AngioDynamics, Inc. (ANGO) Earnings Call Transcript & Summary

Thanks. Good morning. Thanks for joining us. I'm Matt Taylor, UBS's U.S. medical supplies and devices analyst, and we're really pleased to be joined by management from AngioDynamics. We have on the line with us Jim Clemmer, who's the President and CEO of the company. And AngioDynamics is a diversified med tech company that has businesses that cross a number of different areas involved with both critical care and elective care that we'll get into later in the program here, including devices for vascular access, oncology treatment, vascular interventions. And they've been very active in business development to move into some areas that are higher growth and higher margin over the last couple of years. So Jim, thanks a lot for joining us today, and I'm excited to dive into some topics on Angio with you.

So thanks, Matt, for the invitation to the conference, and I look forward to speaking with you.

Great. I think, just to get started, we'd like to have a bigger picture question for you to answer. Talk a little bit about some of the growth you've been experiencing in your -- sorry, fiscal third quarter. You grew about 9% on an underlying basis, and that's showing some progress in a number of different areas. Maybe you could just talk about some of the areas that are growing well, how you're looking to continue to evolve the portfolio and a few of the products that you're really excited about.

Sure. So I'll remind our audience, Matt, at AngioDynamics, we have an off-cycle fiscal year. So the quarter that we most recently reported was the quarter that ended on February 29 this year for us. It was our fiscal third quarter, as you identified. And we were happy to speak to our investors at that point because each of our 3 GBUs, our 3 businesses, had growth in that quarter, and we expected that as well. It was what the plan we had coming into this year. Each of the 3 grew, and I'll give more detail in a few minutes as we speak, but I want to make sure I can give the macro story, really, the transformation that we're doing here at AngioDynamics. It starts first with our portfolio. And I think we've communicated in the past 18 months or so to our investor base that we want to move from kind of diversified "department store" that we had been before to a more focused med tech and med device company, focusing really now on our 3 main technologies: AngioVac, Auryon and NanoKnife, each of which are unique technologies. There -- and all 3 are in areas where treatment is decided by outcomes that are measurable. And we think we have unique technologies that make us willing and able to compete in those areas. So really, Matt, it's part of our transformation. This entire year, what we identified early on and gave guidance for good growth throughout the year. Unfortunately, as you know, in Q4, now with COVID, it interrupted normal operating procedure. But again, we planned for growth in all 3 businesses. What you saw from our last report was good growth, and I'll share with you more details as we speak. But it's really part of the larger transformation at Angio. We sold the business a year ago. That was more of a commodity or supplies business that we thought we weren't the best owner for. We redeployed some of those assets to ensure that we could buy a technology like the Eximo Auryon laser, which we're really excited about. So that's the larger story, Matt, behind our quarter in our company.

Great. I want to get into a few of those areas in more detail. Maybe we could start with the Auryon laser and talk about the launch of that, the time line, how it's been impacted by COVID and just address the market opportunity for that product as well.

Sure. So for the last couple of years, as we focused on deciding where we were going to invest our resources and our time, we knew that we had a special device with our AngioVac, our thrombus products, that does amazing -- has had amazing results in clearing veins. We launched a new version of AngioVac last fall, which has been received tremendously. I think you saw in our quarter that we reported over 40% growth year-over-year with the new AngioVac. So being that we have such a great product in the vein product, and we're going to expand AngioVac over time, I'll talk about, but we'd always watch the atherectomy market. We're interested in that market as well. When we saw the Eximo laser that we've now named Auryon, we were really excited because of how it did and what it did. It's a very, very different laser from the other one that's been in the market for a while. And the outcomes that they could prove and when they receive their indications from the FDA were very, very strong because it is such a unique technology. So Matt, we're excited to enter this market. It's over a $500 million U.S. market, growing at very high single digits. We think it's ripe for disruption. There are 3 really good players with mechanical products and then the one kind of historical laser player. But our product is so unique and so different, we're ready to enter it. So when we made the acquisition in early October, we spoke to our investors and told them, give us 6 months or so to get ready to prepare for launch. We had to develop a supply chain to our quality specs and our expectations. So now we're building lasers and catheters to our quality specs. We've now added 15 new employees to this group. All 15 of those have come from experiences in this space. So we've hired them from the other companies. So they're really, really knowledgeable about the space, and we're continuing to hire more. 11 of those first 15 hires are field sales reps. So really, Matt, we're at that phase now. And COVID probably slowed us down a little bit. Because at AngioDynamics, we froze hiring about 90 days ago across the board to make sure we could leverage our balance sheet, preserve cash during this crisis. But we'll start real soon, again, rehiring and finishing to build out this division. They're all dedicated people just to work in the Auryon products and to deliver our product to our customers.

