8-K
Angiodynamics Inc (ANGO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 7, 2020
AngioDynamics, Inc.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 000-50761 | 11-3146460 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File<br><br> <br>Number) | (IRS Employer<br><br> <br>Identification No.) |
| 14 Plaza Drive Latham, New York | 12110 | |
| --- | --- | |
| (Address of Principal Executive Offices) | (Zip Code) |
(518) 795-1400
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| □ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| □ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| □ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b)) |
| □ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.01 per share | ANGO | NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 – Results of Operations and Financial Condition.
On April 7, 2020, AngioDynamics, Inc. (“AngioDynamics”) issued a press release announcing financial results for the fiscal third quarter ended February 29, 2020. A copy of the press release is furnished herewith as Exhibit 99.1.
The information set forth in Item 2.02 of this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section. Furthermore, such information shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01 – Regulation FD Disclosure.
Presentation slides discussing AngioDynamics and its fiscal third quarter ended February 29, 2020 are furnished herewith as Exhibit 99.2.
The presentation slides furnished pursuant to Item 7.01 of this Form 8-K (including Exhibit 99.2) shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section. Furthermore, the presentation slides shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.
Forward-Looking Statements
This document and its attachments contain 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 and objectives of management for future operations, as well as statements that include the words such as “expects,” “reaffirms,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “optimistic,” or variations of such words and similar expressions, are forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Investors are cautioned that actual events or results may differ from AngioDynamics’ expectations. Factors that may affect the actual results achieved by AngioDynamics include, without limitation, the ability of AngioDynamics to develop its existing and new products, technological advances and patents attained by competitors, infringement of AngioDynamics’ technology or assertions that AngioDynamics’ technology infringes the technology of third parties, the ability of AngioDynamics to effectively compete against competitors that have substantially greater resources, future actions by the FDA or other regulatory agencies, domestic and foreign health care reforms and government regulations, results of pending or future clinical trials, overall economic conditions, the results of on-going litigation, challenges with respect to third-party distributors or joint venture partners or collaborators, the results of sales efforts, the effects of product recalls and product liability claims, changes in key personnel, the ability of AngioDynamics to execute on strategic initiatives, the effects of economic, credit and capital market conditions, general market conditions, market acceptance, foreign currency exchange rate fluctuations, the effects on pricing from group purchasing organizations and competition, the ability of AngioDynamics to integrate purchased businesses, as well as the risk factors listed from time to time in AngioDynamics’ SEC filings, including but not limited to its Annual Report on Form 10-K for the year ended May 31, 2019 and its Quarterly Reports on Form 10-Q for the fiscal period ended August 31, 2019 and November 30, 2019. AngioDynamics does not assume any obligation to publicly update or revise any forward-looking statements for any reason.
Item 9.01 – Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release, dated April 7, 2020. |
| 99.2 | Presentation, dated April 7, 2020. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ANGIODYNAMICS, INC. | ||
|---|---|---|
| (Registrant) | ||
| Date: April 7, 2020 | By: | /s/ Stephen A. Trowbridge |
| Stephen A. Trowbridge | ||
| Executive Vice President, General Counsel | ||
| and Chief Financial Officer |
Exhibit 99.1
PRESS RELEASE
Investor Contact:
AngioDynamics, Inc.
Stephen Trowbridge, Executive Vice President & CFO
(518) 795-1408
AngioDynamics Reports Fiscal 2020 Third Quarter Financial Results
Fiscal 2020 Third Quarter Highlights
| • | Net sales of $69.8 million increased 6.5% compared to the prior-year quarter |
|---|---|
| • | Gross margin declined 40 basis points to 57.8% year over year |
| --- | --- |
| • | GAAP loss per share of $0.15; adjusted earnings per share of $0.01 |
| --- | --- |
| • | Launched PATHFINDER I Registry to evaluate performance and clinical outcomes of the AURYON^™^ Atherectomy System |
| --- | --- |
| • | As a result of the uncertainty created by the COVID-19 pandemic, management is withdrawing its fiscal year 2020 financial guidance |
| --- | --- |
Latham, New York, April 7, 2020 – AngioDynamics, Inc. (NASDAQ: ANGO), a leading provider of innovative, minimally invasive medical devices for vascular access, peripheral vascular disease, and oncology, today announced financial results for the third quarter of fiscal year 2020, which ended February 29, 2020.
“The health and safety of the team is our top priority, and I want to thank each of our team members for the resiliency they have shown. We are very pleased with our third quarter results, as increases across all three of our businesses drove solid ex-Asclera top-line growth of 9.3%,” commented Jim Clemmer, President and Chief Executive Officer of AngioDynamics, Inc. “Looking ahead, we are operating in a very dynamic macro environment, and the coming months are likely to present further challenges. However, our healthy balance sheet and world-class team leave us well-prepared to weather those challenges. We experienced strong momentum during the third quarter, and we look forward to building on that momentum once the environment begins to normalize, as we believe that the long-term fundamentals and growth drivers of our
business remain intact. All of us at AngioDynamics remain steadfastly focused on the health and safety of our employees and patients and ensuring that our physicians and customers have uninterrupted access to our innovative product portfolio in order to deliver the highest quality care possible.”
