What changed in this filing

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Item 1. Financial Statements

2021-09-30 compared with 2021-03-31 · 152 added, 229 removed, 425 unchanged (47% of the section changed)

4 unchanged sentences

(in thousands of dollars, except per share data)

Three Months Ended Nine Months Ended

Feb 28, 2021 Feb 29, 2020 Feb 28, 2021 Feb 29, 2020

Three Months Ended

Aug 31, 2021 Aug 31, 2020

Net sales $ 76,971 $ 70,216

13 unchanged sentences

Other income (expense), net ( 352 ) 524

Total other expense, net ( 389 ) ( 297 ) ( 417 ) ( 739 )

Total other income (expense), net ( 508 ) 309

Loss before income tax benefit ( 8,608 ) ( 4,813 )

12 unchanged sentences

(in thousands of dollars)

Three Months Ended Nine Months Ended

Feb 28, 2021 Feb 29, 2020 Feb 28, 2021 Feb 29, 2020

Three Months Ended

Aug 31, 2021 Aug 31, 2020

Net loss $ ( 6,972 ) $ ( 4,268 )

Other comprehensive income (loss), before tax:

Other comprehensive income, before tax:

Foreign currency translation 590 2,095

8 unchanged sentences

(in thousands of dollars, except share data)

Feb 28, 2021 May 31, 2020

Aug 31, 2021 May 31, 2021

Current assets

6 unchanged sentences

Property, plant and equipment, net 41,133 37,073

Other assets 19,443 15,338

Intangible assets, net 168,893 168,977

Goodwill 201,491 201,316

Other assets 12,925 13,193

Total assets $ 555,763 $ 561,438

3 unchanged sentences

Accrued liabilities 26,892 35,459

Current portion of contingent consideration — 836

Other current liabilities 2,518 2,495

10 unchanged sentences

Common stock, par value $ 0.01 per share, 75,000,000 shares authorized;

38,877,367 and 38,448,536 shares issued and 38,507,367 and 38,078,536 shares outstanding at February 28, 2021 and May 31, 2020, respectively

39,390,241 and 38,920,951 shares issued and 39,020,241 and 38,550,951 shares outstanding at August 31, 2021 and May 31, 2021, respectively

Additional paid-in capital 576,380 573,507

Accumulated deficit ( 138,838 ) ( 131,866 )

Treasury stock, 370,000 shares at February 28, 2021 and May 31, 2020, respectively

Treasury stock, 370,000 shares at August 31, 2021 and May 31, 2021, respectively

( 5,714 ) ( 5,714 )

Accumulated other comprehensive income (loss) 1,946 ( 1,341 )

Accumulated other comprehensive income 3,743 3,153

Total Stockholders’ Equity 435,950 439,457

5 unchanged sentences

(in thousands of dollars)

Nine Months Ended

Feb 28, 2021 Feb 29, 2020

Three Months Ended

Aug 31, 2021 Aug 31, 2020

Cash flows from operating activities:

Net loss $ ( 6,972 ) $ ( 4,268 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 6,997 6,577

5 unchanged sentences

Fixed and intangible asset impairments and disposals 30 90

Write-off of other assets — 593

Other ( 46 ) ( 432 )

4 unchanged sentences

Accounts payable, accrued and other liabilities ( 6,345 ) ( 10,087 )

Net cash provided by (used in) operating activities 11,894 ( 18,434 )

Net cash used in operating activities ( 8,904 ) ( 5,425 )

Cash flows from investing activities:

Additions to property, plant and equipment ( 1,021 ) ( 1,824 )

Acquisition of intangibles — ( 350 )

Additions to placement and evaluation units ( 4,471 ) —

Cash paid for acquisitions ( 3,600 ) —

2 unchanged sentences

Proceeds from borrowings on long-term debt 5,000 —

Repayment of long-term debt ( 10,000 ) ( 132,500 )

Deferred financing costs on long-term debt — ( 775 )

Payment of acquisition related contingent consideration — ( 1,208 )

Proceeds (outlays) from exercise of stock options and employee stock purchase plan 2,459 ( 706 )

Net cash used in financing activities ( 7,541 ) ( 120,189 )

Proceeds from exercise of stock options and employee stock purchase plan 446 491

Net cash provided by financing activities 5,446 491

Effect of exchange rate changes on cash and cash equivalents ( 139 ) 252

Increase (decrease) in cash and cash equivalents 34 ( 200,481 )

Decrease in cash and cash equivalents ( 12,689 ) ( 6,506 )

Cash and cash equivalents at beginning of period 48,161 54,435

2 unchanged sentences

Accrual for capital expenditures incurred during the period $ 162 $ 197

Fair value of contingent consideration for acquisitions — 14,900

The accompanying notes are an integral part of these consolidated financial statements.

