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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to                 
Commission file number 0-50761
AngioDynamics, Inc.
(Exact name of registrant as specified in its charter)
https://cdn.kscope.io/451062e9664f39004768e22b338f6cd6-ango-20220228_g1.gif
 
Delaware11-3146460
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)

14 Plaza Drive, Latham, New York 12110
(Address of principal executive offices and zip code)
(518) 795-1400
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common stock, par value $.01ANGONASDAQ Global Select Market
Preferred Stock Purchase RightsNASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)


Table of Contents
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes      No  
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.    Yes      No  
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer   Accelerated filer 
Non-accelerated filer Smaller reporting company 
Emerging growth company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
Indicate the number of shares outstanding of each of the Issuer’s classes of common stock, as of the latest practicable date.
Class Outstanding as of April 6, 2022
Common Stock, par value $.01 38,780,101



Table of Contents
AngioDynamics, Inc. and Subsidiaries
TABLE OF CONTENTS
 
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2

Table of Contents
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements.

AngioDynamics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands of dollars, except per share data)

 
Three Months Ended
Nine Months Ended
Feb 28, 2022Feb 28, 2021Feb 28, 2022Feb 28, 2021
Net sales$73,970 $71,182 $229,221 $214,168 
Cost of sales (exclusive of intangible amortization)35,387 32,652 109,944 99,700 
Gross profit38,583 38,530 119,277 114,468 
Operating expenses:
Research and development7,280 8,565 22,873 27,286 
Sales and marketing20,416 19,607 68,468 57,486 
General and administrative8,727 9,011 27,348 26,787 
Amortization of intangibles4,895 4,292 14,605 13,838 
Change in fair value of contingent consideration201 183 1,005 (290)
Acquisition, restructuring and other items, net2,359 610 7,052 3,057 
Total operating expenses43,878 42,268 141,351 128,164 
Operating loss(5,295)(3,738)(22,074)(13,696)
Other income (expense):
Interest expense, net(173)(226)(503)(676)
Other income (expense), net(289)(163)(651)259 
Total other expense, net(462)(389)(1,154)(417)
Loss before income tax benefit(5,757)(4,127)(23,228)(14,113)
Income tax benefit(799)(583)(2,947)(2,033)
Net loss$(4,958)$(3,544)$(20,281)$(12,080)
Loss per share
Basic$(0.13)$(0.09)$(0.52)$(0.32)
Diluted$(0.13)$(0.09)$(0.52)$(0.32)
Weighted average shares outstanding
Basic39,092 38,360 38,959 38,281 
Diluted39,092 38,360 38,959 38,281 
The accompanying notes are an integral part of these consolidated financial statements.
3

Table of Contents
AngioDynamics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited)
(in thousands of dollars)
 
Three Months Ended
Nine Months Ended
Feb 28, 2022Feb 28, 2021Feb 28, 2022Feb 28, 2021
Net loss$(4,958)$(3,544)$(20,281)$(12,080)
Other comprehensive income (loss), before tax:
Foreign currency translation (1,036)12 373 3,287 
Other comprehensive income (loss), before tax(1,036)12 373 3,287 
Income tax expense related to items of other comprehensive income (loss)    
Other comprehensive income (loss), net of tax(1,036)12 373 3,287 
Total comprehensive loss, net of tax$(5,994)$(3,532)$(19,908)$(8,793)
The accompanying notes are an integral part of these consolidated financial statements.

4

Table of Contents
AngioDynamics, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands of dollars, except share data)
Feb 28, 2022May 31, 2021
Assets
Current assets
Cash and cash equivalents$23,890 $48,161 
Accounts receivable, net of allowances of $1,780 and $1,919 respectively
41,810 35,405 
Inventories48,039 48,614 
Prepaid expenses and other13,947 8,699 
Total current assets127,686 140,879 
Property, plant and equipment, net43,594 37,073 
Intangible assets, net159,105 168,977 
Goodwill201,484 201,316 
Other assets11,309 13,193 
Total assets$543,178 $561,438 
Liabilities and stockholders' equity
Current liabilities
Accounts payable$21,570 $19,630 
Accrued liabilities25,196 35,459 
Other current liabilities2,602 2,495 
Total current liabilities49,368 57,584 
Long-term debt25,000 20,000 
Deferred income taxes16,961 19,955 
Contingent consideration16,741 15,741 
Other long-term liabilities5,416 8,701 
Total liabilities113,486 121,981 
Commitments and contingencies (Note 14)
Stockholders' equity
Preferred stock, par value $0.01 per share, 5,000,000 shares authorized; no shares issued and outstanding
  
