AngioDynamics, Inc. (NASDAQ:ANGO) Q1 2024 Earnings Call Transcript

AngioDynamics, Inc. (NASDAQ:ANGO) Q1 2024 Earnings Call Transcript October 4, 2023

AngioDynamics, Inc. beats earnings expectations. Reported EPS is $-0.12, expectations were $-0.14.

Operator: Good morning, and welcome to the AngioDynamics Fiscal Year 2024 First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference call is being recorded. The news release detailing AngioDynamics’ fiscal 2024 first quarter results crossed the wire earlier this morning and is available on the company’s website. This conference call is also being broadcast live over the Internet at the Investors section of the company’s website at www.angiodynamics.com, and the webcast replay of the call will be available at the same site approximately one hour after the end of today’s call.

Before we begin, I would like to caution listeners that during the course of this conference call, the company will make projections or forward-looking statements regarding future events, including statements about expected revenue, adjusted earnings and gross margins for fiscal year 2024, as well as trends that may continue. Management encourages you to review the company’s past and future filings with the SEC, including, without limitation, the company’s Forms 10-Q and 10-K, which identify specific factors that may cause the actual results or events to differ materially from those described in the forward-looking statements. The company will also discuss certain non-GAAP and pro forma financial measures during this call. Management uses these measures to establish operational goals and review operational performance and believes that these measures may assist investors in analyzing the underlying trends in the company’s business over time.

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Investors should consider these non-GAAP and pro forma measures in addition to, not as a substitute for or as superior to, financial reporting measures prepared in accordance with GAAP. A slide package offering insight into the company’s financial results is also available on the Investors section of the company’s website under Events & Presentations. This presentation should be read in conjunction with the press release discussing the company’s operating results and financial performance during this morning’s conference call. I’d now like to turn the call over to Jim Clemmer, AngioDynamics’ President and Chief Executive Officer. Mr. Clemmer?

Jim Clemmer: Thank you, and good morning, everyone, and thank you for joining us for AngioDynamics’ fiscal 2024 first quarter earnings call. Joining me on today’s call is Steve Trowbridge, AngioDynamics’ Executive Vice President and Chief Financial Officer, who will provide a detailed analysis of our first quarter financial performance. Unless otherwise noted, all financial metrics and growth rates provided during the call today will be on a pro forma basis, which excludes the impact of our divested Dialysis and BioSentry businesses in both our fiscal ‘24 and fiscal ‘23 first quarters. In our first quarter of FY ‘24 was highlighted by the attainment of important milestones in our long-term strategy and is a solid start financially against our fiscal year goals.

Over the last few quarters, we’ve outlined for you several areas, where we were focused on improving, and I’m happy to say that we are seeing improvements here during the first quarter, although there’s still more to come. We ended the first quarter with revenue of $78 million, representing growth of approximately 6% year-over-year, led by growth of approximately 13% from our MedTech segments. Our adjusted pro forma EPS was a loss of $0.13 and was in-line with our expectations. This excludes approximately $700,000 in sales from the divested businesses during the six business days in June that we still own to them. Beyond our financial performance, we made important progress on key milestones related to our long-term strategy. As we have stated, it is our mission to address meaningful treatment gaps in large, high-growth markets with a focus on cardiovascular disease and cancer.

During our first quarter, we enrolled and treated our final patient in our PRESERVE study, which is designed to prove that NanoKnife is a safe and effective treatment for men diagnosed with intermediate-risk prostate cancer. We look forward to collecting data from this study at the 12-month follow-up stage, then submitting our data to the FDA in Q3 of calendar 2024 to support an expanded indication for NanoKnife to treat prostate tissue. We believe that the timing of our submission is ideal. It is clear that patients with intermediate-risk prostate cancer are looking for new treatment options that better preserve their quality of life. The interest and desire for focal therapy continues to build with both patients and physicians. We believe that NanoKnife will be the best option for this patient population due to its simplicity, versatility, and ability to reduce the risk of undesirable side effects that other treatment options carry.