6 unchanged sentences

comprehensive

income (loss) Treasury Stock

income Treasury Stock

Shares Amount Shares Amount Total

1 unchanged sentence

Net loss ( 6,972 ) ( 6,972 )

Issuance/Cancellation of restricted stock units 164,946 ( 143 ) ( 143 )

Purchases of common stock under ESPP 79,596 1 633 634

Stock-based compensation 1,864 1,864

Other comprehensive income, net of tax 2,095 2,095

Balance at August 31, 2020 38,693,078 $ 375 $ 564,225 $ ( 104,586 ) $ 754 ( 370,000 ) $ ( 5,714 ) $ 455,054

Net loss ( 4,268 ) ( 4,268 )

Issuance/Cancellation of restricted stock units 8,952 ( 10 ) ( 10 )

Stock-based compensation 2,387 2,387

Other comprehensive income, net of tax 1,180 1,180

Balance at November 30, 2020 38,702,030 $ 375 $ 566,602 $ ( 108,854 ) $ 1,934 ( 370,000 ) $ ( 5,714 ) $ 454,343

Net loss ( 3,544 ) ( 3,544 )

Exercise of stock options 80,635 1 1,279 1,280

Issuance/Cancellation of restricted stock units 279,495 ( 1,734 ) ( 1,734 )

Issuance/Cancellation of performance share units 59,371 —

Purchases of common stock under ESPP 49,789 1 899 900

1 unchanged sentence

Other comprehensive income, net of tax 590 590

Balance at February 28, 2021 38,877,367 $ 377 $ 570,725 $ ( 112,398 ) $ 1,946 ( 370,000 ) $ ( 5,714 ) $ 454,936

Balance at August 31, 2021 39,390,241 $ 379 $ 576,380 $ ( 138,838 ) $ 3,743 ( 370,000 ) $ ( 5,714 ) $ 435,950

Common Stock Additional

capital Retained earnings Accumulated

capital Accumulated deficit Accumulated

comprehensive

loss Treasury Stock

income (loss) Treasury Stock

Shares Amount Shares Amount Total

1 unchanged sentence

Net loss ( 4,268 ) ( 4,268 )

Exercise of stock options 48,136 1 530 531

Issuance/Cancellation of restricted stock units 164,946 ( 143 ) ( 143 )

1 unchanged sentence

Stock-based compensation 1,864 1,864

Other comprehensive loss, net of tax ( 151 ) ( 151 )

Balance at August 31, 2019 38,359,875 $ 373 $ 555,723 $ 65,194 $ ( 1,503 ) ( 370,000 ) $ ( 5,714 ) $ 614,073

Net loss ( 2,736 ) ( 2,736 )

Issuance/Cancellation of restricted stock units 4,051 —

Stock-based compensation 2,242 2,242

Other comprehensive income, net of tax 2,095 2,095

Balance at November 30, 2019 38,363,926 $ 373 $ 557,965 $ 62,458 $ ( 1,272 ) ( 370,000 ) $ ( 5,714 ) $ 613,810

Net loss ( 5,709 ) ( 5,709 )

Exercise of stock options 2,500 30 30

Issuance/Cancellation of restricted stock units 8,034 ( 25 ) ( 25 )

Purchases of common stock under ESPP 60,297 1 588 589

Stock-based compensation 1,772 1,772

Other comprehensive income, net of tax 8 8

Balance at February 29, 2020 38,434,757 $ 374 $ 560,330 $ 56,749 $ ( 1,264 ) ( 370,000 ) $ ( 5,714 ) $ 610,475

Balance at August 31, 2020 38,693,078 $ 375 $ 564,225 $ ( 104,586 ) $ 754 ( 370,000 ) $ ( 5,714 ) $ 455,054

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Balance Sheet as of February 28, 2021, the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Loss for the three and nine months ended February 28, 2021 and February 29, 2020, the Consolidated Statements of Stockholders’ Equity for the three months ended February 28, 2021 and February 29, 2020 and the Consolidated Statements of Cash Flows for the nine months ended February 28, 2021 and February 29, 2020 have been prepared by the Company and are unaudited.

