AngioDynamics, Inc. (AngioDynamics), a cardiovascular devices company, has reported net sales of $49.4 million for the third quarter of fiscal 2009, up 21%, compared with the net sales of $40.7 million in the year-ago quarter. It has reported a net income of $1.9 million or $0.08 per share, for the third quarter of fiscal 2009, compared with the net income of 4.9 million or $0.20 per share, in the year-ago quarter.
With the completion of the chief executive officer (CEO) transition announced on December 3, 2008, the company recorded a provision in the quarter for all current and future costs associated with the Employment Agreement and Non-Statutory Stock Option Agreement entered into on January 20, 2009, with its former chief executive officer, Eamonn Hobbs, and certain costs associated with the recruitment of its new CEO, Jan Keltjens, under an agreement entered into on January 19, 2009. The costs related to the foregoing, inclusive of stock-based compensation, were $2.8 million.
Operating income was $2.6 million in the third quarter, inclusive of the cost of the CEO transition, compared with $7.6 million in the prior year third quarter, which included a gain on the settlement of litigation. Excluding these two items, operating income increased 23% in the third quarter to $5.5 million from $4.5 million a year ago. Net income was $1.9 million or $0.08 per share in the third quarter, compared with $4.9 million or $0.20 per share a year ago. Excluding the aforementioned two items, net income increased 26% in the third quarter to $3.7 million from $2.9 million a year ago. EBITDA (Non GAAP) was $5.7 million or $0.23 per share in the third quarter and $10.0 million or $0.41 per share in the third quarter a year ago. Excluding the aforementioned two items, EBITDA increased 25% to $8.5 million or $0.35 per share in the third quarter from $6.8 million or $0.28 per share a year ago.
For the nine months ended February 28, 2009, net sales of $142.2 million increased 19% over the $119.7 million reported in the prior year period; gross margin increased to 61.4% from 61.2% in the prior year period; operating income was $11.3 million compared with $15.9 million in the prior year period; net income was $7.0 million or $0.29 per share, compared with $10.4 million or $0.43 per share in the prior year period; and EBITDA (Non GAAP) was $20.2 million or $0.82 per share, compared with $22.6 million or $0.93 per share in the prior year period. Excluding the aforementioned CEO transition costs and gain on settlement of litigation, for the nine months ended February 28, 2009, operating income increased 13% to $14.4 million from $12.8 million in the prior year period; net income increased 6% to $8.9 million from $8.4 million in the prior year period; and EBITDA (Non GAAP) increased 19% to $23.2 million or $0.95 per share, compared with $19.5 million or $0.80 per share in the prior year period.
AngioDynamics reported cash and investments of $62.3 million and long-term debt of $7.2 million at February 28, 2009.
In fiscal 2009, AngioDynamics began operating three business units: Peripheral Vascular, Access and Oncology/Surgery. Peripheral Vascular sales were $20.7 million in the quarter, an increase of 35% from the third quarter a year ago, inclusive of the laser ablation products acquired from Diomed and the Benephit® product line acquired from FlowMedica. Access sales were $17.2 million in the quarter, an increase of 8% from the third quarter a year ago, and Oncology/Surgery sales grew 22% to $11.5 million from the third quarter a year ago.
“Our third quarter results illustrate how smoothly our CEO transition has gone as we recorded solid growth across all of our business units,” said Jan Keltjens, President and CEO. “I would like to thank Eamonn Hobbs for his support during our transition and for all his contributions to AngioDynamics. Since joining the company, I’ve visited our principal operating locations in New York, Georgia, California and England to become familiar with our people and our products, and have met some of our customers and industry associations. As a result, I am more excited than ever about the potential of our company.
“For the remainder of fiscal 2009 and beyond, I look forward to working with our team to maximize our opportunities,” continued Keltjens. “We have a strong and growing oncology/surgery business that is in a position to potentially help millions of patients through our exciting IRE technology. We are focusing our efforts with the NanoKnife™ IRE System on continuing pre-clinical studies to advance the technology and support regulatory filings, enhancing our focus on driving clinical programs towards gaining labeling for specific indications, and building professional education programs. Our goal is to use evidence-based medicine to build a strong IRE offering and a successful and sustainable business benefitting a large group of patients.
“We also will be working to build our market-leading laser vein ablation business, the Benephit Targeted Renal Therapy™ product line and our access product lines, as well as reinvigorating our product development effort. Our overall goal is to capitalize on our numerous opportunities while maintaining our business model that generates substantial operating cash flow and positions us to drive a growth strategy through focused internal and external investments,” Keltjens concluded.
Highlights of the quarter and more recent activities include the following:
AngioDynamics completed the product development integration of the acquired Diomed business with the February launch of NeverTouch – FRS. The company’s product set has now been expanded to enable the use of the NeverTouch fiber on the Delta series laser, as well as lasers formerly manufactured by Diomed.
The assets of privately-held FlowMedica Inc., a leader in the emerging field of Targeted Renal Therapy were purchased for $1.75 million plus an earn out based on 2011 net sales. The Benephit product line has been integrated into AngioDynamics Peripheral Vascular business unit. Targeted Renal Therapy is a therapeutic approach which delivers drugs directly to the kidneys to prevent and treat acute kidney injury (AKI), which results from many common interventional and surgical procedures.
Positive clinical uses of NanoKnife continued, as six sites in the US., Australia, Germany and Italy have completed a total of 48 IRE procedures for percutaneous prostate, percutaneous and laparoscopic liver, percutaneous kidney, lymph node, and lung lesions as of the date of this release. The physicians performing the procedures have reported either same day patient discharge, in the case of prostate procedures, or typically a one-day stay, in the case of hepatic or renal procedures. Physicians have also commented on short procedure times compared to thermal ablation modalities. Most patients treated continue to comment on a distinct lack of, or very minimal pain, especially when compared to previous thermal focal therapy treatments.
Two independent pre-clinical pancreatic IRE safety studies have concluded with promising results. One of these studies is now entering a second phase to gather longer-term chronic data and to gain a more in-depth understanding of pathology results. In addition, in Australia, the Therapeutic Good Administration has approved the NanoKnife System for commercial sale and similar approval has been obtained from the Canadian Health Protection Branch.
Fiscal 2009 Guidance
AngioDynamics has updated its outlook for fiscal 2009 incorporating the results from the third fiscal quarter and the acquisition of FlowMedica assets:
Net sales in the range of $195 million to $198 million
Gross margin in the range of 61% to 62%
GAAP operating income in the range of $17 million to $18 million
EBITDA in the range of $29 million to $30 million
GAAP EPS in the range of $0.42 to $0.45, inclusive of the expenses incurred for the chief executive officer transition.