVac by AlphaVac? - Management acknowledged some expected cannibalization but believes the overall market expansion opportunities for AlphaVac will outweigh this effect [57][58] Question: What is the expected revenue for AlphaVac in FY 2023? - Management expects AlphaVac revenue to be in the range of $7 million to $9 million for FY 2023 [78]

AngioDynamics, Inc. (NASDAQ:ANGO) Q3 2022 Results Conference Call April 7, 2022 8:00 AM ET Company Participants Jim Clemmer - President and Chief Executive Officer Steve Trowbridge - Executive Vice President and Chief Financial Officer Conference Call Participants Jayson Bedford - Raymond James Bill Plovanic - Canaccord Genuity Steven Lichtman - Oppenheimer & Company Matthew Mishan - KeyBanc Capital Markets Operator Good morning, and welcome to the AngioDynamics' Fiscal Year 2022 Third Quarter Earnings Call ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) AngioDynamics' unaudited consolidated financial statements for periods ended February 28, 2022, are presented with detailed explanatory notes [Consolidated Statements of Operations (unaudited)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20(unaudited)) Consolidated Statements of Operations (in thousands, except per share data) | Metric | 3 Months Ended Feb 28, 2022 | 3 Months Ended Feb 28, 2021 | 9 Months Ended Feb 28, 2022 | 9 Months Ended Feb 28, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net sales | $73,970 | $71,182 | $229,221 | $214,168 | | Cost of sales | $35,387 | $32,652 | $109,944 | $99,700 | | Gross profit | $38,583 | $38,530 | $119,277 | $114,468 | | Operating loss | $(3,738) | $(3,738) | $(22,074) | $(13,696) | | Net loss | $(4,958) | $(3,544) | $(20,281) | $(12,080) | | Basic Loss per share | $(0.13) | $(0.09) | $(0.52) | $(0.32) | | Diluted Loss per share| $(0.13) | $(0.09) | $(0.52) | $(0.32) | [Consolidated Statements of Comprehensive Loss (unaudited)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Loss%20(unaudited)) Consolidated Statements of Comprehensive Loss (in thousands) | Metric | 3 Months Ended Feb 28, 2022 | 3 Months Ended Feb 28, 2021 | 9 Months Ended Feb 28, 2022 | 9 Months Ended Feb 28, 2021 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss | $(4,958) | $(3,544) | $(20,281) | $(12,080) | | Foreign currency translation | $(1,036) | $12 | $373 | $3,287 | | Total comprehensive loss, net of tax | $(5,994) | $(3,532) | $(19,908) | $(8,793) | [Consolidated Balance Sheets (unaudited)](index=6&type=section&id=Consolidated%20Balance%20Sheets%20(unaudited)) Consolidated Balance Sheets (in thousands) | Metric | Feb 28, 2022 | May 31, 2021 | | :------------------------- | :----------- | :----------- | | Cash and cash equivalents | $23,890 | $48,161 | | Accounts receivable, net | $41,810 | $35,405 | | Inventories | $48,039 | $48,614 | | Total current assets | $127,686 | $140,879 | | Property, plant and equipment, net | $43,594 | $37,073 | | Intangible assets, net | $159,105 | $168,977 | | Goodwill | $201,484 | $201,316 | | Total assets | $543,178 | $561,438 | | Accounts payable | $21,570 | $19,630 | | Accrued liabilities | $25,196 | $35,459 | | Total current liabilities | $49,368 | $57,584 | | Long-term debt | $25,000 | $20,000 | | Total liabilities | $113,486 | $121,981 | | Total Stockholders' Equity | $429,692 | $439,457 | | Total Liabilities and Stockholders' Equity | $543,178 | $561,438 | [Consolidated Statements of Cash Flows (unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Consolidated Statements of Cash Flows (in thousands) | Metric | 9 Months Ended Feb 28, 2022 | 9 Months Ended Feb 28, 2021 | | :------------------------------------------------- | :-------------------------- | :-------------------------- | | Net cash (used in) provided by operating activities | $(15,754) | $11,894 | | Net cash used in investing activities | $(15,534) | $(4,567) | | Net cash provided by (used in) financing activities | $7,354 | $(7,541) | | Effect of exchange rate changes on cash and cash equivalents | $(337) | $248 | | (Decrease) increase in cash and cash equivalents | $(24,271) | $34 | | Cash and cash equivalents at end of period | $23,890 | $54,469 | [Consolidated Statements of Stockholders' Equity (unaudited)](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity%20(unaudited)) - Total Stockholders' Equity decreased from **$439.457 million** at