AngioDynamics (ANGO) reported fourth-quarter fiscal 2012 (ended May 31) adjusted earnings of 10 cents per share (flat year over year) beating the Zacks Consensus Estimate of 9 cents per share. Adjusted earnings exclude one-time expenses such as product recalls, the Quality Call to Action program expenses, acquisition and restructuring charges.
Results include the Navilyst Medical acquisition, which was completed on May 22, 2012. In the fourth-quarter fiscal 2012, the company reported a loss of $7.03 million (or 27 cents a share) compared with a loss of $0.86 million (or 3 cents a share) in the year-ago quarter. The loss was mainly driven by higher operating costs associated with the Navilyst acquisition and restructuring.
For fiscal 2012, AngioDynamic’s adjusted earnings of 43 cents per share beat the Zacks Consensus Estimate of 40 cents but trailed the year-ago earnings per share of 46 cents. AngioDynamics reported a net loss of $5.1 million (or 20 cents per share) in fiscal 2012 versus net income of $8.1 million (or 32 cents per share) in fiscal 2011.
Revenue Analysis
Revenues for the fourth quarter increased 2.6% year over year to $57.7 million, beating the Zacks Consensus Estimate of $52 million. Navilyst Medical added $4.8 million to total sales.
On a geographic basis, revenues in the U.S. dropped 1.6% year over year to $47.6 million. However, international sales climbed 28.4% (or 31% on a constant currency basis) to $10.1 million, mainly driven by the Navilyst acquisition and new product launches.
For the fiscal, revenues increased 2.8% to $221.8 million from the year-ago period. Fiscal revenues also exceeded the Zacks Consensus Estimate of $216 million.
Segment Analysis
Revenues from the core Vascular segment (80.2% of total revenue) soared 22.6% to $46.3 million. Within Vascular, sales from the Peripheral Vascular sub-segment also jumped 26.2% to $28.3 million and sales from the Access sub-segment increased 8.5% to $18 million.
Revenues from the Oncology/Surgery division (19.8% of total revenue) dropped 38.3% year over year to $11.4 million due to the loss of LC Beads. NanoKnife product sales increased 54% to 4.1 million despite a temporary halt in shipments in the U.S. For the fiscal, NanoKnife sales surged 59% to $11.6 million. As of May 31, 2012, roughly 1300 patients have already been treated with the NanoKnife System.
As per the company, revenues from VenaCure EVLT laser vein therapy system grew 17% in the quarter and 14% in the fiscal on the back of higher sales of recently launched VenaCure 1470 nanometer (nm) laser for treating varicose veins (abnormally swollen veins) and the NeverTouch procedure kits.
In the fourth quarter of fiscal 2012, on a reported basis, gross margin fell to 54% from 57.7% in the year-ago period, on account of product recall charges and expenses for its quality efforts. Sales and marketing along with general and administrative expenses (as a percentage of sales) increased to 37.3% from 35.7% in the year-ago period.
Research and development expenses (as a percentage of sales) edged down to 9.1% from 9.9%. Adjusted operating income in the quarter was $4.3 million, roughly flat year-over-year.
Balance Sheet and Other
AngioDynamics ended the quarter with cash and cash equivalents of $23.5 million, down 48.9% year over year. Total long-term debt was $150 million, 23 times higher than the year-ago quarter due to the Navilyst acquisition.
Guidance
AngioDynamics forecasts revenues (both on reported and adjusted basis) in the band of $360 million and $363 million for fiscal 2013, way ahead of the Zacks Consensus Estimate of $329 million. Sales growth is expected to be 5% both on reported and adjusted basis.
Earnings per share (on a reported basis) for fiscal 2013 are expected in the band of 21 cents – 23 cents. Adjusted earnings per share are projected in the range of 49cents – 51 cents. The guidance is almost in line compared with the Zacks Consensus Estimate adjusted earnings of 48 cents for the fiscal year.
Gross margin is forecast in the range of 52% to 53% for fiscal 2013. Adjusted operating income is expected to be $34 million to $36 million. Earnings before interest, taxes, depreciation and amortization (EBITDA), on an adjusted basis, has been forecast in the range of $60 million to $61 million.
In the reported quarter, AngioDynamics provided details on its strategic relation with Microsulis Medical Ltd. The agreement includes an investment of $5 million for a 14.3% ownership right; total distribution rights to sell the Accu2i pMTA device outside the U.S. until December 2013 and an exclusive agreement to buy all the global assets of Microsulis at any time till September 2013.
AngioDynamics entered into a three-year agreement with Canadian HealthPRO, which represents the purchasing interest of provincial authorities, 225 hospitals and Shared Service Organizations. The company also launched the Embarc Microcatheter and the Charter Guidewire in the quarter to boost its Oncology/Surgery business.
However, AngioDynamics’ 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, which carries a short-term Zacks #3 Rank (Hold).
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