AngioDynamics Reports Financial Results for Fiscal 2009 Third Quarter

Net Sales Increase 21% to $49.4 Million

Net Income of $1.9 Million and EPS of $0.08; EPS of $0.15 Prior to Expense Associated with Completion of CEO Transition

(Non GAAP) EBITDA of $5.7 Million or $0.23 Per Share

Conference Call Begins Today at 4:30 p.m. Eastern Time

QUEENSBURY, N.Y.--(BUSINESS WIRE)--Apr. 2, 2009-- AngioDynamics, Inc. (NASDAQ: ANGO), a leading provider of innovative medical devices used by interventional radiologists and surgeons for the minimally-invasive treatment of cancer and peripheral vascular disease, today reported financial results for the fiscal third quarter and nine months ended February 28, 2009. Financial results include the acquisition of Diomed assets since June 17, 2008, the date of acquisition, and the acquisition of FlowMedica assets since January 12, 2009, the date of acquisition.

Net sales in the third quarter were $49.4 million, a 21% increase over the $40.7 million reported in the third quarter a year ago. Gross margin in the third quarter was 61.1% compared with 62.2% a year ago. With the completion of the CEO transition announced on December 3, 2008, the Company recorded a provision in the quarter for all current and future costs associated with the Employment Agreement and Non-Statutory Stock Option Agreement entered into on January 20, 2009, with its former chief executive officer, Eamonn Hobbs, and certain costs associated with the recruitment of its new CEO, Jan Keltjens, under an agreement entered into on January 19, 2009. The costs related to the foregoing, inclusive of stock-based compensation, were $2.8 million.

Operating income was $2.6 million in the third quarter, inclusive of the cost of the CEO transition, compared with $7.6 million in the prior year third quarter, which included a gain on the settlement of litigation. Excluding these two items, operating income increased 23% in the third quarter to $5.5 million from $4.5 million a year ago. Net income was $1.9 million or $0.08 per share in the third quarter, compared with $4.9 million or $0.20 per share a year ago. Excluding the aforementioned two items, net income increased 26% in the third quarter to $3.7 million

from $2.9 million a year ago. EBITDA (Non GAAP) was $5.7 million or $0.23 per share in the third quarter and $10.0 million or $0.41 per share in the third quarter a year ago. Excluding the aforementioned two items, EBITDA increased 25% to $8.5 million or $0.35 per share in the third quarter from $6.8 million or $0.28 per share a year ago.

For the nine months ended February 28, 2009, net sales of $142.2 million increased 19% over the $119.7 million reported in the prior year period; gross margin increased to 61.4% from 61.2% in the prior year period; operating income was $11.3 million compared with $15.9 million in the prior year period; net income was $7.0 million or $0.29 per share, compared with $10.4 million or $0.43 per share in the prior year period; and EBITDA (Non GAAP) was $20.2 million or $0.82 per share, compared with $22.6 million or $0.93 per share in the prior year period. Excluding the aforementioned CEO transition costs and gain on settlement of litigation, for the nine months ended February 28, 2009, operating income increased 13% to $14.4 million from $12.8 million in the prior year period; net income increased 6% to $8.9 million from $8.4 million

in the prior year period; and EBITDA (Non GAAP) increased 19% to $23.2 million or $0.95 per share, compared with $19.5 million or $0.80 per share in the prior year period.

AngioDynamics reported cash and investments of $62.3 million and long-term debt of $7.2 million at February 28, 2009.

In fiscal 2009, AngioDynamics began operating three business units: Peripheral Vascular, Access and Oncology/Surgery. Peripheral Vascular sales were $20.7 million in the quarter, an increase of 35% from the third quarter a year ago, inclusive of the laser ablation products acquired from Diomed and the Benephit^® product line acquired from FlowMedica. Access sales were $17.2 million in the quarter, an increase of 8% from the third quarter a year ago, and Oncology/Surgery sales grew 22% to $11.5 million from the third quarter a year ago.

“Our third quarter results illustrate how smoothly our CEO transition has gone as we recorded solid growth across all of our business units,” said Jan Keltjens, President and CEO. “I would like to thank Eamonn Hobbs for his support during our transition and for all his contributions to AngioDynamics. Since joining the Company, I’ve visited our principal operating locations in New York, Georgia, California and England to become familiar with our people and our products, and have met some of our customers and industry associations. As a result, I am more excited than ever about the potential of our company.