May 31, 2021, to **$429.692 million** at February 28, 2022, primarily due to net losses[16](index=16&type=chunk)[21](index=21&type=chunk) - Additional paid-in capital increased from **$573.507 million** to **$583.647 million**, driven by stock option exercises and stock-based compensation[16](index=16&type=chunk)[21](index=21&type=chunk) - Accumulated deficit increased from **$(131.866) million** to **$(152.147) million**, reflecting the net losses incurred during the period[16](index=16&type=chunk)[21](index=21&type=chunk) [Notes to Consolidated Financial Statements (unaudited)](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(unaudited)) [Note 1. CONSOLIDATED FINANCIAL STATEMENTS](index=10&type=section&id=Note%201.%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) - The interim consolidated financial statements are unaudited but prepared with all necessary adjustments for fair presentation[25](index=25&type=chunk) - The statements consolidate AngioDynamics, Inc. and its wholly-owned subsidiaries, with all intercompany balances and transactions eliminated[26](index=26&type=chunk) [Note 2. ACQUISITIONS](index=10&type=section&id=Note%202.%20ACQUISITIONS) - On July 27, 2021, AngioDynamics acquired the Camaro support catheter (rebranded as Syntrax) from QX Medical, LLC[27](index=27&type=chunk) - The aggregate purchase price was **$4.0 million**, including an upfront payment of **$3.6 million** and **$1.0 million** in potential future contingent consideration related to revenue milestones[27](index=27&type=chunk) - The acquisition was accounted for as an asset purchase, recording **$0.1 million** in inventory and fixed assets, and **$3.9 million** in intangible asset product technology, amortized over 15 years[27](index=27&type=chunk) [Note 3. REVENUE FROM CONTRACTS WITH CUSTOMERS](index=10&type=section&id=Note%203.%20REVENUE%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) - Revenue is recognized when a customer obtains control of promised goods or services, primarily from the sales of products[28](index=28&type=chunk)[36](index=36&type=chunk) - The company is strategically shifting its portfolio to focus on high-technology Med Tech products (Auryon, Thrombectomy, NanoKnife) for growth, moving away from mature Med Device products[32](index=32&type=chunk) Net Sales by Global Business Unit and Geography (in thousands) | Net Sales | 3 Months Ended Feb 28, 2022 | 3 Months Ended Feb 28, 2021 | 9 Months Ended Feb 28, 2022 | 9 Months Ended Feb 28, 2021 | | :----------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | **By Global Business Unit:** | | | | | | Endovascular Therapies | $38,083 | $33,251 | $115,799 | $97,008 | | Vascular Access | $23,431 | $24,813 | $73,459 | $76,848 | | Oncology | $12,456 | $13,118 | $39,963 | $40,312 | | Total | $73,970 | $71,182 | $229,221 | $214,168 | | **By Geography:** | | | | | | United States | $62,445 | $58,654 | $192,259 | $173,446 | | International | $11,525 | $12,528 | $36,962 | $40,722 | | Total | $73,970 | $71,182 | $229,221 | $214,168 | Net Sales by Med Tech and Med Device (in thousands) | Net Sales | 3 Months Ended Feb 28, 2022 | 3 Months Ended Feb 28, 2021 | % Change (3M) | 9 Months Ended Feb 28, 2022 | 9 Months Ended Feb 28, 2021 | % Change (9M) | | :----------------------- | :-------------------------- | :-------------------------- | :------------ | :-------------------------- | :-------------------------- | :------------ | | Med Tech | $19,612 | $15,246 | 28.6% | $56,117 | $39,581 | 41.8% | | Med Device | $54,358 | $55,936 | (2.8)% | $173,104 | $174,587 | (0.8)% | | Total | $73,970 | $71,182 | 3.9% | $229,221 | $214,168 | 7.0% | [Note 4. INVENTORIES](index=13&type=section&id=Note%204.%20INVENTORIES) Inventories (in thousands) | Inventory Category | Feb 28, 2022 | May 31, 2021 | | :----------------- | :----------- | :----------- | | Raw materials | $28,086 | $22,925 | | Work in process | $6,804 | $8,022 | | Finished goods | $13,149 | $17,667 | | Total Inventories | $48,039 | $48,614 | - The total inventory reserve for obsolescence, expiring, and slow-moving inventory increased from **$3.8 million** at May 31, 2021, to **$4.1 million** at February 28, 2022[46](index=46&type=chunk) [Note 5. GOODWILL AND INTANGIBLE ASSETS](index=13&type=section&id=Note%205.