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

So, good afternoon, everyone. Thank you for joining us for Canaccord's New News 2026 MedTech Diagnostics Digital Health and Services Forum. My name is John Young, and I'm one of the analysts here at Canaccord. It's my pleasure to be joined today by Eric Honroff, who officially steps into the president and CEO role of AngioDynamics on November 2nd, and i believe this is his first public-facing commentary we've had since doing that. Eric brings more than 20 years of medical device and life experiences, leadership experience to the company. We're also joined by CFO Stephen Trowbridge. So just to start, for investors who are new to the story, can you just give us an overview of AndroDynamics and where the company is today? Absolutely. So first of all, I'm extremely excited about the future of Androdynamics. And I think that the company has been on a milestone journey. It started in 1988 as mostly an interventional radiology company doing a number of different types of diagnostic catheters. And Jim, Steve, and the team have led this transformational journey. And what we've come to at this point is a strong focus on cardiovascular and oncology. And you can see that permeate through all of our businesses. There are really core areas that those are the spots that we're going to continue to focus, put our time and attention and make sure that we find the way to win. With that, as I said, that the business at this point is still broken up into what we have, our medical device area, which is some of our slower growth and some of our legacy product areas, and then our high growth, high margin, double digit when it comes to the med tech area. And once again, laser focused on cardiovascular, endovascular, and also oncology. Awesome. And then I think I've heard investors meeting you for the first time, Eric. Just what experiences from your career, from BSX to Abbott, do you draw on to most in this role? Yeah, absolutely. And so, first of all, very excited to be a part of this. And for those that know, I've got a long history in medical device. And I'll just kind of walk everyone through that. Over the last four years, I was on the life science side, more in the cell and gene therapy, molecular therapy, and biopharma, running a global business for getting up. And And so that was a very important business for Nubian. But prior to that, all of my time and attention has been in medical device, both urology as well as cardiovascular. So companies, as you mentioned, Boston Scientific, Abbott Vascular, getting Beckton Dickinson. And so this was a coming home for me. This was a really great opportunity for me to go into fields that I know a lot about. I've got strong KOL relationships. I know what it takes like to win. Traditionally, I've built some very strong and well-performed teams that I'm looking forward to being a part of. So when I got a chance to look at my history and the things that I've done, getting a chance to be part of Andrew Dynamics was a great fit and why I'm really excited about it. And to follow up on that, too, you know, you obviously run some large businesses, but what are you most looking forward about being a CEO of a public-facing company? Yes. So first of all, you know, I joined AngioDynamics and some of the other businesses because of the great products, right? And truly, Angio Dynamics has got game-changing type technology, so I love being customer-facing. I love getting out there with our physicians, our clinicians, and better understanding how we can impact the decisions they're making. To me, I love that and looking forward to it. But also, for the first time as a CEO, getting a chance to work closely with our investors. It's not something that I've done to that level. I've don't it before in a different chair, but this is an opportunity to work closely with them, understand what they like about the company, understand their suggestions and their thoughts, and help us to craft the long-term strategy that is going to provide that double-digit growth and the profitability that has been so incumbent in what we're doing. So I'm looking forward to that, for sure. Nice. See, I thought Eric was going to say what he's looking forward most was reporting on arbitrary three-month timelines and having 40 million omens. Yes. And I think, you know, too, just, you know, it sounds like you're making the most of it, but just any thoughts on just how you're approaching this transition period, and perhaps also, I know investors love hearing the 100-day plan, so any early outlines of what that 100- day plan could look like? So, John, I would love to say that I've built a robust strategic plan in week one. I have not, so I'm just going to be forthright. That will be forthcoming, and we will definitely be putting the time and attention, but let me just kind of detail. First of all, we are going to be very action-oriented because I do feel like there is significant opportunity and continued growth here. Secondarily, I want to be a really good listener, and I'll kind of go through what that listening plan looks like. First and foremost, last week, I spent a good bit of time with my executive leadership team understanding where we play, how we win, and what are the key areas that we're going to drive success. That was first, and we'll continue doing that with key members of the and your dynamics organization. Secondarily, and I pivot to this end of this week, customer facing, right? So I'm going to be with one of our super user programs in Nashville, and I love getting a chance to work closely with customers. I want to understand, you know, where our technology is meeting and exceeding their needs, and what are things that we need to continue to do to drive that