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Share Name | Share Symbol | Market | Type |
---|---|---|---|
AngioDynamics Inc | NASDAQ:ANGO | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.19 | 3.12% | 6.27 | 5.80 | 6.60 | 6.27 | 6.07 | 6.12 | 307,474 | 22:28:45 |
|
|
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Delaware
|
|
11-3146460
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
14 Plaza Drive Latham, New York
|
|
12110
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
|
Name of each exchange on which registered
|
Common stock, par value $.01
|
|
NASDAQ Global Select Market
|
Preferred Stock Purchase Rights
|
|
NASDAQ Global Select Market
|
|
Large accelerated filer
|
|
¨
|
|
Accelerated filer
|
|
x
|
|
|
|
|
|||
Non-accelerated filer
|
|
¨
|
|
Smaller reporting company
|
|
¨
|
|
|
|
|
|
|
|
Emerging growth company
|
|
o
|
|
|
|
|
Class
|
|
Outstanding as of September 28, 2018
|
Common Stock, par value $.01
|
|
37,121,628
|
|
|
|
Page
|
|
|
|
|
|
|
Item 1.
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
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Item 2.
|
||
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Item 3.
|
||
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Item 4.
|
||
|
|
|
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
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Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
|
|
Three Months Ended
|
||||||
|
|
Aug 31, 2018
|
|
Aug 31, 2017
|
||||
Net sales
|
|
$
|
85,340
|
|
|
$
|
85,411
|
|
Cost of sales (exclusive of intangible amortization)
|
|
40,873
|
|
|
44,182
|
|
||
Gross profit
|
|
44,467
|
|
|
41,229
|
|
||
Operating expenses:
|
|
|
|
|
||||
Research and development
|
|
7,662
|
|
|
6,441
|
|
||
Sales and marketing
|
|
19,433
|
|
|
19,402
|
|
||
General and administrative
|
|
8,496
|
|
|
8,056
|
|
||
Amortization of intangibles
|
|
4,116
|
|
|
4,096
|
|
||
Change in fair value of contingent consideration
|
|
12
|
|
|
105
|
|
||
Acquisition, restructuring and other items, net
|
|
4,422
|
|
|
2,989
|
|
||
Total operating expenses
|
|
44,141
|
|
|
41,089
|
|
||
Operating income (loss)
|
|
326
|
|
|
140
|
|
||
Other (expenses) income:
|
|
|
|
|
||||
Interest expense, net
|
|
(917
|
)
|
|
(723
|
)
|
||
Other income, net
|
|
114
|
|
|
567
|
|
||
Total other expenses, net
|
|
(803
|
)
|
|
(156
|
)
|
||
Loss before income tax expense
|
|
(477
|
)
|
|
(16
|
)
|
||
Income tax expense (benefit)
|
|
(8
|
)
|
|
19
|
|
||
Net loss
|
|
$
|
(469
|
)
|
|
$
|
(35
|
)
|
Earnings per share
|
|
|
|
|
||||
Basic
|
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
Diluted
|
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
Weighted average shares outstanding
|
|
|
|
|
||||
Basic
|
|
37,323
|
|
|
36,919
|
|
||
Diluted
|
|
37,323
|
|
|
36,919
|
|
|
|
Three Months Ended
|
||||||
|
|
Aug 31, 2018
|
|
Aug 31, 2017
|
||||
Net loss
|
|
$
|
(469
|
)
|
|
$
|
(35
|
)
|
Other comprehensive income (loss), before tax:
|
|
|
|
|
||||
Unrealized gain on marketable securities
|
|
33
|
|
|
—
|
|
||
Foreign currency translation
|
|
(125
|
)
|
|
283
|
|
||
Other comprehensive income (loss), before tax
|
|
(92
|
)
|
|
283
|
|
||
Income tax expense related to items of other comprehensive income
|
|
—
|
|
|
—
|
|
||
Other comprehensive income (loss), net of tax
|
|
(92
|
)
|
|
283
|
|
||
Total comprehensive income (loss), net of tax
|
|
$
|
(561
|
)
|
|
$
|
248
|
|
|
Aug 31, 2018
|
|
May 31, 2018
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
24,762
|
|
|
$
|
74,096
|
|
Marketable securities
|
1,350
|
|
|
1,317
|
|
||
Accounts receivable, net of allowances of $2,222 and $2,466, respectively
