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

Hi. Well, look, thank you, everyone, for joining us today. I think, at least for me, this is the last session of the day. And I couldn't be happier to be sitting here next to these 2 gentlemen. So I'm Seth Damergy, I lead the medical device investment banking practice at UBS. And I'm pleased to be able to introduce our next presenters or more of our fireside chat, AngioDynamics. So we have Jim Clemmer, CEO; Steve Trowbridge, CFO of the company. Two folks I've known for a very long period of time. AngioDynamics is a NASDAQ-listed med tech company. We'll go through some Q&A. I've got an iPad up here that's going to have lots of your questions. But in the meantime, I'll get the Q&A started. So feel free to just jump in with anything that you feel is pertinent.

So gentlemen, I thought it would make sense, with everything that we're seeing in the market and even what we've heard from you about some of the macro dynamics. To start off with inflation. So from an inflation perspective, how do you see that impacting your business on the day in, day out basis? And then we'll kind of lead in from there.

Sure. Well, thanks, Seth, and thanks for the conference today. So we looked at inflation this past year. We've talked about it. I'll remind the investors that are here with us today or listening. We have a really unique fiscal year. So June 1 is the beginning of our fiscal year. So we're about 1 week away from closing out our FY '22. So just to remind investors of our timing. So now to answer your question more directly, Seth, last summer, we gave guidance for this year in July. And a lot of it has been really, really close. Our company has performed well. One of the areas that's been a big challenge for us has been the inflation and some of the aspects of it. So 3 areas primarily we've looked at, Seth, that have impacted us this year. First is labor and wage inflation in our manufacturing sites and a lot of our logistics, transportation and quality aspects. Second has been, obviously, raw materials, subcomponent suppliers for us around the globe. And third is transportation. So we have built in, Steve and I, planned for some inflation this year built into our models, but I don't think any of us have seen it coming at the rate that we've absorbed. The company of our size, sometimes, we have a diverse supply chain. And we don't always buy a lot from our suppliers. So we don't always have the leverage that one might like to have in situations like this. So we've seen inflation hit us. We've done a good job managing it internally with some really great supply chain teams, some proactive aspects of it. One thing we did this year was move a lot of our labor, some subcomponent manufacturing that we did internally, to an operation in Costa Rica during the course of this year to offset some of the wage inflation. And finally, what we're doing at a higher rate than normal with our customers is passing some of that back on to our customers at a rate that probably doesn't keep up with the inflation that we've taken, but it's higher than we normally do to pass some of those increases on.

And maybe if I -- if we just kind of dovetail off that. On the passing along to your customers, does it vary dependent upon the segments of the portfolio, maybe the more mature versus the earlier stage growth segments? Are you able to pass along some costs more easily than others?

Yes, it's a good question. So we manage our company actually with 3 different businesses. We're trying to report it now, and Steve will do a better job making it clear for our investors. We really manage our company with a medical technology view, with 3 really important platform projects -- products in that med tech platform, and then a med device view, which has a lot of our historic AngioDynamics products, our vascular access products, angiographic catheters, some of the things our companies have been founded upon. So a lot of that, Seth, some of the higher increases have actually been in those areas, some of the raw materials and the labor necessary to build those products. And that's where we've seen us pass along a higher rate back to our customers than we normally would. Usually, those lose probably 50 to 100 basis points annually historically. Next year, we flip that around a little bit. But our med tech areas, some of those are brand-new products we're launching -- we have recently launched because they're very exclusive and innovative. Some areas we hold the only technology in the space or we're joining others who have pricing parameters that we agree with. So we're seeing probably less movement in the med tech area.

That's fair. And then just back to your other point on the labor shortages, I know you talked about moving production to ensure supply. Are you seeing labor shortages not only in operations, but also in your sales force, elsewhere in the company? Or how prevalent is this? And I mean, have things maybe slowed since the peak because the markets potentially taking a little breather?

Steve?