Third Quarter 2020 Financial Results
Net sales for the third quarter of fiscal 2020 were $69.8 million, an increase of 6.5% compared to the prior-year quarter. Excluding the impact of Asclera sales, which were discontinued during fiscal year 2019, net sales grew 9.3% year over year. Foreign currency translation did not have a significant impact on the Company’s sales in the quarter.
• Oncology net sales were $14.6 million, an increase of 5.1% from $13.9 million a year ago, led by strong NanoKnife sales.
• Vascular Interventions and Therapies (“VIT”) net sales were $30.6 million, an increase of 4.3%, compared to $29.3 million a year ago. Excluding last year’s Asclera sales of $1.7 million in the third quarter, VIT grew 10.5%, driven by higher sales of the Company’s AngioVac, Thrombolytic, and core VIT products.
• Vascular Access net sales were $24.6 million, an increase of 10.3% from $22.3 million a year ago, due primarily to higher sales of PICCs, Ports, and Midline products.
Excluding Asclera, U.S. net sales in the third quarter of fiscal 2020 were $54.9 million, an increase of 6.1% from $51.7 million a year ago, and International net sales were $14.9 million, an increase of 22.8% from $12.1 million a year ago.
Gross margin for the third quarter of fiscal 2020 was 57.8%, a decrease of 40 basis points compared to the third quarter of fiscal 2019, primarily due to product mix.
The Company recorded a net loss from continuing operations of $5.7 million, or a loss of $0.15 per share, in the third quarter of fiscal 2020. This compares to a net loss from continuing operations of approximately $4.6 million, or a loss of $0.12 per share, a year ago.
Excluding the items shown in the non-GAAP reconciliation table below, adjusted net income for the third quarter of fiscal 2020 was $0.4 million, or $0.01 per share, compared to adjusted net income of $1.9 million, or $0.05 per share, in the third quarter of fiscal 2019.
Adjusted EBITDA in the third quarter of fiscal 2020, excluding the items shown in the reconciliation table below, was $3.8 million, compared to $7.7 million in the third quarter of fiscal 2019.
In the third quarter of fiscal 2020, the Company used $17.8 million in operating cash and had capital expenditures of $1.7 million. As of February 29, 2020, the Company had $27.2 million in cash and cash equivalents and $15.0 million in debt outstanding.
Nine Months Financial Results
For the nine months ended February 29, 2020:
| • | Net sales were $205.8 million, an increase of 3.2%, compared to $199.5 million for the same period a year ago. Excluding the impact of Asclera,<br> sales of which were discontinued during fiscal year 2019, net sales grew 5.7% year over year. |
|---|---|
| • | The Company's net loss from continuing operations was $9.7 million, or a loss of $0.26 per share, compared to a net loss from continuing operations of $13.9 million, or a loss of $0.37 per share,<br> a year ago. |
| --- | --- |
| • | Gross margin improved 80 basis points to 58.3% from 57.5% a year ago. |
| --- | --- |
| • | Excluding the items shown in the non-GAAP reconciliation table below, adjusted net income was $5.7 million, or $0.15 per share, compared to adjusted net income of $5.4 million, or $0.14 per share,<br> a year ago. |
| --- | --- |
| • | Adjusted EBITDA, excluding the items shown in the reconciliation table below, was $17.5 million, compared to $22.0 million for the same period a year ago. |
| --- | --- |
Fiscal Year 2020 Financial Guidance
As a result of the ongoing pandemic, health systems throughout the country, many of which are AngioDynamics customers, are currently prioritizing the care of COVID-19 patients. Consequently, certain of the procedures that the Company supports have been, and will continue to be, impacted. Given the uncertainty surrounding the magnitude and duration of these impacts, management is withdrawing its fiscal year 2020 financial guidance.
Conference Call
The Company’s management will host a conference call today at 8:00 a.m. ET to discuss its fiscal 2020 third quarter results.
To participate in the conference call, dial 1-877-407-0784 (domestic) or +1-201-689-8560 (international) and refer to the passcode 13700177.
This conference call will also be webcast and can be accessed from the “Investors” section of the AngioDynamics website at www.angiodynamics.com. The webcast replay
of the call will be available at the same site approximately one hour after the end of the call.
A recording of the call will also be available from 11:00 a.m. ET on Tuesday, April 7, 2020, until 11:59 p.m. ET on Tuesday, April 14, 2020. To hear this recording, dial 1-844-512-2921 (domestic) or +1-412-317-6671 (international) and enter the passcode 13700177.
Use of Non-GAAP Measures
Management uses non-GAAP measures to establish operational goals and believes that non-GAAP measures may assist investors in analyzing the underlying trends in AngioDynamics' business over time. Investors should consider these non-GAAP measures in addition to, not as a substitute for or as superior to, financial reporting measures prepared in accordance with GAAP. In this news release, AngioDynamics has reported adjusted EBITDA, adjusted net income, adjusted earnings per share, free cash flow and net sales excluding Asclera. Management uses these measures in its internal analysis and review of operational performance. Management believes that these measures provide investors with useful information in comparing AngioDynamics' performance over different periods. By using these non-GAAP measures, management believes that investors get a better picture of the performance of AngioDynamics' underlying business. Management encourages investors to review AngioDynamics' financial results prepared in accordance with GAAP to understand AngioDynamics' performance taking into account all relevant factors, including those that may only occur from time to time but have a material impact on AngioDynamics' financial results. Please see the tables that follow for a reconciliation of non-GAAP measures to measures prepared in accordance with GAAP.
