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What changed in ANGIODYNAMICS INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ANGIODYNAMICS INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+230 added−210 removedSource: 10-K (2023-08-03) vs 10-K (2022-07-22)

Top changes in ANGIODYNAMICS INC's 2023 10-K

230 paragraphs added · 210 removed · 168 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

53 edited+3 added−10 removed117 unchanged
Biggest changeWe will refer to these high technology product lines as our Med Tech business and we will refer to the remainder of the portfolio as our Med Device business. All products discussed below have been cleared for sale in the United States by the Food and Drug Administration. International regulatory clearances vary by product and jurisdiction.
Biggest changeAll products discussed below have been cleared for sale in the United States by the Food and Drug Administration. International regulatory clearances vary by product and jurisdiction. Med Tech Auryon The Auryon Atherectomy System is one of our latest advancements in peripheral arterial disease.
The Company grew over the following years as a result of acquisitions of companies including RITA Medical Systems in January 2007, Oncobionic in May 2008, Vortex Medical, Inc. in October 2012, Clinical Devices in August 2013, the assets of Diomed in June 2008 and the assets of Microsulis Medical Limited in January 2013.
The Company grew over the following years as a result of acquisitions of companies including RITA Medical Systems in January 2007, Oncobionic in May 2008, the assets of Diomed in June 2008, Vortex Medical, Inc. in October 2012, the assets of Microsulis Medical Limited in January 2013, and Clinical Devices in August 2013.
Campbell joined AngioDynamics from Medtronic where he served as the Vice President of Marketing for the Patient Care and Safety business after serving as the Vice President of Marketing for the SharpSafety business at Covidien (Medtronic). During his tenure at Covidien, Mr.
Mr. Campbell joined AngioDynamics from Medtronic where he served as the Vice President of Marketing for the Patient Care and Safety business after serving as the Vice President of Marketing for the SharpSafety business at Covidien (Medtronic). During his tenure at Covidien, Mr.
Item 1A "Risk Factors" in this Annual Report on Form 10-K. ENVIRONMENTAL, HEALTH AND SAFETY We are subject to federal, state and local laws, rules, regulations and policies governing the use, generation, manufacture, storage, air emission, effluent discharge, handling and disposal of certain hazardous and potentially hazardous substances used 12 in connection with our operations.
Item 1A "Risk Factors" in this Annual Report on Form 10-K. ENVIRONMENTAL, HEALTH AND SAFETY We are subject to federal, state and local laws, rules, regulations and policies governing the use, generation, manufacture, storage, air emission, effluent discharge, handling and disposal of certain hazardous and potentially hazardous substances used in connection with our operations.
Advanced features of the BioFlo Port include multiple profile and catheter options, a large septum area for ease of access and the ability to administer contrast through a CT injection for purposes of imaging. • SmartPort, SmartPort+, SmartPort Plastic : The SmartPort power-injectable port with Vortex technology offers the ability for a clinician to access a vein for both the delivery of medications or fluids and for administering power-injected contrast to perform a CT scan.
Advanced features of the BioFlo Port include multiple profile and catheter options, a large septum area for ease of access and the ability to administer contrast through a CT injection for purposes of imaging. • SmartPort, SmartPort+, SmartPort Plastic : The SmartPort power-injectable port with Vortex technology offers the ability for a clinician to access a vein for both the delivery of medications or fluids and for administering power- 6 injected contrast to perform a CT scan.
The funnel shaped tip enhances venous drainage flow when the distal tip is exposed by retracting the sheath, helps prevent clogging of the cannula with commonly encountered undesirable intravascular material, and facilitates embolic removal of such extraneous material. AlphaVac The AlphaVac System is an emergent mechanical aspiration device that eliminates the need for perfusionist support.
The funnel shaped tip enhances venous drainage flow when the distal tip is exposed by retracting the sheath, helps prevent clogging of the cannula with commonly encountered undesirable intravascular material, and facilitates embolic removal of such extraneous material. 3 AlphaVac The AlphaVac System is an emergent mechanical aspiration device that eliminates the need for perfusionist support.
After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, requires a new 510(k) clearance. The 510(k) clearance procedure including questions and responses may take up to 12 months. In some cases, supporting clinical data may be required.
After a device receives 510(k) clearance, any modification that could significantly affect 10 its safety or effectiveness, or that would constitute a major change in its intended use, requires a new 510(k) clearance. The 510(k) clearance procedure including questions and responses may take up to 12 months. In some cases, supporting clinical data may be required.
Two lines are available in stiff/standard, 10cm or 15cm and echogenic for visibility under ultrasound guidance: Micro Introducer Kit and Ministick Max. BioFlo AngioDynamics offers the BioFlo catheter, the only catheter on the market with Endexo Technology, a material more resistant to thrombus accumulation, in vitro (based on platelet count).
Two lines are available in stiff/standard, 10cm or 15cm and echogenic for visibility under ultrasound guidance: Micro Introducer Kit and Ministick Max. 5 BioFlo AngioDynamics offers the BioFlo catheter, the only catheter on the market with Endexo Technology, a material more resistant to thrombus accumulation, in vitro (based on platelet count).
AngioVac devices are for use with other manufacturers’ off-the-shelf pump, filter and reinfusion cannula, to facilitate venous drainage as part of an extracorporeal bypass procedure. 3 The AngioVac venous drainage cannula is a 22 French flat coil-reinforced cannula designed with a proprietary self-expanding nitinol reinforced funnel shaped distal tip.
AngioVac devices are for use with other manufacturers’ off-the-shelf pump, filter and reinfusion cannula, to facilitate venous drainage as part of an extracorporeal bypass procedure. The AngioVac venous drainage cannula is a 22 French flat coil-reinforced cannula designed with a proprietary self-expanding nitinol reinforced funnel shaped distal tip.
Procedure kits are available in a variety of lengths and configurations to accommodate varied patient anatomies. The VenaCure EVLT system comes with a comprehensive physician training program and extensive marketing support. Microwave Ablation Solero Microwave Tissue Ablation (MTA) System The Solero MTA System features the Solero Microwave (MW) Generator and the specially designed Solero MW Applicators.
Procedure kits are available in a variety of lengths and configurations to accommodate varied patient anatomies. The VenaCure EVLT system comes with a comprehensive physician training program and extensive marketing support. 7 Microwave Ablation Solero Microwave Tissue Ablation (MTA) System The Solero MTA System features the Solero Microwave (MW) Generator and the specially designed Solero MW Applicators.
As part of the PMA approval the FDA may place 10 restrictions on the device, such as requiring additional patient follow-up for an indefinite period of time. If the FDA’s evaluation of the PMA application or the manufacturing facility is not favorable, the FDA may deny approval of the PMA application or issue a “not approvable” letter.
As part of the PMA approval the FDA may place restrictions on the device, such as requiring additional patient follow-up for an indefinite period of time. If the FDA’s evaluation of the PMA application or the manufacturing facility is not favorable, the FDA may deny approval of the PMA application or issue a “not approvable” letter.
International partners that are participating in the MDSAP include: • Therapeutic Goods Administration of Australia • Brazil’s Agência Nacional de Vigilância Sanitária • Health Canada • Japan’s Ministry of Health, Labour and Welfare, and the Japanese Pharmaceuticals and Medical Devices Agency • U.S.
International partners that are participating in the MDSAP include: • Therapeutic Goods Administration of Australia 9 • Brazil’s Agência Nacional de Vigilância Sanitária • Health Canada • Japan’s Ministry of Health, Labour and Welfare, and the Japanese Pharmaceuticals and Medical Devices Agency • U.S.
Clemmer currently serves on the Board of Directors for AngioDynamics and previously served on the Board of Directors for Lantheus Medical Imaging. Mr. Clemmer is a graduate of the Massachusetts College of Liberal Arts, where he served as interim president from August 2015 until March 2016. Stephen A.
Clemmer currently serves on the Board of Directors for 13 AngioDynamics and previously served on the Board of Directors for Lantheus Medical Imaging. Mr. Clemmer is a graduate of the Massachusetts College of Liberal Arts, where he served as interim president from August 2015 until March 2016. Stephen A.
Accordingly, investors should monitor our website, in addition to following our press releases, SEC filings and public conference calls and webcasts. We use these channels as well as social media and blogs to communicate with the public about our company, our services and other issues.
Accordingly, investors should monitor our website, in addition to following our press releases, SEC filings and public conference calls and webcasts. We use these channels as well 14 as social media and blogs to communicate with the public about our company, our services and other issues.
It is possible that the information we post on social media and blogs could be deemed to be material information. Therefore, we encourage 14 investors, the media, and others interested in our Company to review the information we post on the social media channels and blogs listed on our website.
It is possible that the information we post on social media and blogs could be deemed to be material information. Therefore, we encourage investors, the media, and others interested in our Company to review the information we post on the social media channels and blogs listed on our website.
Additionally, products are sold under product trademarks and/or registered product trademarks owned by AngioDynamics, Inc., or an affiliate or subsidiary. Some products contain trademarks of companies other than AngioDynamics. See Part I, Item 3 "Legal Proceedings" and Note 16 to the consolidated financial statements in this Annual Report on Form 10-K for additional details on litigation regarding proprietary technology.
Additionally, products are sold under product trademarks and/or registered product trademarks owned by AngioDynamics, Inc., or an affiliate or subsidiary. Some products contain trademarks of companies other than AngioDynamics. See Part I, Item 3 "Legal Proceedings" and Note 17 to the consolidated financial statements in this Annual Report on Form 10-K for additional details on litigation regarding proprietary technology.
We continue to focus on meeting the demand for our product and working towards standard inventory and backlog levels in fiscal year 2023. See Part I, Item 1A "Risk Factors" in this Annual Report on Form 10-K. INTELLECTUAL PROPERTY Patents, trademarks and other proprietary rights are very important to our business.
We continue to focus on meeting the demand for our product and working towards standard inventory and backlog levels in fiscal year 2024. See Part I, Item 1A "Risk Factors" in this Annual Report on Form 10-K. INTELLECTUAL PROPERTY Patents, trademarks and other proprietary rights are very important to our business.
The energy delivery is hyperechoic and can be monitored under real-time ultrasound. 4 Peripheral Products (Core) We offer a comprehensive portfolio for minimally invasive peripheral products. Product categories include an extensive line of angiographic catheters and diagnostic and interventional guidewires, percutaneous drainage catheters and coaxial micro-introducer kits.
The energy delivery is hyperechoic and can be monitored under real-time ultrasound. 4 Med Device Peripheral Products (Core) We offer a comprehensive portfolio for minimally invasive peripheral products. Product categories include an extensive line of angiographic catheters and diagnostic and interventional guidewires, percutaneous drainage catheters and coaxial micro-introducer kits.
For additional information, see both Part I, Item 3 "Legal Proceedings" and Note 16 to the consolidated financial statements in this Annual Report on Form 10-K.
For additional information, see both Part I, Item 3 "Legal Proceedings" and Note 17 to the consolidated financial statements in this Annual Report on Form 10-K.
Executive Officers of the Company The following table sets forth certain information with respect to our executive officers. Name Age Position James C. Clemmer 58 President and Chief Executive Officer Stephen A. Trowbridge 47 Executive Vice President and Chief Financial Officer Chad T.
Executive Officers of the Company The following table sets forth certain information with respect to our executive officers. Name Age Position James C. Clemmer 59 President and Chief Executive Officer Stephen A. Trowbridge 49 Executive Vice President and Chief Financial Officer Chad T.
EMPLOYEES As of May 31, 2022, we had approximately 760 full time employees. None of our employees are represented by a labor union and we have never experienced a work stoppage.
EMPLOYEES As of May 31, 2023, we had approximately 815 full time employees. None of our employees are represented by a labor union and we have never experienced a work stoppage.
As of October 2021, Mr. Campbell assumed responsibility of the Oncology Global Business Unit in addition to his role of General Manager for Vascular Access. In his role, Mr. Campbell oversees research and development and global commercialization of the Global Business Unit’s portfolio. Mr.
Campbell joined AngioDynamics in May 2016 as the Senior Vice President and General Manager for Vascular Access. As of October 2021, Mr. Campbell assumed responsibility of the Oncology Global Business Unit in addition to his role of General Manager for Vascular Access. In his role, Mr. Campbell oversees research and development and global commercialization of the Global Business Unit’s portfolio.
Clemmer became our President and Chief Executive Officer (CEO) in April 2016. Prior to joining AngioDynamics, Mr. Clemmer served as President of the $1.8 billion medical supplies segment at Covidien plc. where he directed the strategic and day-to-day operations for global business divisions that collectively manufactured 23 different product categories.
Prior to joining AngioDynamics, Mr. Clemmer served as President of the $1.8 billion medical supplies segment at Covidien plc. where he directed the strategic and day-to-day operations for global business divisions that collectively manufactured 23 different product categories.
In fiscal year 2022, COVID-19 related issues including the Company's ability to manufacture products, the reliability of our supply chain, labor shortages, backlog and inflation (including the cost and availability of raw materials, direct labor and shipping) have impacted our business and resulted in a backlog of $8.4 million at the end of the fourth quarter.
In fiscal year 2023, the Company's ability to manufacture products, the reliability of our supply chain, labor shortages, backlog and inflation (including the cost and availability of raw materials, direct labor and shipping) have impacted our business and resulted in a backlog of $2.7 million at the end of the fourth quarter.
INSURANCE Our product liability insurance coverage is limited to a maximum of $10 million per product liability claim and an annual aggregate policy limit of $10 million, subject to a self-insured retention of $500,000 per occurrence and $2 million in the aggregate.
Item 1A "Risk Factors" in this Annual Report on Form 10-K. 12 INSURANCE Our product liability insurance coverage is limited to a maximum of $10 million per product liability claim and an annual aggregate policy limit of $10 million, subject to a self-insured retention of $500,000 per occurrence and $2 million in the aggregate.
