AngioDynamics' Q2 2026 Earnings Call: Contradictions Emerge on AlphaReturn Regulatory Path, Manufacturing Outsourcing Timeline, and NanoKnife Growth Outlook

Date of Call: Not specified in transcript

Financials Results

• Revenue: $79.4 million, up 8.8% YOY
• EPS: Adjusted loss per share of $0.10, compared to adjusted loss per share of $0.04 in the prior year
• Gross Margin: 56.4%, a 170 basis point increase YOY
• Operating Margin: Not explicitly provided (calculated from operating expenses as a percentage of sales)

Guidance:

• Net sales expected to be in the range of $312 million to $314 million (raised from $308M-$313M), representing growth of 6.6% to 7.3% over fiscal 2025.
• Med Tech net sales expected to grow 14% to 16%.
• Med Device sales expected to grow 0% to 1% (raised from prior guidance of flat growth).
• Gross margin expected to be 53.5% to 55.5%, inclusive of $4M-$6M tariff impact.
• Adjusted EBITDA expected to be $8 million to $10 million (raised from $6M-$10M), inclusive of tariff impact.
• Adjusted loss per share expected in the range of negative $0.33 to negative $0.23 (unchanged from prior guidance).

Business Commentary:

Strong Second Quarter Performance and Raised Full-Year Guidance:- AngioDynamics reported record revenue of $79.4 million for Q2 FY26, up 8.8% year-on-year.- This performance drove significant profitability improvement, with Adjusted EBITDA nearly doubling to $5.9 million compared to $3.1 million in Q2 FY25.- Based on this momentum, the company is raising its full-year guidance for both revenue and Adjusted EBITDA.

Key Segment Growth Trends and Drivers:- Med Tech segment revenue grew 13% to $35.7 million, with Auryon delivering its 18th consecutive quarter of double-digit growth (up 18.6%).- Mechanical thrombectomy portfolio grew 3.9%, driven by AlphaVac's strong sequential and year-on-year growth (up 40.2%). AngioVac revenue decreased 7.5% year-over-year due to a tough comparison against a particularly strong Q2 FY25.- NanoKnife revenue grew 22.2%, driven by strong prostate procedure growth. Med Device segment grew 5.6%, ahead of expectations.

Gross Margin Expansion and Cost Initiatives:- Gross margin improved 170 basis points year-on-year to 56.4% in Q2, driven by a favorable product mix shift towards higher-margin Med Tech, benefits from manufacturing transfer initiatives, and cost savings from a sales channel transaction.- For the full year, the company expects gross margin to be in the range of 53.5% to 55.5%, inclusive of $4–6 million in tariff expenses.- The strong Q2 margin was partly accelerated, and some cost savings have already been realized, which will not be fully repeated in H2 FY26 as production shifts to a third-party manufacturer in Costa Rica.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 'strong results,' 'improved profitability,' and 'adjusted EBITDA nearly doubled year-over-year.' They also raised full-year guidance for revenue and adjusted EBITDA, citing 'confidence in our ability to deliver sustained profitable growth.' The tone was optimistic across portfolio segments, with specific praise for multiple business areas and regulatory milestones.

Q&A:

• Question from Frank Takkinen (Lake Street Capital): Concerns about gross margin expectations and whether mid-50% margins can be sustained.
  Response: Gross margin benefited from positive pricing, product mix shift, and manufacturing cost savings in H1, but H2 will see structural underabsorption from production relocation without the offsetting cost cuts already realized.

• Question from Frank Takkinen (Lake Street Capital): Why mechanical thrombectomy (AngioVac) growth was weaker and the impact of new regulatory approvals like AlphaReturn.
  Response: AngioVac faced a tough YOY comp but remains strong with good YTD growth. AlphaReturn IDE approval is expected to be a catalyst for future AlphaVac growth by addressing a key customer adoption hurdle.

• Question from William Plovanic (Canaccord Genuity): Status of insurer updates for the new prostate CPT code and whether strong capital sales signaled preparation for prostate procedures.
  Response: Too early to estimate insurer updates, but the code change is a positive catalyst. Strong capital sales were driven partly by a France distribution deal and increased international demand, with U.S. sales expected to follow probe demand driven by prostate procedures.

• Question from William Plovanic (Canaccord Genuity): Expectations for adjusted EBITDA in Q3.
  Response: Adjusted EBITDA will be lower in H2 than H1 due to planned investments, but Q3 is not expected to be negative; it will be less robust than H1.

• Question from Eduardo Martinez-Montes (H.C. Wainwright): Expectations for Auryon international sales post-CE Mark and associated spend.
  Response: International sales are expected to grow over time with distributor support, but no specific market size or increased sales spend was quantified in the near term.

• Question from Eduardo Martinez-Montes (H.C. Wainwright): Timeline and R&D spend for Auryon coronary application expansion.
  Response: Coronary expansion is a longer-term strategic initiative likely requiring a PMA trial; it is not expected to significantly impact R&D spend in FY2026.

Contradiction Point 1

Regulatory Pathway for AlphaReturn (Blood Return System)

This is a **substantial contradiction** regarding the regulatory clearance type (510(k) vs. IDE) for a key product add-on, directly impacting the timeline and certainty of its market availability to drive growth.