type of, you now, value for them. And also, what does innovation look like, right. I'm a big fan of new product development, but also what is innovation that they need to continue to accelerate with their practices. So that's the second leg, if you will. And finally, as evidenced by this week, a lot of time with investors. I think that when we look at the Andrew Dynamics story, it sometimes is a little bit of a complicated one. And so I think some of that nuance is probably lost a little bit in how we can continue to showcase all the important things that we're doing and how we continue to drive growth. And so I do want to, you know, focus and lean in with the investor community just to understand and obviously figure out, especially on that strategic plan, which I will launch, especially as we go into next year, a better idea as to where we want to focus our time and attention. Got it. And then, Eric, too, just looking at your background, heavily commercial. Yeah. And just, you Know, where do you think you can make the biggest difference? What have your early interactions with the sales forces have been like and just early overall thoughts on the commercial structure of Angio? Yes, absolutely. So, first of all, I look at, you know, the commercial acumen is definitely an advantage. It's one of those that I love being close to the customers because I've been able to glean and learn so much from them. And I continue to look at that, and I also do feel like I know what good looks like when it comes to building strong commercial organizations. And I have had a history of doing so. So, that is the case. But I also want to showcase that I've run both larger and smaller businesses than Angio Dynamics and full platforms. Basically, R&D, manufacturing, innovation, regulatory compliance. So I know complex businesses, so I think that the angiodynamics one, I can step in, I can understand, and hopefully I can make an immediate impact. I know you asked, obviously, about the competence of the angio-dynamic sales force. Listen, I'm gauging it based upon double-digit growth and profitability. They clearly are doing a number of things right. Now, obviously I think there's opportunities for us to continue to scale. I think there's opportunities for us to continue to focus, but I do think that I've got a strong group just to start with. Great. I always love asking CEOs who are new to the business because you guys do such extensive diligence before taking the job, obviously. But what was the one thing that really drew you to NGO? And what are you most excited about looking ahead? Yeah. So, and same thing. It was a long process, as you're probably familiar, and it definitely took an extensive amount of time. So I think that my due diligence was thorough, right? Getting a chance to do that. Also, the good news, as I mentioned, is that I have been in this cardiovascular space for the lion's share of my career. So I know a lot of people. I know a lot people that I can draw from and get insightful comments and advice. Fortunately, all of them were very bullish about AngioDynamics. They said, great company, great products, opportunity for acceleration and growth. That was the thought. The most exciting thing, once again, I'm going to get back to when you look at our product portfolio, not just in cardio and endovascular, but on oncology, we truly have game-changing type technology that is impacting patients' lives. And if I am doing that and being involved in continuing to change and help patients, then I'm doing what I should be, you know, built to be doing here. And so really excited about that. AngioDynamics is a continuation of what I've done before in the past and excited to be a part of that. Great. Maybe we could just walk for the most recent quarter, the FQ1 results, and just where we stand versus the plan for the year? Yeah, we were really excited about the results that we put up in Q1. So if you've been following the company, as Eric had mentioned, our focus is on the portfolio of assets that we call MedTech. So we started putting into that MedTech segment those products of ours that have a high growth potential, high margin profile, and are going into really large total addressable markets. We're funding the investments that are necessary to drive growth in those businesses through our more legacy med device business that Eric was talking about, right? And so within MedTech, we've got the two verticals of cardiovascular and oncology, but we're using the earnings foundation and the cash generation profile of the more legacy businesses to fund the investments necessary to drive grow from the top line. And so you've seen that over the course of the last five, six years. Talk about our MedTech business has had a 25% Keger over the last five years. When we started this process, that group of assets made up about 17% of overall revenue base. This fiscal year, we have an odd fiscal year. We're just about to end our Q2 in November. But this fiscal year that group will become the majority of our revenue base. It will be more than 50%. And so Q1 was a continuation of that. So our Q1 again is June, July, and August. We reported that in October. We were excited about the growth that we saw in those medtech assets right it was definitely double digits right where we where we've guided been led by uh our arion business we had 21 consecutive quarters of double digit growth within that arion pad business we're really excited about the opportunity for that to continue and to keep going and take share with the versatile technology that we have there we were also very pleased with the performance of our mechanical thrombectomy business and we have two two different technologies in there that that kind of works synergistically AngioVac, which