|
40,164
|
|
|
39,401
|
|
||
Inventories
|
49,721
|
|
|
48,916
|
|
||
Prepaid expenses and other
|
4,888
|
|
|
4,302
|
|
||
Total current assets
|
120,885
|
|
|
168,032
|
|
||
Property, plant and equipment, net
|
42,163
|
|
|
42,461
|
|
||
Other assets
|
3,637
|
|
|
3,417
|
|
||
Intangible assets, net
|
144,194
|
|
|
130,310
|
|
||
Goodwill
|
382,992
|
|
|
361,252
|
|
||
Total assets
|
$
|
693,871
|
|
|
$
|
705,472
|
|
Liabilities and stockholders' equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
16,916
|
|
|
$
|
15,775
|
|
Accrued liabilities
|
19,900
|
|
|
34,426
|
|
||
Current portion of long-term debt
|
5,000
|
|
|
5,000
|
|
||
Current portion of contingent consideration
|
3,973
|
|
|
2,100
|
|
||
Total current liabilities
|
45,789
|
|
|
57,301
|
|
||
Long-term debt, net of current portion
|
85,444
|
|
|
86,621
|
|
||
Deferred income taxes
|
17,154
|
|
|
17,173
|
|
||
Contingent consideration, net of current portion
|
—
|
|
|
1,161
|
|
||
Other long-term liabilities
|
595
|
|
|
621
|
|
||
Total liabilities
|
148,982
|
|
|
162,877
|
|
||
Commitments and contingencies (Note 14)
|
|
|
|
||||
Stockholders' equity
|
|
|
|
||||
Preferred stock, par value $.01 per share, 5,000,000 shares authorized; no shares issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, par value $.01 per share, 75,000,000 shares authorized; 37,861,057 and 37,594,493 shares issued and 37,491,057 and 37,224,493 shares outstanding at August 31, 2018 and May 31, 2018, respectively
|
372
|
|
|
370
|
|
||
Additional paid-in capital
|
546,615
|
|
|
543,762
|
|
||
Retained earnings
|
4,660
|
|
|
5,129
|
|
||
Treasury stock, 370,000 shares at August 31, 2018 and May 31, 2018, respectively
|
(5,714
|
)
|
|
(5,714
|
)
|
||
Accumulated other comprehensive loss
|
(1,044
|
)
|
|
(952
|
)
|
||
Total Stockholders’ Equity
|
544,889
|
|
|
542,595
|
|
||
Total Liabilities and Stockholders' Equity
|
$
|
693,871
|
|
|
$
|
705,472
|
|
|
Three Months Ended
|
||||||
|
Aug 31, 2018
|
|
Aug 31, 2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(469
|
)
|
|
$
|
(35
|
)
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
5,599
|
|
|
5,793
|
|
||
Stock based compensation
|
2,150
|
|
|
1,797
|
|
||
Change in fair value of contingent consideration
|
12
|
|
|
105
|
|
||
Deferred income taxes
|
(10
|
)
|
|
(82
|
)
|
||
Change in accounts receivable allowances
|
(228
|
)
|
|
278
|
|
||
Other
|
25
|
|
|
(567
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(562
|
)
|
|
3,103
|
|
||
Inventories
|
(761
|
)
|
|
(781
|
)
|
||
Prepaid expenses and other
|
(1,200
|
)
|
|
620
|
|
||
Accounts payable, accrued and other liabilities
|
(13,429
|
)
|
|
(7,195
|
)
|
||
Net cash provided by (used in) operating activities
|
(8,873
|
)
|
|
3,036
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Additions to property, plant and equipment
|
(682
|
)
|
|
(501
|
)
|
||
Cash paid for acquisition
|
(37,000
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(37,682
|
)
|
|
(501
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Repayment of long-term debt
|
(1,250
|
)
|
|
(1,250
|
)
|
||
Payment of acquisition related contingent consideration
|
(2,100
|
)
|
|
(2,100
|
)
|
||
Proceeds from exercise of stock options and employee stock purchase plan
|
705
|
|
|
812
|
|
||
Net cash used in financing activities
|
(2,645
|
)
|
|
(2,538
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(134
|
)
|
|
659
|
|
||
Increase (decrease) in cash and cash equivalents
|
(49,334
|
)
|
|
656
|
|
||
Cash and cash equivalents at beginning of period
|
74,096
|
|
|
47,544
|
|
||
Cash and cash equivalents at end of period
|
$
|