We believe that we have a reputation among interventional physicians as a strong partner for developing high quality products because of our tradition of close physician collaboration, dedicated market focus, responsiveness and execution capabilities for product development and commercialization.
We believe that we have a reputation among interventional physicians as a strong partner for developing high quality products because of our tradition of close physician collaboration, dedicated market focus, responsiveness and execution capabilities for product development and commercialization. We recognize the importance of, and intend to continue to make investments in R&D.
The needles’ low profile design is intended to allow clinicians to easily dress the site. 6 Dialysis Products We market an extensive line of dialysis products that provide short and long-term vascular access for dialysis patients. Dialysis, or cleaning of the blood, is necessary in conditions such as acute renal failure, chronic renal failure and end-stage renal disease (ESRD).
Dialysis Products We market an extensive line of dialysis products that provide short and long-term vascular access for dialysis patients. Dialysis, or cleaning of the blood, is necessary in conditions such as acute renal failure, chronic renal failure and end-stage renal disease (ESRD).
BioFlo catheters are available across the Vascular Access family of products, including PICCs, midlines, ports and dialysis catheters. 5 Midlines Midline catheters are inserted via the same veins used for PICC placement in the middle third of the upper arm; however, the midline catheter is advanced and placed so that the catheter tip is level or near the level of the axilla and distal to the shoulder.
Midlines Midline catheters are inserted via the same veins used for PICC placement in the middle third of the upper arm; however, the midline catheter is advanced and placed so that the catheter tip is level or near the level of the axilla and distal to the shoulder.
On December 17, 2019, the Company acquired the C3 Wave tip location asset from Medical Components Inc. On July 27, 2021, AngioDynamics acquired the Camaro Support Catheter asset from QX Medical, LLC. AngioDynamics is publicly traded on the NASDAQ stock exchange under the symbol ANGO.
On December 17, 2019, the Company acquired the C3 Wave tip location asset from Medical Components Inc. On July 27, 2021, AngioDynamics acquired the Camaro Support Catheter asset from QX Medical, LLC. AngioDynamics is publicly traded on the NASDAQ stock exchange under the symbol ANGO. PRODUCTS Our product offerings fall within two segments, Med Tech and Med Device.
This happens through internal product development, technology licensing, strategic alliances and acquisitions. Our research and development (R&D) teams work closely with our marketing teams, sales force and regulatory and compliance teams to incorporate customer feedback into our development and design process.
Our research and development (R&D) teams work closely with our marketing teams, sales force and regulatory and compliance teams to incorporate customer feedback into our development and design process.
We believe our products compete primarily based on their quality, clinical outcomes, ease of use, reliability, physician familiarity and cost-effectiveness. In the current environment of managed care, which is characterized by economically motivated buyers, consolidation among health care providers, increased competition and declining reimbursement rates, we have been increasingly required to compete on the basis of price.
In the current environment of managed care, which is characterized by economically motivated buyers, consolidation among health care providers, increased competition and declining reimbursement rates, we have been increasingly required to compete on the basis of price.
Auryon The Auryon Atherectomy System is one of our latest advancements in peripheral arterial disease. The Auryon system is designed to deliver an optimized wavelength, pulse width, and amplitude to remove lesions while preserving vessel wall endothelium. Additionally, the Auryon system includes aspiration which enhances the safety of the procedure.
The Auryon system is designed to deliver an optimized wavelength, pulse width, and amplitude to remove lesions while preserving vessel wall endothelium. Additionally, the Auryon system includes aspiration which enhances the safety of the procedure. Regardless of lesion type, the Auryon system provides safety and efficacy.
The BioFlo catheter’s long-term durability and efficacy is intended to provide clinicians a high degree of safety and confidence in providing better patient care and improved patient outcomes.
The BioFlo catheter’s long-term durability and efficacy is intended to provide clinicians a high degree of safety and confidence in providing better patient care and improved patient outcomes. BioFlo catheters are available across the Vascular Access family of products, including PICCs, midlines, ports and dialysis catheters.
In addition, the Solero MTA System offers physicians scalability with a single applicator designed for multiple, predictable ablation volumes by varying time and wattage.
In addition, the Solero MTA System offers physicians scalability with a single applicator designed for multiple, predictable ablation volumes by varying time and wattage. Solero is a single applicator system able to complete up to a 5 cm ablation in six (6) minutes at maximum power.
For a typical 5 cm ablation using our StarBurst Xli-enhanced disposable device, the ablation process takes approximately ten (10) minutes. The RFA system consists of a radiofrequency generator and a family of disposable devices.
During the procedure, our system automatically adjusts the amount of energy delivered in order to maintain the temperature necessary to ablate the targeted tissue. For a typical 5 cm ablation using our StarBurst Xli-enhanced disposable device, the ablation process takes approximately ten (10) minutes. The RFA system consists of a radiofrequency generator and a family of disposable devices.
During the fourth quarter of fiscal year 2022, AngioDynamics entered into a supply agreement with Precision Concepts, Costa Rica S.A., a Costa Rica corporation, with its principal place of business in Alajuela, Costa Rica.
During the fourth quarter of fiscal year 2022, AngioDynamics entered into a supply agreement with Precision Concepts, Costa Rica S.A., a Costa Rica corporation, with its principal place of business in Alajuela, Costa Rica. Precision Concepts is manufacturing, storing, and handling certain products for the Company and is registered with the FDA and certified to the ISO 13485 standard.
Precision Concepts is manufacturing, storing, and handling certain products for the Company and is registered with the FDA and certified to the ISO 13485 standard. 9 BACKLOG We have historically kept sufficient inventory on hand to ship product within 24-48 hours of order receipt to meet customer demand.
The Company also relies on third party manufacturers for the manufacturing of certain products. BACKLOG We have historically kept sufficient inventory on hand to ship product within 24-48 hours of order receipt to meet customer demand.
Regardless of lesion type, the Auryon system provides safety and efficacy. The Auryon system is indicated for use in the treatment, including atherectomy, of infrainguinal stenoses and occlusions, including in-stent restenosis (ISR).
The Auryon system is indicated for use in the treatment, including atherectomy, of infrainguinal stenoses and occlusions, including in-stent restenosis (ISR), and to aspirate thrombus adjacent to stenoses in native and stented infrainguinal arteries.
Clinical evaluations of products under MDR requires more information than previously required. All devices must have current clinical literature that specifically addresses data-driven safety and performance criteria, and legacy devices often require additional biocompatibility, bench testing and redesign to address changes in standards over time.
All devices must have current clinical literature that specifically addresses data-driven safety and performance criteria, and legacy devices often require additional biocompatibility, bench testing and redesign to address changes in standards over time. Additionally, there can be extended time frames under MDR for product certifications that can be 12-18 months or longer.
Alatus Vaginal Balloon Packing System The Alatus device was developed with the patient's comfort in mind and to assist the physician to move healthy tissue away from the radiation treatment field. Prior to the Alatus device, the clinician would push gauze into the vagina to move the bladder and bowel away from the radiation treatment field.
Lastly, the IsoLoc device repositions and lifts the bowel in patients that have a low-lying bowel. 8 Alatus Vaginal Balloon Packing System The Alatus device was developed with the patient's comfort in mind and to assist the physician to move healthy tissue away from the radiation treatment field.
Secondly, the structure of the ERB aids in defining the anatomy for difficult planning scenarios with post-radical patients. Lastly, the IsoLoc device repositions and lifts the bowel in patients that have a low-lying bowel.
Secondly, the structure of the ERB aids in defining the anatomy for difficult planning scenarios with post-radical patients.
We recognize the importance of, and intend to continue to make investments in, R&D. 8 COMPETITION We encounter significant competition across our product lines and in each market in which our products are sold. These markets are characterized by rapid change resulting from technological advances, scientific discoveries and changing customer needs and expectations.
COMPETITION We encounter significant competition across our product lines and in each market in which our products are sold. These markets are characterized by rapid change resulting from technological advances, scientific discoveries and changing customer needs and expectations. We face competitors, ranging from large manufacturers with multiple business lines, to small manufacturers that offer a limited selection of products.
New products must be compliant with the Medical Device Regulation ("MDR") as of May 2021 and previously CE Marked products must become compliant when their certification expires, with a transition period ending May 2025. Products with an expiring certification must be in distribution before certification expiration dates to continue to be sold.
New 11 products must be compliant with the Medical Device Regulation ("MDR") as of May 2021 and previously CE Marked products must become compliant when their certification expires, with a transition period ending December 2027 for higher classification devices, or December 2028 for lower classification devices.
Campbell 51 Senior Vice President and General Manager, Vascular Access and Oncology Scott Centea 44 Senior Vice President and General Manager, Endovascular Therapies David D. Helsel 58 Senior Vice President, Global Operations and Research and Development Laura Piccinini 52 Senior Vice President and General Manager, International Richard C. Rosenzweig 55 Senior Vice President, General Counsel and Secretary James C.
Campbell 52 Senior Vice President and General Manager, Vascular Access and Oncology Scott Centea 45 Senior Vice President and General Manager, Endovascular Therapies David D. Helsel 59 Senior Vice President, Global Operations and Research and Development Laura Piccinini 53 Senior Vice President and General Manager, International James C. Clemmer became our President and Chief Executive Officer (CEO) in April 2016.
In some cases, we rely on our international distributors to obtain regulatory approvals, complete product registrations, comply with clinical trial requirements and complete those steps that are customarily taken in the applicable jurisdictions. 11 International sales of medical devices manufactured in the United States that are not approved or cleared by the FDA for use in the United States, or are banned or deviate from lawful performance standards, are subject to FDA export requirements.
International sales of medical devices manufactured in the United States that are not approved or cleared by the FDA for use in the United States, or are banned or deviate from lawful performance standards, are subject to FDA export requirements.
This product line consists of titanium, plastic and dual-lumen offerings. • PASV Valve Technology: The PASV Valve Technology is designed to automatically resist backflow and reduce blood reflux that could lead to catheter-related complications. • LifeGuard: The LifeGuard Safety Infusion Set and The LifeGuard Vision are used to infuse our ports and complement our port and vascular access catheters.
With its rounded chamber, the Vortex port is designed to have no sludge-harboring corners or dead spaces. This product line consists of titanium, plastic and dual-lumen offerings. • PASV Valve Technology: The PASV Valve Technology is designed to automatically resist backflow and reduce blood reflux that could lead to catheter-related complications.
There can be no assurance that reimbursement approvals will be received. See Part I. Item 1A "Risk Factors" in this Annual Report on Form 10-K.
There can be no assurance that reimbursement approvals will be received. See Part I.
The physician inserts the disposable needle electrode device into the targeted body tissue, typically under ultrasound, CT or Magnetic Resonance Imaging (MRI) guidance. During the procedure, our system automatically adjusts the amount of energy delivered in order to maintain the temperature necessary to ablate the targeted tissue.
Our StarBurst Radiofrequency Ablation devices deliver radiofrequency energy to raise the temperature of cells above 45-50°C, causing cellular death. The physician inserts the disposable needle electrode device into the targeted body tissue, typically under ultrasound, CT or Magnetic Resonance Imaging (MRI) guidance.
Trowbridge received a Bachelor of Science in Science and Technology Studies from Rensselaer Polytechnic Institute, a Juris Doctor from the University of Pennsylvania Law School, and a Master of Business Administration from Duke University’s Fuqua School of Business. 13 Chad T. Campbell joined AngioDynamics in May 2016 as the Senior Vice President and General Manager for Vascular Access.
Trowbridge began his career with Cadwalader, Wickersham & Taft LLP in the firm’s Mergers and Acquisitions and Securities Group. Mr. Trowbridge received a Bachelor of Science in Science and Technology Studies from Rensselaer Polytechnic Institute, a Juris Doctor from the University of Pennsylvania Law School, and a Master of Business Administration from Duke University’s Fuqua School of Business. Chad T.
We face competitors, ranging from large manufacturers with multiple business lines, to small manufacturers that offer a limited selection of products. Our primary device competitors include: Boston Scientific Corporation; Cook Medical; Medical Components, Inc. (MedComp); TeleFlex Medical; Becton Dickinson; Medtronic; Merit Medical; Terumo Medical Corporation; Johnson and Johnson; Philips Healthcare; Inari Medical; Varian Medical Systems and Total Vein Systems.
Our primary device competitors include: Boston Scientific Corporation; Cook Medical; Medical Components, Inc. (MedComp); TeleFlex Medical; Becton Dickinson; Medtronic; Merit Medical; Terumo Medical Corporation; Johnson and Johnson; Philips Healthcare; Inari Medical; Varian Medical Systems and Total Vein Systems. We believe our products compete primarily based on their quality, clinical outcomes, ease of use, reliability, physician familiarity and cost-effectiveness.
Inserting gauze into the vagina can be uncomfortable before treatment and unpleasant at the end of treatment as it tends to dry out before removing. RESEARCH & DEVELOPMENT Our growth depends in large part on the continuous introduction of new and innovative products, together with ongoing enhancements to our existing products.
RESEARCH & DEVELOPMENT Our growth depends in large part on the continuous introduction of new and innovative products, together with ongoing enhancements to our existing products. This happens through internal product development, technology licensing, strategic alliances and acquisitions.
Radiofrequency Ablation StarBurst Radiofrequency Ablation Devices Radiofrequency Ablation (RFA) products use radiofrequency energy to provide a minimally invasive approach to ablating solid cancerous or benign tumors. Our StarBurst Radiofrequency Ablation devices deliver radiofrequency energy to raise the temperature of cells above 45-50°C, causing cellular death.
The Solero MTA System and Accessories are indicated for the ablation of soft tissue during open procedures. The Solero MTA System is not intended for cardiac use. Radiofrequency Ablation StarBurst Radiofrequency Ablation Devices Radiofrequency Ablation (RFA) products use radiofrequency energy to provide a minimally invasive approach to ablating solid cancerous or benign tumors.
