Good day, ladies and gentlemen, thank you for standing by. Welcome to the AngioDynamics First Quarter 2013 Financial Earnings Conference Call. [Operator Instructions] The conference is being recorded today, October 8, 2012. I would now like to turn the conference over to Mr. Doug Sherk. Please go ahead, sir.

Thank you, Camille, and thank you, everyone for joining us today for the AngioDynamics conference call to review the results of the fiscal 2013 first quarter, which ended on August 31, 2012. The news release announcing the results across the wire this afternoon after the market closed, in addition a separate news release announcing the acquisition of Vortex Medical, was also issued this afternoon. These press releases are available on the AngioDynamics website at www.angiodynamics.com. The call is being broadcast live with accompanying presentation slides and is available on the AngioDynamics' website. A replay of the call will also be archived on the AngioDynamics website. To access both the live webcast and the archived replay, including the presentation slides, go to the Investors section of the AngioDynamics website and click on Events and Presentations. If you are listening by telephone, to view the slide presentation, navigate to the Live Webcast, as noted, and choose the No Audio Slides-Only Option to view the slides in conjunction with the live conference call. Before we get started, during the course of this conference call, the company will make projections and forward-looking statements regarding future events, including statements about revenue and earnings for fiscal 2013. We encourage 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 forward-looking statements. Finally, during the question-and-answer period today, we'd like to request each caller to limit themselves to 2 questions and encourage callers to requeue to ask additional questions. We appreciate everyone's cooperation with this procedure. And now I'd like to turn the call over to Joseph DeVivo, President and Chief Executive Officer of AngioDynamics.

Thank you, Doug, and thank you, everyone, for joining us today on a very successful first quarter, and thank you for joining us on this call. Today, we plan on providing you with an update on our results for the quarter, highlight key accomplishments and then do a review of our financials. After that, we will review an exciting new acquisition of Vortex Medical, which will add revolutionary new technology to our Peripheral Vascular product offering. Following a review of the Vortex Medical, I'll give you an outlook for the balance of fiscal year 2013. So I'm pleased to announce a very positive operating results for our first full quarter following the acquisition of Navilyst Medical. Our integration activities have all proceeded on schedule. We completed the integration of the U.S. sales organization mid-quarter, completed our international structure, our new corporate structure, integrated quality systems, management teams, our operations teams, financial organizations, HR and other functions. We continue making progress on our longer-term efficiency projects, such as our Oracle and Agile implementations, as well as key cost reduction activities to improve vendor management. Our worldwide Oncology business was well -- as well as our international sales, showed very strong revenue performance, posting consistent double-digit gains of 15% and 18%, respectively. Our U.S. sales organization for Peripheral Vascular and Vascular Access is finding its footing from a very significant reorganization. They've had new products to learn, new customers to serve and most likely new managers managing them. And while the structure of the organization is sound, and we clearly are committed to our strategy the task at hand required significant change management and patience. None of these was unexpected, as in line with our guidance. Now after all this change, our focus is on rebuilding revenue momentum for the second half…

Thank you, Joe, and good afternoon, ladies and gentlemen. Our 53% as-reported growth rate in the first quarter net sales can be considered on a pro forma basis. Comparison of the year-over-year performance is adjusted to include Navilyst, which was acquired on May 22 and exclude LC Beads from last year's numbers. The schedule on Page 11 of the release provides this analysis at the product line level and shows the overall result as a 1% pro forma decrease, as double-digit growth in Oncology sales was offset by single-digit decline in Vascular sales. We were very pleased with the performance of our Oncology business, with growth in ablation sales driven by the new microwave products, as well as 31% growth in NanoKnife sales, which were $3 million in the quarter. 7 NanoKnife generators were purchased this quarter and we now have a total of 64 commercial revenue sites, which we define as a hospital which is purchased NanoKnife products in the past 6 months. On the vascular side, we expected this would be a challenging quarter in the U.S. from a sales perspective, as Joe mentioned, and our first quarter sales guidance reflected this dynamic. As the sales reps move up the learning curve on existing products, we expect to see progressively improving comparisons in future quarters. We will also begin to see initial U.S. sales in the second quarter in the new BioFlo PICC, as well as the newly acquired AngioVac product. Meanwhile, our International business enjoyed another solid quarter, with 18% constant currency pro forma sales growth. This reflects strong growth in Canada where we now have a direct sales operation and a recent GPO contract win, as well as microwave product sales under our international distribution agreement with Microsulis. Pricing pressure moderated somewhat this quarter, as average…