Over the course of this fiscal year, we look forward to providing you with more details as physicians publish additional data detailing their experiences using NanoKnife to treat prostate. Our NanoKnife business performed very well and grew approximately 36% during the first quarter, with sales of probes growing 35%. NanoKnife growth was strong again internationally, as our international team continues to establish new relationships with partners who assist in supporting our procedures and our strong U.S. growth was driven by continuing interest in this technology as more physicians become aware of our direct and preserved trials. We believe that NanoKnife has the potential to be one of the most important breakthroughs for men who qualify for a focal treatment approach to their disease by driving beneficial outcomes and offering significant quality of life benefits.

It has the potential to open up a roughly $700 million market in the U.S. and potentially $2 billion market globally for those intermediate-risk patients. In the first quarter of FY ’24, our international businesses grew 26% year-over-year with impressive growth from both our Med Tech and our Med Device segments. Our team is strong and we will continue to grow in international markets through a strategy that employs key partners to support our products, continued exposure through our series of scientific symposiums, and further expansion of our Med Tech portfolio, as we gain important regulatory approvals around the globe. We believe this is the right approach and it allows us to leverage our partners in both the Med Tech and Med Device segments without the significant investment that would be required to build out a fully direct global sales force.

Our mechanical thrombectomy business, which includes AngioVac and AlphaVac declined roughly 6% year-over-year. We were encouraged to see that AngioVac revenues while down year-over-year, grew sequentially, and we believe that the steps we are taking to drive this business are gaining positive traction. As you saw in our press release, we recently received a breakthrough designation for the use of AngioVac to remove right heart vegetation. We have engaged in productive conversations with the FDA and we expect to finalize our study design in our second fiscal quarter. Our APEX PE study is now more than 75% enrolled. This study is designed to prove that the AlphaVac F18 can be a safe and effective interventional treatment tool for physicians to treat patients who are at risk of a pulmonary embolism.

We look forward to completing enrollment soon and after the 30 day patient follow-up period, we’ll collect and submit our data to the FDA. We expect the data to support a PE indication around the end of calendar Q2 2024. We have been very pleased with the clinical feedback that we’ve received regarding the success that physicians have had with AlphaVac. They tell us that the intuitive design allows for safe and effective clot removal and they also specifically comment about how quickly and effectively they can steer our device through an often tortuous anatomy. This gives AlphaVac an advantage over other competitive options. They feel that our product will soon be an important part of the treatment options that they can choose from to treat VTE.

In addition to the expected PE indication in calendar 2024, our customers will also see the second generation of AlphaVac and a number of important product innovations that will enhance usability even further. The rapidly developing venous thrombectomy market is highly competitive and contains numerous unmet clinical gaps. We are confident that we will be one of the top three players in this large and growing market for years to come. Not only will we win market share with our unique and innovative products, we will also drive adoption to catheter-based interventions and help move care in the VTE space away from historic lytic-based therapies. During the first quarter, we saw continued strong growth of our Auryon platform, up 26% year-over-year.

This solid growth is a result of the unique way, we deliver laser energy and safely treat diseased vessels. We continue to gain share because physicians are gaining confidence in our technology, while they are also getting exposure to data generated by their peers, which is evidence of how special Auryon is as a treatment tool. Last quarter, we discussed the Auryon laser Micro-CT data and its importance, which provides evidence that Auryon can effectively fracture medial arterial calcification in small vessels typically located below the knee. This data has resonated well with physicians, and we believe can be an additional reason for clinicians to choose Auryon over our competitors. In addition, there are a number of presentations and podium discussions during this quarter’s trade meetings that highlighted the power, versatility, and safety of Auryon.

Auryon is special. We intend to launch catheters specially designed to allow Auryon to treat small vessel DVT in 2025. We believe that Auryon will enhance our venous thrombectomy strength and allow treating physicians a new and powerful option to treat clots in small vessels. We are also pursuing plans to gain an indication for Auryon to treat coronary artery disease. We believe that Auryon can be a safe and effective option to treat CAD. And we expect that the soon to be released FARO study will support this position. We continue to do our development planning and will give you further updates in subsequent quarters. And finally, we anticipate receiving CE Mark for Auryon in the next few months. As part of our ongoing focus to generate additional clinical data, we are proud to be holding our fourth Scientific Symposium at the end of October, where we’ll be hosting global key opinion leaders interested in doing research on our devices to further prove safety and efficacy.

