AngioDynamics Inc.
07/18/2025 | Press release | Distributed by Public on 07/18/2025 08:39
Annual Report for Fiscal Year Ending May 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Conditions and Results of Operations.
The following information should be read together with the audited consolidated financial statements and the notes thereto and other information included elsewhere in this annual report on Form 10-K. This discussion may contain forward-looking statements related to future events and our future financial performance that are based on current expectation and are subject to risks and uncertainties. Our actual results may differ materially from those anticipated in any forward-looking statements as a result of many factors, including those set forth in Part I, Item 1A, "Risk Factors" and "Disclosure Regarding Forward-Looking Statements" included in this Annual Report on Form 10-K.
Company and Market
AngioDynamics is a dynamic, diversified medical technology company committed to expanding treatment options and improving patient outcomes and quality of life by focusing on cardiovascular disease and cancer. Our execution strategy is built on innovative R&D, clinical and regulatory pathway expansion and customer centric sales performance. We design, manufacture and sell a wide range of medical, surgical and diagnostic devices used by professional healthcare providers for vascular access, for the treatment of peripheral vascular disease and for use in oncology and surgical settings. Our devices are generally used in minimally invasive, image-guided procedures. Many of our products are intended to be used once and then discarded, or they may be temporarily implanted for short- or long-term use.
Our business operations cross a variety of markets. Our financial performance is impacted by changing market dynamics, which have included an emergence of value-based purchasing by healthcare providers, consolidation of healthcare providers, the increased role of the consumer in health care decision-making and an aging population, among others. In addition, our growth is impacted by changes within our sector, such as the merging of competitors to gain scale and influence; changes in the regulatory environment for medical device; and fluctuations in the global economy.
Our sales and profitability growth also depends, in part, on the introduction of new and innovative products, together with ongoing enhancements to our existing products. Expansions of our product offerings are created through internal and external product development, technology licensing and strategic alliances. We recognize the importance of, and intend to continue to make investments in research and development activities and selective business development opportunities to provide growth opportunities.
We sell our products in the United States primarily through a direct sales force, and outside the U.S. mainly through distributor relationships. Our end users include interventional radiologists, interventional cardiologists, vascular surgeons, urologists, interventional and surgical oncologists and critical care nurses. We expect our businesses to grow in both sales and profitability by expanding geographically, penetrating new markets, introducing new products and increasing our presence internationally.
The current macroeconomic environment continues to impact our business and may continue to pose future risks. The Company's ability to manufacture products, the reliability of our supply chain, labor shortages, backlog, inflation (including the cost and availability of raw materials, direct labor and shipping) and tariffs have impacted our business, trends that may continue. Accordingly, management continues to evaluate the Company's liquidity position, communicate with and monitor the actions of our customers and suppliers, and review our near-term financial performance.
On January 5, 2024, the Company announced a restructuring to optimize its manufacturing efficiency, capabilities and footprint (the "Plan"). In the second quarter of fiscal year 2025, the Company announced a modification to the Plan to maintain a presence in Queensbury, NY for the manufacturing of select products, customer service, logistics, shipping, quality and regulatory operations. The restructuring activities associated with the modified Plan are still expected to be completed in the third quarter of fiscal year 2026. The modified Plan is still expected to generate $15.0 million in annual cost savings starting in fiscal year 2027.
On July 16, 2024, the Board of Directors approved a share repurchase program (the "Repurchase Program") under which they authorized the Company the option to repurchase up to $15.0 million of its outstanding common stock. The timing and amount of any share repurchases under the authorization will be determined by management within certain parameters and based on market conditions and other considerations. During the year ended May 31, 2025, the Company repurchased 243,847 shares of common stock in the open market at an aggregate cost of $1.7 million under the Repurchase Program. As of May 31, 2025, $13.3 million remained available for repurchase under the Repurchase Program.
