AngioDynamics, Inc. ($ANGO)

Welcome to the AngioDynamics Goldman Sachs Investor conference presentation. My name is Jim Clemmer. I'm the CEO of AngioDynamics, and thank you for joining us today. We'll start by reminding all investors to do your homework. What we'll say and present today are our projections, our thoughts, our strategies and our ideas that our business and the markets we serve. We'll do our best to be accurate the information we put forth, but do the best you can as investors to do your research before you make any investments. So let's talk about AngioDynamics. So AngioDynamics is a company founded in 1988, but really live 2 different lives, over the past 6 years or so, we've taken this company to a new level. So if you look at us pre-2020 pre art transformation, you'll see a very different company. It was a company built to serve the interventional radiologist as our primary call point. And we did a really good job. We're known for quality products and we are a good partner for those company -- those providers. But over time, we knew we had to change -- we made a few moves to go upmarket in our product development, upmarket in the markets we serve and to divest things that didn't make sense for us on our journey. So today, we're a company with accelerating commercial growth. We've made the right moves from an R&D platform to make sure we can invest in spots where care was delivered to the 2 leading causes of mortality in the world, which are cardiovascular disease in solid tumor cancers. We play in markets that have really large TAMs. And those TAMs are growing at above market rates. So we're in good places to play. And finally, we've got a pipeline of products that are not only delivering today for our customers, but also have a long runway in the future to continue to open up these markets new markets and opened up new indications of areas that we think we can be really strong treatment options. If you look at our portfolio today, I mentioned how we treat cardiovascular disease and solid tumor cancer. We also have a lot of moving parts in our company, different product categories that remain with us. So we split our company, if you look at our results into our MedTech segment and our Med Device segment. So 2 operating segments. I'll remind those listening as well. We actually have a June 1 fiscal year start each year. So about a week ago, we finished our FY '26 on May 31. We'll report those results early in July to you. But June 1 is our start -- so we've actually started our FY '27. When you see our results that reported to you in the 2 operating segments of MedTech and MedTech device. But we think this slide is a good job to help you understand. 2 of the 3 categories in our MedTech segment are in cardiovascular and 1 is in cancer and below our med device products that really do a good job of paying our bills providing us with EBITDA and stable cash flow, funding our investments in our higher-growth MedTech markets. Those are split out in med device. As we go forward, we've made decisions when we look at our cardiovascular business to focus on venous disease and arterial diseases, the 2 areas that we think we can play and do a good job. We launched a product called Arion in September of 2020, dedicated to treat peripheral arterial disease. Arion uses a laser with a really unique 355-nanometer wavelength that is uniquely qualified to break down hard, calcification, hard plaque, and soft calcification as well. It works above-and-below-the-knee and it can treat instant restenosis -- so it's a very unique product in this category. This is a very large category with 5 other players. But since launch, we've actually passed 3 of those players become the #3 market share player today. So if you've seen our results in the first 3 quarters of the year, we're growing or on in high double digits, just under 20% growth, taking share from the other 5 players in this market. Why -- our product is really good. that provides the clinical outcomes that doctors look for provides relief to the patients that they need and economically, it's feasible for the payers. So we'll expect Arion to continue to grow at above market rates for years to come. We also believe Arion is a platform that can treat other modalities over time, and we'll share more as we expand. But for us, just put a stake in the ground to show we're a serious cardiovascular company. PAD is a really large important market, and it also gets us aligned with key physicians and caregivers that treat other areas of cardiovascular disease that we're interested in. And the second part of our cardiovascular offering is our venous business where we really focus on treating VTE, venous thromboembolism, which is made up of 2 parts really, DVT, deep vein thrombosis and PE, pulmonary embolism. We will not have any more acronyms after this. But this is a really large, fast-growing market. The beauty of the PE treatment market over the last 6 years or so, us and 2 other companies have done a really good job of offering catheter-based ways to treat the clot initially get the clot instead of the standard of care for years, which is drug therapy or lytics designed to use as blood thinners to break up the clot and those have a lot of side effects that are undesirable many times to patients. So using a device like ours to pull the clot out, we think, is the move of the future for physicians. We think this is about a $3 billion U.S. market alone to treat these clocks using a mechanical device. And it's less than 20% penetrated today by us and the other couple of companies in this space. So this is a really large opportunity for us to grow over time using our Alpha VAC product and our AngioVac product, which is the base product of Alphavac. AngioVac is uniquely designed actually to treat more complex disease, uses a simultaneous reinfusion system to reinfuse the patient's blood back into the body and some significant cardiovascular disease treatments. What makes these 2 products special. They both use large bore catheters with a vortex funnel tip on the end. That's really, really important. It enables us to come in the body in an 18 French or 22 French catheter yet