About AngioDynamics, Inc.
AngioDynamics, Inc. is a leading provider of innovative, minimally invasive medical devices used by professional healthcare providers for vascular access, peripheral vascular disease, and oncology. AngioDynamics’ diverse product lines include market-leading ablation systems, vascular access products, angiographic products and accessories, drainage products, thrombolytic products and venous products. For more information, visit www.angiodynamics.com.
Safe Harbor
This release 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 and objectives of management for future operations, as well as statements that include the words such as "expects," "reaffirms," "intends,"
"anticipates," "plans," "believes," "seeks," "estimates," "optimistic," or variations of such words and similar expressions, are forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Investors are cautioned that actual events or results may differ from AngioDynamics' expectations. Factors that may affect the actual results achieved by AngioDynamics include, without limitation, the scale and scope of the COVID-19 global pandemic, the ability of AngioDynamics to develop its existing and new products, technological advances and patents attained by competitors, infringement of AngioDynamics' technology or assertions that AngioDynamics' technology infringes the technology of third parties, the ability of AngioDynamics to effectively compete against competitors that have substantially greater resources, future actions by the FDA or other regulatory agencies, domestic and foreign health care reforms and government regulations, results of pending or future clinical trials, overall economic conditions, the results of on-going litigation, challenges with respect to third-party distributors or joint venture partners or collaborators, the results of sales efforts, the effects of product recalls and product liability claims, changes in key personnel, the ability of AngioDynamics to execute on strategic initiatives, the effects of economic, credit and capital market conditions, general market conditions, market acceptance, foreign currency exchange rate fluctuations, the effects on pricing from group purchasing organizations and competition, the ability of AngioDynamics to integrate acquired businesses, as well as the risk factors listed from time to time in AngioDynamics' SEC filings, including but not limited to its Annual Report on Form 10-K for the year ended May 31, 2019 and its Quarterly Report on Form 10-Q for the period ended February 29, 2020. AngioDynamics does not assume any obligation to publicly update or revise any forward-looking statements for any reason.
In the United States, the NanoKnife System has received a 510(k) clearance by the Food and Drug Administration for use in the surgical ablation of soft tissue and is similarly approved for commercialization in Canada, the European Union, and Australia. The NanoKnife System has not been cleared for the treatment or therapy of a specific disease or condition.
| ANGIODYNAMICS, INC. AND SUBSIDIARIES | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED INCOME STATEMENTS | ||||||||||||
| (in thousands, except per share data) | ||||||||||||
| Three months ended | Nine months ended | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Feb 29, 2020 | Feb 28, 2019 | Feb 29, 2020 | Feb 28, 2019 | |||||||||
| (unaudited) | (unaudited) | |||||||||||
| Net sales | $ | 69,780 | $ | 65,524 | $ | 205,825 | $ | 199,451 | ||||
| Cost of sales (exclusive of intangible amortization) | 29,481 | 27,361 | 85,765 | 84,783 | ||||||||
| Gross profit | 40,299 | 38,163 | 120,060 | 114,668 | ||||||||
| % of net sales | 57.8 | % | 58.2 | % | 58.3 | % | 57.5 | % | ||||
| Operating expenses | ||||||||||||
| Research and development | 8,395 | 6,915 | 22,450 | 21,365 | ||||||||
| Sales and marketing | 20,934 | 18,385 | 60,427 | 56,054 | ||||||||
| General and administrative | 10,203 | 8,718 | 29,651 | 26,414 | ||||||||
| Amortization of intangibles | 5,019 | 4,660 | 13,417 | 12,599 | ||||||||
| Change in fair value of contingent consideration | 419 | 609 | 116 | 865 | ||||||||
| Acquisition, restructuring and other items, net | 1,565 | 2,550 | 4,486 | 9,700 | ||||||||
| Total operating expenses | 46,535 | 41,837 | 130,547 | 126,997 | ||||||||
| Operating loss | (6,236) | (3,674) | (10,487) | (12,329) | ||||||||
| Interest expense, net | (166) | (1,442) | (672) | (3,689) | ||||||||
| Other expense, net | (131) | (266) | (67) | (72) | ||||||||
| Total other expense, net | (297) | (1,708) | (739) | (3,761) | ||||||||
| Loss from continuing operations before income tax benefit | (6,533) | (5,382) | (11,226) | (16,090) | ||||||||
