Headquartered in Latham, NY, AngioDynamics Inc. (NASDAQ:ANGO) , a leading provider of minimally invasive medical devices, reported adjusted earnings of 19 cents per share for the fourth quarter of fiscal 2017.
Earnings beat the Zacks Consensus Estimate by 3 cents but remained flat year over year. The stock has delivered positive earnings surprises in the past four quarters at an average of 23.7%.
Meanwhile, net sales fell almost 7% on a year-over-year basis to $86.9 million, missing the Zacks Consensus Estimate of $91 million.
Stock Performance Lacks Luster
Share price of AngioDynamics declined 3.9% to close at $15.12 following the earnings release. In fact, the company had a negative return of almost 3.9% over the last three months, as against the Zacks classified Medical Instruments sub-industry’s gain of 9.6%. The current level is also significantly below the S&P 500’s 4.7% gain over the same time frame.
Highlights of the Quarter
Internationally, AngioDynamics registered revenues of $16.1 million, down 9.6% year over year. However, sales in the U.S. totaled $70.8 million, down 6.3%.
Peripheral Vascular (PV) business: Sales at this segment were $53.9 million in the reported quarter, lower than $55.6 million in the year-ago quarter.
Despite the disappointing performance, management expects the ‘Thrombus Management’ platform in the PV product line to provide the company with a competitive advantage and open up significant long-term opportunities.
We note that AngioDynamics is a leading player in the thrombolytic catheters space (catheter directed thrombolysis). The company boasts highly unique catheters like Uni-Fuse, SpeedLyser and Pulse Spray under the thrombus portfolio.
Vascular Access (VA)business: Sales at this segment declined almost 2.2% year over year to $24.2 million, partially offset by solid growth at BioFlo Midlines and Dialysis.
The BioFlo line of products at the segment is expected to be a key catalyst.
Oncology/Surgery business: Sales at this segment plunged over 33% from the year-ago quarter to $8.9 million owing to lower sales of ablation products and NanoKnife capital.
The segment performed unimpressively primarily due to the market withdrawal of the company’s flagship Acculis Microwave Tissue Ablation System.
The recall also affected the company’s international sales. Precisely, this had an overall negative impact of $4.5 million on earnings. Per management, without the recall of Acculis, net revenues would have totaled $352 million, within the previously guided range.
AngioDynamics, Inc. Price and Consensus
AngioDynamics, Inc. Price and Consensus | AngioDynamics, Inc. Quote
FY17 Highlights
Net sales for fiscal 2017 were $349.6 million, down 1.2% from $353.9 million a year ago. AngioDynamics registered adjusted earnings of 73 cents per share, up 22% on a year-over-year basis.
Per management, the year-over-year decline in sales was primarily led by unimpressive performances by the company’s VA (28.1 % of net sales) and Oncology segments (13.8% of net sales). However, this was partially offset by growth in the PV segment (58.1% of net sales).
In this regard, the PV segment saw a 1% rise to $208.6 million on a year-over-year basis. PV sales were driven by growth in the core Angiographic Catheter business. However, sales at the VA and oncology segments declined 3% and 9%, respectively, on a year-over-year basis.
Margin Details
Adjusted gross margin increased 100 basis points (bps) to 51.8% in the quarter.
Adjusted EBITDAS in the fourth quarter of fiscal 2017, excluding the items shown in the attached reconciliation table, was $15.0 million compared with $14.2 million in the fourth quarter of fiscal 2016.
Coming to operating expenses, sales & marketing (S&M) and research & development (R&D) expenses declined 30 bps and 10 bps, respectively, as a percentage of revenues. However, general & administrative (G&A) expenses rose 230 bps on a year-over-year basis.
Financial Condition
AngioDynamics had a strong cash flow balance in the fourth quarter. Per management, it generated $19 million in operating cash flow and $18.3 million in free cash flow.
Additionally, AngioDynamics ended the quarter with $47.5 million in cash and cash equivalents and outstanding debt of $97.5 million.
Guidance
For fiscal 2018, the company expects adjusted earnings per share in the band of 64 cents to 68 cents.
The company projects fiscal 2018 revenues in the range of $352 million to $359 million.
Furthermore, free cash flow is expected to be over $35 million.
Our Take
AngioDynamics reported a mixed fourth quarter of fiscal 2017, wherein adjusted earnings surpassed the Zacks Consensus Estimate while revenues missed the same. The company also provided encouraging earnings guidance for fiscal 2018.
The major growth drivers for the company are the Perpheral Vascular, the NanoKnife and BioFlo Midline product lines. Growth in the core Angiographic Catheter business is also likely to fortify the company’s footprint in the global space.
On the flipside, AngioDynamics recalled the Acculis Microwave Tissue Ablation System under the Oncology and Surgery segment. The company also has a high outstanding debt level at the end of the fourth quarter. Higher debts impose certain operating and financial restrictions which might limit the execution of the company’s core business strategies.
Zacks Rank & Key Picks
AngioDynamics has a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader medical sector are Edwards Lifesciences Corporation (NYSE:EW) , CryoLife, Inc. (NYSE:CRY) and EDAP TMS SA (NASDAQ:EDAP) . Notably, EDAP TMS sports a Zacks Rank #1 (Strong Buy), while Edwards Lifesciences and CryoLife have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
EDAP TMS represents an impressive return of 25.5% for the last three months. The company delivered a solid earnings surprise of 533.3% in the last reported quarter.
Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. Notably, the stock boasts an impressive one-year return of 10%.
CryoLife yielded a strong return of 3.5% over the last one month. The stock delivered a positive earnings surprise of 80% in the last reported quarter.
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AngioDynamics, Inc. (ANGO): Free Stock Analysis Report
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