We retain our Neutral recommendation for therapeutic and diagnostic devices maker AngioDynamics (ANGO). Its first-quarter fiscal 2012 adjusted earnings of 8 cents a share matched the Zacks Consensus Estimate. Revenues rose 6% year over year to $54.4 million, but missed the Zacks Consensus Estimate.
Profit slipped 27% year over year on account of charges associated with the CEO's departure and the closure of the company’s U.K. facility. Sustained double-digit growth at the Oncology business was, however, somewhat marred by a still soft Vascular division.
Oncology/Surgery revenues climbed 15% year over year owing to solid sales of the company’s popular tumor-zapping NanoKnife system. More than 800 patients received treatment with the device at the end of the quarter.
AngioDynamics’ larger Vascular segment posted modest growth (of 2%) in the quarter. However, the division bounced back from a roughly 4% decline registered a year ago, supported by gains from new products. The Vascular business remains challenged by sustained pricing pressure and intense competition.
AngioDynamics is a leader in therapeutic and diagnostic devices for treating peripheral vascular and other non-coronary diseases. It has market leadership positions in several of its operating segments including angiographic products and thrombolytic catheters and products. The company’s focus on interventional peripheral products has allowed it to expand its share as the market continues to migrate from open surgery to less invasive interventional procedures.
NanoKnife remains the life blood for AngioDynamics and it is looking to expand the label to broaden its commercial opportunity. The company is seeking regulatory approval for the system in additional indications, including prostate, hepatocellular (liver) and pancreatic cancers. AngioDynamics recently completed patient enrollment for the European clinical trial of the NanoKnife system for hepatocellular cancer.
AngioDynamics is ramping up R&D investments to expand its product portfolio and support the ongoing clinical studies of NanoKnife and vascular product development programs. Moreover, the company has a strong balance sheet and continues to generate healthy cash flows. It therefore, has ample flexibility to spend on product development programs and/or acquisitions for growth.
However, AngioDynamics is exposed to pricing headwinds, stemming from lower selling prices of some access and peripheral vascular products. Moreover, its product lines face strong challenges from the competitive offerings of its larger rivals such as Boston Scientific (BSX) and C.R. Bard (BCR). We are also mindful of the dilutive impact of higher R&D spending as well as costs related to the CEO's exit and the U.K. facility closure on the company’s bottom line.
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