We continue to build momentum with these KOLs, and we can see how differently our company is viewed by them as our credibility has grown, as an innovator that is committed to our physician customers and their patients. In addition to the progress that our medical technology segment is making, our medical device segment posted solid results and continues to provide an earnings and cash generation foundation. Growth in our Med Device segment was primarily driven by Ports and our Solero Microwave Ablation System. Our ports, which grew over 22%, illustrate the strength and leadership of our vascular access product portfolio and our commercial team. This is a very competitive market and our team has continually shown the ability to win. With that, I’d like to turn the call over to Steve Trowbridge, our Executive Vice President and Chief Financial Officer to review the quarter in more detail.

Steve Trowbridge: Thanks, Jim. Good morning, everyone. Before I begin, I’d like to direct everyone to the presentation on our Investor Relations website summarizing the key events from our quarterly results. As Jim mentioned, unless otherwise noted, all metrics and growth rates mentioned during today’s call are on a pro forma basis and exclude the results of the Dialysis and BioSentry businesses that we divested in mid-June. Our revenue for the first quarter of FY ’24 increased 5.7% year-over-year to $78 million, driven by continued strength in our Med Tech platforms. This is exclusive of approximately $700,000 of revenue from Dialysis and BioSentry in June. On an as-reported basis, revenue for the first quarter was $78.7 million.

Med Tech revenue was $25.9 million, a 13.3% year-over-year increase, while Med Device revenue was $52.1 million, growing 2.3% compared to the first quarter of FY ’23. For the first fiscal quarter, our Med Tech platforms comprised 33% of our total revenue compared to 31% of total revenue a year ago. Our Auryon platform contributed $11.1 million in revenue during the first quarter, growing 25.7% compared to last year. Mechanical thrombectomy revenue, which includes AngioVac and AlphaVac sales, declined 5.8% over the first quarter of FY ’23. AlphaVac revenue for the first quarter was $1.8 million. AngioVac revenue was $6.3 million in the quarter, representing a decline of 7.7% over the prior year, but up sequentially from the fourth quarter and trending in the right direction.

AngioVac continues to stabilize and rebound from the challenges we faced in Q2 and Q3 of fiscal ’23, and we continue to take meaningful steps to address those challenges, including new sales leadership as well as a more robust sales training platform. Additionally, we recently received the Breakthrough Device Designation for the use of AngioVac in right heart and we believe this is an illustration of the distinct role that AngioVac can play in the VTE space. We remain confident that mechanical thrombectomy will be a significant contributor to our growth strategy, and we will continue to prioritize investments in this platform, including the new product introductions that Jim mentioned, as well as our clinical initiatives, such as the APEX PE study.

NanoKnife disposable revenue during the quarter increased 34.5% year-over-year. Early in the quarter, we announced that enrollment in PRESERVE is now 100% complete. And as this data starts to be made public over the course of this year, we look forward to sharing it with you. In the first quarter, our Med Device segment grew 2.3% year-over-year, led by strength in our port products, angiographic, catheter products and microwave ablation business. At the end of our first quarter, our backlog stood at $3.3 million. Moving down to income statement. Our gross margin for the first quarter of FY ’24 was 50.8%, a decrease of 20 basis points compared to the year ago period. For the first fiscal quarter, Med Tech gross margin was 64.7%, an increase of 150 basis points and Med Device gross margin was 43.9%, a decrease of 170 basis points each when compared to the first quarter of last year.

Med Tech gross margins were positively impacted by sales mix, driven by our NanoKnife performance. Med Device gross margins were negatively impacted by raw material inflationary pressures and sales mix driven by growth in our international markets. As we’ve discussed, our strategic business model contemplates gross margin expansion as our high-margin Med Tech segment continues to become a larger portion of our overall revenue base. As mentioned last quarter, the next phase of our transformation is to address the scale and structural limitations of our operating footprint in a capital-efficient manner, which will reduce the impacts of many of the raw material and inflationary headwinds that we’ve seen recently. We look forward to continuing to update you on our plans and actions to drive margin enhancement in the short and medium term.

