AngioDynamics, Inc. Aktie

Hi. Welcome. Welcome to the AngioDynamics Goldman Sachs Investor Conference Presentation. My name is Jim Clemmer. I'm the CEO of AngioDynamics, and thank you for joining us today. We'll start by reminding all investors to do your homework. What we'll say and present today are our projections, our thoughts, our strategies and our ideas about our business and the markets we serve. We'll do our best to be accurate in the information we put forth, but do the best you can as investors to do your research before you make any investments.

So let's talk about AngioDynamics. So AngioDynamics is a company founded in 1988, but really live 2 different lives. Over the past 6 years or so, we've taken this company to a new level. So if you look at us pre-2020, pre our transformation, you'll see a very different company. It was a company built to serve the Interventional Radiologist as our primary call point, and we did a really good job. We're known for quality products, and we are a good partner for those companies -- those providers. But over time, we knew we had to change. We made a few moves to go upmarket in our product development, upmarket in the markets we serve and to divest things that didn't make sense for us on our journey.

So today, we're a company with accelerating commercial growth. We've made the right moves from an R&D platform to make sure we can invest in spots where care was delivered to the 2 leading causes of mortality in the world, which are cardiovascular disease and solid tumor cancers. We play in markets that have really large TAMs, and those TAMs are growing at above market rates. So we're in good places to play.

And finally, we've got a pipeline of products that are not only delivering today for our customers, but also have a long runway in the future to continue to open up these markets, new markets and open up new indications of areas that we think we can be really strong treatment options. If you look at our portfolio today, I mentioned how we treat cardiovascular disease and solid tumor cancer. We also have a lot of moving parts in our company, different product categories that remain with us.

So we split our company, if you look at our results into our Med Tech segment and our Med Device segment. So 2 operating segments. I'll remind those listening as well, we actually have a June 1 fiscal year start each year. So about a week ago, we finished our FY '26 on May 31. We'll report those results early in July to you. But June 1 is our start. So we've actually started our FY '27. I mean you see our results are reported to you in the 2 operating segments of Med Tech and Med Device.

But we think this slide is a good job to help you understand 2 of the 3 categories in our Med Tech segment are in Cardiovascular and one is in Cancer and below our Med Device products that really do a good job of paying our bills, providing us with EBITDA and stable cash flow, funding our investments in our higher-growth Med Tech markets. Those are split out in Med Device.

As we go forward, we've made decisions when we look at our Cardiovascular business to focus on Venous Disease and Arterial Diseases, the 2 areas that we think we can play and do a good job. We launched a product called Auryon in September of 2020, dedicated to treat peripheral arterial disease. Auryon uses a laser with a really unique 355-nanometer wavelength that is uniquely qualified to break down hard calcification, hard plaque, and soft calcification as well. It works above- and below-the-knee, and it can treat in-stent restenosis. So it's a very unique product in this category. This is a very large category with 5 other players.

But since launch, we've actually passed 3 of those players and become the #3 market share player today. So if you've seen our results in the first 3 quarters of the year, we're growing Auryon in high double digits, just under 20% growth, taking share from the other 5 players in this market. Why? Our product is really good. It provides the clinical outcomes that doctors look for, provides relief to the patients that they need and economically, it's feasible for the payers.

So we'll expect Auryon to continue to grow at above market rates for years to come. We also believe Auryon is a platform that can treat other modalities over time, and we'll share more as we expand. But for us, just put a stake in the ground to show we're a serious cardiovascular company. PAD is a really large important market, and it also gets us aligned with key physicians and caregivers that treat other areas of Cardiovascular disease that we're interested in.

And the second part of our Cardiovascular offering is our Venous business, where we really focus on treating VTE, venous thromboembolism, which is made up of 2 parts really, DVT, deep vein thrombosis and PE pulmonary embolism. We will not have any more acronyms after this. But this is a really large fast-growing market. The beauty of the PE treatment market over the last 6 years or so, us and 2 other companies have done a really good job of offering catheter-based ways to treat the clot initially, get the clot instead of the standard of care for years, which is drug therapy or lytics designed to use as blood thinners to break up the clot.

And those have a lot of side effects that are undesirable many times to patients. So using a device like ours to pull the clot out, we think, is the move of the future for physicians. We think this is about a $3 billion U.S. market alone to treat these clots using a mechanical device, and it's less than 20% penetrated today by us and the other couple of companies in this space. So this is a really large opportunity for us to grow over time using our AlphaVac product and our AngioVac product, which is the base product of AlphaVac.

AngioVac is uniquely designed actually to treat more complex disease, uses a simultaneous reinfusion system to reinfuse the patient's blood back into the body and some significant cardiovascular disease treatments. What makes these 2 products special, they both use large-bore catheters with a Vortex funnel tip on the end. That's really, really important. It enables us to come in the body in an 18 French or 22 French catheter, yet expand to 32 or 36 French when that funnel is expanded. You see what that does on the bottom of the slide, you can see an actual case result of significant clot being pulled from the body. You'll see our APEX slide in a minute of how we performed in our clinical study. We pulled more clot out than anything else.

We pulled more clot out than the other competitors. Why? Because of the way that Vortex funnel tip works and with unique characteristics of steerability, other things that we offered into our product to make sure the doctor can get to the clot, seek the clot, then safely remove it and limit blood loss during that procedure by the way we designed the product. So it's really, really unique. We're third in this market. We're the newest, smallest company here, and we had to develop a better product. We have the investors here have seen -- the other two are really large companies who wanted to enter the space.

So we think AlphaVac is really the base for us to continue to grow in the space. We back it up with the APEX study that was done to get us on label 2 years ago. If you look at what it did on the bottom of the slide, it shows the reduction in clot burden and how much more clot we pull and also the time for procedure. If we can save a physician 20 minutes of time because of the simplicity, intuitive nature of our device, that's a lot of time to an Interventional Cardiologist. So it helps give efficiency, safety, and results in how we clear the clot.

So APEX was important for us. We're now actually running an APEX-RETURN study to add a blood return feature to our product to show that if a physician chooses to return blood after the procedure, they can do so in a safe and effective manner, even though we designed the AlphaVac to lose less blood than the other products and the APEX study showed that works in real-world evidence. The third area I talked to you about earlier was treating solid tumor cancers. We have a unique product called NanoKnife.

NanoKnife is a non-thermal ablation tool that uses electrical pulses of energy to break down the cell wall of certain solid tumors, allowing that solid tumor to die naturally within the body. We think NanoKnife can treat certain tumors that are hard to treat. Pancreatic cancer, liver cancer are the 2 areas that it has been used historically to treat the most patients in need. But we thought the primary opportunity for us is using NanoKnife as an intermediate-risk prostate cancer treatment option.

Nearly 40% to 50% of the men diagnosed every year are diagnosed with an intermediate level of prostate cancer. It would be about a Gleason 7 score if your urologists were to treat the patient. Many of those patients fall kind of between, hey, you need to have a radical prostatectomy and you're going to have side effects that are undesirable on the high end, and we're not here to change the radicals out. As folks have high-end prostate cancer, you need to have a radical prostatectomy, remove the prostate and deal with those undesirable side effects.

On the other end of the scale, men with low-risk disease may be told you go home, we'll do watchful waiting. We'll monitor your disease. It usually grows slowly in the body. But for those men in the middle who don't want either situation, using a Focal Therapy option, which is where we call -- where we fall, which is keeping the prostate in the body, treating the gland, not disrupting the other parts, the nerves that cause incontinence or impotence with other treatments, we have found a really great way to treat men and give them this option, give urologists a new option to treat and give men a way to have a safe option that reduces the risk of those undesirable side effects.

What's unique about NanoKnife for us is we can use our science to deliver this energy in a way that does minimize the side effects. What's important for us is we received our FDA indication for NanoKnife to treat solid tumors in January 1 of '25. And a year later, just this past January, we received our CPT I code, which now allows reimbursement to take place at a much more consistent level. We have a lot of interesting developments in this business. There's a lot of natural urologist demand. People want to use a focal option.

They've tried some of the other focal options. They don't treat the way we treat. So I think there's been a ton of interest in the product. If you've seen the results we posted for the first 3 quarters of this year, you've seen really strong results, double-digit over 20% probe growth year-over-year, which is dynamic for a company just in this space and just getting our CPT I code. So it's really, really important for us. So NanoKnife for solid tumor cancer is important.

But for us, the Urology space is where we think we can win. The PRESERVE study was what got us on label, and it really showed the ability for us to treat these men to make sure that they can have the results that are expected to limit the significance of their disease and also to limit the risk of incontinence or impotence. As you see the results posted here from our PRESERVE pivotal study, it supports the intent and the desire of the device to treat men in that manner. Well, since that time, recently, we posted the second year. We did a follow-up study to track men on their second year of the journey post-treatment, and the results were outstanding.

They were just presented at AUA a few weeks ago. Results were outstanding. We batted 1,000; each of the men that consented to the second-year follow-up had terrific results. So it gives us more credibility in the space about the durability of our treatment option and that we maintain the men's primary function without losing his care with the secondary functions you don't want to give up, which are incontinence and impotence. So we're really excited about what this can do. This market today, we believe, is about a $900 million U.S. market and potentially a $2 billion global market.

And people are looking for new ways to treat men with prostate cancer. We're also proud that recently, we've been identified by TIME Magazine as one of the best interventions -- one of the Best Inventions of 2025. And AARP recognized us as well, and we did some digital follow-up advertising there. So we're finding new ways to connect to our customers. We're a medical device technology company. We're not a consumer company. But we've learned now there's such needed demand out there. We found new ways to communicate our messaging.

We have a lot of men finding us on social media or on other sites, getting information, then calling their urologists to learn more. So we've done a really good job in the background doing awareness campaigns, education campaigns, and linking need to service with the Urology community. The start we're off to this year has been great for NanoKnife. We expect it to grow and continue to grow at very high-double-digits for years to come. We're seeing some of the reimbursement challenges get cleared, hurdles get cleared.

We posted a press release a little over a week ago that one of the local MACs called Palmetto Group that covers a lot of the Medicare patients in the Southeast actually gave us a favorable Local Coverage Decision that we think is ideal and allowing more men to be treated and the urologists and the hospitals to be paid for their service. So we're really excited. We have the right product at the right time. It's paid and reimbursed the right way and the outcomes for the men who have been treated have been awesome.

So we're excited about this business. So AngioDynamics is a story of today and tomorrow. The company we've rebuilt here during this transformation has a portfolio that has that balance of the device products that carry us and the Med Tech products that are now nearly 50% of our revenue and growing at high-double-digits. Those products also have higher accretive gross margins than our corporate average and will continue to pull our gross-margin mix up.

That's why for us, it's really important not just to deliver today for investors to show the credibility of the company we've become, but we've got a really tremendous pipeline that will show tremendous growth opportunities for each of these 3 platforms we've developed. Here's a chart that gives you some guidance as to areas that we've already invested in, and we expect to have significant product launches over the next few years.

This is not our entire pipeline, but these are things we've already presented to the public markets to let you know that what we can do in this space does not require a lot of risky M&A to go find new products to add, but this is internal development. It's market clearance. It's clinical hurdles we can clear and open up new markets globally that are large and significant. And we believe our products have already proved they work in these spaces. So it's a really strong clinical pipeline that will open up markets for our company to thrive for years to come.

So if you look at our 2026, again, it was about a month ago or 2 months ago in April, we presented our Q2 -- excuse me, our Q3 results, and they were very strong, as our last number of years have been. So we're growing our Med Tech business nearly 20%. The overall company is growing at nearly 9%, the blend of the two, which is unique for a company in our space to grow and do well in each of the three target categories we're in. We're outgrowing the markets we compete in. We're taking share in each of those spaces. We're winning.

As I said to you earlier, the P&L today still has significant investment built in, and we'll always invest going forward. But over time, we believe that our revenue growth at the good gross margin mix that will come through will offset the necessary investments and drop continued EBITDA to the bottom line at a higher pace than has been and stabilize our balance sheet. Today, we have 0 debt. We've got plenty of cash, and we'll generate cash going forward from here on in on this P&L. So we're a really strong company today with credibility of doing what we said we'd do, and we have a pathway to future growth top-line and bottom-line.

You look at our compelling outlook for the year. Again, I look forward to presenting our full-year results and our Q4 results in about 4 weeks from today. We expect the results again will follow what you have seen. It's similar to what you saw in Q3. We think we'll grow at or above market rates. We'll grow with guidance that we projected -- guidance that we gave at the end of Q3, which are above-market rates as well. And we expect to give investors an area to look at. The investors are looking at a company that is in the right place in markets that matter, can win in those markets and generate a healthy business plan to grow for years to come, we believe we offer that today.

Today, we know we trade at a discount to where we should be trading. Probably every CEO at this conference is frustrated with their stock price. But I'll knock my head against them all more than anybody. I do the sum-of-the-parts analysis every morning when I drive to work. I know that each of these segments are worth more individually. That's frustrating. But we're willing to accept a small discount for a department store discount, but not this small. So we'll continue to do what we've done for you, articulate a business plan and a direction to change this company to be one that will thrive in really important competitive large markets.

We'll outgrow those markets and the economics work to drop that bottom line -- the top-line revenue to bottom-line growth. So we think we're a compelling investment opportunity, and we look forward to having more conversations with you in the future. Our investment summary, again, is very simple, as I said, we've got the cash we need. We've got no debt in the balance sheet. So you've got a strong balance sheet. And you've got a plan that works.

And again, we're in markets that are desirable. You guys have seen like we have when strategics have bought companies to add segments like ours to their mix, they pay really high prices for the spots we're in. So we think we've done a good job by putting our company in a spot where we win today and create compelling investment opportunities in the future. So I thank you for joining us here today. If there are any questions, I'll take them. And if not, we'll look forward to presenting our results to you in July. Thank you.

Good morning, and welcome to the AngioDynamics Fiscal Year 2026 Third Quarter Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded.

The news release detailing AngioDynamics' fiscal 2026 third quarter results crossed the wire earlier this morning and is available on the company's website. This conference call is also being broadcast live over the Internet at the Investors section of the company's website at www.angiodynamics.com. A webcast replay of the call will be available at the same site approximately 1 hour after the end of today's call.

Before we begin, I'd like to caution listeners that during the course of this conference call, the company will make projections or forward-looking statements regarding future events, including statements about expected revenue, adjusted earnings and gross margins for fiscal year 2026 as well as trends that may continue. Management encourages you to review the company's past and future filings with the SEC, including, without limitation, the company's Form 10-Q and 10-K, which identify specific factors that may cause the actual results or events to differ materially from those described in the forward-looking statements.

The company will also discuss certain non-GAAP and pro forma financial measures during this call. Management uses these measures to establish operational goals and review operational performance and believes that these measures may assist investors in analyzing the underlying trends in the company's business over time. Investors should consider these non-GAAP and pro forma measures in addition to, not a substitute for or as superior to financial reporting measures prepared in accordance with GAAP.

A slide package offering insight into the company's financial results is also available in the Investors section of the company's website under Events and Presentations. This presentation should be read in conjunction with the press release discussing the company's operating results and financial performance during this morning's conference call.

Unless otherwise noted, all metrics and growth rates mentioned during today's call are on a pro forma basis, which exclude the results of the Dialysis and BioSentry businesses that were divested in June 2023. The PICC and Midline products that were divested in February 2024 and the Radiofrequency and Syntrax support catheter products that we discontinued in February 2024. Also, unless otherwise noted, all comparisons will be the third fiscal quarter of 2026 versus the third fiscal quarter of 2025.

Now I would like to turn the call over to Jim Clemmer, AngioDynamics' President and Chief Executive Officer. Mr. Clemmer?

Thank you, operator. Good morning, everyone, and thank you for joining us for AngioDynamics' Fiscal 2026 Third Quarter Earnings Call. Joining me on today's call is Steve Trowbridge, AngioDynamics' Executive Vice President and Chief Financial Officer.

Our third quarter was strong across the board, and I am proud of how our team continues to execute. We maintained our trend of driving top line growth, led by impressive growth in our Med Tech segment. Beyond the top line, we continued to deliver strong profitability by expanding our adjusted EBITDA. Our performance continues to show that our strategy to drive profitable growth in our high-margin, large Med Tech markets is working. Based on that, we are once again raising our full year guidance for net sales and adjusted EBITDA. That is our third consecutive quarter of raised guidance, and Steve will touch upon the details shortly.

I am very proud of the resilience we have built into the business. We've developed this company around cardiovascular and oncology markets with 3 product portfolios that we are really excited about. Along the way, we've had to work through a manufacturing transition, deal with tariffs and manage through a lot of macro uncertainty. None of that has slowed us down. That is because we have great people who know how to get the job done and the results we are putting up are not because 1 thing went right, it is years of work coming together.

Within our Med Tech business, Auryon continued its strong momentum with the 19th consecutive quarter of double-digit year-over-year growth, which is a track record we are very proud of. We have consistently driven revenue growth by leveraging our superior technology to take share and our push into the hospital market keeps paying off driving both top line growth and better economics. And it is not just about taking share with our AMBITION BTK study, we are not only winning in the current market, we are working to make the market larger. Internationally, we are seeing continued traction following our CE Mark approval.

Turning to our Mechanical Thrombectomy business. We loved what we saw this quarter. Our combined portfolio of AlphaVac and AngioVac grew approximately 18% over the prior year, demonstrating the superior clinical performance of this portfolio. AlphaVac in particular, had an outstanding quarter, delivering strong year-over-year growth and driving the largest sequential revenue increase we have seen since its launch.

New accounts are coming on, more hospitals are bringing us through the VAC process and into inventory. And utilization within existing accounts keeps increasing. The physician feedback on this product is consistently strong. Our training and clinical education programs continue to be well received, and we are seeing strong demand from physicians who want to learn how to use this technology and bring it into their practice.

On the regulatory front, we have enrolled our first patients in the APEX-Return pivotal trial, evaluating the AlphaReturn Blood Management System when used with the AlphaVac for treating acute PE. That is an important milestone, and we expect it to be a catalyst for accelerating adoption. We continue to strive to complete the approval process during the first quarter of calendar 2027.

AngioVac continues to see strong demand. Together, these 2 products give us a differentiated position that we believe is unmatched in Mechanical Thrombectomy and the portfolio selling approach keeps paying off. Our sales teams are doing a great job positioning both products based on clinical need and physician preference, and we expect to see continued strong growth from the combined thrombectomy portfolio going forward.

Finally, NanoKnife. We had a very strong quarter for both disposables and capital. As you know, our CPT 1 Code became effective on January 1. And what we have seen thus far has been positive. There is continued opportunity to broaden coverage across both public and private payers, and our market access team remains focused on that.

With respect to the patients being treated, what our physicians are seeing in practice lines up with what our PRESERVE Study showed, in particular, excellent quality of life outcomes. We continue to see lots of organic interest in NanoKnife. And as a result, more patients are being treated each month.

During the quarter, we also announced expanded European indications for NanoKnife to include soft tissue ablation for tumors of the liver, pancreas, kidney and prostate. This expanded indication supports our broad-based market in Europe and positions NanoKnife as a true multi-organ platform internationally.

Our Med Device segment keeps delivering as expected, and the team running this business does a terrific job competing across multiple markets simultaneously. I am really proud of where this company is today. 5 years ago, we set out to transform AngioDynamics into a faster growing, more profitable company by getting into larger markets with better products. We've reshaped the portfolio, built the teams to support it and figured out how to make it all work. And that is what you're seeing in our numbers.

Three consecutive quarters of raised guidance does not happen by accident. It is the right people doing the right things every day, and we are just getting started.

With that, I'll turn the call over to Steve Trowbridge, our Executive Vice President and Chief Financial Officer, to review the quarter.

Thanks, Jim, and good morning, everybody. As always, before I begin, I'd like to direct everyone to the presentation on our Investor Relations website summarizing the key items from our quarterly results. Unless otherwise noted, all metrics and growth rates mentioned during today's call are on a pro forma basis, which exclude the results of the Dialysis and BioSentry businesses that we divested in June 2023, the PICC and Midline products that we divested in February 2024 and the Radiofrequency and Syntrax support catheter products that we discontinued also in February '24. Additionally, unless otherwise noted, all comparisons will be the third fiscal quarter of 2026 versus the third fiscal quarter of 2025.

Company top line revenue performance was strong again in the quarter. Revenue increased 8.9% to $78.4 million, driven by growth across both our Med Tech and Med Device segments.

Med Tech revenue was $37.3 million, a 19% increase. Year-to-date, our Med Tech segment is up 19.1%. For the third fiscal quarter, our Med Tech platforms comprised 48% of our total revenue compared to 44% of total revenue a year ago, reflecting the ongoing shift in our business mix. When digging into our Med Tech segment, our Auryon platform contributed $16.3 million in revenue, growing 17.9% compared to last year.

Auryon has now delivered double-digit year-over-year growth for 19 consecutive quarters. Beyond what Jim mentioned, we have continued to invest in product line extensions based on what we are hearing directly from our physicians including our radio access and 1.7 millimeter catheters. That focus on listening to our customers and improving the platform is a big part of why Auryon keeps winning.