| Income tax benefit | (824) | (773) | (1,506) | (2,191) | ||||||||
| Net loss from continuing operations | (5,709) | (4,609) | (9,720) | (13,899) | ||||||||
| Income from discontinued operations, net of income tax | — | 5,405 | — | 16,366 | ||||||||
| Net income (loss) | $ | (5,709) | $ | 796 | $ | (9,720) | $ | 2,467 | ||||
| Loss per share - continuing operations | ||||||||||||
| Basic | $ | (0.15) | $ | (0.12) | $ | (0.26) | $ | (0.37) | ||||
| Diluted | $ | (0.15) | $ | (0.12) | $ | (0.26) | $ | (0.37) | ||||
| Income per share - discontinued operations | ||||||||||||
| Basic | $ | — | $ | 0.14 | $ | — | $ | 0.44 | ||||
| Diluted | $ | — | $ | 0.14 | $ | — | $ | 0.44 | ||||
| Income (loss) per share | ||||||||||||
| Basic | $ | (0.15) | $ | 0.02 | $ | (0.26) | $ | 0.07 | ||||
| Diluted | $ | (0.15) | $ | 0.02 | $ | (0.26) | $ | 0.07 | ||||
| Weighted average shares outstanding | ||||||||||||
| Basic | 37,999 | 37,518 | 37,924 | 37,446 | ||||||||
| Diluted | 37,999 | 37,518 | 37,924 | 37,446 |
| ANGIODYNAMICS, INC. AND SUBSIDIARIES |
|---|
| GAAP TO NON-GAAP RECONCILIATION |
| (in thousands, except per share data) |
Reconciliation of Net Loss to non-GAAP Adjusted Net Income:
| Three months ended | Nine months ended | |||||||
|---|---|---|---|---|---|---|---|---|
| Feb 29, 2020 | Feb 28, 2019 | Feb 29, 2020 | Feb 28, 2019 | |||||
| (unaudited) | (unaudited) | |||||||
| Net loss from continuing operations | $ | (5,709) | $ | (4,609) | $ | (9,720) | $ | (13,899) |
| Amortization of intangibles | 5,019 | 4,660 | 13,417 | 12,599 | ||||
| Change in fair value of contingent consideration | 419 | 609 | 116 | 865 | ||||
| Acquisition, restructuring and other items, net (1) | 1,565 | 2,550 | 4,486 | 9,700 | ||||
| Write-off of deferred financing fees (2) | — | — | 593 | — | ||||
| Tax effect of non-GAAP items (3) | (932) | (1,334) | (3,205) | (3,818) | ||||
| Adjusted net income | $ | 362 | $ | 1,876 | $ | 5,687 | $ | 5,447 |
Reconciliation of Diluted Loss Per Share to non-GAAP Adjusted Diluted Earnings Per Share:
| Three months ended | Nine months ended | |||||||
|---|---|---|---|---|---|---|---|---|
| Feb 29, 2020 | Feb 28, 2019 | Feb 29, 2020 | Feb 28, 2019 | |||||
| (unaudited) | (unaudited) | |||||||
| Diluted loss per share | $ | (0.15) | $ | (0.12) | $ | (0.26) | $ | (0.37) |
| Amortization of intangibles | 0.13 | 0.12 | 0.35 | 0.33 | ||||
| Change in fair value of contingent consideration | 0.01 | 0.02 | — | 0.02 | ||||
| Acquisition, restructuring and other items, net (1) | 0.04 | 0.07 | 0.12 | 0.25 | ||||
| Write-off of deferred financing fees (2) | — | — | 0.02 | — | ||||
| Tax effect of non-GAAP items (3) | (0.02) | (0.04) | (0.08) | (0.09) | ||||
| Adjusted diluted earnings per share | $ | 0.01 | $ | 0.05 | $ | 0.15 | $ | 0.14 |
| Adjusted diluted sharecount | 38,094 | 38,338 | 38,111 | 38,350 | ||||
| (1) Includes costs related to merger and acquisition activities, restructuring, and unusual items, including asset impairments and write-offs, certain litigation, and other items. | ||||||||
| --- | ||||||||
| (2) Deferred financing fees related to the old credit agreement were written off during the first quarter of fiscal year 2020. | ||||||||
| (3) Adjustment to reflect the income tax provision on a non-GAAP basis has been calculated assuming no valuation allowance on the Company's U.S. deferred tax assets and an effective tax rate of 23% for February<br> 29, 2020 and February 28, 2019. |
| ANGIODYNAMICS, INC. AND SUBSIDIARIES |
|---|
| GAAP TO NON-GAAP RECONCILIATION (Continued) |
| (in thousands, except per share data) |
Reconciliation of Net Loss to Adjusted EBITDA
| Three months ended | Nine months ended | |||||||
|---|---|---|---|---|---|---|---|---|
| Feb 29, 2020 | Feb 28, 2019 | Feb 29, 2020 | Feb 28, 2019 | |||||
| (unaudited) | (unaudited) | |||||||
| Net loss from continuing operations | $ | (5,709) | $ | (4,609) | $ | (9,720) | $ | (13,899) |
| Income tax benefit | (824) | (773) | (1,506) | (2,191) | ||||
| Interest expense, net | 166 | 1,442 | 672 | 3,689 | ||||
| Depreciation and amortization | 6,401 | 6,066 | 17,434 | 16,767 | ||||
| Change in fair value of contingent consideration | 419 | 609 | 116 | 865 | ||||
| Stock based compensation | 1,772 | 2,370 | 5,998 | 7,096 | ||||
| Acquisition, restructuring and other items, net ^(1)^ | 1,565 | 2,550 | 4,486 | 9,700 | ||||
| Adjusted EBITDA | $ | 3,790 | $ | 7,655 | $ | 17,480 | $ | 22,027 |
| Per diluted share: | ||||||||
| Adjusted EBITDA | $ | 0.10 | $ | 0.20 | $ | 0.46 | $ | 0.57 |
(1) Includes costs related to merger and acquisition activities, restructuring, and unusual items, including asset impairments and write-offs, certain litigation, and other items.
