What happened
Shares of AngioDynamics (ANGO 0.18%) stock, the maker of "NanoKnife" surgical tools for zapping cancer cells with electricity, surged in Thursday morning trading -- up 10.1% as of 11:55 a.m. ET -- after beating analyst earnings targets.
Heading into fiscal Q3 2022, analysts had forecast that AngioDynamics would lose $0.01 per share for the quarter on sales of $76.3 million. AngioDynamics came up a bit short on revenue, collecting just $74 million -- but the company beat earnings expectations nonetheless, reporting a $0.03-per-share profit where Wall Street had expected a loss.
Image source: Getty Images.
So what
The news wasn't all good, of course. Missing expectations, revenues grew only 4% in fiscal Q3, with sales in the medical devices segment actually declining. Gross profit margins were another problem, falling 190 basis points year over year to 52.2%.
And speaking of profits, it turns out that AngioDynamics didn't earn any profit at all in Q3 -- not really. The $0.03 profit that the company reported was more than analysts expected, true. But like the analysts' estimates, it was only a pro forma number. When profits are calculated according to generally accepted accounting principles (GAAP), AngioDynamics actually lost $0.13 per share for the quarter.
Free cash flow also ran negative for the quarter, with AngioDynamics burning through another $9.9 million in cash.
Now what
Nevertheless, investors are focusing on the facts that, one, bad as the news was, it still technically represented an "earnings beat," and, two, there's a chance AngioDynamics will beat again later this year. With analysts forecasting a $0.01-per-share pro forma loss for fiscal 2022, AngioDynamics told investors it expects earnings to range from a $0.02-per-share loss to a $0.02-per-share profit. Taken at the midpoint, that implies break-even profits -- and an earnings beat for the year.
It's just a shame that it'll probably all still be pro forma and that, according to GAAP, AngioDynamics will end up still losing money for the year.