Turning to R&D. Our research and development expense during the first quarter of FY ’24 was $7.9 million or 10.1% of sales compared to $8.3 million or 11.2% of sales a year ago. Spending on clinical programs was 32% of total R&D spend during the first quarter of fiscal ’24, compared to 26% during the first quarter of last year and 16% for the full fiscal year 2021. This mix shift within our R&D spending is well aligned with our long-term strategy to support increased physician adoption of our Med Tech platform technologies through the generation of data and clinical evidence. SG&A expense for the first quarter of FY ’24 was $38.2 million, representing 49% of sales compared to $36.6 million or 49.6% of sales a year ago. Our adjusted net loss for the first quarter of FY ’24 was $5.2 million or adjusted loss per share of $0.13 compared to an adjusted net loss of $6 million or adjusted loss per share of $0.15 in the first quarter of last year.

During the first quarter of fiscal ’24, we revised our annual equity grant practice for our non-employee directors, moving from granting shares with a one-year vesting term to granting immediately vested shares. The target grant value has not changed from the prior year. This change is reflected in adjusted loss per share for the quarter of $0.13, meaning that approximately $0.02 of the negative $0.13 was shifted into this fiscal quarter, instead of radically being included in our second, third and fourth quarters of fiscal ’24. GAAP net income, as reported in our earnings release this morning included a gain on the sale of assets related to our Med Device segment in connection with the divestiture of our Dialysis and BioSentry businesses. As we mentioned last quarter, these businesses that were divested on June 8, 2023, subsequent to the company’s fiscal year-end were accounted for as held for sale as of May 31, 2023.

As a result, we recorded a goodwill impairment during the fiscal fourth quarter ended May 31, 2023. The impairment resulted in a loss of $14.5 million or $0.37 on a per share basis. Due to the timing of the transaction, the losses recorded in our fourth fiscal quarter of FY ’23, with the offsetting gain on the sale of assets recorded as part of this quarter’s results. The results of a large GAAP loss in the fourth quarter of FY ’23 and a larger GAAP gain in the first quarter of FY ’24. Adjusted EBITDA in the first quarter of FY ’24 was $0.4 million compared to negative EBITDA of $1.6 million in the first quarter of FY ’23. In the first quarter of fiscal ’24, we used $25.9 million in operating cash at capital expenditures of $0.8 million in addition to Auryon placement and evaluation units of $0.8 million.

At August 31, 2023, we had $57.6 million in cash and cash equivalents compared to $44.6 million in cash and cash equivalents at May 31, 2023. So we continue to expect to finish the year with cash balances in the range of $65 million to $70 million, and we expect to be cash flow positive exiting FY ’25, having utilized an aggregate of $10 million to $20 million of cash over a two-year period. Given the timing of Q1 payments and managing our working capital, Q1 exhibited the highest level of cash utilization we will see in FY ’24. As has historically been the case, our first fiscal quarter is expected to have the highest utilization of cash during the fiscal year with cash balances building throughout the remainder of the fiscal year. We believe that we have more than sufficient cash to execute on our strategic initiatives as we move to generating positive cash flow towards the end of FY ’25.

Turning now to guidance. We continue to anticipate that FY ’24 revenue will be in the range of $328 million to $333 million, and we expect full year adjusted loss per share to be in the range of $0.28 to $0.34. As a reminder, this compares to pro forma revenue and loss per share, excluding the recently divested assets of $306.3 million and a loss of $0.43, respectively for FY ’23. We expect FY ’24 gross margin to be in the range of 50% to 52% compared to pro forma FY ’23 gross margin of 50.5%. We expect FY ’24 Med Tech revenue growth in the range of 20% to 25% and Med Device revenue growth in the range of 1% to 3%. We expect Med Tech gross margins in the range of 63% to 65% and Med Device gross margins in the range of 43% to 45%. We’re continuing to transition our company with a focus on delivering value to our global customers.

We also understand that investors expect us to be a company that will grow at attractive rates, while improving profitability and cash generation. And we believe that our first quarter exhibits execution against those expectations. Finally, I’d like to thank our team here at AngioDynamics for their hard work and commitment, and we’re looking forward to executing further on our strategy and delivering a strong fiscal year ’24. With that, I’ll turn it back to Jim.