Thank you, Joe. So today, we announced in a separate press release issued this afternoon that we've entered into a definitive agreement to acquire Vortex Medical, a privately-held company focused on the development and commercialization of innovative medical devices for venous drainage and the removal of thrombus, or blood clots, from occluded blood vessels. As we detailed in our previous call, venous disease is a core focus of ours, and we believe the acquisition of Vortex significantly accelerates our market presence and solutions in this key target market. Nearly 1 million people encounter venous thromboembolisms each year in the United States. Leading to approximately 300,000 deaths, representing a significant unmet clinical need. Vortex is currently commercializing the AngioVac System, which we believe has the potential to be a real game changer. The AngioVac System is a patented, proprietary design that facilitates on block or whole removal of undesirable intravascular material. Unlike some other options,, AngioVac has the potential to minimize risk of complications associated with major surgery, internal bleeding and/or clot fragmentation. AngioVac is currently cleared by the FDA for venous drainage used during extracorporeal bypass up to 6 hours. An application for an expanded indication to include the removal of fresh and soft emboli and thrombi is currently pending approval for CE Mark and Vortex is currently pursuing an additional 510(k) for the same expanded indications. The product has generated considerable interest among the surgical and interventional communities and more than 350 cases have been performed successfully in the U.S. to date. Vortex, and now us, will also develop next-generation technology aimed at expanding the applications of the device. So why are we so excited? Well, you really just have to see this product in action to believe it. First, I'll give you a brief description. The AngioVac System…

[Operator Instructions] Our first question is the from the line of the Matt Hewitt with Craig-Hallum Capital Group.

A couple of questions. First, I wasn't quite clear on the FDA inspection. They have come through it sounds like, did they give you a clean bill of health or was there a couple outstanding items that you're working on closing?

They -- in my view, the audit went well. They did issue us some new 483s, which were basically items that had been discussed in the past. We -- the period of time for the audit was from February through the beginning of September when they came in. And we had a remediation schedule that we gave to the FDA, as to items that we would be accomplishing to remediate through February, March, April, May, June all the way through August. There were several items that were found earlier in the process before the remediation took place. So, of course, the inspector has to cite us for those. But they were all -- that they identified, the ones that were repeat, fixed within the end of that period of time. The biggest challenge when you do an audit is ensuring that you have -- that you not only have a process remediated, but then you have time to run the process to show it works. And some of these things that we remediated on schedule were just so new that when they looked at some of the earlier findings, she had to write us up. But I'd say, in my view, I was very proud of the team. I think we've made amazing progress and we thought we put that all into writing to the FDA.

And when will they be back to check up on the outstanding items? I mean, is that something they will be back by the end of this calendar year or next 6 months?

Well, as I -- well, I don't really know. As I mentioned at the last audit, that it's very typical for them to give their findings and then come back in 6 months. They did give their findings or they did come back in 6 months, and I believe we had a very positive dialogue. So I don't know what their next step will be as to whether or not they'd come back in 6 months and do another audit -- is what they've just done. So I would expect that to continue.

Okay. And then I guess one more and then I'll jump back in the queue. First of all, congratulations on the BioFlo approval that you received during the quarter. What's been the initial response by customers here in the states? And I guess, how important is that tip location device? And what can that mean to the BioFlo product as you roll those out?

