CG MEDTECH, DIAGNOSTICS AND DIGITAL HEALTH & SERVICES FORUM - ANGIODYNAMICS INC

Financial Performance:

• FQ1 (June-August) demonstrated continued double-digit growth driven by the high-margin MedTech segment, which is projected to comprise >50% of total revenue for the current fiscal year (up from 17% five years ago).
• The MedTech portfolio has delivered a 25% compound annual growth rate over the last five years.
• Ariane (Atherectomy): Achieved 21 consecutive quarters of double-digit growth; revenue mix is shifting from 90% office-based labs (OBL) to ~60% OBL/40% hospital to capture higher Average Selling Prices (ASPs).
• Mechanical Thrombectomy: AngioVac showed strong sequential growth despite a tough year-over-year comparison; Alphavac reported year-over-year and sequential growth, having grown nearly 40% the prior year.
• NanoKnife (Oncology): Disposable revenue grew 24% year-over-year, fueled by prostate market volume; full-year disposable growth is tracked above 20%.
• Cash flow dynamics reflect the company's odd fiscal year (ending November), with Q1 typically being a cash usage period due to early-year spending; full-year cash generation is expected to remain positive.

Guidance and Future Outlook:

• Management targets sustained double-digit growth for the next several years across all three MedTech verticals (Ariane, Mechanical Thrombectomy, NanoKnife).
• Alphavac (PE): Expected to accelerate growth this year; the Blood Return IDE trial is on track to conclude and receive approval within the current calendar year.
• Ariane (Coronary): Long-term strategy includes a 4-5 year roadmap to expand Total Addressable Market (TAM) into the coronary space via a PMA process; FDA discussions are underway.
• NanoKnife (Prostate): Reimbursement strategy focuses on expanding Local Coverage Determinations (LCDs) with Medical Advisory Committees (MACs) beyond Palmetto and securing additional private payer (e.g., Humana) adoptions to match federal Medicare coverage.
• The legacy medical device portfolio will continue to fund investments in the high-growth MedTech segment while improving overall EBITDA margins.

Business Segments and Product Lines:

• MedTech (High Growth/High Margin): Now the core focus, split into Cardiovascular (Ariane, Mechanical Thrombectomy) and Oncology (NanoKnife).
• Legacy Medical Device: Slower growth segment serving as the cash engine to support R&D and commercial expansion of the MedTech portfolio.
• New Product/Expansion: Alphavac's Blood Return technology is being developed as an ancillary feature to address sales objections and offer physician choice regarding blood return protocols.
• Reimbursement Wins: NanoKnife secured a permanent CPT-1 code (Jan 2024), Palmetto MAC affirmative coverage for intermediate-risk prostate patients, and Humana Medicare Advantage adoption; 2-year follow-up data showed zero recurrence in the intended ablation zone.

Market and Competitive Landscape:

• Mechanical Thrombectomy: Highly competitive with entrenched, well-capitalized players; recently validated by M&A activity (Boston Scientific acquiring Inari, J&J acquiring Penumbra), which signals market attractiveness but also intensifies competition.
• Atherectomy: Smallest of the MedTech markets with single-digit industry growth, yet AngioDynamics' Ariane system differentiates itself through versatility (effective above/below knee and in-stent restenosis).
• Oncology: NanoKnife is leveraging unique technology and clinical data to disrupt the prostate ablation market, where procedure volume has become the lion's share of their U.S. business.
• Market Share: Company is actively taking share in PE (Alphavac) and PAD (Ariane) markets, positioning itself as a challenger with superior product versatility.

Risks and Challenges:

• M&A Disruption: Acquisition of competitors (Inari, Penumbra) by larger rivals may create disruption and increase competitive pressure in the mechanical thrombectomy space.
• Reimbursement Complexity: While progress has been made, achieving predictable, nationwide reimbursement coverage for NanoKnife across all MACs and private payers remains an ongoing iterative challenge.
• Clinical Trial Timing: Dependence on the Alphavac Blood Return IDE trial completion and approval within the current year to fully equip the sales force against objections.
• Fiscal Oddity: The non-standard November fiscal year end creates temporary cash flow volatility and compatability issues with standard industry quarter reporting.

Management Commentary and Tone:

• New CEO Eric Honroff: Expressed high confidence, citing "game-changing" technology and a strong history of building profitable teams in medical devices; described the role as "coming home" due to his background in cardiovascular and urology devices (Boston Scientific, Abbott).
• Strategic Focus: Honroff outlined a "listening tour" approach for the 100-day plan, engaging with the executive team, customers (clinicians), and investors before finalizing a detailed strategic roadmap for next year.
• Commercial Confidence: Management expressed confidence in the current sales force's ability to drive double-digit growth and profitability, viewing the team as a foundation for scaling rather than a replacement.
• Investor Relations: Acknowledged the "complicated" nature of the AngioDynamics story and emphasized a commitment to clarity in communicating the dual-engine growth strategy (legacy funding MedTech).

Analyst Questions and Answers:

• Q: What differentiates the current commercial structure and what was the biggest draw for the new CEO?
  • A: CEO Honroff emphasized the product portfolio (specifically the versatility of Ariane and the efficacy of NanoKnife) and the opportunity to impact patient lives as the primary draw; he noted his ability to leverage KOL relationships in cardiovascular and urology.
• Q: How is the Alphavac sales force adapting to the Blood Return feature?
  • A: The Blood Return is positioned as an ancillary tool to overcome sales objections; the company remains agnostic on blood return debates, offering the option to physicians who want it while ensuring the core device works without it.
• Q: What is the status of reimbursement for NanoKnife prostate?
  • A: Progress is strong with Palmetto and Humana coverage; the focus remains on securing additional MAC approvals and private payer adoptions to ensure predictable reimbursement.
• Q: How will cash flow behave in the remainder of the year?
  • A: Q2 and Q3 are expected to transition to cash generation, with significant positive cash flow anticipated in Q4, validating the business model's ability to fund growth while generating profit.

Other Key Points:

• Fiscal Year Structure: The company operates on an odd fiscal year ending in November, with Q1 comprising June, July, and August.
• CEO Transition: Eric Honroff officially assumed the role of President and CEO on November 2nd.
• Product Versatility: Ariane's ability to treat restenosis, above-knee, and below-knee PAD simultaneously is a key competitive moat preventing reliance on a single market segment.
• Long-term Vision: Success for Honroff in the first year is defined by three milestones: accelerating MedTech growth/profitability, advancing pivotal clinical trials, and building trust with the investor community.