Jim Clemmer: Thank you, Steve. And before we open up the call for questions, I’d like to say a few words. Like Steve and I, many of you have had the pleasure of knowing Matt Mishan, who sadly and unexpectedly passed away several weeks ago. Matt did an excellent job following our company for many years, and all of us here at AngioDynamics truly enjoyed working with him, both as an analyst and as a person. Matt will be missed, and we offer our condolences to his family and his key bank colleagues, particularly Brett. Now operator, could you please open up the call for questions.

Operator: Thank you. [Operator Instructions] And our first question today comes from the line of Jayson Bedford with Raymond James. Please proceed with your questions.

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Q&A Session

Jayson Bedford: Hi. Good morning, guys. Maybe just to start on the business. NanoKnife use is quite strong. I was wondering, if you could break out growth U.S. versus internationally. And internationally, are you seeing it mostly in prostate or are you seeing use in other areas?

Jim Clemmer: Hi, Jayson. Actually, we’re seeing it in both. So we track different organs that we treat. There’s been some — the international team has had a head start and the U.S. team, they’ve done a great job of establishing relationships internationally with some really strong prostate physicians. And then, I’ll refer back to the July call we had for Q4, we announced that NICE had upgraded our status in the U.K. So we think that also has a knock-on effect in other areas within Europe, Jayson. So we’re going to continue to work with our clinicians and grow in Europe and U.S. Steve, do you have to break down.

Steve Trowbridge: Yes. And then Jayson, we saw a strong growth in both geographies. So in the U.S., disposable growth was 28%. And in the international markets, our disposable growth for NanoKnife was about 44%. So we’ve seen really strong growth, both sides of the ocean.

Jayson Bedford: Okay. On mechanical thrombectomy, you seem to be stabilizing AngioVac. AlphaVac still seems like it’s kind of stuck in first year. Can you just give us a little indication as to why growth should improve in AlphaVac? And I think you also alluded to a second-gen product and I apologize I may have missed the timing there.

Jim Clemmer: No, it’s fine. Again, AngioVac, we’re really confident in — obviously, how the device works and what it does and gaining the breakthrough designation from the FDA is important because they’ve acknowledged an area of unmet need that we think AngioVac can fit, or work with them on the study design and get that communicated soon. Second, the AlphaVac, we love the product and the physician feedback is really strong. I was at PERT, two weeks ago talking to many, many physicians who have used it, want to try it. The trick for us, Jayson are two things: completing the APEX PE enrollment. You saw we announced today, we’re 75% of the way there, which is actually a great time line being that there are two other good products already with a PE indication.

And we’re growing at the same pace. I think that the first one of those went out a couple of years ago, and they got their indication. We’re really pleased in the — take-up of the product. So we do — and we did announce this morning, we have a couple of design enhancements that we’ll launch next calendar year, Jayson. So you’ll see those enhancements. So really, next year is really important for us. We’ll have that PE indication, we believe, about mid-calendar year next year. We’ll also have some design enhancements to the product. Anybody does, after you launch the first gen, just based on physician feedback to make it a little more intuitive and user-friendly, but we have full confidence that AlphaVac F18 will be a major player, not just PE, but other clot removal within the anatomy.

Jayson Bedford: And does the design enhancements require an additional filing?

Jim Clemmer: No. The simple enhancements, I think they’ve just done as a letter to file to our current design. Again, I’m answering it from my regulatory team, but I’m pretty sure that’s the case, Jayson, we’ll let you know.

Jayson Bedford: Okay. And then just lastly, and I’ll let others jump in. On Auryon, strong, can you just give us an update in terms of the installed base? And I realize you don’t get a lot of upfront for the capital, but is this — the growth you’re seeing, is it procedure driven or have you seen a bolus in placement or capital sale?

