AngioDynamics, Inc. (ANGO – Free Report) reported an adjusted loss per share of 3 cents for third-quarter fiscal 2023 against the year-ago earnings per share (EPS) of 3 cents. The loss per share was wider than the Zacks Consensus Estimate of a loss of a penny per share.
Our projection of adjusted loss per share was also a penny, in line with the Zacks Consensus Estimate.
GAAP loss per share came in at 24 cents, wider than the year-over-year loss of 13 cents per share.
Revenue Details
Revenues in the fiscal third quarter totaled $80.7 million, up 9.1% year over year on a reported basis (up 9.4% at constant exchange rate or CER). The top line missed the Zacks Consensus Estimate by 2.3%.
The fiscal third-quarter revenue compares to our estimate of $82.3 million.
The company continued to see strong contributions from its Med Tech (which include the Auryon peripheral atherectomy platform, the thrombus management platform and the NanoKnife irreversible electroporation platform) and Med Device businesses during the quarter.
Geographical Analysis
In the quarter under review, U.S. net revenues totaled $67.6 million, up 8.3% year over year.
This figure compares to our U.S. net revenues’ fiscal third-quarter projection of $69.5 million.
International revenues came in at $13.1 million, up 13.6% from the year-ago quarter on a reported basis and up 15.2% at CER.
This figure compares to our fiscal third-quarter International revenues’ projection of $12.8 million.
Segmental Analysis
AngioDynamics derives revenues from two businesses — Med Tech and Med Device.
The Med Tech business’ net sales in the fiscal third quarter were $ 22.9 million, reflecting an uptick of 16.6% year over year. This was primarily on the back of increased net sales of Auryon amounting to $10.4 million (up 42.8%), NanoKnife sales of $4.1 million (up 5.4%) and NanoKnife disposable sales of $3.5 million (up 22.2%) compared with the prior-year quarter. AlphaVac sales in the reported quarter were $2 million. However, the improvement in the Med Tech segment was partially offset by a decline of 15.7% in AngioVac sales which amounted to $5.5 million in the quarter.
This figure compares to our fiscal third quarter’s Med Tech business’ net sales projection of $24.5 million.
Med Device revenues in the fiscal third quarter grossed $57.8 million, up 6.4% from the year-ago period. This was primarily driven by growth in angiographic catheters, ports, dialysis catheters and microwave products.
This figure compares to our fiscal third quarter’s Med Device business’ net sales projection of $57.8 million, which matched the company-reported figures.
Margin Analysis
In the quarter under review, AngioDynamics’ gross profit rose 4.9% to $40.5 million. However, the gross margin contracted 198 basis points to 50.2%.
We had projected 52.6% of gross margin for third-quarter fiscal 2023.
Sales and marketing expenses rose 24.4% to $25.4 million year over year. Research and development expenses decreased 5.9% year over year to $6.9 million, whereas general and administrative expenses rose 1.3% year over year to $8.8 million. Adjusted operating expenses of $41.1 million increased 12.8% year over year.
The adjusted operating loss totaled $0.6 million against the prior-year quarter’s adjusted operating profit of $2.2 million.
Cash Position
AngioDynamics exited the third quarter of fiscal 2023 with cash and cash equivalents of $30.1 million compared with $29.9 million at the end of the fiscal second quarter. The long-term debt (net of current portion) at the end of third-quarter fiscal 2023 was $49.8 million, flat compared with that at the end of the fiscal second quarter.
Cumulative net cash used in operating activities came in at $ 15.9 million compared with net cash used in operating activities of $15.8 million a year ago.
FY23 Guidance
AngioDynamics has lowered its guidance for fiscal 2023 due to its lower-than-expected AngioVac sales.
The company now expects its net sales in the range of $338 million-$342 million, lowered from its earlier projection of $342-$348 million. The Zacks Consensus Estimate for the same currently stands at $342.9 million.
The adjusted loss per share is now projected to be between 6 cents and a penny, against its earlier projections of adjusted EPS of a penny and 6 cents. The Zacks Consensus Estimate for the metric is currently pegged at EPS of a penny.
Our Take
AngioDynamics registered a solid year-over-year uptick in its overall top line and domestic and international revenues, which are impressive. The company continued gaining from its Med Tech and Med Device businesses, which is promising. Robust sales of Auryon and NanoKnife look encouraging. Positive physician feedback for AlphaVac products, including the F22 and F18 versions, raises optimism.
During the fiscal third quarter, AngioDynamics confirmed that it continues to execute its clinical trials, including three investigational device exemption studies — the PRESERVE study for the treatment of prostate cancer with NanoKnife, the APEX study for the treatment of pulmonary embolism with its AlphaVac F18 and the DIRECT study for the treatment of pancreatic cancer with NanoKnife. This raises optimism regarding the stock.
However, AngioDynamics’ lower-than-expected results and dismal bottom-line performance in the third quarter of fiscal 2023 are disappointing. Lower revenues from AngioVac sales and a decline in the company’s EVLT business of the Med Device segment during the quarter were also concerning.
The gross margin contraction does not bode well for the stock. AngioDynamics lowering its financial outlook due to lower-than-anticipated AngioVac sales and higher inflationary pressure than previously expected also raises apprehension.
Zacks Rank & Key Picks
AngioDynamics currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space that are supposed to report earnings soon are Zimmer Biomet Holdings, Inc. (ZBH – Free Report) , Cardinal Health, Inc. (CAH – Free Report) and Haemonetics Corporation (HAE – Free Report) .
The Zacks Consensus Estimate for Zimmer Biomet’s first-quarter 2023 adjusted EPS is currently pegged at $1.66. The consensus estimate for revenues is pegged at $1.70 billion. Zimmer Biomet currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zimmer Biomet has an estimated long-term growth rate of 6.2%. ZBH’s earnings yield of 5.6% compares favorably with the industry’s negative yield.
Cardinal Health currently has a Zacks Rank #2. The Zacks Consensus Estimate for its third-quarter fiscal 2023 adjusted EPS is currently pegged at $1.46. The same for revenues is pegged at $49.05 billion.
Cardinal Health has an estimated long-term growth rate of 11.6%. CAH’s earnings yield of 7.2% compares favorably with the industry’s 4.9%.
Haemonetics currently flaunts a Zacks Rank #1. The Zacks Consensus Estimate for its fourth-quarter fiscal 2023 adjusted EPS is currently pegged at 68 cents. The same for its revenues stands at $284.5 million.
Haemonetics has an estimated long-term growth rate of 10%. HAE’s earnings yield of 3.7% compares favorably with the industry’s negative yield.
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