24,762
|
|
|
$
|
48,200
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
||||
|
|
|
|
||||
Contractual obligations for acquisition of fixed assets
|
$
|
38
|
|
|
$
|
38
|
|
|
Common Stock
|
|
Additional
paid in
capital
|
|
Retained earnings
|
|
Accumulated
other
comprehensive
loss
|
|
Treasury Stock
|
|
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Amount
|
|
Total
|
||||||||||||||||||
Balance at May 31, 2018
|
37,594,493
|
|
|
$
|
370
|
|
|
$
|
543,762
|
|
|
$
|
5,129
|
|
|
$
|
(952
|
)
|
|
(370,000
|
)
|
|
$
|
(5,714
|
)
|
|
$
|
542,595
|
|
Net loss
|
|
|
|
|
|
|
(469
|
)
|
|
|
|
|
|
|
|
(469
|
)
|
||||||||||||
Exercise of stock options
|
71,336
|
|
|
1
|
|
|
607
|
|
|
|
|
|
|
|
|
|
|
608
|
|
||||||||||
Issuance/Cancellation of restricted stock units
|
149,446
|
|
|
|
|
|
(460
|
)
|
|
|
|
|
|
|
|
|
|
(460
|
)
|
||||||||||
Issuance/Cancellation of performance share units
|
5,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||||
Purchases of common stock under ESPP
|
40,547
|
|
|
1
|
|
|
556
|
|
|
|
|
|
|
|
|
|
|
557
|
|
||||||||||
Stock-based compensation
|
|
|
|
|
2,150
|
|
|
|
|
|
|
|
|
|
|
2,150
|
|
||||||||||||
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
(92
|
)
|
|
|
|
|
|
(92
|
)
|
||||||||||||
Balance at August 31, 2018
|
37,861,057
|
|
|
$
|
372
|
|
|
$
|
546,615
|
|
|
$
|
4,660
|
|
|
$
|
(1,044
|
)
|
|
(370,000
|
)
|
|
$
|
(5,714
|
)
|
|
$
|
544,889
|
|
|
|
Aug 14, 2018
|
||
(in thousands)
|
|
|
||
Inventory
|
|
$
|
50
|
|
Property, plant and equipment
|
|
10
|
|
|
Intangible assets:
|
|
|
||
BioSentry trademark
|
|
1,700
|
|
|
BioSentry product technology
|
|
13,800
|
|
|
Customer relationships
|
|
2,500
|
|
|
Goodwill
|
|
21,740
|
|
|
Net assets acquired
|
|
$
|
39,800
|
|
(in thousands)
|
United States
|
|
International
|
|
Total
|
||||||
Net sales
|
|
|
|
|
|
||||||
Vascular Interventions & Therapies
|
$
|
42,039
|
|
|
$
|
7,956
|
|
|
$
|
49,995
|
|
Vascular Access
|
20,447
|
|
|
3,343
|
|
|
23,790
|
|
|||
Oncology
|
5,198
|
|
|
6,357
|
|
|
11,555
|
|
|||
Total
|
$
|
67,684
|
|
|
$
|
17,656
|
|
|
$
|
85,340
|
|
|
Aug 31, 2018
|
|
May 31, 2018
|
||||
(in thousands)
|
|
|
|
||||
Receivables
|
$
|
40,164
|
|
|
$
|
39,401
|
|
Contract assets
|
$
|
—
|
|
|
$
|
—
|
|
Contract liabilities
|
$
|
1,153
|
|
|
$
|
1,203
|
|
|
Aug 31, 2018
|
|
May 31, 2018
|
||||
(in thousands)
|
|
||||||
Raw materials
|
$
|
21,556
|
|
|
$
|
18,678
|
|
Work in process
|
9,829
|
|
|
10,808
|
|
||
Finished goods
|
18,336
|
|
|
19,430
|
|
||
Inventories
|
$
|
49,721
|
|
|
$
|
48,916
|
|
(in thousands)
|
|
||
Goodwill balance at June 1, 2018
|
$
|
361,252
|
|
Additions for BioSentry acquisition (Note 2)
|
21,740
|
|
|
Goodwill balance at August 31, 2018
|
$
|
382,992
|
|
|
August 31, 2018
|
||||||||||
|
Gross
carrying
value
|
|
Accumulated
amortization
|
|
Net carrying
value
|
||||||
(in thousands)
|
|
||||||||||
Product technologies
|
$
|
160,973
|
|
|
$
|
(71,204
|
)
|
|
$
|
89,769
|
|
Customer relationships
|
58,917
|
|
|
(24,199
|
)
|
|
34,718
|
|
|||
Trademarks
|
30,100
|
|
|
(12,411
|
)
|
|
17,689
|
|
|||
Licenses
|
5,752
|
|
|
(4,527
|
)
|
|
1,225
|
|
|||
Distributor relationships
|
1,250
|
|
|
(457
|
)
|
|
793
|
|
|||
|
$
|
256,992
|
|
|
$
|
(112,798
|
)
|
|
$
|
144,194
|
|
|
May 31, 2018
|
||||||||||
|
Gross
carrying
value
|
|
Accumulated
amortization
|
|
Net carrying
value
|
||||||
(in thousands)
|
|
||||||||||
Product technologies
|
$
|
147,175
|
|
|
$
|
(68,880
|
)
|
|
$
|
78,295
|
|
Customer relationships
|
56,428
|
|
|
(23,237
|
)
|
|
33,191
|
|
|||
Trademarks
|
28,400
|
|
|
(11,809
|
)
|
|
16,591
|
|
|||
Licenses
|
5,752
|
|
|
(4,357
|
)
|
|
1,395
|
|