Yes, it's a great question. We -- primarily, the issue that we've seen when it comes to the tight labor market is in the operations side. So we've got a manufacturing facility -- 2 manufacturing facilities in Upstate New York and Queensbury. And that's really where we've been hard hit. We've been seeing the tight labor market in other areas. There's no doubt when you look through all other areas of your business, whether it's on the commercial side, whether it's R&D, marketing, some of the support functions, there's no doubt that the labor market itself is hotter and there's competition for talent, and we've seen wages increase everywhere. But the primary place we've been hit has been in that manufacturing side. So Jim talked about this. When you think about kind of coming out of COVID, the 2 main things we've been dealing with, the increased inflation for raw material pricing and then the tight labor market and the competition for talent in Queensbury. That's what led us to work with our partner in Costa Rica to try to increase our manufacturing capacity. For those of you who have been following our company, you saw in our Q2 and Q3, we ended up with an increased backlog from where we typically see. Dramatically increased as we headed into our Q3. It's really driven by that tight labor market. Now bringing Costa Rica online, we talked about this at the end of our third quarter. We increased manufacturing capacity by about 20% from the nature of where we were before that. We're going to report again, as Jim said, in our fourth quarter, but we've seen that continued increase in our manufacturing capacity. And so costs have gone up, no doubt, in terms of the hourly wages, but also in retention bonuses, referral bonuses that we paid to our manufacturing labor force in Queensbury. We expect that it to start to even out a little bit as Costa Rica continues to come online and we continue to put more resources in terms of person hour equivalents down there.

And Steve, just so we're all clear, that backlog that you're referencing that you talked about on the last call, I mean those are orders that were placed that you weren't able to fill, but that over time, if you can fill them, you will. Is that right?

Absolutely. So those -- I mean, the really good thing about the back order is it's an equation, right? There's an input and then there's an output. The input is the demand. And so one of the things that we've been really pleased with is if you look over our second, third quarter and then into the fourth quarter, demand has stayed really strong. So demand for our products has stayed really high. It's just outpacing our ability to manufacture, primarily when we got hit by that labor shortage from that acute disruption that we saw in Q3. So we expect the demand to continue. We've seen those signals. And yes, they are orders that we're going to work through. Now we're going to be smart about this, right? The one thing we don't want to do is whipsaw our commercial side of the business and have too much of a bolus go out and then you've got sequential down quarters. So we're going to be thoughtful as we work through that. But one of the encouraging signs is as we finished our third quarter, we said we expect that backlog to peak in the fourth quarter, start to come down as we increase our manufacturing capacity, and then we'll give you some more details as we get through our fourth quarter call.

That's fair. Maybe just pivoting to, again, having a banker up here, I always want to ask about M&A. You guys have, I think, effectively helped build the business and transition the business organically and inorganically. I mean, how do you think about M&A at this point in time for the company? And is it something that's on the back burner? Volumes are down? Or is it something you're still thinking about?

It's a good question, Seth. When you look at AngioDynamics, and we talk about our company transforming and everybody uses the word transformation in many ways, but to us, we started first with our portfolio. So M&A was an initial part of that transformation for us. And in our case, one of the most obvious signs of our M&A in our transformation was a sale of our largest single business. We sold our NAMIC, Fluid Management business to Medline a few years ago. And that really signaled to our investors and our company we are serious about getting out of commodities or supplies areas, where there was not a lot of product differentiation. It was a small limited TAM. And there's originally a lot of room for us to expand through technology. So we took 1/3 of those proceeds and bought Eximo Medical, which now is the new Auryon PAD system we launched, which is being really well received in the marketplace. So if you look at that symbol of selling a commodity business and buying a high-tech business, driven by innovation and with outcomes that can be measured through patient wellness, that's our story. So Seth, I think in the future, we'll continue to use M&A and R&D to fuel our growth. But today, for the short term, investors should look at the moves we've made and really focus on what probably be more internally R&D-focused for the near term. We have 3 really amazing platforms, each of which have other opportunities that we can spin off of. We'll probably do a little less M&A in the short term than we've done to get here.

That's fair. That's actually a great segue, right? So I think a lot of -- one of the big questions that comes up a lot is growth. And I think over the past, I don't know, 2, 2.5 years, you've done a nice job of, you said, transforming this business, launching Auryon. You've got AlphaVac, NanoKnife. How -- I guess for me, there's -- one question is, one, how sustainable is the growth? And then two, I mean, maybe we'll move to portfolio second on the pipeline. But maybe we'll start with sustainability of growth?