Mechanical Thrombectomy revenue, which includes AngioVac and AlphaVac sales, increased 17.9% year-over-year with revenue of $11.5 million. In the quarter, AlphaVac revenue was $4.4 million, a 47.4% year-over-year increase and a greater than 24% sequential increase over Q2 of this year. AngioVac revenue was $7.2 million, a 5% year-over-year increase.

In Mechanical Thrombectomy, we are seeing strong adoption driven by new accounts, increasing utilization within existing accounts and the continued expansion of our dedicated sales force. AngioVac revenue returned to growth in the quarter, and we remain pleased with the sustained procedure volumes and demand for this product.

Total NanoKnife revenue was $7.6 million, an increase of 21% with probes growing 20%. Probe sales are primarily driven by demand for NanoKnife in prostate care. NanoKnife capital sales grew 24.9% and were bolstered by strong demand for new systems as new physicians and providers adopt the technology. As these systems are placed and new physicians and providers experience the improved patient outcomes our technology enables, we expect them to drive increased probe utilization going forward. The leading indicators are encouraging. Demand for our training programs is strong and the procedural trends we track give us confidence in where this business is headed.

In the third quarter, our Med Device segment increased 1.1% year-over-year. Year-to-date, our Med Device segment is up 3%. This business generates consistent cash and profitability, allowing us to keep investing in the growth of our Med Tech platforms.

Now moving down the income statement. Our gross margin for the third quarter of FY '26 was 52.9%, a 110 basis point decrease from the third quarter of FY 2025. As we discussed during our last earnings call for our Q2 results, the year-over-year decrease was primarily driven by the impact and timing of tariffs, inflation and certain costs associated with our manufacturing transition. These expected structural elements were partially offset by continued product mix shift towards Med Tech sales and pricing initiatives across both Med Tech and Med Device.

Total operating expenses in the quarter were $54.4 million, representing 69% of sales compared to $48.8 million or 68% of sales last year.

Turning to R&D. Our research and development expense was $7.1 million or 9% of sales compared to $6.9 million or 10% of sales a year ago. We remain committed to investing in R&D initiatives to support the long-term growth of our Med Tech segment and are targeting approximately 10% of sales going forward.

SG&A expense for the third quarter of FY 2026 was $38.2 million, representing 49% of sales compared to $36 million or 50% of sales a year ago. This result illustrates our strategy of simultaneously investing in sales and marketing to support sustained growth, while driving operating leverage. Our adjusted net loss for the third quarter of FY 2026 was $3 million or an adjusted loss per share of $0.07 compared to an adjusted net loss of $3.1 million or an adjusted loss per share of $0.08 in the third quarter of last year.

Adjusted EBITDA in the third quarter of FY '26 was $1.8 million compared to adjusted EBITDA of $1.3 million in the third quarter of '25. This year-over-year improvement is largely attributable to our Med Tech revenue growth and the success of our gross margin and operating efficiency initiatives. We've done all this while absorbing tariff costs that were not there a year ago.

Now touching briefly on tariffs. Tariff expense of $1.3 million in Q3 was again in line with our expectations. As we discussed last quarter, while the tariff landscape remains dynamic, we continue to expect to incur between $4 million and $6 million of tariff expenses for the full fiscal year 2026. As a reminder, there were no tariff-related expenses in our fiscal third quarter last year.

At February 28, '26, we had $37.8 million in cash compared to $41.6 million in cash at November 30, 2025. In the third quarter of fiscal '26, the company used $3.1 million of cash, slightly better than our expectations.

Turning now to guidance. Based on another strong quarter and our expectations for the balance of the year, we are raising multiple components of our full year fiscal 2026 guidance. We now expect net sales to be in the range of $313.5 million to $315.5 million raised from our previously issued range of $312 million to $314 million. This increased range represents growth of between 7.1% and 7.8% over fiscal 2025 revenue of $292.7 million.

On a segment basis, we are raising Med Tech net sales growth to 15% to 17% and now expect Med Device sales to grow at approximately 1%. For fiscal 2026, we continue to expect gross margin to be in the range of 53.5% to 55.5%. This is inclusive of our reiterated estimate of $4 million to $6 million tariff impact for the full year.

We now expect adjusted EBITDA to be in the range of $10 million to $12 million, up from prior guidance of $8 million to $10 million, again, inclusive of our estimated tariff impact. As a reminder, adjusted EBITDA will be lower in the second half of the year than the first as our planned investments in clinical data development hit the P&L as well as the structural gross margin impacts I previously discussed.

We now expect adjusted loss per share in the range of $0.30 to $0.23, improving from our prior guidance of a loss of $0.33 to $0.23.

Turning to cash. We remain on course to illustrate that our business model will be cash flow positive as we expect to generate substantial cash in the fourth fiscal quarter, in line with historical trends. During the third fiscal quarter, we were advised by our sterilization vendors of their plan to implement 2 upcoming temporary shutdowns to perform maintenance activities during the fourth quarter.

To proactively address this and avoid any potential commercial disruptions, we are planning to increase inventory levels for certain products during the fourth quarter. The net result will be the acceleration of the use of approximately $3 million to $5 million of cash to build inventory in the back half of this fiscal year, which normally would have been used in future periods. Now this may result in cash flow for FY '26 being slightly negative, but there is literally no modification to the positive cash generation pathway we have been on in the cash generation profile of our business. We maintain a strong balance sheet with 0 debt.

With that, I'll turn the call back to Jim.

Thanks, Steve. And looking to the fourth quarter, we remain focused on finishing the year strong. We have built this company with a new portfolio aligned with the market and where the market is growing. We have built tremendous technologies. Every day, we bring value to our customers and the patients they serve. We are committed to grow our company in a really important way. We are committed to our shareholders to grow our value along the way.

Before turning the call over to Q&A, I want to provide a quick update on the leadership transition. The Board has formed a search committee and has engaged a leading executive search firm. The process is moving forward on the time line we laid out until my successor is appointed, Steve and I will continue leading the team, driving the company's strategic and financial initiatives. And I am committed to making sure we have a seamless transition.

With that, I'll turn the call back for questions.

Our first question comes from the line of John Young with Canaccord Genuity.

Congratulations on the quarter. I first want to start on AlphaVac, the sequential growth there was really impressive. Any additional color on the drivers? I know it was a bit subsequent to the quarter, but are you seeing any benefit today from the PE guidelines that were released in February? And maybe just how do you expect that to benefit the company in fiscal Q4 and in the following fiscal year?

Thanks, John. Good question. John, it's really going through according to what we expected. Each quarter that goes by, we're able to get our product into new hands or hands of a physician who heard from his partner another KOL, how well the product performs. You saw the APEX data that was generated to get our product on label. What we do is remove more clot faster and in a safe, really safe manner. So that's becoming more exposed day-to-day, John. This is normal business cycle that we expect to grow our share.

Two primary ways we're doing that are more hospitals approving us through their VAC process or VAC, for everybody not knowing, is Value Analysis Committee or term, whatever each hospital uses. That basically means we pass their test to get into inventory, get on the shelf to be utilized. And usually with 1 or 2 of the other products in the market, let physicians choose.

And then second, John, also, we're getting physicians who've now used it a few times getting really comfortable in the innovative features we've built into the product and getting more comfortable and choosing it over the other competitive products. So John, we expect the product to grow sequentially going forward, because it's a great design, and it's a really good market. We have 2 good competitors, as you know, but we'll win more than our share going forward.

Great. And then, Steve, just on the guidance. Given the climate we're in, I think investors are probably also curious, have you baked in any impact from higher energy costs? Are you seeing any impact yet in terms of rising supplier costs? And are you giving any specific buffer for that, for the fiscal fourth quarter? And if costs do rise, what's the ability for Angio to pass on those costs to customers?

Yes. Thanks, John. Absolutely. We're living in a dynamic environment, as you know that. You talked about inflation, you talked about energy costs. We mentioned tariffs in the prepared markets. All of those elements definitely have an impact on the business, and they're all very hard to predict. We have built into our guidance, our expectations of the best we know today of how we're going to manage all of those different dynamic elements.

So if you think about the guidance that we have, both in terms of EBITDA, profitability, as well as gross margin, we're expecting that we're going to have an impact that's embedded in there, both in terms of inflationary costs, which could include the energy increases that you've talked about as well as tariffs. And again, that remains dynamic, but it's our best guess of where things are going today.

In terms of rising prices and passing on to our customers, I did mention in the prepared remarks around gross margin. We are seeing a benefit from our ability to raise prices in certain areas. That is not specifically tied to these dynamics of inflation or tariffs. It's more our ability, which is within the natural course of the commercial dealing to be able to take price with some of our superior products, both in Med Tech as well as in Med Device. We'll continue to take price where we can, but we haven't been able to explicitly take price related to some of those rising costs. So that's really up to -- it's up to us to continue to manage through the way that we have been.

Our next question comes from the line of Frank Takkinen with Lake Street Capital Markets.

I was hoping to also a follow-up on AlphaVac, just given how strong the number was there. As we think about future quarters and any gyrations in ordering patterns, should we kind of view this $4.4 million as a new baseline to grow off of? Or was there potentially some pull ahead into the quarter that could have that number step back as we go forward? I know historically, we've seen it pretty consistently grow sequentially. Just curious if that is expected to continue to be the trend going forward for the last quarter as well as into '27?

Frank, thanks for the question. We expect AlphaVac to continue to grow sequentially. As we've talked about, we think this is one of the drivers of growth for AngioDynamics this year as well as heading into future periods. We're very excited about the product that we have. We're very excited about being in this market. It's a huge market that's going to continue to grow. We're going to continue to take share as well as grow along with the market. So I would expect you would see AlphaVac continue to grow sequentially heading into the future periods.

Perfect. Very helpful. And then just for my second one, I was hoping to follow up on Auryon a little bit more. Any color you can provide on volume versus price and progress hospital versus OBL, would be really helpful.

Yes. As we've mentioned over the last number of quarters, moving into the hospital site of care has been a strategic imperative of our company. It helps us, as you mentioned, on price, it helps us on the nature of the customers, but it also helps us on setting the stage for the future. We talked about Auryon as a platform technology moving into areas like coronary. And so it's important for us to be in the hospital setting.

Our team has done a great job, changing that dynamic of moving from being very OBL-centric, which is where we started due to the time frame when we launched this product. That was during COVID. We can get into the OBLs, you couldn't get into the hospitals. But now making that shift and focusing on the hospital side of care. But they've also done a great job making sure that we continue to grow that OBL business.

So if you look at the Auryon results, it's being driven by both elements. The price that we're seeing by having a higher percentage of our overall revenue base in the hospital, but also by driving additional procedure volume in the OBL. We expect to continue to do that. Now we expect to continue to do that because of the product that we have, the versatility that the Auryon laser has in treating calcification, both above and below the knee. It can do things that no other product can do. So we're excited about the continued future, which is why we said we expect Auryon to be a grower as we continue to head into future years, even though we're getting to much larger revenue base than we had when we first started launching the product.

Ladies and gentlemen, our final question this morning comes from the line of Yi Chen with H.C. Wainwright.

This is Katie on for Yi. I had 2 quick follow-on questions for supply chain, things that have come up. Could you give us a sense of what proportion of Med Tech cost of goods are still exposed to China sourcing of components? And how much of that is kind of addressed by the Costa Rica transition? And then if you could also provide a little color on how continuous the sterilization shutdowns might be? Is that something that will happen annually? Just something how we can think about that in terms of the supply chain?

On the first one on the supply chain, we haven't historically had a significant risk to component sourcing coming from China. So over the years, we didn't necessarily get some of the benefit that you may have expected in 3, 4 years ago, but we don't have the risk as we sit here today. So we don't identify component sourcing out of China as a big risk for us, either in Med Tech or our Med Device products. Inflationary impacts, we have talked about in terms of the supply chain, but it's not necessarily what I would call a China exposure.

On your question around the sterilization shutdown, is it continuous. Look, these happen. It's not something that happens all the time. The reason we called it out was more because there was a little bit of a stack tolerance going into our inventory buildups as we were finishing the supply manufacturing agreement with Spectrum, which is who we sold the PICC and Midline business to, while we were continuing to our move from the rest of the products that we had out of Queensbury down to Costa Rica. So you had a couple of things that were stacking on top of this.

The reason we bring it up is, it is going to be a little bit of a use of cash ahead of our expectations in the quarter. But we're doing exactly what you expect us to do. We're managing the business. That's why we have a very strong balance sheet to start with, with really good quick and current ratios. If you go through the assets and the liabilities that we have, we have a significant net cash position.

We're going to generate significant cash in the fourth quarter, along with historical trends and along with our current business model updates. It allows us to be able to do what we're talking about doing and mitigate any potential disruption from sterilization shutdowns. They happen, we're going to stay close to our sterilizers. I wouldn't think of it as something that is going to be derailing in the future. We're just calling it out because we're managing our business. We're doing what everyone would expect us to do, and we're making sure there's no disruptions because of the strong position that we're in.

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'll turn the floor back to Mr. Clemmer for any final comments.

Thank you, and thanks for joining us today and hope you got insight to what makes AngioDynamics special and shows how we can compete and win in this marketplace today, tomorrow and going forward for a long period of time. I'd like to thank our employees for really making this happen. We have a great team of people at work.

But I also want to mention here at Angio this week, we lost an important member of our team. We want to recognize Jim Culhane for his work as a leader, one of our research and development leaders. Jim really lived our culture of patients first. Jim helped to build products like the AlphaVac. His great design work, the team he led really enables patients today to get better and get healthier due to our products. Jim Culhane was an important leader here, and we express our condolences to his family and friends with his recent passing.

Thank you for joining us today.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

Great. Hello everyone. Thank you for joining us this afternoon. My name is Harry Pearson. I'm with JPMorgan's health care investment banking team. It's my pleasure to be introducing Jim Clemmer, CEO of AngioDynamics; and Stephen Trowbridge, CFO. We're going to have a presentation followed by a little time for Q&A. Take it away, Jim.

Thank you, Harry, and thanks for JPMorgan for a perfect conference again. Thank you for joining us today. Before I begin, let me remind you to look at our forward-looking statements, remind you that we're going to give you some thoughts, ideas, plans and projections today. We can't guarantee you that all these will come true. But do your good work as investors, do your due diligence and make your best decisions.

So AngioDynamics is a company that has gone through a transformation over the past 5 years or so. We started off as an interventional radiology based company in upstate New York and built a strong legacy serving that community. They got to know us well. we serve them well. But over time, our portfolio needed to be refreshed. So myself and my colleagues took a look about 6 years ago of where we should be, where we shouldn't be and really how to change the company through a more vibrant scientific-based portfolio that compete in larger, more addressable markets.

So over the past 5 years, the left side of the slide shows you what we've done, really focused on refreshing that portfolio. We did 3 divestitures to exit markets or businesses, but we didn't think we were the best owner of those businesses. They either were slow markets, they were undifferentiated by technology. We're really commodity markets that we weren't interested in. So we took a look at how we could change. And we develop what we call today our Med Tech portfolio focused on 3 different categories with 4 great pros in those categories.

As you can see in the bottom left slide there, over the past 5 years, during this investment period, during this time of change and transformation, we've actually performed really well. We've got a 5-year CAGR of growth there at about 25% in the med tech markets while we're transforming the company. On the far right, you'll see the company that we are today, and we will be for many years: high-performing company based on markets that are large, addressable markets have a great growth rate, and we can win scientifically or outcome-based with our products. That's who we are.

So during the journey, we're a company with more than one thing in our portfolio. So a few years ago, we decided to report to you in 2 operating segments. On the left side of the slide, it shows you those 2 segments, our Med Tech portfolio, that's our growth-based future; and our Med Device portfolio, which has really gotten us here. And what we have today in that portfolio are kind of the best of what we decided to keep there. These are good products. They're in good markets. We have a really great commercial and clinical team that supports them and really can keep at or above growth rates even in those markets.

So we're focused on our company really on the 2 disease states you see on the top through leading causes of mortality globally, or cardiovascular disease and solid tumor cancer. So we focus most of our energy in those disease states. So this is a busy slide that shows you what we've got to offer in each of those 2 segments and categories and maybe why we can be a little bit complicated for investors to understand. I'll do my best job and we'll do the best job we can to make us easier to understand because there's a lot of good things here at Angio.

So let me talk about a few of those things. First, the cardiovascular markets. We decided to focus on cardiovascular disease that we can treat in the arteries and veins. We want to keep healthy blood flowing to and from the heart and work on areas that we can help that happen. So once we decided to focus on cardiovascular disease, we had a product on AngioVac that you'll hear about in a minute. We had just completed the go-ahead for AlphaVac, the R&D project to launch AlphaVac. So we had a venous disease platform that we were building, we were confident in.

We wanted to be in our arterial disease. And we knew about PAD. We thought the market was right for disruption, and we found this product called Auryon, which we launched in September of 2020. Since launch, we've taken share from the other 5 players in those categories. And they're really large global players that you all know well. So we launched it in September 2020 with 0 revenue. And this year, we'll do well over $60 million of revenue, all organic growth, taking share from 5 really good, strong companies.

Why? Our product is really good. Scientific based product that uses laser energy delivered through our disposable catheters that can disrupt hard calcification or soft plaque above or below the knee and treat instant restenosis safely within the diseased arteries. So we've taken share in this space because our product is really good. And along the way, we learned how to build the business within a business, kind of created a start-up mentality here in this older company.

So today, Auryon is a really important product for our company. We just reported our second quarter, I should have mentioned earlier, we're probably the only company here at the conference with a June 1 fiscal year start every year. So November 30 was the second quarter operationally for us. We just reported those results last Tuesday. And you can see Auryon is up nearly 20% year-to-date in our first 2 quarters. So still taking share in a market that's not growing that rapidly.

What this shows, again, what we can do with a scientific product in a tough market with tough competitors, we've also shifted different care points. Early when we launched Auryon, we sold it to the office-based laboratory setting as the COVID pandemic kind of kept a lot of us in new products out of hospitals during that time period. So we can win in the OBL labs. Then when hospitals reopened about 2 years ago, we focused there, that we're in the hospital, gaining traction, gaining business there. It's really a good place for us to be long term. We have higher ASPs, better reimbursement, higher gross margins for us. We have a great mix today in our business. Really proud of what Auryon has done.

So that's what we call our Cardiovascular A business. Now Cardiovascular Venous is a really important category for us as well. This is a business made with 2 different products in this category, treating VTE, which is venous thromboembolism. We will not have a spelling test, but the part of VTE that we compete in today is PE, pulmonary embolism, which is an interesting, fast-growing space, many investors are well aware of a couple of companies that are doing well in that space. So we decided to enter the PE space with a product that we call AlphaVac, which is spun off of our AngioVac product.

AngioVac is a unique product with a vortex funnel tip, a large board catheter and gets hooked up to a simultaneous reinfusion system within a hospital, allows physicians to get mass burden of clot out of the body in a safe and effective manner and return blood safely back to that patient in these complex right heart procedures. So AngioVac is the base of this business. AlphaVac is our new product. We got AlphaVac on label about 18 months ago with a PE study. So today, we're competing in that market as well.

This market is really important for us. So we decided that we focused really firmly on the technology and design of our products. We give Inari a lot of credit really kind of broke ground in catheter-based interventions in treating PE about 6 years ago, did a really good job getting doctors used to using catheter-based products instead of lytic-based therapies as a front-line treatment. Inari did a good job there, for a number of soon followed adapting their products to this market.

What we're third in, we had the blessing though being third, looking at what those 2 companies did well. And where they left some gaps for improvement, and we listened to doctors what we could do better. If you take a look at the product design in the middle of the page there, you'll see our product. It's a really well-designed catheter with that vortex funnel tip on the right side. So we've got an 18 French catheter and a 32 French funnel tip enables us to grab more clot than the other products can do in a safe manner without hurting the vessel wall internally.

On the left side, you'll see a purpose-built handle giving the physician control of aspiration, technique, steerable options and also limiting blood loss when he's searching for finding the clot, then removing the clot. That's the AlphaVac. It competes today in that market.

If you take a look at the picture in the bottom middle, we're really proud of this. Every morning, I decided I wake up. I usually get 1 or 2 of these pictures every morning. That's a real picture of clot pulled out of a patient that was on a table that was suffering from a PE. AlphaVac does what others can't quite do. The other companies are terrific and their products are good, but our product can pull more cloud out faster in a more effective and safe manner. We're really proud of the design of AlphaVac.

You'll see that here. The study that we piloted to get our FDA clearance for PE was called APEX PE. And the APEX study was done following the same protocol that Penumbra and are used. So following that same protocol, you can see in the bottom of the page there, how much better we performed in getting a reduction in the patients that were in the study.

So it's not an accident. You saw that picture in the last slide. It's because the doctors can use our product. They can use their skill and their knowledge. We give them a tool, enables them to use more of their knowledge, how to access the clock in a safe and effective manner get to it, extract as much clot as they can and reduce the blood loss during the procedure. So we've built in some really cool innovative features that the other products don't have. And we can also have an adaptable steerable component, doesn't require the doctor to take out a guidewire reanswer guidewires. So we save the physician time and make the ability to flip from the left PA to the right PA much faster and more seamless for the physician.