Piccinini is a graduate of the Parma University of Medicine, where she received a nursing degree with specializations in ICU, Anesthesia, and First Aid as a Helicopter Flight Coordinator. Richard C. Rosenzwei g joined AngioDynamics as Senior Vice President, General Counsel and Secretary in February 2021. Mr.
Piccinini is a graduate of the Parma University of Medicine, where she received a nursing degree with specializations in ICU, Anesthesia, and First Aid as a Helicopter Flight Coordinator. AVAILABLE INFORMATION Our corporate headquarters is located at 14 Plaza Drive, Latham, New York 12110. Our phone number is (518) 795-1400. Our website is www.angiodynamics.com .
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PRODUCTS Our product offerings fall within three Global Business Units (GBUs): Endovascular Therapies (“VIT”), Oncology/Surgery (“OS”) and Vascular Access (“VA). As the Company has previously announced, the Company is focused on its ongoing transformation from a company with a broad portfolio of largely undifferentiated products to a more focused medical technology company that delivers unique and innovative health care solutions.
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Prior to the Alatus device, the clinician would push gauze into the vagina to move the bladder and bowel away from the radiation treatment field. Inserting gauze into the vagina can be uncomfortable before treatment and unpleasant at the end of treatment as it tends to dry out before removing.
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As such, we believe the growth in the near to mid-term will be driven by our high technology products including Auryon, the Thrombectomy platform (which includes AngioVac, AlphaVac and thrombolytics) and NanoKnife.
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Products with an expiring certification must be in distribution before certification expiration dates to continue to be sold. Clinical evaluations of products under MDR requires more information than previously required.
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With its rounded chamber, the Vortex port is designed to have no sludge-harboring corners or dead spaces.
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During that time period, significant design modifications cannot be made. Similar regulations are in place for Canada, Japan, China, Brazil and most other countries. In some cases, we rely on our international distributors to obtain regulatory approvals, complete product registrations, comply with clinical trial requirements and complete those steps that are customarily taken in the applicable jurisdictions.
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Solero is a single applicator system able to complete up to a 5 cm ablation in six (6) minutes at maximum power. 7 The Solero MTA System and Accessories are indicated for the ablation of soft tissue during open procedures. The Solero MTA System is not intended for cardiac use.
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Additionally, there can be extended time frames under MDR for product certifications that can be 12-18 months or longer. Similar regulations are in place for Canada, Japan, China and most other countries.
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Trowbridge began his career with Cadwalader, Wickersham & Taft LLP in the firm’s Mergers and Acquisitions and Securities Group. Mr.
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Rosenzweig brings to his role more than 20 years of experience in executive leadership providing legal guidance, governance and compliance oversight, and strategic business direction to global medical device and health care companies, including C. R.
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Bard for more than ten years where he most recently served as Vice President, Law, and Assistant Secretary, Phibro Animal Health Corporation and Impath, Inc. as Senior Vice President, General Counsel and Secretary, and Johnson & Johnson as Director, Licensing and Acquisitions. Prior to AngioDynamics, Mr.
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Rosenzweig advised companies in the medical device industry as an independent consultant on corporate development initiatives. Mr. Rosenzweig received his Bachelor of Arts in Psychology from Brandeis University and his Juris Doctor from Boston University School of Law.
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He serves as Vice Chair and Chair-Elect of the Director’s Leadership Council of the Rutgers Cancer Institute of New Jersey, and is a member of the Director’s Leadership Council for Rutgers Biomedical and Health Sciences, an academic medical center. AVAILABLE INFORMATION Our corporate headquarters is located at 14 Plaza Drive, Latham, New York 12110. Our phone number is (518) 795-1400.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

46 edited+24 added−16 removed179 unchanged
Biggest changeForeign Corrupt Practices Act (“FCPA”) and similar anti-bribery laws in international jurisdictions, including the UK Anti-Bribery Act, the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), General Data Protection Regulation (“GDPR”), domestic and foreign data protection, data security and privacy laws, laws related to the collection, storage, use and disclosure of personal data and laws and regulations relating to sanctions and money laundering. 25 The failure to comply with these laws and regulatory standards, allegations of such non-compliance or the discovery of previously unknown problems with a product or manufacturer: (i) could result in FDA Form-483 notices and/or warning letters or the foreign equivalent, fines, delays or suspensions of regulatory clearances, investigations, detainment, seizures or recalls of products (with the attendant expenses), the banning of a particular device, an order to replace or refund the cost of any device previously manufactured or distributed, operating restrictions and/or civil or criminal prosecution, and/or penalties, as well as decreased sales as a result of negative publicity and product liability claims; (ii) could expose us to breach of contract claims, fines and penalties, costs for remediation and harm to our reputation; (iii) could result in criminal or civil sanctions, including substantial fines, imprisonment and exclusion from participation in healthcare programs such as Medicare and Medicaid and health programs outside the United States; and (iv) could otherwise disrupt our business and could have a material adverse effect on our business, financial condition, results of operations and/or liquidity.
Biggest changeThe failure to comply with these laws and regulatory standards, allegations of such non-compliance or the discovery of previously unknown problems with a product or manufacturer: (i) could result in FDA Form-483 notices and/or warning letters or the foreign equivalent, fines, delays or suspensions of regulatory clearances, investigations, detainment, seizures or recalls of products (with the attendant expenses), the banning of a particular device, an order to replace or refund the cost of any device previously manufactured or distributed, operating restrictions and/or civil or criminal prosecution, and/or penalties, as well as decreased sales as a result of negative publicity and product liability claims; (ii) could expose us to breach of contract claims, fines and penalties, costs for remediation and harm to our reputation; (iii) could result in criminal or civil sanctions, including substantial fines, imprisonment and exclusion from participation in healthcare programs such as Medicare and Medicaid and health programs outside the United States; and (iv) could otherwise disrupt our business and could have a material adverse effect on our business, financial condition, results of operations and/or liquidity.
If integration-related expenses and capital expenditure requirements are greater than anticipated or if we are unable to manage our growth profitably, our financial results and the market price of our common stock may decline. 21 In recent years we have begun to implement operational excellence initiatives which include a number of restructuring, realignment and cost reduction initiatives.
If integration-related expenses and capital expenditure 21 requirements are greater than anticipated or if we are unable to manage our growth profitably, our financial results and the market price of our common stock may decline. In recent years we have begun to implement operational excellence initiatives which include a number of restructuring, realignment and cost reduction initiatives.
Additionally, there can be no assurance that the size of the markets in which we compete will increase above existing levels or not decline, that we will be able to maintain, gain or regain market share or that we can compete effectively on the basis of price or that the number of procedures in which our products are used will increase above existing levels or not decline. 16 In particular, the future prospects of many of our high growth products, such as the NanoKnife system, the AngioVac system and the Auryon system, rely on continued market development and continued generation of clinical data pursuant to clinical trials conducted by us, our competitors or other third parties.
Additionally, there can be no assurance that the size of the markets in which we compete will increase above existing levels or not decline, that we will be able to maintain, gain or regain market share or that we can compete effectively on the basis of price or that the number of procedures in which our products are used will increase above existing levels or not decline. 16 In particular, the future prospects of many of our high growth products, such as the NanoKnife system, the AngioVac system, the AlphaVac system and the Auryon system, rely on continued market development and continued generation of clinical data pursuant to clinical trials conducted by us, our competitors or other third parties.
We are periodically subject to product liability claims, and patients or customers may in the future bring claims against us in a number of circumstances and for a number of reasons, including if our products were misused, if a component of our product fails, if our manufacture or design was flawed, if the product produced unsatisfactory results or if the instructions for use and operating manuals and disclosure of product related risks for our products were found to be inadequate.
We are periodically subject to product liability claims, and patients or customers may in the future bring claims against us in a number of circumstances and for a number of reasons, 19 including if our products were misused, if a component of our product fails, if our manufacture or design was flawed, if the product produced unsatisfactory results or if the instructions for use and operating manuals and disclosure of product related risks for our products were found to be inadequate.
In addition, political and social turmoil may put further pressure on economic conditions in the United States and abroad. The global economy has been periodically impacted by the effects of global economic downturns (such as recently related to COVID-19). There can be no assurance that there will not be further such events or deterioration in the global economy.
In addition, political and social turmoil may put further pressure on economic conditions in the United States and abroad. The global economy has been periodically impacted by the effects of global economic downturns (such as those recently related to COVID-19). There can be no assurance that there will not be further such events or deterioration in the global economy.
Either process can be lengthy and expensive. The FDA’s 510(k) clearance procedure, also known as “premarket notification,” is the process we have used for our current products. This process usually takes from four to twelve months from the date the premarket notification is submitted to the FDA, but may take significantly longer.
Either process can be lengthy and expensive. The FDA’s 510(k) clearance procedure, also known as “premarket notification,” is the process we have used for our current products. This process usually takes from four to twelve months from the date the premarket 26 notification is submitted to the FDA, but may take significantly longer.
Third-party infringement claims, regardless of their outcome, would not only consume our financial resources but also divert our management’s time and effort. 28 Such claims could also cause our customers or potential customers to purchase competitors’ products or defer or limit their purchase or use of our affected products until resolution of the claim.
Third-party infringement claims, regardless of their outcome, would not only consume our financial resources but also divert our management’s time and effort. Such claims could also cause our customers or potential customers to purchase competitors’ products or defer or limit their purchase or use of our affected products until resolution of the claim.
Any of these results could have a material adverse effect on our business, financial condition, results of operations and/or liquidity. Laws and regulations governing the export of our products could adversely impact our business. If the U.S. government imposes strict sanctions on Iran, our revenue could be impacted. The U.S.
Any of these results could have a material adverse effect on our business, financial condition, results of operations and/or liquidity. Laws and regulations governing the export of our products could adversely impact our business. If the U.S. government imposes strict sanctions on Iran, our revenue could be impacted. 27 The U.S.
Any or all of these suppliers could discontinue the manufacture or supply of these products, raw materials and/or components at any time. 18 Due to FDA and other business considerations, we may not be able to identify and integrate alternative sources of supply in a timely fashion or at all.
Any or all of these suppliers could discontinue the manufacture or supply of these products, raw materials and/or components at any time. Due to FDA and other business considerations, we may not be able to identify and integrate alternative sources of supply in a timely fashion or at all.
Similar to other large multi-national companies, the size and complexity of our information technology systems makes them vulnerable to cyber-attacks, malicious intrusions, breakdowns, destruction, losses of data privacy, or other significant disruptions. Our supply chain partners face similar risks.
Similar to other large multi-national companies, the size and complexity of our information technology systems makes them vulnerable to cyber-attacks, malicious intrusions, breakdowns, destruction, losses of data privacy, or other significant disruptions. Our distributors and supply chain partners face similar risks.
We operate in many parts of the world, and our operations are affected by complex state, federal and international laws relating to healthcare, environmental protection, antitrust, anti-corruption, anti-bribery, fraud and abuse, export control, tax, employment and laws regarding privacy, personally identifiable information and protected health information, including, for example, the Food, Drug and Cosmetic Act (“FDCA”), various FDA and international regulations relating to, among other things, the development, quality assurance, manufacturing, importation, distribution, marketing and sale of, and billing for, our products, the federal Anti-Kickback Statute and Federal False Claims Act (Note 16), the U.S.
We operate in many parts of the world, and our operations are affected by complex state, federal and international laws relating to healthcare, environmental protection, antitrust, anti-corruption, anti-bribery, fraud and abuse, export control, tax, employment and laws regarding privacy, personally identifiable information and protected health information, including, for example, the Food, Drug and Cosmetic Act (“FDCA”), various FDA and international regulations relating to, among other things, the development, quality assurance, manufacturing, importation, distribution, marketing and sale of, and billing for, our products, the federal Anti-Kickback Statute and Federal False Claims Act (Note 17), the U.S.
A cyber-attack or other breach of our or our supply chain partners' information technology systems could have a material adverse effect on our business, financial condition and/or results of operations. We rely on information technology systems to process, transmit, and store electronic information in our day-to-day operations.
A cyber-attack or other breach of our, our distributors, or our supply chain partners' information technology systems could have a material adverse effect on our business, financial condition and/or results of operations. We rely on information technology systems to process, transmit, and store electronic information in our day-to-day operations.
These economic conditions make it more difficult for us to accurately forecast and plan our future business activities. Volatility in the cost of raw materials, components, freight and energy increases the costs of producing and distributing our products.
These economic conditions make it more difficult for us to accurately forecast and plan our future business activities. 20 Volatility in the cost of raw materials, components, freight and energy increases the costs of producing and distributing our products.
Patient enrollment is a function of many factors, including the size of the patient population for the target indication, the proximity of patients to clinical sites, the eligibility criteria for the trial, the existence of competing clinical trials and the availability of alternative or new treatments.
Patient enrollment is a function of many factors, including the size of the patient population for the target indication, the 17 proximity of patients to clinical sites, the eligibility criteria for the trial, the existence of competing clinical trials and the availability of alternative or new treatments.
Any delays in delivery of or shortages in those or other products and components (like we experienced during our 2022 fiscal year) could interrupt and delay manufacturing of our products, lead to backlogs and result in the cancellation of orders for our products.
Any delays in delivery of or shortages in those or other products and components (like we experienced during our 2022 and 2023 fiscal year) could interrupt and delay manufacturing of our products, lead to backlogs and result in the cancellation of orders for our products.
Many of these procedures that use our products were suspended or postponed at times during fiscal years 2021 and 2022. Similarly, our clinical trials were impacted by COVID-19 as hospitals prioritized treating these patients.
Many of these procedures that use our products were suspended or postponed at times during fiscal years 2021, 2022 and 2023. Similarly, our clinical trials were impacted by COVID-19 as hospitals prioritized treating these patients.
If we are incorrect in our belief that our promotional materials and training methods regarding physicians are conducted in compliance with regulations of the FDA and other applicable regulations, and the FDA determines that our promotional materials or training constitutes promotion of an unapproved use, the FDA could request that we modify our training or promotional materials or subject us to regulatory enforcement actions, including the issuance of a warning letter, injunction, seizure, civil fine and criminal penalties.