The Consolidated Balance Sheet as of August 31, 2021, the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Loss for the three months ended August 31, 2021 and 2020, the Consolidated Statements of Stockholders’ Equity for the three months ended August 31, 2021 and 2020 and the Consolidated Statements of Cash Flows for the three months ended August 31, 2021 and 2020 have been prepared by the Company and are unaudited.

The Consolidated Balance Sheet as of May 31, 2021 was derived from audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary to state fairly the financial position, changes in stockholders’ equity and comprehensive income, results of operations and cash flows as of and for the period ended February 28, 2021 (and for all periods presented) have been made.

The unaudited interim consolidated financial statements for the three and nine months ended February 28, 2021 and February 29, 2020 include the accounts of AngioDynamics, Inc.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary to state fairly the financial position, changes in stockholders’ equity and comprehensive income, results of operations and cash flows as of and for the period ended August 31, 2021 (and for all periods presented) have been made.

The unaudited interim consolidated financial statements for the three months ended August 31, 2021 and 2020 include the accounts of AngioDynamics, Inc.

and its wholly owned subsidiaries, collectively, "us", "we" or the “Company”.

All intercompany balances and transactions have been eliminated.

C3 Wave Tip Location Acquisition

On December 17, 2019, the Company acquired the C3 Wave tip location asset from Medical Components Inc.

("MedComp") for an aggregate purchase price of $ 10.0 million with $ 5.0 million of potential future contingent consideration related to technical milestones.

This acquisition filled a gap in the Vascular Access portfolio and supports the Company's strategic plan.

Camaro Support Catheter Asset Acquisition

On July 27, 2021, the Company acquired the Camaro support catheter asset from QX Medical, LLC for an aggregate purchase price of $ 4.0 million, which included an upfront payment of $ 3.6 million and $ 0.4 million in purchase price holdbacks, along with $ 1.0 million of potential future contingent consideration related to revenue milestones.

This acquisition supports the Auryon product family and the Company's strategic plan.

The Company accounted for this acquisition as an asset purchase.

The Company recorded the amount paid at closing as inventory of $ 0.6 million and intangible assets of a trademark of $ 0.9 million and product technology of $ 8.5 million.

The intangible assets will be amortized over 15 years.

The contingent consideration is comprised of technical milestones and will be accounted for when the contingency is resolved or becomes probable and reasonably estimable.

Eximo Acquisition

On October 2, 2019, the Company entered into a share purchase agreement to acquire Eximo Medical, Ltd., a pre-commercial stage medical device company with a proprietary 355nm B Laser Atherectomy technology.

The aggregate purchase price of $ 60.7 million included an upfront payment of $ 45.8 million and contingent consideration with an estimated fair value of $ 14.9 million.

This acquisition expands and complements the Company’s Vascular Interventions and Therapies product portfolio by adding the 355nm B Laser Atherectomy technology which treats Peripheral Artery Disease.

The Company accounted for the Eximo acquisition under the acquisition method of accounting for business combinations.

Accordingly, the cost to acquire the assets was allocated to the underlying net assets in proportion to estimates of their respective fair values.

The excess of the purchase price over the estimated fair value of the net assets acquired was recorded as goodwill.

Goodwill is non-deductible for income tax purposes.

The Company has not disclosed the amount of revenue and earnings for sales of Eximo products since acquisition, nor proforma information, because these amounts are not significant to the Company's financial statements.

Acquisition-related costs associated with the Eximo acquisition, which are included in "acquisition, restructuring and other items, net" in the accompanying Consolidated Statements of Operations, were approximately $ 0.6 million in fiscal year 2020.

The following table summarizes the final aggregate purchase price allocated to the net assets acquired:

(in thousands) Final allocation

Accounts receivable $ 50

Inventory 150

Prepaid and other current assets 54

Long-term deposits 51

Property, plant and equipment 397

Intangible assets:

Product technology 60,300

Goodwill 11,427

Total assets acquired $ 72,429

Liabilities assumed

Accounts payable $ 84

Other current liabilities 615

Deferred tax liabilities 11,070

Total liabilities assumed $ 11,769

Net assets acquired $ 60,660

The Company finalized the allocation of the purchase price to the assets acquired and liabilities assumed in the fourth quarter of fiscal year 2020.

