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AngioDynamics Bags Major Deal

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Shares of AngioDynamics Inc. (ANGO) reached 52-week high of $15.15 following its better than expected fiscal first-quarter 2014 results and major deal with Large Integrated Delivery Network Group (“LIDN”). Shares went up 5.2% since the earnings announcement by the company on Oct 10.

AngioDynamics revealed that it has signed a single-source, three-year port product agreement with the Large Integrated Delivery Network Group (“LIDN”) for supplying its port lineup, including recently approved BioFlo Port, to several hospitals run by the group members.

LIDN is formed by eight IDNs from Premier, Inc. member healthcare systems. It includes Adventist Health, Carolinas Healthcare System, Fairview Health System, Henry Ford Health System, Methodist Health System, Norton Healthcare, Park Nicollet, and Texas Health Resource.

As per the agreement, effective Nov 1, 2013, ANGO will offer its port lineup to 130 hospitals in the group that use ports. Every year, LIDN Members account for roughly $3.8 billion in healthcare expenditure, of which, up to $4 million is spent on implantable ports.

In August this year, AngioDynamics’ subsidiary, Navilyst Medical Inc. received 510(k) clearance from U.S. Food and Drug Administration (:FDA) for its BioFlo Port built with Endexo technology to bring down accumulation of catheter-related thrombus. As per in-vitro blood loop model test results, BioFlo Port catheter has 96% less thrombus accumulation on its surface compared to non-coated conventional port catheters.

For the first quarter of fiscal 2014, ANGO’s adjusted earnings of 4 cents per share 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.

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 Corporation (BSX), revenues grew 1% in the quarter.

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

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

Currently, ANGO retains 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), are also worth a look.

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