Good morning, and welcome to the AngioDynamics Fourth Quarter and Fiscal Year 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference call is being recorded. The news release detailing the fourth quarter and fiscal year 2020 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, and the webcast replay of the call will be available at the same time, same site approximately one 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 2021. 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. A slide package offering insight into the company's financial results is also available on 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 the morning's conference call. I'd now like to turn the call over to Jim Clemmer, AngioDynamic's President and Chief Executive Officer. Mr. Clemmer?

Thank you, Kevin. Good morning, everyone, and thank you for joining us for AngioDynamics' fiscal 2020 fourth quarter and full year earnings call. Joining me on today's call is Steve Trowbridge, AngioDynamics' Executive Vice President and Chief Financial Officer, who will provide a detailed analysis of our fourth quarter financial performance. As you are all aware, for the past several months, the world has been impacted by the ongoing COVID-19 pandemic putting particular strain on the healthcare industry. We remain focused on our ability to provide products to our customers and patients, while also continuing to invest in our growth platforms and carefully managing our expenses and our cash position. While we are seeing early signs of improvement, since the onset of the pandemic in March, the near-term impacts from this virus are not fully transparent, and our business has not yet returned to pre-COVID levels. With that in mind, Steve and I will characterize the potential impact from the virus on our business with as much transparency as we can for you throughout this call. Our fourth quarter and full year 2020 results were negatively impacted by this pandemic. Fourth quarter revenue of $58.3 million decreased 18.1% year-over-year and decreased roughly 17% when excluding Asclera. Revenue for the full year was $264.2 million, a decrease of 2.4% but flat compared to 2019 when excluding Asclera. In addition, we reported an adjusted loss per share of $0.06 for the quarter, reflecting the impacts of COVID-19 as well as ongoing investments in our key technology platforms, most notably in preparing for the full launch of our Auryon atherectomy system. Adjusted earnings per share for the full year 2020 was $0.09. As we discussed on our third quarter call, hospitals began restricting access for all nonessential employees and procedures in the early…

Thank you, Jim and good morning everyone. Before I begin, I’d like to point you to the presentation on our Investor Relations website, summarizing the key items associated with our quarterly and full year results. I’d also like to note that with respect to the fourth quarter and our business moving forward, we will provide slightly more inter-quarter detail than we would in a normal operating environment. We will not be providing guidance at this time, as it remains difficult to accurately assess the impacts from COVID-19 on procedural volumes in the near future. Additionally, unless otherwise noted, all prior year results and comparisons exclude the contribution of our NAMIC fluid management business, which we divested at the end of our fiscal year ended May 31, 2019. As Jim mentioned, our sales during the fourth quarter were negatively impacted by COVID. Our net sales for the fourth quarter of fiscal 2020 decreased 18.1% year-over-year to $58.3 million. Excluding the fiscal 2019 revenue contribution from the Asclera sclerotherapy product, which we stopped distributing during the fourth quarter of fiscal year 2019, revenue decline for the fourth quarter was roughly 17%. Each of our three businesses saw varying degrees of impact from the deferral of non-essential procedures associated with the COVID-19 pandemic. Our Oncology and VIT businesses face the greatest impact as these two businesses have the largest exposure to elective procedures. Our VA business faced a smaller impact as solid growth in PICCs and midlines help to offset declines of other products in the VA portfolio. Our total VIT business declined 28.8% year-over-year and when excluding Asclera declined 26.2% driven by declines in the venous and core businesses. AngioVac sales fell 11% compared to the fourth quarter of last year. However, as Jim mentioned, we have seen a strong rebound in…