“For the remainder of fiscal 2009 and beyond, I look forward to working with our team to maximize our opportunities,” continued Mr. Keltjens. “We have a strong and growing oncology/surgery business that is in a position to potentially help millions of patients through our exciting IRE technology. We are focusing our efforts with the NanoKnife™ IRE System on continuing pre-clinical studies to advance the technology and support regulatory filings, enhancing our focus on driving clinical programs towards gaining labeling for specific indications, and building professional education programs. Our goal is to use evidence-based medicine to build a strong IRE offering and a successful and sustainable business benefitting a large group of patients.

“We also will be working to build our market-leading laser vein ablation business, the Benephit Targeted Renal Therapy™ product line and our access product lines, as well as reinvigorating our product development effort. Our overall goal is to capitalize on our numerous opportunities while maintaining our business model that generates substantial operating cash flow and positions us to drive a growth strategy through focused internal and external investments,” Mr. Keltjens concluded.

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

• 
  
  AngioDynamics completed the product development integration of the acquired Diomed business with the February launch of NeverTouch^® – FRS. The company’s product set has now been expanded to enable the use of the NeverTouch fiber on the Delta series laser, as well as lasers formerly manufactured by Diomed.
• The assets of privately-held FlowMedica Inc., a leader in the emerging field of Targeted Renal Therapy were purchased for $1.75 million plus an earn out based on 2011 net sales. The Benephit product line has been integrated into AngioDynamics Peripheral Vascular business unit. Targeted Renal Therapy is a therapeutic approach which delivers drugs directly to the kidneys to prevent and treat acute kidney injury (AKI), which results from many common interventional and surgical procedures.



• Positive clinical uses of NanoKnife continued, as six sites in the U.S., Australia, Germany and Italy have completed a total of 48 IRE procedures for percutaneous prostate, percutaneous and laparoscopic liver, percutaneous kidney, lymph node, and lung lesions as of the date of this release. The physicians performing the procedures have reported either same day patient discharge, in the case of prostate procedures, or typically a one-day stay, in the case of hepatic or renal procedures. Physicians have also commented on short procedure times compared to thermal ablation modalities. Most patients treated continue to comment on a distinct lack of, or very minimal pain, especially when compared to previous thermal focal therapy treatments.
• Two independent pre-clinical pancreatic IRE safety studies have concluded with promising results. One of these studies is now entering a second phase to gather longer-term chronic data and to gain a more in-depth understanding of pathology results. In addition, in Australia, the Therapeutic Good Administration has approved the NanoKnife System for commercial sale and similar approval has been obtained from the Canadian Health Protection Branch.



• Study results published in the December 2008 edition of the Journal of Urology demonstrated the benefits of using the Habib^® 4X radio frequency resection device in procedures to treat kidney malignancies compared to a control group using other common means. These benefits include significantly diminished blood loss, far fewer adverse events and a shorter operative time.

Fiscal 2009 Guidance

AngioDynamics has updated its outlook for fiscal 2009 incorporating the results from the third fiscal quarter and the acquisition of FlowMedica assets:

• Net sales in the range of $195 million to $198 million
  
  
• Gross margin in the range of 61% to 62%
• GAAP operating income in the range of $17 million to $18 million
• 
  
  EBITDA in the range of $29 million to $30 million
• GAAP EPS in the range of $0.42 to $0.45, inclusive of the expenses incurred for the CEO transition

Conference Call

AngioDynamics management will host a conference call to discuss its third quarter results today beginning at 4:30 p.m. Eastern Time. To participate in the live call by telephone, please dial 1 (800) 257-7087 from the U.S. or for international callers, please dial +1 (303) 262-2140.

In addition, individuals can listen to the call on the Internet by visiting the investor relations portion of the AngioDynamics Web site at http://investor.angiodynamics.com. To listen to the live call, please go to the Web site 15 minutes prior to its start to register, download and install the necessary audio software.

A replay will be available on the Web site. A telephone replay will be available from 6:30 p.m. Eastern time on April 2, 2009, through 11:59 p.m. Eastern time on April 9, 2009, by dialing 1 (800) 405-2236 (domestic) or +1 (303) 590-3000 (international) and entering the passcode: 11128472#.