expand to 32 or 36 French when that funnel has expanded. And you see what that does on the bottom of this slide, you can see an actual case result of significant clot being pulled from the body. You'll see our APEX slide in a minute of how we performed in our clinical study. We pulled more clot out than anything else. We pulled more clot out than the other competitors. Why? Because the way that Fortex funnel tip works, and with unique characteristics of steerability, other things that we offered into our product to make sure the doctor can get to the clot. Seek the clot, then safely remove it and limit blood loss during that procedure, by the way we design the product. So it's really, really unique. We're a 1/3 in this market. We're the newest, smallest company here, and we had to develop a better product. We have the investors here have seen -- the other 2 are really large companies who wanted to enter the space. So we think AlphaVac is really the base for us to continue to grow in the space. We back it up with the APEX study that was done to get us on label 2 years ago. You look at what it did on the bottom of the slide, it shows a reduction in clot burden and how much more clot we pull and also the time for procedure. If we can save a physician 20 minutes of time because of the simplicity, intuitive nature of our device, that's a lot of time to an interventional cardiologist. So it helps give efficiency, safety and results and how we clear the clot. Apex was important for us. We're now actually running an APEX return study to add a blood return feature to our product to show that if a physician chooses to return blood after the procedure, they can do so in a safe and effective manner even though we designed the AlphaVac to lose less blood than the other products and the APEX study showed that works in real-world evidence. The third area I talked to you about earlier was treating solid tumor cancers. We have a unique product called NanoKnife. NanoKnife is a nonthermal ablation tool that uses electrical pulses of energy to break down the cell wall of certain solid tumors, allowing that solid tumor to die naturally within the body. We think NanoKnife can treat certain tumors that are hard to treat, pancreatic cancer, liver cancer are the 2 areas that it has been used historically to treat the most patients in need. But we thought the primary opportunity for us is using NanoKnife as a intermediate risk prostate cancer treatment option. Nearly 40% to 50% of the men diagnosed every year are diagnosed with an intermediate level of prostate cancer would be about a Gleason 7 score. If a urologists were to treat the patient. Many of those patients fall kind of between, hey, you need to have a radical prostectomy and you're going to have side effects that are undesirable on the high end, and we're not here to change the radicals out as folks have high-end prostate cancer, you need to have a radical prostectomy, remove the prostate and deal with those undesirable side effects. On the other end of the scale, meant with low-risk disease maybe told you go home, we'll do watch for waiting or monitor your disease that usually grow slowly in the body. But for those men in the middle who don't want either situation, using a focal therapy option, which is where we call where we fall, which is keeping the prostate in the body, treating the gland, not disrupting the other parts, the nerves that cause incontinence or impotence with other treatments. We have found a really great way to treatment and give them this option, give urologists a new option to treat and give men away to have a safe option that reduces the risk of those undesirable side effects. What's unique about NanoKnife for us is we can use our science to deliver this energy in a way that does minimal of side effects. What's important for us is we received our FDA indication for NanoKnife to treat solid tumors in January 1 of '25. And a year later, just this past January, we received our CPT 1 code, which now allows reimbursement to take place at a much more consistent level. We have a lot of interesting developments in this business. There's a lot of natural urologist demand, people want to use a focal option. They've tried some of the other focal options. They don't treat the way we treat. So I think there's been a ton of interest in the product. If you've seen the results we posted for the first 3 quarters of this year, you've seen really strong results. double-digit over 20% probe growth year-over-year, which is dynamic for a company just in the space and just getting our CPT 1 code. So it's really, really important for us. So Nanolife for solid tumor cancer is important. But for us, the urology space is where we think we can win. The Preserve study was what got us on label, and it really showed the ability for us to treat these men to make sure that they can have the results that are expected to limit the significance of their disease and also to limit the risk of incontinence or impetus. As you see the results posted here from our preserve pivotal study, it supports the intent and the desire of the device to treatment in that manner. Well, since that time recently, we posted the second year. We did a follow-up study to track men on their second year of the journey post treatment, and the results were outstanding. They were just presented at AUA a few weeks ago. Results were outstanding, we batted 1,000, each of the men that consented to the second year follow-up had terrific results. So it gives us more credibility in this space about the durability of our treatment option and that we maintain the men's primary function without losing his care with the secondary functions. You don't want to give up what's our incontinence and impotence. So we're really excited about what this can do. This market today, we believe, is about a $900 million U.S. market and potentially a $2 billion global market. And people are looking for new ways to treat men with prostate cancer. We're also proud that recently we've been identified by Time magazine as one of the best interventions -- one of the best inventions of 2025. And AARP recognized us as well, we did some digital follow-up