Yes. Look, I think that's one of the stories that we think is really important when you understand the AngioDynamics' story. So as Jim mentioned, we're doing a transformation. We're moving from a company that was slower to almost no growth, right, but focusing on some cash generation. But moving into a high-growth med tech company, we're doing it by using technology and going into larger total addressable markets. So the growth that we've been showing this year, even in the face of a very disruptive environment, we're seeing that transformation take hold. Last summer, we came out with an Investor Day, and we gave some projections for 3 years to our investors about the type of growth profile you can expect from Angio. We said 5% to 7% for the first year, that's a year that we're in now. We're going to report on that. We were looking at 7% to 9%, and then kind of into that 10% to 12% double-digit grower in the third year, all driven by our med tech businesses that Jim talked about. So it's the Auryon, peripheral atherectomy business, mechanical thrombectomy and then NanoKnife in the Oncology space. The great thing about our growth is that each of those 3 main technologies are a platform. So it's not -- we think that there's sustainable growth that we can drive by utilizing different aspects of each of those platforms over the medium and long term. So short term, I think it's pretty clear how we're driving the growth. As you get into the medium and long term, we think that there's great opportunities to expand the use cases through regulatory and clinical pathway expansion. A great example would be Auryon. We can move into some other areas. It's pretty clear that there's an opportunity in coronary if you think about the atherectomy laser. That could be something that we would then move into as we kind of squeeze the growth out of PAD. Mechanical thrombectomy, we've talked about the line extensions. So we have our 22 French off-circuit AlphaVac that we just finished, the limited market release we've gone into full market release. We expect as we head into our new fiscal year, we'll be finishing the limited market release of our 18 French AlphaVac. And as we've talked about in our slides, there's then a 14 French. And then all 3 of those things together will allow us to go after the entire total addressable market for DVT. NanoKnife is another great example. We started in pancreas. That's where the market told us there was an unmet need. We're now listening to our market again. They tell us there's a really great unmet need, with an even larger opportunity commercially in prostate. Given the unique mechanism of action of NanoKnife, you can understand where you can kind of roll that into other solid tumor opportunities in the future, too. So it's that platform aspect of all of our growth drivers that give us that confidence that as we've gone up this curve, to get towards that double-digit med tech grower. That is not just a kind of a onetime thing that it flattens out. We think we can drive that over the medium and long term.

So I mean, it's interesting. So to get to a double-digit grower, you laid out a number of products. Maybe just focusing on the vascular side now. Is there any one indication, area, product that over the next 2 years or maybe it's different sizing that's going to come out and you think will be a meaningful addition to drive the top line? Or is it more of that portfolio approach?

In the very short term, I think it's the things that are right in front of us. So if you look at Auryon today, when we first launched that product in the first year, we did about $11 million of revenue. This year, we've guided to -- we'll give you the final numbers, but we gave you a guidance that was targeting about $28 million. And then we'll go kind of -- and then we'll give you guidance for the next year as we move into our FY '23. So you can see the growth trajectory coming from Auryon, and I think that's just in the peripheral atherectomy space. We're really excited about mechanical thrombectomy. So we've had good traction with our AngioVac product that's on circuit. We're really excited to get into the full market release of our 18-French AlphaVac, which is the off-circuit product. We think that can drive good growth. And then once we get that 14-French in about 2 years, that will kind of round out that side of the portfolio. And then this year, we talked about NanoKnife has about a 20% growth target in disposable probes. We think that, that -- we'll tell you where we are there, but you can kind of see that same trajectory going. So in the short term, that pathway to the double-digit grower is those products that are right in front of us that we've already gotten through our pipeline and then sustaining that growth is what we think is coming from those platform opportunities.