| ANGIODYNAMICS, INC. AND SUBSIDIARIES | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| NET SALES BY PRODUCT CATEGORY AND BY GEOGRAPHY | ||||||||||||||
| (in thousands) | ||||||||||||||
| Three months ended | Nine months ended | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Feb 29,<br><br> <br>2020 | Feb 28,<br><br> <br>2019 | % Growth | Currency Impact | Constant Currency Growth | Feb 29,<br><br> <br>2020 | Feb 28,<br><br> <br>2019 | % Growth | Currency Impact | Constant Currency Growth | |||||
| (unaudited) | (unaudited) | |||||||||||||
| Net Sales by Product Category | ||||||||||||||
| Vascular Interventions & Therapies | $ | 30,552 | $ | 29,298 | 4.3% | $ | 90,616 | $ | 88,870 | 2.0% | ||||
| Vascular Access | 24,642 | 22,348 | 10.3% | 70,585 | 69,861 | 1.0% | ||||||||
| Oncology | 14,586 | 13,878 | 5.1% | 44,624 | 40,720 | 9.6% | ||||||||
| $ | 69,780 | $ | 65,524 | 6.5% | 0.0% | 6.5% | $ | 205,825 | $ | 199,451 | 3.2% | 0.0% | 3.4% | |
| — | — | |||||||||||||
| Net Sales by Geography | ||||||||||||||
| United States | $ | 54,889 | $ | 53,400 | 2.8% | 0.0% | 2.8% | $ | 163,381 | $ | 161,195 | 1.4% | 0.0% | 1.4% |
| International | 14,891 | 12,124 | 22.8% | 0.0% | 23.1% | 42,444 | 38,256 | 10.9% | 1.0% | 11.8% | ||||
| $ | 69,780 | $ | 65,524 | 6.5% | 0.0% | 6.5% | $ | 205,825 | $ | 199,451 | 3.2% | 0.0% | 3.4% |
| ANGIODYNAMICS, INC. AND SUBSIDIARIES | ||||
|---|---|---|---|---|
| CONSOLIDATED BALANCE SHEETS | ||||
| (in thousands) | ||||
| Feb 29, 2020 | May 31, 2019 | |||
| --- | --- | --- | --- | --- |
| (unaudited) | (audited) | |||
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 27,160 | $ | 227,641 |
| Accounts receivable, net | 35,619 | 43,577 | ||
| Inventories | 54,898 | 40,071 | ||
| Prepaid expenses and other | 11,369 | 4,003 | ||
| Total current assets | 129,046 | 315,292 | ||
| Property, plant and equipment, net | 28,182 | 24,258 | ||
| Other assets | 13,684 | 3,835 | ||
| Intangible assets, net | 201,956 | 145,387 | ||
| Goodwill | 359,093 | 347,666 | ||
| Total assets | $ | 731,961 | $ | 836,438 |
| Liabilities and stockholders' equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 18,304 | $ | 22,829 |
| Accrued liabilities | 27,445 | 38,338 | ||
| Current portion of long-term debt | — | 7,500 | ||
| Current portion of contingent consideration | 889 | 4,635 | ||
| Other current liabilities | 2,074 | — | ||
| Total current liabilities | 48,712 | 73,302 | ||
| Long-term debt, net of current portion | 14,341 | 124,407 | ||
| Contingent consideration, net of current portion | 26,405 | 8,851 | ||
| Deferred income taxes | 24,013 | 14,542 | ||
| Other long-term liabilities | 8,015 | 521 | ||
| Total liabilities | 121,486 | 221,623 | ||
| Stockholders' equity | 610,475 | 614,815 | ||
| Total Liabilities and Stockholders' Equity | $ | 731,961 | $ | 836,438 |
| ANGIODYNAMICS, INC. AND SUBSIDIARIES | ||||||||
|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (in thousands) | ||||||||
| Three months ended | Nine months ended | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Feb 29, 2020 | Feb 28, 2019 | Feb 29, 2020 | Feb 28, 2019 | |||||
| (unaudited) | (unaudited) | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | (5,709) | $ | 796 | $ | (9,720) | $ | 2,467 |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 6,440 | 6,867 | 17,550 | 19,158 | ||||
| Non-cash lease expense | 663 | — | 1,567 | — | ||||
| Stock based compensation | 1,772 | 2,378 | 5,998 | 7,119 | ||||
| Change in fair value of contingent consideration | 419 | 609 | 116 | 865 | ||||
| Deferred income taxes | (872) | 138 | (1,606) | 633 | ||||
| Change in accounts receivable allowances | (13) | (24) | 186 | (99) | ||||
| Fixed and intangible asset impairments and disposals | 26 | 677 | 395 | 689 | ||||
| Write-off of other assets | — | — | 593 | — | ||||
| Other | 97 | 12 | 70 | (5) | ||||
| Changes in operating assets and liabilities, net of acquisitions: | ||||||||
| Accounts receivable | (1,630) | (785) | 7,834 | (3,853) | ||||
| Inventories | (4,027) | (1,747) | (14,036) | (2,702) | ||||
| Prepaid expenses and other | (5,834) | (325) | (9,378) | (1,508) | ||||
| Accounts payable, accrued and other liabilities | (9,169) | (254) | (18,003) | (10,336) | ||||
| Net cash provided by (used in) operating activities | (17,837) | 8,342 | (18,434) | 12,428 | ||||