|||
Distributor relationships
|
1,250
|
|
|
(412
|
)
|
|
838
|
|
|||
|
$
|
239,005
|
|
|
$
|
(108,695
|
)
|
|
$
|
130,310
|
|
(in thousands)
|
|
||
Remainder of 2019
|
$
|
13,457
|
|
2020
|
16,280
|
|
|
2021
|
15,121
|
|
|
2022
|
14,236
|
|
|
2023
|
13,786
|
|
|
2024 and thereafter
|
71,314
|
|
|
|
$
|
144,194
|
|
|
Aug 31, 2018
|
|
May 31, 2018
|
||||
(in thousands)
|
|
||||||
Payroll and related expenses
|
$
|
6,381
|
|
|
$
|
10,235
|
|
Royalties
|
1,121
|
|
|
1,537
|
|
||
Accrued severance
|
1,428
|
|
|
1,940
|
|
||
Sales and franchise taxes
|
1,425
|
|
|
683
|
|
||
Outside services
|
4,557
|
|
|
2,396
|
|
||
Litigation matters
|
—
|
|
|
12,500
|
|
||
Other
|
4,988
|
|
|
5,135
|
|
||
|
$
|
19,900
|
|
|
$
|
34,426
|
|
|
Three Months Ended
|
||||
(in thousands)
|
Aug 31, 2018
|
|
Aug 31, 2017
|
||
Basic
|
37,323
|
|
|
36,919
|
|
Effect of dilutive securities
|
—
|
|
|
—
|
|
Diluted
|
37,323
|
|
|
36,919
|
|
|
|
|
|
||
Securities excluded as their inclusion would be anti-dilutive
|
2,309
|
|
|
1,085
|
|
|
Three Months Ended
|
||||||
(in thousands)
|
Aug 31, 2018
|
|
Aug 31, 2017
|
||||
Net sales
|
|
|
|
||||
Vascular Interventions & Therapies
|
$
|
49,995
|
|
|
$
|
49,865
|
|
Vascular Access
|
23,790
|
|
|
23,238
|
|
||
Oncology
|
11,555
|
|
|
12,308
|
|
||
Total
|
$
|
85,340
|
|
|
$
|
85,411
|
|
•
|
Level 1 - Inputs to the valuation methodology are quoted market prices for identical assets or liabilities.
|
•
|
Level 2 - Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.
|
•
|
Level 3 - Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk.
|
|
Fair Value Measurements using
inputs considered as:
|
|
Fair Value at August 31, 2018
|
||||||||||||
(in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
||||||||
Financial Assets
|
|
|
|
|
|
|
|
||||||||
Marketable securities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,350
|
|
|
$
|
1,350
|
|
Total Financial Assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,350
|
|
|
$
|
1,350
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration for acquisition earn out
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,973
|
|
|
$
|
3,973
|
|
Total Financial Liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,973
|
|
|
$
|
3,973
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
Fair Value Measurements using
inputs considered as:
|
|
Fair Value at May 31, 2018
|
||||||||||||
(in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
||||||||
Financial Assets
|
|
|
|
|
|
|
|
||||||||
Short-term investments*
|
$
|
2,100
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,100
|
|
Marketable securities
|
—
|
|
|
—
|
|
|
1,317
|
|
|
1,317
|
|
||||
Total Financial Assets
|
$
|
2,100
|
|
|
$
|
—
|
|
|
$
|
1,317
|
|
|
$
|
3,417
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration for acquisition earn out
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,261
|
|
|
$
|
3,261
|
|
Total Financial Liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,261
|
|
|
$
|
3,261
|
|
|
Three Months Ended August 31, 2018
|
||||||
|
Financial Assets
|
|
Financial Liabilities
|
||||
(in thousands)
|
Fair Value Measurements
Using Significant Unobservable Inputs (Level 3) |
|
Fair Value Measurements
Using Significant Unobservable Inputs (Level 3) |
||||
Balance, May 31, 2018
|
$
|
1,317
|
|
|
$
|
3,261
|
|
Total gains or losses (realized/unrealized):
|
|
|
|
|
|
||
Contingent consideration liability recorded as the result of an acquisition (Note 2)
|
—
|
|
|
2,800
|
|
||
Change in present value of contingent consideration
(1)
|
—
|
|
|
12
|
|
||
Fair market value adjustments
|
33
|
|
|
—
|
|
||
Contingent consideration payments