On December 24, 2024, the Company entered into an agreement to sell the manufacturing facilities in Queensbury, NY and Glens Falls, NY for a purchase price of $5.5 million and $1.2 million, respectively, and net proceeds of $5.2 million and
$1.1 million, respectively. The Company simultaneously entered into lease agreements with future lease payments of $4.6 million over seven years for the Queensbury, NY facility and $0.4 million over three years for the Glens Falls, NY facility.
On May 28, 2025, the Company entered into a new Credit Agreement (the "Credit Agreement") with JPMorgan Chase Bank, N.A. The Credit Agreement has a two-year maturity and provides for a $25.0 million secured revolving credit facility (the "Revolving Facility"), which is subject to a borrowing base comprised of certain working capital assets of the Company. As of May 31, 2025, there is no outstanding balance on the Revolving Facility.
In evaluating the operating performance of our business, management focuses on revenue, gross margin, operating income, earnings per share and cash flow from operations. A summary of these key financial metrics for the year ended May 31, 2025 compared to the year ended May 31, 2024 follows:
Year ended May 31, 2025:
•Revenue decreased by 3.8% to $292.5 million
•Med Tech growth of 19.0% and Med Device declined by 16.0%
•Gross margin increased by 300 bps to 53.9%
•Net loss decreased by $150.4 million to $34.0 million
•Loss per share decreased by $3.76 to a loss of $0.83
•Cash flow from operations increased by $18.0 million resulting in cash used in operations of $10.1 million
For the year ended May 31, 2025, the decrease in revenue is due to the divestiture of the PICCs, Midline, dialysis and BioSentry businesses, along with the discontinuation of the RadioFrequency Ablation and Syntrax product lines, the total of which impacted sales by $33.4 million compared to the year ended May 31, 2024. Our Med Tech business, comprised of Auryon, the thrombus management platform and NanoKnife grew 19.0% in fiscal year 2025 was driven by growth in growth in Auryon and the thrombus management platform, while Nanoknife sales remained consistent year over year. Our Med Device business decreased 16.0% in fiscal year 2025 driven mainly by the divestiture of the PICCs, Midlines, dialysis and BioSentry businesses along with the discontinuation of the RadioFrequency Ablation product lines.
Strategic Initiatives to Drive Growth
The Company is focused on its Med Tech segment which is committed to expanding treatment options and improving patient outcomes and quality of life by focusing on cardiovascular disease and cancer. Our execution strategy is built on innovative R&D, clinical and regulatory pathway expansion and customer centric sales performance. Our investments in our high technology products including Auryon, Mechanical Thrombectomy (which includes AngioVac and AlphaVac) and NanoKnife, will provide us access to larger and faster growing markets.
Throughout the year, we introduced strategic moves designed to streamline our business, improve our overall business operations and position ourselves for growth. Those initiatives included:
•Innovative R&D and Clinical and Regulatory Pathway Expansion.The Company continued its disciplined product development process which is intended to improve the Company's ability to bring new products to market and achieve clinical and regulatory pathway expansion. The Company:
◦Received CE mark approval in Europe for Auryon;
◦Received CPT Category I Codes for Irreversible Electroporation (IRE), the primary method of action for the NanoKnife System, for the treatment of lesions in the prostate and liver, effective January 2026;
◦Received FDA 510(k) clearance for NanoKnife Prostate Tissue Ablation;
◦Received CPT Category I Codes for Irreversible Electroporation (IRE), the primary method of action for the NanoKnife System, for the treatment of the pancreas, effective January 2027;
◦Published APEX-AV trial results in the Journal of the Society for Cardiovascular Angiography & Interventions demonstrating the safety and efficacy of the AlphaVac F1885 System;
◦Initiated RECOVER-AV Clinical Trial in Europe for AlphaVac; and
◦Initiated the AMBITION BTK RCT and Registry to generate definitive clinical evidence supporting the use of the Auryon Atherectomy System in treating below the knee lesions in patients with critical limb ischemia.