is a little bit larger revenue base, we were really pleased with the growth that we saw in Angiovac sequentially from where we came from Q4. We had a tough comp, so it didn't necessarily show year-over-year growth, but that business is right on track to do exactly what we said. We expect that to be high single-digit grower going forward, and then the significant growth is going to come from Alphavac in the PE business. Really pleased with a sequential growth as well as a year-ever-year grow that we see in Alphabac. And then the third leg of the stool in our med tech business is our NanoKnife, and that's the oncology product that Eric was talking about. Again, really pleased with the growth that we saw there. It was 24% year-over-year growth within our disposables, continued strong capital quarters, even though capital can be lumpy, right, as you're dealing with hospital capital budgets. But we've been pleased with what we're seeing there. We had some questions coming out of the quarter sequentially around NanoKnive and where we went from Q4 to Q1. Our Q4 was always our biggest quarter. But so we look at it and we think we're right on track for more than 20% growth for the full year in the disposable business. And then the device business has continued to go. We were really pleased, and I'm sure we'll get into this, with the gross margin performance in the quarter. Really, I think that was a strong point for us. And what that's doing is that's continuing to allow us to grow the EBITDA contribution that the assets have. So it gets back to the original strategy of using the device portfolio to fund the investments that are necessary to keep getting that above-market growth in all three of our MedTech businesses while we're also dropping to the bottom line and growing EBITDA. Perfect. I think we'll walk through each of the segments of MedTech, if that's okay. First, with NanoKnife, just the enthusiasm around prostate, I think, continues. You've seen some good reimbursement wins around that, too. A lot of disposable growth has really been driven by prostate. Just how much of the opportunity have you realized versus what is ahead for NanoKnife Prostate? Yeah, so we're really excited about the prostate opportunity with NanoKnive. I think we're just scratching the surface of the opportunities for Nanoknife and Prostrate. You know, if you've been following the NGO story, we've always felt that we had a truly unique technology with Nanoknive that we knew could drive really good results. Over the last three, four years that we pivoted, at least in the U.S., to be primarily focused on the prostate market, we haven't been able to make great strides. And so over the last couple years, prostate procedure volume has become the lion's share in the U.S. So most of the procedure volume that we're seeing every quarter is in prostate. So that growth that we'RE seeing in the disposables is all driven by the prostate market. But as you mentioned, we were really pleased with our ability to parallel path some of the reimbursement wins that we had. We talked about the CPT-1 code going into place last January. That was a big milestone to get the permanent CPT-1 code. We always said, in and of itself, that's not necessarily going to be a hockey stick. But all of the information that we've seen since then has been really positive, right? And that led to two other announcements that we made, which was getting the positive LCD decision in the Palmetto MAC, where they have an affirmative decision out there that says they're going to cover Nanonite for the intermediate-risk prostate patients. And then what we followed up with another press release recently over the summer, where Humana has now said for their Medicare Advantage patients, they adopted the same language that was in that Palmetto positive coverage decision. Really important progress for us. Now, it's not mission accomplished. There's still work that we have to do to make sure that we're getting predictable reimbursement across the country, but everything that we've seen so far is really heading in the right direction. Add to that the other press release that we put out where we've now published the two-year follow-up data for the patients that were in our preserved study. So the Preserve study was the study that we did to get the indication, the regulatory indication for prostate treatment with NanoKnife. We published a two-year follow-up data where we had zero incidence of reoccurrence within the intended ablation zone. So when you think about how we're building this business, we're showing that we've got very good cancer control, and we're getting wins and making strides on building out that predictable reimbursement. That's what's manifesting itself in the growth that we talked about. And as we think about the next 12 months, what should investors be looking for in terms of additional reimbursement news? What do you think is more consequential, getting more of those LCDs or tackling more of the MA plans? Just walk us through what you think occurs here. Yeah, it's a little bit of a whole company approach into how we're going to handle reimbursement. I do think it's going to be important for us to continue to get other MACs follow suit. It's not in and of itself a necessary piece, but it absolutely is something that we're focusing on. We want folks to continue to do what we think was the move that Palmetto made and the right decision to come out with a positive coverage decision. It's also important for us to continue the talk to privates like we did with Humana and get them to pick it up. So, you know, it's been an iterative process, starting with being on the Medicare fee schedule a while ago, having our Medicare patients get reimbursed, moving now into the Medicare