If we are incorrect in our belief that our promotional materials and training methods regarding the use of our products are conducted in compliance with regulations of the FDA and other applicable regulations, and the FDA determines that our promotional materials or training constitutes promotion of an unapproved use, the FDA could request that we modify our training or promotional materials or subject us to regulatory enforcement actions, including the issuance of a warning letter, injunction, seizure, civil fine and criminal penalties.
Any disaster at our manufacturing facilities or those of our suppliers could disrupt our ability to manufacture our products for a substantial amount of time. We conduct manufacturing and assembly at facilities in Queensbury, New York, Glens Falls, New York, and other third parties in Costa Rica, Latvia, and other locations.
Any disaster at our manufacturing facilities or those of our suppliers could disrupt our ability to manufacture our products for a substantial amount of time. We conduct manufacturing and assembly at facilities in Queensbury, New York, Glens Falls, New York, and other third parties in Costa Rica, Israel, Latvia, China and other locations.
Some companies in the medical device industry have used intellectual property infringement litigation to gain a competitive advantage.
Some companies in the medical device industry have used intellectual property infringement litigation to 28 gain a competitive advantage.
We may not realize the benefits of these initiatives to the extent or on the timing we anticipated and the ongoing difficulties in implementing these measures may be greater than anticipated and/or offset by inflationary pressures, which could cause us to incur additional costs or result in business disruptions like the backlogs we experienced in fiscal year 2022.
We may not realize the benefits of these initiatives to the extent or on the timing we anticipated and the ongoing difficulties in implementing these measures may be greater than anticipated and/or offset by inflationary pressures, which could cause us to incur additional costs or result in business disruptions like the backlogs we have experienced in fiscal years 2022 and 2023.
Any actual or perceived diminution in the quality of our products, or our failure or inability to maintain these other efforts, could damage our reputation with interventional physicians and cause our growth to be limited and our business to be harmed, which could have a material adverse effect on our business, financial condition, results of operations and/or liquidity.
Any actual or perceived diminution in the quality of our products, or our failure or inability to maintain these other efforts, could damage our reputation with interventional physicians, interventional and surgical oncologists, and critical care nurses, and cause our growth to be limited and our business to be harmed, which could have a material adverse effect on our business, financial condition, results of operations and/or liquidity.
As such, our revenue, if any, depends on the terms of such arrangements and the distributors’ efforts. These efforts may turn out not to be sufficient and our third-party distributors may not effectively sell our products. International distributors accounted for approximately 61% of international revenues for the fiscal year ended May 31, 2022.
As such, our revenue, if any, 18 depends on the terms of such arrangements and the distributors’ efforts. These efforts may turn out not to be sufficient and our third-party distributors may not effectively sell our products. International distributors accounted for approximately 72% of international revenues for the fiscal year ended May 31, 2023.
Our state net operating loss carryforwards as of May 31, 2022 after considering remaining IRC Section 382 limitations are $30.1 million which expire in various years from 2029 to 2042.
Our state net operating loss carryforwards as of May 31, 2023 after considering remaining IRC Section 382 limitations are $24.1 million which expire in various years from 2029 to 2042.
Other disruptions or potential disruptions include: (i) restrictions on our personnel and personnel of business partners to travel and access customers for training and case support; (ii) reductions in spending by our customers; (iii) delays in clearance, approvals or certifications by regulatory bodies; (iv) diversion of or limitations on employee resources that would otherwise be focused on the operations of our business, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; (v) reductions in our sales team, including through layoffs, furloughs or other losses of sales representatives; (vi) additional government requirements or other incremental mitigation efforts that may further impact our or our suppliers’ capacity to manufacture our products; (vii) disruption of our research and development activities; and (viii) delays in ongoing studies and pre-clinical trials. 24 In addition, elective procedures that use our products significantly decreased in number during fiscal year 2021, as health care organizations around the world prioritized the treatment of patients with COVID-19 and reduced spending in other areas.
Other disruptions or potential disruptions include: (i) restrictions on our personnel and personnel of business partners to travel and access customers for training and case support; (ii) reductions in spending by our customers; (iii) delays in clearance, approvals or certifications by regulatory bodies; (iv) diversion of or limitations on employee resources that would otherwise be focused on the operations of our business, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; (v) reductions in our sales team, including through layoffs, furloughs or other losses of sales representatives; (vi) additional government requirements or other incremental mitigation efforts that may further impact our or our suppliers’ 24 capacity to manufacture our products; (vii) disruption of our research and development activities; and (viii) delays in ongoing studies and pre-clinical trials.
See Note 9 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2022 for a further discussion of our tax loss carryovers.
See Note 10, "Income Taxes" set forth in our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended May 31, 2023 for a further discussion of our tax loss carryovers.
In fiscal year 2020, we recorded a goodwill impairment loss of $158.6 million. If actual results differ from the assumptions and estimates used in the goodwill and intangible asset calculations, we could incur future impairment or amortization charges, which could negatively impact our financial condition and results of operations.
If actual results differ from the assumptions and estimates used in the goodwill and intangible asset calculations, we could incur future impairment or amortization charges, which could negatively impact our financial condition and results of operations.
In addition, third parties may attempt to gain access into our systems or products or those of our supply chain partners to obtain data relating to patients or our proprietary information. 23 Any failure by us or our supply chain partners to maintain or protect information technology systems and data integrity, including from cyber-attacks, ransomware, intrusions or other breaches, could result in the unauthorized access to supply chain partners or vendors and personally identifiable information, theft of intellectual property, misappropriation of assets, or otherwise compromise confidential or proprietary information and disrupt operations of our Company or our supply chain partners.
Any failure by us, our distributors, or our supply chain partners to maintain or protect information technology systems and data integrity, including from cyber-attacks, ransomware, intrusions or other breaches, could result in the unauthorized access to supply chain partners or vendors and personally identifiable information, theft of intellectual property, misappropriation of assets, or otherwise compromise confidential or proprietary information and disrupt operations of our Company, our distributors, or our supply chain partners.
Our ability to maintain and expand our business may be impaired if we are unable to retain our current key personnel or hire or retain other qualified personnel in the future, including personnel for our manufacturing facilities. If we are not able to hire and retain personnel in our manufacturing facilities, we may not meet our production demand.
Our ability to maintain and expand our business may be impaired if we are unable to retain our current key personnel or hire or retain other qualified personnel in the future, including personnel for our manufacturing facilities and field based sales employees.
Our Federal net operating loss carryforwards as of May 31, 2022 after considering IRC Section 382 limitations are $174.2 million. The expiration of the Federal net operating loss carryforwards is as follows: $8.6 million between 2022 and 2023, $79.4 million between 2028 and 2037 and $86.1 million indefinitely.
Our Federal net operating loss carryforwards as of May 31, 2023 after considering IRC Section 382 limitations are $169.7 million. The expiration of the Federal net operating loss carryforwards is as follows: $5.2 million between 2023 and 2024, $79.4 million between 2028 and 2037 and $85.1 million indefinitely.
The PMA process is much more costly, lengthy and uncertain. It generally takes from one to three years from the date the application is submitted to, and filed with the FDA, and may take even longer.
It generally takes from one to three years from the date the application is submitted to, and filed with the FDA, and may take even longer.
Reimbursement varies by country and can significantly impact the acceptance of new technology. Implementation of healthcare reforms in the United States and in other countries may limit, reduce or eliminate reimbursement for our products and adversely affect both our pricing flexibility and the demand for our products.
Implementation of healthcare reforms in the United States and in other countries may limit, reduce or eliminate reimbursement for our products and adversely affect both our pricing flexibility and the demand for our products.
While we have implemented cost containment measures, selective price increases and taken other actions to offset these inflationary pressures in our supply chain, we may not be able to completely offset all the increases in our operational costs, any of which could adversely affect our business, financial condition, results of operations and/or liquidity. 20 Sales outside the U.S. accounted for approximately 16% of our net sales during our fiscal year ended May 31, 2022.
While we have implemented cost containment measures, selective price increases and taken other actions to offset these inflationary pressures in our supply chain, we may not be able to completely offset all the increases in our operational costs, any of which could adversely affect our business, financial condition, results of operations and/or liquidity.
We anticipate that sales from international operations will continue to represent a significant portion of our total sales, and we intend to continue our expansion into emerging and/or faster-growing markets outside the U.S.
Sales outside the U.S. accounted for approximately 17% of our net sales during our fiscal year ended May 31, 2023. We anticipate that sales from international operations will continue to represent a significant portion of our total sales, and we intend to continue our expansion into emerging and/or faster-growing markets outside the U.S.
Management will need to maintain existing customers and attract new customers, recruit, retain and effectively manage employees, as well as expand operations and integrate customer support and financial control systems.
Our future financial results will depend in part on our ability to profitably manage our growth. Management will need to maintain existing customers and attract new customers, recruit, retain and effectively manage employees, as well as expand operations and integrate customer support and financial control systems.
Further restrictions may be enacted, amended, enforced or interpreted in a manner that materially impacts our operations. In fiscal year 2022 we generated $1.2 million of revenue for sales to distributors doing business in Iran. We continuously review our ability to sell products to distributors that conduct business in Iran in accordance with all applicable U.S. laws.
In fiscal year 2023 we generated $1.2 million of revenue for sales to distributors doing business in Iran. We continuously review our ability to sell products to distributors that conduct business in Iran in accordance with all applicable U.S. laws.
Under current prospective payment systems, such as the diagnosis related group system and the hospital out-patient prospective payment system, both of which are used by Medicare and in many managed care systems used by private third-party payors, the cost of our products will be incorporated into the overall cost of a procedure and not be separately reimbursed. 19 If hospitals and physicians cannot obtain adequate reimbursement for our products or the procedures in which they are used, this could have a material adverse effect on our business, financial condition, results of operations and/or liquidity.
Under current prospective payment systems, such as the diagnosis related group system and the hospital out-patient prospective payment system, both of which are used by Medicare and in many managed care systems used by private third-party payors, the cost of our products will be incorporated into the overall cost of a procedure and not be separately reimbursed.
Even after a device receives regulatory approval it remains subject to significant regulatory and quality requirements, such as manufacturing, recordkeeping, renewal, recertification or reporting and other post market approval requirements, which may include clinical, laboratory or other studies. 26 Product approvals by the FDA and other foreign regulators can be withdrawn due to failure to comply with regulatory standards or the occurrence of unforeseen problems following initial approval or may be re-classified to a higher regulatory classification, such as requiring a PMA for a previously cleared 510(k) device.
Product approvals by the FDA and other foreign regulators can be withdrawn due to failure to comply with regulatory standards or the occurrence of unforeseen problems following initial approval or may be re-classified to a higher regulatory classification, such as requiring a PMA for a previously cleared 510(k) device. The PMA process is much more costly, lengthy and uncertain.
Department of Commerce (BIS), administer certain laws and regulations that restrict U.S. persons and, in some instances, non-U.S. persons, in conducting activities, transacting business with or making investments in certain countries, governments, entities and individuals subject to U.S. economic sanctions. 27 Due to our international operations, we are subject to such laws and regulations, which are complex, restrict our business dealings with certain countries and individuals, and are constantly changing.
Department of the Treasury’s Office of Foreign Assets Control (OFAC), and the Bureau of Industry and Security at the U.S. Department of Commerce (BIS), administer certain laws and regulations that restrict U.S. persons and, in some instances, non-U.S. persons, in conducting activities, transacting business with or making investments in certain countries, governments, entities and individuals subject to U.S. economic sanctions.
The COVID-19 pandemic has negatively impacted our business and operations around the world and may continue to materially and adversely impact our business, operations and financial results.
The COVID-19 pandemic has negatively impacted our business and operations around the world and may continue to materially and adversely impact our business, operations and financial results. The COVID-19 pandemic has created significant disruption and uncertainty in the global economy and has negatively impacted our business and results of operations and financial condition during fiscal years 2021, 2022 and 2023.
We experienced labor shortages in fiscal year 2022 that significantly contributed to the backlog. In addition, our sales force is highly talented and we face intense competition in our industry for sales personnel which could have an adverse effect on our business if there is significant turnover.
In addition, our sales force is highly talented and we face intense competition in our industry for sales personnel which could have an adverse effect on our business and revenue if there is significant turnover. If we are unable to manage our growth profitably, our business, financial results and stock price could suffer.
This resulted in an impairment charge of $14.0 million. The impairment charge is recorded in "Acquisition, restructuring and other items, net", on the Consolidated Statements of Operations (see Note 18).
The impairment charge is recorded in "Acquisition, restructuring and other items, net", on the Consolidated Statements of Operations (see Note 19, "Acquisition, restructuring and other items, net" set forth in the Notes in the consolidated financial statements included in this Annual Report on Form 10-K).
If an intangible asset is considered to be impaired, the amount of the impairment will equal the excess of the carrying value over the fair value of the asset. Goodwill is required to be tested for impairment at least annually.
If an intangible asset is considered to be impaired, the amount of the impairment will equal the excess of the carrying value over the fair value of the asset. Goodwill and other intangible assets that have indefinite useful lives are not amortized, but rather, are tested for impairment annually or more frequently if impairment indicators arise.
Our failure to generate sufficient operating cash flow to pay our potential debts or to successfully undertake any of these actions could have a material adverse effect on us. Uncertainty relating to the LIBOR calculation method and potential phasing out of LIBOR after 2021 may adversely affect the interest rates under our Credit Agreement.
Our failure to generate sufficient operating cash flow to pay our potential debts or to successfully undertake any of these actions could have a material adverse effect on us. Inflationary pressure and unfavorable economic conditions could negatively affect our operations and business.
A significant portion of our assets consists of goodwill, intangible assets and fixed assets, the carrying value of which may be reduced if we determine that those assets are impaired, including intangible assets from recent acquisitions. During the fourth quarter of fiscal year 2021, the Company made the decision to abandon the OARtrac product technology and trademark.