Why was AngioVac growth below expectations? Are there factors beyond challenging YoY comparisons? What is the potential impact of AlphaReturn and recent regulatory approvals on the mechanical thrombectomy business? - Frank Takkinen (Lake Street Capital Markets)

20260106-2026 Q2: The **AlphaReturn IDE approval is a significant catalyst**... It addresses a common customer hurdle—the ability to return aspirated blood during procedures—which is expected to accelerate **AlphaVac adoption**. - James Clemmer(CEO)

What is the regulatory pathway for the AlphaVac blood return product—will it require a 510(k) or clinical trial? Is it an ancillary product? Is AlphaVac's growth constrained without it? - John Edward Young (Canaccord Genuity Corp.)

2025Q4: A blood return add-on version is in development and **requires a 510(k) clearance** with the FDA; discussions are ongoing, but no agreement has been reached yet. - James Clemmer(CEO)

Contradiction Point 2

Timeline for Manufacturing Outsourcing Benefits

This is a **substantial contradiction** concerning the expected timing for realizing cost savings and margin benefits from a major operational initiative, which is critical for financial forecasting.

Given Q2's strong gross margin performance and unchanged full-year guidance, will the mid-50% gross margin persist through the end of the year and into future years? - Frank Takkinen (Lake Street Capital Markets)

20260106-2026 Q2: For the second half, while pricing and mix benefits will continue, there will be a **structural underabsorption** cost as production shifts to a third-party manufacturer in Costa Rica. This underabsorption will not be fully offset by cost savings, as **those reductions have already been realized in the first half**. - Stephen Trowbridge(CFO)

Does FY26 gross margin guidance account for tariff impact offsets? And what portion of the outsourcing initiative's benefit will be realized in FY26? - Steven Michael Lichtman (Oppenheimer & Co. Inc.)

2025Q4: Benefits from the manufacturing transfer plan are already being seen in FY25, with **full benefits expected in FY27**. Some cost savings and margin improvement from operations are expected to continue into the back half of FY26. - Stephen A. Trowbridge(CFO)

Contradiction Point 3

Growth Trajectory and Outlook for NanoKnife

This is a **substantial contradiction** in characterizing the expected growth inflection for NanoKnife following a key CPT code change, affecting revenue projections and market confidence in the near-term catalyst.

How many insurers have updated their systems to prevent automatic denials following the CPT code change for prostate procedures? What drove the strong Q2 capital sales, and is this a precursor to increased system purchases driven by procedure volume growth? - William Plovanic (Canaccord Genuity)

20260106-2026 Q2: **NanoKnife grew 22.2%**, driven by prostate procedures and the recent CPT code change. - Stephen Trowbridge(CFO) (Implies strong growth is already materializing)

With NanoKnife's new CPT Category I codes effective January 2026, will growth see an inflection point by then? - John Edward Young (Canaccord Genuity Corp.)

2025Q4: Growth is expected to accelerate, especially in the second half of fiscal 2026. While **not an immediate 'hockey stick'**... - Stephen A. Trowbridge(CFO) (Suggests a more gradual acceleration)

Contradiction Point 4

Second Half Gross Margin Trajectory

This is a **substantial contradiction** in the CFO's guidance on gross margin stability, introducing a new structural headwind in Q2 that was not disclosed in the more optimistic Q1 commentary, impacting full-year and future-year expectations.

Given Q2's strong gross margin and unchanged full-year guidance, will the mid-50% gross margin persist through the year and into future years? - Frank Takkinen (Lake Street Capital Markets)

20260106-2026 Q2: For the second half, while pricing and mix benefits will continue, there will be a **structural underabsorption** cost as production shifts... Therefore, **gross margin is expected to remain stable but not improve significantly in H2.** - Stephen Trowbridge(CFO)

Is the raised guidance based on Mechanical Thrombectomy and NanoKnife? How to assess growth trends between them, especially with prostate reimbursement starting in Q3? - John Young (Canaccord Genuity Corp.)

2026Q1: The raised guidance is **primarily driven by Mechanical Thrombectomy and NanoKnife**... **Growth is sustained** for both AngioVac and AlphaVac in Mechanical Thrombectomy, with international contributions. - Stephen Trowbridge(CFO) (Implied strong performance and no mention of near-term margin headwinds)

Contradiction Point 5

Auryon Sales Force Investment Strategy

This is a **substantial contradiction** in the strategic emphasis and capital allocation plan for expanding the sales force to support the Auryon platform, affecting growth execution and resource planning.

What is the timeline for Auryon's expansion into coronary applications, and will this result in higher R&D spending in FY2026? - Eduardo Martinez-Montes (H.C. Wainwright)

20260106-2026 Q2: Expanding Auryon into the coronary space is a long-term strategic imperative... **R&D spend related to this initiative is not expected to be significant in FY2026**. The current year's R&D investments are focused on other clinical programs... - Stephen Trowbridge(CFO)

Will the existing commercial team handle the AMBITION study, or will expansion be needed? - Eduardo (on behalf of Yi Chen, H.C. Wainwright)

2025Q3: No **major bolus investment** in the Auryon sales force is expected right away. The team built for Auryon’s launch is sufficient... **Significant expansion is anticipated next year** to support the thrombectomy team and the new oncology CPT code. - Stephen Trowbridge(CFO)