So we're really proud of the device. It's really important device for us. Competing in a market, as we all know, that's really interesting and fast growing. Today, between Inari, Penumbra and AngioDynamics, we're probably only about 15% penetrated in the potential TAM that exists. So all 3 of us will work on market development, getting more physicians comfortable with our devices and getting them to convert frontline treatment of patients suffering from PEs from lytic-based blood thinner therapies to these clut-extraction devices.

Along the way, we'll also probably take share from the other 2 players in the space because our product is better. Even though we're smaller, we're third in, we have the best device. We're really proud of it. So that's a really important device for us. That kind of rounds out our cardiovascular business. We're going to be a serious player for years to come in arterial and venous disease.

Now the other intermediate risk. Prostate cancer is a really important area for us to focus on. We have a product called NanoKnife, which you'll see in a moment. It uses energy in a unique format to treat solid tumor cancers. So we've had this device in house for a number of years. It's been used primarily for liver cancer, the most common, pancreas cancer, second most common. But we always thought prostate was the ideal application to give men a focal treatment option, meaning you leave the prostate in the body, treat the disease, and you can really reduce the risk of incontinence or impotence that we all know are associated with radical prostatectomy that most of men are used to treat these diseases.

NanoKnife works really well. It preserves function for the man while destroying the tissue that serves as the house of the tumor. The way NanoKnife works is we have a generator that allows electricity to be generated and deliver it through our probes. The doctor can place the probes around the tumor, creates really a mini electrical field, which creates nano-sized particles in the cell wall of the tumor that we're targeting. And then ultimately, those cell destruction allows the tumor to die naturally and get flushed out of the body, while keeping intact the other organs, the vascular structure and other tissue surrounding the delicate organs we're treating.

So it's a really unique science IRE or irreversible electroporation is the science underlying NanoKnife. It's really amazing and unique. And it gives our physicians the ability to treat organs like prostate in a matter that didn't have that chance to do before. So really excited about what we can do. We've worked hard with this device.

The FDA opened up a new pathway for clearance about 5 years ago. We chose that pathway and sponsored a study called PRESERVE. What the PRESERVE study showed that we can treatment and do a 1-year follow-up to measure their cancer control, also measure the level of incontinence the men have suffered from post treatment, and the results are stunning when you see it on the slide here today. So PRESERVE showed what we knew, showed to the urology community, how NanoKnife could be an effective treatment for the men with intermediate risk prostate cancer.

So the size of this market is important. In the U.S. alone, 300,000 men will be diagnosed this year with some level of prostate cancer. Nearly half of those will be intermediate risk, a Gleason 7 score, if you're familiar with that range. That's a really large market. for us to focus on. Most of those men today are getting either radical prostatectomy that don't need it or maybe they're being told to go home and have what's for waiting still or maybe another one of the other focal modalities that are on the market, but haven't really taken a lot of share in the market. for other reasons as to how they work.

What the PRESERVE study showed that NanoKnife is easy to use for a physician, can do the procedure in less than 1 hour, the cancer control is tremendous and the reduction of the 2 forms of unfortunate side effects of the other treatment options don't happen here. So we give patients the ability to be treated. We preserve the function of the man being treated. We also preserve the chance to be treated again someday, whether it's another NanoKnife procedure 3, 5, 7 years later or maybe radiation years later, maybe a radical prostatectomy, but pushing that off for a long period of time is important to us. So NanoKnife is really important. This is a really big market.

We got on label about 13 months ago, in December 2024, the PRESERVE study allowed the FDA to grant us the indication and clearance to market the device. And we just got our CPT I code approved and opened 14 days ago. As of January 1, we've got a product now on label and a CPT won't go to support reimbursement. So now we've shifted into now adjacent and awareness gains, making men aware of this new treatment option that they have and making urologists in the country aware of how they can bring that into their practice and use NanoKnife to give men a new focal treatment option that gives the men what they're looking for a safe and effective way to control the cancer.

It gives urologist a way to bring it into a practice and a procedure that can be done in less than an hour. The reimbursement is fine for the facility and for the physician. They're both pleased and the man gets what he wants. So we're really excited here. It's a new thing for us. We're not a consumer marketing company, but we've done a really good job today bringing awareness about this product out there.

We've also been named this year to TIME Magazine, One of the Top 25 Medical Inventions this year. We're really proud of that. And on the other side, we started part of our marketing and awareness campaign in October, a really nice full page ad in AARP, which generated a ton of interest that we're working on follow-ups on today.

So here we are today, 4 different products in 3 different areas in 2 big disease states. This is our company. I think our company has also performed really well looking at the results we've delivered over time. company, I would argue, probably every CEO at this conference will say we're undervalued. I can point to that and do math for you later. But we really have a lot of value we can create, if we keep following this pathway of our journey of transformation. We keep executing and delivering on growth above market in these 3 important categories.

And how are we going to do that? Here's how. So today, I'm talking about what we have today on the market and why we're such a significant player and these products work really well. but we got a big tomorrow as well. What this slide I'll show you on the left side of the slide, it shows you the 3 disease states I talked about, and shows you the products we have today already launched the PAD product, the PE product, the right heart product, and now the prostate on the bottom. We're in those 4 markets today with our 4 products. We've got a really strong pipeline. So each of these platform products will spin off over the next 5 years.

So it doesn't require us to look to M&A or other areas to try to find new ideas. Each of these platforms offer really big TAM expansion opportunities with the same technology we have today. Let me give an example, starting in the bottom of the slide. Over the past year or 2 now that we're treating more men with prostate cancer, physicians are following up with those patients after they've been treated. And they're calling us saying, "Hey, guys, not only do we control that man's cancer, we also control his BPH. You shrunk is prostate. The BPH went away." The BPH market is far larger than the immediate risk prostate cancer market. By the way, the prostate cancer market is nearly $1 billion in the U.S. BPH exceeds that. So we're now going to see what do we do next? How we entered that market over the next couple of years. Really big TAM expansion opportunity for our company.

Right above that, you'll see with our AngioVac and AlphaVac opportunities to expand where we play today with the same products. I mentioned to you today, we're a player in PE, a really great, important opportunity for us. But DVT is the other half of venous thromboembolism treatment. Penumbra does a really good job in that space. We think we can challenge that space today. If you look, you'll see what's interesting here, you see a DVT slide on both the Auryon section at top in blue and in red on the AlphaVac section. So we've actually got 2 different R&D teams at Angio competing, a little bake off here. We think we have a way for both teams actually to have a really effective treatment option for DVT.

So the gentleman in the audience, Ben Davis, who runs our or indeed department, and we're having this bake off internally to see which product we'll bring to market during this 5-year period, opening up again another opportunity for us to compete in a really large, fast-growing and important market.

And finally, at the top on Auryon, on the bottom right in the blue there is the coronary market. Today, I mentioned how good Auryon is doing, taking share from the other 5 big companies in the peripheral arterial disease market. The coronary market is larger than PAD. We don't think it takes much R&D work at all to deliver a safe and effective treatment for coronary arterial disease, which will again expand our TAM and opportunity in a big way.

So that's our company, focused on today, delivering it today in the large markets we're in, focusing on growth. And while we're doing this, we're also affecting the P&L that we have. We're now growing these markets which are larger gross margins, higher gross margins, dropping them through a P&L, which for the last few years was under pressure, funding investments, getting things to market. Today, now we're generating positive EBITDA -- this is the first year will be cash flow positive as well. Every year from here, we'll generate more EBITDA and free cash. And the P&L is strong, and our balance sheet today has 0 debt. So we're a really strong company with a bright future.

Last Tuesday, as I mentioned, we gave our second quarter financial outlook. We met or exceeded all the Wall Street consensus numbers that were put upon expectations for us. We even raised guidance in a couple of categories here. So for the full year in the far right column shows the new guidance that we put out last year, it shows again a company that although more than half of our revenue today is in that med device slower growth area, our med tech area slowly about to pass that. Over time, our med device products become less important to the P&L, really important to our company and our customers, and they're an important part of our journey. But the company will be more known as a growth company led by our Med Tech products and what it can do. for our business and our customers going forward.

And finally, as I wrap, this is a great summary, I think, of our company. We've changed this company. We've done with other companies need to do or should do. We did it. a small-cap company during a time of change. And in this marketplace, we sold products that had EBITDA. They were profitable. They were the wrong product for us. We entered markets that are larger, faster-growing, they're competitive but we knew that science-based outcomes that you could prove can change physician behavior and grow revenue and sales.

That's what we've done. We're still working on it. We're not done yet. We're just getting started here, but this shows you really a summary of what we're proud about how this can stands today and how strong we are. So last Tuesday, when we announced our Q2 results, we were proud of what we announced. Our stock didn't do well, though. We also announced I'm going to retire from our company this calendar year. We've been in our industry for 35 years, been really fortunate to serve our industry working for 3 great companies, AngioDynamics and 2 other ones. I've been here almost 10 years. So the role that I took when I served -- when I joined Angio was to change the company to set it up for where we are today.

So I'm going to stay at the helm over the next number of months. We're going to do a search process and find the right leader to come in at some point later this year and serve the company in this role. I'll stay associated with the company for a long period to come. I'm a really large shareholder, so we get a room from the sidelines and advise from the inside as well. But that might have put pressure on the stock last week as well. Whenever you have a management transformation that's announced.

With that, I'll stop for a minute, and I'll welcome Steve Trowbridge, our CFO, to take questions. Steve?

Jim, thank you so much. Maybe I'll kick off with one question, just touching on your retirement that you just announced or that you had recently announced. Can you talk a little bit more about why was now the right time? What do you think this means for Angio going forward?

Thanks, Harry. So it's really the clock for me, the right time at this point in my life, 35 years in the business. I am fortunate I want to pursue some family obligations and interest that I have outside of work. And I've given a lot of time and energy to this career in this company in the last 9 or 10 years. I need a little bit of free time on the site to do other interest from my family. So it was the right time for me personally. It's never a great time for the company, I know that. I love this company, love where we are. But I felt better about it based upon what we just delivered last week and what we delivered in the last 6 or 7 quarters before that.

I think the company, if you look at us, has a pretty good legacy now of delivering or beating expectations. While we're also transforming the thing, which is hard to do. So over here, we're working on stuff and today, we're delivering. So I felt really good. It's a good time. The company is going to thrive for years to come. And so here we are today. We'll do a really good job. If there's qualifying internal candidates, they'll get a chance to compete for the job. And we're also probably a really desirable role for good external people probably want to be interested in coming here. So we'll make sure we choose the right leader. There's not a rush to it. We'll be deliberate and thoughtful to get the right leader for our company.

That's fantastic. I have a few more questions, but we'll turn it over to the audience, see if we have any in the gallery Okay. More for me then. Perfect. I think you have a lot of exciting developments in the Med Tech business coming down the pipeline over the medium term. Can you also talk a little bit about how we should think about the continuation of -- to drive growth in the near term with your existing portfolio and how you're pursuing that?

Sure, Steve.

Yes. I think as Jim went through the story for AngioDynamics is we're driving growth primarily through our Med Tech platform. So he had a slide up there that talked about the last 5 years, the products that we put into our Med Tech segment have had a CAGR of 25% growth. We expect growth to continue through those existing Med Tech products in the markets that they're in today in the short to medium term.

So as Jim mentioned, we talk about the Auryon product line. We've been really pleased with the growth we've seen with Auryon. We expect that to continue. We're taking share in the atherectomy market. On the mechanical thrombectomy that's probably where you're going to see the biggest growth for us over the short term into the medium term as we go into those really attractive markets into PE just kind of in the beginning of seeing what AlphaVac can do and pleased with the performance that we've seen with AngioVac. So that's probably where you're going to see the most growth is in that thrombectomy space.

And then there's NanoKnife I actually hope there's a horse race between where the biggest growth is coming from, whether it's thrombectomy or NanoKnife now with getting the CPT code and the really exciting prostate market that Jim talked about. But I think what's even more exciting than the growth you're going to see, which is really exciting, you have in the short to medium term, is the fact that all 3 of those platforms that we have are set up to drive growth in the medium to long term as well. And it doesn't mean that we have to do a lot of R&D work to change those products. The platform technologies can go into other markets. We can increase the TAM that we're going after primarily through regulatory and clinical pathway expansion.

And that's what Jim talked about taking Auryon and then in the medium to long term, moving into the coronary space. It's actually a bigger market than PAD than what we're playing in now. And so that's a sustained kind of 20%, 15% to 20% growth that you're seeing in Auryon, we expect that to continue for quite a long time with that pathway expansion. Getting into BPH with NanoKnife is another good example of where you're going to see some growth accelerators because we think the prostate market, we can drive growth in that short, medium and long term and then add BPH on top of that.

And then in the thrombectomy market, potentially taking AngioVac from being focused on the right side, while we're growing the PE space with AlphaVac and going on to the left side of the heart, which is a much bigger market there. So we're really well positioned with the technologies that we have in-house to drive growth that we've seen historically to continue that in the short term, but then to make it sustainable as you head into the medium and long term.

That's great. I just wanted to touch a little bit more on that sort of the profitability side and what you all have done. Can you walk us through the progression of profitability in the back half of '26 in particular? And how that might evolve moving forward and what you all are learning?

Yes. I think what Jim talked about with the transformation of AngioDynamics, he had mentioned that we had done some portfolio moves over the past 3 to 5 years, right, getting rid of some of the less core, less strategic assets that maybe we weren't the best owners of so that we could focus on those Med Tech assets. Now while we did that, there was some EBITDA that we gave away. So if you look historically, we did take a step back in terms of EBITDA, but it was the right time in kind of that '21 time frame for us to sell assets, take cash, recapitalize the balance sheet, got us into the position that we're in today with 0 debt and a net cash position.

Last year, we were positive EBITDA on an adjusted basis from a pro forma perspective coming out of those divestitures. So it was important for us to get over that hump to prove that the business model can provide positive EBITDA. We're going to then build on that EBITDA this year. And as Jim said, we'll be cash flow positive. So cash sustaining after this fiscal year that ends in May 31 of 2026 and then heading into FY '27.

So if you look at this year's results, we're getting to your question, we were really pleased with the EBITDA generation that we had in the first half. It was ahead of the expectations that we set. It was ahead of some of the consensus expectations that we had out there. A little bit of that is timing, right? We announced a couple of new studies that were approved that we're going to start to fund in the back half of the year. And then we're going to be making some investments in the sales and marketing group as well.

So as Jim mentioned, as we're growing into that thrombectomy space. We went from 40 reps last year. We have 50 reps this year. We're going to continue to add reps to execute on that opportunity in thrombectomy. We're going to continue to add reps in the oncology space as we get the CPT code, and that is start to expanding into the prostate market. So R&D and sales and marketing, we've got some investments that are coming into the back half, not that we're going to go backwards in EBITDA, but just we may not see the exact same pace of EBITDA generation in the final 6 months that we saw in the first 6 months. But we're still ahead of the expectations that we set at the very beginning of the year.

That's great. It's really helpful. You talked a little bit about some of the strategic decisions you've made over the past couple of years of the portfolio. How should investors be thinking about your future portfolio management both in terms of acquisitions or divestitures?

It's a great question. And if you look at the last slide we presented, we think there's so much room internally on internal development work the product development teams we have, the clinical and regulatory teams that are working on pathway expansion and even our global geographic teams, they're working around the world to open up new access to markets. We think there's so much opportunity there on our current pipeline of products we have and it's a safer bet working with things you know and you own internally.

So I would not look to us to do a lot of work externally for M&A over the next couple of years. We're going to build cash and have a strong balance sheet, but I don't think we'll use cash immediately to buy other things. You may see us again work on the portfolio shifts along the way of maybe assets that we don't love as much as someone else may love. But most of our focus will be on getting what you saw on that slide to market.

Perfect. And then maybe wrapping up here, one last kind of broader question. What do you think investors are missing up the story you want them to take away from today?

Yes. It's a question we talk about all the time. And quite frankly, in the days we've been here at this conference, we've had a lot of conversations with investors that are both in the stock and some that are maybe thinking about getting in the stock asking that exact question. I think Jim hit on it in his prepared remarks in that we're a small cap Med Tech company, right? And certainly coming into this conference, there was -- you were watching the market dynamics, and it was challenging. And I think structurally, there's some of those things.

We're also not a pure play, right? So at a company that's our size as you see, we've got a lot of opportunities but that means that there's a lot of elements that you have to go through to understand our company and understand all the different options that we have in med tech, and then we've got 2 different businesses, the Med Tech and the med device business. They make a lot of sense together for us as we run this business when you think about the strategic direction that we've taken using the earnings profile and the cash generation foundation of the med device business to fund the investments necessary to drive growth into med tech.

When you put them together, they tend to mask each other a little bit in terms of looking at the overall company. And to your earlier -- to the previous question around M&A, divestiture acquisitions, I think Jim is exactly right. I wouldn't look for us to do tuck-in acquisitions because I think we have so many opportunities in front of us with the platforms that we have in-house. But you may see us do a little bit more of the portfolio optimization that we were doing over the last 4 or 5 years.

As we continue to get critical mass in the Med Tech segment, when we started this transformation, those products made 17% of our total revenue base. Today, they're over 45% and they'll probably be more than 50 as we head into FY '27. And are getting critical mass in that higher-margin, higher-growth businesses. And as we do that and they get that critical mass where they can be stand-alone and profit generating on their own, becomes a little less imperative for us to continue to own some of those legacy device assets.

Again, we think there's probably better owners for those assets than a company like AngioDynamics as we're currently structured where we want to focus on the tech growth. But as they're together today does provide a little bit of an offsetting story. Device provides earnings and cash, but it brings down our top line revenue growth profile, it brings down our margin profile. And that's the balance we're always thinking about. So I think there's a lot there for investors to try to unpack in a market when we know that some of the small cap Med Tech name just in general, are under challenge.

And then, look, we have some uncertainty with Jim's announcement. Your first question was why was it the right time for the company? I think Jim won't say this himself. The answer is, it's not. It's not right for the company. It is right for Jim. It's right for Jim in his personal life. He's earned that right to do that. And he set the company up well that we're very well positioned to go through this transition, but I think there's some uncertainty in the market now.

Never is the right time, but you have a great team in place. Awesome. Well, Jim, Stephen, with that, I think we can wrap things up. Thank you so much.

Thank you very much.

Thank you.

Good morning. Welcome to the AngioDynamics Fiscal Year 2026 Second Quarter Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded.

The news release detailing AngioDynamics' fiscal 2026 second quarter results crossed the wire earlier this morning and is available on the company's website. This conference call is also being broadcast live over the Internet at the Investors section of the company's website at www.angiodynamics.com. A webcast replay of the call will be available at the same site approximately 1 hour after the end of today's call.

Before we begin, I'd like to caution listeners that during the course of this conference call, the company will make projections or forward-looking statements regarding future events, including statements about expected revenue, adjusted earnings and gross margins for fiscal year 2026 as well as trends that may continue. Management encourages you to review the company's past and future filings with the SEC, including, without limitation, the company's Forms 10-Q and 10-K, which identify specific factors that may cause the actual results or events to differ materially from those described in the forward-looking statements.

The company will also discuss certain non-GAAP and pro forma financial measures during this call. Management uses these measures to establish operational goals and review operational performance and believes that these measures may assist investors in analyzing the underlying trends in the company's business over time. Investors should consider these non-GAAP and pro forma measures in addition to, not as a substitute for or as superior to financial reporting measures prepared in accordance with GAAP. A slide package offering insight into the company's financial results is also available in the Investors section of the company's website under Events and Presentations. This presentation should be read in conjunction with the press release discussing the company's operating results and financial performance during this morning's conference call.

Unless otherwise noted, all metrics and growth rates mentioned during today's call are on a pro forma basis, which exclude the results of the Dialysis and BioSentry businesses that were divested in June 2023, the PICC and Midline products that were divested in February 2024 and the Radiofrequency and Syntrax support catheter products that we discontinued in February 2024. Also, unless otherwise noted, all comparisons will be the second fiscal quarter of 2026 versus the second fiscal quarter of 2025.

Now I'd like to turn the call over to Jim Clemmer, AndioDynamics' President and Chief Executive Officer. Mr. Clemmer?

Thank you, operator. Good morning, everyone, and thank you for joining us for AngioDynamics' Fiscal 2026 Second Quarter Earnings Call. Joining me today is Steve Trowbridge, AngioDynamics' Executive Vice President and Chief Financial Officer.

We delivered strong results in the second quarter. Revenue grew 8.8% with Med Tech up 13%, and we translated that top line performance into improved profitability. Adjusted EBITDA nearly doubled year-over-year, and we generated positive cash flow. These results prove that we can drive both revenue growth and profitability simultaneously. Based on our strong performance, we are raising our full year guidance for both revenue and adjusted EBITDA, which Steve will detail later in the call.