Thanks, Steve. I’d like to remind everybody how hard our company worked during this pandemic. Our marketing, our training and our clinical teams worked really closely with our customers to ensure they have the support they needed to provide care during this process. Our manufacturing, quality and logistics teams also worked in an uninterrupted fashion, providing our life-saving products, providing availability globally during this period. The COVID-19 situation is incredibly dynamic, with mandates and recommendations changing on a daily basis globally and no firm end in sight. We are encouraged by the sales trends we have seen throughout the first month of June and the first half of July. While we have not yet returned to our pre-COVID sales levels, we have continued to see consistent improvement back towards these levels. We are optimistic that these trends will continue as states and hospitals reopen and procedural volumes continue to improve. However, given the recent surge in cases in states such as Florida, Texas, Arizona, California, we acknowledge that the recovery will not be linear, and we remain cautious in our optimism. I am pleased with the way our team is responding to this crisis, and I believe we have taken the necessary steps to preserve the momentum that we had established through the end of Q3, while remaining focused on controlling expenses and preserving cash. We will continue to work hard to ensure that we maintain this balance in the near term while positioning ourselves to build on our previous momentum as we exit this pandemic. We spent a lot of time today telling you how we are managing through the COVID-19 pandemic. But I want to assure you that we have not lost sight of our long-term strategy and the fact that we are in the early stages of a transformation. This transformation will reshape AngioDynamics into a company with differentiated technology platforms that will compete in larger, higher growth addressable markets, where we will compete effectively. While we have been challenged by COVID, we acted urgently and decisively. And as we sit here today, we have a solid financial platform and a sound long-term strategy. As the impacts of COVID-19 eventually taper over time, we are excited to be able to return our entire focus to growing the business and delivering increasing value to all of our stakeholders. With that, Kevin, I’d like to turn the call back for questions.

Thank you. [Operator Instructions] Our first question today is coming from Cecilia Furlong from Canaccord Genuity. Your line is now live.

Hi, thanks for taking the question. I guess I wanted to start with Auryon and really what’s factored into your 2021 guidance. And really just what you’ve been able to do during this current period in terms of customer outreach and setting up the full commercial launch? And then just how you’re thinking about initial penetration, whether it’s laser accounts, non-laser, and then also hospital setting?

Cecilia, it’s Jim. Good morning. Thanks for the question. So regarding Auryon, so what we talked about is the three areas that we’re investing in immediately after our acquisition of Eximo Medical. So, our supply chain build-out has occurred. We’re now building products that meet our quality standards, not just the hardware and lasers, but the catheters to support the delivery of energy throughout our products. We’ve also done the physician and sales training programs. Now we’ve added people to our team. So, at the end of FY 2020, we had 16 people dedicated to this business. In a few more weeks, by August 1, we’ll have 24 people dedicate people dedicated to the business. And by the end of the year, about 40 in this stand- alone business with our company. So Cecilia, we’re very, very committed to growing the business as we mentioned. Most of these people are field-based people. Sales reps and clinical support members support the customer use. So, along the way, as we gain more confidence from our customers that will use the product to treat more people, we’ll be able to support them. We feel over time, Cecilia, we’ll see a balance of about 50-50 from in-hospital customers and procedures and OBL procedures in the office space labs. Initially, we’re seeing a lot of the contracts that we’ve signed and a lot of the new business that we’re gaining coming from the OBLs as the cycle of procurement seems to go a little faster there. We’re also seeing interest from people who use each of the current technologies in the market today. Obviously, many of the folks who are used to the current laser that’s offered, seem to be kind of people most interested and come over. But over time, we think we’ll be an alternative to each of the products out there. I would guess that over time, really, most OBLs will have a product like ours in addition to a mechanical entry as well. But as people gain confidence in our product, and the fact that we can treat hard and soft calcification above and below the knee, we think will be a product of choice in many applications.

Thank you, Jim. And then I guess, if I could just turn to AngioVac and really the trends that you called out that you saw in June. If you could provide just some more color around really what you’re seeing as the main drivers of this strong rebound. And then just how you think about that going forward and the sustainability of what you’ve seen in June so far? Thank you.

Sure. So, Cecilia, as you saw, even in Q3, I think we reported a 44% growth in Q3. And a lot of that was driven by the AngioVac 3.0 that we launched late calendar year of FY of 2019. And so we’ve had – a lot of physicians try the product with our AngioVac 3.0 that hadn’t tried it before. We’re seeing really amazing results driven clinically. We can pull from this and get rid of clots that no other device can do in the market. It’s a really unique product. So we saw now, even with the slowdown from COVID that really hit us in April and May. We were probably a little surprised with the uptick in June, but really, we shouldn’t be over time because this amazing technology is being utilized by more and more physicians. So June was the largest month we’ve had for procedures and even sales. So we’re really encouraged by this product. And as you know, we’ve spoken publicly about the two new products we’ll launch next year, with an AngioVac 4, a smaller version that will enable physicians to get into other vessels and to treat clots and other vessels. And then finally, another product that will be able to compete right in the middle of the spectrum, where today, we don’t play as well. As you know, with our Uni-Fuse catheter, we play on the low-end of the thrombectomy clinical need spectrum, and with our AngioVac on the high-end. But we really look forward to launching a product next year that allow us to compete in that middle end of acuity, where a lot of other companies have offerings today and the market is growing. As the market trust mechanical thrombectomy more and more, we really look forward to sharing our new technology with you soon. So we want to be a major player. AngioVac is a platform, and the outcomes that it generates are very impressive. So, we’ll continue to see sales growth, we believe, not just throughout fiscal year 2021, but as we add our new products and technology, this will be a platform of growth for our company for the long term.