Common stock, par value $0.01 per share, 75,000,000 shares authorized; 39,520,101 and 38,920,951 shares issued and 39,150,101 and 38,550,951 shares outstanding at February 28, 2022 and May 31, 2021, respectively
380 377 
Additional paid-in capital583,647 573,507 
Accumulated deficit (152,147)(131,866)
Treasury stock, 370,000 shares at February 28, 2022 and May 31, 2021, respectively
(5,714)(5,714)
Accumulated other comprehensive income3,526 3,153 
Total Stockholders’ Equity429,692 439,457 
Total Liabilities and Stockholders' Equity$543,178 $561,438 
The accompanying notes are an integral part of these consolidated financial statements.
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AngioDynamics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands of dollars)
Nine Months Ended
Feb 28, 2022Feb 28, 2021
Cash flows from operating activities:
Net loss$(20,281)$(12,080)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization21,682 19,392 
Non-cash lease expense1,822 1,860 
Stock based compensation7,789 6,398 
Change in fair value of contingent consideration1,005 (290)
Deferred income taxes(3,121)(2,187)
Change in accounts receivable allowances(66)31 
Fixed and intangible asset impairments and disposals245 190 
Other(27)(149)
Changes in operating assets and liabilities:
Accounts receivable(6,441)(1,823)
Inventories588 11,119 
Prepaid expenses and other(7,147)(8,821)
Accounts payable, accrued and other liabilities(11,802)(1,746)
Net cash (used in) provided by operating activities(15,754)11,894 
Cash flows from investing activities:
Additions to property, plant and equipment(3,258)(4,567)
Additions to placement and evaluation units(8,676) 
Cash paid for acquisitions(3,600) 
Net cash used in investing activities(15,534)(4,567)
Cash flows from financing activities:
Proceeds from borrowings on long-term debt5,000  
Repayment of long-term debt (10,000)
Proceeds from exercise of stock options and employee stock purchase plan2,354 2,459 
Net cash provided by (used in) financing activities7,354 (7,541)
Effect of exchange rate changes on cash and cash equivalents(337)248 
(Decrease) increase in cash and cash equivalents(24,271)34 
Cash and cash equivalents at beginning of period48,161 54,435 
Cash and cash equivalents at end of period$23,890 $54,469 
Supplemental disclosure of non-cash investing and financing activities:
Accrual for capital expenditures incurred during the period$(5)$(113)
The accompanying notes are an integral part of these consolidated financial statements.
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AngioDynamics, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited)
(in thousands of dollars, except share data)

  
Common StockAdditional
paid in
capital
Accumulated deficit Accumulated
other
comprehensive
income
Treasury Stock
SharesAmountSharesAmountTotal
Balance at May 31, 202138,920,951 $377 $573,507 $(131,866)$3,153 (370,000)$(5,714)$439,457 
Net loss(6,972)(6,972)
Exercise of stock options80,635 1 1,279 1,280 
Issuance/Cancellation of restricted stock units279,495 (1,734)(1,734)
Issuance/Cancellation of performance share units59,371 — 
Purchases of common stock under ESPP49,789 1 899 900 
Stock-based compensation2,429 2,429 
Other comprehensive income, net of tax590 590 
Balance at August 31, 202139,390,241 $379 $576,380 $(138,838)$3,743 (370,000)$(5,714)$435,950 
Net loss(8,351)(8,351)
Exercise of stock options56,064 1,022 1,022 
Issuance/Cancellation of restricted stock units8,695 (83)(83)
Purchases of common stock under ESPP19333 
Stock-based compensation3,008 3,008 
Other comprehensive income, net of tax819 819 
Balance at November 30, 202139,455,193 $379 $580,330 $(147,189)$4,562 (370,000)$(5,714)$432,368 
Net loss(4,958)(4,958)
Exercise of stock options5,000 77 77 
Issuance/Cancellation of restricted stock units11,304 (84)(84)
Purchases of common stock under ESPP48,604 1 972 973 
Stock-based compensation2,352 2,352 
Other comprehensive loss, net of tax(1,036)(1,036)
Balance at February 28, 202239,520,101 $380 $583,647 $(152,147)$3,526 (370,000)$(5,714)$429,692 