What's particularly encouraging is the breadth of our execution across our portfolio. Auryon delivered another quarter of double-digit year-over-year growth. Our Mechanical Thrombectomy platforms continue to gain traction, both commercially and from a regulatory product development standpoint. NanoKnife is well positioned to capitalize on the prostate opportunity with the CPT code becoming effective a few days ago, and our Med Device business delivered solid results. Now let me walk you through each of our businesses.

Auryon continues to perform exceptionally well. We delivered our 18th consecutive quarter of double-digit growth, and we continue to take share in the atherectomy market. Our strategy to increase penetration in hospitals is working, driving both higher volumes and better economics. International is starting to contribute following our CE Mark approval. We're also making progress on expanding the addressable market. The AMBITION BTK study is enrolling well, and we're advancing our work towards coronary applications. These initiatives will take time, but they represent opportunities to broaden where Auryon can compete.

Moving to mechanical thrombectomy. We are pleased with the continued trajectory of our mechanical thrombectomy platform and we are thrilled with the 3 regulatory milestones that we announced today in this portfolio. Our combined mechanical thrombectomy portfolio grew 3.9% over the prior year, driven by continued growth in AlphaVac. In addition, we are pleased with the continued performance of AngioVac.

AlphaVac maintained its momentum, delivering sequential quarterly growth and strong year-over-year growth this quarter. We continue to win new accounts, move through the hospital value analysis committees and see strong physician feedback on the unique design advantages of our platform. AngioVac was down year-over-year this quarter, impacted by a tough comparison against a particularly strong second quarter in 2025. We will continue to be excited about the trajectory of the business, and we remain confident in the long-term opportunity ahead.

From a regulatory standpoint, we made significant progress this quarter with 3 important milestones for our mechanical thrombectomy portfolio, that strengthen our competitive position and expand our clinical applications. First, we received IDE approval for our APEX-Return study, a pivotal trial evaluating the AlphaReturn Blood Management System when used with AlphaVac for treating acute pulmonary embolism. AlphaReturn addresses a hurdle to initial adoption that a number of prospective new customers have raised, which is the ability to collect, filter and reinfuse aspirated blood during thrombectomy procedures. We believe that this additional offering will be a catalyst to accelerating the already impressive growth profile of AlphaVac.

Second, we received IDE approval for our PAVE study, a pilot trial evaluating AngioVac for the percutaneous removal of right heart vegetation in patients with right-sided infective endocarditis. This addresses an underserved patient population with limited treatment options, particularly when surgical risk is high.

Third, we received 510(k) clearance for a modified AlphaVac F18 85 system with expanded indications. The clearance expands the cannula indication to allow aspiration and injection of contrast media and other fluids and includes the sheath as an alternative introducer that minimizes blood loss. These enhancements give physicians greater flexibility in how they use the device across a broader range of cases. Together, these regulatory wins demonstrate the versatility and innovation of our mechanical thrombectomy platform. They represent meaningful opportunities to expand clinical applications, address unmet patient needs and strengthen our competitive position in the thrombectomy market by delivering improved treatment options that physicians are seeking to improve patient outcomes.

NanoKnife delivered strong growth this quarter, driven by prostate procedures. The CPT code went live on January 1, which should provide a tailwind for adoption. We've been consistent in our messaging that this adoption will build over time rather than be an immediate step change, and that's what we're seeing. Physician interest is high. Procedure volumes are growing and we are executing on our commercial and awareness building initiatives. We believe we're well positioned as this market continues to develop.

Finally, in October, we were excited that the NanoKnife system was named to TIME's 2025 Best Innovations list, which we believe will accelerate patient awareness in this growing market.

Med Device grew over 5% this quarter, ahead of our expectations. The team running this business executes consistently, and it provides profitable cash flow that supports our Med Tech investments.

Looking at the quarter overall, we're executing on multiple fronts. We grew revenue, expanded margins, we advanced important clinical programs, and we generated cash. Our first half performance gives us confidence in our ability to operate efficiently while investing in the initiatives that position us for sustained growth. That balance between delivering today and investing for tomorrow is what will drive long-term value creation.

Now let me turn the call to Steve for the financial details.

Thanks, Jim, and good morning, everybody. As always, before I begin, I'd like to direct everyone to the presentation on our Investor Relations website summarizing the key items from our quarterly results. Unless otherwise noted, all metrics and growth rates mentioned during today's call are on a pro forma basis, which excludes the results of the Dialysis and BioSentry businesses that we divested in June 2023, the PICC and Midline products that we divested in February 2024 and the Radiofrequency and Syntrax support catheter products that we discontinued also in February 2024. Additionally, unless otherwise noted, all comparisons will be the second fiscal quarter of 2026 versus the second fiscal quarter of 2025.

Top line revenue performance was strong again in the quarter. Revenue increased 8.8% to $79.4 million, driven by growth across both our Med Tech and Med Device segments. Med Tech revenue was $35.7 million, a 13% increase. We're very pleased with the performance of our Med Tech segment.

Now the comp for our second quarter was much more difficult than the comp for our first quarter. And year-to-date, Med Tech is up 19.1%. In the quarter, our Med Device revenue was $43.8 million, an increase of 5.6%. For the second fiscal quarter, our Med Tech platforms comprised 45% of our total revenue, compared to 43% of total revenue a year ago, further illustrating the sustained execution of our strategy to increase the percentage of our overall revenue base coming from our higher growth, higher-margin Med Tech segment.

Digging into our Med Tech segment, our Auryon platform contributed $16.3 million in revenue, growing 18.6% compared to last year. Auryon has now delivered double-digit year-over-year growth for 18 consecutive quarters. As Jim mentioned, this growth is supported by our strategy to increase the percentage of our atherectomy business in the hospital side of care. In addition to this mix shift, we continue to grow our customer base in both the hospital and OBL settings and are benefiting from continued adoption internationally following CE Mark approval in September of last year.

Mechanical thrombectomy revenue, which includes AngioVac and AlphaVac sales, increased 3.9% year-over-year with revenue of $11 million. In the quarter, AngioVac revenue was $7.5 million, a 7.5% year-over-year decrease and AlphaVac revenue was $3.5 million, a 40.2% year-over-year increase. While AngioVac revenue was down year-over-year, we are pleased with the continued strength in this business, which delivered year-to-date growth of 11.2%. Q2 of last year exhibited the initial step-up in AngioVac revenue and therefore, provided for a tough comp. We remain bullish on AngioVac going forward and are particularly encouraged by the sustained procedure volumes for this product.

The approval of our IDE to study the use of AngioVac to treat right-sided infective endocarditis will be an enabler of sustained growth for AngioVac in the future. AlphaVac continued its sequential quarter-over-quarter growth. And as Jim mentioned, the approval of our IDE for our blood return product will be an additional catalyst to accelerate momentum in AlphaVac. Combined mechanical thrombectomy portfolio continues to demonstrate strong momentum with our sales teams effectively positioning both AngioVac and AlphaVac based on clinical need and physician preference.

Total NanoKnife revenue was $7.3 million, an increase of 22.2% with probe growth of 14.4%. Probe growth continues to be driven by increasing growth in demand and utilization of NanoKnife to treat prostate cancer patients, and Q2 was a record quarter for us for prostate procedure cases. NanoKnife capital sales, were bolstered by a transaction in France in which we moved from a direct sales model to a distribution model. As part of this transaction, the new distribution partner purchased NanoKnife systems that were previously placed at customer sites and were included on our balance sheet. In addition to NanoKnife sales, this transaction also included Auryon, Microwave and EVLT capital sales.

NanoKnife capital sales in the transaction were approximately $1 million and Auryon, Microwave and EVLT capital sales were approximately $250,000 each. Now this represents a smart transaction that will enable growth in a strategic international market. I applaud the efforts of our international team and specifically Laura Piccinini, our GM of Global Cardiovascular International for executing on this deal.

In the second quarter, our Med Device segment increased 5.6% year-over-year. Year-to-date, our Med Device segment is up 4%. We are very pleased with the performance of this segment. And while we do not expect our Med Device segment to grow at this level for the full year, as I will discuss in more detail in a moment, we are raising our expectations for Med Device for the full year, up from our previous guidance.

Now moving down the income statement. Our gross margin for the second quarter of FY '26 was 56.4%, a 170 basis point increase from the second quarter of fiscal year 2025. The year-over-year improvement was driven by continued product mix shift towards Med Tech sales, accelerated benefits from our manufacturing transfer initiatives and the sales channel transaction in France. With respect to our manufacturing transfer initiative, our operations team has done a fantastic job executing on our manufacturing optimization strategy, and we have been able to accelerate a meaningful portion of the cost savings ahead of schedule.

Touching briefly on tariffs, the expense in Q2 was in line with our expectations. And as we discussed last quarter, we continue to expect to incur between $4 million and $6 million of tariff expenses for the full fiscal year 2026. Total operating expenses in the quarter were $50.9 million, down to 64.1% of sales, compared to $51 million or 69.9% of sales last year as we continue to drive operating leverage in the business.

Turning to R&D. Our research and development expense was $7.8 million or 9.8% of sales, compared to $6.4 million or 8.8% of sales a year ago. As previously mentioned, we remain committed to investing in R&D initiatives to support the long-term growth of our Med Tech segment and are targeting approximately 10% of sales going forward. Clinical initiatives that we previously mentioned, including the IDEs for blood return and infective endocarditis treated with AngioVac are included in our projections for the balance of the year.

SG&A expense for the second quarter of FY '26 was $36.9 million, representing 46.4% of sales compared to $36 million or 49.3% of sales a year ago. Our adjusted net loss for the second quarter of FY '26 was $0.1 million or an adjusted loss per share of $0.10 compared to an adjusted net loss of $1.7 million or an adjusted loss per share of $0.04 in the second quarter of last year. This year-over-year improvement is largely attributable to our Med Tech revenue growth and the success of our gross margin initiatives and operating efficiencies.

Adjusted EBITDA in the second quarter of FY '26 was $5.9 million compared to an adjusted EBITDA of $3.1 million in the second quarter of 2025. The France distribution transaction I discussed earlier contributed approximately $1.4 million of adjusted EBITDA in the quarter. We are very pleased with the adjusted EBITDA generation in the quarter, both including and excluding the France transaction.

At November 30, 2025, we had $41.6 million in cash and cash equivalents compared to $38.8 million in cash and cash equivalents at August 31, 2025. In the second quarter of fiscal '26, the company generated $4.7 million of cash ahead of the company's expectations. We continue to expect to be cash flow positive for the full fiscal year 2026. Following the strong cash generation in the second fiscal quarter, we expect to utilize between $3 million and $5 million of cash in the third quarter and then generate substantial cash in the fourth fiscal quarter and in line with historical trends.

Turning now to guidance. Based on our strong second quarter performance and our expectations for the balance of the year, we are raising components of our full year fiscal 2026 guidance. We now expect net sales to be in the range of $312 million to $314 million raised from our previously issued range of $308 million to $313 million. This increased range represents growth of between 6.6% and 7.3% over fiscal 2025 revenue of $292.7 million. On a segment basis, we continue to expect Med Tech net sales to grow 14% to 16%, and we now expect Med Device sales to grow 0% to 1%, an increase from our prior guidance of flat growth.

For fiscal '26, we continue to expect gross margin to be in the range of 53.5% to 55.5%. This is inclusive of our reiterated estimate of $4 million to $6 million of tariff impact for the full year.

As I mentioned, we've accelerated some of our gross margin improvement initiatives during the first half of this fiscal year, so we don't expect to see a significant step-up in gross margin during the balance of the year. We now expect adjusted EBITDA to be in the range of $8 million to $10 million, up from prior guidance of $6 million to $10 million, again, inclusive of our estimated tariff impact. We continue to be pleased about our ability to generate increasing adjusted EBITDA while accelerating investments into initiatives to support the long-term growth of our business, which speaks to the effectiveness of our overall strategy. As a reminder, adjusted EBITDA will be lower in the second half of the year than it was in the first half as our planned investments in clinical data development hit the P&L. And finally, we continue to expect adjusted loss per share in the range of negative $0.33 to negative $0.23, unchanged from our prior guidance.

We're pleased with our second quarter performance and the momentum we're building across the business. Our raised guidance reflects confidence in our ability to deliver sustained profitable growth.

Before ending, I want to briefly mention that following the quarter, we received notice that the U.S. Court of Appeals for the Fed Circuit affirmed the District Court's judgment in our previously settled port patent litigation with C.R. Bard invalidating Bard's patents. This decision concludes C.R. Bard's appeal and eliminates the potential that Angio would make a $3 million payment under the settlement agreement. This brings to a close litigation that we've successfully defended for more than a decade.

Now with that, I'll turn the call back to Jim.

Before we open the line for questions, I want to share an update on the leadership transition we announced earlier today. After a decade with the company, I have announced my intention to retire. I have spent over 30 years in the industry and have made the decision, along with my family to move on to the next chapter of my life. The last 10 years at AngioDynamics have been tremendously rewarding as we have transformed the company into a leading innovator of novel solutions that directly address the world's 2 leading causes of death. Within our Med Tech segment, we now have products addressing over a $10 billion global addressable market, and we have set ourselves up to be a physician partner and focus on expanding the applicability of these platforms to help more health care providers and their patients.

With all of the work we have done, particularly over the last few years, the organization has earned enormous trust through the efficacy of our life-changing platforms, and we are in a fantastic position to execute on our strategy and continue the momentum we have built. I worked with the Board with regard to the timing of my retirement and the Board has established a search committee and is conducting a comprehensive process, assisted by a leading executive search firm to identify our next CEO, which we expect to occur during fiscal 2027. Until my successor is appointed, I will continue to oversee the company's strategic and financial initiatives and will continue with the company to ensure a seamless transition.

I will have plenty of time to reflect before my transition occurs, but I wanted to take this opportunity to thank each and every one of our employees, our partners and the talented health care providers that I have had the good fortune to work alongside during these last 10 years as we have collectively worked to help health care providers deliver the best care to patients with unmet needs. With that, we can open the line for questions.

[Operator Instructions] Our first question is from the line of Frank Takkinen with Lake Street Capital.

Jim, congratulations on the retirement. Wishing you all the best in that new chapter. I was hoping to start with a question around gross margin. It feels like that really outperformed nicely in the quarter, and obviously saw the guidance stay unchanged. And I think I heard a comment around staying relatively stable, which would imply gross margin actually doing a little bit better than where the consensus is at right now for the year? Any comments around kind of gross margin expectations and why we shouldn't see that kind of mid-50% gross margin stay throughout the end of the year and into the following years?

Frank, this is Steve. I'll take the gross margin question. So you're right. We were very pleased with the performance that we've seen on gross margin, particularly in the first half. And as we mentioned, there's a couple of dynamics that are driving that. We're seeing positive price in both our Med Tech and our Med Device businesses. And we're seeing a benefit of the production related to us getting ready to do is the move of some of those materials down to Costa Rica. So increased price along with the mix shift to Med Tech and then some of those production volumes are what we're seeing as a nice positive for gross margin in the first half.

In the back half of the year, the price that we took is still going to continue to stay there. That mix shift will continue, but we're going to have a little bit of a structural underabsorption as we move some of those final products out of Queensbury and having them being produced by our third-party manufacturing partner down in Costa Rica. As we talked about this plan originally, we knew that there was going to be some of that structural underabsorption. And we had mentioned that, that would be somewhat offset by taking costs out, and that has been the overall plan as we take some costs out of indirect labor. The good thing that our team has done is we've accelerated some of those costs coming out of the plant. So you're seeing that in the first half of the year.

So really, the dynamic going into the second half is some of those products now finalizing their move according with our plans, you'll see some of that structural underabsorption. You won't have the offsetting cost cuts, but that's because those costs have already come out. So that's really the dynamic and the difference between the first and the second half.

Got it. Okay. That's helpful. And then maybe just for my second one, I was hoping to talk a little bit more about mechanical thrombectomy. I heard the comments around AngioVac had a more challenging year-over-year comp, but I was curious if there's anything else going on in that business. We were hoping it would be a little bit stronger growth, but I understand it was off a pretty tough comp. And then maybe as a second part to that, if you could talk about kind of ApexReturn and some of the other work in right heart and what that might do to the growth profile of that line item over time?

Yes, Frank, thanks for the question. Really, really pleased with the performance of AlphaVac and PE as we're gaining new cases, new doctors and getting awarded kind of status in the hospital through VAC committees, getting "on the shelf in inventory". In new accounts, the performance of AlphaVac is terrific. We see pictures every day, hear stories of new physicians using it because of the unique design elements that we innovatively put into the product. So really excited about that continued growth at a strong level for a long time to come. AngioVac will be fine.

If you look back a year ago, we had a really strong Q2, and revenue went down in Q3 and back in Q4. There are cycles that just happen sometimes. So we're pleased. And you saw, I think we're up 11% in AngioVac in the first 6 months of the year. So we're really pleased with the platform. It will be one of our key growth categories for a long time to come. We have 2 amazing products that work really well in that place and it will drive growth. And then Steve, as far as...

Yes. And then, Frank, to follow up on the question on AlphaReturn. As we've always said, we've got the best product on the market. We're very confident in that. We think when we take the AlphaVac product, we get that into the hands of physicians, consistently, the feedback that we're getting is that it gives them what they need and it's the best product that is out there.

As we've talked about, a hurdle to adoption in some areas because of the way that the market has been conditioned has been the ability to then return the blood. AlphaVac is designed upfront to limit blood loss and mitigate that. But there's no doubt that the market is looking for an opportunity to return that blood in certain scenarios. And so we think that the AlphaReturn product is really important for us to get over some of those initial humps to have people choose AlphaVac if maybe in the past, they've been used to using competitive products.

So we're really excited about it. We've talked about the conversations we've been having FDA for a while. We are very pleased to get this over the finish line. We're excited about the IDE study starting it and then getting this into the bag of our sales force really as a way to take away an objection, and we expect it to be a catalyst to accelerating growth in the future.

The next questions are from the line of Bill Plovanic with Canaccord Genuity.

Just first, Jim, congratulations. I know 10 years is a long time, and it's a lot of work that you've accomplished and some great outcomes. So my hats off to you and you'll definitely be missed. In terms of my questions are, I want to start with prostate. I know you're only a few days in. Just talk about the change to the Level 1 CPT code. How many insurers have really made that back-end change to reflect the coding change to prevent the automatic denials so far by your estimation?

And then I noticed that the capital was a really strong quarter. I mean disposables were good. They saw a very strong, but it seems like capital was even stronger. And I'm curious, is that a precursor to the prostate is they're buying the systems to get ready to do procedures?

Bill, thanks for the question. This is Steve. And we want to congratulate Jim too, although he's not going anywhere right away. So he's going to be with us for a while. So we're happy about that, and there will be time to talk about everything that he's done. On your question on prostate, we're just a few days into it, so we don't have an estimate for the changes that you were talking about, but it's something that our team is absolutely keyed in on, and we're going to continue to watch and monitor. We think that this is going to be a catalyst for us, particularly on the Medicare side. So it's something that we're going to stay close to and watch. But we're pleased now with over the last year, I've been talking about the code going into effect. So the turn of the calendar was a good move for us, and we're excited about that.

On capital, there's 2 dynamics. Capital was strong. There was also the capital sales that we talked about in the distribution channel move in France that added some additional NanoKnife capital. But on top of that, we were still pretty pleased with the capital sales that we saw. So as we've mentioned, capital sales are mostly going to be in the international markets. Here in the U.S., it's going to be a mixture of different models to make sure that we get capital into the hands of our physicians that could be through placement models, that could be through sales.

I think the arbiter that we're looking at are those probe sales. And so we were really pleased with the nice increase in probe sales. And it's all coming from increased awareness and enthusiasm on the part of urologists. And it's really a prostate that's driving the NanoKnife results that we've seen so far.

And then just on EBITDA, you mentioned that the back half would be, I think, lower than the first half. And -- just directionally, how do we think of adjusted EBITDA in the third quarter? Is it going to be negative?

Yes. Thanks, Bill. So on EBITDA, we just wanted to make sure we were very pleased with the performance that we've seen here in the first half in EBITDA. We think it does prove out that the model is and can generate positive EBITDA, can generate cash as well as driving the top line. So we're excited to keep that continuing. We've also talked about wanting to balance that with investments that are necessary to continue to drive the top line growth in those Med Tech businesses. And so we've talked about investments into feet on the street in terms of the sales force as well as some of those R&D investments that Jim mentioned with his prepared remarks today for some of the nice trials that are coming up.

So some of that's going to come into the back half. We don't expect negative in the third quarter. Maybe just not as robust as what we saw in the first half.

The next question is from the line of Eduardo Martinez with H.C. Wainwright.

Congrats on the quarter. I had a few questions on Auryon. You mentioned the CE Mark, and I'm just curious what your expectations are for international sales, if there are any specific regions you guys are going to target. And if that would be associated with any increased sales spend? And also if you could quantify the opportunity there and your expectations for this year?

