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AngioDynamics (ANGO) Q2 Earnings Beat on Gains From NanoKnife

Zacks Equity Research

AngioDynamics Inc. ANGO reported second-quarter fiscal 2019 adjusted earnings of 22 cents per share, which edged past the Zacks Consensus Estimate by a penny. The bottom line also surged 29.4% on a year-over-year basis.

Revenues totaled $91.5 million, surpassing the Zacks Consensus Estimate by 2.9%. On a year-over-year basis, the metric increased 5.5%.

A glimpse of the company’s price trend reveals that AngioDynamics has outperformed the industry in a year’s time. The stock has rallied 29.2% compared with the industry’s 1.5% growth. The current level also compares favorably with the S&P 500 index’s 7.6% decline.

The stock currently carries a Zacks Rank #3 (Hold).

Geographical Analysis

In the quarter under review, U.S. net revenues totaled $71.9 million, up 5.2% year over year and at constant currency (cc).

International revenues summed $19.6 million, up 6.6% year over year and 7.8% at cc.

AngioDynamics, Inc. Price, Consensus and EPS Surprise

AngioDynamics, Inc. Price, Consensus and EPS Surprise | AngioDynamics, Inc. Quote

Segmental Analysis

Vascular Interventions and Therapies (VIT) Business

VIT revenues in the quarter grossed $52.4 million, up 2.2% from the year-ago quarter’s figure. Per management, Fluid Management and AngioVac saw strong growth but were partially offset by a decelerating decline in the Venous Insufficiency business.

Vascular Access (VA) Business

Revenues at this segment amounted to $23.7 million, which surged 5.1% on a year-over-year basis. Per management, strong revenues of Ports and Dialysis products were slightly offset by a decline in revenues of PICCs.

Oncology/Surgery Business

Revenues at the Oncology segment improved 19.8% year over year to $15.3 million backed by strong NanoKnife revenues in both capital and disposables. The segment also saw positive contributions from the two recent acquisitions of BioSentry and RadiaDyne, which was somewhat offset by decreased revenues of the company’s Thermal Ablation products.

Excluding the impact of transition from the company’s Acculis Microwave product to its Solero Microwave product, its Oncology business grew 28.7% year over year.

Margin Analysis

In the quarter under review, gross profit totaled $49.1 million, up 14.9% from the year-ago quarter number. Gross margin was 53.7%, up 440 basis points (bps).

Adjusted operating income totaled $12.1 million, up 20% year over year. Adjusted operating margin was 13.2%, up 150 bps year over year.

Guidance Retained

For fiscal 2019, AngioDynamics continues to expect revenues in the range of $354-$359 million. The Zacks Consensus Estimate is pegged at $357.1 million, within the guided range.

Adjusted earnings per share is expected between 82-86 cents. The Zacks Consensus Estimate is pinned at 85 cents, within the guided range.

Free cash flow is projected within $26-$31 million for fiscal 2019.

Wrapping Up

AngioDynamics exited the fiscal second quarter on a solid note, with both earnings and revenues beating estimates. The company continues to gain from its core Oncology business unit that witnessed solid growth, courtesy of strong NanoKnife business. Per management, Fluid Management, AngioVac and Ports and Dialysis products also saw growth in the quarter. Recent acquisitions of BioSentry and RadiaDyne are contributing to the company’s results as well. Targeted investments in the thrombus management portfolio indicate focus on innovation. Significant expansion in gross and operating margins is an added positive. The company retained its fiscal 2019 outlook.

On the flip side, headwinds in the company’s Venous Insufficiency business and sluggish show by the radiofrequency ablation products raise concerns. However, management stated that declines in Venous business line are decelerating. Additionally, PICCs revenues dipped in the quarter.

Key Picks

A few better-ranked stocks in the broader medical space are Veeva Systems Inc VEEV, athenahealth ATHN and DexCom DXCM.

Veeva Systems’ long-term earnings growth rate is projected at 19.5%. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

athenahealth’s long-term earnings growth rate is projected at 17.7%. The stock carries a Zacks Rank #2 (Buy).

DexCom’s current-quarter earnings growth rate is projected at 30%. The stock carries a Zacks Rank of 2.

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