On April 7, 2022 AngioDynamics, Inc. (NASDAQ: ANGO), a leading and transformative medical technology company focused on restoring healthy blood flow in the body’s vascular system, expanding cancer treatment options and improving quality of life for patients, reported financial results for the third quarter of fiscal year 2022, which ended February 28, 2022 (Press release, AngioDynamics, APR 7, 2022, View Source [SID1234611604]).

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"We are proud of our team’s ability to drive continued growth in our business during the third quarter while operating amid macro-related supply chain disruptions, procedural volume challenges and ongoing inflation, particularly in December and January. During the quarter, we made significant progress implementing our manufacturing capacity enhancement initiatives, exiting the quarter with an approximately 20% increase in production hours. Even as we started to see benefits of our capacity enhancement initiatives, we saw our backlog increase during our third quarter, signaling continued strong customer demand. Since mid-February, we have seen steady improvement in procedure volumes and remain confident in both the long-term growth trajectory of our portfolio and the strategic transformation of the Company," commented Jim Clemmer, President and Chief Executive Officer of AngioDynamics.

Clemmer continued, "Despite the increased COVID and macro headwinds in our third quarter, we continued to invest in our transformation to make Med Tech comprise a larger, faster-growing piece of our business. As an example, we are pleased to announce the recent FDA clearance of our AlphaVac F18 thrombectomy system for use in the venous vasculature and approval of our IDE study for the use of AlphaVac F18 to treat pulmonary embolism."

Third Quarter 2022 Financial Results

Net sales for the third quarter of fiscal 2022 were $74.0 million, an increase of 3.9% compared to the prior-year quarter.

Foreign currency translation did not have a significant impact on the Company’s sales in the quarter.

Med Tech net sales were $19.6 million, a 28.6% increase from $15.2 million in the prior- year period, while Med Device net sales were $54.4 million, a decrease of 2.8% compared to $55.9 million in the prior-year period. Med Tech includes the Auryon Peripheral Atherectomy platform, the thrombectomy platform and the NanoKnife irreversible electroporation platform. The Company’s performance was impacted by headwinds related to the Omicron variant spike, particularly during the months of December and January, which included supply chain disruptions, procedural challenges and continued inflationary pressures.

Endovascular Therapies (formerly Vascular Interventions and Therapies) net sales were $38.1 million, an increase of 14.5%, compared to $33.3 million a year ago. Growth was driven by strength in our atherectomy and thrombectomy portfolios relative to the prior-year period. Auryon sales during the quarter were $7.3 million, as the Company continued to see sequential sales growth of this platform.
Oncology net sales were $12.5 million, a decrease of 5.0%, compared to $13.1 million in the prior-year period. The year-over-year decline was largely due to procedural volume pressures related to COVID and lower NanoKnife capital sales, partially offset by increased sales of NanoKnife disposables in the U.S.
Vascular Access net sales were $23.4 million, a decrease of 5.6%, compared to $24.8 million a year ago.
Med Device products make up the majority of the Company’s backlog, which stood at approximately $9.6 million at the end of the third quarter.
U.S. net sales in the third quarter of fiscal 2022 were $62.4 million, an increase of 6.5% from $58.7 million a year ago. International net sales were $11.5 million, a decrease of 8.0%, compared to $12.5 million a year ago. International net sales were primarily impacted by the global Omicron variant spike and reduced capital sales.

Gross margin for the third quarter of fiscal 2022 was 52.2%, a decrease of 190 basis points compared to the third quarter of fiscal 2021. During the quarter, gross margin continued to be negatively impacted by macro forces including the tight labor market and increased expense for raw materials, labor and freight.

The Company recorded a net loss of $5.0 million, or a loss per share of $0.13, in the third quarter of fiscal 2022. This compares to a net loss of $3.5 million, or a loss per share of $0.09, a year ago.

Excluding the items shown in the non-GAAP reconciliation table below, adjusted net income for the third quarter of fiscal 2022 was $1.3 million, and adjusted earnings per share was $0.03 compared to adjusted net income in the prior-year period of $0.7 million and adjusted earnings per share of $0.02. Adjusted net income and adjusted earnings per share in the third quarter of fiscal 2022 includes a $4.2 million, or $0.08 per share benefit, respectively, related to the reimbursement of certain expenses under the employee retention credit as part of the CARES Act. A similar reimbursement benefit of $1.9 million was included in the prior year period.

Adjusted EBITDA in the third quarter of fiscal 2022, excluding the items shown in the reconciliation table below, was $6.7 million, compared to $5.4 million in the third quarter of fiscal 2021.

In the third quarter of fiscal 2022, the Company utilized $8.8 million in operating cash, had capital expenditures of $1.1 million and additions to Auryon placement and evaluation units of $1.5 million. As of February 28, 2022, the Company had $23.9 million in cash and cash equivalents compared to $34.3 million in cash and cash equivalents on November 30, 2021. The Company had debt outstanding of $25.0 million on February 28, 2022, unchanged from November 30, 2021.

Nine Months Financial Results

For the nine months ended February 28, 2022:

Net sales were $229.2 million, an increase of 7.0%, compared to $214.2 million for the same period a year ago.
Med Tech net sales were $56.1 million, a 41.8% increase from the prior year period. Med Device net sales were $173.1 million, a decrease of 0.8% from the prior year period.
The Company’s net loss was $20.3 million, or a loss of $0.52 per share, compared to a net loss of $12.1 million, or a loss of $0.32 per share, a year ago.
Gross margin decreased 140 basis points to 52.0% from 53.4% a year ago.
Excluding the items shown in the non-GAAP reconciliation table, below, adjusted net loss was $0.4 million, with adjusted loss per share of $0.01, compared to adjusted net income and adjusted earnings per share of $1.9 million, and $0.05, respectively, a year ago.
Adjusted EBITDA, excluding the items shown in the reconciliation table below, was $14.7 million, compared to $15.0 million for the same period a year ago.
Reiterating Fiscal Year 2022 Guidance

The Company continues to expect:

Fiscal year 2022 net sales to be in the range of $310 to $315 million;
Gross margin to be in the range of 52.0% to 54.0%; and
Adjusted earnings per share in the range of a loss of $0.02 to a gain of $0.02.
Conference Call

The Company’s management will host a conference call today at 8:00 a.m. ET to discuss its 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 13727875.

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 Thursday, April 7, 2022, until 11:59 p.m. ET on Thursday, April 14, 2022. To hear this recording, dial 1-844-512-2921 (domestic) or +1-412-317-6671 (international) and enter the passcode 13727875.

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 and adjusted earnings per share. 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.