|
—
|
|
|
(2,100
|
)
|
||
Balance, August 31, 2018
|
$
|
1,350
|
|
|
$
|
3,973
|
|
|
Fair value at
|
|
|
|
|
|
|
||
(in thousands)
|
Aug 31, 2018
|
|
Valuation Technique
|
|
Unobservable Input
|
|
Range
|
||
Revenue based payments
|
$
|
1,173
|
|
|
Discounted cash flow
|
|
Discount rate
|
|
4%
|
|
|
|
|
|
Probability of payment
|
|
100%
|
||
|
|
|
|
|
Projected fiscal year of payment
|
|
2019-2020
|
||
|
|
|
|
|
|
|
|
||
Supplier default holdback payment
|
$
|
2,800
|
|
|
Estimated probability
|
|
Estimated probability
|
|
95%
|
|
|
|
|
|
Project fiscal year of payment
|
|
2019
|
|
August 31, 2018
|
||||||||||||||
(in thousands)
|
Amortized
cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Government agency obligations
|
$
|
1,350
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,350
|
|
|
$
|
1,350
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,350
|
|
|
May 31, 2018
|
||||||||||||||
(in thousands)
|
Amortized
cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Government agency obligations
|
$
|
1,350
|
|
|
$
|
—
|
|
|
$
|
(33
|
)
|
|
$
|
1,317
|
|
|
$
|
1,350
|
|
|
$
|
—
|
|
|
$
|
(33
|
)
|
|
$
|
1,317
|
|
|
Three months ended
|
||||||
(in thousands)
|
Aug 31, 2018
|
|
Aug 31, 2017
|
||||
Legal*
|
$
|
2,880
|
|
|
$
|
1,611
|
|
Mergers and acquisitions
|
1,318
|
|
|
153
|
|
||
Restructuring
|
130
|
|
|
1,216
|
|
||
Other
|
94
|
|
|
9
|
|
||
Total
|
$
|
4,422
|
|
|
$
|
2,989
|
|
|
|
Three Months Ended August 31, 2018
|
||||||||||||||||||||||
|
|
Termination Benefits
|
|
Plant Consolidation
|
|
Regulatory Filings
|
|
Contract Cancellation Costs
|
|
Other Costs
|
|
Total
|
||||||||||||
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at May 31, 2018
|
|
$
|
838
|
|
|
$
|
21
|
|
|
$
|
12
|
|
|
$
|
200
|
|
|
$
|
—
|
|
|
$
|
1,071
|
|
Charges
|
|
—
|
|
|
110
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
130
|
|
||||||
Non-cash adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Cash payments
|
|
(521
|
)
|
|
(114
|
)
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
(653
|
)
|
||||||
Balance at August 31, 2018
|
|
$
|
317
|
|
|
$
|
17
|
|
|
$
|
14
|
|
|
$
|
200
|
|
|
$
|
—
|
|
|
$
|
548
|
|
|
|
Three months ended August 31, 2018
|
||||||||||
(in thousands)
|
|
Foreign currency translation gain (loss)
|
|
Unrealized gain (loss) on marketable securities
|
|
Total
|
||||||
Balance at May 31, 2018
|
|
$
|
(1,035
|
)
|
|
$
|
83
|
|
|
$
|
(952
|
)
|
Other comprehensive income (loss) before reclassifications, net of tax
|
|
(125
|
)
|
|
33
|
|
|
(92
|
)
|
|||
Amounts reclassified from accumulated other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net other comprehensive income (loss)
|
|
$
|
(125
|
)
|
|
$
|
33
|
|
|
$
|
(92
|
)
|
Balance at August 31, 2018
|
|
$
|
(1,160
|
)
|
|
$
|
116
|
|
|
$
|
(1,044
|
)
|
Recently Issued Accounting Pronouncements - Adopted
|
|||
Standard
|
Description
|
Date Adopted
|
Effect on the Consolidated Financial Statements
|
ASU No. 2014-09,
Revenue from Contracts with Customers (ASU 2014-09)
|
This ASU provides a single, comprehensive accounting model for revenues arising from contracts with customers that supersedes most of the existing revenue recognition guidance, including industry-specific guidance. Under this model, revenue is recognized at an amount that an entity expects to be entitled to upon transferring control of goods or services to a customer, as opposed to when risks and rewards transfer to a customer under existing revenue recognition guidance.
|
June 1, 2018
|
See Note 3, "Revenue from Contracts with Customers" for the required disclosures related to the impact of adopting this standard.