Cecilia, what I would add to what Jim said is, he mentioned that we did see that drop-off in procedure volume in the April time frame into early May. And on our third quarter call, we talked about that shifting line of where procedures would fall on the essential versus nonessential. And we were surprised at the time to see some of those AngioVac procedures fall down the way that they did. We have been very pleased with the trend that we’ve been seeing through May and then definitely into June and July. We’re keeping an eye on it. We think that – we’re looking to see if there’s signs of there having been some pent-up demand, which you’re now seeing in June. So, we’re keeping our eye on that. But what we will say, going back to what Jim mentioned, don’t forget the AngioVac procedures are on the very far end of the acuity spectrum. So these are very sick patients that have to be put on venovenous bypass with a tremendous amount of clot burden. I don’t think those are the type of procedures that you would necessarily have the opportunity to delay and see pent-up demand. So we’re really driving where AngioVac is currently playing in that marketplace. But as Jim said, what we’ve seen has been verified by other competitors in the space. That middle area is a very hot market. The physicians are becoming very comfortable using mechanical interventions to keep thrombectomy. So, as we continue to really hone in on the market, the current area of that market that AngioVac plays in today, we’re excited about the AngioVac platform moving into the other areas and driving our business over the long term.

Great, thank you, both Jim and Steve.

Thank you.

Thank you. Our next question today is coming from Matthew Mishan from KeyBanc. Your line is now live.

Great. Thanks for taking the questions and good morning, Jim, Stephen. Just a follow-up to that. I mean given that AngioVac is for those higher acuity procedures, do you think it’s possible that some of the delays in that patients – in patients actually getting that procedure had moved them from a middle acuity to a higher acuity procedure, and you’re seeing more patients that would necessarily kind of benefit from AngioVac as a result of some of the delays in addressing their conditions?

So Matt, this is Steve. I think it’s a great point. We’re looking at that. I don’t know that we have enough data points right now to affirmatively say that a patient who might be a candidate for one of the middle section mechanical procedures. If you wait too long, will then end up into AngioVac. It’s something that we’re looking at. I think it’s – there’s a certain logic to it, but we don’t have the data now to definitively say. What we do know is that over the previous years as well as what we’re seeing now, there’s definitely a market for AngioVac, and we’re doing really well in the market that AngioVac plays in, and we’re still very interested in building out that platform and moving into those other areas as well.

Okay. And on the Vascular Access side, the onetime order from the UK in – for pandemic planning, is it your sense that’s – restocking of some of what they had run down inventory of? Are they preparing for a second wave of the virus with that? Or is this something that they’re now addressing and saying that we need to have a certain amount of inventory in preparation now moving forward and this is part of us just stocking up for it. And I’m sorry for the four-part question. What was included – what was really included in that order, in it that a good gauge for what countries would – are looking to stock up on as part of your Vascular Access unit for future.

Sure. So Matt, good series of questions. So, we were probably in the middle of pandemic when the NHS and our partner in the UK reached out to us was really looking for PICCs and midlines primarily. And I think a little bit of all the things you reference matter to see what occurred what occurred here. They were seeing the need to get fluid in medication to the people and PICCs and medlines are widely used in those situations. We have a good amount of business in those markets. They trust our products. And so we’re asked really, it’s about a $6 million offer that – to supply them with. So, our operations team moved very quickly and were able to produce product to the specifications they required. And as you saw, we fulfilled about $1 million of that in May and the remaining $5 million we’ll ship this quarter. So, we wanted to make you guys aware of that because we see it as a one timer, Matt. But to your point, this is really a little bit of the blend you mentioned. It was taking care of current need, filling the shelves a little bit, but also they want to put a stockpile there. So, in case pandemic wave 2 happens or something else, the NHS wanted to prepare for their citizens, have adequate supply of these products on the shelves. And maybe we’ll see that with other countries and other governments. We’ve not yet seen it to that level, but I think I covered the areas you touched upon. You’re exactly right.

