AngioDynamics(ANGO) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q2 FY 2024 was $79.1 million, representing a year-over-year growth of approximately 3% [8][19] - Adjusted EPS was a loss of$ 0.05, an improvement from a loss of $0.09 in the same quarter last year [26] - Gross margin for Q2 FY 2024 was 50.9%, a decrease of 80 basis points compared to the prior year [22][23] Business Line Data and Key Metrics Changes - Med Tech revenue was$ 25.4 million, a 3.5% year-over-year increase, while Med Device revenue was $53.7 million, growing 2.3% [19] - Mechanical thrombectomy revenue, including AngioVac and AlphaVac, declined 4.7% year-over-year [20] - NanoKnife sales grew approximately 2.8% during the quarter, with total NanoKnife sales up 16.7% year-to-date [12][21] Market Data and Key Metrics Changes - International business grew 12.6% year-over-year, with double-digit growth from both Med Tech and Med Device segments [14] - The U.S. market saw a decline in probe sales for NanoKnife, while capital sales grew robustly by 22.8% [21] Company Strategy and Development Direction - The company is transitioning to a fully outsourced manufacturing model, expected to drive annualized savings of approximately$ 15 million by FY 2027 [15][16] - Focus remains on portfolio optimization and driving growth in both Med Tech and Med Device businesses [7][18] - Anticipated product launches and regulatory approvals are set to open larger, high-growth markets [17][70] Management's Comments on Operating Environment and Future Outlook - Management acknowledged headwinds in the thrombectomy business but remains optimistic about future growth driven by new product introductions and regulatory approvals [9][37] - The company expects FY 2024 revenue to be in the range of $320 million to$ 325 million, down from previous guidance [27] - Management emphasized the importance of training and preparing sales teams for upcoming product launches and market expansions [38][39] Other Important Information - Research and development expenses increased to $8.7 million, representing 10.9% of sales, compared to 8.8% of sales a year ago [25] - The company has zero debt on the balance sheet and cash and cash equivalents increased to$ 60.9 million [26] Q&A Session Summary Question: Will gross margin continue to decrease until the shift to third-party manufacturing is complete? - Management indicated that while there may be fluctuations, the most significant benefits will come at the end of the two-year transition period [33][34] Question: What factors are expected to drive sales increases in thrombectomy? - Management highlighted the breakthrough designation for AngioVac and anticipated FDA approvals as key drivers for future sales growth [36][37] Question: Can you elaborate on the headwinds faced by AngioVac? - Management noted that AngioVac serves a smaller market and emphasized the importance of new sales leadership and training to address challenges [41][42] Question: What improvements are expected with AlphaVac 2? - Management discussed unique design elements of AlphaVac that enhance usability and safety, with pricing positioned competitively in the market [44][46] Question: What is the logistical process for moving to a fully outsourced model? - Management explained that the transition will occur over two years, with established protocols and supplier partnerships already in place [55][56]