Got you. Well, you touched on this in the beginning of your explanation, but you mentioned that you're excited about how it did what it did and it was different than the other laser approach. Can you just expand on that and talk about some of the differences and the efficacy that you see inferred based on that?

Sure. What's unique about it, again, and I'm not an engineer or a scientist, but my engineers has treated -- taught me. It's a different -- there's 2 things unique about the device. It's a different wavelength, or 355-nanometer wavelengths, than the other laser that's been in the market. And that allows us to use pulses of laser technology. And the pulses, combined with the power of 355, are what enables hard and soft calcification to be broken up. And it could be used above or below the knee, really unique, to provide enough energy through the pulses to affect the calcium but not damage vessel wall. So it's really a special device. We've seen great outcomes, and we can't wait to launch this on a national level and have more outcomes be generated by the physicians that choose to use it and watch how the different science behind the technology provides the outcomes to the patients. So it really is different. It's unique. And it does what most people want to do, deliver as much energy as you can to open up the artery yet still protecting vessel wall, and that's what's important to us.

Great. Well, before we go into some of the other products, I was hoping you might talk just a little bit about the outlook that you have for the remainder of this year, or what you can talk about in terms of recent trends. I know you're not giving guidance anymore. A lot of companies have pulled their guidance because it's just been so uncertain. But what are some of the observations that you can offer from recent weeks in terms of the procedural trends with the states and other areas opening up?

So when we gave our Q3 earnings, we actually -- it was the first week of April. So we did give some look into March to our investors on that call. And really, Matt, what we saw in March was, maybe the first 20 days or so were running at our normal run rate, which was a growth run rate during the course of the year. And really, that final week or so of March is when we saw a slowdown. And it kind of coincided with the immediacy of how many of the medical centers were treating COVID by stopping what was now called elective surgeries, which to us was sometimes not really elective when you're doing tumor ablations or vein surgeries. But that's what was defined as elective in this process. So we saw the revenue slide. It's when we stepped in immediately, froze hiring, stopped expenses that we can control, get other things to protect our balance sheet and our cash and still maintain operations. So we're still manufacturing our products through our quality specs, but we've grounded our field sales force in response to our customer needs. What we've seen since then, Matt, is a gradual kind of pick up back. We looked at the April results, again, below what we had expected in the course of the year. Our revenue was definitely impacted by slower procedures that were being performed in hospitals. But even now, 2 weeks or so into May, we've seen an uptick from the April levels into the first 2 weeks of May, an uptick in procedures and volume from our customers and the conversations we're having and also an uptick in our revenue to support those procedures. So I don't know when that will get to -- back to the cadence of trajectory that we were on, but it's definitely seen an uptick in the last couple of weeks.

Got you. And when you think about the next year, have you -- do you have any predictions about when you will return back to normal or what next year could look like relative to your prior plans? I mean just from a higher level, I'm wondering if you could speak to, even if it's just as it relates to the necessity or electiveness of some of your different products, or the sites of care where they're delivered. Any kind of insights like that, even if you can't be specific on a number, that would help investors understand how your portfolio could come back?

