) reported adjusted earnings of 10 cents per share for the second
quarter of fiscal 2013 ended November 30, 2012, beating the Zacks
Consensus Estimate by a penny but falling short of the year-ago
earnings by the same magnitude. Adjusted earnings exclude
one-time expenses related to the Quality Call to Action program
(QCAP), and acquisition and restructuring associated with
The New York-based therapeutic and diagnostic devices maker's
reported earnings declined 33.3% year over year to 6 cents a
share from 9 cents a year ago. Results include the Navilyst
Medical acquisition, which was completed on May 22, 2012. The
company also completed the takeover of Vortex and its AngioVac
venous drainage system in the reported quarter.
Revenues increased 3% to $87 million on a pro forma basis, in
line with the Zacks Consensus Estimate. Pro forma results include
the Navilyst acquisition and exclude the LC Beads sales. The
growth reflects successful sales force productivity after the
merger. However, the company's sales were affected by Hurricane
Sandy and an overall softness in the U.S. market.
Geographically, U.S. revenues inched down 1% on a pro-forma
basis to $69.7 million and accounted for roughly 80% of total
sales. International sales increased 21% to $17.4 million, backed
by healthy growth across Canada and strong adoption of the
company's Microwave ablation offerings.
The company's larger Vascular business remained somewhat soft
with revenues growing just 1% on a pro forma basis to $72.5
million in the quarter. The division continued to face strong
competition and sustained pricing pressure.
Revenues from the VenaCure EVLT laser vein therapy system
climbed 10% on the back of higher global sales of NeverTouch
laser fiber kits. Revenues from Peripheral Vascular rose 3% to
$45.8 million, while Vascular Access revenues declined 3% to
Revenues from the Oncology/Surgery division (14% of total
revenue) rose 12% to $12.0 million on a pro forma basis
(excluding LC Beads). NanoKnife product revenues were flat at
$3.2 million, while thermal ablation revenues grew 19% on the
back of solid international sales of Microwave ablation
offerings. Supply Agreement revenues were $2.5 million in the
reported quarter, up 14% on a pro forma basis.
Gross margin fell to 50.7% from 57.2% a year ago. However,
operating margin (on an adjusted basis) in the quarter was 8.6%
versus 7.9% in the year-ago quarter, reflecting significant
AngioDynamics ended the quarter with cash and cash equivalents
and marketable securities of $21.5 million, down 84.2% from the
year-ago level. Total long-term debt was $146.3 million as of
November 30, 2012, which is 23 times higher than the year-ago
level due to the Navilyst acquisition. The company generated
healthy cash from operations of $11.1 million in the quarter
compared with $2.7 million in the previous-year quarter.
AngioDynamics lowered its full-year fiscal 2013 guidance.
Adjusted revenues guidance for the fiscal year is expected
between $355 million and $360 million compared with the earlier
projection of $361 million-$364 million. Pro forma sales growth
is now projected to be 4% instead of the earlier view of 5%. The
company, however, reiterated its adjusted earnings per share in
the range of 40-42 cents for the year.
Adjusted gross margin is expected in the range of 50%-51% for
fiscal 2013. Adjusted operating income is expected between $29
million and $31 million. Earnings before interest, taxes,
depreciation and amortization (EBITDA), on an adjusted basis, are
projected in the range of $56-$57 million, down from the earlier
view of $60-$61 million.
The current Zacks Consensus Estimates for revenues and
earnings per share for fiscal 2013 are $360 million and 40 cents,
AngioDynamics should continue to benefit from the ongoing
shift from open surgery to less invasive interventional
procedures. Further, acquisitions, GPO contracts and new products
are expected to generate incremental opportunities for the
company. The company is aggressively investing in restructuring
and integration activities as well as cutting jobs to achieve
cost synergies and operational leverage.
However, AngioDynamics is exposed to pricing headwinds,
stemming from lower selling prices of some access vascular
products. Additionally, we remain concerned about the setback in
NanoKnife sales and strong challenges from the competitive
offerings of its larger rivals such as
Currently, AngioDynamics retains a Zacks #3 Rank (Hold) for
the short term, which supports its Neutral recommendation for the
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