•Customer Centric Sales Performance. To create value and drive future growth, the Company is focused on ensuring that the sales team is appropriately trained on how to market the products to our customers and that our customers are receiving the appropriate training and exposure to our products. This included:
◦Continued focus on training of the sales teams; and
◦Conducted targeted physician trainings and symposiums both in the U.S. and internationally throughout the year.
•Focused Resource Deployment. The Company continued its discipline on deploying resources. This included:
◦The announcement to restructure the manufacturing footprint, which includes maintaining a presence in Queensbury, NY for select products, customer service, logistics, shipping, quality and regulatory operations, and shifting all other products to an outsourced model utilizing third-party manufacturers to allow the Company to more effectively compete in chosen markets and fundamentally change its corporate gross margin profile. The restructuring activities are expected to be completed in the third quarter of fiscal year 2026 and are expected to generate $15.0 million in annual cost savings starting in fiscal year 2027.
Critical Accounting Policies and Use of Estimates
Our significant accounting policies are summarized in Note 1 "Basis of Presentation, Business Description and Summary of Significant Accounting Policies" in the consolidated financial statements included in this Form 10-K. While all of these significant accounting policies affect the reporting of our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require us to use a greater degree of judgment and/or estimates. Actual results may differ from those estimates.
Revenue Recognition
Under ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
The Company contracts with its customers based on customer purchase orders, which in many cases are governed by master purchasing agreements. The Company's contracts with customers are generally for product only, and do not include other performance obligations such as services or other material rights. As part of its assessment of each contract, the Company evaluates certain factors including the customer's ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations.
Transaction prices of products are typically based on contracted rates. Product revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products to a customer, net of any variable consideration as described below.
If a contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised products underlying each performance obligation. The Company has standard pricing for its products and determines standalone selling prices based on the price at which the performance obligation is sold separately.
Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company's performance obligation is satisfied), which occurs at a point in time, and may be upon shipment from the Company's manufacturing site or delivery to the customer's named location, based on the shipping terms of a contract.
In determining whether control has transferred, the Company considers if there is a present right to payment from the customer and when physical possession, legal title and risks and rewards of ownership have transferred to the customer.
The Company typically invoices customers upon satisfaction of identified performance obligations. As the Company's standard payment terms are 30 to 90 days from invoicing, the Company does not provide any significant financing to its customers.
The Company enters into agreements to place placement and evaluation units ("units") at customer sites, but the Company retains title to the units. For the duration of these agreements the customer has the right to use the unit at no upfront charge in connection with the customer's ongoing purchase of disposables. These types of agreements include an embedded operating lease for the right to use the units. In these arrangements, revenue recognized for the sale of the disposables is not allocated between the disposable revenue and lease revenue due to the insignificant value of the units in relation to the total agreement value.
Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue.
Reserves: Revenue from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established for discounts, product returns, rebates and allowances that are offered within contracts between the Company and its customers.
The Company generally offers customers a limited right of return. Product returns after 30 days must be pre-approved by the Company and customers may be subject to a 20% restocking charge. To be accepted, a returned product must be unadulterated, undamaged and have at least twelve months remaining prior to its expiration date. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company currently estimates product return liabilities using its historical product return information and considers other factors that it believes could significantly impact its expected returns, including product recalls. Discounts and product returns are based on amounts earned or to be claimed on the related sales and are classified as a contra asset. During the years ended May 31, 2025, 2024 and 2023, such product returns were not material. The Company provides certain customers with rebates and allowances that are explicitly stated in the Company's contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized. The Company establishes reserves for such amounts, which is included in "Accrued liabilities" in the accompanying Consolidated Balance Sheets. These rebates and allowances result from performance-based offers that are primarily based on attaining contractually specified sales volumes. The Company is also required to pay administrative fees to group purchasing organizations.