All right, excellent. And switching over to NanoKnife. I guess how much of your installed base has switched over to the NanoKnife 3.0 at this point? And how much of the uptake in this conversion is the existing base versus new users?

So you look back, Matt, in fiscal year 2020, we sold record capital. And a lot of that was brand-new full systems on some of those were upgrades. We sell upgrades to the Gen 3 version. Matt, prior to the Gen 3 version being launched, we had almost 300 NanoKnifes sold over the years globally. And one of our challenges has been getting those products utilized to provide patient care on a daily basis. So part of the challenge we have in front of us – and getting the DIRECT study and the IDE approved is critical for us in getting the product used. The AngioVac 3.0 platform has a platform has a better physician interface and it’s a little easier to use and use it to train on. So, we think it will increase adoption of our product, get more people into the DIRECT study. But over time, we look forward to, as we said earlier, we’re investing in this platform, and we’ll talk to you about a newer version of AngioVac over time that will be far easier to use, we think will enable physicians to access other organ treatment, but we’ll look at opening up those clinical pathways with the FDA as well. So it’s a – I know your question is, it’s a hard one to put our harvest around because we haven’t been able to get all the NanoKnifes in the field utilized the level that we’d like to. That’s what we’re working on.

Okay, excellent. Congratulations on really managing through a tough quarter. Doing well, here.

Thanks, Matt. Our team did a really great job. Thanks, Matt.

Thank you. [Operator Instructions] Our next question today is coming from Jayson Bedford from Raymond James. Your line is now live.

Hi, this is Matt Wizman on for Jayson Bedford. Thanks for taking the questions here. So, I know you’re not giving guidance on fiscal 2021, and so at a higher level, fiscal 2020 was obviously a bit of a transformational year with COVID headwinds on top. Should we think about EPS as growing in fiscal 2021? And with that, can you provide a bit more color on the gross margin headwinds you’re expecting through the first half of the fiscal year as well? Thank you.

Good morning. So, a couple of things. Steve will follow. We’re in investment phase. We’ve called that out with our acquisition of Eximo Medical last October. And I mentioned a few minutes ago, the investment we’re making into adding people to service our customers in this unique business division. So we’re not going to give guidance at this point. We hope to, soon, when we have full market transparency. But you got to remember, again, we are investing in, especially these three primary platforms of growth that we have internally. The further gross margin headwinds, Steve will give detail in a minute. But as I mentioned earlier, we made a decision during the COVID period to operate our facilities that produce our products because we didn’t know how long COVID was going to last, and we know people need our products for care and treatment. So, our operations team did a terrific job. They run a really well-oiled efficient and effective machine that produces high-quality products. But in this case, I asked them to push efficiency to the side and focus on employee safety and production of our products, maintaining our supply chain security. So we pushed our gross margin to the site for a the site for a while, and we’re still there, honestly, because we’ve got to make sure our employees can operate in a safe manner and we produce our products with the quality levels that our customers expect. So for a while, we’re going to take that hit on gross margins. We think it’s reasonable and necessary to do the right thing during this pandemic. Steve, anything you’d like to add?

Yes. Matt, I think it’s a good question. And as Jim mentioned, and as you alluded to in the beginning of your question, FY 2020 was a transformational year for us. We are putting in the strong foundational – financial foundation to make this strategic transition to being a growth company. And so we are focusing on growth. And we have a line of sight to growth through FY 2021 in a lot of the areas that we talked about. I think if you look at FY 2020, through Q3, we were driving growth, and we were also driving a nice amount of that growth down to the product – to the bottom line in terms of profit. When you saw our Q4, as we were managing through COVID, the profitability becomes more challenging as you’re trying to do what Jim said and keep people in their seats and to keep the company moving through that challenge. As we showed in Q4, we were focusing on our people. We were focusing on our cash management, and then we were focusing on our business. And as we mentioned here, we don't see our business back to pre-COVID levels yet. We expect it to continue to be tracking that way through the first half of the year, that's what we're seeing, but we're not going to get there. So I think you can use that as a nice microcosm of thinking of how we’re looking at FY 2021. We have a site towards growth with our products. We talked about Auryon as $7 million to $10 million, that is purely incremental to what we're seeing. Then we talked about our VA business being relatively resilient. We expect that to continue. AngioVac bouncing back and seeing what we can do there. We definitely…

Got it. And it makes total sense. I appreciate the details there. So I guess just following up, from a product standpoint, thrombolytic was probably a bit stronger than I would have thought. Can you talk about kind of the dynamics there? Are you seeing an uptick in thrombolysis, maybe in lieu of more interventional treatment? Or are you seeing an increase in thrombolysis events a bit? And is this COVID-related directly? Or can you just speak to that? Thanks.

