AngioDynamics, Inc. — Form 10-K Summary
Reporting period: Fiscal year ended May 31, 2022, compared primarily with fiscal 2021. Although the request metadata specifies “2021 Q4,” this filing is an annual report for FY2022, not a quarterly filing.
Business context
AngioDynamics develops and sells medical devices for vascular access, peripheral vascular disease, oncology and surgical procedures. It is shifting from a broad portfolio toward higher-technology products, particularly Auryon atherectomy, thrombectomy systems including AngioVac and AlphaVac, and NanoKnife. The company reports one operating segment.
Financial performance and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Net sales | $316.2 million | $291.0 million |
| Gross profit | $165.7 million; 52.4% margin | $156.8 million; 53.9% margin |
| Operating loss | $28.5 million | $35.3 million |
| Net loss | $26.5 million | $31.5 million |
| Diluted loss per share | $0.68 | $0.82 |
| Cash from operations | Cash used: $7.2 million | Cash provided: $24.1 million |
- Med Tech sales grew 41.2% to $78.7 million; Med Device sales rose 0.9% to $237.5 million. Endovascular Therapies grew 19.1%, Vascular Access declined 1.1%, and Oncology/Surgery grew 0.9%.
- U.S. sales increased 12.2% to $266.0 million; international sales fell 6.9% to $50.3 million. International sales represented 16% of total sales, versus 19% a year earlier.
- Gross margin declined 150 basis points. Sales volume and favorable product mix helped, while launch costs, labor shortages, freight and raw-material inflation weighed on margin.
- Cash and cash equivalents were $28.8 million, down from $48.2 million. Debt outstanding under the revolving facility was $25.0 million, with a 2.31% interest rate. The facility has $125.0 million of commitments; the company reported covenant compliance at year-end.
- Operating cash flow was pressured by higher receivables and inventory. Investing activities used $19.3 million, including $11.4 million for Auryon placement and evaluation units and $3.6 million for the QX Medical asset acquisition.
- Year-end current assets were $143.3 million and current liabilities were $74.3 million. Inventory was $51.4 million, net of reserves.
Changes, outlook and key risks
- Sales grew 8.7%, led by Auryon sales growth of $18.0 million and $3.7 million growth in the thrombectomy platform. COVID-related procedure disruptions and supply constraints affected products including AngioVac and vascular access.
- Backlog was $8.4 million at year-end, attributed to manufacturing capacity, supply-chain reliability, labor shortages and inflation. Management said it was working toward standard inventory and backlog levels in FY2023.
- Management expects growth to be driven by Auryon, mechanical thrombectomy and NanoKnife, and stated that available cash and revolver access should cover anticipated capital needs for at least 12 months. The filing provides no quantified revenue or earnings guidance.
- During FY2022, AlphaVac received a full market launch and FDA clearance for its F18 system; the FDA also authorized an IDE study of AlphaVac F18 for pulmonary embolism. The first patients were enrolled in the NanoKnife PRESERVE prostate study. Expanded NanoKnife indications depend on clinical results and regulatory approvals.
- A $4.2 million employee-retention-credit benefit was recorded in the third quarter. FY2021 included a $14.0 million impairment charge related to abandonment of OARtrac; no goodwill impairment was recorded in FY2022.
- Acquisition-related contingent consideration had a $16.9 million fair value; the company estimated approximately $20.0 million of undiscounted future contingent payments. Minimum future royalties were $44.5 million.
- Material risks include persistent COVID-related procedure disruption, supply and labor constraints, inflation, competition and pricing pressure, reimbursement and regulatory uncertainty, clinical-trial outcomes, reliance on distributors, and product liability and patent litigation. Bard patent cases remained pending; the company said potential losses could not yet be determined as probable and reasonably estimable.
- The company reported effective internal control over financial reporting. Deloitte issued unqualified opinions on the financial statements and internal controls.
Important facts for investors to verify
- Whether the $8.4 million backlog was reduced and supply reliability improved after year-end.
- Whether growth in Auryon and thrombectomy can continue while launch spending and inflationary costs moderate, and whether gross margin recovers.
- Progress, enrollment, results and regulatory milestones for NanoKnife and AlphaVac clinical studies.
- Operating cash-flow trends, receivables and inventory levels, and continued compliance with credit-facility covenants.
- Developments in Bard litigation and the timing and amount of contingent consideration and royalty payments.