Thanks, Eduardo. Good question. We're really pleased the fact that our team got the CE Mark for Auryon. And then our commercial and clinical teams have really done a great job driving awareness outside of the U.S. Atherectomy isn't chosen at the same rate outside the U.S. to treat PAD as it is here. But we've used a series of clinical forms and educational programs that our team has driven outside of the U.S. to really give people confidence in Auryon as a platform, how the science works. And it's important for us because once people see how the science works, how safe and effective the product is in treating that artery, above or below the need, flexible and safe. So it doesn't take a lot of hands-on user training by us. So we're able to use our really good distributor network to support growth, support customers during the use of the product.

So we've not identified or targeted yet a size of the market that we think we'll capture, but we're really pleased with the uptake already in people getting new Auryon systems, buying the disposables, treating patients with PAD and having really good results. So over time, you'll see our international sales creep up as a larger percentage of our overall sales.

Got it. That's really helpful. And also on Auryon, you mentioned expansion into coronary applications. I'm just curious if you had a time line for that? And also any increased spend, if that's something we can expect in the R&D line item this year in 2026?

I wouldn't expect a significant amount of spend in the R&D line item this year as we talk about coronary. Clearly, it's a strategic imperative of ours to take the product and move into the coronary space. It's a little bit of a longer-term initiative. As we talked about, it's probably a PMA trial. So we gave some highlights in the past of the ability to take our current platform technologies and through clinical and regulatory pathway expansion, move into additional TAMs. A very good example of that is Auryon moving into the coronary space, but it's not something that's going to be impactful in terms of the spend in this year.

At this time, I'll hand the call back to Mr. Jim Clemmer for closing remarks.

Thanks, Rob. Rob, I'd like to thank all of our employees here at AngioDynamics, who've made these great results possible by their commitment and dedication to our customer and our products. So we've changed this company by its portfolio. You've seen us become active portfolio managers to make sure our company is positioned in the right places at the right time with the right products for future growth. The company is doing a really good job executing today, but we're also building for tomorrow and investing in opportunities to expand the application of our products geographically and in new clinical applications. So we're really pleased with where the company is headed. We can't wait to share more results with you in the future. Thanks to all of our teammates.

This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day.

Well, good morning, everyone. Thank you for joining us. I'm Danielle Antalffy, the U.S. MedTech analyst here at UBS. And happy to kick off our Annual Healthcare Conference with the AngioDynamics team. Jim Clemmer, President and CEO; Steve Trowbridge, Chief Financial Officer. So guys, thanks for joining.

Good morning.

And maybe just a quick start, quick intro to AngioDynamics, and we can launch into Q&A.

Sure. So Danielle, just to ground investors, AngioDynamics has a unique fiscal year. So we begin each fiscal year on June 1. So we're about 3 weeks away from completing our second quarter FY 2026. AngioDynamics is in a transformation. So investors who are new to the story, it would be interesting to learn. We've done a lot of work over the past 5 years to transform our portfolio in our company.

So a company that's less kind of a device widget department store to a really focused MedTech company competing in large addressable markets high gross margins in areas that we can win, and we are winning. So Danielle, we'd love to share that with you today.

Well, great. Maybe -- well, you promised me you would tell us how the quarter is going. No, I'm kidding. Okay. Well, so maybe let's talk a little bit about the transformation sort of what inning you guys are in at this point with the transformation and sort of what's still to come?

Yes. So we started about 5 or 6 years ago, we really made the decision to change our portfolio. In 2019, we sold our largest business at the time. But it was a low-margin commodity business, where we didn't want to compete with really large players. So that was important symbolically and realistically. We took 1/3 of the proceeds from that sale that we received and later that year bought an Israeli-based start-up with a really unique science to treat peripheral arterial disease.

Today, that's our Auryon system for PAD. We've gone from 0 revenue in 2020 when we launched to this year, we'll do well over $60 million organically growing it through a really great product in a market where we change outcomes in patients, and we can win competing with really good products.

So Danielle, that's symbolically part of our transformation. But as we sit here today, we've got 2 reportable segments, our older, slower growth products is what we call our medical device portfolio. And those are great products, but grow really kind of flat is what we've guided flat growth. And they provide us with EBITDA and cash to invest during this cycle than our MedTech business is what we'll spend more time with you on. That's really where we think investors are excited to learn about our company. We're in really good markets. And they're growing fast, and we're winning there.

Yes. I think the point to understand is we're probably in the sixth or seventh inning of the transformation. So we're not in the very early stages like we were a few years ago. And as Jim mentioned, the MedTech business that we have, has grown to a point where there's critical mass in that business now.

A few years ago, when we started the transformation, less than 17% of our total revenue base was coming from the MedTech business. we're now about 45% and ready to go over that majority of our revenue coming from MedTech. That's driving gross margin. It's getting us to a point, where last fiscal year, we were able to become EBITDA positive adjusted EBITDA positive.

We're going to be adjusted EBITDA positive going forward. And for this fiscal year that ended May 31, we're going to be cash flow positive in the business as well. So even though we've been doing some of those divestitures that Jim talked about, where you're, by definition, going to be giving up some of your profitability and your cash generation for those low-growth businesses. We've now been able to grow the MedTech to a point, where we've gotten over those -- that transom.

Right. And that's a big key in MedTech. It's all about getting your weighted average your WAMGR up into the right. So I guess I would ask, are you guys -- do you feel like you have the portfolio now in place in the MedTech business that will continue that trajectory? And I guess, in 3 years, what percentage do you think the MedTech business will be of sales?

Yes. So to back into the MedTech business, we believe in next fiscal year, we'll pass our med device. So we think it will become our largest segment in and continue going forward. So it will be really critical. It's also -- it's higher gross margin, and it's providing us a nice P&L drop. As Steve said, last year, they became adjusted EBITDA positive, that will only continue throughout our journey now.

So investors will see a company with good top-line results good growing gross margins as the mix is really important. And then bottom line that will grow over time. We'll have plenty of money to invest back into our business to fund more growth. But really, you'll see a time with a really interesting P&L and a great balance sheet. We have no debt today and we're going to generate cash this year and every year going forward.

And on the growth question, the MedTech segment that we've had has grown quite a bit over the last 3 years. Over the last 5 years, we've had about a 25% CAGR for that MedTech segment. But the thing that really excites us is that all of the businesses that we have in MedTech are platform technologies that we think with not too much additional effort, it's mostly clinical and regulatory. It can get us into new total addressable markets, so that growth can continue, not just the 25% that we've seen over the last 5 years.

But we're excited about the opportunities for the growth for the businesses that they're in now for the next 3 to 5 years, but we've got opportunities in those platforms to use that same technology and continue that growth trajectory beyond the 5-year period.

Okay. Got you. And maybe let's dig into the MedTech business and the total addressable markets that you're addressing or participating in there and what you see as the most critical growth drivers?

Yes. So if you take a look at our MedTech portfolio, it's 2 cardiovascular areas we're focused on, in 1 interventional oncology area. I'll back into it for a minute, the interventional oncology area is our NanoKnife product. We just got our label last December to treat intermediate-risk prostate patients.

Really, really large market, we estimate over $2 billion globally, over $700 million in the U.S. of patients, who are diagnosed with intermediate risk, we'll call it. Prostate cancer. About 40% of the men every year need a focal treatment option, which we give them now. So we're really excited to share more with you there.

Then on our cardiovascular side. We compete on arterial and venous diseases. On the arterial side, we treat PAD with our NanoKnife, excuse me, with our Auryon system. And that's about $1 billion market in the U.S., larger globally. And over time, part of our expansion going forward, we're going to get into the coronary space, which is about double the potential side. We know our product is safe and effective and works really well. So we want to get a label and treat there then back to our venous side for VTE, many investors know how exciting this market is.

So we have -- our AlphaVac system was approved last year. We treat PE. We're #3 in a really large fast-growing market. So we're going to take share from #1 and #2, but we'll also expand the share as we're all 3 working to grow the addressable market there as doctors get more comfortable using interventional devices to treat PE.

Yes. Yes. And I want to dig into that a little bit more. But maybe we can talk a little bit about how you see -- I don't think you guys have given sort of long-term guidance or any of that. But maybe you mentioned you're just ending or almost close to ending your second fiscal quarter. How you feel the year has started?

I'd love your just sort of high-level views on where you think health care is going -- I'm asking this question in the context of we've got 1 big beautiful bill and what's going to happen from the capital purchasing perspective, hospital budgets, things like that, procedure volume trends have been healthy, but how you guys are thinking about, since you are an off-cycle and so you are guiding for a little bit of 2026, what's going to happen?

I'll give a quick note and I'll let Steve give you detail. Macro-wise, we're all watching the space. Our customers are under pressure. They're trying to deal with Medicare, Medicaid changes, reimbursement. So they're under pressure. We get that. The good news for us is some of our products do have a capital and a the disposable component. We're not capital-intensive. We don't rely upon that. We have alternative methods for folks to get our capital if they need it.

We really want to sell the probes or the catheters that provide care and delivery of our technology. And that's a really, really good place to be today. So there's some uncertainty in the marketplace, as we know, but it's not going to hold us back, we don't believe. And Steve, on our Q1 and where we're at today?

Yes. So just on the macro point, being in health care, it's great. It's very -- it's not complex at all, right? It's very easy and simple and straightforward. As Jim said, there's a lot going on there and procedure volumes, reimbursement pressure on the hospital system. The good thing is the markets that we are moving into with our MedTech business, we feel that they're pretty well set up for the future.

So there's still physician preference items. If you look at where reimbursement has been going in the areas, the trend has actually been okay in the markets we're going into, particularly, when you think about PAD, was pretty well pressured maybe 3 years ago that seems to have we've kind of gotten through that.

So on the macro side, there's absolutely going to continue to be challenges. We're watching that to the point about the Omnibus bill. We're keeping an eye on that. We think that there's some opportunities maybe for some R&D credits that we'll take advantage of, but nothing that's derailing the overall strategy that we have.

In terms of our first quarter, we were really pleased with the quarter that we announced that ended in August. We were -- we grew double digits. We had our MedTech business that was growing over 20%, seeing the right trajectory in terms of margins.

So we expect to continue to see a good trajectory for this year. We guided at the very beginning of the year. We raised guidance in terms of expectations for top line as well as the bottom line coming out of our Q1, which we tend to like to see a little bit more of the year going as we think about it. But we're pleased with the trajectory that we're seeing at this point.

Okay. Got you. Well, let's actually talk about some of the key businesses here. So you mentioned BTE Thrombus Management. I mean that's a great market, very underpenetrated. Maybe you can talk about you grew 40% from your mechanical thrombectomy systems in Q1, I believe.

Help us understand some of the drivers here of growth? Is it share gains? Is it market growth, a combination of both? And how you're helping -- there's been a building body of clinical evidence in this market and sort of what Angio is doing to contribute to that?

Yes. So entering this year, FY '25, we had over a $40 million base in this space. So we're a legit player in the space. We've got an AlphaVac and an AngioVac product, each specifically designed for different reasons. But they're really unique and special. AngioVac has been kind of our lead device for many years. It uses a centrifugal pump to help reinfuse the blood back in the body for a very complex right heart cases, other things.

A couple of years ago, doctors said, "Hey, we love the AngioVac. You could take that off the pump, give us a purpose-built handle to control aspiration and power." We would love it and we compete really well with the burgeoning market to treat PE with interventional devices. So we did that.

So AlphaVac now Danielle does a really good job, gave the doctor the vortex funnel tip that pulls more clot burden than anybody else into the device and a control mechanism that they don't have with other devices. So we've seen really great growth.

So #1, we're taking share in PE from the #1 and #2 players. We have the best product in the market, really well designed to treat PE in a safe and effective manner. Our APEX data showed that in our study. We pulled more clot out faster.

And then second, we're going to help the market grow. The other 2 companies are really, really good. With us now entering here, you got 3 really good companies in this space, giving doctors confidence to stop using lytic-based therapies, which have been the historic treatment for PE and really trying an interventional device like 1 of our 3 to get the clot out of the body right away.

So Danielle, we'll all 3 work together to grow that market to do market development. We all believe the market is about $3 billion potentially in the U.S. just to treat PE with these devices.

Yes. And I mean we've had a lot of clinical data over the last few weeks here actually on PE. Just curious about what you're seeing hearing in the real world as far as adoption of mechanical thrombectomy. It sounds like docs are pretty excited.

Sure. I think that's exactly right. I mean we applaud Penumbra for the STORM-PE trial. That was a landmark trial that was randomized. They were doing the right things, and we think that that's going to be a rising tide that's going to lift all...

Class effect...

Yes. Absolutely because we firmly agree with the other competitors in the space that we're moving the clot. Is the most important thing that's going to benefit the patients. And so we applaud the trial that they did. We've got our own data that came out with our PE trial. We're going to committed to also generate data in this space.

We think it's going to be important to continue to have that steady drumbeat of additional data supporting mechanical thrombectomy. Because as we sit now, your question, for the most part, we're taking share, right? So we know that this market is growing. But given the size that we are and the timing that we came in, for the most part, the procedures that we're getting today are share shift.

We're going to move into the Blue Ocean as well and try to do the market expansion. But as we sit here today, a lot of our growth has been mostly in that share shift. As Jim mentioned, we went from $30 million to $40 million last year in our overall mechanical thrombectomy business. We said we expect to grow from $40 million to $50 million this year. So really good growth. We've got some tougher comps coming up in the back end. But we're excited about the growth we're seeing.

Okay. Got you. What about from a pricing perspective, are you guys at parity? And what are you seeing in this market from a price side of things?

Yes. We haven't seen price move much in the last few years. They just set their points and when we fit right where they do. So we don't think price is really a factor in this place. It's really about care delivery and safety.

Yes. What do you think the barriers to adoption still are at this point? I mean, we've talked about PRET teams, for example, and it's shocking that that's not more widely implemented. I mean, how are you guys doing on the ground sort of helping hospitals build these -- the infrastructure to really focus on mechanical thrombectomy?

Yes. So it's a great point. We believe in the process, the theory and how it works, how we can treat patients faster and more safe manner. So as more hospitals adopt the PRET process into their flow -- we'll be part of that process with our other peer competitors as well. But it's a really great way to give a patient a much more urgent need to treat a PE, we think using a mechanical product like ours or the others or the best way for PRET team to do what it can do best.

So there's really so much upside. I think investors have seen that. and they're really bullish on how much upside exists in this space, how us 3 and maybe others will help solve that. But that PRET team approach has been a really, really great way to get customers used to treating people in a new way.

Yes. Totally.

And Jim mentioned that we think we have the best products on the market. And so one of the things that we're doing to help aid that move is making sure that we've got the features and benefits that we think are going to be important to physicians, when they decide to choose mechanical thrombectomy for the first time.

So one of the things that's unique about AngioVac, as you mentioned, we've got the simultaneous reinfusion circuit. That's for more complex cases. But when we set that up, there's 0 blood loss, and they can have continuous aspiration for the time you can't do with any other product that's on the market.

Our AlphaVac product, we were listening to the physician and we designed that product with them in mind. So we added steerability. We added the ability for them to go out and have the tactile feel to find out, when they're on the clot. We added some blood limiting switches, so they can decide between a 10 cc pull or a 30 cc pull.

Let them use their skill as they decide to go after these disease states. And so we think continuing to innovate, listening to those physicians, make it easier to do these procedures is one of the way that you're going to continue to facilitate that change.

Do you think that the body of clinical evidence is there yet that this market should start to inflect? Or do you think there's still ways to go? Like I'm just curious.

Yes. Well, it's funny asking myself and probably the other 2 companies on the stage, they said there's enough evidence. Ask a physician, they'll say there's never enough evidence.

Right.

But I think it's a combination of both, Danielle. I think companies like us and what Penumbra did is really remarkable. We're all going to invest in the space. We have a new trial we're running now, too. We'll continue to show that these are safe and effective treatment tools. And the physicians will still expect more. And that's okay. We'll meet in the middle there.

I think there's also a groundswell of people, who've now used the devices and are gaining confidence in the patient outcomes and what they can expect. And really lytics and drug therapy has been around so long, and it's unpredictable the outcomes, nobody really loves it. So think the space is really going to burgeon and grow with a combination of data to support it and just use and the comfort in practice.

I think, it's the use case, right? Because I think the data is there that says, off the bat, it's safe, right? I think a lot of the trials that have been published are indicating that, yes, mechanical thrombectomy is a safe option. It's when you use it and if you're in the room, and I've been in the room a couple of times, the patients get better immediately.

Like on the table, they feel better when you go in and you're moving clots from their lungs. And so, I think as more physicians get experience with that, they're going to realize that this is the right answer as opposed to just giving systemic lytics and hoping that the clots will break out on their own.

Yes. Okay. agree with all of that. So maybe let's talk about Auryon, So solid 20% growth exiting Q1. And -- can you maybe talk a little bit about where Auryon stacks up versus other atherectomy modalities and how is specifically BTK penetration trended as you scale randomized and registry evidence there?

Yes. We're really excited with the Auryon product. This is the product I mentioned that we acquired in 2019. We launched it in September of 2020, 6 months into pandemic, not a great time to launch a new product as hospitals are telling us, hey, don't come with either product today.

So we focus on the OBL market first, which treats a lot of the PAD treatments here in the U.S. We gained a lot of share initially. We have a laser-based product the way it works. Laser energy is directed through our catheter to break up the soft or hard calcium or plaque clogging up the arterials. Our product is better than the other laser because it can do above and below the knee, which was the other product didn't deliver there.

And we can break up the hard calcification and plaque below the knee. And that's what we're measuring now with our new AMBITION study. So we've taken share from the other 5 companies in the space. They're really big companies we all know who they are. And we're a small company. We can't bundle or tie it to other things in the lab, but our product is that much better we've taken a lot of share.

So today, we've gone from the sixth entrant to #3 in the market. We're growing taking share over year. So the market isn't growing at the rate we are. So we're #3 out of 6 really good companies in the space in PAD. We continue to grow double digits for years to come.

What we're also excited about Auryon as a platform, the way we deliver energy through the device, we think it can do other things. Our European customers, now we have a CE Mark are really excited about it as a coronary product. So they've done some work overseas to double check that it's safe and effective. We believe it is. So we've talked to our investors, we're going to look to get on label here in the U.S. It's probably going to be a 4-year PMA, but we'll give you more detail when we have it, but we're really excited about what that market can do.

We've also seen from customers who have used that, "Hey, guys, this breaks up the needle calcification, kind of like Shockwave. A shock wave effect." We said, "Great." So the customers are leading us to new areas where we can really look at how we can penetrate larger addressable markets with the same science and technology. So Danielle we will grow Auryon for years to come, not just in the OBLs, we've shifted our focus to the hospitals in the last couple of years and a lot of growth is coming from there. So above and below the knee, instant restenosis, OBL hospital, coronary, peripheral, we really love this device.

Okay. What is the mix right now of Auryon revenue in the OBL versus hospital?

So hospital is now over 40%. So it's coming up to near the OBL mix. It probably pass it soon. It will stay around 50-50 over time. But it's really important for us, it's a higher ASP, it's a more stable customer that we'd love to get. We want to get it in that cath lab, have it used for more devices.

Yes. Sure.

And this has been a big switch for us. As Jim mentioned, we launched the product right in the middle of COVID. And so hospitals were saying that they were just building up capacity to treat COVID patients, but the OBLs were open. So when we were doing our due diligence on this technology, it was about a 60-40 split hospital to OBL.

That flipped when we got to COVID and it went to probably 60-40 OBL versus hospital. Originally, when we launched our product, we were probably over 90% in the OBL because that's where the customers were. That's where we were looking to grow. But then over the last 2 years, our team has done a great job having this initiative to get more into the hospitals to get us to where we are at that 60-40 split. OBL versus hospital.

A lot of times, we get asked, where you want to end up. I don't -- 50-50 is probably a good goal. I don't think we'll get to a point where it's more than that. I think we still have some runway to grow within the hospital, but we're also growing in the OBLs as well. So we're going to continue to open up new customers in the OBL setting. We're going to continue to open up customers in the hospital setting, getting ready for the future with coronary. We think we've got a good runway to continue to take share.

And pricing in this market, you mentioned there are 5 very big competitors here, right? And reimbursement has been volatile over the last few years in this market. How durable do you think pricing is here? Is this a market, where you do think you're going to have a little bit more pricing pressure?

We did our -- thesis to enter the market, we expect the pricing to come down. And it did along with our expectations. But recently, we've seen some kind of bottoming. Yes, if anything, even next year, some of the work we've seen will help OBLs. There's some new pricing models, some medicare reimbursement that we think is slightly favorable.

So we don't think it's going to be a headwind as it has been anything, maybe a slight tailwind. Either way, we're going to take share. We're at a place where we're pleased with our ASPs, our margins and where the competitive pricing is. So we think we're in a pretty good spot. And if it gets a little better, like it looks like it might, then terrific.

And you talked about the data in the mechanical thrombectomy space. We think data is just as important here in these space, which is why we're running the AMBITION-BTK study. So to your question about stabilizing the market, we think that, that study is actually going to be pretty important to show that balloon angioplasty with atherectomy is just as safe and potentially even more effective than just balloon angioplasty alone, particularly below the knee.

