ango-20240831

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-50761

AngioDynamics, Inc.

(Exact name of registrant as specified in its charter)


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 and zip code)

(518) 795-1400

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, par value $.01

ANGO

NASDAQ Global Select Market

Preferred Stock Purchase Rights

NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.


Class						Outstanding as of October 2, 2024
Common Stock, par value $.01						40,634,249

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AngioDynamics, Inc. and Subsidiaries

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		Page
	Part I: Financial Information

Item 1.	Financial Statements

	Consolidated Statements of Operations (unaudited)	3

	Consolidated Statements of Comprehensive Income (Loss) (unaudited)	4

	Consolidated Balance Sheets (unaudited)	5

	Consolidated Statements of Cash Flows (unaudited)	6

	Consolidated Statements of Stockholders’ Equity (unaudited)	7

	Notes to Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4.	Controls and Procedures	29

	Part II: Other Information

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3.	Defaults on Senior Securities	30

Item 4.	Mine Safety Disclosures	30

Item 5.	Other Information	30

Item 6.	Exhibits	32

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PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements.

AngioDynamics, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands of dollars, except per share data)


	Three Months Ended
	Aug 31, 2024		Aug 31, 2023
Net sales	$	67,491	$	78,679
Cost of sales (exclusive of intangible amortization)	30,767		38,619
Gross profit	36,724		40,060
Operating expenses:
Research and development	6,285		7,941
Sales and marketing	25,605		27,368
General and administrative	10,975		10,856
Amortization of intangibles	2,570		3,625

Change in fair value of contingent consideration	76		(130)
Acquisition, restructuring and other items, net	4,311		3,212
Total operating expenses	49,822		52,872
Gain on sale of assets	—		47,842
Operating income (loss)	(13,098)		35,030
Other expense:
Interest income, net	606		119
Other expense, net	(173)		(288)
Total other income (expense), net	433		(169)
Income (loss) before income tax benefit	(12,665)		34,861
Income tax expense (benefit)	133		(11,023)
Net income (loss)	$	(12,798)	$	45,884


Earnings (loss) per share
Basic	$	(0.31)	$	1.15
Diluted	$	(0.31)	$	1.15






Weighted average shares outstanding
Basic	40,653		39,842
Diluted	40,653		39,968

The accompanying notes are an integral part of these consolidated financial statements.

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AngioDynamics, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)

(in thousands of dollars)


	Three Months Ended
	Aug 31, 2024		Aug 31, 2023
Net income (loss)	$	(12,798)	$	45,884
Other comprehensive income (loss), before tax:

Foreign currency translation gain (loss)	1,098		(930)
Other comprehensive income (loss), before tax	1,098		(930)
Income tax expense related to items of other comprehensive income (loss)	—		—
Other comprehensive income (loss), net of tax	1,098		(930)
Total comprehensive income (loss), net of tax	$	(11,700)	$	44,954

The accompanying notes are an integral part of these consolidated financial statements.

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AngioDynamics, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands of dollars, except share data)


	Aug 31, 2024		May 31, 2024
Assets
Current assets
Cash and cash equivalents	$	55,005	$	76,056

Accounts receivable, net of allowances of $2,363 and $2,141 respectively	39,563		43,610
Inventories	64,700		60,616


Prepaid expenses and other	13,326		12,971

Total current assets	172,594		193,253
Property, plant and equipment, net	34,377		35,666
Intangible assets, net	75,774		77,383

Other assets	10,883		11,369

Total assets	$	293,628	$	317,671
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	31,272	$	37,751
Accrued liabilities	34,108		41,098


Current portion of contingent consideration	4,804		4,728
Other current liabilities	6,515		7,578
Total current liabilities	76,699		91,155

Deferred income taxes	4,626		4,852

Other long-term liabilities	15,721		16,078
Total liabilities	97,046		112,085
Commitments and contingencies (Note 14)
Stockholders' equity
Preferred stock, par value $0.01 per share, 5,000,000 shares authorized; no shares issued and outstanding	—		—
Common stock, par value $0.01 per share, 75,000,000 shares authorized; 41,446,390 and 40,801,597 shares issued and 41,004,249 and 40,431,597 shares outstanding at August 31, 2024 and May 31, 2024, respectively	386		385
Additional paid-in capital	613,730		610,484
Accumulated deficit	(408,002)		(395,204)
Treasury stock, 442,141 and 370,000 shares at August 31, 2024 and May 31, 2024, respectively	(6,265)		(5,714)
Accumulated other comprehensive loss	(3,267)		(4,365)
Total Stockholders’ Equity	196,582		205,586
Total Liabilities and Stockholders' Equity	$	293,628	$	317,671

The accompanying notes are an integral part of these consolidated financial statements.