Our goodwill, intangible assets and fixed assets are subject to potential impairment; we have recorded significant goodwill impairment charges and may be required to record additional charges to future earnings if our goodwill or intangible assets become impaired. 22 A significant portion of our assets consists of goodwill, intangible assets and fixed assets, the carrying value of which may be reduced if we determine that those assets are impaired, including intangible assets from recent acquisitions.
If we are unable to maintain our relationships or establish direct sales capabilities on acceptable terms or at all, we may lose significant revenue or be unable to achieve our growth aspirations. In certain circumstances, distributors may also sell competing products, or products for competing diagnostic modalities, and may have incentives to shift sales towards those competing products.
In certain circumstances, distributors may also sell competing products, or products for competing diagnostic modalities, and may have incentives to shift sales towards those competing products.
We experienced a similar impact to procedure volumes with the resurgence of COVID-19 in fiscal year 2022.
In addition, elective procedures that use our products significantly decreased in number during fiscal year 2021, as health care organizations around the world prioritized the treatment of patients with COVID-19 and reduced spending in other areas. We experienced a similar impact to procedure volumes with the resurgence of COVID-19 in fiscal year 2022 which continued through fiscal year 2023.
Removed
Our business and prospects depend heavily on the NanoKnife system, which is currently approved for the surgical ablation of soft tissue. If we are unable to secure expanded specific regulatory approvals for the NanoKnife system, our business and prospects may be materially harmed. Our NanoKnife System is indicated for the surgical ablation of soft tissue.
Added
International sales grew 12% in fiscal year 2023 as we continued to develop and foster partnerships with distributors such as Healthcare 21, Cardiva and Mediplast. If we are unable to maintain our relationships or establish direct sales capabilities on acceptable terms or at all, we may lose significant revenue or be unable to achieve our growth aspirations.
Removed
The long-term prospects for our NanoKnife business may rely on securing expanded indications for specific disease states and treatments. Based on our current indication, our ability to promote the NanoKnife system and provide training with respect to the use of the NanoKnife system is limited to the surgical ablation of soft tissue.
Added
If hospitals and physicians cannot obtain adequate reimbursement for our products or the procedures in which they are used, this could have a material adverse effect on our business, financial condition, results of operations and/or liquidity. Reimbursement varies by country and can significantly impact the acceptance of new technology.
Removed
In the fourth quarter of our 2019, we received approval from the FDA to initiate our DIRECT clinical trial to study the use of the NanoKnife system for the treatment of Stage III pancreatic cancer. 17 In the second quarter of our 2022, we received approval from the FDA to initiate our PRESERVE clinical trial to study the use of the NanoKnife system for the treatment of prostate cancer.
Added
We may be exposed to risks associated with product line divestitures as we may never realize the expected benefits and could cause operational disruptions with personnel, systems and infrastructure changes.
Removed
If we are not able to successfully complete these trials and secure clearances or approvals for expanded indications for our NanoKnife system, including for the treatment of Stage III pancreatic cancer or the treatment of prostate cancer, or if expanded indications are significantly delayed or limited, our business and prospects may be materially harmed and we may need to delay our initiatives or even significantly curtail operations, which could have a material adverse effect on our business, financial condition, results of operations and/or liquidity.
Added
On June 8, 2023, the Company entered into an asset purchase agreement (the "Asset Purchase Agreement") with Merit Medical Systems, Inc. pursuant to which Merit acquired the dialysis product portfolio and BioSentry tract sealant system biopsy businesses for $100.0 million in cash.
Removed
In addition, the United Kingdom’s (“UK”) departure from the European Union (“EU”) (commonly known as “Brexit”) has created uncertainties affecting business operations in the UK, the EU and a number of other countries, including with respect to compliance with the regulatory regimes regarding the labeling and registration of the products we sell in these markets.
Added
The Company and Merit entered into various agreements to facilitate the transition to Merit, including a Transactions Services Agreement and Contract Manufacturing Agreement. This divestiture along with potential future divestitures of certain product lines will allow us to transform ourselves into a high growth, highly profitable, medical technology company.
Removed
While we have taken proactive steps to mitigate possible disruption to our operations, we could face increased costs, volatility in exchange rates, market instability and other risks, depending on the effects of existing and future agreements between the UK and EU regarding Brexit and the future EU/UK trading relationship.
Added
If we are unable to achieve our growth and profitability objectives due to competition, lack of acceptance of our products, failure to generate favorable clinical data or gain regulatory approvals, or other risks as described in this section, or due to other events, we will not be successful in transforming our business and may not see the appropriate market valuation.
Removed
If we are unable to manage our growth profitably, our business, financial results and stock price could suffer. Our future financial results will depend in part on our ability to profitably manage our growth.
Added
The divestiture of product lines will impact revenue, earnings and cash flows, which over time we expect to replace by investing in higher margin revenue streams. There is a risk that we will be unable to replace the revenue, earnings and cash flow that these product lines generated, or that the cost of such will be higher than expected.
Removed
Certain of the interest rates applicable to our Credit Agreement, are LIBOR-based. On July 27, 2017, the U.K. Financial Conduct Authority (the “FCA”) announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR rates after 2021.
Added
If we are unable to achieve our profit and growth objectives, such failure will be exacerbated by the loss of revenue, earnings and cash flow generated by our divested product lines and could materially impact our financial position and results of operations, resulting in a decline in our stock price.
Removed
Actions by the FCA, other regulators or law enforcement agencies may result in changes to the method by which LIBOR is calculated. At this time, it is not possible to predict the effect of any such changes or any other reforms to LIBOR that may be enacted in the UK or elsewhere.
Added
The sale of product lines could require us to restructure significant personnel, systems and infrastructure. In some instances, we may enter into short term transition service arrangements, under which the parties perform certain services for each other pending establishment of new processes and systems.
Removed
Uncertainty as to the nature of such potential changes may adversely affect the trading market for LIBOR-based securities, including the floating rates applicable to our Credit Agreement.
Added
Although these transitions are thoroughly planned, it is not unlikely in a transaction of this complexity that disruptions could occur. If disruptions to our financial controls, IT, administrative support, manufacturing or regulatory processes occur, and if such disruptions prove to be more severe than our planning anticipated, this could have a material adverse effect on our business.
Removed
It is possible that the changes in how LIBOR is calculated, changes in the trading market for LIBOR-based securities or actions of the FCA and other government entities may cause unexpected increases in LIBOR rates or a breakdown in the LIBOR systems.
Added
If we are not able to hire and retain personnel in our manufacturing facilities, we may not meet our production demand. We have experienced labor shortages in fiscal years 2022 and 2023 that significantly contributed to the backlog.
Removed
If these issues arise, we could experience increased interest rates or uncertainty with respect to the calculation of interest on our Credit Agreement, which could adversely affect our business, financial condition, results of operations and/or liquidity. 22 Our goodwill, intangible assets and fixed assets are subject to potential impairment; we have recorded significant goodwill impairment charges and may be required to record additional charges to future earnings if our goodwill or intangible assets become impaired.
Added
A significant deterioration in economic conditions, including economic slowdowns or recessions, increased unemployment levels, inflationary pressures or disruptions to credit and capital markets, could lead to decreased consumer confidence and spending and availability of credit. For example, in 2022 and continuing into 2023, the United States and other certain foreign countries have experienced a rapid increase in inflation levels.
Removed
We historically reviewed our single reporting unit for potential goodwill impairment in the third fiscal quarter of each year as part of our annual goodwill impairment testing, and more often if an event or circumstance occurred making it likely that impairment exists.
Added
Such heightened inflationary levels may negatively impact demand for our products and increase our costs. Additionally, we finance a portion of our portfolio with unhedged floating- rate debt from our Credit Agreement.
Removed
In the fourth quarter of fiscal year 2022, the Company changed its annual impairment assessment date from December 31 to April 30 to more closely align the impairment assessment date with the Company's long term planning and forecasting process. The annual goodwill impairment review performed in December 2021 and April 2022 indicated no goodwill impairments.
Added
The rapid increase in inflation during fiscal year 2023 led to a rapid increase in market interest rates, which materially increased the interest rate on our floating rate debt. In addition, if rates continue to increase, we may incur significant additional expense and adversely impact our ability to achieve our other strategic goals and business plans.
Removed
The COVID-19 pandemic has created significant disruption and uncertainty in the global economy and has negatively impacted our business and results of operations and financial condition, most recently with the escalation of the Omicron and subsequent variants, and we anticipate that it may continue to negatively impact our business, results of operations and financial condition for the foreseeable future.
Added
During the fourth quarter of fiscal year 2021, the Company made the decision to abandon the OARtrac product technology and trademark. This resulted in an impairment charge of $14.0 million.
Removed
Department of the Treasury’s Office of Foreign Assets Control (OFAC), and the Bureau of Industry and Security at the U.S.
Added
Prior to the first quarter of fiscal year 2023, the Company managed its operations as one reporting unit.
Added
At the beginning of the first quarter of fiscal year 2023, the Company began to manage its operations as two operating segments and two reporting units, namely Med Tech and Med Device (see Note 18 "Segment and Geographic Information" set forth in the Notes to our consolidated financial statements included in this Annual Report on Form 10-K).
Added
The annual goodwill impairment review performed in April 2023 and 2022 indicated no goodwill impairments. As of May 31, 2023, the Company concluded that the sale of the dialysis product portfolio and BioSentry tract sealant system biopsy businesses to Merit Medical Systems, Inc. was a triggering event for the Med Device report unit.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperty Type Latham, NY Corporate headquarters 39,000 Leased Glens Falls, NY Manufacturing 41,000 Owned Queensbury, NY Manufacturing and distribution 194,000 Owned Marlborough, MA Research and development 31,000 Leased Amsterdam, NL Selling, marketing and administrative 8,100 Leased Rehovot, IL Research and development 4,300 Leased In addition, we lease sales offices in various other jurisdictions. Item 3. Legal Proceedings.
Biggest changeProperty Type Latham, NY Corporate headquarters 39,000 Leased Glens Falls, NY Manufacturing 21,000 Owned Queensbury, NY Manufacturing 135,000 Owned Queensbury, NY Distribution 58,000 Leased Marlborough, MA Research and development 8,400 Leased Amsterdam, NL Selling, marketing and administrative 8,100 Leased Rehovot, IL Research and development 4,300 Leased In addition, we lease sales offices in various other jurisdictions. Item 3. Legal Proceedings.
Information regarding legal proceedings is included in Note 16 to our consolidated financial statements in this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures. Not applicable. 30 Part II
Information regarding legal proceedings is included in Note 17 to our consolidated financial statements in this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures. Not applicable. 30 Part II
Item 2. Properties. During the year ended May 31, 2022, we operated in the following locations: Location Purpose Approx. Sq. Ft.
Item 2. Properties. During the year ended May 31, 2023, we operated in the following locations: Location Purpose Approx. Sq. Ft.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSale Price High Low Year ended May 31, 2022 Fourth Quarter $ 24.50 $ 17.98 Third Quarter $ 29.16 $ 20.46 Second Quarter $ 30.97 $ 23.36 First Quarter $ 28.49 $ 22.99 Sale Price High Low Year ended May 31, 2021 Fourth Quarter $ 25.12 $ 20.61 Third Quarter $ 21.58 $ 13.77 Second Quarter $ 14.38 $ 9.10 First Quarter $ 12.01 $ 8.26 As of July 21, 2022, there were 170 holders of record of our common stock.
Biggest changeSale Price High Low Year ended May 31, 2023 Fourth Quarter $ 12.65 $ 8.29 Third Quarter $ 15.48 $ 12.06 Second Quarter $ 22.81 $ 12.51 First Quarter $ 24.30 $ 17.83 Sale Price High Low Year ended May 31, 2022 Fourth Quarter $ 24.50 $ 17.98 Third Quarter $ 29.16 $ 20.46 Second Quarter $ 30.97 $ 23.36 First Quarter $ 28.49 $ 22.99 As of August 2, 2023, there were 169 holders of record of our common stock.
Performance Graph The graph below matches AngioDynamics, Inc.’s cumulative 5-year total shareholder return on common stock with the cumulative total returns of the NASDAQ Composite index, the RDG SmallCap Medical Devices index, and the NASDAQ Medical Equipment index.
Performance Graph The graph below matches AngioDynamics, Inc.’s cumulative 5-year total shareholder return on common stock with the cumulative total returns of the NASDAQ Composite index, the RDG SmallCap Medical Devices index, S&P 500 Health Care index and the NASDAQ Medical Equipment index.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from May 31, 2017 to May 31, 2022. The stock price performance included in this graph is not necessarily indicative of future stock price performance. 31
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from May 31, 2018 to May 31, 2023. The stock price performance included in this graph is not necessarily indicative of future stock price performance. 31 Item 6. [Reserved] 32

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur 2019 Credit Agreement provides for a $125.0 million secured Revolving Facility, which includes an uncommitted expansion feature that allows the Company to increase the total revolving commitments and/or add new tranches of term loans in an aggregate amount not to exceed $75.0 million.
Biggest changeSee Note 12 "Long-Term Debt" set forth in the Notes to the consolidated financial statements; • $0.8 million of deferred financing costs associated with the new Credit Agreement; • $5.0 million draw on the Revolving Facility in the first quarter of fiscal year 2022 for the QX Medical asset acquisition; and • $1.2 million and $2.7 million, respectively, of proceeds from stock option and ESPP activity. 41 On August 30, 2022, the Company repaid all amounts outstanding under its then existing credit agreement and entered into a new Credit Agreement that provides for a $75.0 million Revolving Facility and a $30.0 million Delayed Draw Term Loan, and also includes an uncommitted expansion feature that allows the Company to increase the total revolving commitments and/or add new tranches of term loans in an aggregate amount not to exceed $75.0 million.
To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following 34 five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
If an intangible asset is considered to be impaired, the amount of the impairment will equal the excess of the carrying value over the fair value of the asset. Goodwill and other intangible assets that have indefinite useful lives are not amortized, but rather, are tested for impairment annually or more frequently if impairment indicators arise.