The value assigned to the product technology was derived using the multi-period excess earnings method under the income approach.

This approach estimates the excess earnings generated over the lives of the customers that existed as of the acquisition date and discounts such earnings to present value.

The product technology is deemed to have a useful life of fifteen years and will be amortized on a straight-line basis over the useful life.

The goodwill arising from the acquisition consists largely of synergies and economies of scale the Company hopes to achieve from combining the acquired assets with the Company's current operations.

The Company recorded the amount paid at closing as inventory and fixed assets of $ 0.1 million and an intangible asset product technology of $ 3.9 million.

The intangible asset will be amortized over 15 years.

The contingent consideration is comprised of revenue milestones and will be accounted for when the contingency is resolved or becomes probable and reasonably estimable.

REVENUE FROM CONTRACTS WITH CUSTOMERS

Revenue Recognition

Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

Under ASC 606, Revenue from Contracts with Customers , revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps:

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Disaggregation of Revenue

The following tables summarize net product revenue by Global Business Unit ("GBU") and geography:

Three Months Ended Feb 28, 2021

Three Months Ended Feb 29, 2020

The following table summarizes net sales by Global Business Unit ("GBU") and geography:

Three Months Ended Aug 31, 2021

Three Months Ended Aug 31, 2020

(in thousands) United States International Total United States International Total

Vascular Interventions & Therapies $ 29,529 $ 3,722 $ 33,251 $ 26,788 $ 3,764 $ 30,552

Endovascular Therapies $ 34,753 $ 3,305 $ 38,058 $ 26,981 $ 2,876 $ 29,857

Vascular Access 20,476 4,481 24,957 19,222 8,883 28,105

1 unchanged sentence

Total $ 64,464 $ 12,507 $ 76,971 $ 54,108 $ 16,108 $ 70,216

Nine Months Ended Feb 28, 2021

Nine Months Ended Feb 29, 2020

(in thousands) United States International Total United States International Total

Vascular Interventions & Therapies $ 87,198 $ 9,810 $ 97,008 $ 80,065 $ 10,551 $ 90,616

Vascular Access 60,392 16,456 76,848 57,865 12,720 $ 70,585

Oncology 25,856 14,456 40,312 25,451 19,173 $ 44,624

As the Company has previously announced, the Company is focused on its ongoing transformation from a company with abroad portfolio of largely undifferentiated products to a more focused medical technology company that delivers unique and

innovative health care solutions.

The Company believes that this transformation will enable the Company to shift the portfolio from the mature, lower-growth markets where we have competed in the past by investing in technology and products that provide access to larger and faster growing markets.

As such, we believe the growth in the near to mid-term will be driven by our high technology products including Auryon, Mechanical Thrombectomy (which includes AngioVac and thrombolytics) and NanoKnife.

We will refer to these high technology product lines as our Med Tech business and we will refer to the remainder of the portfolio as our Med Device business.

The following table summarizes net sales by Med Tech and Med Device:

Three Months Ended

(in thousands) Aug 31, 2021 Aug 31, 2020

Med Tech $ 17,619 $ 10,486

Med Device 59,352 59,730

Total $ 76,971 $ 70,216

3 unchanged sentences

Most of the Company's products are intended to be used once and then discarded, or they may be implanted for short or long term use.

The Company sells its products to its distribution partners and to end users, such as interventional radiologists, interventional cardiologists, vascular surgeons, urologists, interventional and surgical oncologists and critical care nurses.

The Company sells its products to its distributors and to end users, such as interventional radiologists, interventional cardiologists, vascular surgeons, urologists, interventional and surgical oncologists and critical care nurses.

Contracts and Performance Obligations

14 unchanged sentences

As the Company’s standard payment terms are 30 to 90 days from invoicing, the Company does not provide any significant financing to its customers.

The Company enters into agreements to place placement and evaluation units (“units”) at customer sites, but the Company retains title to the units.

The duration of these agreements are typically a year and the customer has the right to use the unit at no upfront charge in connection with the customer’s ongoing purchase of disposables.

These types of agreements include an

embedded operating lease for the right to use the units.

In these arrangements, revenue recognized for the sale of the disposables is not allocated between the disposal revenue and lease revenue due to the insignificant value of the units in relation to the total agreement value.

Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue.

12 unchanged sentences

The Company currently estimates product return liabilities using its historical product return information and considers other factors that it believes could significantly impact its expected returns, including product recalls.

During the nine months ended February 28, 2021, such product returns were not material.

During the three months ended August 31, 2021, such product returns were not material.

Contract Balances with Customers

4 unchanged sentences

The following table presents changes in the Company’s receivables, contract assets and contract liabilities with customers:

(in thousands) Feb 28, 2021 May 31, 2020

(in thousands) Aug 31, 2021 May 31, 2021

Receivables $ 35,416 $ 35,405

1 unchanged sentence

Contract liabilities $ 462 $ 426

During the nine months ended February 28, 2021, the Company had additions to contract liabilities of $ 1.0 million.

This was offset by $ 1.0 million in revenue that was recognized during the nine months ended February 28, 2021.

During the three months ended August 31, 2021, the Company had additions to contract liabilities of $ 0.4 million.

This was offset by $ 0.4 million in revenue that was recognized during the three months ended August 31, 2021.

Costs to Obtain or Fulfill a Customer Contract

7 unchanged sentences

Inventories consisted of the following:

(in thousands) Feb 28, 2021 May 31, 2020

(in thousands) Aug 31, 2021 May 31, 2021

Raw materials $ 25,367 $ 22,925

2 unchanged sentences

Inventories $ 49,305 $ 48,614

The Company periodically reviews for both obsolescence and loss of value.

The Company periodically reviews inventory for both obsolescence and loss of value.

The Company makes assumptions about the future demand for and market value of the inventory.

Based on these assumptions, the Company estimates the amount of obsolete, expiring and slow-moving inventory.

The total inventory reserve at February 28, 2021 and May 31, 2020 was $ 4.0 million and $ 4.7 million, respectively.

The total inventory reserve at August 31, 2021 and May 31, 2021 was $ 3.9 million and $ 3.8 million, respectively.

GOODWILL AND INTANGIBLE ASSETS

Intangible assets other than goodwill are amortized over their estimated useful lives on either a straight-line basis or proportionately to the benefit being realized.

Useful lives range from two to eighteen years .

The Company periodically reviews the estimated useful lives of its intangible assets and reviews such assets or asset groups for impairment whenever events or changes in circumstances indicate that the carrying value of the assets or asset groups may not be recoverable.

If an intangible asset or asset group is considered to be impaired, the amount of the impairment will equal the excess of the carrying value over the fair value of the asset.

Goodwill is not amortized, but rather, is tested for impairment annually or more frequently if impairment indicators arise.

4 unchanged sentences

Even though the Company determined that there was no goodwill impairment as of December 31, 2020, the future occurrence of a potential indicator of impairment, such as a significant adverse change in legal, regulatory, business or economic conditions or a more-likely-than-not expectation that the reporting unit or a significant portion of the reporting unit will be sold or disposed of, would require an interim assessment for the reporting unit prior to the next required annual assessment as of December 31, 2021.

There were no adjustments to goodwill for the nine months ended February 28, 2021 other than foreign currency translation adjustments.

There were no adjustments to goodwill for the three months ended August 31, 2021 other than foreign currency translation adjustments.

Definite Lived Intangible Assets

Intangible assets other than goodwill are amortized over their estimated useful lives on a straight-line basis.

Useful lives range from two to eighteen years .

The Company periodically reviews, and adjusts, if necessary, the estimated useful lives of its intangible assets and reviews such assets or asset groups for impairment whenever events or changes in circumstances indicate that the carrying value of the assets or asset groups may not be recoverable.

If an intangible asset or asset group is considered to be impaired, the amount of the impairment will equal the excess of the carrying value over the fair value of the asset.

Intangible assets consisted of the following:

11 unchanged sentences

$ 313,235 $ ( 144,258 ) $ 168,977

Amortization expense for the three months ended February 28, 2021 and February 29, 2020 was $ 4.3 million and $ 5.0 million, respectively.

Amortization expense for the nine months ended February 28, 2021 and February 29, 2020 was $ 13.8 million and $ 13.4 million, respectively.

Amortization expense for the three months ended August 31, 2021 and 2020 was $ 4.8 million and $ 5.0 million, respectively.

