AngioDynamics' Q2 2026: Contradictions Emerge on Gross Margins, Prostate/NanoKnife Growth, and AngioVac Projections

Date of Call: None provided

Financials Results

• Revenue: $79.4M, up 8.8% YOY
• EPS: Adjusted net loss of $0.1M; adjusted loss per share $0.10, compared to adjusted net loss $1.7M and adjusted loss per share $0.04 in Q2 FY25
• Gross Margin: 56.4%, a 170 basis point increase vs Q2 FY25

Guidance:

• Full-year net sales now expected to be $312M to $314M (up from $308M-$313M), representing ~6.6%-7.3% growth vs FY25.
• Med Tech net sales expected to grow 14% to 16%; Med Device sales expected to grow 0% to 1% (raised from flat).
• FY26 gross margin expected 53.5% to 55.5% (inclusive of $4M-$6M tariff impact).
• Adjusted EBITDA expected $8M to $10M (raised from $6M-$10M).
• Adjusted loss per share expected negative $0.33 to negative $0.23 (unchanged).
• Expect $3M-$5M cash use in Q3, then substantial cash generation in Q4; remain cash-flow positive for FY26.

Business Commentary:

* Revenue and Profitability Increase: - AngioDynamics reported an 8.8% increase in revenue to $79.4 million for Q2 2026, with Med Tech up 13%. - The growth was driven by improved execution across their portfolio, including strong performance in Auryon and improved profitability with adjusted EBITDA nearly doubling year-over-year.

• Auryon Performance and Strategy:
• Auryon revenue grew 18.6% to $16.3 million, marking the 18th consecutive quarter of double-digit year-over-year growth.

• This growth is supported by increased penetration in hospitals, international expansion following CE Mark approval, and strategic initiatives to expand the addressable market.

• Mechanical Thrombectomy Platform Traction:

• The combined mechanical thrombectomy portfolio grew 3.9%, driven by AlphaVac's sequential growth and strong year-over-year performance.

• Key regulatory milestones, including IDE approvals for APEX-Return and PAVE studies, are expected to expand clinical applications and enhance competitive positioning.

• NanoKnife Prostate Procedure Growth:

• NanoKnife revenue increased 22.2% to $7.3 million, with probe growth of 14.4%, primarily driven by prostate procedures.
• The CPT code effective on January 1 is anticipated to provide a tailwind for adoption, with physician interest and procedure volumes growing.

Sentiment Analysis:

Overall Tone: Positive

• Management: "We delivered strong results... Revenue grew 8.8%... Adjusted EBITDA nearly doubled..." and "based on our strong performance, we are raising our full year guidance." CFO: raised revenue and adjusted EBITDA guidance and noted positive cash generation and margin improvement (56.4%, +170 bps YOY).

Q&A:

• Question from Frank Takkinen (Lake Street Capital): Jim, congratulations on the retirement. I was hoping to start with a question around gross margin. It feels like that really outperformed nicely in the quarter, and obviously saw the guidance stay unchanged. Any comments around kind of gross margin expectations and why we shouldn't see that kind of mid-50% gross margin stay throughout the end of the year and into the following years?
  Response: H1 margin benefit from price, Med Tech mix and accelerated manufacturing cost savings; in H2 expect structural underabsorption as final production moves to Costa Rica partially offset by earlier cost cuts, so gross margin should stay within guided 53.5%-55.5% range.

• Question from Frank Takkinen (Lake Street Capital): Maybe just for my second one, I was hoping to talk a little bit more about mechanical thrombectomy. I heard the comments around AngioVac had a more challenging year-over-year comp, but I was curious if there's anything else going on in that business. We were hoping it would be a little bit stronger growth, but I understand it was off a pretty tough comp. And then maybe as a second part to that, if you could talk about kind of ApexReturn and some of the other work in right heart and what that might do to the growth profile of that line item over time?
  Response: AlphaVac is gaining share and growing sequentially; AngioVac saw a tough Q2 comp but is up 11% YTD; IDE approvals (AlphaReturn and PAVE) should remove adoption hurdles and act as catalysts to accelerate future growth.

• Question from William Plovanic (Canaccord Genuity): In terms of prostate, just talk about the change to the Level 1 CPT code. How many insurers have really made that back-end change to reflect the coding change to prevent the automatic denials so far by your estimation? And I noticed that capital was a really strong quarter—is that a precursor to the prostate is they're buying the systems to get ready to do procedures?
  Response: Too early to quantify insurer updates after the CPT change; the team is monitoring and expects a Medicare tailwind. Capital strength was partly due to the France distribution transaction (~$1M NanoKnife capital) and continued international capital demand; probe growth signals procedure-driven adoption.

• Question from William Plovanic (Canaccord Genuity): On EBITDA, you mentioned that the back half would be lower than the first half. Directionally, how do we think of adjusted EBITDA in the third quarter? Is it going to be negative?
  Response: We don't expect Q3 adjusted EBITDA to be negative; it will be lower than H1 as planned investments (sales force and clinical/R&D initiatives) ramp, with full-year adjusted EBITDA still guided to $8M-$10M.

