What happened
Shares of small-cap medical technology company AngioDynamics (ANGO 2.87%) cratered in morning trading Thursday, falling 12.2% through 10 a.m. ET after missing on earnings this morning.
Analysts had forecast that AngioDynamics would lose $0.02 per share (pro forma) on sales of $83.4 million for its fiscal first quarter of 2023, which ended Aug. 31. In fact, the loss was three times as bad as feared -- $0.06 per share, pro forma -- and sales missed as well, coming in at only $81.5 million.
NASDAQ: ANGO
Key Data Points
So what
Sales grew 6% year over year in fiscal Q1, led by AngioDynamics' fast-growing "med tech" division -- home of the NanoKnife cancer electroporation device -- where sales grew 30%. But while that division was growing, Angio's larger "med device" business was shrinking, with sales down 1%.
On the profits front, as bad as AngioDynamics' pro forma loss was, its loss under generally accepted accounting principles (GAAP) was even worse. When calculated according to GAAP, AngioDynamics lost a staggering $0.33 per share -- nearly twice as much as its losses in the year-ago quarter. Hurting the company's performance especially was the fact that gross profit margin in its med tech business declined sharply, down 220 basis points year over year to 63.2%, blunting the effect of the sales gains. Gross margin was also down in the med device segment, compounding the effect of declining sales there.
CEO Jim Clemmer said he was "pleased with our performance" during the quarter. Investors apparently were not.
Now what
AngioDynamics did say it expects things to look up as the year progresses. Management sees gross margin improving for fiscal 2023 as a whole, for example, to a range of from 52.5% to 54.5% -- up from 51.9% in Q1. And management is forecasting that pro forma profits (not GAAP) will be positive for the year as a whole -- somewhere between $0.01 and $0.06 per share.
At the midpoint, that's about a penny better than the $0.02 per share pro forma profit that Wall Street is forecasting. But seeing as AngioDynamics just missed earnings by four pennies in Q1, it's understandable if investors aren't exactly excited by the prospect of beating by one penny later on.
With AngioDynamics now on track to score its fourth straight money-losing year -- GAAP -- I cannot say I blame them.
