AngioDynamics, Inc. (ANGO)
F1Q2011 Earnings Call Transcript
October 7, 2010 4:30 pm ET
Doug Sherk – IR
Jan Keltjens – President and CEO
Joseph Gersuk – EVP and CFO
Jayson Bedford – Raymond James & Associates
Jason Mills – Canaccord Genuity
Brooks West – Craig-Hallum Capital
Tom Kouchoukos – Stifel Nicolaus
Robert Goldman – CL King
Ronald Sadlowski [ph]
Previous Statements by ANGO
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And I would now like to turn the conference over to Doug Sherk. Please go ahead, sir.
Well, thank you, Britney, and thank you everyone for joining us today for the AngioDynamics conference call to review the results of the fiscal first quarter, which ended on August 31, 2010.
The news release announcing the first quarter earnings crossed the wire this afternoon after the market closed and is available on the AngioDynamics website. The call is being broadcast live on the web at www.angiodynamics.com, and a replay of the call will also be archived on the AngioDynamics website.
Before we get started, during the course of this conference call the company will make projections or forward-looking statements regarding future events including the statements about revenue and earnings for fiscal 2011. We encourage you to review the company’s past and future filings with the SEC, including without limitation the company’s Forms 10-Q and 10-K, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.
In addition, today’s presentation includes certain financial measures used to better understand our business that have not been prepared in accordance with the Generally Accepted Accounting Principles, better known as GAAP. An explanation and reconciliation of these non-GAAP measures has been provided in today’s news release issued by the company and is available on the website at www.angiodynamics.com.
AngioDynamics uses non-GAAP measures to establish operational goals and believe that non-GAAP measures may assist investors in analyzing the underlying trends of the company’s business over time. Investors should consider these non-GAAP measures in addition to, not as a substitute for or superior to financial reporting measures prepared in accordance with GAAP.
On today's call, the company has reported non-GAAP EBITDA and EBITDA per share and has reviewed these measures as an internal analysis and review of operational performance.
Finally, during the question-and-answer period today, we’d like to request each caller to limit themselves to two questions and encourage callers to re-queue to ask additional questions. We appreciate everyone’s cooperation with this procedure.
And now, I’d like to turn the call over to Jan Keltjens, President and Chief Executive Officer of AngioDynamics.
Thanks, Doug, and good afternoon everyone. Thank you for joining us on the first quarter conference call. With me today as usual is Joe Gersuk, our Chief Financial Officer.
I would like to begin our comments this afternoon with a review of the factors that contributed to our solid and desired growth rate during the first quarter. Then, I will provide an update on the progress of the NanoKnife program. Joe will subsequently review the financial highlights for the quarter, as well as our revised guidance. And before we take your questions, I will come back and review our strategies to achieve our long-term growth to grow at a rate that are significantly faster than the broader market.
Well, let’s get started. Our first quarter revenue growth of 3% was lower than we would have liked. Our lead in the marketplace as the procedure growth rates has slowed down in recent months and have compounded while first quarter sales were impacted by the internal transition to unified U.S. vascular sales force.
We believe a confluence of factors had created a slowdown in procedure volume growth, namely the state of the economy and the resulting increased unemployment, the exploration of extended COBRA coverage in the U.S. and increased agent copay with many insurance plans.
As expected, acute therapies were least affected if at all. However, elective and subacute procedure growth slowed down by a few percentage points. On top of this, the product prices in the market continued, however, its impact on our results was relatively small this quarter.
Outside of Q1, we created a large unified U.S. vascular sales force. This strategic move allows us to create a larger footprint, thus increasing coverage and penetration that will result in higher efficiency and effectiveness. This restructuring did create a transient negative impact on our sales on which Joe will provide some further details.
We remain confident about the long-term growth prospects of our company. We believe that procedure volume growth will accelerate over time, and we are increasingly focused on high growth opportunities in oncology and vascular intervention. Our R&D pipeline is strong and we are launching a significant number of new products.
Our NanoKnife System continues to make solid clinical and commercial progress, and our leadership team has been strengthened at multiple levels and we are making some early, but promising progress in international expansion.
Due to these strategic drivers, we again delivered a strong growth quarter from our Interventional oncology business. Overall, oncology sales increased 22% from a year ago, and thus include a 1.1 million in sales of the NanoKnife System. This is a further increase from previous quarter’s $1 million sales number. We are encouraged by this sales momentum, and in addition to our NanoKnife non-thermal ablation system, strong LCB sales contributed to oncology performance.