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Common StockAdditional
paid in
capital
Accumulated deficit Accumulated
other
comprehensive
income (loss)
Treasury Stock
SharesAmountSharesAmountTotal
Balance at May 31, 202038,448,536 $374 $561,871 $(100,318)$(1,341)(370,000)$(5,714)$454,872 
Net loss(4,268)(4,268)
Issuance/Cancellation of restricted stock units164,946 (143)(143)
Purchases of common stock under ESPP79,596 1 633 634 
Stock-based compensation1,864 1,864 
Other comprehensive income, net of tax2,095 2,095 
Balance at August 31, 202038,693,078 $375 $564,225 $(104,586)$754 (370,000)$(5,714)$455,054 
Net loss(4,268)(4,268)
Issuance/Cancellation of restricted stock units8,952 (10)(10)
Stock-based compensation2,387 2,387 
Other comprehensive income, net of tax1,180 1,180 
Balance at November 30, 202038,702,030 $375 $566,602 $(108,854)$1,934 (370,000)$(5,714)$454,343 
Net loss(3,544)(3,544)
Exercise of stock options81,636 1 1,353 1,354 
Issuance/Cancellation of restricted stock units9,103 (49)(49)
Purchases of common stock under ESPP84,598 1 672 673 
Stock-based compensation2,147 2,147 
Other comprehensive loss, net of tax12 12 
Balance at February 28, 202138,877,367 $377 $570,725 $(112,398)$1,946 (370,000)$(5,714)$454,936 

