AngioDynamics, Inc. (ANGO)

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AngioDynamics (ANGO)

Q2 2012 Earnings Call

January 05, 2012 4:30 pm ET


Joseph M. DeVivo - Chief Executive Officer, President and Director

D. Joseph Gersuk - Chief Financial Officer, Chief Accounting Officer, Executive Vice President and Treasurer

Doug Sherk - Founder and Chief Executive Officer


Robert M. Goldman - CL King & Associates, Inc.

Robert Glyn Moses - RGM Capital, LLC

Unknown Analyst

Jason R. Mills - Canaccord Genuity, Research Division

Jayson T. Bedford - Raymond James & Associates, Inc., Research Division

Christian Russel Sessing - AMI Asset Management Corporation

James Quinton

Thomas Kouchoukos - Stifel, Nicolaus & Co., Inc., Research Division

Larry Haimovitch - Haimovitch Medical Technology Consultants

Charles Croson - Sidoti & Company, LLC

Matthew Hewitt - Craig-Hallum Capital Group LLC, Research Division

Larry Haimovitch



Good day, ladies and gentlemen. Thank you for standing by. Welcome to the AngioDynamics Second Quarter 2012 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Thursday, January 5, 2012. I would now like to turn the conference over to Doug Sherk. Please go ahead.

Doug Sherk

Thank you, operator, and thank you, everyone, for joining us today for the AngioDynamics conference call to review the results of the fiscal 2012 second quarter, which ended on November 30, 2011.

The news release announcing the results crossed the wire this afternoon after the market closed, and they are available on the AngioDynamics website. The call is being broadcast live on the web at replay of the call will be also be archived on the AngioDynamics website. To access both the webcast and the archived replay, go to the AngioDynamics website at and go to the Investors section under Events & Presentations.

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 revenues and earnings for fiscal 2012. 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.

Finally, during the question-and-answer period today, we'd like to request each caller to limit themselves to 2 questions and encourage callers to requeue to ask additional questions. We appreciate everyone's cooperation with this procedure.

And now I'd like to turn the call over to Joseph DeVivo, President and Chief Executive Officer of AngioDynamics.

Joseph M. DeVivo

Thank you, Doug, and good afternoon, everyone. Thanks for joining us today. With me is Joe Gersuk, our Chief Financial Officer.

Our sales and marketing organization did a great job this second quarter, which led to a 9% year-over-year sales growth. Our strong Peripheral Vascular -- our strong Peripheral Vascular organization built on the momentum started last quarter, producing a 2% increase in sales. Our market-leading Oncology/Surgery team continues to execute with a 25% increase in sales as compared to last year, and the NanoKnife System was a major factor behind the team's performance as sales increased $3.2 million, up 100% over last year.

And on the international front, our team continues to deliver consistent growth. They generated a 27% increase in sales, which represented now 15% of our total sales for the second quarter, up from 12% in the second quarter of fiscal year 2011.

Three product lines are driving our international growth and that's NanoKnife, RF ablation and the VenaCure EVLT system. The growth is coming from both Europe and Asia, with RF ablation sales in Asia being especially strong. It's important to note that our international growth has been generated without LCDs. Our expiring distribution agreement for that product line was exclusively for the U.S. Therefore, we believe we can continue to grow international sales at the current healthy clip, and we expect continued success in the U.S. as our sales team reemphasizes on our legacy oncology products.

Several quarters ago, the management team determined that there was a need to improve the leadership of the company's quality systems and regulatory programs. For example, I believe the company needed a more robust regulatory strategy for obtaining additional NanoKnife claims that would allow for greater utilization of the product to its full capability.

Since the Donna Haire, our new SVP of Quality and Regulatory, arrived 2 months ago, we have embarked on a broad-based plan to evaluate a variety of our systems to evaluate and improve our quality, regulatory and clinical processes. This effort, being led by Donna, is establishing a compressive approach to compliance, and we are intently focused on a significant transformation and implementation of corporate-wide quality systems.

As a part of the plan, we've reviewed and initiated augmentation of the quality systems at our work Queensbury facility and have temporarily shifted some of our engineering resources to help quite a number of actions in place. We are committed to delivering a consistent high level of quality as an organization and these improvements will be implemented in the near future. As part of the process at the end of the quarter, we initiated 3 voluntary Class II recalls that stemmed from nonconforming parts manufactured from suppliers. Necessary process improvements to address the situation with all 3 products have been identified and are currently being implemented. The good news is that shipments for all the 3 products have resumed in late December. We'll be working off a backlog for better part of the third quarter. And as a result, we've updated our guidance.

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