Well, right now, there is a very positive trend in the PICC market of procedures moving from the IR suite into bedside nursing. And I think our competitors have done a very job building that market. And so it has been a continuing headwind for us, as we should have been in this earlier. BioFlo, I personally believe that in the next -- within the next year, many companies will have tip location devices, that many companies will have different things approved. And just like an ultrasound machine, a tip location device will not be some proprietary device that someone uses to bundle to drive their revenue. I think once that occurs, BioFlo will be a significant differentiator for us. But I mean today, I'd be misleading you if I didn't tell you that not having a tip location device wasn't on the minds of our sales force and creating issues. We should have had one in the past, and we don't today. But it's in our top priority and we have several options in the works.

And our next question is from the line of Brooks West, Piper Jaffray.

Question, I wanted to tease out, if we could, the components of the revenue growth. You have in the release that net sales, including Navilyst, excluding LC Beads, increased 1%. Can you give us any idea how core Angio did versus core Navilyst?

How Angio -- core Angio to core Navilyst, I don't think we have it broken out that way, Brooks. And even it was, it wouldn't be a fair comparison because we've taken all of those product lines and put them into different seller's bags. I think the best way to look at it is the U.S. versus international in oncology the way we've laid it out. We put these sales force together as we told you in the middle of the first quarter, and they're just very much finding their way and learning and coming off a pretty strong fourth quarter close for both companies in the prior year. So they're just getting their footing, but it was also a part of our guidance. We guided for our 23% or around $83 million of revenue. We expected it in the U.S. to be slow. But where the disruption was less, they really did a great job.

Okay. And then, Joe, on the gross margins, is there anything product-related in the gross margin guidance reduction? Or is it just the footnoted items?

Brooks?

Yes.

I'm sorry, you cut out. Would you say it again, please?

Oh, sorry, on the reduction of gross margins, that you got in the release, the guidance, so we went from 52 to 53, to 50 to 51, is there anything product related in that or is it just the footnoted items that are impacting them?

No, it's only the footnoted items. So the med device tax comes up and becomes a cost of goods sold item and the acquisition item with regard to the step-up in basis also, so it's just the accounting adjustments that are being reflected there into cost of goods. So nothing at all on the product side impacted that guidance. And we were quite pleased to see about a 70 basis point improvement year-over-year in gross margins on a pro forma basis. So we're feeling pretty good about that, that progress we're making.

And then one more, if I could. Joe, I know that you've got a whole portfolio of BioFlo-related products, can you just update us again on what's coming and kind of the timing of the rest of the products?

Sure. What we've done is we now received our BioFlo approval for PICC. And it was very -- obviously, an important approval because the core technology now is approved and then the ability of now showing that core technology in the different applications becomes our next set of challenges, not a revalidation of the core technology. So we are currently working on new 510(k) submissions for both BioFlo on dialysis catheters, as well as BioFlo on our port lines. We are running testing. We have had the opportunity, post-approval, to sit with the FDA and get their guidance on what we would need to do for those other approvals. We've listened diligently and are performing exactly what they're asking. We hope to have all that testing and those applications in before the end of the calendar year. And we'd expect sometime by the beginning of fiscal '14, plus or minus a few months, to have those other products cleared if everything goes as planned. So that would allow us to go into a fiscal '14 with a complete Vascular Access product line with codes that would have BioFlo.

[Operator Instructions] Our next question is from the line of Jayson Bedford with Raymond James. Jayson T. Bedford - Raymond James & Associates, Inc., Research Division: Just on the EVLT business, it looked like up 4%. Obviously, the business had been growing faster in the last few years. Kind of what happened in that market? Maybe can you comment on volumes, price and then your expectation for the year?