| Cash flows from investing activities: | ||||||||
| Additions to property, plant and equipment | (1,742) | (887) | (5,756) | (2,303) | ||||
| Acquisition of intangibles | — | — | (350) | — | ||||
| Cash paid in acquisition | (10,000) | — | (55,760) | (84,920) | ||||
| Proceeds from sale of marketable securities | — | 1,350 | — | 1,350 | ||||
| Net cash provided by (used in) investing activities | (11,742) | 463 | (61,866) | (85,873) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of long-term debt | 15,000 | — | 15,000 | 55,000 | ||||
| Repayment of long-term debt | — | (11,250) | (132,500) | (13,750) | ||||
| Deferred financing costs on long-term debt | (34) | — | (775) | — | ||||
| Payment of acquisition related contingent consideration | — | — | (1,208) | (2,100) | ||||
| Proceeds (outlays) from exercise of stock options and employee stock purchase plan | 594 | 1,169 | (706) | 2,023 | ||||
| Net cash provided by (used in) financing activities | 15,560 | (10,081) | (120,189) | 41,173 | ||||
| Effect of exchange rate changes on cash and cash equivalents | (68) | 160 | 8 | (120) | ||||
| Decrease in cash and cash equivalents | (14,087) | (1,116) | (200,481) | (32,392) | ||||
| Cash and cash equivalents at beginning of period | 41,247 | 42,820 | 227,641 | 74,096 | ||||
| Cash and cash equivalents at end of period | $ | 27,160 | $ | 41,704 | $ | 27,160 | $ | 41,704 |
| ANGIODYNAMICS, INC. AND SUBSIDIARIES | ||||||||
|---|---|---|---|---|---|---|---|---|
| GAAP TO NON-GAAP RECONCILIATION | ||||||||
| (in thousands) | ||||||||
| Reconciliation of Free Cash Flows: | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Three months ended | Nine months ended | |||||||
| Feb 29, 2020 | Feb 28, 2019 | Feb 29, 2020 | Feb 28, 2019 | |||||
| (unaudited) | (unaudited) | |||||||
| Net cash provided by (used in) operating activities | $ | (17,837) | $ | 8,342 | $ | (18,434) | $ | 12,428 |
| Additions to property, plant and equipment | (1,742) | (887) | (5,756) | (2,303) | ||||
| Free Cash Flow | $ | (19,579) | $ | 7,455 | $ | (24,190) | $ | 10,125 |
Exhibit 99.2
AngioDynamics Third Quarter 2020 Earnings PresentationApril 7, 2020
Notice Regarding Forward-Looking StatementsThis 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 and objectives of management for future operations, as well as statements that include the words such as “expects,” “reaffirms,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “optimistic,” or variations of such words and similar expressions, are forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Investors are cautioned that actual events or results may differ from AngioDynamics’ expectations. Factors that may affect the actual results achieved by AngioDynamics include, without limitation, the scale and scope of the COVID-19 global pandemic, the ability of AngioDynamics to develop its existing and new products, technological advances and patents attained by competitors, infringement of AngioDynamics’ technology or assertions that AngioDynamics’ technology infringes the technology of third parties, the ability of AngioDynamics to effectively compete against competitors that have substantially greater resources, future actions by the FDA or other regulatory agencies, domestic and foreign health care reforms and government regulations, results of pending or future clinical trials, overall economic conditions, the results of on-going litigation, challenges with respect to third-party distributors or joint venture partners or collaborators, the results of sales efforts, the effects of product recalls and product liability claims, changes in key personnel, the ability of AngioDynamics to execute on strategic initiatives, the effects of economic, credit and capital market conditions, general market conditions, market acceptance, foreign currency exchange rate fluctuations, the effects on pricing from group purchasing organizations and competition, the ability of AngioDynamics to integrate acquired businesses, as well as the risk factors listed from time to time in AngioDynamics’ SEC filings, including but not limited to its Annual Report on Form 10-K for the year ended May 31, 2019 and the Quarterly Report on Form 10-Q for the period ended February 29, 2020. AngioDynamics does not assume any obligation to publicly update or revise any forward-looking statements for any reason.In the United States, the