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AngioDynamics Reports Q2 Fiscal 2009 Results

AngioDynamics, Inc. (AngioDynamics) has reported net sales of $48.5 million for the second quarter of fiscal 2009, up 17%, compared with the net sales of $41.5 million in the year-ago quarter. It has also reported a net income of $2.9 million, or $0.12 per share, for the second quarter of fiscal 2009, compared with the net income of $3.1 million, or $0.13 per share, in the year-ago quarter.

Gross margin in the second quarter was 61.3%, consistent with the gross margin reported for the same period one year ago. Operating income increased in the second quarter to $4.9 million compared with $4.8 million in the prior year period. EBITDA (Non GAAP) increased 11% to $7.8 million or $0.32 per share from $7.0 million or $0.29 per share in the second quarter a year ago. A non-cash charge associated with an interest rate swap initiated in 2006 and foreign exchange losses reduced second quarter pretax income by $570,000 and net income by $350,000, or a total of $0.01 per share.

For the six months ended November 30, 2008, net sales were $92.8 million, a 17% increase over the $79.0 million reported in the prior year period; gross margin increased to 61.6% from 60.7% a year ago; operating income increased to $8.7 million from $8.3 million a year ago; and net income was $5.1 million or $0.21 per share, compared with $5.5 million or $0.23 per share for the corresponding period a year ago. EBITDA (Non GAAP) increased 15% to $14.5 million or $0.59 per share from $12.6 million or $0.52 per share in the first half last year. The aforementioned non-cash charge on the interest rate swap and foreign exchange losses reduced first half pretax income by $800,000 and net income by $500,000, or $0.02 per share.

In fiscal 2009, AngioDynamics began operating three business units: Peripheral Vascular, Access and Oncology/Surgery. Peripheral Vascular sales were $21.8 million in the quarter, an increase of 33% from the second quarter a year ago, inclusive of the laser ablation products acquired from Diomed. Access sales were $16.1 million in the quarter, an increase of 2% from the second quarter a year ago, and Oncology/Surgery sales grew 13% to $10.6 million in the second quarter.

“Our second quarter results illustrate the benefit of our diverse product offering,” said Eamonn Hobbs, president and CEO. “The favorable impact of the acquired Diomed products, combined with strong sales growth from the LC Bead, Smart PortCT, Morpheus insertion kit and VenaCure EVLT™ procedure kit product lines overcame lower sales from our conventional ports, PTA, Habib, and RF ablation product lines. In addition, while sales of the Morpheus PICC line were impacted by the previously disclosed manufacturing issue incurred in the first quarter, the issue was successfully resolved and Morpheus PICC sales during the final month of the quarter regained momentum. Overall, for the quarter our net sales growth was 17% and, importantly, we recorded our first IRE NanoKnife sales in the quarter,” said Hobbs.

Highlights of the quarter and more recent activities include the following:

Substantial progress in integrating the acquired Diomed business into the Peripheral Vascular business unit. The entire Peripheral Vascular sales force has been trained on the VenaCure EVLT product line and kit sales were extremely strong in the quarter. Laser sales were below expectations, as prospective customers remain cautious. Occupancy costs in Cambridge, England were lowered 35% through relocation to smaller premises.

The company’s first commercial sale of NanoKnife probes, contributed $42,000 to second quarter sales.

Continued positive clinical uses of NanoKnife, as five sites in the USA, Australia, Germany and Italy have completed a total of 35 IRE procedures for percutaneous prostate, percutaneous and laparoscopic liver, kidney, lymph node, and lung lesions as of the date of this release. The physicians performing the percutaneous IRE procedures have all reported NanoKnife IRE system ease of use, rapid radiographic lesion resolution, and short procedure times required compared to other focal therapies. Most patients treated have also commented on a distinct lack of, or very minimal, pain, especially when compared to previous thermal focal therapy treatments.

Additional shipments of NanoKnife IRE systems to hospitals in the USA, Australia, Italy and Germany under the company’s program to place systems with 25 key thought leaders, including 5 of the top 10 cancer centers in the USA. This brings the number of systems shipped to key thought leaders from various clinical specialties to 19. Two of these sites have also completed pre-clinical pancreatic IRE safety studies.

Receipt of CE Mark approval for both NanoKnife IRE electrode models has enabled the sale of NanoKnife IRE systems within the European Union. TGA and HPB approvals for Australia and Canada, respectively, are pending.

The company reported cash and investments at November 30, 2008 of $57.8 million and long term debt of $7.2 million.

Fiscal 2009 Guidance

The company has updated its outlook for fiscal 2009 incorporating first half financial performance as well as the overall current economic environment. The company now expects the following financial results for the fiscal year, with reference to previous guidance:

Net sales in the range of $198 to $203 million (a decrease of $5 million)

Gross margin in the range of 61-62% (an increase of 1%)

GAAP operating income in the range of $19-21 million (a decrease of $1-2 million)

EBITDA in the range of $31 – $33 million (a decrease of $1-2 million)

GAAP EPS in the range of $0.45 to $0.50, inclusive of additional operating expenses of $0.05 per share associated with the CEO transition and non-operating expenses of $0.03 per share as a result of the impact of the interest rate swap and foreign exchange losses (versus approximately $0.55 per share).