Yes, I don't think anything's really happened in the market per se. I think what's happened is we restructured our sales organization, our sales organization who's holding EVLT has now had to learn a whole new business with Fluid Management, new customers, new territories. It's usually a product line that needs to be sold and managed. And I think if you look all the way down the categories, there's no rhyme or reason from a marketplace standpoint as to where each one of them are. We think they're basically impacted by an organization at mid-quarter had their cheese moved. I do think we did mention on our last call that we were a bit concerned that our 2 largest markets in Europe, both the Netherlands and the U.K., have decided to not reimburse certain stages of the disease, which has moved it towards a private pay. And while we were transitioning to it, there definitely have been some headwinds. But in general, we are still very bullish on the business. Some have believed that -- it was a very hot -- also a pretty hot summer and usually when it's a very hot summer, the EVLT procedures, which require patients to walk around with stockings for a couple of weeks after, those procedure volumes go down. But we think, in general, and especially within the U.S., there's a lot of disruption to the U.S. sales organization. We've given them a chance to breath. We've given them a chance to catch their bearings and things are moving again, which is great. But it's why again we set our guidance to where we set it, knowing that the first quarter out, especially at the end of a reporting fiscal year would be light. So everything's as planned. Jayson T. Bedford - Raymond James & Associates, Inc., Research Division: Okay. And are you still expecting that business to grow in the high-teens?

Yes, we're still expecting the business to grow. We also, Jayson, are going to calendarize some rough times we had last year and that comes up in the end of the second quarter, beginning of the third, so, for what it's worth. Jayson T. Bedford - Raymond James & Associates, Inc., Research Division: Okay. And just on the combination of the 2 businesses, certainly, there's some overlapping categories whether it would be PICCs or ports. In the past, I think you've talked about rationalizing some lines, have you started that? When do expect to do it? And maybe if you can comment or quantify the impact, if there was one in the quarter?

Yes, I think now, with having a full quarter under our belt, we're getting more experience based upon the global selling environment, which products we think are the winners and which ones should be for phaseout. I think the biggest risk is we didn't want to get ahead of it. We didn't want to all of a sudden forcibly getting rid of products and make a mistake that it might be something a customer wants to keep. So I think, as we get through the fiscal year, when we get through the end of the fiscal year, our marketing teams will start identifying natural phaseouts. So a part of our ongoing cost initiative will be a reduction in SKUs, reduction in inventory. But it has not been our first priority. So our first priority has been able to have the entire offering for our customers and then learn how they see the combined offering, use that market information to determine which products we phaseout and then do that when it's evident. Jayson T. Bedford - Raymond James & Associates, Inc., Research Division: Okay. So those are more kind of towards the back half of the...

Yes. It's not something we'll do right away. Jayson T. Bedford - Raymond James & Associates, Inc., Research Division: And then just lastly, housekeeping, the supply-related revenue, is that continuing at this level, which are we looking for, for the full year?

We had it at a lower level. But we really don't know. I mean it's been pretty consistent. We just don't want to depend on it and we had it declining through the year. If it stays at this level, it stays at this level but we just -- we intend to honor the agreements that we've had with our OEM customer and just see where it goes, but we don't have any plans to increase it.

[Operator Instructions] And I'm now showing no further questions in the queue at this time. I'd like to turn the call back over to management for closing remarks.

Okay. Well, everyone, we very much appreciate your support in getting on, on the Columbus Day holiday. We are very excited about how well the companies have come together, the cost that we've taken out, the accretion that we are creating and the value that we're creating for shareholders. We are also, as we've mentioned, continuing to look at a novel, technology tuck-ins, and I believe we've just caught the tiger by the tail. I think if you just go and learn more about AngioVac and I've even gone and googled and seen how many clinicians have used it and the type of stories and how it has helped patients, it's just so exciting. We're giving incredibly high growth, incredibly novel technology to complete our Peripheral Vascular strategy to be synergistic with the vascular surgeon community and interventional cardiology community that we are now serving in that segment, as well as our core interventional radiology customers. So the Vortex transaction, I look forward to you learning more about that, more about the product and about the things that we think we can do with it in the future. I'm proud of my overall team for the performance that they've delivered, and I very much look forward to continuing to show our operating results, as we drive our profitability and accelerate our top line. So everyone, thank you so much for being on the call, and I look forward to updating you next quarter.