Yes. So I mean on the last point, NanoKnife, I mean, the first, I guess, AlphaVac has obviously been around, but let's say, we really like kind of reimagined and retransformed. Auryon, you did the portfolio. NanoKnife, it's really nice to hear you guys continue to talk about the volume growth. And I mean, for me, it's kind of funny. Like I think 15 years ago, you could look in a transcript. And I'm in the transcript. There's a research analyst. I probably asked about NanoKnife, but the volume wasn't there. I mean, we finally there for NanoKnife. I know there's been a lot of investment, a lot of clinical work. Is this a year of NanoKnife?

Yes. I think we're -- is this the year of NanoKnife? It's the year that we start the process to really prove out the benefit that Nano can have. And I think that the prostate initiative and moving on with our PRESERVE trial is going to be the early innings of seeing that proving out what NanoKnife can do as a technology. When Jim first got here, one of the first things he said is, okay, I've been hearing about NanoKnife for a long time. I went back, I looked at Angio when I decided to take a job. All the companies done was talk about NanoKnife, right, hasn't really gone anywhere. So we said, first, I'm going to find out is there a [ there ] there? And then if there is, we're going to do it the right way. We're going to actually put the investment that is necessary behind it. We're going to go after the trials. We're going to try to prove this technology. So pretty quickly, you realized, yes, there's a [ there ] there, right? This is a very unique technology that we think has opportunities that no other technology has out there. I've been with the company for 14 years. I'm a true believer in NanoKnife, but I am never been more excited about the opportunity than I am today because of the investment we put behind it. It's very important for us to start that initial trial with the FDA for pancreas, to get the initial FDA approval to start that process. But the prostate market dwarfs the pancreatic market. So we're -- as Jim says, we're committed to those patients. We're committed to that space in pancreas because there is just no other options for some of those patients. But the real commercial opportunity, I think, is going to come from prostate. And so this is kind of the start of that.

So Seth, before we talk about the vascular products, again, I agree with everything Steve said. What excites us about the NanoKnife, I think it is this year, the next few years will show if NanoKnifes are real or not. We truly believe it is. The PRESERVE study for our prostate program really is driven by how it does what it does, the mechanism of actions Steve talked about, why it's so unique, why we believe we can make focal treatment options for men diagnosed with the intermediate risk prostate cancer. What's important for investors to know, in The U.S. annually, nearly 0.25 million men are diagnosed with prostate cancer. About 40% or 100,000 of those are what's deemed intermediate risk, 4+3 to 3+4 in a Gleason's scale. We think that's the sweet spot for a focal treatment, especially when utilizing the mechanism of action of NanoKnife. So we believe it can be a really effective treatment option for a large segment of this population. If you look at that as an addressable market, that's about a $600 million opportunity that we can create, we believe. Give these men an option for treatment, give physicians a different way to treat and then give a new market opportunity for our company to grow and serve. So we do believe NanoKnife, we know it works. We have to do a good job supporting the process with the data to prove we can become an effective product in the marketplace.

So with those 3 distinct drivers and all of them growing double digits, respectively, in their areas. when you think about reps and deployment of capital, how do you kind of bifurcate where you want to -- where should I be spending Oncology, Vascular, geographical? How do you think through that and make the decisions, because for a small company, you've got a lot of things going on?

We've done -- we've also talked to our investors. This time, we've spoken to them. We are in investment mode. When we decided to transform this company a couple of years ago, I mentioned earlier that the portfolio is the most obvious sign of our transformation. But the second piece was our people and investing in our people. So Seth, if you take a look at when we bought Eximo Medical and created the Auryon business. When we bought Auryon, we had 15 amazing engineers in Israel and 1 U.S.-based commercial person. He's now joined by 70 other colleagues in the U.S. we've invested in. These are really talented selling and marketing people and clinical support people helping our customers used to the power of the technology, how it works and how to deliver a safe and effective treatment for PAD. So we've shown a willingness to invest in our businesses and we'll continue to do so. Steve and I have a nice cadence of where we believe the investment scale will be needed next. We'll still invest in Auryon. We'll probably bend the curve a little flatter over the next couple of years as we've gotten so many lasers in the market, so many new customers. We know we can drive incredible growth without the same investment scale that got us here. So now we'll look at our mechanical thrombectomy investment. Now that we have the new AlphaVac 18, getting the scale behind that for investment in our selling, marketing and clinical capabilities. Supporting also the new APEX PE trial, which we believe will prove out the AlphaVac for PE usage, opening up another really large market for us. And then finally, we'll make sure that we do support that NanoKnife potential growth with investment there. Today, we think we have a great platform and a great selling and marketing team and clinical support team to support those customers in the PRESERVE study, but we're ready to invest in the growth as well there.

