Therapeutic and diagnostic devices maker
) recently won a contract with HealthTrust Purchasing Group, a
group purchasing organization ("GPO") that supports roughly 1,400
hospitals. The contract will cover AngioDynamics' vascular access
products, including chronic and acute dialysis catheters.
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The HealthTrust agreement became effective from October 1, and is
expected to leverage AngioDynamics' top-line growth. Per the
agreement, the vascular access products to be covered by
HealthTrust include DuraFlow, DuraFlow 2 and EvenMore chronic
hemodialysis catheters, DuraMax chronic dialysis catheter, and the
Schon XL acute hemodialysis catheter.
AngioDynamics had earlier been in similar contracts, with
HealthTrust covering its peripheral vascular and fluid management
offerings. Despite being able to sell off a bulk of its
manufactured products, pricing pressure from the GPO could
adversely affect selling prices and corresponding profitability of
New York-based AngioDynamics specializes in the design,
development, manufacture, and marketing of therapeutic and
diagnostic devices to treat peripheral vascular disease as well as
other non-coronary diseases. With a market-cap of $393.2 million,
the company has approximately 1,400 employees and 7 operating
We believe AngioDynamics is well positioned for sustained growth
driven by strong market adoption of the NanoKnife system and its
focus on interventional peripheral products. The recently concluded
Navilyst acquisition in May, 2012 is expected to boost earnings by
at least 8 cents in fiscal 2013.
However, management expects the proposed Vortex Medical acquisition
to be dilutive to AngioDynamics' reported earnings by 9 cents for
fiscal 2013, as the company expects an approximate $5 million
decrease in operating income along with a trivial impact on EBITDA.
In addition, AngioDynamics' product line face strong challenges
from the competitive offerings of its larger rivals such as
Boston Scientific Corporation
CR Bard Inc.
). We are currently 'Neutral' on AngioDynamics, which carries a
short-term Zacks #3 Rank (Hold rating).