The adoption of this standard did not have a material impact on the Company’s consolidated balance sheets and statements of operations.
|
ASU No. 2016-15,
Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15)
|
This ASU identifies how certain cash receipts and cash payments are presented and classified in the Statement of Cash Flows under Topic 230.
|
June 1, 2018
|
This adoption did not have an impact on the Company's financial statements.
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations.
|
•
|
Revenue
decreased
by
0.1%
to
$85.3 million
|
•
|
Gross margin
increased
380 bps to
52.1%
|
•
|
Operating income
increased
by
$0.2 million
to
$0.3 million
|
•
|
Earnings per share
decreased
by
$0.01
to
$(0.01)
|
•
|
Cash flow used in operations decreased by
$11.9 million
to
$8.9 million
|
|
Three months ended
|
||||||||
(in thousands)
|
Aug 31, 2018
|
|
Aug 31, 2017
|
|
% Growth
|
||||
Net Sales by Global Business Unit
|
|
|
|
|
|
||||
Vascular Interventions & Therapies
|
$
|
49,995
|
|
|
$
|
49,865
|
|
|
0.3%
|
Vascular Access
|
23,790
|
|
|
23,238
|
|
|
2.4%
|
||
Oncology
|
11,555
|
|
|
12,308
|
|
|
(6.1)%
|
||
Total
|
$
|
85,340
|
|
|
$
|
85,411
|
|
|
(0.1)%
|
|
|
|
|
|
|
||||
Net Sales by Geography
|
|
|
|
|
|
||||
United States
|
$
|
67,684
|
|
|
$
|
68,931
|
|
|
(1.8)%
|
International
|
17,656
|
|
|
16,480
|
|
|
7.1%
|
||
Total
|
$
|
85,340
|
|
|
$
|
85,411
|
|
|
(0.1)%
|
•
|
U.S. net sales decreased 1.8% from the prior year as growth in Fluid Management, Angiographic catheters and AngioVac was offset by reimbursement challenges in Venous, continued declines in our PICCs business and a decrease in our thermal ablation products. The Company's Microwave product line declined year over year due to the negative impact from the timing of the Company's prior year replacement shipments of $1.6 million which took place in the first quarter as a result of the market withdrawal of Acculis.
|
•
|
International sales increased from the prior year 7.1% as a result of growth in NanoKnife in China as well as growth in PICCs and dialysis businesses.
|
•
|
Total Vascular Interventions & Therapies sales
increased
$0.1 million
primarily attributable to strong performance in Fluid Management, Angiographic catheters and AngioVac. The increase in Fluid Management was attributed to continued efforts around new custom kits. The Company continues to see strong results in the Angiographic catheters business and has maintained the majority of the business from a competitor's recall. The Company continues to see strong case volumes in AngioVac. AngioVac case volume increased 16% percent from the prior year due to increased adoption of the Company's unique technology. These increases were partially offset by decreased sales volume of Venous products due to reimbursement challenges.
|
•
|
U.S. Vascular Interventions & Therapies sales increased $0.2 million due to an increase in volume in Fluid Management, Angiographic catheters and AngioVac. This was partially offset by decreased sales volume of Venous products. International Vascular Interventions & Therapies sales remained consistent year over year.
|
•
|
Total Vascular Access sales
increased
$0.6 million
due to growth primarily in our BioFlo businesses. Our BioFlo product lines, other than BioFlo PICCs, increased $0.5 million year over year. This was offset by decreased sales of BioFlo PICCs of $0.1 million. The Company's BioFlo portfolio now comprises 50% of overall Vascular Access sales, compared to 49% a year ago.
|
•
|
U.S. Vascular Access sales declined by $0.1 million due to competitive pressures in the PICC product line which was partially offset by growth in Midlines and BioFlo Dialysis products which continue to gain traction in the marketplace.
|
•
|
International Vascular Access sales increased by $0.7 million as the Company continues to expand its global reach of its Vascular Access product offerings.