The accompanying notes are an integral part of these consolidated financial statements.
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AngioDynamics, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Loss for the three and nine months ended February 28, 2022 and 2021, the Consolidated Balance Sheet as of February 28, 2022, the Consolidated Statements of Cash Flows for the nine months ended February 28, 2022 and 2021, and the Consolidated Statements of Stockholders’ Equity for the nine months ended February 28, 2022 and 2021 have been prepared by the Company and are unaudited. The Consolidated Balance Sheet as of May 31, 2021 was derived from audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary to state fairly the financial position, changes in stockholders’ equity and comprehensive income, results of operations and cash flows as of and for the period ended February 28, 2022 (and for all periods presented) have been made.
The unaudited interim consolidated financial statements for the three and nine months ended February 28, 2022 and 2021 include the accounts of AngioDynamics, Inc. and its wholly owned subsidiaries, collectively, "us", "we" or the “Company”. All intercompany balances and transactions have been eliminated.
2. ACQUISITIONS
Camaro Support Catheter Asset Acquisition
On July 27, 2021, the Company acquired the Camaro support catheter (rebranded as Syntrax) from QX Medical, LLC for an aggregate purchase price of $4.0 million, which included an upfront payment of $3.6 million and $0.4 million in purchase price holdbacks, along with $1.0 million of potential future contingent consideration related to revenue milestones. This acquisition supports the Auryon product family and the Company's strategic plan. The Company accounted for this acquisition as an asset purchase. The Company recorded the amount paid at closing as inventory and fixed assets of $0.1 million and an intangible asset product technology of $3.9 million. The intangible asset will be amortized over 15 years. The contingent consideration is comprised of revenue milestones and will be accounted for when the contingency is resolved or becomes probable and reasonably estimable.
3. REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue Recognition
Under ASC 606, Revenue from Contracts with Customers, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. 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.
The Company has one primary revenue stream which is the sales of its products.
Disaggregation of Revenue
The following table summarizes net sales by Global Business Unit ("GBU") and geography:
Three Months Ended Feb 28, 2022
Three Months Ended Feb 28, 2021
(in thousands)United StatesInternationalTotalUnited StatesInternationalTotal
Net sales
Endovascular Therapies$34,400 $3,683 $38,083 $29,529 $3,722 $33,251 
Vascular Access19,483 3,948 23,431 21,009 3,804 24,813 
Oncology8,562 3,894 12,456 8,116 5,002 13,118 
Total$62,445 $11,525 $73,970 $58,654 $12,528 $71,182 
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Nine Months Ended Feb 28, 2022
Nine Months Ended Feb 28, 2021
(in thousands)United StatesInternationalTotalUnited StatesInternationalTotal
Net sales
Endovascular Therapies$105,405 $10,394 $115,799 $87,198 $9,810 $97,008 
Vascular Access60,664 12,795 73,459 60,392 16,456 76,848 
Oncology26,190 13,773 39,963 25,856 14,456 40,312 
Total$192,259 $36,962 $229,221 $173,446 $40,722 $214,168 
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. The Company believes that this transformation will enable the Company to shift the portfolio from the mature, lower-growth markets where we have competed in the past by investing in technology and products that provide access to larger and faster growing markets. As such, we believe the growth in the near to mid-term will be driven by our high technology products including Auryon, Thrombectomy (which includes AngioVac, AlphaVac and thrombolytics) and NanoKnife. We will refer to these high technology products as our Med Tech business and we will refer to the remainder of the portfolio as our Med Device business.
The following table summarizes net sales by Med Tech and Med Device:
Three Months Ended
Nine Months Ended
(in thousands)Feb 28, 2022Feb 28, 2021Feb 28, 2022Feb 28, 2021
Net Sales
Med Tech$19,612 $15,246 $56,117 $39,581 
Med Device54,358 55,936 173,104 174,587 
Total$73,970 $71,182 $229,221 $214,168 
Net Product Revenue
The Company's products consist of 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. The Company's devices are generally used in minimally invasive, image-guided procedures. Most of the Company's products are intended to be used once and then discarded, or they may be implanted for short or long term use. The Company sells its products to its distributors and to end users, such as interventional radiologists, interventional cardiologists, vascular surgeons, urologists, interventional and surgical oncologists and critical care nurses.
Contracts and Performance Obligations
The Company contracts with its customers based on customer purchase orders, which in many cases are governed by master purchasing agreements. The Company’s contracts with customers are generally for product only, and do not include other performance obligations such as services or other material rights. As part of its assessment of each contract, the Company evaluates certain factors including the customer’s ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations.
Transaction Price and Allocation to Performance Obligations
Transaction prices of products are typically based on contracted rates. Product revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products to a customer, net of any variable consideration as described below.
If a contract contains a single performance obligation, the entire transaction price is allocated to the single 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.


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Revenue Recognition
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.
In determining whether control has transferred, the Company considers if there is a present right to payment from the customer and when physical possession, legal title and risks and rewards of ownership have transferred to the customer.
The Company typically invoices customers upon satisfaction of identified performance obligations. As the Company’s standard payment terms are 30 to 90 days from invoicing, the Company does not provide any significant financing to its customers.
The Company enters into agreements to place placement and evaluation units (“units”) at customer sites, but the Company retains title to the units. For the duration of these agreements the customer has the right to use the unit at no upfront charge in connection with the customer’s ongoing purchase of disposables. These types of agreements include an embedded operating lease for the right to use the units. In these arrangements, revenue recognized for the sale of the disposables is not allocated between the disposal revenue and lease revenue due to the insignificant value of the units in relation to the total agreement value.
Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue.
Variable Consideration
Reserves: Revenue from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established for discounts, returns, rebates and allowances that are offered within contracts between the Company and its customers. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as a contra asset.
Rebates and Allowances: The Company provides certain customers with rebates and allowances that are explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized. The Company establishes reserves for such amounts, which is included in accrued expenses in the accompanying Consolidated Balance Sheets. These rebates and allowances result from performance-based offers that are primarily based on attaining contractually specified sales volumes. The Company is also required to pay administrative fees to group purchasing organizations.
Product Returns: The Company generally offers customers a limited right of return. Product returns after 30 days must be pre-approved by the Company and customers may be subject to a 20% restocking charge. To be accepted, a returned product must be unadulterated, undamaged and have at least twelve months remaining prior to its expiration date. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. 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 nine months ended February 28, 2022, such product returns were not material.
Contract Balances with Customers
A receivable is generally recognized in the period the Company ships the product. Payment terms on invoiced amounts are based on contractual terms with each customer and generally coincide with revenue recognition. Accordingly, the Company does not have any contract assets associated with the future right to invoice its customers. 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.
The following table presents changes in the Company’s receivables, contract assets and contract liabilities with customers:
(in thousands)Feb 28, 2022
May 31, 2021
Receivables$41,810 $35,405 
Contract assets$ $ 
Contract liabilities$416 $426 
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During the nine months ended February 28, 2022, the Company had additions to contract liabilities of $1.6 million. This was offset by $1.6 million in revenue that was recognized during the nine months ended February 28, 2022.
Costs to Obtain or Fulfill a Customer Contract
Under ASC 606, the Company may recognize an asset for incremental costs of obtaining a contract with a customer if it expects to recover those costs. The Company’s sales incentive compensation plans qualify for capitalization since these plans are directly related to sales achieved during a period of time. However, the Company has elected the practical expedient under ASC 340-40-25-4 to expense the costs as they are incurred within selling and marketing expenses since the amortization period is less than one year.
The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. Shipping and handling costs, associated with the distribution of finished products to customers, are recorded in costs of goods sold and are recognized when the related finished product is shipped to the customer. Amounts charged to customers for shipping and handling are recorded in net sales.