Expected future amortization expense related to the intangible assets for each of the following fiscal years is as follows:

4 unchanged sentences

Accrued liabilities consisted of the following:

(in thousands) Feb 28, 2021 May 31, 2020

(in thousands) Aug 31, 2021 May 31, 2021

Payroll and related expenses $ 11,214 $ 20,408

3 unchanged sentences

Outside services 6,129 4,256

Indemnification holdback 4,625 5,000

Litigation Matters — 975

Rebates 694 503

Other 5,883 5,475

1 unchanged sentence

LONG-TERM DEBT

On June 3, 2019 and in connection with the completion of the Fluid Management divestiture, the Company repaid all amounts outstanding under its existing Credit Agreement and entered into a new Credit Agreement with the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and Bank of America, N.A.

On June 3, 2019 the Company repaid all amounts outstanding under its existing Credit Agreement and entered into a new Credit Agreement with the lender's party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and Bank of America, N.A.

and KeyBank National Association, as co-syndication agents.

11 unchanged sentences

* The definitions of consolidated total indebtedness, consolidated EBITDA, consolidated capital expenditures and consolidated interest expense are specifically defined in the credit agreement included as an exhibit to Form 8-K filed on June 6, 2019.

As of February 28, 2021, there was a $ 30.0 million outstanding balance on the Revolving Facility.

As of February 28, 2021 and May 31, 2020, the carrying value of long-term debt approximated its fair market value.

The interest rate on the Revolving Facility at February 28, 2021 was 1.63 %.

The Company was in compliance with the Credit Agreement covenants as of February 28, 2021.

As of August 31, 2021, there was $ 25.0 million outstanding on the Revolving Facility.

As of August 31, 2021 and May 31, 2021, the carrying value of long-term debt approximated its fair market value.

The interest rate on the Revolving Facility at August 31, 2021 was 1.34 %.

The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate for the full fiscal year adjusted for any discrete events, which are recorded in the period that they occur.

The estimated annual effective tax rate prior to discrete items was 15.6 % as of the third quarter of fiscal year 2021, as compared to 12.9 % for the same period in fiscal year 2020.

The estimated annual effective tax rate prior to discrete items was 10.6 % as of the first quarter of fiscal year 2022, as compared to 14.2 % for the same period in fiscal year 2021.

In fiscal year 2022, the Company’s effective tax rate differs from the U.S.

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Based on the review of all available evidence, the Company determined that it has not yet attained a sustained level of profitability and the objectively verifiable negative evidence outweighed the positive evidence.

Therefore, the Company has provided a valuation allowance on its federal and state net operating loss carryforwards, federal and state R&D credit carryforwards and other net deferred tax assets that have a limited life and are not supportable by the naked credit deferred tax liability sourced income as of February 28, 2021.

The Company will continue to assess the level of the valuation allowance required.

3 unchanged sentences

The 2020 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance share units, performance shares and other incentive awards to the Company's employees, directors and other service providers.

As of February 28, 2021, there was a maximum of 2.4 million shares of common stock available for future grant under the 2020 Plan.

As of August 31, 2021, there was a maximum of 1.7 million shares of common stock available for future grant under the 2020 Plan.

Prior to the adoption of the 2020 Plan, equity awards were issued under the 2004 Stock and Incentive Award Plan (the “2004 Plan”).

1 unchanged sentence

The Company also has an employee stock purchase plan.

As of February 28, 2021, there was a maximum of 4.0 million shares of common stock available for future grant under the employee stock purchase plan.

For the three months ended February 28, 2021 and February 29, 2020, share-based compensation expense was $ 2.1 million and $ 1.8 million, respectively.

For the nine months ended February 28, 2021 and February 29, 2020, share-based compensation expense was $ 6.4 million and $ 6.0 million, respectively

During the nine months ended February 28, 2021 and February 29, 2020, the Company granted stock options and restricted stock units under the 2004 Plan and 2020 Plan to certain employees and members of the Board of Directors.

As of August 31, 2021, there was a maximum of 2.4 million shares of common stock available for future grant under the employee stock purchase plan.

For the three months ended August 31, 2021 and 2020, share-based compensation expense was $ 2.4 million and $ 1.9 million, respectively.

During the three months ended August 31, 2021 and 2020, the Company granted stock options and restricted stock units under the 2020 and 2004 Plan to certain employees and members of the Board of Directors.