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AngioDynamics, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands of dollars)


	Three Months Ended
	Aug 31, 2024		Aug 31, 2023
Cash flows from operating activities:
Net income (loss)	$	(12,798)	$	45,884
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	6,785		6,688
Non-cash lease expense	494		476
Stock based compensation	3,205		4,144
Gain on disposal of assets	—		(47,842)
Transaction costs for disposition	—		(2,427)
Change in fair value of contingent consideration	76		(130)

Deferred income taxes	(339)		(11,415)
Change in accounts receivable allowances	270		(78)
Fixed and intangible asset impairments and disposals	20		65

Write-off of other assets	—		869
Other	121		(9)
Changes in operating assets and liabilities:
Accounts receivable	3,784		3,157
Inventories	(4,053)		(4,574)
Prepaid expenses and other	(836)		(4,168)
Accounts payable, accrued and other liabilities	(14,982)		(16,539)
Net cash used in operating activities	(18,253)		(25,899)
Cash flows from investing activities:
Additions to property, plant and equipment	(1,092)		(791)
Additions to placement and evaluation units	(1,313)		(767)




Proceeds from sale of assets	—		100,000
Net cash (used in) provided by investing activities	(2,405)		98,442
Cash flows from financing activities:
Repayment of long-term debt	—		(50,000)


Payment of acquisition related contingent consideration	—		(10,000)
Repurchase of common stock	(552)		—
Proceeds from exercise of stock options and employee stock purchase plan	43		410
Net cash used in financing activities	(509)		(59,590)
Effect of exchange rate changes on cash and cash equivalents	116		13
Increase (decrease) in cash and cash equivalents	(21,051)		12,966
Cash and cash equivalents at beginning of period	76,056		44,620
Cash and cash equivalents at end of period	$	55,005	$	57,586

Supplemental disclosure of non-cash investing and financing activities:

Accrual for capital expenditures incurred during the period	$	(32)	$	(68)

The accompanying notes are an integral part of these consolidated financial statements.

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AngioDynamics, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited)

(in thousands of dollars, except share data)


	Common Stock			Additional paid in capital		Accumulated deficit		Accumulated other comprehensive loss		Treasury Stock
	Shares	Amount								Shares	Amount		Total
Balance at May 31, 2024	40,801,597	$	385	$	610,484	$	(395,204)	$	(4,365)	(370,000)	$	(5,714)	$	205,586
Net loss						(12,798)							(12,798)

Issuance/Cancellation of restricted stock units	432,144			(321)									(321)
Issuance/Cancellation of performance share units	60,731			(347)									(347)
Purchases of common stock under ESPP	151,918	2		709									711
Stock-based compensation				3,205									3,205

Common stock repurchased		(1)								(72,141)	$	(551)	(552)
Other comprehensive income, net of tax								1,098					1,098
Balance at August 31, 2024	41,446,390	$	386	$	613,730	$	(408,002)	$	(3,267)	(442,141)	$	(6,265)	$	196,582


	Common Stock			Additional paid in capital		Accumulated deficit		Accumulated other comprehensive loss		Treasury Stock
	Shares	Amount								Shares	Amount		Total
Balance at May 31, 2023	39,981,422	$	382	$	599,206	$	(210,855)	$	(4,723)	(370,000)	$	(5,714)	$	378,296
Net income						45,884							45,884

Issuance/Cancellation of restricted stock units	386,031			(280)									(280)
Issuance/Cancellation of performance share units	87,377			(210)									(210)
Purchases of common stock under ESPP	131,811	1		899									900
Stock-based compensation				4,144									4,144


Other comprehensive loss, net of tax								(930)					(930)
Balance at August 31, 2023	40,586,641	$	383	$	603,759	$	(164,971)	$	(5,653)	(370,000)	$	(5,714)	$	427,804

The accompanying notes are an integral part of these consolidated financial statements.

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AngioDynamics, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Income (Loss) for the three months ended August 31, 2024 and 2023, the Consolidated Balance Sheet as of August 31, 2024, the Consolidated Statements of Cash Flows for the three months ended August 31, 2024 and 2023, and the Consolidated Statements of Stockholders’ Equity for the three months ended August 31, 2024 and 2023 have been prepared by the Company and are unaudited. The Consolidated Balance Sheet as of May 31, 2024 was derived from audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary to state fairly the financial position, changes in stockholders’ equity and comprehensive income, results of operations and cash flows as of and for the period ended August 31, 2024 (and for all periods presented) have been made.