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) - Goodwill is not amortized and was tested for impairment as of December 31, 2021, with no impairment found[47](index=47&type=chunk)[48](index=48&type=chunk) Intangible Assets, Net (in thousands) | Intangible Asset Category | Feb 28, 2022 (Net carrying value) | May 31, 2021 (Net carrying value) | | :------------------------ | :-------------------------------- | :-------------------------------- | | Product technologies | $132,962 | $139,564 | | Customer relationships | $23,115 | $26,127 | | Trademarks | $2,835 | $3,045 | | Licenses | $193 | $241 | | Total Intangible Assets, net | $159,105 | $168,977 | Amortization Expense (in thousands) | Period | Amortization Expense | | :-------------------------- | :------------------- | | 3 Months Ended Feb 28, 2022 | $4,900 | | 3 Months Ended Feb 28, 2021 | $4,300 | | 9 Months Ended Feb 28, 2022 | $14,600 | | 9 Months Ended Feb 28, 2021 | $13,800 | Expected Future Amortization Expense (in thousands) | Fiscal Year | Amount | | :------------ | :----- | | Remainder of 2022 | $4,878 | | 2023 | $19,032 | | 2024 | $16,823 | | 2025 | $16,804 | | 2026 | $16,624 | | 2027 and thereafter | $84,944 | | Total | $159,105 | [Note 6. ACCRUED LIABILITIES](index=14&type=section&id=Note%206.%20ACCRUED%20LIABILITIES) Accrued Liabilities (in thousands) | Accrued Liability Category | Feb 28, 2022 | May 31, 2021 | | :------------------------- | :----------- | :----------- | | Payroll and related expenses | $13,307 | $20,408 | | Royalties | $2,153 | $2,663 | | Outside services | $1,983 | $4,256 | | Research and Development | $1,730 | $1,223 | | Sales and franchise taxes | $908 | $631 | | Litigation Matters | $0 | $975 | | Rebates | $472 | $544 | | Other | $4,643 | $4,759 | | Total Accrued Liabilities | $25,196 | $35,459 | [Note 7. LONG-TERM DEBT](index=15&type=section&id=Note%207.%20LONG-TERM%20DEBT) - The company has a **$125.0 million** secured revolving credit facility with a five-year maturity, which includes an uncommitted expansion feature up to **$75.0 million**[54](index=54&type=chunk) - As of February 28, 2022, **$25.0 million** was outstanding on the Revolving Facility, with an interest rate of **1.36%**[57](index=57&type=chunk)[144](index=144&type=chunk) - The Credit Agreement includes financial covenants requiring a maximum leverage ratio of **3.00 to 1.00** and a fixed charge coverage ratio of not less than **1.25 to 1.00**[56](index=56&type=chunk) [Note 8. INCOME TAXES](index=15&type=section&id=Note%208.%20INCOME%20TAXES) - The estimated annual effective tax rate prior to discrete items was **12.7%** for the third quarter of fiscal year 2022, compared to **15.6%** for the same period in fiscal year 2021[58](index=58&type=chunk) - The company has provided a valuation allowance on its federal and state net operating loss carryforwards and other deferred tax assets due to not yet attaining a sustained level of profitability[60](index=60&type=chunk) - A benefit of **$4.2 million** from the employee retention credit (CARES Act) was recorded in the third quarter of fiscal year 2022, compared to **$1.9 million** in the prior year period[61](index=61&type=chunk) [Note 9. SHARE-BASED COMPENSATION](index=16&type=section&id=Note%209.%20SHARE-BASED%20COMPENSATION) Share-Based Compensation Expense (in thousands) | Period | Share-based Compensation Expense | | :-------------------------- | :------------------------------- | | 3 Months Ended Feb 28, 2022 | $2,400 | | 3 Months Ended Feb 28, 2021 | $2,100 | | 9 Months Ended Feb 28, 2022 | $7,800 | | 9 Months Ended Feb 28, 2021 | $6,400 | - As of February 28, 2022, there were **1.6 million** shares available for future grant under the 2020 Stock and Incentive Award Plan and **2.3 million** shares under the employee stock purchase plan[62](index=62&type=chunk)[63](index=63&type=chunk) - Unrecognized compensation expense related to share-based payment arrangements was **$19.1 million** as of February 28, 2022, expected to be recognized over approximately three years[65](index=65&type=chunk) [Note 10. EARNINGS PER SHARE](index=16&type=section&id=Note%2010.