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AngioDynamics (ANGO) Misses on Earnings & Revenues in Q1

AngioDynamics Inc. ANGO reported adjusted earnings of 12 cents per share in the first quarter of fiscal 2018. Earnings missed the Zacks Consensus Estimate by 4 cents and decreased 29.4% year over year. Meanwhile, net sales fell almost 3.4% on a year-over-year basis to $85.4 million, missing the Zacks Consensus Estimate of $86 million.

It is important to note that foreign exchange did not have any impact in the reported quarter. However, continued softness in the Vascular Access and Venous business affected revenues in the first quarter.

Internationally, AngioDynamics registered revenues of $16.5 million, up from $15.9 million in the year-ago quarter. International growth was strengthened by solid sales from the Oncology and Surgery business. However, the company registered $68.9 million revenues in the United States, down from $72.2 million on a year-over-year basis. The lackluster performance was led by softness in the venous business, which was more or less muted by growth in the oncology portfolio.

AngioDynamics, Inc. Price, Consensus and EPS Surprise

 

Segment Details

Peripheral Vascular (PV) business: Sales at this segment totaled $49.9 million in the reported quarter, lower than $52 million in the year-ago quarter.

The quarter saw slow growth in the venous and core businesses, which was offset by stellar performance in fluid management and thrombus management product lines.

Despite the disappointing performance in the PV segment, management expects the thrombus management platform to lend the company a competitive edge and open up significant long-term opportunities.

We note that AngioDynamics is a leading player in the thrombolytic catheters space (catheter directed thrombolysis). The company boasts highly unique catheters like Uni-Fuse, SpeedLyser and Pulse Spray under the thrombus portfolio.

Vascular Access (VA) business: Sales at this segment were $23.2 million, down from $25 million on a year-over-year basis. However, this was offset by solid growth at BioFlo Midlines and Dialysis.

The BioFlo line of products at the segment is expected to be a key catalyst.

Oncology/Surgery business: AngioDynamics witnessed sales of$12.3 million in the first quarter, up from $11.1 million on a year-over-year basis. The segment performed impressively on the recent launch of Solero Microwave Tissue Ablation System.

Meanwhile, AngioDynamics announced market withdrawal of its flagship Acculis Microwave Tissue Ablation System in the last quarter.

Margin Details

Adjusted gross margin decreased 280 basis points (bps) to 48.3% in the quarter. The decline in gross margin was primarily because of voluntary market withdrawal of the Acculis Microwave Tissue Ablation System in the recent past. Solero's direct impact on gross margins was approximately 90 bps.

Adjusted EBITDAS in the first quarter of fiscal 2018, excluding the items shown in the attached reconciliation table, was $10.6 million compared with $14.2 million in the first quarter of fiscal 2017.

Financial Condition

AngioDynamics had a strong cash flow balance in the first quarter. Per management, the company generated $3 million in operating cash flow and $2.5 million in free cash flow.

Additionally, AngioDynamics ended the quarter with $48.2 million as cash and cash equivalents and outstanding debt of $96.3 million.

Guidance

AngioDynamics reaffirmed its guidance for fiscal 2018.

For fiscal 2018, the company expects adjusted earnings per share in the band of 64 cents to 68 cents.

The company projects fiscal 2018 revenues in the range of $352 million to $359 million.

Furthermore, free cash flow is expected to be more than $35 million.

Our Take

AngioDynamics reported a dismal first quarter of fiscal 2018 wherein adjusted earnings and revenues missed the Zacks Consensus Estimate. The company also reaffirmed its guidance for fiscal 2018. AngioDynamicis rides on the market’s solid response to Solero, especially within the Microwave Ablation space. Growth in the core Angiographic Catheter business is also likely to fortify the company’s footprint in the global space.

On the flipside, AngioDynamics recalled the Acculis Microwave Tissue Ablation System under the Oncology and Surgery segment last quarter. The company also had a high outstanding debt level at the end of the first quarter. Higher debts impose certain operating and financial restrictions which might limit the execution of the company’s core business strategies.

Zacks Rank & Key Picks

AngioDynamics has a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader medical sector are SONOVA HOLDING SONVY, IDEXX Laboratories, Inc. IDXX and Cogentix Medical, Inc. CGNT. All the companies hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SONOVA represented a solid return of 28.9% over the last year. The company has a long-term expected earnings growth rate of 7%.

IDEXX Laboratories has an average earnings beat of 9.3% over the trailing four quarters. It has a long-term expected earnings growth rate of 19.8%.

Cogentix Medical came up with a positive earnings surprise of 200% in the last quarter. The stock represented a stellar return of 100.9% in the last year.

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