AngioDynamics (ANGO) Q2 Earnings Top Estimates, Revenues Miss
AngioDynamics, Inc. ANGO reported an adjusted loss per share of 5 cents for second-quarter fiscal 2024, against the year-ago earnings per share (EPS) of a penny. However, the adjusted loss per share was narrower than the Zacks Consensus Estimate of a loss of 9 cents per share.
Excluding Dialysis and BioSentry, on a pro-forma basis, adjusted loss per share in second-quarter fiscal 2024 was also 5 cents, narrower than the adjusted loss per share of 9 cents in the year-ago period.
GAAP loss per share was 72 cents, wider than the year-ago period’s loss per share of 21 cents.
On a pro-forma basis, the GAAP loss per share in second-quarter fiscal 2024 was also 72 cents, wider than the GAAP loss per share of 33 cents in the prior-year period.
Revenue Details
Revenues in the fiscal second quarter totaled $79.1 million, down 7.4% year over year both on a reported basis and at constant exchange rate (CER). However, the top line missed the Zacks Consensus Estimate by 3.2%.
On a pro forma basis, excluding sales of Dialysis and BioSentry, net sales were $79.1 million, up 2.7% both on a reported basis and at CER compared with the prior-year quarter.
The company continued to see strong contributions from its Med Tech (which includes the Auryon peripheral atherectomy platform, the thrombus management platform and the NanoKnife irreversible electroporation platform) business during the quarter.
Geographical Analysis
In the quarter under review, U.S. net revenues totaled $64 million, down 10.7% year over year. This figure compares to our U.S. net revenues’ fiscal second-quarter projection of $67.1 million.
On a pro forma basis, U.S. net revenues also totaled $64 million, up 0.6%.
International revenues came in at $15.1 million, up 9.2% from the year-ago quarter, both on a reported basis and at CER. This figure compares to our fiscal second-quarter International revenues’ projection of $13.9 million.
On a pro forma basis, International revenues also totaled $15.1 million, up 12.6%.
Segmental Analysis
AngioDynamics derives revenues from two businesses — Med Tech and Med Device.
The Med Tech business’ net sales in the fiscal second quarter were $25.4 million, reflecting an uptick of 3.5% year over year. This was primarily on the back of increased net sales of Auryon amounting to $11.4 million (up 12.9%) and AlphaVac sales of $1.9 million (up 17.9%) compared with the prior-year quarter. However, the improvement in the Med Tech segment was partially offset by a decline of 10.8% in AngioVac sales (which amounted to $5.4 million in the quarter) and NanoKnife disposable revenue of 3.6% year over year. This figure compares to our fiscal second-quarter’s Med Tech business’ net sales projection of $19 million.
Med Device revenues in the fiscal second quarter grossed $53.7 million, down 11.8% from the year-ago period. This figure compares to our fiscal second quarter’s Med Device business’ net sales projection of $62 million.
Excluding sales of Dialysis and BioSentry, Med Device revenues also totaled $53.7 million, up 2.3%.
AngioDynamics, Inc. Price, Consensus and EPS Surprise
AngioDynamics, Inc. price-consensus-eps-surprise-chart | AngioDynamics, Inc. Quote
Margin Analysis
In the quarter under review, AngioDynamics’ pro forma gross profit rose 1.1% to $40.3 million. However, the pro forma gross margin contracted 81 basis points to 50.9%.
Sales and marketing expenses on a pro forma basis decreased 2% to $25.5 million year over year. Research and development expenses on a pro forma basis increased 27.8% year over year to $8.7 million, whereas general and administrative expenses on a pro forma basis declined 14.3% year over year to $9.3 million. On a pro forma basis, adjusted operating expenses of $43.4 million fell 0.4% year over year.
The adjusted operating loss on a pro forma basis totaled $3.1 million compared with the prior-year quarter’s adjusted operating loss of $3.8 million.
Cash Position
AngioDynamics exited second-quarter fiscal 2024 with cash and cash equivalents of $60.9 million compared with $57.6 million at the end of the fiscal first quarter.
The company ended the quarter with no debt on its balance sheet.
Cumulative net cash used in operating activities was $20.6 million compared with $17.2 million a year ago.
FY24 Guidance
AngioDynamics has revised its guidance for fiscal 2024.
The company now expects its net sales in the range of $320 million-$325 million, lower than the earlier outlook of $328 million-$333 million. The Zacks Consensus Estimate is currently pegged at $328.9 million.
AngioDynamics now projects its Med Tech revenue growth in the range of 10-15%, lowered from the previous guidance of 20-25%. However, Med Device revenue growth has been reiterated at 1-3%.
The adjusted loss per share is now projected to be between 35 cents and 42 cents, wider than the earlier guidance of adjusted loss per share of 28 cents and 34 cents. The Zacks Consensus Estimate currently stands at a loss of 32 cents.
Our Take
AngioDynamics exited the second quarter of fiscal 2024 with a narrower-than-expected adjusted loss per share. The solid uptick in revenues and narrower adjusted loss per share (both on a pro forma basis) were impressive. Robust domestic revenues (on a pro forma basis) and international revenues (both reported and on a pro forma basis) were also encouraging. The company continued gaining from its Med Tech business, which was promising. Robust sales of Auryon and AlphaVac looked encouraging. Strength in the Med Device segment on a pro forma basis raised optimism.
During the earnings release, management announced its plans to shift its manufacturing operations from a company-owned facility to a fully outsourced model over the next two years. The shift is expected to result in an approximate $15 million annualized reduction in expenses by fiscal year 2027. AngioDynamics expects to achieve full-year adjusted EPS profitability in fiscal 2027. This also raised our optimism about the stock.
However, AngioDynamics’ dismal top-line and bottom-line performances on a reported basis and lower revenues from AngioVac sales in the fiscal second quarter were disappointing. Lower U.S. revenues and the Med Device segment’s revenues on a reported basis were also worrying. The gross margin contraction does not bode well.
Management’s expectations of continued softer Thrombectomy sales (initially observed during the fiscal second quarter) throughout the rest half of the year, as well as certain SKU rationalization and other impacts associated with the manufacturing restructuring looks discouraging for AngioDynamics. Continued adverse impacts from sales mix, hardware placements and sustained but reduced material and labor inflationary pressures also raise 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 DaVita Inc. DVA, Cardinal Health, Inc. CAH and Cencora, Inc. COR.
The Zacks Consensus Estimate for DaVita’s fourth-quarter 2023 adjusted EPS is currently pegged at $1.53. The consensus estimate for revenues is pegged at $3 billion. DVA currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita has an estimated long-term growth rate of 17.3%. DVA’s earnings yield of 7.9% compares favorably with the industry’s 3.8%.
Cardinal Health currently has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its second-quarter fiscal 2024 adjusted EPS is currently pegged at $1.57. The same for revenues is pegged at $56.80 billion.
Cardinal Health has an estimated long-term growth rate of 15.3%. CAH’s earnings yield of 6.5% compares favorably with the industry’s 4.4%.
Cencora currently carries a Zacks Rank #2. The Zacks Consensus Estimate for its first-quarter fiscal 2024 adjusted EPS is currently pegged at $2.85. The same for its revenues stands at $68.81 billion.
Cencora has an estimated long-term growth rate of 8.7%. COR’s earnings yield of 6.1% compares favorably with the industry’s 0.9%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
AngioDynamics, Inc. (ANGO) : Free Stock Analysis Report
DaVita Inc. (DVA) : Free Stock Analysis Report
Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
Cencora, Inc. (COR) : Free Stock Analysis Report
