AngioDynamics, Inc. 2027 Q1 Earnings Call

Mr. Clemmer. Thank you, operator.

Good morning, everyone. Thank you for joining us for AngioDynamics' fiscal 2027 first quarter earnings call. Joining me today is Steve Trowbridge, AngioDynamics Executive Vice President and Chief Financial Officer. Before I get into our results, I want to start with an important update. Our board has completed a comprehensive search for my successor. I am pleased to share that Eric Honroth will be joining us as President and Chief Executive Officer effective November 2nd. Eric brings more than 20 years of leadership experience in medical devices and life sciences. He most recently served as Global President, Life Science at Getinge, and before that, he led Getinge's $1.2 billion North American business, where he accelerated growth, delivered sustained revenue gains, and strengthened operational performance.

His career spans the cardiovascular, endovascular, urology, and oncology markets with senior leadership roles at Abbott Vascular, Becton Dickinson, CareFusion, and Boston Scientific. That combination is exactly what our board was looking for: someone who has driven real growth and profitability in large, complex organizations and who knows our markets firsthand. I am confident that he is the right person to build upon the foundation that we have put in place, and I will remain closely involved to make sure that we have a smooth transition. I want to thank our board, our search committee, and everyone across this organization who helped make this happen. Now moving on to results. We grew total revenue by approximately 7%, led by strength in our Med Tech segment, which grew more than 13%. That is clear evidence that the strategy guiding our transformation over the past several years keeps paying off.

As a result, Med Tech now represents approximately 49% of our total revenue, and that mix shift is only gaining momentum as we move through the year. Starting with Auryon, which remains one of the most consistent growth engines in this business. This quarter marked our 21st consecutive quarter of double-digit year-over-year growth. We are taking share across both the hospital and office-based laboratory settings, with international adoption building as well. We are also advancing enrollment in our AMBITION BTK study, which we believe will support the long-term clinical case for Auryon below the knee. Turning to mechanical thrombectomy. We are also growing above market in this business, and the reason is simple. We have the most versatile product on the market and a commercial team that is executing at a high level, and we are taking share from our competitors. AlphaVac is building real momentum as more hospitals continue to adopt it.

In addition, we are really pleased with the progression of our AlphaReturn blood management system IDE trial to further strengthen our position. AngioVac is working through a tougher comp right now, but the underlying demand for the product remains strong, and we expect it to return to more normal growth as the year progresses. Finally, NanoKnife continues to fundamentally change the landscape of men's healthcare by improving outcomes and preserving quality of life through an innovative procedure for men with intermediate-risk prostate cancer. Reimbursement progress remains a key driver, including the positive MAC coverage decision that we received last quarter. And we are now working with additional regions with the goal of building towards consistent nationwide coverage. Physician interest and procedure volumes in prostate care remain strong.

We also received FDA approval for our RELIEF study, which is evaluating NanoKnife for the treatment of BPH, a condition affecting millions of men, and a market opportunity we estimate at approximately $1.9 billion, an important step in expanding where this technology can help patients. Our Med Device segment grew approximately 1%. This business remains a steady, reliable performer, providing the consistent cash flow that funds our investment in Med Tech platforms. Before I turn things over to Steve, I really want to thank our team. The work happening across the company is reflected in this quarter's results and is driving future growth ahead. We compete in large, fast-growing markets, and we are positioned to win. Looking ahead, we have real catalysts in front of us.

Continued progress in AlphaReturn, expanding reimbursement coverage for NanoKnife, and ongoing enrollment in our AMBITION BTK case study, each of which will create new opportunities. This all comes back to patients first. We believe people living with some of society's most challenging diseases deserve trusted solutions that deliver real care and better outcomes. When we deliver on that, we deliver value for everyone we serve, from patients and physicians to our shareholders. Now I'll turn it over to Steve to review the financials for the quarter.

Thanks, Jim, and good morning, everybody. As always, before I begin, I'd like to direct everyone to the presentation on our investor relations website summarizing the key items from our quarterly results. Unless otherwise noted, all comparisons will be the first fiscal quarter of 2027 versus the first fiscal quarter of 2026. Company top-line revenue performance was strong again in the quarter. Revenue increased 6.9% to $80.9 million, driven by growth across our Med Tech segments. Med Tech revenue was $39.9 million, a 13.2% increase. For the first fiscal quarter, our Med Tech platforms comprised 49% of our total revenue, compared to 47% of total revenue a year ago, reflecting the ongoing shift in our business mix. We remain on track for our Med Tech segment to comprise a majority of our overall revenue base during this fiscal year.

Within our Med Tech segment, our Auryon platform contributed $18.9 million in revenue, growing 14.7% compared to last year. Auryon has now delivered double-digit year-over-year growth for 21 consecutive quarters. This above-market growth continues to be supported by our strategy to shift more of our atherectomy business towards the hospital side of care, while we keep growing our customer base across both the hospital and OBL settings, along with ongoing international adoption following our CE mark approval. We're confident in the long-term opportunity for our mechanical thrombectomy portfolio. Combined AngioVac and AlphaVac sales were $12 million, an increase of 6.7% year over year. In the quarter, AlphaVac continued its strong trajectory, generating revenue of $4.5 million, representing a 37.4% year-over-year increase, as well as growth of 6.4% sequentially. We're also pleased with the trajectory of AngioVac, which generated revenue of $7.5 million.

While this represented a 5.9% year-over-year decrease, AngioVac grew 9.1% sequentially. On the clinical front, we are encouraged by the ongoing progress in our AlphaReturn and AngioVac right-sided infective endocarditis IDE studies, both of which are seeing strong enrollment. Turning to NanoKnife, total revenue was $8.3 million, an increase of 29%, with probes growing 24.1% and capital sales growing 53.5%. Probe sales are primarily driven by demand for NanoKnife in prostate care, and we hit record procedure volumes during the quarter. Additionally, as systems are placed and new physicians and providers experience the improved patient outcomes our technology enables, we expect them to drive continued increases in probe utilization going forward. I will note that capital sales are always lumpy quarter to quarter, so we would not expect capital to grow at this rate going forward. Continue to view disposables as the bellwether for this business.

In the first quarter, our Med Device segment increased 1.4% year-over-year, with revenue of $41 million. This business generates consistent cash and profitability, allowing us to continue to invest in the growth of our Med Tech platforms. Moving down the income statement, our gross margin for the first quarter of FY 2027 was 59.4%, a 410 basis point increase from the first quarter of FY 2026. Driven primarily by favorable pricing and the ongoing revenue mix shift towards Med Tech, which is partially offset by the manufacturing transition and global inflation, all of which were in line with the company's expectations. Gross margin also benefited from tariff refunds received during the quarter. Absent that benefit, gross margin would have been 57.8%.