Stock option awards are valued using the Black-Scholes option-pricing model and then amortized on a straight-line basis over the requisite service period of the award.

Restricted stock unit awards are valued based on the closing trading value of the Company’s common stock on the date of grant and then amortized on a straight-line basis over the requisite service period of the award.

During the nine months ended February 28, 2021 and February 29, 2020, the Company granted performance share units under the 2004 Plan to certain employees.

The awards may be earned by achieving relative performance levels over the requisite service period.

During the three months ended August 31, 2021 and 2020, the Company granted performance share units under the 2020 and 2004 Plan to certain employees.

The awards may be earned by achieving performance levels over the requisite service period.

The performance criteria are based on achieving certain performance targets and the total shareholder return (“TSR”) of the Company’s common stock relative to the TSR of the common stock of a pre-defined industry peer-group.

The fair value of these awards are based on the closing trading value of the Company’s common stock on the date of grant and use a Monte Carlo simulation model.

As of February 28, 2021, there was $ 14.4 million of unrecognized compensation expense related to share-based payment arrangements.

As of August 31, 2021, there was $ 22.4 million of unrecognized compensation expense related to share-based payment arrangements.

These costs are expected to be recognized over a weighted-average period of approximately four years .

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The following table reconciles basic to diluted weighted-average shares outstanding:

Three Months Ended Nine Months Ended

(in thousands) Feb 28, 2021 Feb 29, 2020 Feb 28, 2021 Feb 29, 2020

Three Months Ended

(in thousands) Aug 31, 2021 Aug 31, 2020

Basic 38,734 38,157

4 unchanged sentences

The Company considers the business to be a single operating segment engaged in the development, manufacture and sale of medical devices for vascular access, peripheral vascular disease and oncology on a global basis.

The Company's chief operating decision maker, the President and Chief Executive Officer (CEO), evaluates the various global product portfolios on a net sales basis.

Executives reporting to the CEO include those responsible for commercial operations, manufacturing operations, regulatory and quality and certain corporate functions.

The Company's chief operating decision maker, the President and Chief Executive Officer (CEO), evaluates the various global product portfolios on a net sales basis utilizing various breakouts of the data including Global Business Unit, Med Tech versus Med Device and geography.

Executives reporting to the CEO include those responsible for commercial operations, manufacturing operations,

regulatory and quality and certain corporate functions.

The CEO evaluates profitability, investment and cash flow metrics on a consolidated worldwide basis due to shared infrastructure and resources.

The table below summarizes net sales by Global Business Unit:

Three Months Ended Nine Months Ended

(in thousands) Feb 28, 2021 Feb 29, 2020 Feb 28, 2021 Feb 29, 2020

Vascular Interventions & Therapies

$ 33,251 $ 30,552 $ 97,008 $ 90,616

Three Months Ended

(in thousands) Aug 31, 2021 Aug 31, 2020

Endovascular Therapies $ 38,058 $ 29,857

Vascular Access 24,957 28,105

1 unchanged sentence

Total $ 76,971 $ 70,216

The table below summarizes net sales by Med Tech and Med Device:

Three Months Ended

(in thousands) Aug 31, 2021 Aug 31, 2020

Med Tech $ 17,619 $ 10,486

Med Device 59,352 59,730

Total $ 76,971 $ 70,216

The table below summarizes net sales by geographic area based on external customer location:

Three Months Ended Nine Months Ended

(in thousands) Feb 28, 2021 Feb 29, 2020 Feb 28, 2021 Feb 29, 2020

Three Months Ended

(in thousands) Aug 31, 2021 Aug 31, 2020

United States $ 64,464 $ 54,108

10 unchanged sentences

The Company's financial instruments include cash and cash equivalents, accounts receivable, accounts payable and contingent consideration.

The carrying amount of cash and cash equivalents, accounts receivable, and accounts payable approximates fair value due to the immediate or short-term maturities.

The Company's recurring fair value measurements using significant unobservable inputs (Level 3) relate to contingent consideration liabilities.

The carrying amount of cash and cash equivalents, accounts receivable, and accounts payable approximates fair value due to their immediate or short-term maturities.

The recurring fair value measurements using significant unobservable inputs (Level 3) relate to contingent consideration liabilities.