If an intangible asset is considered to be impaired, the amount of the impairment will equal the excess of the carrying value over the fair value of the asset. 36 Goodwill and other intangible assets that have indefinite useful lives are not amortized, but rather, are tested for impairment annually or more frequently if impairment indicators arise.
In some cases, if control of the product has not yet transferred to the customer or the timing of the payments made by the customer precedes the Company’s fulfillment of the performance obligation, the Company recognizes a contract liability that is included in deferred revenue in the accompanying Consolidated Balance Sheets.
In some cases, if control of the product has not yet transferred to the customer or the timing of the payments made by the customer precedes the Company’s 35 fulfillment of the performance obligation, the Company recognizes a contract liability that is included in deferred revenue in the accompanying Consolidated Balance Sheets.
The significant estimates used in valuing certain of the intangible assets include, but are not limited to: future expected cash flows of the asset, discount rates to determine the 35 present value of the future cash flows, attrition rates of customers, royalty rates and expected technology life cycles.
The significant estimates used in valuing certain of the intangible assets include, but are not limited to: future expected cash flows of the asset, discount rates to determine the present value of the future cash flows, attrition rates of customers, royalty rates and expected technology life cycles.
The Company currently estimates product return liabilities using its historical product return information and considers other factors that it believes could significantly impact its expected returns, including product recalls. During the year ended May 31, 2022, such product returns were not material. A receivable is generally recognized in the period the Company ships the product.
The Company currently estimates product return liabilities using its historical product return information and considers other factors that it believes could significantly impact its expected returns, including product recalls. During the year ended May 31, 2023, such product returns were not material. A receivable is generally recognized in the period the Company ships the product.
Therefore, the Company has provided a valuation allowance on its federal and state net operating loss carryforwards, federal and state R&D credit carryforwards and other net deferred tax assets that have a limited life and are not supportable by the naked credit deferred tax liability sourced income as of May 31, 2022.
Therefore, the Company has provided a valuation allowance on its federal and state net operating loss carryforwards, federal and state R&D credit carryforwards and other net deferred tax assets that have a limited life and are not supportable by the naked credit deferred tax liability sourced income as of May 31, 2023.
The other financial covenant requires us to maintain a total leverage ratio of not greater than 3.00 to 1.00. The total leverage ratio is based upon our trailing twelve months total consolidated EBITDA (as defined in the Credit Agreement). The amount that we can borrow under our Credit Agreement is directly based on our leverage ratio.
The other financial covenant requires us to maintain a total leverage ratio of not greater than 3.00 to 1.00. The total leverage ratio is based upon our trailing twelve months total adjusted EBITDA (as defined in the Credit Agreement). The amount that we can borrow under our Credit Agreement is directly based on our leverage ratio.
Company and Market We design, manufacture and sell a wide range of medical, surgical and diagnostic devices used by professional healthcare providers for vascular access, for the treatment of peripheral vascular disease and for use in oncology and surgical settings. Our devices are generally used in minimally invasive, image-guided procedures.
We design, manufacture and sell a wide range of medical, surgical and diagnostic devices used by professional healthcare providers for vascular access, for the treatment of peripheral vascular disease and for use in oncology and surgical settings. Our devices are generally used in minimally invasive, image-guided procedures.
Many of our products are intended to be used once and then discarded, or they may be temporarily implanted for short- or longer-term use. Our business operations cross a variety of markets.
Many of our products are intended to be used once and then discarded, or they may be temporarily implanted for short- or long-term use. Our business operations cross a variety of markets.
The Company periodically reviews the estimated useful lives of intangible assets and reviews such assets for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.
The Company periodically reviews the estimated useful lives of intangible assets and reviews such assets or asset groups for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.
To create value and drive future growth, the Company plans to practice dispassionate portfolio optimization and continue to focus on areas of compelling unmet needs including those that are patient-centric and evidenced-based. In addition, the Company is pursuing targeted global expansion opportunities.
To create value and drive future growth, the Company plans to practice dispassionate portfolio optimization and continue to focus on areas of compelling unmet needs including those that are patient-centric and evidenced-based. In addition, the Company continues to pursue targeted global expansion opportunities.
For goodwill, the impairment test requires a comparison of the estimated fair value of the reporting unit to which the goodwill is assigned to the carrying value of the assets and liabilities of that reporting unit. The determination of reporting units also requires management judgment.
For goodwill, the impairment test requires a comparison of the estimated fair value of each reporting unit to which the goodwill is assigned to the carrying value of the assets and liabilities of those reporting units. The determination of reporting units also requires management judgment.
Strategic Initiatives to Drive Growth As the Company has previously announced, the Company is focused on its ongoing transformation from a company with a broad portfolio of largely undifferentiated products to a more focused medical technology company that delivers unique and innovative health care solutions.
Strategic Initiatives to Drive Growth The Company is focused on its ongoing transformation from a company with a broad portfolio of largely undifferentiated products to a more focused medical technology company that delivers unique and innovative health care solutions.
Sales and marketing expense - Sales and marketing (“S&M”) expense consists primarily of salaries, commissions, travel and related business expenses, attendance at medical society meetings, product promotions and marketing activities. S&M expense increased by $14.0 million compared to the prior year.
Sales and marketing expense - Sales and marketing (“S&M”) expense consists primarily of salaries, commissions, travel and related business expenses, attendance at medical society meetings, product promotions and marketing activities. S&M expense increased by $8.9 million compared to the prior year.
General and administrative expense - General and administrative (“G&A”) expense includes executive management, finance, information technology, human resources, business development, legal, and the administrative and professional costs associated with those activities. G&A expense increased by $2.5 million compared to the prior year.
General and administrative expense - General and administrative (“G&A”) expense includes executive management, finance, information technology, human resources, business development, legal, and the administrative and professional costs associated with those activities. G&A expense increased by $1.6 million compared to the prior year.
Acquisition, restructuring and other items, net - Acquisition, restructuring and other items, net represents costs associated with mergers and acquisitions, restructuring expenses, legal costs that are related to litigation that is not in the ordinary course of business, legal settlements and other one-time items. Acquisition, restructuring and other items, net decreased by $11.2 million compared to the prior year.
Acquisition, restructuring and other items, net - Acquisition, restructuring and other items, net represents costs associated with mergers and acquisitions, restructuring expenses, legal costs that are related to litigation that is not in the ordinary course of business, legal settlements and other one-time items. Acquisition, restructuring and other items, net increased by $6.6 million compared to the prior year.
Assessing the realization of deferred tax assets requires significant management judgment. In determining whether its deferred tax assets are more likely than not realizable, the Company evaluated all available positive and negative evidence, and weighted the evidence based on its objectivity.
The Company regularly assesses its ability to realize its deferred tax assets. Assessing the realization of deferred tax assets requires significant management judgment. In determining whether its deferred tax assets are more likely than not realizable, the Company evaluated all available positive and negative evidence, and weighted the evidence based on its objectivity.
Change in fair value of contingent consideration - Represents changes in contingent consideration driven by changes to estimated future payments on earn-out liabilities created through acquisitions and amortization of present value discounts on long-term contingent consideration. • The change in the fair value for the year ended May 31, 2022 is related to the Eximo contingent consideration.
Change in fair value of contingent consideration - Represents changes in contingent consideration driven by changes to estimated future payments on earn-out liabilities created through acquisitions and amortization of present value discounts on long-term contingent consideration. • The change in the fair value for the year ended May 31, 2023 is related to the Eximo contingent consideration and the increased probability of achieving the revenue milestones.
Cash used in investing activities: Years ended May 31, 2022 and 2021: • $4.3 million and $5.2 million, respectively, of cash was used for fixed asset additions; • $11.4 million and $8.5 million, respectively, of cash was used for Auryon placement and evaluation unit additions; and • $3.6 million of cash was used for the QX Medical asset acquisition in the first quarter of fiscal year 2022.
Cash used in investing activities: Years ended May 31, 2023 and 2022: • $3.8 million and $4.3 million, respectively, of cash was used for fixed asset additions; • $5.4 million and $11.4 million, respectively, of cash was used for Auryon placement and evaluation unit additions; • $0.5 million of cash was used for the acquisition of an exclusive license in the first quarter of fiscal year 2023; and • $3.6 million of cash was used for the QX Medical asset acquisition in the first quarter of fiscal year 2022.
If the carrying value of the reporting unit exceeds the fair value of the reporting unit, the carrying value is reduced to its fair value through an adjustment to the goodwill balance, resulting in an impairment charge.
If the carrying value of the reporting units exceed the fair value, the carrying value is reduced to its fair value through an adjustment to the goodwill balance, resulting in an impairment charge.
The Company considers whether a reporting unit exists within a reportable segment based on the availability of discrete financial information. The Company operates as a single operating segment with one reporting unit and consequently evaluates goodwill for impairment based on an evaluation of the fair value of the Company as a whole.
The Company considers whether a reporting unit exists within a reportable segment based on the availability of discrete financial information. The Company operates as two operating segments with two reporting units and consequently evaluates goodwill for impairment based on an evaluation of the fair value of each reporting unit.
At May 31, 2022, the Company had a backlog of $8.4 million. The Med Tech business net sales increased $23.0 million for the year ended May 31, 2022 compared to the prior year.
At May 31, 2023, the Company had a backlog of $2.7 million compared to $8.4 million at the end of May 31, 2022. The Med Tech business net sales increased $18.0 million for the year ended May 31, 2023 compared to the prior year.
Goodwill and Intangible Assets Intangible assets other than goodwill, indefinite lived intangible assets and in process research and development ("IP R&D") are amortized over their estimated useful lives, which range between two to eighteen years, on either a straight-line basis over the expected period of benefit or as revenue is earned from the sales of the related product.
Goodwill and Intangible Assets Intangible assets other than goodwill, indefinite lived intangible assets and in process research and development ("IP R&D") are amortized over their estimated useful lives, which range between two to eighteen years, on a straight-line basis over the expected period of benefit.
The current year and prior year effective tax rates differ from the U.S. statutory rate primarily due to the impact of the valuation allowance, foreign taxes, and other non-deductible permanent items (such as non-deductible meals and entertainment, Section 162(m) excess compensation) and the impact of stock-based compensation. The Company regularly assesses its ability to realize its deferred tax assets.
The current year and prior year effective tax rates differ from the U.S. statutory rate primarily due to the impact of the valuation allowance, foreign taxes, and other non-deductible permanent items (such as non-deductible meals and entertainment, Section 162(m) excess compensation), goodwill impairment and the impact of stock-based compensation.
This increase was partially offset by decreased NanoKnife capital sales in the U.S. and NanoKnife disposable sales internationally. The Med Device business net sales increased $2.2 million for the year ended May 31, 2022 compared to the prior year.
This increase was partially offset by decreased NanoKnife capital sales in the U.S. The Med Device business net sales increased $4.6 million for the year ended May 31, 2023 compared to the prior year.
Results of Operations for the years ended May 31, 2022 and 2021 For the fiscal year ended May 31, 2022, the Company reported a net loss of $26.5 million, or a loss of $0.68 per diluted share, on net sales of $316.2 million compared to a net loss of $31.5 million, or a loss of $0.82 per diluted share, on net sales of $291.0 million in fiscal year 2021.
Results of Operations for the years ended May 31, 2023 and 2022 For the fiscal year ended May 31, 2023, the Company reported a net loss of $52.4 million, or a loss of $1.33 per diluted share, on net sales of $338.8 million compared to a net loss of $26.5 million, or a loss of $0.68 per diluted share, on net sales of $316.2 million in fiscal year 2022.
The change from the prior year was primarily driven by: • Compensation and benefits expense, which increased $1.3 million; and • Other outside consultant spend, which increased $2.0 million, partially offset by decreased legal expense of $0.9 million.
The change from the prior year was primarily driven by: • Compensation and benefits expense, which decreased $0.5 million; and • Other outside consultant spend for legal and IT which increased $1.9 million .
The Company has standard pricing for its products and determines standalone selling prices based on the price at which the performance obligation is sold separately. 34 Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which occurs at a point in time, and may be upon shipment from the Company’s manufacturing site or delivery to the customer’s named location, based on the contractual shipping terms of a contract.
Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which occurs at a point in time, and may be upon shipment from the Company’s manufacturing site or delivery to the customer’s named location, based on the contractual shipping terms of a contract.
The table below summarizes our cash flows for the years ended May 31, 2022 and 2021: Year ended May 31, (in thousands) 2022 2021 Cash (used in) provided by: Operating activities $ (7,194) $ 24,093 Investing activities (19,307) (13,711) Financing activities 7,683 (16,986) Effect of exchange rate changes on cash and cash equivalents (518) 330 Net change in cash and cash equivalents $ (19,336) $ (6,274) During the years ended May 31, 2022 and 2021, cash flows consisted of the following: Cash (used in) provided by operating activities: Years ended May 31, 2022 and 2021: • Net loss of $26.5 million and $31.5 million, respectively, plus the non-cash items, primarily driven by depreciation and amortization and stock-based compensation, along with the changes in working capital below, contributed to cash used in operations of $7.2 million for the year ended May 31, 2022 and cash provided by operations of $24.1 million for the year ended May 31, 2021. 40 • For the year ended May 31, 2022, working capital was unfavorably impacted by increased accounts receivable and inventory on hand of $17.2 million and $2.8 million, respectively.