%20EARNINGS%20PER%20SHARE) Weighted Average Shares Outstanding (in thousands) | Metric | 3 Months Ended Feb 28, 2022 | 3 Months Ended Feb 28, 2021 | 9 Months Ended Feb 28, 2022 | 9 Months Ended Feb 28, 2021 | | :------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic | 39,092 | 38,360 | 38,959 | 38,281 | | Diluted | 39,092 | 38,360 | 38,959 | 38,281 | - Securities totaling **3.457 million** for the three and nine months ended February 28, 2022, were excluded from diluted EPS calculation because their inclusion would be anti-dilutive due to the net loss[66](index=66&type=chunk)[67](index=67&type=chunk) [Note 11. SEGMENT AND GEOGRAPHIC INFORMATION](index=16&type=section&id=Note%2011.%20SEGMENT%20AND%20GEOGRAPHIC%20INFORMATION) - The company operates as a single operating segment, engaged in the development, manufacture, and sale of medical devices for vascular access, peripheral vascular disease, and oncology on a global basis[68](index=68&type=chunk)[69](index=69&type=chunk) - The CEO evaluates performance on a consolidated global basis, utilizing various breakouts of net sales data including Global Business Unit, Med Tech versus Med Device, and geography[69](index=69&type=chunk) [Note 12. FAIR VALUE](index=17&type=section&id=Note%2012.%20FAIR%20VALUE) - The company measures certain financial assets and liabilities at fair value, primarily contingent consideration liabilities, which are categorized as Level 3 due to significant unobservable inputs[74](index=74&type=chunk)[79](index=79&type=chunk) Contingent Consideration Liabilities (in thousands) | Metric | Feb 28, 2022 | May 31, 2021 | | :------------------------ | :----------- | :----------- | | Contingent consideration liabilities | $16,741 | $15,741 | - The change in fair value of contingent consideration for the nine months ended February 28, 2022, was a gain of **$1.005 million**, primarily from changes in estimated earn-out payments and amortization of the present value discount[77](index=77&type=chunk)[78](index=78&type=chunk) - The amount of undiscounted future contingent consideration expected to be paid is approximately **$20.0 million**, with milestones ranging from fiscal years 2022 to 2029[80](index=80&type=chunk) [Note 13. LEASES](index=19&type=section&id=Note%2013.%20LEASES) Lease Information (in thousands) | Metric | Feb 28, 2022 | May 31, 2021 | | :-------------------------------- | :----------- | :----------- | | Operating lease ROU asset | $7,594 | $9,382 | | Current operating lease liabilities | $2,526 | $2,415 | | Non-current operating lease liabilities | $5,378 | $7,319 | | Total lease liabilities | $7,904 | $9,734 | - The weighted average remaining lease term is **3.46 years**, and the weighted average discount rate is **3.8%** as of February 28, 2022[83](index=83&type=chunk) - Total future lease payments are **$8.423 million**, with **$2.526 million** classified as the current portion of lease obligations[85](index=85&type=chunk) [Note 14. COMMITMENTS AND CONTINGENCIES](index=20&type=section&id=Note%2014.%20COMMITMENTS%20AND%20CONTINGENCIES) - The company is involved in various legal proceedings, including commercial, intellectual property, product liability, and regulatory matters, considered normal for its business[88](index=88&type=chunk) - Multiple patent infringement lawsuits with C.R. Bard, Inc. are ongoing, with some cases stayed pending appeals or scheduled for trial[89](index=89&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - The company has not recorded an expense related to the outcome of these litigations because it is not yet possible to determine if a potential loss is probable or reasonably estimable[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - AngioDynamics has also commenced an antitrust action against C.R. Bard, Inc. alleging illegal tying of sales, with trial scheduled to commence on July 5, 2022[93](index=93&type=chunk) [Note 15. ACQUISITION, RESTRUCTURING, AND OTHER ITEMS, NET](index=22&type=section&id=Note%2015.%20ACQUISITION,%20RESTRUCTURING,%20AND%20OTHER%20ITEMS,%20NET) Acquisition, Restructuring and Other Items, Net (in thousands) | Item | 3 Months Ended Feb 28, 2022 | 3 Months Ended Feb 28, 2021 | 9 Months Ended Feb 28, 2022 | 9 Months Ended Feb 28, 2021 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Legal | $1,681 | $967 | $5,837 | $2,947 | | Mergers and acquisitions | $0 | $0 | $59 | $1 | | Transition service agreement | $0 | $(323) | $0 | $(1,032) | | Divestiture | $0 | $8 | $0 | $393 | | Manufacturing relocation | $396 | $0 | $455 | $0 | | Other | $282 | $(42) | $701 | $748 | | Total | $2,359 | $610 | $7,052 | $3,057 | - The increase in these items was primarily driven by higher legal expenses related to litigation outside the normal course of business and manufacturing relocation expenses to Costa Rica[96](index=96&type=chunk)[129](index=129&type=chunk) [Note 16. ACCUMULATED OTHER COMPREHENSIVE INCOME](index=22&type=section&id=Note%2016.