The unaudited interim consolidated financial statements for the three months ended August 31, 2024 and 2023 include the accounts of AngioDynamics, Inc. and its wholly owned subsidiaries (collectively, the "Company", "we", "our" or "us"). All intercompany balances and transactions have been eliminated.

2. DIVESTITURES

PICCs and Midlines

Pursuant to an asset purchase agreement dated February 15, 2024 (the "Asset Purchase Agreement"), the Company completed the sale of the PICC and Midline businesses (the "Divestiture") to Spectrum Vascular ("Spectrum"). Total consideration received by the Company for the Divestiture in the third quarter of fiscal year 2024 was $34.5 million in cash and resulted in a pre-tax book gain of $6.7 million. Included in the agreement is a $5.5 million earn-out related to the sales of divested products over a two-year period and a milestone payment of $5.0 million paid upon final transfer of the manufacturing to a third-party that Spectrum will pay to the Company upon achievement.

The Company and Spectrum entered into various agreements to facilitate the transition of the divested businesses to Spectrum, including a Transition Services Agreement and Contract Manufacturing Agreement. The Company determined that the sale of the businesses did not constitute a strategic shift that had a major effect on the Company's operations or financial results and as a result, this transaction is not classified as discontinued operations.

The following table summarizes the major classes of assets sold on the date of the sale:


(in thousands)	As of February 15, 2024
Current assets:
Inventories	$	4,203
Total current assets	$	4,203
Non-current assets:
Property, plant and equipment, net	$	158
Intangible assets, net	20,781
Other assets	40
Total non-current assets	$	20,979

Dialysis and BioSentry

Pursuant to an asset purchase agreement dated June 8, 2023 (the "Asset Purchase Agreement"), the Company completed the sale of the dialysis and BioSentry tract sealant system biopsy businesses (the "Divestiture") to Merit Medical Systems, Inc. ("Merit"). Total consideration received by the Company for the Divestiture in the first quarter of fiscal year 2024 was $100.0 million in cash and resulted in a pre-tax book gain of $47.8 million.

The Company and Merit entered into various agreements to facilitate the transition of the divested businesses to Merit, including a Transition Services Agreement and Contract Manufacturing Agreement. The Company determined that the sale of

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the businesses did not constitute a strategic shift that had a major effect on the Company's operations or financial results and as a result, this transaction will not be classified as discontinued operations.

The following table summarizes the major classes of assets sold on the date of the sale:


(in thousands)	As of June 8, 2023
Current assets:
Inventories	$	4,068
Prepaid expenses and other	2,000
Total current assets	$	6,068
Non-current assets:
Property, plant and equipment, net	$	54
Intangible assets, net	17,629
Goodwill	25,980
Total non-current assets	$	43,663

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenue Recognition

Under ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company has one primary revenue stream which is the sales of its products.

Disaggregation of Revenue

The following table summarizes net sales by Med Tech, Med Device and by geography:


	Three Months Ended August 31, 2024						Three Months Ended August 31, 2023
(in thousands)	United States		International		Total		United States		International		Total
Net sales
Med Tech	$	24,889	$	3,080	$	27,969	$	22,242	$	3,618	$	25,860
Med Device	34,592		4,930		39,522		42,157		10,662		52,819
Total	$	59,481	$	8,010	$	67,491	$	64,399	$	14,280	$	78,679

Net Product Revenue

The Company's products consist of a wide range of medical, surgical and diagnostic devices used by professional healthcare providers for vascular access, for the treatment of peripheral vascular disease and for use in oncology and surgical settings. The Company's products are generally used in minimally invasive, image-guided procedures. Most of the Company's products are intended to be used once and then discarded, or they may be implanted for short or long term use. The Company sells its products to its distributors and to end users, such as interventional radiologists, interventional cardiologists, vascular surgeons, urologists, interventional and surgical oncologists and critical care nurses.

Contracts and Performance Obligations

The Company contracts with its customers based on customer purchase orders, which in many cases are governed by master purchasing agreements. The Company’s contracts with customers are generally for product only, and do not include other performance obligations such as services or other material rights. As part of its assessment of each contract, the Company evaluates certain factors including the customer’s ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations.