That's fair. So -- and if I think about portfolio approach, right, we've talked a lot about the growth channel within the tech faction of AngioDynamics. How do you see all of the businesses coming together? Because you have a large part of the business that's more of your regular way medical device. What's the commonality, if you will?

It's a good question. So Steve and I are going to try to make it easier for our investors to understand our company because we can be complicated. We have a lot of products in our company. In the last year or so, we've been trying to talk to our investors with this med tech and med device to portfolio approach. So a year or so ago, our med tech portfolio was only about 15% or 16% of our revenue. I think the last quarter, we've reported it was 26% or 27%. So I think our investors are seeing it become a larger percentage of our business overall. We mentioned last year, as Steve will update in July, the growth rates it will have. I think we talked about a 35% CAGR over a 3-year period. And it's also more accretive to our corporate gross margin as well, which our investors have asked us as well if we could split that out, make it easier to see, which as long as Steve does a math, we'll do that soon, too. So over time, Seth, I think back to your point, we want investors to say, "Hey, AngioDynamics is a really unique company." We have a platform of over about $200 million of what we call our device business. It's solid. It doesn't take a lot of investment, generates cash and EBIT for us. It doesn't take a lot of time and energy from investment for us. But they've also got this exciting armor of tech products that can grow at really high double-digit rates and [indiscernible] by the way, the really high gross margin. So over time, the leverage will drop to the bottom line, create a really unique value created company.

So I think Jim said 3 things that are really important throughout this talk. And if you put those 3 together, you can kind of understand our very complicated story, that is AngioDynamics. First is we're going to be active portfolio managers. So Jim talked about selling the NAMIC business that we weren't the right owners for that using those proceeds and turning that into Auryon. The second piece is about that shift, right, how we're going to get the mix shift. And then the third piece is the cash that we generate. So if you think about how we want to think of our business, you've got med tech, you got med device. When we came out in our Investor Day, we said, look, the growth is going to come from med tech. As Jim said, it's about a 35% CAGR over the next 3 years. Device is not going to be really where the growth comes from. It's going to grow 1% to 3%. We're not going to lose share anymore. We've brought some people in there managing that business well. But it's providing the right investment opportunity into that tech space. Now we're going to continue to be portfolio managers, and we're going to look at opportunities to optimize that, right? So if someone were to look to monetize some of those noncore assets, we would look into that. But if you look at what today's environment, I think we're actually set up pretty well to have both areas of these business. One which we own right now that we can leverage and we can harvest and it can provide the cash and EBITDA to invest into those -- into the tech segment, into the growth business and allow us to really move that, the needle, both in terms of top line growth as you're seeing moving for the corporate as it stands today and then the margin profile because all of those tech businesses are higher-margin products, larger TAMs, bigger growth opportunities. So as we move from 15% to 25%, 25% to 30% of our overall revenue base coming from that tech segment, top line growth is going to change as well as that margin profile. So I think the businesses that we have, we like having them now. It does add complications to how we think about capital allocation, but even how we tell our story. But I think it actually makes sense in today's environment when profitability, cash is at a premium. We've got the internal engine to fund the investments that are necessary in our top line growth.

So just using that as like the internal engine. So you talked about higher revenue growth from technology, higher margin. I mean, I have to imagine you're well over-indexed from an R&D perspective towards that. So what we're seeing probably in the public domain is an average, that's probably not a real representation of what you're doing on the tech side versus the device side?

I think it's a great point. So we've guided to say we're going to try to be in that 10% to 13% of sales range that we spend on R&D every year. 90-plus percent of that R&D spend is going into the tech side. So it's 10% to 13% of the overall corporate entity, but it's much higher than that on the tech side.