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME) Accumulated Other Comprehensive Income (in thousands) | Metric | Balance at Nov 30, 2021 | 3 Months Ended Feb 28, 2022 | Balance at Feb 28, 2022 | | :---------------------------------------------------- | :---------------------- | :-------------------------- | :---------------------- | | Foreign currency translation income (loss) | $4,562 | $(1,036) | $3,526 | - Accumulated other comprehensive income decreased to **$3.526 million** as of February 28, 2022, primarily due to a foreign currency translation loss of **$1.036 million** in the three-month period[98](index=98&type=chunk) [Note 17. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS](index=23&type=section&id=Note%2017.%20RECENTLY%20ISSUED%20ACCOUNTING%20PRONOUNCEMENTS) - The company plans to adopt ASU 2021-10 (Government Assistance disclosures) in the first quarter of fiscal year 2023, with no material impact expected[100](index=100&type=chunk) - The company plans to adopt ASU 2021-08 (Business Combinations - Contract Assets and Contract Liabilities) in the first quarter of fiscal year 2024, with no material impact expected[100](index=100&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) AngioDynamics' strategic shift to high-tech Med Tech products drove sales growth, despite increased net losses from operational challenges, with sufficient liquidity [Executive Overview](index=24&type=section&id=Executive%20Overview) - AngioDynamics designs, manufactures, and sells medical devices for vascular access, peripheral vascular disease, and oncology, primarily used in minimally invasive, image-guided procedures[106](index=106&type=chunk) - The company is transforming into a focused medical technology company, investing in high-technology products like Auryon, Thrombectomy, and NanoKnife, to access larger and faster-growing markets[32](index=32&type=chunk)[110](index=110&type=chunk) - COVID-19 continues to impact business operations, including consumer demand, hospital procedures, supply chain reliability, labor shortages, backlog, and inflation[109](index=109&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Key Financial Metrics (in millions, except per share data) | Metric | 3 Months Ended Feb 28, 2022 | 3 Months Ended Feb 28, 2021 | 9 Months Ended Feb 28, 2022 | 9 Months Ended Feb 28, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Sales | $74.0 | $71.2 | $229.2 | $214.2 | | Net Loss | $(5.0) | $(3.5) | $(20.3) | $(12.1) | | Loss per diluted share| $(0.13) | $(0.09) | $(0.52) | $(0.32) | - Med Tech business growth was **28.6%** for the three months and **41.8%** for the nine months, while Med Device declined **2.8%** and **0.8%** respectively[113](index=113&type=chunk) - Gross profit decreased by **190 basis points** to **52.2%** for the three months and **140 basis points** to **52.0%** for the nine months[113](index=113&type=chunk) [Net Sales](index=25&type=section&id=Net%20Sales) Net Sales Performance (in thousands) | Metric | 3 Months Ended Feb 28, 2022 | 3 Months Ended Feb 28, 2021 | % Change (3M) | 9 Months Ended Feb 28, 2022 | 9 Months Ended Feb 28, 2021 | % Change (9M) | | :----------------------- | :-------------------------- | :-------------------------- | :------------ | :-------------------------- | :-------------------------- | :------------ | | Total Net Sales | $73,970 | $71,182 | 3.9% | $229,221 | $214,168 | 7.0% | - The company had a backlog of **$9.6 million** at February 28, 2022, primarily impacting sales of Core, Venous, and Vascular Access products[115](index=115&type=chunk)[117](index=117&type=chunk) - Med Tech net sales increased by **$4.4 million (28.6%)** for the three months and **$16.5 million (41.8%)** for the nine months, driven by Auryon and the thrombectomy platform[116](index=116&type=chunk) - Med Device net sales decreased by **$1.6 million (2.8%)** for the three months and **$1.5 million (0.8%)** for the nine months, primarily due to the backlog and decreased sales in several product