AngioDynamics Inc.(ANGO), a healthcare and diagnostic devices company, reported third-quarter fiscal 2012 (ended February 29) adjusted (excluding one-time expenses, acquisition and restructuring charges) earnings of 6 cents per share, missing the Zacks Consensus Estimate of 7 cents per share.
In the reported quarter, the company slipped into a loss of $1.8 million (or 7 cents a share) compared with a profit of $3.8 million (or 15 cents a share) in the year-ago quarter.
Revenue Analysis
Revenues dropped 5.5% year over year to $51.6 million, slightly beating the Zacks Consensus Estimate of $51 million.
On a geographic basis, revenues in the U.S. market dipped 9.7% year over year to $43.6 million mainly due to supply restraints. However, international sales climbed 25.8% to $7.9 million, backed by healthy sales across Europe and Asia.
Segment Analysis
Revenues from the core Vascular segment inched down 1.1% to $37.9 million. Within Vascular, sales from Peripheral Vascular sub segment increased 4.6% to $22.9 million while sales from Access sub segment dipped 8.5% to $15.1 million.
Revenues from Oncology/Surgery division dropped 16.3% year over year to $13.7 million. This includes NanoKnife product sales worth $2 million, up 5.3% over the prior- year quarter. Sales from LC Beads fell 37.3% to $4.2 million in the reported quarter.
As per the company, revenues from VenaCure EVLT laser vein therapy system grew in the double-digit bracket on the back of recently launched VenaCure 1470 nanometer (nm) laser for treating varicose veins (abnormally swollen veins) and the NeverTouch procedure kits.
Gross margin fell to 57% from 58% a year ago, driven by product recall charges and expenses for its quality efforts. Adjusted operating income was $3.6 million, down 30.8% year over year.
Balance Sheet and Other
AngioDynamics ended the quarter with cash and cash equivalents and marketable securities of $143 million, up 19% year over year. Total long-term debt was $6.3 million, down 4.1% year over year. Net cash flow from operations was $6.8 million in the quarter.
In the reported quarter, AngioDynamics revealed the proposed takeover of Navilyst Medical. This company has expertise in areas such as vascular access. The deal is expected to culminate in the fourth quarter of fiscal 2012. AngioDynamics also revealed an understanding with Microsulis Medical. This company focuses on less invasive ablation know-how.
Guidance
For fiscal 2012, AngioDynamics revised its guidance based on the assumed impact of restructuring charges, R&D expenses worth $20 million, quality efforts of $1.5 million and an anticipated loss of 15 cents a share from the NanoKnife product.
The company now forecasts revenues for fiscal 2012 in the band of $216.2 million and $218.2 million with a projected growth of 0% to1%. EPS (on a reported basis) for fiscal 2012 is expected be in the band of 12 and 14 cents. Adjusted EPS is projected between 42 cents and 44 cents.
Gross margin is forecast in the range of 59% to 60% for fiscal 2012. Adjusted operating income is now expected to be $17.6 million to $18.6 million. EBITDA, on an adjusted basis, has been forecast in the range of $30.9 million to $31.9 million.
AngioDynamics’ focus on interventional peripherals should help drive future growth. Moreover, the company should continue to benefit from the ongoing shift from open surgery to less invasive interventional procedures.
However, AngioDynamics is exposed to pricing headwinds, stemming from lower selling prices of some access and peripheral vascular products. Moreover, its product lines face strong challenges from the competitive offerings of its larger rivals such as Boston Scientific (BSX) and C.R. Bard (BCR). We are currently Neutral on AngioDynamics, supported by a short-term Zacks #3 Rank (Hold).
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