Advantage side of things, and then building that up into the private payers. It's all about the data that we can show, continue to generate, and the benefit that the clinicians are saying that it is providing for their patients. Got it. Then moving on, just throwing it back to me, you know, Alphavac continues to grow nicely. Andriovac, let's say, it's stabilized now. What tells you that the changes that you guys had made in the commercial sales force is working? And also, can you talk about how important alpha return is to growth? I think alpha return is very important to growth, right? We think that we have the best PE product out on the market. Now, we're going into a market that is very competitive. They've got some really well-capitalized, you know, entrenched competitors in that. So we had to be better. So when we launched the AlphaVac product in terms of the features and benefits of the cannula that we have, the purpose-built handle, steerability, we're set up to continue to take share, right. And so as we grow AlphaVac in the PE space, we're taking share. And we grew nearly 40% last year. I expect that to actually accelerate this year. I think we're going to continue to see that growth. I do think the alpha return, which is the blood return piece, is going to be an important ancillary addition to our Salesforce sales bag, primarily to get over sales objections. So if we're talking share, we are going to those physicians who have already chosen mechanical thrombectomy and how they choose to treat their patients. By and large, those are physicians who have gotten used to having a blood return option. Now, we designed AlphaVac up front to make blood return not necessary, not much of an issue, because if you look at our APEX trial, the majority of physicians who did treatments in that APEx trial lost less than 250 cc's of blood. And we also know that there is a debate in the community today about whether or not you should return blood or whether or not you shouldn't return the blood. And there's been two big competitors that were kind of on either side of that debate. Look, our perspective is we want to be agnostic. If a physician chooses to give blood, we want give them that option. We also want to give those physicians who aren't that keen in returning blood a product that means that they can do a mechanical thrombectomy without having to have that. With that being said, it's very important for us to give that option, right? And so that's what Blood Return will do. We're excited about the IDE trial that we're in. We're exited about the pace of enrollment. We're really looking forward to getting that approval, putting ourselves on an equal footing. And I think that that will help us continue to accelerate the growth profile. And could you just give us an update on that pace of enrolment and when you still are expecting to finish the trial and get approval for the device? Yep. So we've said we're expecting to finished the trial during this calendar year. And so I've got a challenge to our team. I actually hope to beat that. Nice. And then, you know, there's been tremendous disruption, too, in this segment from some of your competitors. Just any thoughts on how you guys are trying to take advantage of just the sales disruption between the two large encumbrance in the space? Yeah, and Eric knows a lot about this, too. I mean, there are always benefits and opportunities, and there are also risks, too., when you see some of the big companies that are out there investing into this space. First and foremost, you know, with Striker buying Inari and J&J buying Penumbra, we look at this and we say, or excuse me, boss, hey, they're investing in this space for a reason because this is a really attractive space. So we see it as a validation of the investments that we're making in the mechanical thrombectomy. Is there going to be disruption whenever there's a change? Absolutely. And we're going to try to be opportunistic. But make no mistake, those two companies are really good, really good competitors, too. So we've got our antenna up. We're going to continue to compete. We like the position that we're in. There's going to be some disruption. There's also going to me a lot of really big, well-heeled, good competitors that are going to be in that space that we are going continue to go after. So I'll go back to the point that says we had to have the best product. And that's why we're excited about our portfolio. And then to go to the last leg of the stool for MedTech, just Ariane, just 21 consecutive quarters of double-digit growth. What is behind that? What is the ability to continue that growth profile, and what's next for the platform itself? So what's behind that growth starts with our product. It's a very similar conversation that we have in mechanical thrombectomy. We have the best, most versatile atherectomy product on the market. Something that really attracted me when we were doing the due diligence around the Ariane platform was the fact that it was not just a laser. It was something that was equally effective both above the knee and below the knee and in instant restenosis. There's no other atherectomy product that can go after all three of those areas. And it's that versatility that has proven to be one of the largest and most important aspects to facilitate the growth that we're talking about. So since we've launched it, about 10% of our procedures are being done in instant restenosis. Roughly half of the rest of the procedures are done above the knee and half below the knee. So the versatility is playing out. And that's what gives us the confidence that we're going to continue to be able to hit the growth in the same level that we've hit for those last 21 consecutive quarters. We're not just relegated