4. INVENTORIES
Inventories are stated at lower of cost and net realizable value (using the first-in, first-out method). Inventories consisted of the following:
(in thousands)Feb 28, 2022May 31, 2021
Raw materials$28,086 $22,925 
Work in process6,804 8,022 
Finished goods13,149 17,667 
Inventories$48,039 $48,614 
The Company periodically reviews inventory for both obsolescence and loss of value. The Company makes assumptions about the future demand for and market value of the inventory. Based on these assumptions, the Company estimates the amount of obsolete, expiring and slow-moving inventory. The total inventory reserve at February 28, 2022 and May 31, 2021 was $4.1 million and $3.8 million, respectively.

5. GOODWILL AND INTANGIBLE ASSETS
Goodwill
Goodwill is not amortized, but rather, is tested for impairment annually or more frequently if impairment indicators arise. 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.
The Company's annual testing for impairment of goodwill was completed as of December 31, 2021. 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 determines the fair value of the reporting unit based on the market valuation approach and concluded that it was not more-likely-than-not that the fair value of the Company's reporting unit was less than its carrying value.
Even though the Company determined that there was no goodwill impairment as of December 31, 2021, the future occurrence of a potential indicator of impairment, such as a significant adverse change in legal, regulatory, business or economic conditions or a more-likely-than-not expectation that the reporting unit or a significant portion of the reporting unit will be sold or disposed of, would require an interim assessment for the reporting unit prior to the next required annual assessment as of December 31, 2022.
There were no adjustments to goodwill for the nine months ended February 28, 2022 other than foreign currency translation adjustments.
Definite Lived Intangible Assets
Intangible assets other than goodwill are amortized over their estimated useful lives on a straight-line basis. Useful lives range from two to eighteen years. The Company periodically reviews, and adjusts, if necessary, the estimated useful lives of its intangible assets and reviews such assets or asset groups for impairment whenever events or changes in circumstances indicate
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that the carrying value of the assets or asset groups may not be recoverable. If an intangible asset or asset group 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.
Intangible assets consisted of the following:
Feb 28, 2022
(in thousands)Gross carrying valueAccumulated amortizationNet carrying value
Product technologies$241,719 $(108,757)$132,962 
Customer relationships60,172 (37,057)23,115 
Trademarks9,950 (7,115)2,835 
Licenses4,837 (4,644)193 
$316,678 $(157,573)$159,105 
May 31, 2021
(in thousands)Gross carrying valueAccumulated amortizationNet carrying value
Product technologies$236,907 $(97,343)$139,564 
Customer relationships60,291 (34,164)26,127 
Trademarks9,950 (6,905)3,045 
Licenses6,087 (5,846)241 
$313,235 $(144,258)$168,977 
Amortization expense for the three months ended February 28, 2022 and 2021 was $4.9 million and $4.3 million, respectively. Amortization expense for the nine months ended February 28, 2022 and 2021 was $14.6 million and $13.8 million, respectively.
Expected future amortization expense related to the intangible assets for each of the following fiscal years is as follows:
(in thousands)
Remainder of 2022$4,878 
202319,032 
202416,823 
202516,804 
202616,624 
2027 and thereafter84,944 
$159,105 