Sure. Sure. So I'll share with you some thoughts there. So if you take a look at our Vascular Access business, and for the last 5 or 6 years, AngioDynamics has struggled there for a couple of reasons. And last year, 2019, was the first year of growth. It was just under 2% growth, first year in many years. But really, our team just did a great job executing. This year, you just saw the numbers we reported -- much, much more robust growth due against the great execution and now some portfolio changes that we've made. We expected the Vascular Access business to grow the next couple years, and it will. But it's almost interesting that, in the last 6 or 8 weeks, we've seen a slower decline in revenue there, probably because these are necessary products and people were getting access to -- for medication into their bodies. So we had less effect from COVID on our Vascular Access business. We think that will also rebound the fastest because the effect was smaller. If you switch over to our Vascular Interventions business, which was our fastest growing of our 3 prior to the event, and we've seen actually this -- the comeback has been slower there. If you look at our EVLT, our vein laser business, that almost had an immediate slowdown or stop in late March, where some of the vein clinics that treat people almost shut their doors and stopped. So we saw a pretty steep decline in revenue there. And just recently, in the last week or so, we've seen an impact back on the upswing. That still may take a while to get back to the run rates we were used to, but we've seen an impact and people are doing procedures again. Our AngioVac business, which is also inside of that portfolio, similar thing. The quarter we reported, Q3, record sales of AngioVac, much of which was due to the unique technology enhancements that we made when we launched the 3.0 version in the fall. And it's getting better and better adoption by physicians, who use it to treat thrombus. But we also saw a slowdown immediately end of March, and now an impact from increased procedures, not back yet to the run rate you saw earlier in the year but closer to it, maybe 3/4 of that run rate is coming back today. So we hope to get that final, maybe 25%, back over the next few weeks or so, but I don't know exactly when. So you're asking a good question. I know investors are looking for that. So am I. So are we. And we're very, very tight with our customers. We have ongoing conversations 7 days a week during this process with our customers, but it's still been really, really hard to pinpoint the exact time when we're back to normal. When you look at our Oncology business, very similar there as well, good growth trend coming into this process. And now we're watching our customers because many of these procedures now are called elective. So we have folks that need ablation, whether it's using our thermal ablation products or our unique NanoKnife nonthermal. They've been really put on hold for a bit, and now we're seeing activity pick up, but not near 100% yet.

Got it. Yes. So I have 2 follow-up questions on the products here. One was you did talk a little bit about how the Vascular Access products are seeing less of a decline. And I would imagine those are ones where you would see some increased demand for things like PICCs for managing COVID patients. Are there other areas of your portfolio where you've actually seen some increased demand because of either, a, necessity for treating COVID patients; or, b, a shift in in-practice because of concerns about going into inpatient facilities, things like that?

It's a good question. I don't think, in the VA business, we could see that yet. I think the pickup there was due to a few things. Some of our products, a new ports agreement that we won in the fall at Premier. We took a Premier, Bard agreement turned it to Angio's. We had some upswing there. And our PICCs were growing this year, our Angio -- I'm sorry, our BioFlo PICCs and/or regular, that was kind of due to the current business. If I look at that now, where things are being maybe affected more quickly, with folks being treated outside of the hospitals or the office-based settings, so a lot of those EVLT vein laser treatments that we're just seeing come back, they may come back more rapidly because they're treated outside of the hospital in many cases. With our new Auryon laser, a lot of the interest that we've seen, even over the past 6 or 8 weeks, we've had tremendous conversations with physicians. We've actually signed contracts using Zoom video and other aspects with never having a physician meeting one-on-one live presentation. We have done full video presentations of our unique technology and have actually signed contracts for laser placements during this period. So we're excited to get back to the field. We also think some of these office-based laboratories will come back faster than some of the hospitals will.

Right. That makes sense. Okay. And then one follow-up on the Oncology business. You talked about the uniqueness of NanoKnife. I was wondering if you could give us some updates there. Just talk about the trends that you're seeing and where it's gaining traction. And also updates on the IDE that you're running for the prostate pilot and how that could be impacted by the COVID disruption?