The table below summarizes our cash flows for the years ended May 31, 2023 and 2022: Year ended May 31, (in thousands) 2023 2022 Cash provided by (used in): Operating activities $ 78 $ (7,194) Investing activities (9,746) (19,307) Financing activities 25,420 7,683 Effect of exchange rate changes on cash and cash equivalents 43 (518) Net change in cash and cash equivalents $ 15,795 $ (19,336) During the years ended May 31, 2023 and 2022, cash flows consisted of the following: Cash provided by (used in) operating activities: Years ended May 31, 2023 and 2022: • Net loss of $52.4 million and $26.5 million, respectively, plus the non-cash items, primarily driven by depreciation and amortization, goodwill impairment and stock-based compensation, along with the changes in working capital below, contributed to cash provided by operations of $0.1 million for the year ended May 31, 2023 and cash used in operations of $7.2 million for the year ended May 31, 2022. • For the year ended May 31, 2023, working capital was unfavorably impacted by increased accounts receivable and inventory on hand of $1.3 million and $8.2 million, respectively.
A summary of these key financial metrics for the year ended May 31, 2022 compared to the year ended May 31, 2021 follows: Year ended May 31, 2022: • Revenue increased by 8.7% to $316.2 million • Med Tech growth of 41.2% and Med Device growth of 0.9% • Gross profit decreased by 150 bps to 52.4% • Net loss decreased by $5.0 million to $26.5 million • Loss per share decreased by $0.14 to a loss of $0.68 • Cash flow from operations decreased by $31.3 million resulting in cash used in operations of $7.2 million Our Med Tech business, comprised of Auryon, the Thrombectomy platform and NanoKnife grew 41.2% in fiscal year 2022.
A summary of these key financial metrics for the year ended May 31, 2023 compared to the year ended May 31, 2022 follows: Year ended May 31, 2023: • Revenue increased by 7.1% to $338.8 million • Med Tech growth of 22.8% and Med Device growth of 1.9% • Gross profit decreased by 100 bps to 51.4% • Net loss increased by $25.9 million to $52.4 million • Loss per share increased by $0.65 to a loss of $1.33 • Cash flow from operations increased by $7.3 million resulting in cash provided by operations of $0.1 million Our Med Tech business, comprised of Auryon, the Thrombectomy platform and NanoKnife grew 22.8% in fiscal year 2023.
This was partially offset by increased accounts payable and accrued liabilities of $3.9 million. • For the year ended May 31, 2021, working capital was favorably impacted by decreased inventory on hand of $11.5 million and increased accounts payable and accrued liabilities of $4.9 million. This was partially offset by increased accounts receivable of $4.2 million.
This was partially offset by increased accounts payable and accrued liabilities of $2.1 million. • For the year ended May 31, 2022, working capital was unfavorably impacted by increased accounts receivable, inventory on hand and prepaids of $17.2 million, $2.8 million and $5.0 million respectively. This was partially offset by increased accounts payable and accrued liabilities of $3.9 million.
The interest rate on the Revolving Facility at May 31, 2022 was 2.31%. The company was in compliance with the Credit Agreement covenants as of May 31, 2022. In the first quarter of fiscal year 2022, the Company made a $5.0 million draw on the Revolving Facility in conjunction with the QX Medical asset acquisition.
In the first quarter of fiscal year 2022, the Company made a $5.0 million draw on the Revolving Facility in conjunction with the QX Medical asset acquisition.
Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised products underlying each performance obligation.
Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised products underlying each performance obligation. The Company has standard pricing for its products and determines standalone selling prices based on the price at which the performance obligation is sold separately.
The change from the prior year was primarily driven by: • The timing of certain projects, which reduced R&D project expense by $4.2 million; • Open R&D positions, which resulted in decreased compensation and benefits expense of $1.6 million ; and • A benefit of $0.5 million that was recorded as a result of the employee retention credit that the Company filed for under the provisions of the CARES Act in the third quarter of the current year compared to $0.3 million in the prior year period.
The change from the prior year was primarily driven by: • The timing of certain projects and clinical spend associated with the ongoing clinical trials, which decreased R&D expense by $1.1 million; • Compensation and benefits expenses, which decreased $0.3 million; and • A benefit of $0.5 million that was recorded as a result of the employee retention credit that the Company filed for under the provision of the CARES Act in the prior year.
Goodwill and intangible assets have been recorded at either incurred or allocated cost. Allocated costs were based on respective fair market values at the date of acquisition.
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. Goodwill and intangible assets have been recorded at either incurred or allocated cost. Allocated costs were based on respective fair market values at the date of acquisition.
If we seek to make acquisitions of other businesses or technologies in the future for cash, we may require external financing. Our contractual obligations as of May 31, 2022 are set forth in the table below (in thousands). We have no variable interest entities or other off-balance sheet obligations.
Our contractual obligations as of May 31, 2023 are set forth in the table below (in thousands). We have no variable interest entities or other off-balance sheet obligations.
This included: ◦ The full market launch of the AlphaVac Mechanical Thrombectomy device in December 2021; ◦ FDA clearance of the AlphaVac F18 thrombectomy system; ◦ FDA approval of an IDE study for the use of AlphaVac F18 to treat pulmonary embolism; and ◦ Enrollment of the first patients in the PRESERVE study for the use of NanoKnife in the prostate. • Value Creation.
This included: ◦ Pathway expansion for Auryon in arterial thrombectomy and full market release of the hyrodphilic coated catheters; ◦ FDA clearance of the AlphaVac F18 thrombectomy system; ◦ Enrollment of patients in the APEX IDE study for the use of AlphaVac F18 to treat pulmonary embolism; and ◦ Continued enrollment of patients in the PRESERVE study for the use of NanoKnife in the prostate. • Value Creation.
Year ended May 31, (in thousands) 2022 2021 $ Change Amortization of intangibles $ 19,458 $ 18,136 $ 1,322 Change in fair value of contingent consideration $ 1,212 $ 89 $ 1,123 Acquisition, restructuring and other items, net $ 9,042 $ 20,232 $ (11,190) Other expense $ (1,478) $ (769) $ (709) Amortization of intangibles - Represents the amount of amortization expense that was taken on intangible assets held by the Company. • Amortization expense increased $1.3 million compared to the prior year.
Year ended May 31, (in thousands) 2023 2022 $ Change Amortization of intangibles $ 18,790 $ 19,458 $ (668) Goodwill impairment $ 14,549 $ — $ 14,549 Change in fair value of contingent consideration $ 2,320 $ 1,212 $ 1,108 Acquisition, restructuring and other items, net $ 15,633 $ 9,042 $ 6,591 Other expense $ (3,256) $ (1,478) $ (1,778) Amortization of intangibles - Represents the amount of amortization expense that was taken on intangible assets held by the Company. • Amortization expense decreased $0.7 million compared to the prior year.
Cash payments due by period as of May 31, 2022 (in thousands) Total Less than One Year 1-3 Years 3-5 Years After 5 Years Contractual Obligations: Long term debt and interest $ 25,778 $ 778 $ 25,000 $ — $ — Operating leases (1) 7,980 3,006 3,671 1,303 — Purchase obligations (2) 6,170 6,170 — — — Acquisition-related future obligations (3) 20,000 10,000 10,000 — — Royalties 44,480 3,840 7,680 7,680 25,280 $ 104,408 $ 23,794 $ 46,351 $ 8,983 $ 25,280 (1) Operating leases include short-term leases that are not recorded on our Consolidated Balance Sheets under ASU No. 2016-02.
Cash payments due by period as of May 31, 2023 (in thousands) Total Less than One Year 1-3 Years 3-5 Years After 5 Years Contractual Obligations: Long term debt and interest $ 50,108 $ 50,108 $ — $ — $ — Operating leases (1) 5,940 2,366 3,016 558 — Purchase obligations (2) 3,166 3,166 — — — Acquisition-related future obligations (3) 20,000 15,000 5,000 — — Royalties 39,840 3,640 7,280 7,280 21,640 $ 119,054 $ 74,280 $ 15,296 $ 7,838 $ 21,640 (1) Operating leases include short-term leases that are not recorded on our Consolidated Balance Sheets under ASU No. 2016-02 .
The change from the prior year was primarily driven by: • Additional headcount from the build-out of the Auryon sales and marketing teams, which increased compensation and benefits expense by $11.7 million; • Travel, meeting, tradeshow and other expenses, which increased $4.2 million as some COVID-19 restrictions were lifte d; and 38 • A benefit of $2.8 million that was recorded as a result of the employee retention credit that the Company filed for under the provisions of the CARES Act in the third quarter of the current year compared to $0.9 million in the prior year period.
The change from the prior year was primarily driven by: • Additional headcount from the build-out of the Auryon and mechanical thrombectomy sales and marketing teams, which increased compensation and benefits expense by $3.1 million; • Travel, meeting, tradeshow and other selling expenses, which increased $3.7 million; • Other fixed expenses (utilities, insurance, depreciation, etc.), which decreased $0.6 million; and • A benefit of $2.8 million that was recorded as a result of the employee retention credit that the Company file for under the provision of the CARES Act in the prior year.
The change in sales from the prior year was primarily driven by: • Increased Auryon sales of $18.0 million; • Growth in the thrombectomy platform of $3.7 million, which was driven by growth in the mechanical thrombectomy platform and was partially offset by decreased sales of thrombolytics.
The change in sales from the prior year was primarily driven by: • Increased Auryon sales of $12.0 million; • Growth in the thrombectomy platform of $3.0 million, which was driven by growth in the mechanical thrombectomy platform in AlphaVac sales of $5.0 million, partially offset by softness in AngioVac; and • Increased NanoKnife sales of $3.0 million, which was driven by NanoKnife disposable sales in the U.S. and internationally which increased $3.3 million due to increased case volume.
In December 2020 and March 2021, payments of $10.0 million each were made on the Revolving Facility. We believe that our current cash balance, together with cash generated from operations and access to our Revolving Facility, will provide sufficient liquidity to meet our anticipated needs for capital for at least the next 12 months.
We believe that our current cash balance, together with cash generated from operations and access to our Revolving Facility, will provide sufficient liquidity to meet our anticipated needs for capital for at least the next 12 months. If we seek to make acquisitions of other businesses or technologies in the future for cash, we may require external financing.
Throughout the year, we introduced strategic moves designed to streamline our business, improve our overall business operations and position ourselves for growth. Those initiatives included: • Product development process. The Company continued its disciplined product development process which is intended to improve the Company’s ability to bring new products to market.
Those initiatives included: • Product development process. The Company continued its disciplined product development process which is intended to improve the Company’s ability to bring new products to market.
As such, we believe the growth in the near to mid-term will be driven by our high technology products including Auryon, Mechanical Thrombectomy (which includes AngioVac and AlphaVac) and NanoKnife. The Company regularly evaluates its reportable segments and will continue to do so along with this transformation.
As such, we believe the growth in the near to mid-term will continue to be driven by our high technology products including Auryon, Mechanical Thrombectomy (which includes AngioVac and AlphaVac) and NanoKnife. Throughout the year, we introduced strategic moves designed to streamline our business, improve our overall business operations and position ourselves for growth.
Timing of payments are as contractually scheduled, or where contingent, the Company's best estimate of payment timing. 41 Results of Operations for the years ended May 31, 2021 and 2020 For management discussion and analysis of our 2021 financial results and liquidity compared with 2020, see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended May 31, 2021 filed on July 27, 2021.
Results of Operations for the years ended May 31, 2022 and 2021 For management discussion and analysis of our 2022 financial results and liquidity compared with 2021, see Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended May 31, 2022 filed on July 22, 2022. 42 Recent Accounting Pronouncements Refer to Note 1 of the Notes to the consolidated financial statements for Recently Issued Accounting Pronouncements. 43
The Company will continue to assess the level of the valuation allowance required. If sufficient positive evidence exists in future periods to support a release of some or all of the valuation allowance, such a release would likely have a material impact on the Company’s results of operations.
If sufficient positive evidence exists in future periods to support a release of some or all of the valuation allowance, such a release would likely have a material impact on the Company’s results of operations. 40 Liquidity and Capital Resources We regularly review our liquidity and anticipated capital requirements in light of the significant uncertainty created by the COVID-19 global pandemic.
This positive impact was partially offset by sales of lower margin Vascular Access products; • Rebate expense, which negatively impacted gross profit by $0.9 million; • Start-up costs related to Auryon and AlphaVac of $3.1 million, including depreciation on Auryon placement units of $1.3 million, which negatively impacted gross profit; • Labor shortages, freight and inflationary costs on raw materials, which negatively impacted gross profit by $3.4 million year over year; and • A benefit of $0.8 million that was recorded as a result of the employee retention credit that the Company filed for under the provisions of the CARES Act in the third quarter of the current year compared to a benefit of $0.7 million in the prior year period.
The change from the prior year was primarily driven by: • Sales volume, which positively impacted gross profit by $13.2 million; • Production volume and other incentives which positively impacted gross profit by $11.3 million • Price and mix, which negatively impacted gross profit by $4.9 million; • Inflationary costs on raw materials, labor shortages and freight costs, which negatively impacted gross profit by $8.1 million; • Incremental depreciation on placement units of $2.2 million; and • A benefit of $0.8 million that was recorded as a result of the employee retention credit that the Company filed for under the provision of the CARES Act in the prior year.
When testing for impairment of definite-lived intangible assets held for use, the Company groups assets at the lowest level for which cash flows are separately identifiable. The Company operates as a single asset group. If a triggering event is deemed to exist, the Company performs an undiscounted operating cash flow analysis to determine if an impairment exists.
The Company operates as two reporting units and two asset groups. If a triggering event is deemed to exist, the Company performs an undiscounted operating cash flow analysis to determine if an impairment exists.
The change from the prior year was primarily driven by: • Legal expense, re lated to litigation that is outside of the normal course of business, which increased $1.5 million; • Manufacturing relocation expense related to the move of certain manufacturing lines to Costa Rica, which increased $0.6 million; • Manufacturing facilities relocation expense related to the sale of the Fluid Management business which decreased $0.4 million ; • Transition Services Agreement fees from Medline Industries of $1.0 million that were received in fiscal year 2021 .