to one spot. We're nicht just taking share from one competitor. We're goingto continue to take share because of that versatility. If you think about the markets that we play in, you know, the atherectomy market is probably the smallest of the medtech markets that were in. and it's probably the one that has the lowest growth profile, growing single digits compared to the mechanical thrombectomy, which we think is $3 billion and growing 20%. But that being said, it's not going to stop us from continuing to hit that double-digit growth in Arion because of the product and because ofthe team that we've built. The people have been fantastic. We've got a very stable sales force on the Arion side, and I expect that we're going to continue to grow double digits over the course of the next handful of years. And mix has also been beneficial. You launched a product during COVID, so you're really over-indexed office-based setting at first because the hospital environment was so hard to get into. I think now a lot of the focus has been on the hospital development, which has a bit of a higher ESP. So just any thoughts on how much mix is contributing versus volume growth? That would be great. We're seeing both. We're seen both volume as well as mix shift coming from pricing. And I think it's a really critical point that you bring up, John. When we launched this product, it was in September of 2020, we were overweighted to the office-based lab setting because they kept their doors open. Hospitals at the time were shutting their doors trying to build up capacity to treat the COVID patients. We couldn't get in the door. And so we put the focus where it needed to be, and we were way overweighted in the OBL when we started. But then we've been able to continue that growth by now having a shifting focus and over the course of the last three years or so, trying to get a little bit more of that hospital side of care into our base, right? So if we started 90-10, 80-20 on the OBL side when we first launched this, we're now closer to 60-40 OBL to hospital. You're right, there's an ASP benefit to us. Now, the volume is mostly in the O BL, right. So we're going to continue to see unit growth and volume growth in the OBL setting. But getting the ASP benefit in the hospitals, they're a little bit of a different customer than the O BLs. That's important for us. But then the other piece that we don't want to lose sight of is building our install base in the hospital side of care gives us a nice platform for what we think is a future TAM expansion opportunity with this technology by taking the PAD product and going into the coronary side. So we talked about that as a really important long-term operation for us, We're excited about that prospect. And just any update there with FDA discussions for the coronary application? Yeah, as we've said, it's going to be a PMA process, right? That's how the predicates have set it up. So it's a little bit of a longer clinical trial. We're in discussions with FDA. We're exciting about moving forward. We have some physicians who have used it in the coronaries, so we know it works. It's a pretty well-defined pathway that we're excited about moving toward, too. And so if you think about the RE on growth, and we talked about the ability to continue to drive double-digit growth in PAD with the versatility of the product. And then in that four- to five-year horizon, an opportunity for us to facilitate continued growth at that same pace and same level with the TAMA expansion opportunity going into coronary. Got it. And then, you know, just touching quickly on Q1, also a cash use quarter, which you guys had telegraphed, but I do think we always get some investor reaction to that. How should investors just think about cash usage or generation through the rest of this year? Yeah, you know, this is probably one of the things that hurts us with our odd fiscal year, right? Our Q1 is that Q3 that everybody else has where they're moving away from early fiscal year cash usage into cash generation. And we come out with our Q1. Every company uses cash within their first quarter. The cash that we use for our Q2 was no different than what we've done in the past. It was no difference than our expectations. We still want people to focus on the overall year that we're going to have. We're going generate cash for the full year. And so, you know, Q2, Q3, you're not going to see the same level burn. We're going to generate a significant amount in Q4, proving out that the business model can generate positive youth, can generate cash while we're investing in the growth to drive that above-market growth within the med tech segment. Great. And we just have 10 seconds left, so I think last one. Just imagining we're back here in a year at this conference, just what would you tell us was a first year, a success as a CEO here? Yeah, I think, as I said, I look at probably three different milestones. Number one was that we have accelerated and continued the growth and profitability associated with our MedTech products. I told you those are game changers. If we have done that, we've done a lot of things really well, and I think that's a really important milestone. Secondarily, as you got a chance to hear from Steve, we have got some pivotal clinical trials. So the advancement of those and, in some cases, the acceptance of those will be critical to expand our platform, which is also very important. And then finally, I mentioned this earlier, just the trust and the understanding from the investment community, knowing that we've got the right strategy, the right team, and the right execution profile in place. Those would be the three. Great. Thank you so much, Eric and Steve. Really appreciate it. Thank you, John. Appreciate it so much.