Yes. It's a good question. It's -- so we're proud of what we've been able to accomplish with NanoKnife in the past 24 months. This is a product that AngioDynamics launched in 2011. It's a unique technology, uses nonthermal ablation energy, and it's been found effective in a lot of different tumors. The one that interested us the most was pancreatic cancer because there's really no standard of care today, as we know. So we filed, negotiated, really worked collaboratively with the FDA to receive the IDE, which is unique for a device that's been on the market for many years, like our products. So the DIRECT study was set up, and we had good momentum coming into the study. 19 sites had received IRB approval, just up until 60 days ago. And we're just -- and we're just –- and are signing up patients now who are being treated. So really good momentum, which really did stop, Matt, about 2 months ago, though, unfortunately, with the COVID situation. So we look to regain that momentum again and to make sure that we can get people treated and get them into the registry and to track the outcomes. What's also happened recently, about a week or so ago, CMS published -- proposed 21 -- FY '21 inpatient perspective payment systems. And the DRGs, to a lot of the med tech products, like NanoKnife and AngioVac, are proposed for increased payments, which is good. But what's unique for us, we don't have it confirmed yet, but they have a program called NTAP, which is a new technology add-on payment program. And we applied for that process because our NanoKnife is unique, and it is a new technology. And we received really good initial outcomes last week when they published that our NanoKnife was one of the few companies that had been approved through NTAP. We're still waiting for final decisions later this summer. But what's really important, Matt, it shows kind of a comprehensive approach we're taking with our technologies now, and it's something that AngioDynamics maybe didn't do as well a few years ago. But we're not just using the science and the technology measured with the outcomes. We also know we have to get the products on-label in the right ways to train physicians, teach them how to use these products. Then we also have payments and coverage to support the use. We have to make sure physicians and hospitals are paid when they're giving treatment. And that's the approach we've taken here. So we're proud that we have now the DIRECT study and the IDE program running for NanoKnife for pancreatic. We're also proud now working with CMS, working on getting payment schedules set up. And this is how we'll approach each of our unique technologies. So really, the bigger story is we're proud of what's happened for NanoKnife. We know it's a great device. We hope to treat people who need care. But we also want you to understand, this is the comprehensive approach that we're taking across our portfolio in our 3 main technologies, which are NanoKnife, Auryon and AngioVac. So hopefully, you'll see more and more from AngioDynamics in this regard as we grow.

Great. Yes. Really encouraging to get on the NTAP list for NanoKnife. I guess, just drilling a little bit deeper on that opportunity, you talked about the data you've produced some in pancreatic cancer. Can you talk about the other areas where you think NanoKnife could really stand out over time as you're able to develop more evidence?

Sure. Well, pancreatic is so unique there. I mean, unfortunately, 57,000 Americans are diagnosed annually. And the life expectancy diagnosis is usually very short, unfortunately. So we thought that was the first area we would target to try to help these people with this technology because the unique way that NanoKnife works using nonthermal energy, it doesn't damage the surrounding tissue and it allows for treatment of the tumor and also faster post-procedure recovery. Another unique body part that can utilize a treatment like this is prostate. And we've seen in Europe, some physicians have used this for a number of years with really, really compelling outcomes. And we treated patients with prostate cancer. As we know, the 2 most unfortunate aspects, side effects, with most prostate treatments, incontinence and impotence, want to be avoided by the patients and the physicians. So we found that when NanoKnife is used for prostate, usually, you get really good immediacy of the treatment to the affected area. You also have an easy post-operative procedure. They can walk home that day. And they don't develop those side effects. So we're starting our safety study with FDA now, and we want to go deeper there. And the prostate market is very different than pancreatic. The pancreatic is smaller and limited, yet it's very lethal. We want to be the standard of care in pancreatic cancer, and I think we will be. Prostate is different. We'll never be maybe the standard of care. There are a lot of other care therapies that are being utilized in prostate. But the market is really large, and we think it's open to a product like ours. We think a lot of physicians will use this as a treatment option for patients in need. And then from there, Matt, those are the 2 we have the most work on, but we'll look at liver, lung and other options, where we believe that AngioDynamics, using IRE, the energy that's the base technology of NanoKnife, this is applicable to any really tumor ablation. Why use heat if you don't have to? Why damage other tissue if you don't have to? So we'll continue to push our science and we're going to launch a new version of NanoKnife in the next 2 to 3 years that will allow it to be easier to use for physicians and focus the energy a bit differently. So we really think this could become the ablative platform for cancer treatment in the coming years.

