ANGO Beats Q1 Earnings, Hits 52-Week High


Shares of AngioDynamics (ANGO) reached 52-week high of $15.15 following its better than expected fiscal first-quarter 2014 results on Oct 10. Shares went up 1.3% after the market closed yesterday.

ANGO’s adjusted earnings of 4 cents per share for the first quarter of fiscal 2014 beat the Zacks Consensus Estimate by a penny. However, it was lower than the year-ago earnings of 10 cents. Excluding amortization, adjusted EPS was 12 cents, down 25% from 16 cents reported in the year-ago quarter.

The New York-based therapeutic and diagnostic devices maker reported net loss of $0.4 million or 1 cent per share, compared with a net loss of $0.7 million or 2 cents per share in the year-ago quarter.

Revenues were flat year over year at $83.6 million, marginally surpassing the Zacks Consensus Estimate of $83 million. Upon exclusion of the planned wind-down of the supply agreement with Boston Scientific (BSX), revenues grew 1% in the quarter.

U.S. revenues increased 2% to $67.1 million and accounted for roughly 80% of total sales. However, international revenues dropped 5% to $14.8 million due to internal issues, timing adjustments and difficult capital purchasing environment.

Gross margin improved 350 basis points (bps) to 50.8% from 47.3% a year ago. Results were also sequentially higher than the fourth-quarter gross margin of 49.1%, led by benefits from new products as well as improved productivity. However, adjusted operating margin in the quarter was 4.8%, 400 bps down from 8.8% in the year-ago quarter.

Segment Results

Revenues from the Peripheral Vascular product category increased 5% to $45.5 million, driven by double-digit rise in U.S. EVLT sales and solid contribution from AngioVac. U.S. EVLT sales were led primarily by the conversion of a competitor's customer and the impact of the new NeverTouch product.

Vascular Access revenues dropped 5% to $25.3 million in the quarter, as the lack of tip-location capability continues to affect the PICC business. This was partially offset by gains in BioFlo.

Revenues from the Oncology/Surgery division inched down 1% to $11.2 million due to difficult year-over-year comparisons, particularly in NanoKnife.

Supply Agreement revenues plunged 27% to $1.6 million in the reported quarter, mainly due to the above-mentioned wind-down of the agreement with BSX.

Financial Health

AngioDynamics ended the quarter with cash and investments of $23.9 million, almost in line with $24.0 million as of May 31, 2013. Total long-term debt (including current portion) was $146.3 million, up 2.7% from $142.5 million as of May 31, 2013. The company’s operating cash flow improved to $7.3 million from $5.6 million of net cash used in the prior-year quarter.

Guidance Raised

AngioDynamics raised its revenue guidance for fiscal 2014 following its recent distribution acquisition. Revenues are expected to be in the range of $347 million–$353 million, above the earlier guidance of $346 million–$352 million. This lies within the Zacks Consensus Estimate of $350 million.

The company also raised its adjusted earnings per share guidance without amortization to the range of 63–67 cents from 61–65 cents for the fiscal. This is mainly due to the company’s debt financing initiatives.

For the second quarter of fiscal 2014, management expects to generate revenues in the range of $85 million–$88 million, up 1% on the top end. Excluding amortization, adjusted earnings per share are anticipated between 12 cents and 15 cents.

The current Zacks Consensus Estimate for revenues and earnings per share for the second quarter of fiscal 2014 are $88 million and 8 cents, respectively.

Recent Developments

AngioDynamics has commenced two new clinical trials in the quarter. One is a multi-center study evaluating the efficiency of the NanoKnife System for ablation of prostrate cancer. The other is a research on the efficacy of BioFlo PICC in reducing catheter-related thrombosis. Moreover, the National Institute for Health and Care Excellence (NICE), in its new guidance, has recommended ANGO’s VenaCure EVLT system for the treatment of varicose tissue.

Our Take

We are encouraged with AngioDynamics’ better-than-expected first quarter results. The company is poised to grow on the back of new products, an innovative pipeline, acquisitions as well as management’s efforts to leverage operational activities. The company currently carries a Zacks Rank #2 (Buy).

Other medical instrument companies such as Mindray Medical International Ltd (MR), carrying a Zacks Rank #1 (Strong Buy) and MAKO Surgical Corp. (MAKO), carrying a Zacks Rank #2 (Buy), warrant a look.

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