NanoKnife System has received a 510(k) clearance by the Food and Drug Administration for use in the surgical ablation of soft tissue, and is similarly approved for commercialization in Canada, the European Union and Australia. The NanoKnife System has not been cleared for the treatment or therapy of a specific disease or condition.Notice Regarding Non-GAAP Financial MeasuresManagement uses non-GAAP measures to establish operational goals and believes that non-GAAP measures may assist investors in analyzing the underlying trends in AngioDynamics’ business over time. Investors should consider these non-GAAP measures in addition to, not as a substitute for or as superior to, financial reporting measures prepared in accordance with GAAP. In this presentation, AngioDynamics has reported adjusted EBITDAS (income before interest, taxes, depreciation and amortization and stock-based compensation); adjusted net income; adjusted earnings per shar, free cash flow and net sales on an organic basis, excluding acquired assets and Asclera. Management uses these measures in its internal analysis and review of operational performance. Management believes that these measures provide investors with useful information in comparing AngioDynamics’ performance over different periods. By using these non-GAAP measures, management believes that investors get a better picture of the performance of AngioDynamics’ underlying business. Management encourages investors to review AngioDynamics’ financial results prepared in accordance with GAAP to understand AngioDynamics’ performance taking into account all relevant factors, including those that may only occur from time to time but have a material impact on AngioDynamics’ financial results. Please see the tables that follow for a reconciliation of non-GAAP measures to measures prepared in accordance with GAAP. Forward-Looking Statements
Third Quarter FY2020 Highlights Corporate Developments Monitoring sales, liquidity, procedural volume and third party spend in light of COVID-19. Please refer to “Risk Factors” included in Form 10-Q for the period ended February 29, 2020.Operational modifications in light of COVID-19 – Field based and office based personnel working remotely: Manufacturing continuity.NanoKnife DIRECT study: 19 sites have secured IRB approval.Acquisition of the C3 Wave PICC tip location system in December 2019.As a result of the ongoing COVID-19 pandemic and the resulting uncertain impact on the healthcare system, the Company has withdrawn its FY2020 guidance. * Excluding Asclera, Venous Insufficiency growth was 2%. Financial Performance Product Family Year-over-Year Sales Growth (in millions) Q3 FY20 Q3 FY19 Change Revenue $69.8 $65.5 6.5% Revenue Excluding Asclera $69.8 $63.9 9.3% Gross Margin 57.8% 58.2% (40 bps) Adjusted EPS $0.01 $0.05 ($0.04) Adjusted EBITDA $3.8 $7.7 ($3.9) Cash Used in Operations ($17.8) $8.3 Free Cash Flow ($19.6) $7.5 Vascular Interventions and Therapies AngioVac® 44% Thrombolytic 24% Core Peripheral 9% Venous Insufficiency (15%)* Vascular Access Midlines 16% PICCs 14% Ports 11% Dialysis 1% Oncology NanoKnife® 47% Solero® Microwave (2%) BioSentry (1%) Alatus and IsoLoc Balloons (14%) RadioFrequency Ablation (23%)
Third Quarter FY2020 Results (unaudited) $ in thousands (except per share data) FY2020Q3 Results FY2019Q3 Results Change FY2020YTD Results FY2019YTD Results Change Revenue Vascular Interventions and Therapies Vascular Access Oncology United States International $69,78030,55224,64214,58654,88914,891 $65,52429,29822,34813,87853,40012,124 6.5%*4.3%*10.3%5.1%2.8%*22.8% $205,82590,61670,58544,624163,38142,444 $199,45188,87069,86140,720161,19538,256 3.2%*2.0%*1.0%9.6%1.4%*10.9% Net Loss from Continuing OperationsAdjusted Net Income ($5,709)$362 ($4,609)$1,876 ($9,720)$5,687 ($13,899)$5,447 GAAP Loss Per ShareNon-GAAP Adjusted EPS ($0.15)$0.01 ($0.12)$0.05 ($0.26)$0.15 ($0.37)$0.14 Gross Margin 57.8% 58.2% 58.3% 57.5% Adjusted EBITDA $3,790 $7,655 $17,480 $22,027 Free Cash Flow ($19,579) $7,455 ($24,190) $10,125 Cash $27,160 $227,641** $27,160 $227,641** Debt $15,000 $132,500** $15,000 $132,500** * When excluding Asclera: AngioDynamics growth was 9.3% FY20 Q3 and 5.7% YTD Vascular Interventions and Therapies growth was 10.5% FY20 Q3 and 7.8% YTD U.S. growth was 6.1% FY20 Q3 and 4.5% YTD** Balances reflect amounts at May 31, 2019.