That's fair. So that means that the remainder is enough to sustain the device business and keep it growing. So when do you start to see this inflection point on the tech side? And when do you start to see -- I mean, I think -- I remember when we first met, when you came, we talked about vitality index and new product. So when do we kind of hit that crossroads, if you will? And we start to get leverage out of that R&D line, is that in the next 12 months, further out? How do you think about that? And then maybe just a follow-up. And then as you think about the bottom line, how do you think about your R&D spend, I mean and managing that?

So leverage on the operating expenses is something we look at every day. I'm not looking -- and Jim is not looking for leverage on the R&D line in the short to medium term. If you think about what we talk about as those opportunities in our portfolio and using all of our tech businesses as a platform to drive sustained growth, we're going to try to target that 10% to 13% for the short to medium term. I think it's necessary to invest in those growth drivers. I think leverage on the G&A side, you're going to see first, and then you're going to then move into seeing leverage on the sales and marketing side. As we mentioned, we want to continue to invest in the feet on the street on our Auryon business and a mechanical thrombectomy business. But pretty quickly, I think you're going to start to see that leverage. First is going to be on the G&A side, then it's going to be sales and marketing. R&D, we want to keep that at that 10% to 13% to really make sure that we're hitting our opportunities in our portfolio.

And maybe back to with those -- maybe on the -- just to finish up on R&D then, are there -- is there any like clinical work that's coming out over the next 12 to 24 months? And you probably -- I'm not sure I know you highlighted it at the Analyst Day. But just to remind us, like what are the big inflection points there that we should be really focused on?

First and foremost is PE. I think that's the biggest one is our APEX study and taking the AlphaVac F-18 into PE. Once we can get through that study, we think we increase our total addressable market on the thrombectomy side from about $1.5 billion to almost $3 billion. And there's a lot of space to go get there, but that's really going to be the biggest hit for us. The NanoKnife study that we talked about in prostate, that's kind of the next one that we think is a big inflection point in the addressable market increase that you're going to get from clinical work. And look, we're committed to clinical evidence, too. We understand that if you're going to be in today's med tech environment, with highly differentiated technology that's going to try to drive physician behavior, improve patient outcomes, you have to prove it with data. So when we launched Auryon for the first time, we did our Pathfinder registry. We expect over the next 6 to 12 months, we're going to start to see some additional publications coming out of that registry proving out the use case for Auryon. We're committed to continue to collect data there, listen to our physicians, find out where there might be data gaps to help them fill in the story of our technologies and move them forward.

And then a lot of these areas that you're going after, I mean, they are, let's say, highly coveted areas for a lot of larger players in med tech. And I think we've all been pretty impressed with the amount of growth that's come out of the Auryon and AlphaVac, AngioVac platforms. How do you sustain that growth? What are the things the drivers that are bringing your KOLs or practitioners to say, yes, these are the products I want to use as opposed to some of the bigger players in the market?

Seth, the Auryon example is a good example of that story you've asked about. Steve and I and our team a couple of years ago already identified the atherectomy space is an area that we thought, although there are 4 really good solid players, all 4 big companies in that space. We knew that atherectomy as a PAD treatment tool still had a long way to grow with increased confidence in using atherectomy tools. Physicians would use it with higher treatment tools. So that was intriguing to us as well as we thought those 4 players while they have really good products, we also thought it was right for disruption. And about 1/4 of the market had already gone through a competitive laser type technology. We saw what Auryon was. It's a laser but it's completely different, and how it does what it does, how it delivers energy inside the vessel wall and treats the calcium. It's the first laser that can do above and below the knee treatment, hard and soft calcification and treat instant restenosis. So we look every week at the treatments that we do. So a blend of about 10% of the cases are instant restenosis. A little over half of the remaining are above the knee and almost half of the other remaining is below the knee. And we don't think there's any other product in the market that can treat all of those areas. So that's why we are really confident in this technology. And we're also now investing into that space as to your question, we think we're going to be a major player in the atherectomy PAD space, while we also know this unique science has spun off new opportunities to us that now we're utilizing the R&D investments Steve talked about, working with our customers who showed increased interest into finding other ways to treat. We've been asked about arterial thrombectomy, venous thrombectomy, coronary or other areas where this amazing device could work on. So Steve and I and the team are spending some of our R&D dollars investigating pathways to expand the opportunity to grow this business.