Yes. It's a great question. We are looking at that. I mean, clearly, in the AngioDynamics portfolio, AngioVac is the flagship when it comes to thrombus management, and that's where we're putting a lot of our efforts, and we're seeing a lot of our activity. I do think our thrombolytic business is also going to rise in that tide of AngioVac moving forward. So we expected to see nice growth with thrombolytics, and we are seeing that. As we've mentioned, it plays on the very far-left end of the spectrum as we define this market, whereas AngioVac is on the very far right. So I don't necessarily believe that we're seeing a shift in the market back to using thrombolysis or catheter-directed thrombolysis in lieu of mechanical interventions, but what you are seeing is continued adoption of all of the spectrum of treatments in the thrombus management space. So our thrombolytic portfolio, coupled with our AngioVac portfolio, and the dedicated sales force that we were able to put on to the market, is seeing that growth. And I think you probably are seeing a little bit of the COVID patients and what we're learning about how they're being treated coming into that thrombolytic space. I wouldn't call that the main driver though. So I think it's more of a dynamic of the full portfolio approach that we're going to take to thrombus management as we continue to be excited, as Jim talked about moving into that middle space over the course of the calendar year.

Okay. Understood. And I guess last one from me. So NanoKnife, obviously strong in the quarter. The rest of oncology probably held up a bit worse than we thought. Do you think this is mainly related to just overall deferrable trends related to facilities shutting down for COVID? Or was there a more – maybe was there any share loss impact? Or was there any impact from the restructuring of the segment that you started to do in the quarter? And just any more detail there would be great. And then that does it for me. Thank you.

Okay. Thanks for the question. So both pieces play to partners. There's no doubt that our customers – our health care providers did less procedures that required our ablation technologies and our other oncology products. So definitely a procedure-related slowdown due to the pandemic. But second and importantly, we can't always control that. We can control our own business. So as I mentioned on the Q3 earnings call, we were disappointed with the pace with our RadiaDyne balloons and our BioSentry products. And I talked about at the time, we realized how we would go to market in a better fashion and bringing a dedicated inside sales division that primary responsibility of those products. It was important to us. We saw opportunity there. So we acted quickly, even with the pandemic and with us freezing expenses and holding things back, we still were able to build out a team that goes live in a few weeks, and we look forward to share with you at the end of Q1 how it's working. But we know we need to go to market differently. And that's what we're doing. And across the board in oncology, although we had record capital sales last year at NanoKnife, which is very impressive, we thought we could still do a better job of getting NanoKnife penetration a bit deeper, and even working on how we combat our competitors in the microwave space. We have a unique microwave product. We compete against J&J, Medtronic, two top competitors, but we think we can do better there. So beyond just the reorg of the sales force, adding the inside sales team, we're looking at the structure of oncology. The current team did a great job getting our IDE done, getting DIRECT study up, selling NanoKnife 3.0, but we need to do a bit more. So I'll share with you more about the reorg in coming quarters and how we restructure this business to attain the performance we think it can.

Got it. Thanks very much.

Thank you. I'd now like to turn the call over to Mr. Clemmer for any closing remarks. Mr. Clemmer.

Thank you, Kevin. And again, I want to remind our investors, our company worked really hard during this uncertain pandemic period to maintain our capital structure and maintain a strong balance sheet. We reacted very quickly and with consistency across our Board, the fact that we could maintain a cash balance, that we had prior to this pandemic, was important to us to show that we put the strength of our balance sheet forward. Now while we did that, we also didn't want to lose the momentum that we had after Q3. Not just short-term momentum that we had with the growth you saw in Q3, but our longer-term strategic momentum of building a transformation around our portfolio changes to make AngioDynamics a long-term growth company. And we have at least now three unique sciences and technologies that provide outcomes that are measurable and provide performance for our company to grow upon. Our people did a great job during this period. We're really, really fortunate to have a resilient team of folks. Thank you again for tuning in today. We look forward to speaking again. Have a good day.

Thank you. That does conclude today’s teleconference. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.