6. ACCRUED LIABILITIES
Accrued liabilities consisted of the following:
(in thousands)Feb 28, 2022May 31, 2021
Payroll and related expenses$13,307 $20,408 
Royalties2,153 2,663 
Outside services1,983 4,256 
Research and Development1,730 1,223 
Sales and franchise taxes908 631 
Litigation Matters 975 
Rebates472 544 
Other4,643 4,759 
$25,196 $35,459 


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7. LONG-TERM DEBT
On June 3, 2019 the Company repaid all amounts outstanding under its then existing credit agreement and entered into a new Credit Agreement with the lender's party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and Bank of America, N.A. and KeyBank National Association, as co-syndication agents.
The Credit Agreement provides for a $125.0 million secured revolving credit facility (the “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.  The proceeds may be used to refinance certain existing indebtedness of the Company and its subsidiaries, to finance the working capital needs, and for general corporate purposes (including permitted acquisitions), of the Company and its subsidiaries.
The Credit Agreement has a five-year maturity. Interest on the Revolving Facility is 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. After default, the interest rate may be increased by 2.0%. The Revolving Facility also carries a commitment fee of 0.20% to 0.25% per annum on the unused portion.
The Company's obligations under the Revolving Facility are unconditionally guaranteed, jointly and severally, by the Company's material direct and indirect domestic subsidiaries (the “Guarantors”). All obligations of the Company and the Guarantors under the Revolving Facility are secured by first priority security interests in substantially all of the assets of the Company and the Guarantors.
The Credit Agreement includes customary representations, warranties and covenants, and acceleration, indemnity and events of default provisions, including, among other things, two quarterly financial covenants as follows: 
Maximum leverage ratio of consolidated total indebtedness* to consolidated EBITDA* of not greater than 3.00 to 1.00 (during certain periods following material acquisitions the ratio shall be increased to 3.50 to 1.00).
Fixed charge coverage ratio of consolidated EBITDA minus consolidated capital expenditures* to consolidated interest expense* paid or payable in cash plus scheduled principal payments in respect of indebtedness under the Credit Agreement of not less than 1.25 to 1.00.
* The definitions of consolidated total indebtedness, consolidated EBITDA, consolidated capital expenditures and consolidated interest expense are specifically defined in the Credit Agreement included as an exhibit to Form 8-K filed on June 6, 2019.
As of February 28, 2022, there was $25.0 million outstanding on the Revolving Facility. As of February 28, 2022 and May 31, 2021, the carrying value of long-term debt approximated its fair market value.
The interest rate on the Revolving Facility at February 28, 2022 was 1.36%.