categories[117](index=117&type=chunk)[119](index=119&type=chunk) [Gross Profit, Operating Expenses, and Other Income (expense)](index=27&type=section&id=Gross%20Profit,%20Operating%20Expenses,%20and%20Other%20Income%20(expense)) Gross Profit and Operating Expenses (in thousands) | Metric | 3 Months Ended Feb 28, 2022 | 3 Months Ended Feb 28, 2021 | % Change (3M) | 9 Months Ended Feb 28, 2022 | 9 Months Ended Feb 28, 2021 | % Change (9M) | | :-------------------------- | :-------------------------- | :-------------------------- | :------------ | :-------------------------- | :-------------------------- | :------------ | | Gross profit | $38,583 | $38,530 | 0.1% | $119,277 | $114,468 | 4.2% | | Gross profit % of sales | 52.2% | 54.1% | (1.9)pp | 52.0% | 53.4% | (1.4)pp | | Research and development | $7,280 | $8,565 | (15.0)% | $22,873 | $27,286 | (16.2)% | | Sales and marketing | $20,416 | $19,607 | 4.1% | $68,468 | $57,486 | 19.1% | | General and administrative | $8,727 | $9,011 | (3.2)% | $27,348 | $26,787 | 2.1% | | Amortization of intangibles | $4,895 | $4,292 | 14.0% | $14,605 | $13,838 | 5.5% | | Change in fair value of contingent consideration | $201 | $183 | 9.8% | $1,005 | $(290) | 446.6% | | Acquisition, restructuring and other items, net | $2,359 | $610 | 286.7% | $7,052 | $3,057 | 130.7% | | Other expense, net | $(462) | $(389) | 18.8% | $(1,154) | $(417) | 176.7% | | Income tax benefit | $(800) | $(600) | 33.3% | $(2,900) | $(2,000) | 45.0% | - Gross profit was negatively impacted by **$1.7 million (3M)** and **$2.7 million (9M)** due to labor shortages, inflationary costs on raw materials, and production volume[121](index=121&type=chunk) - R&D expense decreased due to the timing of projects and decreased compensation from open R&D positions[123](index=123&type=chunk) - S&M expense increased due to additional headcount for the Auryon sales and marketing teams and increased travel, meeting, and tradeshow expenses[124](index=124&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) Cash Flow Summary (in thousands) | Cash Flow Category | 9 Months Ended Feb 28, 2022 | 9 Months Ended Feb 28, 2021 | | :----------------------- | :-------------------------- | :-------------------------- | | Operating activities | $(15,754) | $11,894 | | Investing activities | $(15,534) | $(4,567) | | Financing activities | $7,354 | $(7,541) | | Net change in cash and cash equivalents | $(24,271) | $34 | - Cash and cash equivalents decreased significantly from **$48.2 million** at May 31, 2021, to **$23.9 million** at February 28, 2022[132](index=132&type=chunk) - Cash used in investing activities included **$8.7 million** for Auryon placement and evaluation unit additions and **$3.6 million** for the QX Medical asset acquisition in fiscal year 2022[136](index=136&type=chunk) - The company believes its current cash balance, cash from operations, and access to its **$125.0 million** Revolving Facility provide sufficient liquidity for at least the next 12 months[132](index=132&type=chunk)[138](index=138&type=chunk) [New Accounting Pronouncements](index=31&type=section&id=New%20Accounting%20Pronouncements) - This section refers to Note 17 for details on recently issued accounting pronouncements, which indicates no material impact is expected from the adoption of ASU 2021-10 and ASU 2021-08[139](index=139&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) AngioDynamics is exposed to market risks from foreign currency and interest rate fluctuations, while managing credit risk through diversified banking and customer monitoring [Foreign Currency Exchange Rate Risk](index=32&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) - Approximately **6%** of the company's sales for the nine months ended February 28, 2022, were denominated in foreign currencies, primarily the Euro, British Pound, and Canadian Dollar[143](index=143&type=chunk) - A strengthening U.S. Dollar negatively impacts the company's sales and gross profit due to lower foreign currency denominated expenses relative to sales[143](index=143&type=chunk) [Interest Rate Risk](index=32&type=section&id=Interest%20Rate%20Risk) - The company is exposed to interest rate risk through its **$125.0 million** Revolving Facility, on which **$25.0 million** was outstanding as of February 28, 2022[144](index=144&type=chunk) - The interest rate on the Revolving Facility is variable, based