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Transaction Price and Allocation to Performance Obligations

Transaction prices of products are typically based on contracted rates. Product revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products to a customer, net of any variable consideration as described below.

If a contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised products underlying each performance obligation. The Company has standard pricing for its products and determines standalone selling prices based on the price at which the performance obligation is sold separately.

Revenue Recognition

Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which occurs at a point in time, and may be upon shipment from the Company’s manufacturing site or delivery to the customer’s named location, based on the shipping terms of a contract.

In determining whether control has transferred, the Company considers if there is a present right to payment from the customer and when physical possession, legal title and risks and rewards of ownership have transferred to the customer.

The Company typically invoices customers upon satisfaction of identified performance obligations. As the Company’s standard payment terms are 30 to 90 days from invoicing, the Company does not provide any significant financing to its customers.

The Company enters into agreements to place placement and evaluation units (“units”) at customer sites, but the Company retains title to the units. For the duration of these agreements the customer has the right to use the unit at no upfront charge in connection with the customer’s ongoing purchase of disposables. These types of agreements include an embedded operating lease for the right to use the units. In these arrangements, revenue recognized for the sale of the disposables is not allocated between the disposable revenue and lease revenue due to the insignificant value of the units in relation to the total agreement value.

Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue.

Variable Consideration

Reserves: Revenue from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established for discounts, returns, rebates and allowances that are offered within contracts between the Company and its customers. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as a contra asset.

Rebates and Allowances: The Company provides certain customers with rebates and allowances that are explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized. The Company establishes reserves for such amounts, which is included in accrued expenses in the accompanying Consolidated Balance Sheets. These rebates and allowances result from performance-based offers that are primarily based on attaining contractually specified sales volumes. The Company is also required to pay administrative fees to group purchasing organizations.

Product Returns: The Company generally offers customers a limited right of return. Product returns after 30 days must be pre-approved by the Company and customers may be subject to a 20% restocking charge. To be accepted, a returned product must be unadulterated, undamaged and have at least twelve months remaining prior to its expiration date. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company currently estimates product return liabilities using its historical product return information and considers other factors that it believes could significantly impact its expected returns, including product recalls. During the three months ended August 31, 2024 and 2023, such product returns were not material.

Contract Balances with Customers

A receivable is generally recognized in the period the Company ships the product. Payment terms on invoiced amounts are based on contractual terms with each customer and generally coincide with revenue recognition. Accordingly, the Company does not have any contract assets associated with the future right to invoice its customers. In some cases, if control of the

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product has not yet transferred to the customer or the timing of the payments made by the customer precedes the Company’s fulfillment of the performance obligation, the Company recognizes a contract liability that is included in deferred revenue in the accompanying Consolidated Balance Sheets.

The following table presents changes in the Company’s receivables, contract assets and contract liabilities with customers:


(in thousands)	Aug 31, 2024		May 31, 2024
Receivables	$	39,563	$	43,610
Contract assets	$	—	$	—
Contract liabilities	$	—	$	391

During the three months ended August 31, 2024, the Company had additions to contract liabilities of $0.1 million. This was offset by $0.1 million in revenue that was recognized during the three months ended August 31, 2024.

Costs to Obtain or Fulfill a Customer Contract

Under ASC 606, the Company may recognize an asset for incremental costs of obtaining a contract with a customer if it expects to recover those costs. The Company’s sales incentive compensation plans qualify for capitalization since these plans are directly related to sales achieved during a period of time. However, the Company has elected the practical expedient under ASC 340-40-25-4 to expense the costs as they are incurred within selling and marketing expenses since the amortization period is less than one year.

The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. Shipping and handling costs, associated with the distribution of finished products to customers, are recorded in costs of goods sold and are recognized when the related finished product is shipped to the customer. Amounts charged to customers for shipping and handling are recorded in net sales.

4. INVENTORIES

Inventories are stated at lower of cost and net realizable value (using the first-in, first-out method). Inventories consisted of the following:


(in thousands)	Aug 31, 2024		May 31, 2024
Raw materials	$	31,444	$	30,736
Work in process	7,728		6,772
Finished goods	25,528		23,108
Inventories	$	64,700	$	60,616

The Company periodically reviews inventory for both obsolescence and loss of value. The Company makes assumptions about the future demand for and market value of the inventory. Based on these assumptions, the Company estimates the amount of obsolete, expiring and slow-moving inventory. The total inventory reserve at August 31, 2024 and May 31, 2024 was $3.2 million and $3.3 million, respectively.

SEC Form 10-Q filed by AngioDynamics Inc.