Use of Non-GAAP Measures

Management uses non-GAAP measures to establish operational goals, and believes that non-GAAP measures may assist investors in analyzing the underlying trends in AngioDynamics’ business over time. Investors should consider these non-GAAP measures in addition to, not as a substitute for or as superior to, financial reporting measures prepared in accordance with GAAP. In this news release, the Company has reported non-GAAP EBITDA, (earnings before interest, taxes, depreciation and amortization), and non-GAAP EBITDA per share. Management uses these measures in its internal analysis and review of operational performance. Management believes that these measures provide investors with useful information in comparing the Company’s performance over different periods, particularly when comparing this period to periods in which the Company did not incur any expenses relating to these activities or items. By using these non-GAAP measures, management believes that investors get a better picture of the performance of the Company’s underlying business. Management encourages investors to review the Company’s financial results prepared in accordance with GAAP to understand the Company’s performance taking into account all relevant factors, including those that may only occur from time to time but have a material impact on the Company’s financial results. Please see the tables that follow for a reconciliation of GAAP to non-GAAP measures.

About AngioDynamics

AngioDynamics, Inc. (“AngioDynamics” or the “Company”) is a leading provider of innovative medical devices used by interventional radiologists, surgeons and other physicians for the minimally-invasive treatment of cancer and peripheral vascular disease. The Company’s diverse product line includes market-leading radiofrequency ablation and irreversible electroporation resection systems, vascular access products, angiographic products and accessories, dialysis products, angioplasty products, drainage products, thrombolytic products, embolization products and venous products. More information is available at www.angiodynamics.com.

Safe Harbor

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements regarding AngioDynamics’ expected future financial position, results of operations, cash flows, business strategy, budgets, projected costs, capital expenditures, products, competitive positions, growth opportunities, plans and objectives of management for future operations, as well as statements that include the words such as “expects,” “reaffirms” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” or variations of such words and similar expressions, are forward-looking statements. These forward looking statements are not guarantees of future performance and are subject to risks and uncertainties. Investors are cautioned that actual events or results may differ from the Company’s expectations. Factors that may affect the actual results achieved by the Company include, without limitation, the ability of the Company to develop its existing and new products, future actions by the FDA or other regulatory agencies, results of pending or future clinical trials, overall economic conditions, general market conditions, market acceptance, foreign currency exchange rate fluctuations, the effects on pricing from group purchasing organizations and competition, the ability of the Company to integrate purchased businesses as well as the risk factors listed from time to time in the SEC filings of AngioDynamics, Inc., including but not limited to its Annual Report on Form 10-K for the year ended May 31, 2008. The Company does not assume any obligation to publicly update or revise any forward-looking statements for any reason.

In the United States, NanoKnife has been cleared by the FDA for use in the surgical ablation of soft tissue. This document may discuss the use of NanoKnife for specific clinical indications for which it is not cleared in the United States at this time.

ANGIODYNAMICS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data)
			Three months ended								Nine months ended
			Feb 28,				Feb 29,				Feb 28,				Feb 29,
				2009				2008				2009				2008
			(unaudited)								(unaudited)
Net sales			$	49,447			$	40,725			$	142,234			$	119,748
Cost of sales				19,225				15,407				54,862				46,474
	Gross profit			30,222				25,318				87,372				73,274
	% of net sales			61.1	%			62.2	%			61.4	%			61.2	%
Operating expenses
Research and development				4,692				3,955				13,079				10,360
Sales and marketing				13,651				11,725				40,735				33,540
General and administrative				4,085				3,409				12,359				11,604
Amortization of intangibles				2,323				1,777				6,816				5,006
Gain on settlement of litigation				-				(3,151	)			-				(3,151	)
CEO transition costs				2,841				-				3,041				-
	Total operating expenses			27,592				17,715				76,030				57,359
	Operating income			2,630				7,603				11,342				15,915
Other income (expense), net				93				238				(658	)			688
	Income before income taxes			2,723				7,841				10,684				16,603
Provision for income taxes				811				2,951				3,654				6,233
	Net income		$	1,912			$	4,890			$	7,030			$	10,370
Earnings per common share
	Basic		$	0.08			$	0.20			$	0.29			$	0.43
	Diluted		$	0.08			$	0.20			$	0.29			$	0.43
Weighted average common shares
	Basic			24,366				24,123				24,342				24,042
	Diluted			24,484				24,404				24,501				24,343

ANGIODYNAMICS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share data)
Reconciliation of Operating Income to non-GAAP EBITDA:
			Three months ended						Nine months ended
			Feb 28,			Feb 29,			Feb 28,			Feb 29,
			2009			2008			2009			2008
			(unaudited)						(unaudited)
Operating income			$	2,630		$	7,603		$	11,342		$	15,915
Amortization of intangibles				2,323			1,777			6,816			5,006
Depreciation				709			589			1,998			1,683
	EBITDA		$	5,662		$	9,969		$	20,156		$	22,604
EBITDA per common share
	Basic		$	0.23		$	0.41		$	0.83		$	0.94
	Diluted		$	0.23		$	0.41		$	0.82		$	0.93
Weighted average common shares
	Basic			24,366			24,123			24,342			24,042
	Diluted			24,484			24,404			24,501			24,343