And further to that, on the growth side, with -- I'd say, with new placements or sales, how do you think about -- like how should we all think about de novo versus displacement in the market? I mean, are there -- are your users a lot of times new to laser atherectomy? Or do they have a system where they're -- it's not really doing everything that they want above, below the knee? Do you track that information on new versus displacements?

We do. So at the end of our third quarter, we put out how many new customers we have, how many lasers we put in the market, we'll update that at the end of Q4 as well. We haven't said internally which products they replace, but we know which products. And it was probably early on, it was pretty obvious. Some of the early interest and demand that came from people who had used the other laser and already understood what laser did and also maybe knew the limitations of that product. And really, we're very interested in trying Auryon. Since then, we're seeing a higher ratio of our newer customers coming from people who never used the laser before, they used one of the other mechanical opportunities. While those are really effective products, there are some things that we think Auryon does very differently. So we're seeing a good ratio now that we're pleased with. People who've used laser before or brand new people who have not used laser. And then what's even more interesting, we had -- every week or so, we get a call from a physician that walks into a case, says, well, I don't think atherectomy should be a good treatment tool for PAD, watches a case and goes, "Wow, I want to try that." So we believe we're doing market development at the same time. So expanding the market for treatment for people who need treatment. We have a really effective tool to treat patients in need. And along the way, if we can do that, we'll grow that segment, make sure people can get a really safe treatment option. And it's also really effective, and that's what we believe Auryon does.

Interesting. Maybe, Jim, for you, at least, we'll start there. I think it's been 5 years now since, more or less. The stocks kind of performed great. You lag. Now you've performed well. We all, I think, understand the direction and the strategy. I mean, how do you kind of think about it as a CEO when you came in to where you are today? What's gone well? What could have gone, maybe better? And how do you feel like -- what's your confidence level about the future?

Good question. So stock price is probably frustrating to probably any CEO who would be here in the conference today and anybody in our industry, but that's part of what we do. And we balance along with the tide sometimes, our job is to create a rising tide rising above the others and create the alpha investors who are looking for. So our job is to do that through what we know best. And I've been blessed to work in this industry for over 30 years, and some other really great companies. And I've learned a lot in the basic learnings of med tech, how you create value by starting with innovation first. When you innovate, you take charge in the marketplace. You innovate in products that actually drive wellness outcomes that can be measured by physicians, you have the chance to change physician behavior. When you do that, you can also maybe become a new standard of care. So we utilize that thesis behind the decisions we make. We want to have innovative products that work and drive measurable outcomes. When we do that, we'll try -- we'll change the physician's behavior. You hear me say they're over and over again because that's what's worked. If you look back on successful companies in this arena, that's what they focus on. So we're not focused on. So Seth, 4 or 5 years ago, I don't know that AngioDynamics was focused on that view, but we are today. And now you see our actions backing up those words, divesting a commodity-based business, buying a technology-based business, investing in those businesses. So that's what we're doing, Seth. I'm proud of that, proud of the team we have that believe in that thesis, leaving what we do, the products we make, really high-quality, great products as companies always made for 30-plus years. But now we're making products, our physicians grab it because they want to, not because they have to. They're saying, "I want to treat this patient with a better tool. I'm going to use AngioDynamics. That's different than our past. But that's our future. And I also -- hopefully, investors know that I put my money where my mouth is. I bought a lot of shares of our company because I believe in our future. And I believe I'll go up and down with our investors, but I believe we'll create a higher level of value opportunity than other companies in our space. We stick to our thesis, keep innovating and driving opportunities to treat patients.

That's great. And on the treatment side, volumes, right? Obviously, treatment is dependent upon volumes. One of the questions from the audience was about GE contrast agents. There's a shortage of contrast agents, at least a supply shortage in the market. How will that if it -- how will that impact your business? I mean, how should we all think about that?