on LIBOR or an alternate base rate plus an applicable margin, and was **1.36%** at February 28, 2022[144](index=144&type=chunk) [Concentration of Credit Risk](index=32&type=section&id=Concentration%20of%20Credit%20Risk) - Financial instruments subject to credit risk include cash and cash equivalents, the Revolving Facility, and trade accounts receivable[145](index=145&type=chunk) - Credit risk is mitigated by maintaining cash at various institutions, structuring the Revolving Facility across five banks, and monitoring customer creditworthiness[145](index=145&type=chunk)[146](index=146&type=chunk) - No single customer represents more than **10%** of total sales, limiting concentration of credit risk with respect to trade accounts receivable[146](index=146&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirmed effective disclosure controls and procedures as of February 28, 2022, with no material changes in internal control over financial reporting [Evaluation of disclosure controls and procedures](index=33&type=section&id=Evaluation%20of%20disclosure%20controls%20and%20procedures) - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of February 28, 2022[148](index=148&type=chunk) - These controls provide reasonable assurance that required information is recorded, processed, summarized, and reported within specified time periods and communicated to management[148](index=148&type=chunk) [Changes in Internal Control over Financial Reporting](index=33&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - There were no material changes in the company's internal control over financial reporting during the fiscal quarter ended February 28, 2022[149](index=149&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) Refers to Note 14, 'Commitments and Contingencies,' in Part I, Item I for detailed information on legal proceedings - Refers to Note 14 'Commitments and Contingencies' in Part I, Item I for information on legal proceedings[152](index=152&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors from the Form 10-K, reiterating that investing in company securities involves high risk - No material changes to the risk factors previously disclosed in the annual report on Form 10-K for the fiscal year ended May 31, 2021[153](index=153&type=chunk) - An investment in the company's securities continues to involve a high degree of risk[153](index=153&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 3,815 common shares at an average of $22.90 per share from employees for tax withholding, not under a public repurchase program Shares of Common Stock Repurchased (Three Months Ended February 28, 2022) | Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | | :------------------------- | :----------------------------------- | :--------------------------- | | Dec 1, 2021 - Dec 31, 2021 | 953 | $26.46 | | Jan 1, 2022 - Jan 31, 2022 | — | $23.26 | | Feb 1, 2022 - Feb 28, 2022 | 2,862 | $21.72 | | Total | 3,815 | $22.90 | - These shares were purchased from employees to satisfy tax withholding requirements on the vesting of restricted shares/units from equity-based awards[155](index=155&type=chunk) - The company does not currently have a publicly announced share repurchase program in effect[155](index=155&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[156](index=156&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were reported - No mine safety disclosures[156](index=156&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) No other information was reported - No other information[156](index=156&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including various certifications and XBRL-related documents - Includes certifications pursuant to Rule 13a-14(a) or 15d-14 under the Securities Exchange Act of 1934[159](index=159&type=chunk) - Includes certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Title 18, United States Code, Section 1350[159](index=159&type=chunk) - XBRL Schema, Calculation Linkbase, Taxonomy Extension Definition Linkbase, Labels Linkbase, and Presentation Linkbase Documents are filed[159](index=159&type=chunk)

