AngioDynamics(ANGO) - 2020 Q3 - Quarterly Report

Financial Performance - Revenue for the three months ended February 29, 2020, increased by 6.5% to $69.8 million compared to$65.5 million in the same period last year[148]. - Gross margin for the same period decreased by 40 basis points to 57.8%[148]. - Operating loss for the three months ended February 29, 2020, increased by $2.6 million to$6.2 million[148]. - The Company recorded a net loss of $5.7 million, or$0.15 per diluted share, for the three months ended February 29, 2020[155]. - Net sales for the nine months ended February 29, 2020, increased by $6.4 million to$205.8 million compared to the same period in the prior year[178]. - Gross profit increased by $2.1 million compared to the prior year, driven by sales volume and price increases[163]. - Gross profit increased by$5.4 million year-over-year, primarily driven by sales volume and price from AngioVac and NanoKnife capital sales, contributing $7.1 million[183]. Sales Performance - Vascular Access sales increased by$2.3 million due to increased sales across all product lines and the acquisition of the C3 Wave tip location asset[160]. - International sales increased by 22.8% to $14.9 million for the three months ended February 29, 2020[157]. - AngioVac business sales grew by$1.5 million, with a 33% increase in case volumes year over year[159]. - Total Oncology sales increased by $3.9 million year over year, primarily due to increased NanoKnife capital sales of$3.8 million[181]. - U.S. Oncology sales increased by $3.2 million, driven by NanoKnife capital sales of$1.9 million and balloon sales of $1.8 million[181]. - International Oncology sales increased by$0.7 million year over year, attributed to increased NanoKnife capital sales of 1.9 million[181]. - Total Vascular Interventions & Therapies sales increased by 1.7 million, primarily due to strong performance in the AngioVac business, which grew by $4.2 million[179]. Expenses - Research and development expenses increased by$1.5 million, primarily due to compensation and benefits related to the Eximo acquisition[164]. - Selling and marketing expenses increased by $2.5 million, mainly due to increased variable compensation and expenses related to the Eximo sales and marketing teams[165]. - General and administrative expenses increased by$1.5 million, primarily due to increased legal and professional fees[166]. - Research and development expenses rose by $1.1 million, with$1.7 million attributed to the Eximo acquisition and a $0.3 million increase in compensation and benefits[185]. - Selling and marketing expenses increased by$4.4 million, mainly due to a $2.4 million rise in compensation and benefits linked to NanoKnife capital sales[186]. - General and administrative expenses grew by$3.2 million, primarily due to a $3.5 million increase in legal and professional fees related to ongoing litigation[187]. Cash Flow and Debt - Cash and cash equivalents totaled$27.2 million as of February 29, 2020, down from $227.6 million as of May 31, 2019[199]. - Cash used in operating activities was$18.4 million for the nine months ended February 29, 2020, driven by a net loss of $9.7 million and increased inventory[201]. - Cash used in investing activities included$10.0 million for acquiring the C3 wave tip location asset and $45.8 million for Eximo Medical Ltd.[203]. - The company repaid$132.5 million in long-term debt as part of a new Credit Agreement entered into at the beginning of fiscal year 2020[204]. - The effective tax rate for the nine months ended February 29, 2020, was 13.4%, slightly down from 13.6% for the same period in the prior year[196]. COVID-19 Impact - The Company anticipates that COVID-19 will have a materially adverse impact on certain procedure volumes related to its products[147]. - The company’s manufacturing capabilities may be adversely impacted by COVID-19, potentially affecting product availability and sales[229]. - The company may experience significant reductions in demand for certain products as healthcare customers reprioritize resources due to COVID-19[229]. - The execution of clinical studies, including the DIRECT Study and Pathfinder Registry, may be materially impacted by COVID-19, affecting future business prospects[229]. - The COVID-19 pandemic has significantly impacted the company's manufacturing capabilities and sales activities, potentially leading to material adverse effects on business operations[229]. - The company anticipates that disruptions caused by COVID-19 may lead to unpredictable reductions in demand for certain products, particularly in elective surgeries[230]. - The company is facing uncertainties regarding the impact of COVID-19 on its supply chain and distribution networks, which could adversely affect results[230]. - The company believes that the value of its goodwill and other long-lived intangible assets may be impaired as a result of COVID-19[230]. Legal Matters - The company is currently involved in litigation against C.R. Bard, alleging anti-competitive practices related to the sales of PICCs[226]. - The company has not recorded any expenses related to ongoing litigation as it cannot determine if a potential loss is probable or reasonably estimable[220]. - The company has not recorded any expenses related to ongoing litigation as potential losses are not yet probable or reasonably estimable[225]. - The company reached a settlement with Merz North America, making a lump-sum payment of $2.5 million to dismiss the case[227]. - The company has not scheduled a hearing date for the consolidated appeals related to the litigation against Bard[225]. Financial Position - The fair value of contingent consideration liability increased to$27.3 million as of February 29, 2020, compared to $13.5 million as of May 31, 2019[199]. - Approximately 7$125 million Revolving Facility with interest rates ranging from 0.25% to 0.75% for base rate loans and 1.25% to 1.75% for LIBOR loans[211]. - No single customer represents more than 10% of total sales, limiting concentration of credit risk[214]. - The company maintains a strong balance sheet as of the end of the third fiscal quarter and does not anticipate the need to raise additional capital in the near term[230]. - The company has a diversified customer base, with no single customer representing more than 10% of total sales, limiting concentration of credit risk[214].