We are dependent on the proper functioning of our critical facilities, our supply chain and distribution networks and our sales force as well as the financial stability of our customers, all of which could be negatively impacted by the coronavirus in a manner that could materially adversely affect our business, financial condition or results of operations.Our ability to manufacture products may be materially adversely impacted by the coronavirus.The Novel Coronavirus Disease 2019 (COVID-19) (“coronavirus”) is impacting worldwide economic activity. Estimates for economic growth have been reduced as a result of the coronavirus, which may have a corresponding effect on our sales activity. The virus continues to spread globally, has been declared a pandemic by the World Health Organization and has spread to over 100 countries, including the United States. The impact of this pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world. With the spread of the coronavirus to the United States and other countries, it is unclear how economic activity and work flows might be impacted on a worldwide basis. Many employers in the United States are requiring their employees to work from home or not come into their offices or facilities. We manufacture primarily out of one facility in Queensbury, New York, and partially out of a facility in Glens Falls, New York. If the manufacturing capabilities of these two sites are impacted as a result of the coronavirus, it may not be possible for us to timely manufacture relevant products at required levels or at all. A reduction or interruption in any of our manufacturing processes could have a material adverse effect on our business, results of operations, financial condition and cash flows. We also might be unable to obtain products, product components, or sterilized products from our suppliers and vendors due to the additional constraints on suppliers created by the coronavirus. Any delays in delivery of or shortages in products and components could interrupt and delay manufacturing of our products and result in the cancellation of orders for our products. Our sales may be materially adversely impacted by the coronavirus.Our sales force functions by meeting in person with physicians and health care providers to discuss our products. The coronavirus may negatively affect demand for our products by limiting the ability of our sales personnel to maintain their customary contacts with customers for a period of time. We may also find that distributors will have to prioritize their work load and may be forced to slow their activities as a result of the coronavirus. As a result, we cannot assure you that our sales force or distributors will increase or maintain our current levels of unit sales or increase or maintain our current unit pricing, which, in turn, could have a material adverse effect on our business, results of operations, financial condition and cash flows. In addition, there is a risk that our international distributors will not be financially viable due to the impact of coronavirus in their respective countries.We may also experience significant and unpredictable reductions in demand for certain products as our health care customers re-prioritize the treatment of patients and divert resources away from non-coronavirus areas. For example, elective surgeries are being de-prioritized which will negatively impact the usage of certain products, including, without limitation, our EVLT and core products and certain Oncology products. As a result of coronavirus, our customers and vendors may experience financial difficulties or be unable to borrow money to fund their operations, which may adversely impact their ability to purchase our products or pay for our products on a timely basis, if at all. The execution of our clinical studies may be materially adversely impacted by the coronavirus.Our future business prospects are highly dependent on generating, collecting and disseminating data pursuant to clinical trials. Clinical trials, including, without limitation, our DIRECT Study, studying the use of NanoKnife to treat pancreatic cancer, and our Pathfinder Registry, collecting data on the use of our Atherectomy laser, may be materially impacted by the coronavirus as hospitals prioritize treating coronavirus patients and creating capacity. Delays in the initiation of sites or enrollment of patients in these and other clinical studies, may have a material adverse effect on our results of operations and future business prospects.Our ability to raise capital may be materially adversely impacted by the coronavirus.Any sustained disruption in the capital markets from the COVID-19 pandemic could negatively impact our ability to raise capital. As of the end of our third fiscal quarter we have a strong balance sheet and do not anticipate the need to raise additional capital. However, we cannot predict when the macro-economic disruption stemming from the coronavirus will ebb or when the economy will return to pre-coronavirus levels, if at all. If the macro-economic disruption continues for pro-longed periods we may need to raise additional capital and capital may not be available on acceptable terms, or at all.The impact of the coronavirus on economic activity, and its effect on our manufacturing facility, supply chain and distribution networks, our sales force and our customers are uncertain at this time and could have a material adverse effect on our results, especially to the extent theses effects persist or exacerbate over an extended period of time.Value of our goodwill and other long lived intangible assets may be materially impaired as a result of COVID-19.A significant portion of our assets consists of goodwill, intangible assets and fixed assets, the carrying value of which may be reduced if we determine that those assets are impaired.Most of our intangible and fixed assets have finite useful lives and are amortized or depreciated over their useful lives on either a straight-line basis or over the expected period of benefit or as revenues are earned from the sales of the related products. The underlying assumptions regarding the estimated useful lives of these intangible assets are reviewed quarterly and more often if an event or circumstance occurs making it likely that the carrying value of the assets may not be recoverable and are adjusted through accelerated amortization if necessary. Whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable we test intangible assets for impairment based on estimates of future cash flows. Based upon the ultimate scope and scale of the COVID-19 global pandemic, there may be materially negative impacts the assumptions we made with respect to our goodwill and other long lived intangible assets and could result in an impairment of such assets. COVID-19 Risk Factor (included in the February 29, 2020 10-Q)
GAAP to Non-GAAP Reconciliation
Reconciliation of GAAP to Non-GAAP Net Income and EPS Amounts in thousands Includes costs related to merger and acquisition activities, restructurings, and unusual items, including asset impairments and write-offs, certain litigation, and other items.Deferred financing fees related to the old credit agreement were written off during the first quarter of fiscal year 2020.Adjustment to reflect the income tax provision on a non-GAAP basis has been calculated assuming no valuation allowance on the Company's U.S. deferred tax assets and an effective tax rate of 23% for February 29, 2020 and February 28, 2019.
Reconciliation of Net Loss to Adjusted EBITDA Amounts in thousands
Growth through Focus Execution Accountability