As Jim mentioned, this is the first laser product that can work below the knee. So we're excited about doing that. Since we've launched this product, just about 50% of our cases have actually been below the knee. So we've had about 10% in instant restenosis and then the other half has been even -- or the other has been evenly split in half between above and below the knee.

So we know our product works. Continue to provide that data foundation to show that atherectomy is a good choice, is a safe choice and is really effective for these patients. We want to make sure that we limit the amount of amputations that are going forward.

Which is it's wild how many amputations are still done?

And we don't think they have to happen all of them.

Right, right. And so I was -- I wanted to ask as well, like what do you think at this point, the below the knee intervention market is growing. And one of the -- not issues, I guess, but 5 to 10 years ago, what lack of clinical evidence, right? There's a little bit of Wild Wild West. How you think it's evolved? Are we there yet where this can really be the standard of care?

Yes. We believe it can be. About a month ago, we sponsored a cardiovascular scientific forum. And one of our keynote speakers stood up on the podium and told her colleagues, 150,000 patients are going to have an invitation this year in the U.S., that's unacceptable. There are ways to treat these patients better than doing that guys.

So our point is really valid. We know Auryon is the best and safest way the way it works. So sponsor in the AMBITION-BTK study, we believe, shows our faith in what we can do in a randomized controlled trial. And we think it will give the outcomes that then physicians can trust. We can reduce those patients, getting amputations and then gain traction in the space.

Yes. So we firmly believe in our product. We firmly believe in this treatment. We still think there's probably a little bit more data that's necessary. That's why we're doing AMBITION and the AMBITION-BTK study. So I don't know that we're quite there yet, but we think we will -- we think we can get there.

Are the majority of these sponsors doing these procedures still vascular surgeons or interventional cardiologists as well?

For Auryon, it's mostly vascular surgeons. So you get more there. You've got some mix of treatment, but vascular surgeons primarily is the main treatment.

Okay. So it's still the same call point that's doing the amputation as well. Is it just a matter of getting these like the patients diagnosed earlier? You think earlier intervention like stop the progress, don't let them get critical limb ischemia.

Exactly.

I think there's a part of that. I mean early diagnosis is going to help in almost any setting that you think of, right? And particularly when we talk about the prostate market. That's another area where we think that earlier diagnosis would be helpful. And as we have with NanoKnife and pancreas too.

But when you think about PAD, yes, early diagnosis, but then also awareness of the treatment, right? And I think the difference between the mechanical type, the rotational devices that were really working below the knee, historically and then laser above the knee. You understand that sometimes you got to go in and open up that vessel, but those rotational devices, they have some safety concerns for some legitimate safety concerns, which is why we think the Auryon technology is such a good option.

The safety profile of laser, it uses a wavelength that's very different than the laser that had been on the market before. It's actually absorbed by the vessel walls. So the safety profile is fantastic. If you look at the IDE that we had 0 dissections. And then the way that the energy is delivered to be able to break up that hard calcification, which is usually what you see below the knee.

The versatility that Jim talked about with Auryon, we think makes it a perfect solution. And that's why we think we're going to continue to keep this ball rolling.

Yes. Yes. Okay. And I want to make sure we touch on NanoKnife here. So maybe some of the momentum in prostate following the FDA clearance in 2024. You're now a year into this and how market adoption has progressed? Maybe let's start there.

Yes. So we're really excited in what we received. We knew that NanoKnife, which is a nonthermal ablation tool uses energy, electricity actually to break down the cell wall in the disease tumor. And that's a body flush the cancer out and die naturally in the body. It's a unique product we got on label last December, a PRESERVE study showed it safe and effective showed really good outcomes in the men, who need to be treated.

We're talking about Gleason 7 intermediate risk patients. Today, we're kind of focusing on that intermediate market. Maybe we can do more above and below that. But today, that's over 40% of the men being diagnosed. It's a really large market today. We're excited by the way it treats and how it works. We've seen really good feedback. So for the first time, we can actually talk about it, educate men and the urology community about the device create awareness for the men, who are diagnosed every day, tonight, 500 men will go home and tell their family, I just got diagnosed with intermediate-risk prostate cancer. What does that mean?

Well, now they go home and Google it or go on Facebook. They're going to learn about our product, which they couldn't have done a year ago. So we're getting a lot of inbound interest. You've also got urologists that always believe men needed a good focal treatment option because too many men were getting radical prostatectomy that didn't need it -- didn't need to have those side effects. So today, the urology community, the awareness with men are really leading to really great growth. You've seen that in our numbers. Q1 was terrific, even last year was. And what's important for us, January 1, our CPT1 code kicks in. So our team did a really good job. We got on label and got our CPT1 code approved, both last year, we're really excited by what this will do to open up more avenues for us.

Yes. So Jim talked about the options that we think are important to give to them. We've seen a tremendous amount of interest from the urology community in the NanoKnife procedure. Because we think that they believe the way that we do that men have been given the wrong choice up to this point. When they're diagnosed with prostate cancer. It's at this point, they've had 1 of 2 choices on the polls, either do nothing, so have active surveillance or watchful waiting or have a radical prostatectomy.

Now overall survival has been good in terms of treating prostate cancer, but then they've had to deal with side effects. Tremendously, a large percentage of men, who have a radical are going to end up with really debilitating quality by side effects in terms of impotence or incontinence.

What's where we think NanoKnife can play a role. So Jim mentioned we can destroy the tissue cells, but what's really unique about NanoKnife is that critical structures that are in the ablation zone, blood vessels, bile ducts, mer vendings aren't impacted, and they remain patent.

So that allows us to do that treatment for those intermediate risk patients, who are right on the cusp of saying, do we either do nothing or go to a really invasive procedure, where you're probably going to end up with habilitating side effects?

Yes.

Now you can get treated, where you can destroy the tissue, we can destroy the cancer cells, but preserve that quality of life?

Yes. So is this 1 looks like you're really growing the intervention market here versus really competing because it sounds like it's all about earlier intervention?

Yes. It's a great point. If you think about some of the other technologies that we talked about, each of our growth drivers is in a different life stage of its life cycle, right? So we talked about Auryon a bit more of a mature market. That's a share shift, right? That market isn't growing much, but we think we've got the technology that can continue the share shift that we've seen.

Mechanical thrombectomy is pretty well understood, but it's a growing market. And really the story there is to continue to turn the served market into the total addressable market -- total addressable market into the served market, excuse me, in mechanical thrombectomy.

NanoKnife is a little different. We're doing a little bit more market development there, right? Because there's a unique technology, there's a unique way of thinking about delivering this therapy now that we're going to have to continue to educate the market on.

Okay. And last question on NanoKnife. As far as innovation in the quarter, you talked about a lot of your products and platforms. I mean, what would innovation look like here?

So we believe NanoKnife also could be safely used to treat other difficult tumors. We've done a study called DIRECT that will launch soon to data for people with Stage III pancreatic cancer, really, really difficult treatment option. We think NanoKnife is a safe and effective way to give them a new hope.

And then what we've learned through the PRESERVE study, now following patients afterwards doctors, who treated men with intermediate risk prostate are now telling us, "Hey, guys, there's a BPH effect you have here." NanoKnife treatment seems to shrink the prostate and men are now flowing better and is a really large market. The BPH market, as we all know, is much larger than just the prostate market. We're watching that very carefully and very closely, but we believe we have a really unique way to treat men with BPH in a different way.

So Danielle, it's almost embolic of our company as a whole. Each of the 3 platforms we just talked about, has a lot of room to grow. So we're going to focus our energy and our efforts on investing into these 3 platforms and opening up more TAMs and larger markets throughout the science that we have today.

And I think that's going to be the key for innovation for Angio going forward, right? Innovation and growing our markets and thinking about future growth is what's imperative if you're going to have a really well-performing stock in MedTech these days.

What's -- where I think we're uniquely set up is for us, the innovation is really data generation and increasing our opportunity to get into those markets with the existing technology.

Right, leveraging the existing platform technology.

We don't have a lot of R&D that's necessary to take Auryon into the core area, right? There isn't a lot of R&D that's going to be necessary to take our AngioVac product from being focused on the right-sided interventions to potentially going into the left side of the heart where there's a huge unmet need.

And with NanoKnife, we don't have to change the product, but we just have to continue to get the data and increase awareness and make those changes in areas like prostate, potentially BPH. And in other solid tumors as well.

Got you. Well, we didn't really talk about the medical device, med devices business, but maybe let's touch on that a little bit. You mentioned basically flat-ish growth there sort of walk us through what's going on there. Will that ever return to growth? Or how do you look at the sort of midterm outlook for that business?

Yes. So we're not investing in the space. We've got a few really good products there in good markets, but it's a spot that we've decided we're not going to invest resources and compete heavily our share gains there. It's doing it's job for us. We're serving the market with really good products there. But it's also giving us a means to an end. We've used the cash and the capital that's showing off to invest in these really interesting markets we talked about. But over time, it's gone from 85% of our revenue now to a little over 50%.

It will soon be passed -- so it gets less important to us. But today, it helps us get EBITDA and cash that we can use and stabilize our company. But over time, the MedTech business is the growth engine for our company. We think most investors are looking there.

And we tell people to think of that overall segment as about a 1% to 3% grower kind of in the short to medium term. So it's not going to go backwards. As Jim said, we're not going to invest a lot in it. So we're going to get that kind of very low single-digit growth. It is lower gross margin, but it definitely provides a ton of EBITDA and a kind of cash generation, which has facilitated this transition that we talked about at the very beginning.

Well, and Steve, I wanted to ask you or Jim as well. So you did talk about the -- a very healthy balance sheet, no debt. Maybe talk a little bit about capital allocation and how you're thinking about that over the next few years?

Sure. Yes. So I think we hit on it. It's going to be investing in the innovation related to the MedTech business. So right now, we think we've got a ton of opportunities in each of those growth drivers that we have in MedTech. That's where our focus is going to be. And we get the question a lot, what about external M&A? Do you want to add more growth drivers to your business? At some point, probably, but not in the next 3 to 5 years I would say.

Sounds like you don't need to...

I don't think we need to. I don't think we want to add more complexity. We're still a small company. We're still a little hard to understand. We want to continue to refine our story -- we want to focus on the growth areas, and we've got the opportunity, as we said, to invest in data and indication expansion.

M&A is always hard, right? It's always a crapshoot, the only R&D is tough. The only thing that less of a hit rate is external M&A. So we think we can focus on what we've got right now.

Yes. That makes sense to me. Okay. Maybe let's touch more specifically on the fiscal '26 guide the midst was 5% to 7% sales growth. Can you talk about some of the puts and takes. We have a minute here, but maybe wrap this up and sort of what are the puts and takes to the guide?

And I always like to ask this question, where do you think there is a disconnect from an investor perception perspective versus what you think AngioDynamics?

Yes, that would probably take us 35 minutes to talk about because we think -- we think that there is a big disconnection in terms of the valuation we're seeing in the market today and the value that our assets have in the way that we've been running the business. That's okay. We're going to continue to execute. And I think it really goes to what you said. It's hitting the numbers that we put out there.

So putting out the growth, you said 5% to 7%, that's on an overall corporate perspective, but we think it's important to look at kind of the level down, the growth that we expect, the double-digit growth we expect to see in the MedTech segment, and then we've guided flat, and we said assume 1% to 3% kind of in the long term as a growth in the med device.

So we're pretty confident in setting it up that way and then seeing gross margin expansion coming from this revenue shift as the MedTech business grows, and then seeing that drop down to being positive adjusted EBITDA than getting to positive cash flow this year.

Yes. Well, sorry, I didn't give more time for that question because I think it's an important one. There's a lot of disconnect. Yes, great. But listen, guys, thanks so much for being here. Really appreciate it. Honored to kick off with you guys.

Thank you for having us. Appreciate it. Thank you.

Good morning, and welcome to the AngioDynamics Fiscal Year 2026 First Quarter Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded.

The news release detailing AngioDynamics' fiscal 2026 first quarter results crossed the wire earlier this morning and is available on the company's website. This conference call is also being broadcast live over the internet at the Investors section of the company's website at www.angiodynamics.com.

A webcast replay of the call will be available at the same site approximately 1 hour after the end of today's call.

Before we begin, I'd like to caution listeners that during the course of this conference call, the company will make projections or forward-looking statements regarding future events including statements about expected revenue, adjusted earnings and gross margins for fiscal year 2026, as well as trends that may continue.

Management encourages you to review the company's past and future filings with the SEC, including, without limitation, the company's Forms 10-Q and 10-K, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. The company will also discuss certain non-GAAP and pro forma financial measures during this call.

Management uses these measures to establish operational goals and review operational performance and believes that these measures may assist investors in analyzing the underlying trends in the company's business over time. Investors should consider these non-GAAP and pro forma measures in addition to, not as a substitute for or as superior to financial reporting with measures prepared in accordance with GAAP.

A slide package offering insight into the company's financial results is also available in the Investors section of the company's website under Events and Presentations. This presentation should be read in conjunction with the press release discussing the company's operating results and financial performance during this morning's conference call.

Unless otherwise noted, all metrics and growth rates mentioned during today's call are on a pro forma basis, which excludes the results of the dialysis and BioSentry business that were divested in June 2023. The PICC and midline products that were divested in February 2024 and the radio frequency and Syntrax support catheter products that we discontinued in February 2024. Also, unless otherwise noted, all comparisons will be the first fiscal quarter of 2026 versus the first fiscal quarter of 2025.

Now I'd like to turn the call over to Jim Clemmer, AngioDynamics' President and Chief Executive Officer. Mr. Clemmer?

Thank you, operator. Good morning, everyone, and thank you for joining us for AngioDynamics' Fiscal 2026 First Quarter Earnings Call. Joining me today is Steve Trowbridge, AngioDynamics' Executive Vice President and Chief Financial Officer. We had a great first quarter. We continue to grow across all areas of our business and performed especially well in the med tech markets that are critical to our future. Not only did we deliver excellent top line results, we demonstrated how that revenue translates into profitability.

Our teams have struck the right balance between increasing profit and investing in our future, which includes developing and launching new products, as well as regulatory expansion opportunities planned for the future. This combination of solid revenue growth with increasing profitability is the most important outcome of our strategic transformation.

As many of you know, we have evolved our product portfolio from what AngioDynamics was historically known for to one that now competes in large, fast-growing markets. We are proven that our unique technologies can win and drive accelerated growth. In Q1, we grew our revenue by 12%, led by the continued strength of our Med Tech segment, which grew 26%, marking our fourth consecutive quarter with over 20% growth. We also achieved strong gross margins because of our revenue mix and our operations team driving solid performance even while managing the impact of tariffs that raised some costs during the quarter.

Our Auryon business has delivered another exceptional quarter, which continues to grow well above market rates as we believe, we have the best technology to deliver better outcomes for patients with peripheral arterial disease. We are growing by taking share from all competitors in this space. And we are seeing our move into the hospital market continue to excel, allowing us to drive both top line growth and higher margins.

We are bullish on Auryon as a long-term growth driver for our company, and we'll continue to invest to unlock new opportunities as demonstrated by our AMBITION BTK study and our plans for Auryon to compete in the coronary market in the future. We intend to continue proving why we believe our device is the most effective solution in the market. We want to expand access the new opportunities that broaden the TAM that we compete in. These studies will help achieve both goals.

Auryon exemplifies how our company can take an innovative product, build a great team around it and execute with focus, which leads to strong growth and a great business. Our Mechanical Thrombectomy business grew by over 40% versus the previous year. Both AlphaVac and AngioVac saw strong customer growth and we are pleased with the number of new users choosing our products. We are continuing to see new hospitals approve our products through their value analysis committees. And bring us into inventory as approved devices, which will drive increased utilization moving forward.

The feedback we continue to hear from customers consistently highlights have a few of the unique design elements that we built into AlphaVac, provide substantial advantages and make it both safe and effective. The fact that a physician can use AlphaVac to treat PE without the need to reinsert a guidewire to safely navigate to the desired location is viewed as an innovative design feature that saves time and simplifies use even in complex interventional procedures.

We will continue to add new features and expand the potential users for AlphaVac as the interventional treatment of PE patients will be a growth driver for our company for many years.

Our NanoKnife team is delivering great results as we experienced growth of over 25%. Our expanded prostate indication allows us to educate and train urologists on our device and has an increased interest from doctors who are seeking an effective focal treatment option for their patients. We are working towards the January 1 date when our CPT I code becomes effective, which will help get our patients treated and our customers paid for the treatment. Physicians are excited to use NanoKnife because of its highly compelling the patient outcome benefits, as well as the assigned payment aligning well with their expectations.

The fact that our device can treat a patient in less than 1 hour makes it both a clinically and economically effective solution to offer their patients as part of our effort to increase awareness with men, we may be seeking treatment options. We are launching a new AARP ad campaign this month to educate men and their families about how our device works and why the patient outcomes are terrific.

We are excited to drive increased awareness and education for patients and physicians as we believe that NanoKnife can become the market-leading product to treat intermediate-risk prostate cancer, and we'll do everything possible to support that opportunity.

Our Medical Device segment reported very strong results. We grew revenue over 2% year-over-year, led by strength in most of our categories. This business not only has excellent products that offer us attractive financial returns, but is also managed and run by a great team of people who know how to compete in more than one market at the same time.

Overall, Q1 was a great start to our year. We're hitting on all cylinders. Our Med Tech business is accelerating. We're taking share with our superior technology, and we're driving sustained profitability. With our strong pipeline of clinical catalysts, expanding market opportunities and the operational leverage we're building, we're positioned to deliver significant value creation for our shareholders.

Now let me turn the call over to Steve Trowbridge, who will provide more detail on our financial results.

Thanks, Jim, and good morning, everybody. And as always, before I begin, I'd like to direct everyone to the presentation on our Investor Relations website summarizing the key items from our quarterly results. Unless otherwise noted, all metrics and growth rates mentioned during today's call are on a pro forma basis, which exclude the results of the Dialysis and BioSentry businesses we divested in June 2023, the PICC and midline products that we divested in February 2024 and the radio frequency and Syntrax support catheter products that we discontinued also in February '24.

Additionally, unless otherwise noted, all comparisons will be the first fiscal quarter of 2026 versus the first fiscal quarter of 2025. Top line revenue performance was strong in the quarter. Revenue increased 12.2% to $75.7 million, driven by growth across both our Med Tech and Med Device segments.

Med Tech revenue was $35.3 million, a 26.1% increase and our Med Device revenue was $40.4 million, an increase of 2.3% As we mentioned in our Q4 call in July, this quarter provided a slightly easier comparison for year-over-year growth than we will see during the rest of FY '26. Now that being said, we are really pleased with the revenue growth we achieved during our first quarter.

For the first fiscal quarter, our Med Tech platforms comprised 47% of our total revenue compared to 41% of total revenue a year ago is illustrating the sustained execution of our strategy to increase the percentage of our overall revenue base coming from our Med Tech segment.

In addition, in the slides accompanying our earnings release this morning, we illustrate the sustained growth of our Med Tech segment over the past 5 years. During this time, the annual revenue of our MedTech segment has grown from $41 million in 2020 to $127 million in 2025, representing a compound annual growth rate of 25%.

Digging into our Med Tech segment, our Auryon platform contributed $16.5 million in revenue, growing 20.1% compared to last year. Auryon has now delivered double-digit year-over-year growth for 17 consecutive quarters. As Jim mentioned, this growth is supported by our strategy to increase the percentage of our atherectomy business in the hospital side of care.

In addition to this mix shift, we continue to grow our customer base in both the hospital and OBL settings. We also benefited from continued adoption internationally following CE Mark approval in September of last year, which drove approximately $500,000 of revenue in the quarter. Mechanical thrombectomy revenue, which includes AngioVac and AlphaVac sales, increased 41.2% year-over-year with revenue of $11.3 million.

In the quarter, AngioVac revenue was $8 million, a 37.1% year-over-year increase and AlphaVac revenue was $3.3 million, a 52.3% year-over-year increase.

Total NanoKnife revenue was $6.4 million, an increase of 26.7% with pro-growth of 31.3%. We view each of our Mechanical Thrombectomy and NanoKnife businesses as strategically important, both in the near and long term and are very happy with their recent performance. We expect both to continue to deliver strong year-over-year growth and contribute meaningfully to our margin profile and profitability moving forward.

As I previously mentioned, in the first quarter, our Med Device segment grew 2.3% year-over-year, we've stated that we believe that our Med Device segment will grow in the low single digits throughout the coming years, and we're pleased with the sustained performance.

Now moving down the income statement. Our gross margin for the first quarter of FY '26 was 55.3%, a 90 basis point increase from the first quarter of FY '25. Primary drivers of the gross margin improvement are pricing initiatives in both our Med Tech and Med Device segments. The sales mix shift to our higher-margin Med Tech products and operating efficiencies. We previously discussed our strategy to rightsize our manufacturing footprint to address labor constraints at our Queensbury facility and utilize third-party manufacturing partners.