Financial Performance - AngioDynamics' Q2 FY2022 revenue increased by 76% to $78280 thousand compared to $72770 thousand in Q2 FY2021[31] - Year-to-date FY2022 revenue increased by 86% to $155251 thousand compared to $142986 thousand in YTD FY2021[31] - Gross margin for Q2 FY2022 was 518%, a decrease of 340 bps compared to 552% in Q2 FY2021[31] - The net loss for Q2 FY2022 was $8351 thousand, compared to a net loss of $4268 thousand in Q2 FY2021[31] - Adjusted EPS for Q2 FY2022 was ($002), compared to $001 in Q2 FY2021[31] - Adjusted EBITDA for Q2 FY2022 was $4421 thousand, compared to $5158 thousand in Q2 FY2021[31] Revenue Contribution and Growth - Med Tech revenue contribution in Q2 FY22 was 24% and Med Device was 76%[32] - Med Tech revenue contribution YTD FY22 was 24% and Med Device was 76%[32] - Med Tech revenue grew by 364% in Q2 FY22 and 500% YTD FY22[32] Thrombus Management - The total addressable market (TAM) for Deep Vein Thrombosis in 2020 was $13 billion[8] - The total addressable market (TAM) for Pulmonary Embolism in 2020 was $16 billion[8]

Financial Data and Key Metrics Changes - The company reported revenue of $78.3 million for Q2 FY 2022, representing a year-over-year growth of 7.6% [8][24] - Adjusted EPS was negative $0.02, compared to adjusted net income of $0.01 in the same quarter last year [31] - Gross margin for Q2 FY 2022 was 51.8%, a decrease of 340 basis points year-over-year due to rising labor and manufacturing costs [28][29] Business Line Data and Key Metrics Changes - Med Tech revenue was $18.9 million, a 36% increase year-over-year, driven by strong performance in Auryon and Thrombectomy platforms [8][24] - The Med Device business grew approximately 1% year-over-year, impacted by a $4 million backlog due to supply chain disruptions [8][20] - Auryon generated $6.3 million in revenue, with an estimated 5% market share, and is expected to continue robust growth [14][15] Market Data and Key Metrics Changes - Endovascular therapies revenue increased 17% year-over-year to $39.7 million, benefiting from the adoption of Auryon [25] - Mechanical Thrombectomy revenue grew 29% year-over-year, with a 21% increase when including unit usage [26] - Oncology business revenue declined 9.3% due to fewer capital sales and procedural pressures related to COVID [27] Company Strategy and Development Direction - The company is focused on transforming into a high-growth med tech company, with ongoing investments in manufacturing capacity and supply chain improvements [7][11] - Strategic initiatives include increasing manufacturing capacity in Costa Rica and pursuing targeted projects to enhance efficiency [11][12] - The company continues to explore strategic tuck-in M&A opportunities as part of its long-term growth strategy [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges from COVID-19, including staffing shortages and supply chain disruptions, but remains optimistic about demand for products [9][39] - The company expects potential headwinds to persist in Q3, with a recovery anticipated as internal initiatives take hold [32][46] - Management reiterated revenue guidance for FY 2022 in the range of $310 million to $315 million, despite current challenges [32][68] Other Important Information - The company has 22 active sites in its DIRECT study, with plans to expand clinical research efforts [22] - The PRESERVE study for the NanoKnife system is expected to begin patient enrollment in Q3, aiming to expand the target market significantly [23] Q&A Session Summary Question: How is the current wave of COVID different from previous ones and its impact on business? - Management noted increased pressure on healthcare networks due to staffing challenges, leading to cancellations of elective procedures [38][39] Question: What is the status of the $4 million backlog? - The backlog has increased slightly and is expected to plateau, with efforts underway to address labor shortages and supply chain issues [43][60] Question: How does the company view the impact of Omicron on revenue guidance? - Management expects some impact on the February quarter but believes demand remains strong overall [44][46] Question: What is the penetration rate of Auryon in the market? - Auryon currently holds about 5% market share, with room for growth as the company continues to place new lasers [47][50] Question: What is the timeline for the AlphaVac commercial release? - The full commercial release is not expected to be significantly impacted by Omicron, with plans to launch the 18 French device in the first half of the calendar year [52][70]