Medical-equipment maker AngioDynamics
Knifing its way through cancer
Although its vascular products still make up the bulk of its revenue, AngioDynamics' real growth potential comes from its cancer-killing NanoKnife, which applies minor electrical jolts to cancer cells that prompt them to self-destruct. This focus separates the company from peers Boston Scientific
AngioDynamics' gross profits rose by 7% to $32.1 million, with a slight improvement in gross profit margins to 59.1%. The company reduced material costs and improved manufacturing productivity in spite of pricing pressures from the vascular business segment.
But AngioDynamics also disappointed with a 27% drop in net income to $1.4 million, which was mainly due to a severance payment of almost $1 million to its former CEO. Another one-time expense of $295,000 was attributed to the shift of laser manufacturing from the U.K. plant to the Queensbury, N.Y., manufacturing facility. Even though the total cost for this shift is estimated at $1.6 million, it's a good step that could result in an approximate annual savings of $1 million.
U.S. revenues rose by a modest 4%, while international revenues climbed 18% on the back of improved direct-sales operations in the Netherlands.
Sales in the company's Vascular segment increased by a tepid 1.8%. In the Oncology division, on the other hand, sales leapt by 15%, primarily on the back of doubling sales of its NanoKnife offering.
A healthy balance sheet
A look at the company's books reveals a relatively small long-term-debt footprint of just $7.7 million. In addition, total cash and equivalents have grown at a phenomenal rate to $137 million, thanks to a steady stream of free cash flow since 2008.
Loaded with all the extra dough, management has decided to approve a $20 million share buyback, which will consume 66% of the total cash the company expects to generate in the current fiscal year.
The Foolish bottom line
AngioDynamics did suffer from continued high unemployment and higher co-pays, both of which made people think twice before paying a visit to the doctor. But the company's plans to use its war chest to acquire other companies and technologies may well augment top- and bottom-line growth and complement its own product-development efforts. And its NanoKnife sounds like a promising alternative to chemotherapy and radiation, which have a lot of negative side effects. On the whole, I am moderately bullish on AngioDynamics.