Steve Trowbridge: Yeah. So in terms of placements, Jayson, the net new placements for this quarter were about 10% from where we were finished last year. But we have also, as we’ve talked about in the past, seen a lot of shifting of lasers from some of the lower volume users and moving into higher volume users. So as we talked last year, we were going to pair back a little bit on buying the new systems and the cash utilization that goes along with that, but we’re going to focus on driving utilization, and that’s what we’ve seen. So there’s — we finished the quarter with right around 415 total lasers in the field, that’s about 10 new net from the end of the year, but then also a significant number of lasers that we’ve been shifting from maybe lower performing customers to finding some of those higher-performing customers.

Jayson Bedford: Okay. Thank you.

Operator: Our next question is from the line of Steve Lichtman with Oppenheimer. Please proceed with your question.

Steve Lichtman: Thank you. Good morning, guys. Just wondering, if you could provide a little bit more detail on NanoKnife performance outside of the U.S. It sounds like that business has been a key performer in your international growth overall. Can you give us any visibility on what that could look like in the coming quarters and years? What are you seeing on the ground there and how sustainable is that?

Jim Clemmer: Hi, Steve. We think it’s sustainable. That was a really strong number in Q1. I don’t know if I expect that number throughout the course of the year. The team did a great job. But they’re also training our partners network to get clinical support during cases and procedures. We’re going to have our — in Monte-Carlo at the end of this month, our fourth Clinical Symposium where our physicians presenting on their experiences and their data with NanoKnife and a lot of it is highly compelling. So we’ve got a lot of things happening. You also have a little knock-on effect here as well with our Solero growth. We think that Nano, as it gets more widely recognized as to how it works, the mechanism of action, we’re getting doctors also utilizing our Solero at a higher rate.

We’ve got some great competitors in the microwave (ph) space. We think our Solero is the most effective tool out there. We’re seeing doctors also give that a try and adopt it, with I think, NanoKnife side by side. So a lot of good things are happening, Steve. It’s going to grow stronger this year. I don’t know if I expect the same growth rate during the next couple of quarters. But we’re also working here in the U.S., as you know to wrap up the data collection on PRESERVE, which will be done next summer submit and then we hope to get that indication in the U.S. next year, but we just still see strong growth U.S. and internationally even prior to that.

Steve Lichtman: Got it. Thanks. And then our Auryon small vessel DVT, you reiterated calendar year ’25. You talk about some docs that are using it in the field. Can we expect any single-center data or is there anything you’re getting a sense on that from your customer — from some of those customers from in small vessel DVT?

Jim Clemmer: Steve, we’re not sure if you’ll see any data published by our customers prior to 2025. We hear anecdotes too where people try it in different areas are so confident in how it works. We’re focused on our internal R&D process. And the research has shown, we’re really, really excited about what it does. There’s a good aspiration device on the market today that does a really good job in small vessel DVT. But we think the — what Auryon does in addition to aspiration, the way our laser can disrupt and break up some of the clock, we found that our testing is really significant. So we’re going to continue to focus on our internal testing, get the product ready for launch. In the meantime, doctors are always free to do their own research, but I wouldn’t expect to see anything I don’t believe, prior to our launch.

Steve Lichtman: Okay. Got it. And then just lastly, as you’re thinking about the Med Tech) business, how are you thinking about balancing the potential benefits of additional sales on top line gross margin versus, I think you mentioned again, Jim, some of the cash benefits that those products provide to the overall company. So should we be thinking about potential additional product line divestitures ahead, or just how are you thinking about balancing those two? Thanks.

Jim Clemmer: A couple of things, we’ve always talked about our role as an active portfolio manager as we grow our Med Tech businesses. But the Med Device segment does a terrific job in providing us that cash and stability to invest in the other side of the house. And we really love what the business does. We mentioned today, we highlighted our ports. Here we compete against a really great company. The number one company in that market is a strong, great company. Our ports are better. And our company is better, and our team is strong. So although, we’re a small guy here, David versus Goliath, we’re going to continue to win in categories like ports, our mid-line did really well as well [indiscernible] will always be a battle, and we know that.

But it’s a good business, Steve. We like the balance, it provides us today. Let’s go back two years ago, when we first talked about our transformation into the Med Tech business that we want to be. Med Tech was only 15% of our revenue. Now you see it about a third of our revenue. So as that continues to grow, we’ll be less reliant on the device cash and stability. But today, we still think it has a good mix over time that could change.