Got it. So those are some really big opportunities, potentially. That's exciting. We touched on the third key product before in AngioVac, you mentioned the new version. I guess I was just hoping you could go into a little bit more detail there. What's different about it? What's special about it? And how are you able to get that 40% growth that you talked about?

Well, AngioVac is a really amazing product. And its blessing is also its curse. So today, it's utilized in very severe cases of thrombus and clot. So when someone is not able to be treated using maybe a catheter-directed thrombectomy treatment or even one of the other products on the market today -- yes, there's some good mechanical thrombectomy products on the market today, but some are not powerful enough or strong enough to treat really severe cases. The way AngioVac works is it allows the patient's blood to be perfused back in the body during the procedure. So it can pull out really large pieces of thrombus, open up severe clots and keep the patient healthy because you don't have the risk of blood loss during procedure as you do with some other devices on the market. So it can be used in those severe situations. So that being said, we can treat people and it's being more widely accepted. We just launched a version that took into play physician feedback they've given us. They wanted it to be steerable, be a little different, how it worked and how it got there, and we delivered that for them. We'll launch another version in less than 12 months to be a little bit smaller. It can access to different-sized veins, different structures. We think it'll be more widely used. Then Matt, we're really excited over time, about 6 months after that launch, we'll launch the version of the perfusion circuit because getting a perfusion circuit sometimes can be part of the problem in the procedure. It's a larger procedure. It takes more people to support it. We know there are some physicians who love the way that the AngioVac works using our vortex funnel design. So it can pull mass thrombus into the product, clear clots, clear veins. So physicians have told us, "Boy, if you could take this off-circuit, give us a handheld device utilizing the unique aspects of AngioVac, we would love to try it." And that's where a lot of our R&D is right now. So we're looking to launch that version in about 18 months or so. We think that opens up a much larger piece of the market to us than where we play today. So we think it will be a really -- another option that will be considered when doctors look at the other thrombectomy products on the market today. We want to cover that gap that we're missing today, and that's what AngioVac will do for us.

Got you. Got you, and that's really helpful. Okay. So we've covered a lot of the key products, I think, in some good detail here. I guess I was just wondering if you could talk a little bit about the margin impact of COVID disruption, some of the things that you've been able to toggle back to help delay the revenue that's lost. And what are the things that are really sacred to you that you're continuing to invest in?