A receivable is generally recognized in the period the Company ships the product. Payment terms on invoiced amounts are based on contractual terms with each customer and generally coincide with revenue recognition. Accordingly, the Company does not have any contract assets associated with the future right to invoice its customers. In some cases, if control of the product has not yet transferred to the customer or the timing of the payments made by the customer precedes the Company's fulfillment of the performance obligation, the Company recognizes a contract liability that is included as deferred revenue in "Accrued liabilities" in the accompanying Consolidated Balance Sheets.
Inventory
Inventories are stated at the lower of cost or net realizable value based on the first-in, first-out cost method and consist of raw materials, work in process and finished goods. Appropriate consideration is given to deterioration, obsolescence, expiring and other factors in evaluating net realizable value. When we evaluate inventory for excess quantities and obsolescence, we utilize historical product usage experience and expected demand for establishing our reserve estimates. Our actual product usage may vary from the historical experience and estimating demand is inherently difficult which may result in us recording excess and obsolete inventory amounts that do not match the required amounts. An increase to inventory reserves results in a corresponding increase in cost of revenue. Inventories are written off against the reserve when they are physically disposed.
Intangible Assets
Intangible assets are amortized over their estimated useful lives, which range between two to eighteen years, on a straight-line basis over the expected period of benefit. The Company periodically reviews the estimated useful lives of intangible assets and reviews such assets or asset groups for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Such conditions could include significant adverse changes in the business climate, current-period operating or cash flow losses, significant declines in forecasted operations, or a current expectation that an asset group will be disposed of before the end of its useful life. When testing for impairment of definite-lived intangible assets held for use, the Company groups assets at the lowest level for which cash flows are separately identifiable. The Company operates as two reporting units and two asset groups. If a triggering event is deemed to exist, the Company performs an undiscounted operating cash flow analysis to determine if an impairment exists. If an intangible asset is considered to be impaired, the amount of the impairment will equal the excess of the carrying value over the fair value of the asset.
Results of Operations for the years ended May 31, 2025 and 2024
For the fiscal year ended May 31, 2025, the Company reported a net loss of $34.0 million, or a loss of $0.83 per diluted share, on net sales of $292.5 million compared to a net loss of $184.3 million, or a loss of $4.59 per diluted share, on net sales of $303.9 million in fiscal year 2024.
Net Sales
Net sales- Net sales are derived from the sale of our products and related freight charges, less discounts, rebates and returns.
| Year ended May 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | $ Change | ||||||||||||||
| Net Sales | |||||||||||||||||
| Med Tech | $ | 126,653 | $ | 106,403 | $ | 20,250 | |||||||||||
| Med Device | 165,845 | 197,511 | $ | (31,666) | |||||||||||||
| Total | $ | 292,498 | $ | 303,914 | $ | (11,416) | |||||||||||
| Net Sales by Geography | |||||||||||||||||
| United States | $ | 250,983 | $ | 251,486 | $ | (503) | |||||||||||
| International | 41,515 | 52,428 | $ | (10,913) | |||||||||||||
| Total | $ | 292,498 | $ | 303,914 | $ | (11,416) | |||||||||||
For the year ended May 31, 2025, net sales decreased $11.4 million to $292.5 million compared to the year ended May 31, 2024. At May 31, 2025, the Company had a backlog of $0.3 million compared to $1.3 million at the end of May 31, 2024.
The Med Tech business net sales increased $20.3 million for the year ended May 31, 2025 compared to the prior year. The change in sales from the prior year was primarily driven by:
•Increased Auryon sales of $9.8 million;
•Decreased sales of Syntrax of $0.4 million due to the discontinuation of this product line as of February 29, 2024;
•Increased sales of the thrombus management platform of $10.9 million, which was driven by increases in AngioVac, AlphaVac and thrombolytic sales of $5.8 million, $4.0 million and $1.1 million, respectively; and
•NanoKnife sales remained consistent year over year, and was comprised of increased NanoKnife disposable sales of $1.7 million offset by decreased capital sales of $1.7 million.