Steve Lichtman: All right. Thanks, Jim.

Operator: Our next question is from the line of John Young with Canaccord Genuity. Please proceed with your question.

John Young: Hi, Jim, Steve. Thanks for taking our questions this morning. First for us just on Med Tech gross margin. It was a great number to see. I know you guide to 65% on the high end of the fiscal guidance for the year from Med Tech specifically, but it feels a bit conservative. Can you just talk about the puts and takes here on the gross margin for Med Tech? Thanks.

Steve Trowbridge: Yeah. So John, as we’ve talked about, right, the overall gross margin kind of long-term strategy for Angio is that you’re going to see gross margin accretion coming from this mix shift as we have the Med Tech products comprised a larger portion of our overall revenue base. We’ve seen that, but we’ve seen it at the corporate level be chewed up a little bit by some of those inflationary pressures that we’ve talked about. So on the Med Tech side specifically, increased sales in NanoKnife as we’ve stabilized, as Jayson talked about, the mechanical thrombectomy business, those are both going to be pretty good tailwinds for us on the gross margin. And then you’ve also seen, as we’ve talked about pulling back a little bit on brand-new lasers being put in the field and trying to increase utilization with those lasers on the Auryon business.

All of those things are going to be supportive of that continued shift with the Med Tech business kind of driving that shift over overall gross margins.

John Young: Great. Thanks. And then on APEX too, getting enrollment now, I saw on the slide, it’s now guided for complete by early calendar ’24. It feels like a bit of a push there. Have the other ongoing PE studies in the space impacted the ability to get patients enrolled?

Jim Clemmer: Hi, John. It’s Jim. No, I don’t think so. I think if you take a look at when we started enrollment and to when we think we finish enrollment, it’s about an 18-month window, we believe, from start to finish. I think if you go back and look at the market leader, I think, is what they took a few years ago when there’s nothing else in the field. So we were a little cautious coming out knowing that we’d be third in behind the other two players there. We thought it might be a little challenging. And it probably was initially, I think there’s a lot of momentum building in the product and physicians, their peers that use it, talk about great outcomes and shared some great outcomes along the way. So I think the momentous building, John, we’re really pleased with the schedule.

It fits what we internally had projected, and we can’t wait to get on label next year, but we’ll do the work to finish it right now. Your question is a good one because it is a space now, we’ll be third in. And it probably will be harder for others. I can’t speculate for them, but we have a unique novel device we’re bringing into that space with two other good products there. So we think we’ll really get people in choice.

John Young: Great. Thanks, Jim. And maybe just my last one I just sneak it in. Just on the strategy on capital allocation. Just thoughts on stock buyback given the strength of the balance sheet and current stock price? Thanks.

Jim Clemmer: Yeah. Steve and I talk about that a lot, and we have conversations with our Board. I think today, given that the external market kind of disruptions and where things have gone, we want our investors to say, hey, we have a strong balance sheet. They want to take a time out for a second. Steve has given you guidance as to where we think our cash utilization will be this year. And if people look back a year ago after Q1, Steve gave the same guidance, we really hit that by the end of the year. So we’re really — we think we’re in a good position to utilize the cash we have. We do have a good strong balance sheet with cash. We’ll always talk about the investments that we’re looking at. And I’m sure at some point, it will be a good conversation around a buyback.

We believe there’s a disconnect in our value today, a strong disconnect. We’ll take a look at that, but we also want to share with investors who want to ensure that we have a stable balance sheet for a while. We get their view as well.

John Young: Thanks.

Jim Clemmer: Thanks, John.

Operator: I’d now like to turn the call back over to Mr. Clemmer for any closing remarks. Mr. Clemmer?

Jim Clemmer: Thank you, operator, and thanks again to all of our AngioDynamics employees. We are on a transformation here, changing our company to one that is highly differentiated by our science and technology and provides meaningful outcomes in patient wellness when our products are utilized. Thanks again, there are tremendous employees who enabled this to occur every day. I look forward to speaking with you at the end of our Q2. Thank you.

Operator: This will conclude today’s conference. You may now disconnect your lines at this time, and thank you for your participation.