Yes. Good question. So immediately, when we saw the impact of what was going to happen, I mentioned earlier, we took some steps immediately to limit our expenses. We froze hiring. We stopped discretionary spend with outside vendors and other things. We froze travel, which happened to get shut down anyway, and really wanted to make sure that we could watch cash coming and going because we're in an investment phase at Angio anyway, investing in these technologies. But we wanted to also look at our balance sheet and make sure it's strong, give our investors necessary comfort. So we're managing the business well, and we'll come out of this as a strong company. And we've done so. So we feel really good that we're going to have the same level of cash that we had entering this process. When we come out of this quarter, we think people will be happy to see that we're maintaining a really strong cash position. We've done that through some really disciplined activities of how we manage our company. So now, that being said, how do we invest from here? As you said, there's some critical areas, and they're really the 3 that I talked about with you. Those 3 areas, the Auryon laser, preparing for a full national launch really at the end of the summer or into the fall. We want to make sure we can add on some new people there to help with that launch. We know there's pent-up customer demand for us to get the lasers to the market. So we're excited about that. So we're doing that balancing act now, Matt. It's tricky, but our company is strong. We've done the steps that were necessary. We've also been able to manufacture products through this period at our manufacturing sites. So we took immediate steps to protect our employees and our workers. They make essential life-saving products. So they had to come to work, and they actually wanted to come to work. We have a really good crew of people that are dedicated to what they do. So we did things like social distancing to the best you can in a production environment. We spaced people out. We shifted kind of their work shifts around. We opened up different cafeterias to spread them out. We did all we could to take safety into play first. And when you do that, sometimes you lose your efficiencies. And right now, that was the most important thing to us. So as you mentioned about a margin impact, we'll probably see one here. Because right now, we're run -- not running at the normal efficiency level because we've added a lot of other safety aspects, of unique things to deal with COVID. So over time, we'll share that with our investors. We've already signaled it. We're probably not the only company that's making steps like this. I think investors will understand it's hard to measure margin during this period. If you look back in the last 5 years in AngioDynamics, in 2015, we had a 48.6% gross margin. This year, earlier in the year, you saw we were pushing towards 59% gross margin. So we've done a lot of things here in the last 5 years to get it from 48% to 59%. It's going to slide back a little bit now, and that's fine. But we know how to get it back forward again. And when we do, it will be a combination of, again, production efficiencies that we're good at and a shift in our portfolio, which really will be what will drive it then in the coming years as we go over the 60% gross margin market into the mid-60s. That will really come from the portfolio that we've built. As that mix changes, we sell more of the products that are upmarket at higher margin. So hopefully, that makes sense to you.

Yes. It does. It does. Just to expand on that point, let's assume things do go back to normal here in a couple of quarters, can you talk about the main drivers of margin for AngioDynamics from here over the next couple of years as it relates to mix and other cost activities?

Yes. A couple of things. We're cycling up almost 1 year to the date that we divested the NAMIC business to Medline, and that was a lower-margin business. And also, as I said earlier, more of a commodity supply business that Medline is great at, and we didn't want to play there. That was a big enabler of margin expansion. But over time, it's really going to be the mix in our portfolio to the higher-end technology products that we're focused on today. Each of the products we talked about earlier, Auryon, AngioVac and NanoKnife, are all going to be over 70% gross margin, and 2 of the 3 are at 90% gross margin levels. Really, really strong products. Those are unique technologies. There's nothing else like them in the market. There's no competition in these unique technology spaces that we've defined. So we think it's really smart for us to continue to invest, not just in the new R&D projects that will spin-off from these, but also invest in the clinical and regulatory pathway expansion to enable us to get them on-label in the right places, enable us to also get the coverage we talked about earlier for payment and to make sure they can be utilized by our care partners to treat people. So you'll see a lot of the investment that we'll make will be really around that in the next couple of years, opening up the expansion of these 3 products so they can be utilized more. So I think, Matt, most of the gross margin expansion that you see from us going forward will be because of the mix when AngioVac, Auryon and NanoKnife grow as a higher percentage of our overall revenue base. You'll see that pull up our gross margin level and our profitability level over the next couple of years.

Right, right. Are there any things, whether it relates to margin or just business activity, that you're looking at now because of COVID that you could use going forward more to actually improve the way you do business? Things like more virtual training or less use of something that was a high-cost item maybe you don't need any more. What have you thought about differently given the learnings from this time?

