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AngioDynamics' (ANGO) Q3 Earnings & Revenues Lag Estimates

Zacks Equity Research

AngioDynamics Inc. ANGO reported third-quarter fiscal 2019 adjusted earnings of 19 cents per share, which missed the Zacks Consensus Estimate of 22 cents. The bottom line also declined 17.4% on a year-over-year basis.

Revenues of this Zacks Rank #3 (Hold) stock totaled $86.3 million, which fell short of the Zacks Consensus Estimate of $89 million. However, the top line increased 30% on a year-over-year basis.

Geographical Analysis

In the quarter under review, U.S. net revenues totaled $68.3 million, up 3.9% on a reported and constant-currency basis (cc).

International revenues summed $18 million, down 0.3% on a reported basis and up 1.9% at cc.

AngioDynamics, Inc. Price and Consensus

 

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

Segmental Analysis

Vascular Interventions and Therapies (VIT) Business

VIT revenues in the quarter grossed $50.1 million, up 3.3% from the year-ago quarter’s figure. Per management, Fluid Management and AngioVac witnessed solid growth but were partially offset by a decelerating decline in the Venous Insufficiency business.

Vascular Access (VA) Business

Revenues at this segment amounted to $22.3 million, which decreased 4% on a year-over-year basis. Per management, strong revenues from Ports and Dialysis products were slightly offset by a decline in revenues from PICCs, Midlines and Ports.

Oncology/Surgery Business

Revenues at the Oncology segment improved 15.1% year over year to $13.9 million. The segment also saw positive contributions from the two recent acquisitions of BioSentry and RadiaDyne, which was somewhat offset by decreased revenues from NanoKnife capital sales.

Margin Analysis

In the quarter under review, gross profit totaled $46.7 million, up 2.7% from the year-ago quarter number. Nonetheless, gross margin was 54.1%, down 10 basis points (bps). It is encouraging to note that the company continues to see gross margin expansion related to operational and supply chain improvements.

These apart, the company’s portfolio optimization strategy, specifically the RadiaDyne and BioSentry acquisitions, are likely to boost the margins in the coming days. However, these gains are likely to be offset by headwinds related to foreign exchange.

Research and development expenses were $7.2 million, up 11.7% year over year. Sales and marketing expenses totaled $19.4 million, up 7.8% on a year-over-year basis. General and administrative expenses were $8.8 million, up 13.7% year over year.

Net adjusted operating expenses were $35.4 million, up 10% year over year. Adjusted operating income totaled $11.3 million, down 15% year over year. Also, adjusted operating margin was 13.1%, down 270 bps year over year.

Guidance Retained

For fiscal 2019, AngioDynamics continues to expect revenues in the range of $354-$359 million. The midpoint of the latest guidance range is $356.5 million, which lies below the Zacks Consensus Estimate of $359.1 million.

Adjusted earnings per share are expected between 82-86 cents. The midpoint of the latest projection is 84 cents, which lies below the Zacks Consensus Estimate of 86 cents.

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

Wrapping Up

AngioDynamics exited the fiscal third quarter on a tepid note, with both earnings and revenues missing the Zacks Consensus Estimate. However, the company continues to gain from its core VIT business unit, which witnessed solid growth backed by impressive performance at the Fluid Management and AngioVac units. Recent acquisitions of BioSentry and RadiaDyne are favorable for the company at the moment.

AngioDynamics announced that it has received an approval from the U.S. FDA to initiate a clinical study for treating stage III pancreatic cancer. The company has also announced that announced that the FDA has granted an expanded 510(k) clearance for its OARtrac Radiation Dose Monitoring System for use during cancer treatments.

On the flip side, headwinds in the company’s Venous Insufficiency business and sluggish show by the radiofrequency ablation products raise concerns. Additionally, PICCs revenues dipped in the reported quarter.

Key Picks

A few better-ranked stocks from the MedTech space are Penumbra, Inc. PEN, Fluidigm Corporation FLDM and Tactile Systems Technology, Inc. TCMD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Penumbra delivered a positive earnings surprise in each of the trailing four quarters, the average being 321.2%.

Fluidigm has a long-term earnings growth rate of 25%.

Tactile Systems has a long-term earnings growth rate of 20%.

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