The Med Device business net sales decreased $31.7 million for the year ended May 31, 2025 compared to the prior year. The backlog, which primarily impacted sales of Core and Vascular Access products, was $0.3 million at May 31, 2025 compared to $1.3 million at May 31, 2024. The change in sales from the prior year was primarily driven by:
•Decreased sales of PICCs and Midline products of $30.1 million which was due to the divestiture of these businesses on February 15, 2024;
•Decreased sales of dialysis and BioSentry products of $0.7 million which was due to the divestiture of these businesses on June 8, 2023;
•Decreased sales of RadioFrequency Ablation of $2.2 million due to the discontinuation of this product line as of February 29, 2024; and
•Increased sales of Core and Venous of $1.9 million and $0.9 million, respectively. This increase was partially offset by decreased sales of Ports, Microwave and other Oncology products of $0.3 million, $0.8 million and $0.5 million, respectively.
Gross Margin
| Year ended May 31, | ||||||||||||||||||||
| (in thousands) | 2025 | 2024 | $ Change | |||||||||||||||||
| Med Tech | $ | 78,515 | $ | 67,198 | $ | 11,317 | ||||||||||||||
| Gross margin % of sales | 62.0 | % | 63.2 | % | ||||||||||||||||
| Med Device | $ | 79,190 | $ | 87,500 | $ | (8,310) | ||||||||||||||
| Gross margin % of sales | 47.7 | % | 44.3 | % | ||||||||||||||||
| Total | $ | 157,705 | $ | 154,698 | $ | 3,007 | ||||||||||||||
| Gross margin % of sales | 53.9 | % | 50.9 | % | ||||||||||||||||
Gross margin- Gross margin consists of net sales less the cost of goods sold, which includes the costs of materials, products purchased from third parties and sold by us, manufacturing personnel, royalties, freight, business insurance, depreciation of property and equipment and other manufacturing overhead, exclusive of intangible amortization.
Total Company gross margin increased by $3.0 million compared to the prior year. The change from the prior year was primarily driven by:
•The divestiture of the PICCs, Midline, dialysis and BioSentry businesses, which negatively impacted gross margin by $9.2 million;
•Sales volume, price and product mix, which positively impacted gross margin by $19.9 million;
•Other incentives and a prior year supplier recall, which positively impacted gross profit by $1.7 million;
•Production volume and other costs which negatively impacted gross margin by $1.5 million;
•Tariffs, along with inflationary costs on raw materials, labor shortages, freight and other costs, which negatively impacted gross margin by $1.6 million and $3.6 million, respectively; and
•Incremental depreciation on placement units of $2.6 million.
The Med Tech segment gross margin increased by $11.3 million compared to the prior year. The change from the prior year was primarily driven by:
•Sales volume, price and product mix, which positively impacted gross margin by $17.2 million;
•Production volume and other incentives which negatively impacted gross margin by $1.5 million;
•Tariffs, along with inflationary costs on raw materials, labor shortages and freight costs, which negatively impacted gross margin by $1.1 million and $0.4 million, respectively;
•The abandonment of the Syntrax product line, which negatively impacted gross margin by $0.2 million; and
•Incremental depreciation on placement units of $2.7 million.
The Med Device segment gross margin decreased by $8.3 million compared to the prior year. The change from the prior year was primarily driven by:
•The divestiture of the PICCs, Midline, dialysis and BioSentry businesses, which negatively impacted gross margin by $9.0 million;
•Price and product mix, which positively impacted gross margin by $3.6 million;
•Other incentives and a prior year supplier recall, which positively impacted gross profit by $2.7 million;
•Sales volume and production volume which negatively impacted gross margin by $1.4 million;
•Tariffs, along with inflationary costs on raw materials, labor shortages and freight and other costs, which negatively impacted gross margin by $0.5 million and $3.7 million, respectively; and
•Incremental depreciation on placement units of $0.1 million.