The change from the prior year was primarily driven by: • Legal expense, related to litigation that is outside of the normal course of business, which increased $2.4 million; • Mergers and acquisition expense related to legal fees, which increased $0.3 million; • Manufacturing relocation expense related to the move of certain manufacturing lines to Costa Rica, which increased $0.4 million; • Other expenses (mainly severance associated with organizational changes), which decreased $0.1 million; and • The payment to the Israeli Innovation Authority of $3.5 million related to grant funds that were provided to Eximo to develop the Auryon laser prior to the acquisition in the second quarter of fiscal year 2020.
The change in sales from the prior year was primarily driven by: • The backlog of $8.4 million at May 31, 2022, which primarily impacted sales of Core, Venous and Vascular Access products; and • Increased case volume , which resulted in increased sales of Core and Venous (despite the impact of the backlog) and BioSentry products of $3.7 million, $0.5 million and $0.4 million, respectively.
The backlog, which primarily impacted sales of Core and Vascular Access products, was $2.7 million at May 31, 2023 compared to $8.4 million at May 31, 2022.
Gross Profit, Operating Expenses, and Other Income (expense) Year ended May 31, (in thousands) 2022 2021 % Change Gross profit (exclusive of intangible amortization) $ 165,732 $ 156,788 5.7 % Gross profit % of sales 52.4 % 53.9 % Research and development $ 30,739 $ 36,390 -15.5 % % of sales 9.7 % 12.5 % Selling and marketing $ 95,301 $ 81,306 17.2 % % of sales 30.1 % 27.9 % General and administrative $ 38,451 $ 35,918 7.1 % % of sales 12.2 % 12.3 % Gross profit - Gross profit consists of net sales less the cost of goods sold, which includes the costs of materials, products purchased from third parties and sold by us, manufacturing personnel, royalties, freight, business insurance, depreciation of property and equipment and other manufacturing overhead, exclusive of intangible amortization.
Gross Profit Year ended May 31, (in thousands) 2023 2022 $ Change Med Tech $ 61,966 $ 52,584 $ 9,382 Gross profit % of sales 64.1 % 66.8 % Med Device $ 112,280 $ 113,148 $ (868) Gross profit % of sales 46.4 % 47.6 % Total $ 174,246 $ 165,732 $ 8,514 Gross profit % of sales 51.4 % 52.4 % Gross profit - Gross profit consists of net sales less the cost of goods sold, which includes the costs of materials, products purchased from third parties and sold by us, manufacturing personnel, royalties, freight, business insurance, depreciation of property and equipment and other manufacturing overhead, exclusive of intangible amortization.
Other expense - Other expense includes interest expense, foreign currency impacts, bank fees, and amortization of deferred financing costs. • The change in other expense of $0.7 million compared to the prior year is primarily due to unrealized foreign currency losses of $0.8 partially offset by decreased interest expense of $0.2 million. 39 Income Tax Benefit Year ended May 31, (in thousands) 2022 2021 Income tax benefit $ (3,402) $ (4,504) Effective tax rate 11 % 12 % Our effective tax rate was a benefit of 11% for fiscal year 2022 compared with an effective tax rate benefit of 12% for the prior year.
Other expense - Other expense includes interest expense, foreign currency impacts, bank fees, and amortization of deferred financing costs. • The change in other expe nse of $1.8 million compared to the prior year, is primarily due to increased interest expense of $2.1 million and unrealized foreign currency fluctuations of $0.2 million.
Liquidity and Capital Resources We regularly review our liquidity and anticipated capital requirements in light of the significant uncertainty created by the COVID-19 global pandemic. We believe that our current cash on hand and availability under our Revolving Facility provide sufficient liquidity to meet our anticipated needs for capital for at least the next 12 months.
We believe that our current cash on hand provides sufficient liquidity to meet our anticipated needs for capital for at least the next 12 months. Our cash and cash equivalents totaled $44.6 million as of May 31, 2023, compared with $28.8 million as of May 31, 2022.
Port sales also increased $2.7 million, driven primarily by sales in the U.S. These increases were partially offset by decreased Midline, PICCs, Di alysis, 37 Radio Frequency Ablation and other Oncology product sales of $2.6 million, $0.9 million, $0.2 million, $0.9 million and $0.6 million respectively.
These increases were partially offset by decreased Venous, PICCs, Midlines and other Oncology and Vascular Access sales of $3.6 million, $2.4 million, $0.8 million and $1.6 million, respectively.
Changes in assumptions or estimates could materially affect the estimated fair value, and therefore could affect the likelihood and amount of a potential impairment. 36 There were no adjustments to goodwill for the year ended May 31, 2022 other than foreign currency translation adjustments.
There were no adjustments to goodwill for the Med Tech reporting unit for the year ended May 31, 2023 other than foreign currency translation adjustments.
Cash provided by (used in) financing activities: Years ended May 31, 2022 and 2021: • $5.0 million draw on the Revolving Facility in the first quarter of fiscal year 2022 for the QX Medical asset acquisition; • $20.0 million payment on the Revolving Facility in the third quarter of fiscal year 2021; and • $2.7 million and $3.0 million, respectively, of proceeds from stock option and ESPP activity.
Cash provided by financing activities: Years ended May 31, 2023 and 2022: • $70.0 million in proceeds on long-term debt less the repayment of $45.0 million associated with the new Credit Agreement in the first quarter of fiscal year 2023.
Net sales for the year ended May 31, 2022 and 2021 were: Year ended May 31, (in thousands) 2022 2021 % Change Net Sales Med Tech $ 78,717 $ 55,731 41.2 % Med Device 237,502 235,279 0.9 % Total $ 316,219 $ 291,010 8.7 % Net Sales by Product Category Endovascular Therapies $ 160,925 $ 135,079 19.1 % Vascular Access 100,193 101,310 (1.1) % Oncology/Surgery 55,101 54,621 0.9 % Total $ 316,219 $ 291,010 8.7 % Net Sales by Geography United States $ 265,963 $ 237,043 12.2 % International 50,256 53,967 (6.9) % Total $ 316,219 $ 291,010 8.7 % For the year ended May 31, 2022, net sales increased $25.2 million to $316.2 million compared to the year ended May 31, 2021.
Year ended May 31, (in thousands) 2023 2022 $ Change Net Sales Med Tech $ 96,687 $ 78,717 $ 17,970 Med Device 242,065 237,502 $ 4,563 Total $ 338,752 $ 316,219 $ 22,533 Net Sales by Geography United States $ 282,713 $ 265,963 $ 16,750 International 56,039 50,256 $ 5,783 Total $ 338,752 $ 316,219 $ 22,533 For the year ended May 31, 2023, net sales increased $22.5 million to $338.8 million compared to the year ended May 31, 2022.
The fair value of the contingent consideration liability as of May 31, 2022 was $16.9 million.
As of May 31, 2023 and 2022, total debt outstanding related to the Credit Agreement was $50.0 million ($25.0 million on the Revolving Facility and $25.0 million on the Delayed Draw Term Loan) and $25.0 million, respectively. The fair value of the contingent consideration liability as of May 31, 2023 was $19.3 million.
Removed
In the third quarter of fiscal year 2022, a benefit of $4.2 million was recorded as a result of the employee retention credit that the Company filed for under the provisions of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted December 27, 2020 which amended and extended the employee retention credit under section 2301 of the CARES Act.
Added
Company and Market AngioDynamics is a leading and transformative medical technology company focused on restoring healthy blood flow in the body's vascular system, expanding cancer treatment options and improving quality of life for patients.
Removed
This growth was partially offset by reductions in AngioVac procedure volumes due to challenges resulting from the 33 COVID-19 pandemic. Our Med Device business grew 0.9% in fiscal year 2022.
Added
Commencing with the first quarter of fiscal year 2023, the Company began to manage its operations through two segments, Med Tech and Med Device to align with the transformation from a company with a broad portfolio of largely undifferentiated products to a more focused medical technology company.
Removed
It was also adversely impacted by the backlog in Vascular Access products and continued pressure from reductions in Oncology procedure volumes, also due to challenges resulting from the COVID-19 pandemic, a trend that may continue.
Added
On August 30, 2022, the Company repaid all amounts outstanding under its then existing credit agreement and entered into a new Credit Agreement that provides for a $75.0 million Revolving Facility and a $30.0 million Delayed Draw Term Loan.
Removed
The Company has historically performed its annual goodwill assessment during the third quarter of each year (as of December 31). During the fourth quarter of fiscal year 2022, the Company decided to change the date of its annual impairment assessment from December 31st to April 30th.
Added
As of May 31, 2023, $25.0 million was drawn on the Revolving Facility and $25.0 million was drawn on the Delayed Draw Term Loan. See Note 12 "Long-Term Debt" set forth in the Notes to the consolidated financial statements. During the fourth quarter of fiscal year 2023, the Company was in discussions with Merit Medical Systems, Inc.
Removed
The change was made to more closely align the impairment assessment date with the Company's long term planning and forecasting process. See Note 8,"Goodwill and Intangible Assets" accompanying the consolidated financial statements. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination.
Added
("Merit") to sell the dialysis product portfolio and BioSentry tract sealant system biopsy businesses. This qualified for held for sale accounting as of May 31, 2023.
Removed
Determining the fair value of a reporting unit is judgmental and requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates and future market conditions, among others.
Added
On June 8, 2023, the Company entered into an asset purchase agreement (the "Asset Purchase Agreement") with Merit Medical Systems, Inc. pursuant to which Merit acquired the dialysis product portfolio and BioSentry tract sealant system biopsy businesses for $100.0 million in cash subject to the terms and conditions of the Asset Purchase Agreement.
Removed
Increased sales in the mechanical thrombectomy platform of $4.0 million was driven by AngioVac and the launch of the AlphaVac product in the second quarter of fiscal year 2022; and • Increased NanoKnife sales of $1.3 million, which was driven by NanoKnife disposable sales in the U.S. which increased $2.3 million due to increased case volume.
Added
The Company and Merit entered into various agreements to facilitate the transition to Merit, including a Transactions Services Agreement and Contract Manufacturing Agreement.
Removed
Excluding the large UK order of $5.2 million in the first quarter of the prior year, net sales increased $7.4 million for the year ended May 31, 2022 .
Added
The Company determined that the sale of the 33 businesses did not constitute a strategic shift that had a major effect on the Company’s operations or financial results and as a result, this transaction will not be classified as discontinued operations.
Removed
Excluding the prior year order in the UK, Midlines, PICCs and Ports increased $4.4 million.
Added
As of May 31, 2023, the Company concluded that the sale of the dialysis product portfolio and BioSentry tract sealant system biopsy businesses to Merit Medical Systems, Inc. was a triggering event for the Med Device reporting unit. The Company utilized the income approach to determine the fair value of the remaining Med Device reporting unit.
Removed
Gross profit increased by $8.9 million compared to the prior year. The change from the prior year was primarily driven by: • Sales volume, which positively impacted gross profit by $14.6 million; • Price and mix, which positively impacted gross profit by $1.6 million as a result of increased sales of higher margin Auryon and AngioVac products.
Added
Based on the results of this evaluation, the Company recorded a goodwill impairment charge of $14.5 million for the year ended May 31, 2023 to write down the carrying value of the Med Device reporting unit to fair value.
Removed
Research and development expense - Research and development (“R&D”) expense includes internal and external costs to develop new products, enhance existing products, validate new and enhanced products, manage clinical, regulatory and medical affairs. R&D expense decreased $5.7 million compared to the prior year.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+2 added−1 removed5 unchanged
Biggest changeInterest on the facility will be based, at the Company’s option, on either a base rate of LIBOR or alternate base rate, plus an applicable margin tied to the Company’s total leverage ratio and having ranges between 0.25% and 0.75% for base rate loans and between 1.25% and 1.75% for LIBOR loans.
Biggest changeINTEREST RATE RISK Interest on the Revolving Facility and Delayed Draw Term Loan is based, at the Company's option, on a rate equal to (i) the Secured Overnight Financing Rate ("SOFR") plus 0.10% (subject to a floor of 0%), or (ii) if the Company elects to treat a borrowing as an ABR Borrowing, an alternate base rate based on SOFR, plus, in each case, an applicable margin of 1.25%, 1.50% or 1.75%, depending on the leverage ratio.
In addition, the Credit Agreement is structured across five investment grade banks. The Company has the ability to draw equally amongst the five banks which limits the concentration of credit risk of one institution. Concentration of credit risk with respect to trade accounts receivable is limited due to the large number of customers that purchase products from the Company.
In addition, the Credit Agreement is structured across three investment grade banks. The Company has the ability to draw equally amongst the five banks which limits the concentration of credit risk of one institution. Concentration of credit risk with respect to trade accounts receivable is limited due to the large number of customers that purchase products from the Company.
Dollar, particularly the Euro, British pound and Canadian dollar. Approximately 6.2% of our sales in fiscal year 2022 were denominated in foreign currencies. We do not have expenses denominated in foreign currencies at the level of our sales and as a result, our profitability is exposed to currency fluctuations. When the U.S.
Dollar, particularly the Euro, British pound and Canadian dollar. Approximately 4.7% of our sales in fiscal year 2023 were denominated in foreign currencies. We do not have expenses denominated in foreign currencies at the level of our sales and as a result, our profitability is exposed to currency fluctuations. When the U.S.
In the event of default, the interest rate may be increased by 2.0%. As of May 31, 2022, there was $25.0 million outstanding on the Revolving Facility. The interest rate on the Revolving Facility at May 31, 2022 was 2.31%.
As of May 31, 2023, there was $25.0 million outstanding on the Delayed Draw Term Loan and $25.0 million outstanding on the Revolving Facility and the interest rate at May 31, 2023 was 6.73%.
Removed
INTEREST RATE RISK We have a Credit Agreement which provides for a $125.0 million Revolving Facility.
Added
If any amounts are not paid when due, such overdue amounts will bear interest at an amount generally equal to 2.0% plus the existing loan rate.
Added
The Credit Agreement also carries a commitment fee in the case of the Revolving Facility, and a ticking fee, in the case of the Delayed Draw Term Loans of 0.20% to 0.25% per annum on the unused portion.

Other ANGO 10-K year-over-year comparisons