8. INCOME TAXES
The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate for the full fiscal year adjusted for any discrete events, which are recorded in the period that they occur.  The estimated annual effective tax rate prior to discrete items was 12.7% as of the third quarter of fiscal year 2022, as compared to 15.6% for the same period in fiscal year 2021. In fiscal year 2022, the Company’s effective tax rate differs 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 non-deductible share-based compensation).
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.
Based on the review of all available evidence, the Company determined that it has not yet attained a sustained level of profitability and the objectively verifiable negative evidence outweighed the positive evidence. 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 February 28, 2022. 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.
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The Company filed for an employee retention credit under the provisions of the CARES Act resulting in a benefit of $4.2 million that was recorded in the third quarter of the fiscal year compared to a benefit of $1.9 million that was recorded in the prior year period. The benefit has been recorded as a receivable and is included in other current assets on the balance sheet.
9. SHARE-BASED COMPENSATION
On October 13, 2020, the Company's shareholders approved the 2020 Stock and Incentive Award Plan (the “2020 Plan”). The 2020 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance share units, performance shares and other incentive awards to the Company's employees, directors and other service providers. As of February 28, 2022, there was a maximum of 1.6 million shares of common stock available for future grant under the 2020 Plan.
Prior to the adoption of the 2020 Plan, equity awards were issued under the 2004 Stock and Incentive Award Plan (the “2004 Plan”). The adoption of the 2020 Plan did not impact the administration of equity awards issued under the 2004 Plan but following the adoption of the 2020 Plan, equity award grants are no longer made under the 2004 Plan.
The Company also has an employee stock purchase plan. As of February 28, 2022, there was a maximum of 2.3 million shares of common stock available for future grant under the employee stock purchase plan.
For the three months ended February 28, 2022 and 2021, share-based compensation expense was $2.4 million and $2.1 million, respectively. For the nine months ended February 28, 2022 and 2021, share-based compensation expense was $7.8 million and $6.4 million, respectively.
During the nine months ended February 28, 2022 and 2021, the Company granted stock options and restricted stock units under the 2020 and 2004 Plan to certain employees and members of the Board of Directors. Stock option awards are valued using the Black-Scholes option-pricing model and then amortized on a straight-line basis over the requisite service period of the award. Restricted stock unit awards are valued based on the closing trading value of the Company’s common stock on the date of grant and then amortized on a straight-line basis over the requisite service period of the award.
During the nine months ended February 28, 2022 and 2021, the Company granted performance share units under the 2020 and 2004 Plan to certain employees. The awards may be earned by achieving performance levels over the requisite service period. The performance criteria are based on achieving certain performance targets and the total shareholder return (“TSR”) of the Company’s common stock relative to the TSR of the common stock of a pre-defined industry peer-group. The fair value of these awards is based on a Monte Carlo simulation model.
As of February 28, 2022, there was $19.1 million of unrecognized compensation expense related to share-based payment arrangements. These costs are expected to be recognized over a weighted-average period of approximately three years. The Company has sufficient shares to satisfy expected share-based payment arrangements.
10. EARNINGS PER SHARE
Basic earnings per share is based on the weighted average number of common shares outstanding without consideration of potential common stock. Diluted earnings per share includes the dilutive effect of potential common stock consisting of stock options, restricted stock units and performance stock units, provided that the inclusion of such securities is not anti-dilutive. In periods with a net loss, stock options and restricted stock units are not included in the computation of diluted loss per share as the impact would be anti-dilutive.
The following table reconciles basic to diluted weighted-average shares outstanding:
Three Months EndedNine Months Ended
(in thousands)Feb 28, 2022Feb 28, 2021Feb 28, 2022Feb 28, 2021
Basic39,092 38,360 38,959 38,281 
Effect of dilutive securities    
Diluted39,092 38,360 38,959 38,281 
Securities excluded as their inclusion would be anti-dilutive3,457 3,003 3,457 3,033 

11. SEGMENT AND GEOGRAPHIC INFORMATION
The Company considers the business to be a single operating segment engaged in the development, manufacture and sale of medical devices for vascular access, peripheral vascular disease and oncology on a global basis. The Company's chief
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operating decision maker, the President and Chief Executive Officer (CEO), evaluates the various global product portfolios on a net sales basis utilizing various breakouts of the data including Global Business Unit, Med Tech versus Med Device and geography. Executives reporting to the CEO include those responsible for commercial operations, manufacturing operations, regulatory and quality and certain corporate functions. The CEO evaluates profitability, investment and cash flow metrics on a consolidated global basis due to shared infrastructure and resources.
The table below summarizes net sales by Global Business Unit:
Three Months EndedNine Months Ended
(in thousands)Feb 28, 2022Feb 28, 2021Feb 28, 2022Feb 28, 2021
Net Sales
Endovascular Therapies$38,083 $33,251 $115,799 $97,008 
Vascular Access23,431 24,813 73,459 76,848 
Oncology12,456 13,118 39,963 40,312 
Total$73,970 $71,182 $229,221 $214,168 
The table below summarizes net sales by Med Tech and Med Device:
Three Months EndedNine Months Ended
(in thousands)Feb 28, 2022Feb 28, 2021Feb 28, 2022Feb 28, 2021
Net Sales
Med Tech$19,612 $15,246 $56,117 $39,581 
Med Device54,358 55,936 173,104 174,587 
Total$73,970 $71,182 $229,221 $214,168 
The table below summarizes net sales by geographic area based on external customer location:
Three Months EndedNine Months Ended
(in thousands)Feb 28, 2022Feb 28, 2021Feb 28, 2022Feb 28, 2021
Net Sales
United States$62,445 $58,654 $192,259 $