Our operations team has done a fantastic job executing on our strategy and has accelerated some of the gross margin initiatives driving gross margin improvement in the first half of our fiscal year, ahead of the scheduled completion date of January 2026.

In addition, gross margin in Q1 included $1.7 million of tariff expense or roughly 220 basis point impact. Touching briefly on tariffs. The expense in Q1 was in line with our expectations. And as we discussed last quarter, we continue to expect to incur between $4 million and $6 million of tariff expenses for the full fiscal year 2026.

Total operating expenses in the quarter were $52.5 million, down to just 69.4% of sales compared to $50 million or 74% of sales last year, as we continue to drive operating leverage in the business.

Turning to R&D. Our research and development expense was $6.4 million or 8.5% of sales compared to $6.3 million or 9.3% of sales a year ago. As we previously stated, we remain committed to investing in R&D initiatives to support the long-term growth of our Med Tech segment, and we're targeting approximately 10% of sales going forward. SG&A expense for the first quarter of FY '26 was $40.7 million, representing 53.7% of sales compared to $36.6 million or 54.2% of sales a year ago.

This increase in spend is largely driven by the investments we have highlighted in an expanded Mechanical Thrombectomy sales force to support the growth of our Med Tech segment. Our adjusted net loss for the first quarter of FY '26 was $4.2 million or an adjusted loss per share of $0.10 compared to an adjusted net loss of $4.4 million or an adjusted loss per share of $0.11 in the first quarter of last year. This year-over-year improvement is largely attributable to our Med Tech revenue growth and the success of our expense management initiatives.

Adjusted EBITDA in the first quarter of FY '26 was $2.2 million compared to an adjusted EBITDA loss of $152,000 in the first quarter of 2025. At August 31, 2025, we had $38.8 million in cash compared to $55.9 million in cash at May 31, 2025. As we mentioned in July, cash utilization is always highest in our first fiscal quarter. This year, cash utilization was a bit better than we expected. We continue to expect to be cash flow positive for the current full fiscal year and in line with historical quarterly patterns, we expect to use approximately $3 million of cash in Q2.

For Q3, we expect to use zero cash or generate some and we expect significant cash generation in Q4. We maintained zero debt and have the flexibility to tap into our revolving credit facility, if needed.

Turning now to guidance for fiscal '26. Based on our first quarter performance and our expectations for the balance of the year, we now expect net sales to be in the range of $308 million to $313 million, raised from our previously issued range of $305 million to $310 million. This increased range now represents growth of between 5% and 7% over fiscal '25 revenue of $292.7 million.

On a segment basis, we now expect Med Tech net sales to grow 14% to 16%, an increase from prior guidance of 12% to 15% and we continue to expect Med Device sales to be roughly flat. For fiscal 2026, we continue to expect gross margin to be in the range of 53.5% to 55.5%. This is inclusive of our reiterated estimate of $4 million to $6 million of tariff impact for the full fiscal year.

Let me give a little more color on gross margin. We don't expect to see a significant step-up in margin during the balance of the year. As discussed above, we've accelerated some of our gross margin improvement initiatives during the first half, and we're seeing that here in our first quarter results. We now expect adjusted EBITDA to be in the range of $6 million to $10 million, up from prior guidance of $3 million to $8 million, again, inclusive of our estimated tariff impact.

And finally, we now expect adjusted loss per share in the range of $0.33 to $0.23, improving from our prior guidance of a loss of $0.35 to $0.25. As you've just heard, we had a fantastic quarter, driven by the continued execution of our strategic transformation. We have a compelling portfolio of world-class products competing in attractive markets. We have a great global team, commercial, R&D, clinical, regulatory market access, all working together to bring innovative solutions to our customers, and we have the infrastructure in place to manufacture and deliver those technologies to our customers efficiently.

Finally, we have a strong balance sheet, which will allow us to continue to invest in growth. We're excited about the momentum we've built and the opportunities ahead of us. We remain focused on executing across our businesses to drive sustained profitable growth and value creation during the balance of fiscal '26 and beyond.

With that, I'll open the line for questions.

[Operator Instructions] Our first question today comes from the line of John Young with Canaccord Genuity.

Jim, Steve, it's John. Congratulations on the nice progress we're seeing here. I first wanted to start on just guidance, if I can. If I'm reading between the lines, right, from your comments, Steve, it sounds like the raise in Med Tech and the go-forward would mostly be predicated on the Mechanical Thrombectomy and NanoKnife segments. Am I right on that? And just any color on how we should think of the growth cadence between those two, especially with reimbursement for prostate coming online in fiscal Q3?

Thanks for the question. Yes, you're correct. If you think about the raising guidance going forward, it is primarily being driven by what we're seeing in the Mechanical Thrombectomy and NanoKnife spaces. As we mentioned, we're very pleased with Auryon and the performance that we've seen in Auryon and the 17 consecutive quarters of growth in that business, had a really good first quarter. We expect that to continue to be a solid contributor to our growth going forward.

But we're really pleased with what we're seeing in Mechanical Thrombectomy and the sustained growth that we've seen in both AngioVac and AlphaVac over the last handful of quarters. We expect that to continue. It's one of the things that we pointed to at the end of Q4. We really like the portfolio that we have here in Mechanical Thrombectomy and the performance that we're getting out of that team, both here in the U.S. as well as globally and seeing some international contribution to growth.

On NanoKnife, as we've said, we expect NanoKnife to be a grower for us and in the short, medium and long term, that's going to be one of the primary drivers of our growth. We're excited about what we saw here in the first quarter. We do have that code coming into effect on January 1. But as we said, we don't expect that to be a light switch that's going to immediately drive the hockey stick. But we're really pleased with the continued increase in interest coming from the urology community, the adoption for this technology to treat the intermediate risk prostate cancer patient. We think it's the absolute right solution. We're going to continue to see growth there.

I appreciate that. And then just as a double click on the NanoKnife disposable revenue this quarter was just really strong. Any color on how much of prostate was in that disposable number. Is there any stocking? And just any KPIs that you could share would be great around that.

Sure. And the disposable numbers that we're seeing in NanoKnife, as well as the capital that we're seeing in NanoKnife, that is being driven by our prostate initiative. By and large, the growth that we're seeing there is all coming from prostate and the increased awareness that we're talking about with the urology community.

With your question on stocking, it's a product that we always expect that customers are going to be buying probes to have them on the shelf to be able to treat their patients. So I don't think I would point to anything as a significant onetime or unnatural progression that we're seeing here in our quarter. We expect customers to continue to adopt NanoKnife as a technology for their treatment options. They're going to continue to be buying probes, and we expect to see that growth continue.

The next question comes from the line of Frank Takkinen with Lake Street Capital.

Great. Congrats on the quarter. I was hoping I could start in Mechanical Thrombectomy. Maybe an update around kind of hospital penetration would be helpful. And then how we should think about that trending going forward?

Frank, it's Jim. So we've seen really good uptake in interest at the hospital and that translates into our sales team then converting accounts into the value analysis committee approvals that we seek. It's always good to have a doctor, buy one and try one, gain the confidence in the device itself. Then to go and put it through the Vac process, which is our ultimate goal to get on the shelf there.

And there's a couple of other good products in that space, as you know. So we're really pleased with the adoption of the space. It's really important to us. We measure it every month. We watch the adoption. We watch our procedures grow every month. So it gives us more confidence in the device. And then just hearing physician feedback. I spent a couple of days last week at the Perth conference talking to a lot of the users who have tried our device recently. Who know the other products on the market and are really confident in our device in some of those design element features we built in.

So Frank, we're going to watch this measure well, invest in this space. As you know, we've added new sales reps into this fiscal year based upon our confidence. And we'll keep measuring it for you. But we have a lot of KPIs we track internally.

Yes. And Frank, just to add to what Jim said, I mean we are bringing on new customers in both the AngioVac and AlphaVac side of the house every quarter. We're really pleased with the trajectory that we're seeing there. We're still in the very early stages here. I wouldn't say that we're significantly penetrated. We've got a lot of opportunities to continue to grow both AngioVac and AlphaVac in the quarters ahead.

Perfect. That's helpful. And then maybe as it relates to some of the sales force hiring you did in Mechanical Thrombectomy, can you update us on where that sales force stands? And then more broadly speaking, how should we think about other commercial investments across the Med Tech business?

Yes. Good question, Frank. I know at the last call, we talked about we ended our kind of fiscal 2025 with about 40 dedicated sales reps selling Mechanical Thrombectomy. And we mentioned we're going to invest about a 25% increase this year. So we have now 50 people, 50 territories, identified who are just solely focused on AlphaVac and AngioVac.

And based upon the feedback we received, we think that's the right cadence. So you'll see us continue to grow. If an investor looks back on the success we've had with Auryon, for example, we launched Auryon 5 years ago. And at the time, there were no sales reps so when we bought the product, launched it. Now we have about 40 reps dedicated to Auryon, and we added and expanded over time selling forward with the opportunity that we saw.

So we'll do a similar model with our AngioVac and AlphaVac team, who's done a really good job getting customer awareness to the level we like. So you'll see that happen over time, not just investments in Auryon and the AlphaVac team. But next year, when we get the CPT I code up and running, you'll see investment probably over the next 3 years coming into that NanoKnife urology sales force to help service what we think will be a lot of increased demand.

The next question is from the line of Yi Chen with H.C. Wainright.

This is Eduardo on for Yi. Just to follow up a little bit on the mix of growth and penetration versus utilization. For -- I guess to start with the thrombectomy. Is there any sense of revenue growth attributable to the price increase? I know that you guys have been playing around with that given the increase in price versus volume? Just to get a feel for how much is being driven by each of those factors.

Yes, it's a great question. We are seeing the ability to take some price in mechanical thrombectomy and we're doing that. But we're also bringing on new customers and we're seeing growth in terms of unit sales as well as utilization at our customer base. So it's a combination of all three. And I think that is a testament to the products that we have the portfolio and how well they're really being adopted by customers when they get their hands on them.

Great. Thanks for the feedback there. And I guess just any update on the ongoing clinical trials, BTK and how you're seeing time line for progression on these trials? And what ultimately findings you anticipate could unlock for the markets?

Yes. As we've said, we think this is a very important clinical trial both to our product line, but also to the market in general for atherectomy. And we think that Auryon has a unique place and a unique role to play in that. There's been some publications of some IITs of physicians who have used Auryon to treat below-the-knee calcifications and lesions with great outcomes. So we're very confident with what we're going to see.

The structure of the AMBITION BTK study, we think, is important to have both the RCT segment as well as the Registry to prove that you can use Auryon, particularly and atherectomy below the knee and get good outcomes for your patients. We're very pleased with the pace that we're seeing, where we're seeing enrollment in both the -- both sides of that trial and the RCT and the Registry. They're pretty comprehensive. So it's going to be -- it's not going to be over any immediately. But we're really pleased with the pace that we're seeing, the uptick, the interest in getting into this study with the clinical and scientific rigor that it has. And we think it will be a very big part of our Auryon business going forward.

At this time, I'll hand the floor back to Mr. Jim Clemmer for closing remarks.

Thank you, Rob. Thank you guys for joining us today on the call. What you'll see from us is what you've seen this quarter. In the future, we believe that we have a company set up to win in the markets that we know are strong. They're difficult to compete in, but we've got significant technology advantages, and we're playing in the right spaces. Our team is supported by really good people who've helped us achieve these great results.

Our teams here, across the board, have come above and beyond. We're a company with more than one moving part, and we ask people to do a lot and they deliver. We're also really encouraged by new people joining our company, who are also thrilled to join us based upon the direction we've changed this company towards, and they want to be a part of our journey.

So folks, we're really excited with the results we just delivered, and we're really bullish on our future. We think we've changed this company. We've set it up well to win. We've got the right people to deliver. So thank you again for joining us. We'll talk to you soon.

This will conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Good morning, and welcome to the AngioDynamics Fiscal Year 2025 Fourth Quarter Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded.

The news release detailing AngioDynamics' fiscal 2025 4th quarter and full year results crossed the wire earlier this morning and is available on the company's website. This conference call is also being broadcast live over the Internet at the Investors section of the company's site at www.angiodynamics.com. A webcast replay of the call will be available at the same site approximately 1 hour after the end of today's call.

Before we begin, I'd like to caution listeners that during the course of this conference call, the company will make projections or forward-looking statements regarding future events, including statements about expected revenue, adjusted earnings and gross margins for fiscal year 2026 as well as trends that may continue. Management encourages you to review the company's past and future filings with the SEC, including, without limitation, the company's Forms Q and 10-K which identify specific factors that may cause the actual results or events to differ materially from those described in the forward-looking statements. The company will also discuss certain non-GAAP and pro forma financial measures during this call. Management uses these measures to establish operational goals and review operational performance and believes that these measures may assist investors in analyzing the underlying trends in the company's business over time.

Investors should consider these non-GAAP and pro forma measures in addition to, not as a substitute for or as superior to financial reporting measures prepared in accordance with GAAP. A slide package offering insight into the company's financial results is also available in the Investor Relations section of the company's website under Events and Presentations. This presentation should be read in conjunction with the press release discussing the company's operating results and financial performance during this morning's conference call.

Now I'd like to turn the call over to Jim Clemmer, AngioDynamics' President and Chief Executive Officer. Mr. Clemmer?

Thank you, operator. Good morning, everyone, and thank you for joining us for AngioDynamics' Fiscal 2025 Fourth Quarter and Full Year Earnings Call. Joining me today is Steve Trowbridge, AngioDynamics' Executive Vice President and Chief Financial Officer. .

Unless otherwise noted, all financial metrics and growth rates provided during the call today are on a pro forma basis, which excludes the impact of our divested dialysis, BioSentry, PICC and midline businesses and our discontinued radio frequency and Cintrex support catheter products. We capped off for trends 2025 with a very strong fourth quarter. Total revenue was $80.2 million representing growth of over 12% year-over-year, led by med tech growth of over 20% and Med Device growth of more than 6%. Beyond the top line performance, we drove solid gross margins, positive adjusted EBITDA and strong free cash flow, all as expected. As we've talked about in the past, we have been navigating a long-term strategic transformation over the past several years to simplify our business, and moving to large, high-growth, high-margin Med Tech markets. Our performance in the quarter and throughout fiscal 2025, validates that strategy and reflects our ability to drive execution.

As this is our fiscal year-end call, I wanted to take the opportunity to highlight the products we have made operationally this year as we have achieved great things here at AngioDynamics as 12 to 24 months, including key regulatory approvals, international market expansion, new product reductions, clinical data development and critical reimbursement wins, among others, all of which have set us up to deliver profitable growth moving forward. Starting with our Med Tech portfolio. Auryon has continued to be our largest Med Tech product line. Since its launch in 2020, we've driven over $185 million in cumulative sales and we are now the third largest product in this space. In the fourth quarter, the platform delivered its 16th consecutive quarter of double-digit increases and for good reason. We believe Auryon is the best-in-class peripheral platform because of its demonstrated safety profile and versatility.

A big focus of our commercial efforts in 2025 was the hospital setting a customer base that for us represented a really compelling growth opportunity. As of the end of this year, our hospital customers represented approximately 36% of total Auryon revenue, up from 28% at the beginning of 2025, validating that with a better analogy that provides superior clinical outcomes, we can take meaningful market share from larger competitors regardless of the site of care. Outside of the U.S., we have started to see solid traction following Auryon receiving a CE mark approval in September of 2024, which opened up the European PAD market, we began the process of commercializing in that region. In the fourth quarter, we generated over $1 million in revenue from Europe, highlighting the great work done by our commercial team to increase awareness of the platform with driven demand from clinicians within geography.

We also have continued to work to develop compelling clinical data in support of its adoption. In January, with the AMBITION BTK trial and registry with the BTK standing for below the knee. This trial will evaluate clinical outcomes in treating patients suffering from critical limb ischemia below their knee using Auryon in combination with standard balloon angioplasty. We believe this rigorous trial, which builds upon our earlier Auryon study, could demonstrate an important advancement and the evidence supporting the benefits of Auryon's laser atherectomy in achieving acute and long-term procedural success in a U.S. market where there is an unmet need, potentially driving increased adoption ofAuryon. Beyond PAD, Auryon's unique mechanism of action can lead to great outcomes in coronary interventions. While not currently indicated for urinary applications, we are investing in the R&D and clinical work necessary to potentially unlock this $900 million U.S. market.

We believe the Auryon platform technology with its current market leadership and future opportunities will continue to be a growth driver for AngioDynamics in the short, medium and long term. Auryon is a prime example of how we have been able to take a novel solution and drive to become one of the leading technologies in a competitive, difficult to penetrate market. We know what it takes to win, a great product, high-quality clinical data highly effective market as programs and a well-established sales and marketing infrastructure. We are running that playbook with our mechanical thrombectomy portfolio and we are in the early stages of replicating the success we have achieved with Auryon. To that end, our mechanical thrombectomy portfolio made up of AngioVac and AngioVac has become the fastest-growing part of our Med Tech segment. In the quarter, we delivered approximately 45% year-over-year growth. These 2 technologies are clearly differentiated and much of the work done over the last 18 months has helped spur a solid adoption trajectory. Following AngioVac's FDA clearance and CE market during the first half of calendar 2024. This product has delivered 5 consecutive quarters of sequential revenue growth. This was aided by the strength of our clinical data, in particular, the publication of our APEX trial results in December of 2024, which demonstrated AlphaVac's strong performance in the U.S. showing a 35.5% reduction in clot burden from the baseline compared to a 9.3% reduction for the current market leaders IDE data.

We also initiated the RECOVER AV trial in Europe in September of 2024, aimed at further strengthening our clinical evidence base in the European market. While AlphaVac is a fantastic product that was purpose built to mitigate the need for blood return. We continue to believe that its rate of adoption would have been even more rapid if we also offered a version that offers blood return functionality. We now have a fully developed product, and we are working with the FDA to establish a regulatory pathway for a version of AlphaVac that includes blood return, and we believe that by offering 2 versions of the technology with and without blood return. It will further enhance our competitive positioning and offer a better suite of solutions for all customers. We continue to be very encouraged about the of our other mechanical thrombectomy platform technology and AngioVac which grew nearly 4% during the quarter and just over 25% for the full year. We attribute much of this success to the ongoing synergistic benefits that we have seen as a result of our concerted joint commercialization efforts within the mechanical thrombectomy portfolio.

AngioVac and AlphaVac provide AngioDynamics with an unparalleled product portfolio option. And with a fully trained and optimized sales force, we continue to realize commercial adoption synergies between these 2 product lines. To support the demand we are seeing in the market, for these products. We plan to add additional dedicated reps to this sales force during fiscal 2026. We also believe we have other tailwinds influencing the adoption of this portfolio. particularly within structural heart, as this sector continues to grow, Angio has a role to play, giving our team an accelerated opportunity to engage with interventional cardiologists and cardiothoracic surgeons. As the overall structural heart market continues to progress, we believe we will benefit from incremental synergies within our portfolio.

And lastly, NanoKnife. Although NanoKnife has been commercially available for a number of years, we achieved multiple key clinical reimbursement and regulatory milestones during the year that has positioned it for accelerated adoption moving forward. PRESERVE met its primary effectiveness end point. demonstrating the performance of a NanoKnife system for the ablation of prostate tissue in patients with intermediate risk prostate cancer. And just as importantly, the study demonstrated extremely compelling quality of life outcomes validating what we already knew about the technology and its ability to provide better care for prostate cancer patients.

Next, in October of 2024, a CPT Category 1 as granted for the treatment of lesions in the prostate and in liver using IRE. The new code will be effective on January 1, 2026 and have put us in a fantastic position to ensure that reimbursement will be widely available across both the commercial and private payers as we move into calendar 2026. And lastly, in December, we've received an expanded indication for the NanoKnife system for prostate tissue ablation. With this clearance in hand, we have been able to more proactively market, educate and train for the procedure in ways that we've been previously unable to do. With these 3 milestones achieved, we have established the 3 pillars necessary for long-term growth, regulatory clearance, reimbursement pathway and market awareness. Coming as a result of these efforts, we are very encouraged by the trends we have seen in NanoKnife business, in particular, with its adoption and utilization within prostate cancer care. We're seeing significant organic interest from the urology community and are seeing solid increases in the number of surgeons trained, the inbound interest in our technology has been strong. Importantly, we continue to receive exceptional feedback from physicians using NanoKnife in real-world settings.

While we are very excited about the demand for NanoKnife in prostate, we have continued to push to broaden its applicability within other disease states. In fact, a CPT level 1 code was granted for IRE in its use in pancreatic care. Admittedly, this is a smaller market than prostate, but it highlights the ability of this technology to change the way patients are cared for across a variety of oncology applications. The CPT1 code for an pancreatic applications will become effective in January 2027. As you've just heard, we've made significant progress across our Med Tech portfolio during 2025. We have systematically executed on our strategy to drive growth in large, fast-growing markets. This execution has already paid off. For the full year, our Med Tech segment generated nearly $127 million in revenue, representing growth of approximately 20%. Over the last 5 years since we initiated our strategic transformation, our Med Tech segment as a percentage of total revenue has doubled from 22% to 43% and delivered a 5-year revenue CAGR of approximately 25%.