|
•
|
Total Oncology sales
decreased
$0.8 million
year over year primarily due to decreased sales in Radiofrequency Ablation and Microwave disposables. Microwave sales were negatively impacted by the timing of the Company's prior year replacement shipments of $1.6 million which took place in the first quarter of the prior year as a result of the market withdrawal of Acculis. This was partially offset by $0.4 million in BioSentry sales as a result of the acquisition during the quarter and growth of NanoKnife disposables.
|
•
|
U.S. Oncology sales decreased by $1.1 million, driven by decreased sales in Microwave disposables as discussed above and NanoKnife capital sales. This was partially offset by BioSentry sales of $0.3 million.
|
•
|
International Oncology sales increased by $0.3 million year over year as a result of increased NanoKnife disposable sales in China.
|
|
|
Three months ended
|
|||||||||
(in thousands)
|
|
Aug 31, 2018
|
|
Aug 31, 2017
|
|
% Change
|
|||||
Gross profit
|
|
$
|
44,467
|
|
|
$
|
41,229
|
|
|
8
|
%
|
Gross profit % of sales
|
|
52.1
|
%
|
|
48.3
|
%
|
|
|
|||
Research and development
|
|
$
|
7,662
|
|
|
$
|
6,441
|
|
|
19
|
%
|
% of sales
|
|
9.0
|
%
|
|
7.5
|
%
|
|
|
|||
Selling and marketing
|
|
$
|
19,433
|
|
|
$
|
19,402
|
|
|
—
|
%
|
% of sales
|
|
22.8
|
%
|
|
22.7
|
%
|
|
|
|||
General and administrative
|
|
$
|
8,496
|
|
|
$
|
8,056
|
|
|
5
|
%
|
% of sales
|
|
10.0
|
%
|
|
9.4
|
%
|
|
|
•
|
The expiration of a royalty agreement in fiscal year 2018 resulted in $1.3 million of favorability compared to the prior year.
|
•
|
$1.0 million of favorability as a result of the plant consolidation.
|
•
|
Net productivity was driven by continued operational and supply chain efforts which contributed $0.9 million of favorability year over year. This was partially offset by timing of capitalized variances of $0.7 million.
|
•
|
Sales volume/mix contributed $1.2 million of favorability year over year offset by increased freight expense of $0.3 million and pricing headwinds of $0.2 million.
|
•
|
$0.9 million increase in new product development and clinical efforts related to the Company’s investment areas of NanoKnife, Thrombus Management and BioFlo.
|
•
|
$0.4 million increase in backfilling of open positions from prior year.
|
•
|
Compensation and benefits increase of approximately $0.8 million primarily as a result of backfilling of prior year openings and stock based compensation.
|
•
|
These increases were partially offset by a decrease in legal and professional fees of $0.3 million.
|
|
|
Three months ended
|
||||||||||
(in thousands)
|
|
Aug 31, 2018
|
|
Aug 31, 2017
|
|
$ Change
|
||||||
Amortization of intangibles
|
|
$
|
4,116
|
|
|
$
|
4,096
|
|
|
$
|
20
|
|
Change in fair value of contingent consideration
|
|
$
|
12
|
|
|
$
|
105
|
|
|
$
|
(93
|
)
|
Acquisition, restructuring and other items, net
|
|
$
|
4,422
|
|
|
$
|
2,989
|
|
|
$
|
1,433
|
|
Other expense
|
|
$
|
(803
|
)
|
|
$
|
(156
|
)
|
|
$
|
(647
|
)
|
•
|
Amortization expense remained consistent.
|
•
|
In the second quarter of fiscal year 2018, the final minimum payment was made on the AngioVac product contingent consideration and a $2.1 million payment was made on the Microsulis contingent consideration during the first quarter of fiscal 2019. Only one remaining minimum payment is remaining on the Microsulis contingent consideration. The normal amortization of the present value discount on the contingent liabilities is now less than $0.1 million per quarter.
|
•
|
M&A expenses of $1.3 million were incurred in the first quarter of fiscal year 2019 compared to $0.2 million in the prior year.
|
•
|
Legal expenses, related to litigation that is outside of the normal course of business, of $2.8 million were recorded in the first quarter of fiscal year 2019 compared to $1.6 million in the prior year.
|
•
|
In the first quarter of fiscal year 2018, the Company incurred $1.2 million of expense which consisted of $0.6 million of severance and $0.6 million of costs to move the product lines related to the plant consolidation that was announced in the third quarter of fiscal year 2017. The plant consolidation was completed in the fourth quarter of fiscal year 2018; therefore, only $0.1 million of expense was incurred in the first quarter of fiscal year 2019.