Yes, it's a question we've gotten quite a bit over the last 2 weeks ever since that news came out. I mean -- so we're keeping an eye on it. We're keeping our ear to the ground. We haven't seen it be terribly disruptive as of right now, and we don't expect it to be derailing as we move into the summer, provided that we kind of get through that process. I think at a high level, the way you think about it is the product that's probably most immediately impacted by a contrast shortage would be our core angiographic catheter business. They're used every procedure that they're doing with some contrast media. But again, that's also the business that we've got some of that backlog. We've been working through that. And so we haven't seen that be derailing into our fourth quarter or what we expect to go into the first quarter. If a shortage persists, some of the things that we have heard from some of our field-based reps is that they're hearing hospitals starting to think about rationing contrast and that may have a knock-on effect to procedure volume. So if this persists, that could have a broader impact, but it's not something that we've seen really be acutely disruptive today. And we don't really think it will be. We'll look into that as we give our guidance as we head into next year. We'll take into account some of the uncertainty that's out there. But I don't expect you're going to see anything like the procedure disruption that we saw in COVID first hit, hospitals were cutting off elective procedures, trying to build up capacity just to treat other COVID patients. I think you may see a little bit of procedural volume pressure as they work through kind of rationing their contracts until they really feel comfort that can get on the right footing. But I don't think it's going to be anything like what we saw.

Sir. Maybe one last one because we're coming up on time. I mean I think what are we missing here? What's the most common question that you've been asked? And I think for me, actually, it's more about what keeps you up at night? I mean what are the pitfalls? I mean the future looks pretty substantial. Feel like you've got a lot of predictability. I mean, what are investors asking about? And how are you sleeping?

Yes. So I sleep well because we believe in what we're doing. We believe in the steps we make. And to transform this company, it took a couple of things, took wisdom, right, [indiscernible] I knew as a kid. Like wisdom, knowledge and courage, right? You have to know when to invest, when not to. And encourage is sometimes important. A couple of years ago, we decided to sell our largest single business. And that's encouragement and it got rid of EBITDA and cash, but we knew we weren't the right owner for that if we wanted to change this company, not selling commodity [indiscernible] widgets and plastic bags. It wasn't what we needed to do. So we need to focus on technology, again, that drives those patient outcomes and we seek to work with our physician partners on. So Seth, that's what we did, and that's what we're continually doing. We're focused on it as a company. What's different for us and what maybe keep us up a little at night, our story is more complicated to tell. We have to do a better job of telling it. So we compete against some companies that are singly focused companies. A bunch of employees every day wake up and do one thing. Well, we do more than one thing in Angio. So it keeps us up a little bit in making sure we do all these things well. We'll do a better job of telling that story to our investors, letting them understand our story. But today, we really believe in the transformation and the journey we're on. We also know that there's a couple of other aspects besides the things we talked about today, besides our 3 technology products. But we also have a really big business on the device side. It's really well managed and well run. So we've got to count on that business to grow 3% to 5%, we identified earlier and to give us the cash that we need, stable investment. We have full confidence that it will, it's well managed. And other things that we have, we haven't talked about. We have a brand-new leader for our international business. This company has always been a U.S.-focused business done well in the U.S., not so well outside the U.S. Today, we have an amazing leader that we hired who has 4 great companies on her resume. People -- anyone will recognize, she's very, very skilled and talented, building how to do international development plan, to take these technologies outside of our borders, to expose new opportunities for patients to be treated for our company to grow. So we'll talk to you about these things later, but today, we want to focus on the transformation, driven by our portfolio first, as many investors seek knowledge around innovation, how technology drives. We know what it does to drive value creation in med tech. So that's what we do, Seth. We'll keep working on it. We're working really hard at it. We have a lot of great colleagues that share our passion for our company and our business. And that's why we sleep pretty well at night, although we're not happy with the stock price.

One thing at a time. Well, look, I personally want to thank you guys for making the trip to the UBS Healthcare Conference. I mean, it's -- to me, this is a pleasure. I don't get to do this very often, ever. So no, I look really impressed by what you've done. And I think as folks continue to digest the story, they too will understand the same, but thank you for your attendance. Thanks, everyone, for the participation.

Thank you, guys.

Thank you, Seth.