It's a great question. And I've been in this industry now 30 years. And I get to work at a smaller privately held company and, obviously, Covidien, a very, very large public company, and now here at Angio, which is a mid-sized public company and have seen different operating models. And really, what we've learned in the last 90 days, Matt, we kind of had to throw all of those out the windows, we all did and so did my peers and competitors, and adapt to the market realities that COVID threw upon us. So I think your question is a good one, and we'll come out of this with some new learnings. We have a list of new things we've curated in the last 90 days. We're questioning everything right now. Our customers are going to ask us to transact with them differently. We know that. They may not want to see us on one-on-one visits than the way they did before. So we're making sure that we're building up an inside sales division to help have that communication continue even if we can't visit with them one on one, utilizing the technology tools like Zoom and the other go-to-meeting platforms. As I said earlier, we've signed contracts now in our newest technology without ever having a physician face-to-face meeting. We didn't expect that 90 days ago. And now it's happening. So we're not great at it or getting good at it. And I think, over time, the companies that will grow the best are the ones that have the flexibility and can be nimble to adapt to these marketplace changes. So we have kind of a running list that we've created that we're looking at on the side that when we get back to normal, we're going to pick that list back up and say, "Okay, which one of these should be part of our overall operating changes in the future?" The amount of work we've been able to do outside of the office, which has been crazy for all of us, but we've gotten pretty good at it, and we want to get great at it. We think this will be kind of some level of the new normal going forward. So you'll see a company that will be more flexible and more nimble and adapt to the market change. And really, we're just letting our customers lead us, and we'll follow very closely the best that we can.

Right. Yes, those are good points. I mean, when you think about the future and maybe you need less office space or you don't have to travel or do in-person meetings or training as much, could that be a material source of savings for Angio?

We think so because we've seen it now. We had some training meetings scheduled that would have occurred in the last 50 days that we stopped, and we did them. Now we have a really good training department, and they had to pick up their game a little bit and add them to the video tools. But they did, and everybody rallied around it. So our sales reps that have been home, with our training and marketing teams worked on some programs, our clinical teams helped support of the training. So everybody kind of rallies in each department. And now we're learning, "Well, wait a minute, why don't we just do this all the time?" So why are we spending this much money on travel and on those budgets, and also the inefficiencies of travel, where it may take 4 days to really do a 2-day training meeting? We can do 2 days of training now in 2 days over the phone, and leave the other 2 for sales or communication opportunities. So your points are really good ones. And my point to you earlier is exactly that. Since this period started, we've developed a lot of new policies, procedures and learnings that we're keeping on a little list here, that we're going to see how we can integrate them into our overall new activities going forward. So part of it, I think will be, as you said, Matt, maybe some cost savings. I think there's definitely some room there, but I think there might be just overall efficiency gains. We'll become a better company, a better operating company, by what we're doing and learning. Sometimes you don't have the courage to make a lot of changes until you're forced to. And now we've almost -- you had to develop the courage here to do your business differently, learn from it. And I think we're going to be more able to make those decisions more quickly and to react to these situations more rapidly.

Right. Right. Yes, you make a good point about the efficiency. I think some investors have joked that the sell-side is doing better research because they're not traveling.

Very similar. Yes.

So the other question I wanted to ask on was pipeline. You mentioned that there could be some delays here for the IDE for NanoKnife, for example. I guess I just wanted you to comment more broadly on the impact that COVID could have on your pipeline. How long do you expect some of these delays to be? And is there anything that could actually come back positive on your pipeline as a result of this?

It's a good point. And I know investors are looking for clarity and transparency, and we'll do our best to give that when we can. So we'll try to be as transparent and clear as we can. But I think right now, it's so hard to pinpoint exactly what we need. So we're just being cautious with what we give. But we'll try to do that. Back to your other point, Matt, we haven't seen major move styles, even looking at a small delay maybe in the Auryon launch. That's not really going to affect us. This is a big program that's going to grow very rapidly in the next 5 years. And so we're not worried about a couple month delay here. It also gave us time to finish the build-out of our supply chain and the training program to get our new reps up to speed, so we'll be fine. The other projects we have in the pipeline that are important to us are the next-generation NanoKnife that I touched upon before. And that program is unaffected. That's really in R&D phase now, the development phase. And we're able to do a lot of that work from home with our R&D partners. And the third one is the continuing development of AngioVac, the same thing there. We're able to continue to do that development for those 2 new products to launch next year on this phase. And the final thing is I don't want to miss on our VA business. We announced in December that we acquired the C3 Wave technology for tip location and PICC placement. That's important. That was a gap for our company for many years. So now we've acquired that technology. We're finishing some development there as well that we'll launch in less than 2 years or have a navigation side of that product as well. So we've really rounded out that portfolio. And I don't think really the COVID pandemic slowdown will affect much of our long-term changes. Really, Matt, our change, over time, what I hope that investors will realize, is we've taken this company that was kind of a department store of a lot of different vascular products. We've really focused on 3 unique technologies. We are, and will be, a growth company for many years because we have unique technologies that generate great outcomes. We're playing in markets that we can win, and they're also robust. The total addressable markets that we compete are so much larger than they were 2 years ago. And 2 years from today, there'll be more -- almost double what they are today. So if you look at the transformation of this company, it's really throughout that, the portfolio driving the transformation to become a growth company that people will trust. And hopefully, people will see that.