|
•
|
The increase in other expenses from the prior year is primarily due to increased interest expense of $0.2 million and fluctuations in foreign currency.
|
|
|
Three months ended
|
||||||
(in thousands)
|
|
Aug 31, 2018
|
|
Aug 31, 2017
|
||||
Income tax expense (benefit)
|
|
$
|
(8
|
)
|
|
$
|
19
|
|
Effective tax rate including discrete items
|
|
1.7
|
%
|
|
118.8
|
%
|
|
Three Months Ended
|
||||||
(in thousands)
|
Aug 31, 2018
|
|
Aug 31, 2017
|
||||
Cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(8,873
|
)
|
|
$
|
3,036
|
|
Investing activities
|
(37,682
|
)
|
|
(501
|
)
|
||
Financing activities
|
(2,645
|
)
|
|
(2,538
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(134
|
)
|
|
659
|
|
||
Net change in cash and cash equivalents
|
$
|
(49,334
|
)
|
|
$
|
656
|
|
•
|
Net loss was driven by higher operating expenses in research and development, selling and marketing and general administrative as well as costs related to our acquisition and restructuring activities. Partially offsetting the higher operating expenses was an increase in gross profit.
|
•
|
The Company continues to focus on optimizing its cash conversion cycle. In the first quarter of fiscal year 2019 working capital was negatively impacted by increased inventory on hand of $0.8 million. Additionally, days sales outstanding ("DSO") increased by two days for a $0.6 million impact. Also, the $12.5 million DOJ settlement payment that was made during the first quarter of fiscal year 2019 negatively impacted working capital from accounts payable and accrued liabilities.
|
•
|
Net loss was driven by lower sales and lower gross margins.
|
•
|
With regards to working capital, the Company focused on optimizing DSO which contributed to $3.1 million of working capital improvement. This working capital improvement was offset by a $7.2 million decrease in accounts payable and accrued liabilities along with a decrease in Acculis inventory reserves of $0.5 million and inventory build related to the plant consolidation.
|
•
|
$0.7 million in fixed asset additions, primarily for maintenance of equipment versus $0.5 million in the prior year.
|
•
|
A $37.0 million cash payment to acquire the BioSentry product from SSC described in Note 2 to the financial statements.
|
•
|
$1.3 million in repayments on long-term debt in both the current year and prior year. This is consistent with the required amortization payment on the Term Loan.
|
•
|
$0.7 million of proceeds from stock option and ESPP activity versus $0.8 million in the prior year.
|
•
|
$2.1 million payment on earn-out liabilities in both the current year and prior year.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 4.
|
Controls and Procedures.
|
Item 1.
|
Legal Proceedings.
|
Item 1A.
|
Risk Factors.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
|
Issuer Purchases of Equity Securities
|
||||||||||||
|
Total
Number of
Shares
Purchased
(1)
|
|
Average
Price Paid
per Share
|
|
Total
Number of
Shares
Purchased
as Part of
Publicly
Announced
Programs (2)
|
|
Maximum
Approximate
Dollar Value
of Shares
that May Yet
Be
Purchased
Under Plans
or Programs
|
||||||
June 1, 2018 - June 30, 2018
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
July 1, 2018 - July 31, 2018
|
20,342
|
|
|
$
|
21.56
|
|
|
—
|
|
|
$
|
—
|
|
August 1, 2018 - August 31, 2018
|
826
|
|
|
$
|
21.90
|
|
|
—
|
|
|
$
|
—
|
|
Total
|
21,168
|
|
|
$
|
21.57
|
|
|
—
|
|
|
—
|
|
(1)
|
Reflects shares withheld to satisfy minimum statutory tax withholding amounts due from employees related to the vesting of restricted shares from equity-based awards.
|
(2)
|
The Company has $11.4 million available to repurchase under the Repurchase Program that was approved by the Board of Directors for the twenty-four month period ending November 6, 2018.
|
Item 3.
|
Defaults on Senior Securities.
|
Item 4.
|
Mine Safety Disclosures.
|
Item 5.
|
Other Information.
|
Item 6.
|
Exhibits.
|
|
|
|
|
ANGIODYNAMICS, INC.
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date:
|
|
October 1, 2018
|
|
/ S / JAMES C. CLEMMER
|
|
|
|
|
James C. Clemmer, President,
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
||
Date:
|
|
October 1, 2018
|
|
/ S / MICHAEL C. GREINER
|
|
|
|
|
Michael C. Greiner, Executive Vice President,
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
1 Year AngioDynamics Chart |
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