{"id":62007,"date":"2023-09-17T04:23:34","date_gmt":"2023-09-17T08:23:34","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/angiodynamics-ango-enormous-effort-required-in-fiscal-24-to-reverse-the-equity-picture\/"},"modified":"2023-09-17T04:23:38","modified_gmt":"2023-09-17T08:23:38","slug":"angiodynamics-ango-enormous-effort-required-in-fiscal-24-to-reverse-the-equity-picture","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=62007","title":{"rendered":"AngioDynamics (ANGO): Enormous Effort Required In Fiscal ’24 To Reverse The Equity Picture"},"content":{"rendered":"
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Investment Briefing<\/h2>\n

AngioDynamics, Inc. (NASDAQ:ANGO<\/span>) posted its fiscal ’23 numbers last month, with mixed results. On the one hand, divisional growth was strong in Med Tech and parts of its mechanical thrombectomy lines. On the other, profitability didn’t even attend the party, whereas investors were left with a hangover from the downsides in its stock price, as the 18-month downtrend continues well in situ [Figure 1].<\/span><\/p>\n

In the last ANGO publication, I rhapsodized at length about the importance of turning a profit and beefing up cash flows. The company’s investment needs aren’t high, but it has ambitious growth plans, and the cash for this needs to come from somewhere. Turning to its ’23 numbers, the major takeout was the Med Tech segment, ANGO’s new focus area. And for good measure, too, it’s also the higher growth, higher-margin business. Per the CEO on the call:<\/span><\/p>\n

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In 2019, we began a transformation of AngioDynamics. The first step of the transformation was to fundamentally change our portfolio to incorporate platform technologies that can provide a unique advantage and compete in higher-growth, high-margin, large total addressable markets.<\/em><\/p>\n

In July of 2021, we articulated a goal of executing to a three-year CAGR for our Med Tech segment of 30% to 35%. Through two years of that three-year plan, our Med Tech segment has a CAGR of 33%.<\/em><\/p>\n

The next phase of our transformation is to address the scale and structural limitations of our operating footprint in a capital-efficient manner.” <\/em><\/p>\n<\/blockquote>\n

This report will unpack the company’s results and link this back to its economic performance, and the requirements + expectations moving forward. Net-net, I continue to rate ANGO a hold for the reasons raised here today.<\/p>\n

Figure 1. <\/strong>ANGO continues in a c.2-year downtrend, repricing off $30.00 highs to trade in the $7’s at the time of writing.<\/em><\/p>\n

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Data: Updata<\/span><\/p>\n<\/figcaption><\/figure>\n

Critical investment facts to reiterate hold thesis<\/h2>\n

1. Key insights from fiscal ’23<\/em><\/h4>\n

ANGO had a reasonably successful fiscal year in ’23 and put up revenues of ~$339mm, up 7.1% YoY. This was a shade off my estimates of $347mm. Q4 sales were $91.1mm, 4.7% growth YoY. It pulled this to gross margin of 51.4%, ~100bps decompression, on adj. EBITDA of $22.6mm (up 830bps). Whilst it’s still early days, looking out to fiscal ’24, management projects top-line sales $328mm\u2014$333mm on a of loss of $0.28\u2014$0.34\/share. Critically, this is a lower number vs. ’23, but ANGO divested from its dialysis and BioSentry business midway through the year. So the ‘pro-forma’ revenues in ’23 are $306mm; hence, it would be looking to grow sales ~8\u20139% on this basis.<\/p>\n

As to the Q4 + FY’23 insights:<\/em><\/strong><\/p>\n

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  1. Med Tech and Medical devices are the major focus going forward<\/em>\n