Operating Expenses and Other Income (expense)
| Year ended May 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | $ Change | ||||||||||||||
| Research and development | $ | 26,222 | $ | 31,512 | $ | (5,290) | |||||||||||
| % of sales | 9.0 | % | 10.4 | % | |||||||||||||
| Selling and marketing | $ | 103,135 | $ | 102,818 | $ | 317 | |||||||||||
| % of sales | 35.3 | % | 33.8 | % | |||||||||||||
| General and administrative | $ | 42,092 | $ | 41,164 | $ | 928 | |||||||||||
| % of sales | 14.4 | % | 13.5 | % | |||||||||||||
Research and development expense - Research and development ("R&D") expense includes internal and external costs to develop new products, enhance existing products, validate new and enhanced products, manage clinical, regulatory and medical affairs.
R&D expense decreased $5.3 million compared to the prior year. The change from the prior year was primarily driven by:
•The timing of certain projects, clinical spend and other costs associated with the ongoing clinical trials, which decreased R&D expense by $5.1 million; and
•Compensation and benefits expenses, which decreased $0.2 million.
Sales and marketing expense- Sales and marketing ("S&M") expense consists primarily of salaries, commissions, travel and related business expenses, attendance at medical society meetings, product promotions and marketing activities.
S&M expense increased by $0.3 million compared to the prior year. The change from the prior year was primarily driven by:
•Trade shows, subscriptions and other marketing expenses, which increased $1.5 million;
•Consulting and other selling expenses, which increased $0.7 million; and
•Compensation and benefits expense, which decreased by $2.0 million.
General and administrative expense- General and administrative ("G&A") expense includes executive management, finance, information technology, human resources, business development, legal, and the administrative and professional costs associated with those activities.
G&A expense increased by $0.9 million compared to the prior year. The change from the prior year was primarily driven by:
•Compensation and benefits expense, which increased $2.1 million;
•Other outside consultant spend, which increased $0.8 million; and
•Depreciation and other corporate expenses, which decreased $2.0 million.
| Year ended May 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | $ Change | ||||||||||||||
| Amortization of intangibles | $ | 10,318 | $ | 13,048 | $ | (2,730) | |||||||||||
| Goodwill impairment | $ | - | $ | 159,476 | $ | (159,476) | |||||||||||
| Change in fair value of contingent consideration | $ | 272 | $ | 432 | $ | (160) | |||||||||||
| Acquisition, restructuring and other items, net | $ | 15,620 | $ | 53,182 | $ | (37,562) | |||||||||||
| Other income | $ | 5,922 | $ | 797 | $ | 5,125 | |||||||||||
Amortization of intangibles- Represents the amount of amortization expense that was taken on intangible assets held by the Company.
•Amortization expense decreased $2.7 million compared to the prior year. The decrease is due to assets being included in the sale of the dialysis, BioSentry, PICCs and Midlines businesses and the abandonment of the Syntrax product line.
Goodwill impairment- Represents the impairment charge taken on goodwill.
•The Company recorded a non-cash goodwill impairment charge of $159.5 million for the year ended May 31, 2024 as the fair value of the Med Tech reporting unit was less than its carrying value.
Change in fair value of contingent consideration- Represents changes in contingent consideration driven by changes to estimated future payments on earn-out liabilities created through acquisitions and amortization of present value discounts on long-term contingent consideration.
•The change in the fair value for the year ended May 31, 2025 is related to the Eximo contingent consideration and the increased probability of achieving the revenue milestones. The final milestone associated with the contingent consideration was reached during the third quarter of fiscal year 2025 and was paid during the fourth quarter of fiscal year 2025.
Acquisition, restructuring and other items, net- Acquisition, restructuring and other items, net represents costs associated with mergers and acquisitions, restructuring expenses, legal costs that are related to litigation that is not in the ordinary course of business, legal settlements and other one-time items.