• Question from Eduardo Martinez-Montes (H.C. Wainwright): You mentioned the CE Mark for Auryon—what are your expectations for international sales, specific regions to target, any increased sales spend, and can you quantify the opportunity or expectations for this year?
  Response: CE Mark enabled early international uptake via our distributor network; initial growth is emerging without large incremental sales spend this year; international will gradually increase as a percent of total sales, but no quantified capture given early stage.

• Question from Eduardo Martinez-Montes (H.C. Wainwright): On Auryon expansion into coronary applications—do you have a timeline and will there be increased R&D spend in 2026?
  Response: Coronary expansion is a longer-term strategic objective likely requiring a PMA trial; not expecting significant incremental R&D spend in 2026 tied to this initiative.

Contradiction Point 1

Gross Margin and Financial Expectations

It involves changes in financial forecasts, specifically regarding gross margin expectations, which are critical indicators for investors.

Can you explain the factors driving the gross margin outperformance and why it may not be sustainable at mid-50% levels long-term? - Frank Takkinen(Lake Street Capital)

20260106-2026 Q2: Gross margin performance was strong due to increased pricing in Med Tech and Med Device segments. The mix shift towards Med Tech and cost optimization from manufacturing transfers contributed positively. In the second half, some underabsorption is expected due to structural costs from manufacturing transfers, but these were offset by earlier cost reductions. - Stephen Trowbridge(CFO)

Guiding to 58.5% gross margin in Q1 vs. 57.1%? Can you explain the drivers? Why the 500 bps Q4 gross margin miss despite pricing leverage mentioned? - John Young(Canaccord Genuity Corp.)

2026Q1: We expect GAAP gross margin for the first quarter of fiscal 2026 to be approximately 58.5%, and we expect fiscal year 2026 GAAP gross margin to be approximately 56%. - Stephen Trowbridge(CFO)

Contradiction Point 2

Prostate Initiative and NanoKnife Growth

It involves expectations for the growth and market adoption of the NanoKnife product, which impacts revenue projections and market positioning.

Is the Med Tech guidance increase primarily driven by Mechanical Thrombectomy and NanoKnife segments? Can you provide details on the growth cadence between these two segments, especially with the prostate reimbursement in fiscal Q3? - John Young(Canaccord Genuity Corp.)

20260106-2026 Q2: NanoKnife's growth is expected to continue short-term and long-term. We anticipate growth from January's CPT I code but not as an immediate hockey stick effect. - Stephen Trowbridge(CFO)

Does the Med Tech guidance increase primarily stem from Mechanical Thrombectomy and NanoKnife? Can you clarify the growth trajectory between these segments, particularly with prostate reimbursement in Q3? - John Young(Canaccord Genuity Corp.)

2026Q1: The NanoKnife's growth comes from the prostate initiative. The product is stocked by customers to treat patients, with ongoing probe purchases expected. - Stephen Trowbridge(CFO)

Contradiction Point 3

Gross Margin Expectations

It involves changes in financial forecasts, specifically regarding gross margin expectations, which are critical indicators for investors.

Can you explain the gross margin outperformance and why it won't persist beyond the mid-50% range for the year? - Frank Takkinen (Lake Street Capital)

20260106-2026 Q2: Gross margin performance was strong due to increased pricing in Med Tech and Med Device segments. The mix shift towards Med Tech and cost optimization from manufacturing transfers contributed positively. In the second half, some underabsorption is expected due to structural costs from manufacturing transfers, but these were offset by earlier cost reductions. - Stephen Trowbridge(CFO)

What is the pathway forward for the AlphaVac blood return product? Is it a 510(k) product and an ancillary product to the existing AlphaVac business? Is AlphaVac revenue growth limited without this product? - John Edward Young (Canaccord Genuity)

2025Q4: We still expect the full-year '25 gross margin to be in the low 50's, as we had previously guided. In fiscal '26, we expect gross margins to be in the mid-50s, with our first-half fiscal '26 gross margin set to be mid-55%. - Stephen A. Trowbridge(CFO)

Contradiction Point 4

AngioVac Growth and Projections

It involves changes in expectations for the growth and performance of a key product, which could impact revenue projections and investor expectations.

Can you discuss the mechanical thrombectomy business, AngioVac's growth prospects, and ApexReturn's impact? - Frank Takkinen (Lake Street Capital)

20260106-2026 Q2: AlphaVac's growth is strong with new accounts and physician buy-in due to product design. AngioVac had a tough comparison but was up 11% in the first half. - James Clemmer(CEO)

Is the $6.8 million from AngioVac a sustainable foundation for the business moving forward? - John Young (Canaccord Genuity)

2025Q3: AngioVac revenue was $6.8 million for the third quarter of fiscal 2025, up 89% from the prior year. For the first nine months of fiscal year 2025, AngioVac revenue was $15.9 million, up 111% from the prior year. - Stephen Trowbridge(CFO)