advertising there. So we're finding new ways to connect to our customers. We're a medical device technology company. We're not a consumer company. But we've learned now there's such need and demand out there. We found new ways to communicate our messaging. We have a lot of men finding us on social media or on other sites, getting information, then calling their urologists to learn more. So we've done a really good job in the background doing awareness campaigns, education campaigns, and linking need to service with the urology community. The start we're off to this year has been great for NanoKnife. We expect it to grow and continue to grow at very high double digits for years to come. We're seeing some of the reimbursement challenges get cleared. Hurdles get cleared. We posted a press release a little over a week ago that one of the local MAC called Palmetto group that covers a lot of the Medicare patients in the Southeast actually gave us a favorable local coverage decision that we think is ideal and allowing more men to be treated and the urologists and the hospitals to be paid for their service. So we're really excited. We have the right product at the right time, it's paid and reimbursed the right way and the outcomes for the men who have been treated have been awesome. So we're excited about this business. So AngioDynamics is a story of today and tomorrow. The company we've rebuilt here doing this transformation has a portfolio that has that balance of the device products that carry us and the med tech products that are now nearly 50% of revenue and growing at high double digits. Those products also have higher accretive gross margins than our corporate average, and we'll continue to pull a gross margin mix up. That's why for us, it's really important not just to deliver today for investors to show the credibility of the company we've become. But we've got a really tremendous pipeline that will show tremendous growth opportunities for each of these 3 platforms we've developed. Here's a chart that gives you some guidance as to areas that we've already invested in, and we expect to have significant product launches over the next few years. This is not our entire pipeline, but these are things we've already presented to the public markets to let you know that what we can do in this space does not require a lot of risky M&A to go find new products to add, but this is internal development. It's market clearance. It's clinical hurdles we can clear and open up new markets globally that are large and significant. And we believe our products have already proved they worked in these spaces. So it's a really strong clinical pipeline that will open up markets for our company to thrive for years to come. So if you look at our 2026, again, it was about a month ago or 2 months ago in April, we presented our Q2 -- excuse me, our Q3 results, and they were very strong. As our last number of years have been. So we're growing our med tech business, nearly 20%. The overall company is growing at nearly 9%, the blend of the 2, which is unique for a company in our space to grow and do well in each of the 3 target categories we're in. We're outgrowing the markets we compete in. We're taking share in each of those spaces. We're winning as I said to you earlier, the P&L today still has significant investment built in. It will always invest going forward. But over time, we believe that our revenue growth at the good gross margin mix that will come through will offset the necessary investments and drop continued EBITDA to the bottom line at a higher pace than has been and stabilize our balance sheet. Today, we have 0 debt. We've got plenty of cash and will generate cash going forward from here on in on this P&L. So we're a really strong company today with credibility of doing what we said we'd do, and we have a pathway to future growth, top line and bottom line. If you look at our compelling outlook for the year, again, I look forward to presenting our full year results and our Q4 results in about 4 weeks from today. We expect the results again will follow what you have seen is similar to what you saw in Q3. We think we'll grow at or above market rates. We'll grow with guidance that we projected guidance that we gave at the end of Q3, which are above market rates as well. And we expect to give investors an area to look at. If investors are looking at a company that is in the right place in markets that matter can win in those markets and generate a healthy business plan to grow for years to come. We believe we offer that today. Today, we know we trade at a discount to where we should be trading. Probably every CEO at this conference is frustrated with their stock price. But I'll knock my head more against them all more than anybody. I do the summer of the parts analysis every morning when I drive to work. I know that each of these segments are worth more individually, that's frustrating. But I'm -- we're willing to accept a small discount for a department store discount, but not this small. So we'll continue to do what we've done for you, articulate a business plan and a direction to change this company to be one that will thrive in really important competitive large markets. We'll outgrow those markets and the economics work to drop that bottom line -- the top line revenue to bottom line growth. So we think we're a compelling investment opportunity, and we look forward to having more conversations with you in the future. our investment summary again is very simple, as I said. We've got the cash we need. We've got no debt in the balance sheet, so you've got a strong balance sheet, and you've got a plan that works. And again, we're in markets that are desirable. You guys have seen like we have when strategics have bought companies to add segments like ours to their mix, they pay really high prices for the spots we're in. So we think we've done a good job by putting our company in a spot where we win today and create compelling investment opportunities in the future. So I thank you for joining us here today. If there are any questions, I'll take them. And if not, we look forward to presenting our results to you in July. Thank you.