Acquisition, restructuring and other items, net decreased by $37.6 million compared to the prior year. The change from the prior year was primarily driven by:
•Legal expense, related to litigation that is outside of the normal course of business, which decreased $34.2 million and was driven by the $19.3 million settlement between the Company and BD in the prior year;
•Mergers and acquisitions expense, which increased $0.3 million;
•Plant closure expense, related to the restructuring of our manufacturing footprint which was announced on January 5, 2024, which increased $4.3 million;
•An impairment of $3.4 million on the Syntrax product technology intangible and fixed assets and an inventory write-off of $2.9 million was taken in the third quarter of fiscal year 2024 related to the abandonment of the Syntrax and RF product lines;
•Transaction services agreements that were entered into as a result of the divestiture of the PICCs, Midline, dialysis and BioSentry businesses. The increase in the fees invoiced was $0.7 million;
•Manufacturing relocation expense related to the move of certain manufacturing lines from Queensbury, New York to a third party, which decreased $0.6 million; and
•Other expenses, mainly severance associated with organizational changes, which decreased $0.4 million.
Other income (expense) - Other expense includes interest income and expense, foreign currency impacts and bank fees.
Other income, net increased by $5.1 million compared to the prior year. The change from the prior year was primarily driven by:
•The Company achieved the $5.5 million sales milestone related to divested products in the third quarter of fiscal year 2025;
•Unrealized foreign currency fluctuations, which increased $0.2 million; and
•Interest income, which decreased $0.6 million compared to the prior year.
Income Tax Benefit
| Year ended May 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Income tax benefit | $ | (39) | $ | (7,289) | |||||||
| Effective tax rate | 0.1 | % | 3.8 | % | |||||||
Our effective tax rate was a benefit of 0.1% for fiscal year 2025 compared with an effective tax rate benefit of 3.8% for the prior year. The current year and prior year effective tax rates differ from the U.S. statutory rate primarily due to the impact of the valuation allowance, foreign taxes, and other non-deductible permanent items (such as non-deductible meals and entertainment, Section 162(m) excess compensation), goodwill impairment and the impact of stock-based compensation.
The Company regularly assesses its ability to realize its deferred tax assets. Assessing the realization of deferred tax assets requires significant management judgment. In determining whether its deferred tax assets are more likely than not realizable, the Company evaluated all available positive and negative evidence, and weighted the evidence based on its objectivity.
Based on the review of all available evidence, the Company determined that it has not yet attained a sustained level of profitability and the objectively verifiable negative evidence outweighed the positive evidence. As a result of the full impairment of Goodwill and the reversal of the naked credit deferred tax liability sourced income, the Company has recorded a full valuation allowance on its U.S. net deferred tax assets as of May 31, 2025. The Company will continue to assess the level
of the valuation allowance required. If sufficient positive evidence exists in future periods to support a release of some or all of the valuation allowance, such a release would likely have a material impact on the Company's results of operations.
Liquidity and Capital Resources
We regularly review our liquidity and anticipated capital requirements and we believe that our current cash on hand provides sufficient liquidity to meet our anticipated needs for capital for at least the next 12 months.
Our cash and cash equivalents totaled $55.9 million as of May 31, 2025, compared with $76.1 million as of May 31, 2024. As of May 31, 2025 and 2024 the Company did not have any outstanding debt.