Beyond our commercial achievements, we've successfully executed on our operational efficiency initiatives, while maintaining our commitment to innovation and growth. During the quarter, we yet again generated positive adjusted EBITDA and over $15 million of free cash flow. And as Steve will go into in more detail, we expect to be cash flow positive during fiscal 2026. As we continue to work to deliver consistent profitable growth, we remain on track to deliver incremental cost optimization through our manufacturing transition process. We continue to expect to deliver approximately $15 million in annualized savings by fiscal 2027, fundamentally improving our cost structure. This year's results demonstrate the successful transformation of AngioDynamics into a profitable, growth-oriented medical technology company. We've systematically built a portfolio of innovative products while achieving sustained profitability. The combination of regulatory achievements, clinical validation, commercial momentum and operational excellence provides strong momentum as we enter fiscal 2026. With our strong balance sheet, expanded market opportunities and proven ability to execute, we expect to continue to deliver for our shareholders.

With that overview, I'll turn the call over to Steve to review our financial performance in more detail.

Thanks, Jim. Good morning, everybody. As always, before I begin, I'd like to direct everyone to the presentation on our Investor Relations website, summarizing the key items from our quarterly results. As Jim mentioned, unless otherwise noted, all metrics and growth rates mentioned during today's call are on a pro forma basis which exclude the results of the dialysis and BioSentry businesses that we divested in June 2023, the midline products that we divested in February 2024 and the radio frequency and Syntax support catheter products that we discontinued in February 2024. Additionally, unless otherwise noted, all comparisons will be the fourth fiscal quarter of 2025 versus the fourth fiscal quarter of 2024. Revenue increased 12.7%, $3.2 million, driven by growth across both our Med Tech and Med Device segments. Med Tech revenue was $35.8 million, a 22% increase while our Med Device revenue was $44.4 million, an increase of 6.2%.

For the fourth fiscal quarter, our Med Tech platforms comprised 45% of our total revenue compared to 41% of total revenue a year ago. Further illustrating the sustained execution of our strategy to increase the percentage of our overall revenue base coming from our Med Tech segment. Our Auryon platform contributed $15.6 million in revenue, growing 19.7% compared to last year. Auryon has now delivered double-digit year-over-year growth in each of the 16 quarters following the anniversary of its launch in September of 2021. Mechanical thrombectomy revenue, which includes AngioVac and AlphaVac sales, increased 44.7% year-over-year. As Jim mentioned earlier, we continue to be very pleased with our ability to take share in an increasingly competitive mechanical thrombectomy market coming as a result of the efforts of our skilled commercial team, the innovative differentiation of these products and the synergistic benefits we are seeing as a result of our joint commercialization efforts.

In the quarter, AngioVac revenue was $8.2 million, a 39.5% year-over-year increase. and AlphaVac revenue was $3.1 million, a 60.8% year-over-year increase. Total NanoKnife revenue was $7.2 million, a decrease of 2.5%. Now this decrease is due to the year-over-year comparison of capital sales. Throughout our fiscal 2025, we consistently discussed that we expect capital sales during the year to be approximately half of what they were in 2024. While capital sales were less than they were a year ago, we have continued to see strong demand for new systems with fourth quarter capital sales down just 24.9% and 26% for the full year, ahead of our initial expectations. Disposable sales, the more consistent barometer of our NanoKnife business remains strong, growing 5.5% in the quarter and we continue to be encouraged by the sustained utilization of NanoKnife within prostate cases which hit our projections for the full year.

NanoKnife prostate procedures in the quarter were 81% of all NanoKnife procedures, a record to date. In the fourth quarter, our Med Device segment increased 6.2% year-over-year. Now before turning to the rest of the income statement, I wanted to provide an update on the impact tariffs had on our business during the quarter. We announced our third quarter results on the morning of April 2, which was just hours before the administration unveiled its tariff program. During our call, we had indicated that we believe we were positioned to not be derailed by tariffs. Even though the tariff program that was ultimately announced clearly was more expensive than we were anticipating at the time, we've continued to execute on our strategy and illustrate that we will indeed not be derailed by tariffs. That being said, there obviously was an impact on our business, stemming from tariffs in the fourth quarter, and there will be an impact on our business during the new fiscal year.

As you are all well aware, the tariff environment remains unclear and unpredictable. However, we will provide an estimate of tariff impacts in connection with our fiscal year 2026 guidance that incorporates our best estimate of the impacts as of today. Now projected tariffs changed over the weekend, so the situation remains fluid. As the situation evolves, we will continue to be transparent regarding any changes in expected impacts. In the fourth quarter of FY '25, we incurred $1.6 million of tariff expense with more than half of that cost associated with our Med Tech segment. This $1.6 million is included in our cost of goods sold and does impact gross margins and ultimately, our EBITDA and EPS results. Given this dynamic, we're particularly pleased with our results and our ability to drive accelerated profitability despite this headwind.

As I'll discuss further towards the end of my remarks, we currently expect the full year impact of tariffs in FY '26 and to be approximately $4 million to $6 million, and we continue to expect that tariffs will not materially alter our trajectory or our ability to execute on our strategic plan for fiscal '26. We do not expect it to alter our stated goals of continuing to generate positive adjusted EBITDA for the full year, and we continue to expect to be cash flow positive for the full year of FY '26, inclusive of paying all associated tariffs. Now moving down the income statement. Our gross margin in the fourth quarter of FY '25 was 52.7%. For the quarter, Med Tech gross margin was 59% and Med Device gross margin was 47.6%. In this quarter, total gross margins saw an approximately 204 basis point negative impact from tariffs. Absent the $1.6 million paid in tariffs, full company gross margin would have been 54.7%. Med Tech gross margin would have been 62.1% and Med Device gross margin would have been 48.8%. Total operating expenses in the quarter were $48 million or 60% of sales compared to $52.9 million or of sales last year.

As a reminder, during the fourth quarter of fiscal 2024 last year, we incurred a number of onetime expenses, including amounts related to the settlement with C.R. Bard and our manufacturing transfer program. Now turning now to R&D. Our research and development expense was $6.6 million or 8.2% of sales compared to $6.7 million or 9.5% of sales a year ago. We remain committed to investing in R&D initiatives to support the long-term growth of our Med Tech segment and are targeting approximately 10% of sales going forward. SG&A expense for the fourth quarter of FY '25 was $36.7 million, representing 45.8% of sales compared to $35 million or 49.2% of sales a year ago. Our adjusted net loss for the fourth quarter of FY '25 was $1.1 million or an adjusted loss per share of $0.03 compared to an adjusted net loss of $2.3 million or an adjusted loss per share of $0.06 in the fourth quarter of last year. This year-over-year improvement is largely attributable to our revenue growth and the success of our expense management initiatives.

Adjusted EBITDA in the fourth quarter of FY '25 was $3.4 million compared to an adjusted EBITDA of $1.5 million in the fourth quarter of 2024. As noted previously, during the fourth quarter, we entered into a revolving line of credit agreement with JPMorgan, which allows us to draw down up to $25 million at our discretion. Now while we are very comfortable with the amount of cash we have on the balance sheet, we view the addition of a revolver as a matter of prudent financial housekeeping and a good safety net to ensure that any short-term working capital fluctuations associated with the Spectrum transition manufacturing agreement doesn't impact our execution on our strategy. At this point, we have not drawn down any of the available capital as part of the revolver agreement. At May 31, 2025, we had $55.9 million in cash and cash equivalents, compared to $44.8 million in cash and cash equivalents at February 28, 2025, which is inclusive of the payment of the final revenue performance-based milestone payment of $5 million made as part of the company's acquisition of Auryon in 2019 and the $1.6 million in tariff-driven COGS impacts and fees associated with our revolving credit facility.

In the quarter, we generated $18.8 million in operating cash, had capital expenditures of $0.8 million in addition to Auryon's placement and evaluation units of 1.8 million. As expected, we generated $16.2 million in free cash flow. Now turning to a quick review of the fiscal full year results. Revenue increased 8.1% to $292.7 million, primarily driven by growth across our Med Tech segment. Med Tech revenue was $126.7 million, a 19.5% increase. Our Auryon platform contributed $56.9 million in revenue, growing 20.8% compared to last year. Mechanical thrombectomy revenue, which includes AngioVac and AlphaVac sales, increased 32.9% year-over-year. In the fiscal full year, AngioVac revenue was $28.9 million, a 25.1% year-over-year increase and AlphaVac revenue was $10.8 million, a 59.5% year-over-year increase. Total NanoKnife revenue was $24.5 million, flat compared to the prior fiscal year. NanoKnife probes grew 9.6% for the year and capital sales were down 26%.

In fiscal year 2025, our Med Device revenue was $166 million, an increase of 0.8%. In the fiscal full year 2025, the company incurred limited revenue impacts because of tariffs. Our gross margin for FY '25 was 53.9%. For the year, Med Tech gross margin was 62% and Med Device gross margin was 47.7%. In the year, total gross margin saw an approximate 56 basis point negative impact from tariffs. Absent the $1.6 million paid in tariffs, full company gross margin would have been 54.5%. The Med Tech gross margin would have been 62.9% and Med Device gross margin would have been 48%. Turning to R&D. Our research and development expense during FY 2025 was $26.2 million or 9% of sales compared to $30.9 million or 11.4% of sales a year ago. FY 2025 was $145.2 million, representing 49.6% of sales compared to $13.2 million or 51.4% of sales a year ago. Our adjusted net loss for FY '25 was $10.2 million or an adjusted loss per share of $0.25 compared to an adjusted net loss of $18.2 million or an adjusted loss per share of $0.45 last year.

This year-over-year improvement is largely attributable to our revenue growth and the success of our expense management initiatives, very similar to the story for the quarter. Adjusted EBITDA in the full fiscal year 2025 was $7.6 million compared to an adjusted EBITDA loss of $3.2 million in fiscal year 2024. Turning now to guidance. For the fiscal year 2026, we anticipate net sales to be in the range of $305 million to $310 million, representing growth of between 4% and 6% over fiscal '25 revenue of $292.7 million. Within each of our businesses, we had Med Tech net sales to grow 12% to 15% year-over-year and we expect med device sales to be roughly flat. For fiscal 2016, we expect gross margin to be in the range of 53.5% to 55.5%. Now this is inclusive of our estimated tariff impact of $4 million to $6 million. Absent this impact, gross margin guidance would have been 55% to 56%. We expect adjusted EBITDA to be in the range of $3 million to $8 million, again, inclusive of our estimated tariff impact.

Absent this impact, adjusted EBITDA guidance would have been $7.5 million to $10.5 million. And finally, we expect adjusted loss per share in the range of negative $0.35 to negative $0.25. And Absent the tariff impact, adjusted loss per share guidance would have been negative $0.30 to negative $0.25. Beyond our P&L guidance, we continue to expect to be cash flow positive for the full fiscal year 2026. As is the case with all companies, our first fiscal quarter will exhibit the highest use of cash. This is typical for AngioDynamics and the first quarter of fiscal 2016 will be no different. In the first quarter '26, we expect to utilize approximately $20 million of cash. We will return to cash generation in subsequent quarters and we will finish FY '26 having generated positive cash for the full year. Our guidance on cash is inclusive of any tariffs that we expect to pay during the year.

With that, I'll turn it back to Jim.

As we look forward, toward fiscal 2026, we are exceptionally well positioned to build on the strong foundation established during fiscal 2025. We entered the new year with multiple regulatory clearances achieved expanded market access, proven commercial momentum and sustained profitability. Our strategic transformation over the past several years has positioned us exceptionally well for the future. We've successfully built a portfolio of innovative med tech platforms addressing large, growing markets. We've optimized our med device business to provide steady cash generation, and we've strengthened our balance sheet and operational efficiency to support sustainable growth. Looking ahead, our priorities remain clear: continue to drive adoption and market share gains across our med tech platforms, maintain operational discipline while investing for growth and deliver increasing value to our shareholders through sustainable profitable growth. We remain very excited about the future of AngioDynamics. We have built a fantastic portfolio focused on large, high-growth markets. We have strengthened our financial profile and operational capabilities.

And with our strong balance sheet and positive trajectory towards sustained profitability, we're well positioned to deliver long-term value creation. Before opening the line for questions, I would like to thank every member of the AngioDynamics team for their tireless work to bring innovative technologies to our customers and the patients they serve.

With that, let's open the line for questions.

[Operator Instructions] And the first question today is from the line of John Young with Canaccord Genuity.

It's John. Congrats on the quarter. And it's really great to see the progress here. I wanted to start on the VTE business. I know you guys mentioned the blood return product. I was wondering to get some more incremental detail on the pathway forward for it. I know you're in regulatory discussions with it. Will this be a 510(k) product that just benchtop testing for hemolysis, Will this need a clinical trial? And is this an ancillary product to the existing AlphaVac business. And then as a follow-up to that question, too, looking at the AlphaVac revenue from this quarter, are you guys hitting a ceiling without having the blood return product because it's interesting you've seen the growth in AngioVac cversus AlphaVac in this quarter.

John, it's Jim. Thanks for the question. So let me take a step backwards. Alvabec was designed and developed with the blood loss in mind, We knew during our initial design and development work with a lot of conversations with our advisory Board of physicians who use other products. That's one of the issues with the leading product in the market was that it drew a lot of blood out, lost a lot of blood. They had to have a system to deal with that. So I'll leave that alone. We purposely built in, as you know, a blood loss feature into our product. It really limits the loss of blood during the pull. As the APEX study showed, we pulled more clot out to the market leader and we lose less blood. APEX study showed our blood loss was less than 250 cc or 60% of the procedure is done. So we're very confident in how the product works, how safe and effective it is. .

That being said now, the market has been conditioned a bit by the market leader to have a blood return feature available because they lose a lot more of the best. So we knew that coming into it. We devised a product now to be kind of an ancillary add-on and it needs to go through a 510(k) process. There's been a process there, as you know how predicates work. So we tried to follow what was established. And in conversations with the FDA, they're watching the space. We haven't come to agree yet as to how to get the product approved and on the market. But we're confident we'll get there. as far as a ceiling note, we've had more and more getting to doctors' hands, more kind of hospitals approve us in the VAC committee process. And we've added new sales reps, as you know, in the past quarter because we're bullish about where can go. So this product has a high ceiling. And combined with AngioVac, which as you said, we had a terrific year at AngioVac, the fact we can sell both together and now we're getting multidisciplines involved in these conversations, meaning interventional cardiologists that maybe didn't know about AngioVac 18 months ago are now seeing it. seeing the applications it can be used for. So John, we have a great suite of products. These 2 will be leading products in thrombectomy for years to come. And we have a great business. We'll keep you up to date, but we expect sequential growth of products from here on it.

Okay. That's great to hear. And then just as a quick follow-up, too. NanoKnife, especially with the approval, we'll see -- or I to say the reimbursement we'll see beginning in 2026, calendar 2026. As we think of the Medtech guidance, are you guys thinking of an inflection essentially around that January approval time line?

Yes, John, this is Steve. Thanks for the question. So with NanoKnife, we've always said that there's 3 things that lead to the growth that we expect to see in on. It's going to be the indication, which is table stakes. We were able to get that reimbursement was probably the most important. That is coming into effect in January of 2026. And the third is continued increase in the adoption and awareness of the urology community. We're absolutely seeing that increase in awareness we're very pleased with the trajectory that we're seeing with new urologists coming on board and choosing NanoKnife as one of their options for treatments. We do expect that the reimbursement is going to be something that's going to drive growth. I don't know that you're going to see an immediate hockey stick.

We've always said that the reimbursement landscape is a growth that's pretty complex. There's a lot of things that go into that. just last night, CMS put out their proposed rules for the RBUs in this space. That ended up pretty much where we expected. There's a lot that we're still unpacking and our team is still going through that. But it was right where we wanted it to be in terms of that piece. Then on top of that, there's the private payers, making sure that they're putting in their coverage decisions. We're doing all that work as we've always said. We do expect we're going to see accelerated growth for NanoKnife and we're going to continue to drive to try to shorten that hockey stick, to immediately, it's not like a light switch. But it is absolutely something that's going to continue to drive NanoKnife growth and adoption in the second half of our fiscal year here.

The next questions are from the line of Steve Lichtman with Oppenheimer.

And Steve, congratulations on the quarter. On FY '26 sales, can you give us any color on the major product growth between MT, Auryon and NanoKnife within medtech? And separate, what level of contribution do you think you can achieve from Orion outside of the U.S.? It sounds like you're off to a nice start there.

Yes, Steve, I think that's absolutely true. We're very pleased with the uptick in some of the international markets that we're seeing with Auryon. As we've always said, the U.S. is going to be the biggest market. International will be a contributor, but it's not going to be at the same level that we've seen here in the U.S. So when you think about FY '26, if you look at what we did last year, Auryon grew just about 20% for the full year. We said that we expected Auryon kind of in this time frame of its life cycle now to be about a mid-teens grower. That's a good way to think about it for FY '26. And then for now, we expected to see continued disposable adoption probably a little bit of a step back in capital. We didn't see the level of step back that we said we expected to see at the beginning of the year last year, we'll still bring on some new capital, but it may be a little bit of a step back.

So very similar progress with the coming into the back half as we talked about reimbursement coming online in NanoKnife. And then thrombectomy, mechanical thrombectomy, particular AngioVac and AlphaVac, expect that to continue to be a very strong role for us, probably the strongest growth that you see in the business there. So when you put that all together, that's how you get to that Med Tech guide that we gave you.

Got it. Appreciate that. And then just secondly, on gross margin, Steve. I appreciate the tariff details. Does the potential impact you laid out in FY '26 include offsets -- and then separately, the ex tariffs gross margin is ahead of our thinking. I was wondering how much of the outsourcing initiative you'll think you'll accrue benefits from in FY '26?

Yes, it's a great question. So there is a lot of moving parts when it goes into tariffs. So there's a lot that we put into our guide there. There's the current thinking that we know today as we've all said, that changes daily, right? Even just a couple of days ago, there were some changes with some potential changes there in the EU community. So there's puts and takes when it cut our expectations around tariffs. We're also doing a lot of the things that you'd expect us to do to try to mitigate any potential tariff impacts. So we'll continue to be transparent as possible with tariffs as we move forward into this fiscal year. I think the point about our manufacturing transfer plan, we've absolutely started to see the benefits coming from that manufacturing transfer plan even in FY '25. .

So as we said, we expected to complete the program by the end of this calendar year, and that's when you're going to start to see the full benefit of that manufacturing transfer plan with FY '27, which starts June 1 of '26, when you're going to see the full year impact. We do expect that we're going to see some of that benefit in the back half of this fiscal '26 that we just started as we started to see some of that benefit in FY '25. So some of the expense management initiatives that we talked about as well as gross margin and the results that we've seen in gross margin, particularly that the results of gross margin ex tariff. We're starting to see some of the benefits of our operations team bringing in some of those cost benefits a little earlier and we expect that to continue.

The next question is from the line of Yi Chen with H.C. Wainright.

Do you have any plan to acquire new Medtech products with high growth potential in fiscal year '26. And do you plan to divest any additional products within that device segment in the next fiscal.

Thanks for the question this morning. This is Jim. We really like the portfolio we have. We've talked to you and to others about the development of this portfolio getting to where it's at today. We think we have a healthy balance between our medical device products which are kind of 4 different little classes within Med Device, but they're really good. They're market-leading products. We have a great selling and marketing and clinical team supporting them. And that Med Tech you've seen as I said in my remarks earlier, we've had a 5-year CAGR of 25% growth in our Med Tech products. That's really important to us. Now that we've actually entered some of these markets we're trying to get through with market development assets like our APEX and RESERVE study, our CE marks other things opening up access, we're really, really busy here the next couple of years on just kind of doing the execution mode here.and supporting some of their clinical studies.

We think they'll expand opportunities of these markets. So we're really pleased with the development of the products themselves. Now we're pleased with the market access, reimbursement, awareness, clinical regulatory hurdles we've cleared, I think we're pretty busy here. So we don't see the need to add definitely another platform to what we have and even adding pieces to it, maybe we'll come across an item or something that looks interesting. But as a company strategy, we want to focus on these assets that we own and make sure we can drive the opportunity because the TAMs are large and we want to drive the opportunity we can to give our shareholders the best fastest return on growth here. I think that's what you'll see from us going forward.

At this time, we've reached the end of the question-and-answer session. I'll hand the floor back to Mr. Clemmer for closing remarks.

Thank you for joining us today. AngioDynamics is really proud of our transformation. We've really changed our company, become now a leading Med Tech provider or really, really counted on products to treat patients with severe disease. I want this journey. It's been hard to do, but we know what our outcome could be, and now we're getting close. we'll Be a company that will be well managed and really great results to our shareholders for years to come. We're a really good company.

Thank you for your interest today and we'll talk to you soon.

This will conclude today's conference. You may disconnect your lines at this time. We thank you for your participation. Have a wonderful day.