ANGIODYNAMICS, INC. AND SUBSIDIARIES
NET SALES BY BUSINESS UNIT AND BY GEOGRAPHY
(in thousands)
				Three months ended						Nine months ended
				Feb 28,			Feb 29,			Feb 28,			Feb 29,
				2009			2008			2009			2008
				(unaudited)						(unaudited)
Net Sales by Business Unit
	Peripheral Vascular			$	20,743		$	15,411		$	60,947		$	45,884
	Access				17,176			15,846			48,931			46,322
	Oncology/Surgery				11,528			9,468			32,356			27,542
		Total		$	49,447		$	40,725		$	142,234		$	119,748
Net Sales by Geography
	United States			$	44,074		$	37,021		$	126,262		$	108,617
	International				5,373			3,704			15,972			11,131
		Total		$	49,447		$	40,725		$	142,234		$	119,748

ANGIODYNAMICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
			Feb 28,			May 31,
			2009			2008
			(unaudited)			(2)
Assets
Current Assets
	Cash and cash equivalents		$	26,776		$	32,040
	Restricted cash			-			68
	Marketable securities			35,557			46,182
	Total cash and investments			62,333			78,290
	Receivables, net			26,501			26,642
	Inventories, net			32,415			22,901
	Deferred income taxes			8,063			10,902
	Prepaid expenses and other			5,305			3,147
	Total current assets			134,617			141,882
Property, plant and equipment, net				22,600			21,163
Intangible assets, net				70,065			71,311
Goodwill				161,990			162,707
Deferred income taxes				7,425			6,860
Other non-current assets				3,882			4,824
	Total Assets		$	400,579		$	408,747
Liabilities and Stockholders' Equity
Current portion of long-term debt			$	350		$	10,040
Contractual payments on acquisition of business, net				5,164			9,625
Other current liabilities				20,370			19,537
Litigation provision				-			6,757
Long-term debt, net of current portion				6,810			7,075
	Total Liabilities			32,694			53,034
Stockholders' equity				367,885			355,713
	Total Liabilities and Stockholders' Equity		$	400,579		$	408,747
Shares outstanding				24,426			24,268
(2) Derived from audited financial statements

ANGIODYNAMICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
					Nine months ended
					Feb 28,				Feb 29,
						2009				2008
					(unaudited)
Cash flows from operating activities:
	Net income				$	7,030			$	10,370
	Depreciation and amortization					8,814				6,689
	Tax effect of exercise of stock options					(104	)			223
	Deferred income taxes					2,438				4,901
	Stock-based compensation					4,508				3,658
	Other					912				602
	Changes in operating assets and liabilities
		Receivables				1,198				(2,242	)
		Inventories				(6,444	)			1,881
		Accounts payable and accrued liabilities				1,704				(509	)
		Litigation provision				(6,757	)			(3,151	)
		Other				(259	)			(2,290	)
			Net cash provided by operating activities			13,040				20,132
Cash flows from investing activities:
	Additions to property, plant and equipment					(3,472	)			(4,792	)
	Acquisition of intangible assets and business					(17,078	)			(3,471	)
	Change in restricted cash					68				(9,195	)
	Purchases, sales and maturities of marketable securities, net					10,516				9,650
			Net cash used in investing activities			(9,966	)			(7,808	)
Cash flows from financing activities:
	Repayment of long-term debt					(9,955	)			(230	)
	Proceeds from exercise of stock options and ESPP					1,765				3,209
	Other					(148	)			30
			Net cash (used in) provided by financing activities			(8,338	)			3,009
			Increase (decrease) in cash and cash equivalents			(5,264	)			15,333
Cash and cash equivalents
			Beginning of period			32,040				28,313
			End of period		$	26,776			$	43,646

Source: AngioDynamics, Inc.

AngioDynamics, Inc.
Company Contact:
D. Joseph Gersuk, CFO, 800-772-6446 x1608
jgersuk@AngioDynamics.com
or
EVC Group, Inc.
Investor Relations Contacts:
Doug Sherk / Jenifer Kirtland, 415-896-6820
dsherk@evcgroup.com
jkirtland@evcgroup.com
Media Contact:
Steve DiMattia, 646-201-5445
sdimattia@evcgroup.com