The table below summarizes our cash flows for the years ended May 31, 2025 and 2024:
| Year ended May 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Cash (used in) provided by: | |||||||||||
| Operating activities | $ | (10,128) | $ | (28,158) | |||||||
| Investing activities | (10,178) | 123,717 | |||||||||
| Financing activities | (255) | (64,248) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 398 | 125 | |||||||||
| Net change in cash and cash equivalents | $ | (20,163) | $ | 31,436 | |||||||
During the years ended May 31, 2025 and 2024, cash flows consisted of the following:
Cash used in operating activities:
Years ended May 31, 2025 and 2024:
•Net loss of $34.0 million and $184.3 million, respectively, plus the non-cash items, primarily driven by depreciation and amortization, gain on the divestiture and related expenses, goodwill impairment and stock-based compensation, along with the changes in working capital below, contributed to cash used in operations of $10.1 million and $28.2 million for the years ended May 31, 2025 and 2024, respectively;
•For the year ended May 31, 2025, working capital was unfavorably impacted by decreased accounts payable and accrued liabilities and inventory on hand of $15.9 million and $1.3 million, respectively. This was partially offset by decreased prepaid expenses of $3.1 million; and
•For the year ended May 31, 2024, working capital was unfavorably impacted by increased prepaid expenses and inventory on hand of $11.6 million and $9.4 million, respectively. This was partially offset by decreased accounts receivable and increased accounts payable and accrued liabilities of $7.9 million and $27.5 million, respectively.
Cash (used in) provided by investing activities:
Years ended May 31, 2025 and 2024:
•$4.5 million and $2.5 million, respectively, of cash was used for fixed asset additions;
•$5.7 million and $5.0 million, respectively, of cash was used for Auryon placement and evaluation unit additions;
•$134.5 million of cash was received for the divestiture of the PICCs, Midline, dialysis and BioSentry businesses in fiscal year 2024; and
•$3.3 million of cash was used for the acquisition of exclusive licenses in fiscal year 2024.
Cash provided by (used in) financing activities:
Years ended May 31, 2025 and 2024:
•$6.3 million of proceeds from financing arrangements offset with $0.1 million of principal payments on the financing arrangements in fiscal year 2025;
•$1.7 million of cash was used for the repurchase of common shares in fiscal year 2025;
•$5.0 million and $15.0 million, respectively, of contingent consideration payments;
•$50.0 million repayment of the Credit Agreement in connection with the completion of the dialysis and BioSentry divestiture in fiscal year 2024; and
•$0.9 million and $0.8 million, respectively, of proceeds from stock option and ESPP activity.
On May 28, 2025, the Company entered into a new Credit Agreement (the "Credit Agreement") with JPMorgan Chase Bank, N.A. The Credit Agreement has a two-year maturity and provides for a $25.0 million secured revolving credit facility (the "Revolving Facility"), which is subject to a borrowing base comprised of certain working capital assets of the Company. As of May 31, 2025, there is no outstanding balance on the Revolving Facility. We believe that our current cash balance, together with cash generated from operations and access to our Revolving Facility, will provide sufficient liquidity to meet our anticipated needs for capital for at least the next 12 months. If we seek to make acquisitions of other businesses or technologies in the future for cash, we may require external financing.
Our contractual obligations as of May 31, 2025 are set forth in the table below (in thousands). We have no variable interest entities or other off-balance sheet obligations.
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Cash payments due by period as of May 31, 2025
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| (in thousands) | Total |
Less than One Year |
1-3 Years | 3-5 Years |
After 5 Years |
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| Contractual Obligations: | |||||||||||||||||||||||||||||
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Operating leases (1)
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$ | 4,580 | $ | 2,277 | $ | 1,788 | $ | 515 | $ | - | |||||||||||||||||||
| Finance leases | 4,714 | 800 | 1,549 | 2,365 | - | ||||||||||||||||||||||||
| Royalties | 32,380 | 3,620 | 7,240 | 7,240 | 14,280 | ||||||||||||||||||||||||
| $ | 41,674 | $ | 6,697 | $ | 10,577 | $ | 10,120 | $ | 14,280 | ||||||||||||||||||||
(1) Operating leases include short-term leases that are not recorded on our Consolidated Balance Sheets under ASU No. 2016-02.
Results of Operations for the years ended May 31, 2024 and 2023
For management discussion and analysis of our 2024 financial results and liquidity compared with 2023, see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended May 31, 2024 filed on July 25, 2024.
Recent Accounting Pronouncements
Refer to Note 1 of the Notes to the consolidated financial statements for Recently Issued Accounting Pronouncements.
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