Yes. Yes. No, it's great to see the focus. I mean, I guess, I'm just going to ask one follow-up question on that. I'm curious because of the foray into atherectomy, whether you see other opportunities to sort of surround those technologies in vascular interventions with things that would be used in those types of procedures. And maybe you could just speak to the M&A strategy of the company more broadly. What do you look for in general? And what are you going to do now and going forward through this period of disruption?

Yes. So to your first point, the Auryon laser is a platform laser. So the first product that we've launched is the PAD laser. But there are definitely potentials because of the way this device works and the science behind the laser. So there's opportunities for potential to lead extraction for our coronary product or a thrombus product over time with just using this basic science. So we're making those evaluations as we speak, looking at our next level of investments. That's important to us. We also think the market that we're competing in today for atherectomy is so large and growing at a fast enough rate. We want to make sure that we have the right tools in place to maximize that investment. So we're focused on that one first. Over time, that -- we're probably taking a little time out right now from M&A. As you know, we've done 5 deals in the last couple of years, 1 divestiture and 4 acquisitions. So now we're getting those into our pipeline, making sure they perform where we want, and we're still watching the market. Your question was good because even in the PAD space, some of the other players in that space have done a nice job surrounding their portfolio with other add-on products to support case coverage and to grow revenue during the cases. So you'll probably see us do the same things, some of which will be internal products, some we may acquire from the outside. I think we'll follow that model that a couple others have done pretty well and even grow beyond just the PAD device as well. Over time, the 3 main areas that will grow our company are research and development, M&A and clinical and regulatory pathway expansion. We'll do all 3 of those over the coming years to ensure that we have a portfolio that will give above-market growth.

Got you. Got you. And then we're almost out of time, but I wanted to ask you one last question on your balance sheet. Maybe you could just speak to the strength of the balance sheet and things that you've done to make sure that you're going to have the liquidity and flexibility to make it through this period?

Sure. Good question. Go back a few years ago, I think we had $130 million of debt, and we were only throwing off about $20 million of cash. As you saw, we brought the debt down to $0 about a year ago, and the cash we generated was about $40 million a year ago. And now we've shifted to become a growth company. So we've asked our investors to understand what that means. So we're going to spend more money right now on these projects. But today, we took $25 million from our revolver and put it on our balance sheet a few months ago just because we didn't know what we didn't know at that point in March with the pandemic. What we've seen is cash preservation, and you'll see that from us during the course of this year. So we're able to maintain a strong, healthy balance sheet. We have a revolver to tap if we need to. And right now, we don't really need to. We are in an investment phase. We've been able to show we can maintain cash during this. So hopefully investors who look back on the last 3 years of our tenure here at Angio will have seen a discipline, a balance sheet discipline, and a discipline to how we run our company. We'll apply that same discipline as we grow into this new company that has better growth-based assets. Yet we still have a disciplined operating style and a strong balance sheet to support that. And hopefully, our investors will see that.

Great. Well, Jim, this has been a great overview. We covered a lot of really interesting topics, and I just want to thank you for your time and all the detail. I think investors appreciate it, especially during this time of uncertainty. And it looks like you've got a lot of things moving in the right direction. So it's good to see the progress there.

Well, Matt, thanks for inviting us to your conference. And have a great day.

Thanks, Jim. Take care. You, too.

Bye. Thank you.