The following tables provide information by level for assets and liabilities that are measured at fair value on a recurring basis:

Fair Value Measurements using inputs considered as:

Fair Value at Feb 28, 2021

Fair Value at Aug 31, 2021

(in thousands) Level 1 Level 2 Level 3

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Total Financial Liabilities $ — $ — $ 15,741 $ 15,741

There were no transfers between Level 1, 2 and 3 for the three and nine months ended February 28, 2021.

There were no transfers between Level 1, 2 and 3 for the three months ended August 31, 2021 and 2020.

The table below presents the changes in fair value components of Level 3 instruments:

Three Months Ended Feb 28, 2021

(in thousands) Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

Balance, November 30, 2020 $ 15,178

Total gains or losses (realized/unrealized):

Change in present value of contingent consideration (1)

Currency gain from remeasurement 1

Balance, February 28, 2021

Nine Months Ended Feb 28, 2021

Three Months Ended Aug 31, 2021

(in thousands) Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

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Change in present value of contingent consideration (1)

Currency gain from remeasurement 5

Balance, February 28, 2021

Balance, August 31, 2021

(1) Change in the fair value of contingent consideration is included in earnings and comprised of changes in estimated earn out payments based on projections of Company performance and amortization of the present value discount.

Contingent Consideration for Acquisition Earn Outs

Contingent Liability for Acquisition Earn Outs

Some of the Company's business combinations involve the potential for the payment of future contingent consideration upon the achievement of certain product development milestones or various other performance conditions.

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The fair value of the contingent consideration is remeasured at the estimated fair value at each reporting period with the change in fair value recognized as income or expense within change in fair value of contingent consideration in the Consolidated Statements of Operations.

The Company measures the initial liability and remeasures the liability on a recurring basis using Level 3 inputs as defined under authoritative guidance for fair value measurements.

The fair value is determined using a discounted cash flow model applied to projected net sales, using probabilities of achieving projected net sales and projected payment dates.

Projected net sales are based on the Company's internal projections and extensive analysis of the target market and the sales potential.

The Company measures the initial liability and remeasures the liability on a recurring basis using Level 3 inputs as defined under authoritative guidance for fair value measurements, which is determined using a discounted cash flow model applied to projected net sales, using probabilities of achieving projected net sales and projected payment dates.

Projected net sales are based on internal projections and extensive analysis of the target market and the sales potential.

Increases or decreases in any valuation inputs in isolation may result in a significantly lower or higher fair value measurement in the future.

The recurring Level 3 fair value measurements of the contingent consideration liabilities include the following significant unobservable inputs as of February 28, 2021:

The recurring Level 3 fair value measurements of the contingent consideration liabilities include the following significant unobservable inputs as of August 31, 2021:

(in thousands) Fair Value Valuation Technique Unobservable Input Range

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Projected fiscal year of payment 2024 - 2025

At February 28, 2021, the range of estimated potential undiscounted future contingent consideration that the Company expects to pay as a result of all completed acquisitions is $ 20.0 million.

The revenue projections milestones associated with the contingent consideration must be reached in future periods ranging from fiscal years 2021 to 2029 in order for the associated consideration to be paid.

At August 31, 2021, the amount of undiscounted future contingent consideration that the Company expects to pay as a result of all completed acquisitions is approximately $ 20.0 million.

The milestones, including revenue projections and technical milestones associated with the contingent consideration must be reached in future periods ranging from fiscal years 2022 to 2029 in order for the associated consideration to be paid.

The Company determines if an arrangement is a lease at inception of the contract.

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The following table presents supplemental balance sheet information related to leases:

(in thousands) Balance Sheet Location Feb 28, 2021 May 31, 2020

(in thousands) Balance Sheet Location Aug 31, 2021 May 31, 2021

Operating lease ROU asset Other assets $ 8,773 $ 9,382

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The maturities of the lease liabilities for each of the following fiscal years is:

(in thousands) Feb 28, 2021

(in thousands) Aug 31, 2021

Remainder of 2022 $ 2,048

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Long-term lease obligations $ 6,668

During the three months ended February 28, 2021 and February 29, 2020, the Company recognized $ 0.8 million and $ 0.9 million of operating lease expense, respectively, which includes immaterial short-term leases.

During the nine months ended February 28, 2021 and February 29, 2020, the Company recognized $ 2.4 million and $ 2.5 million of operating lease expense, respectively, which includes immaterial short-term leases.

During the three months ended August 31, 2021 and 2020, the Company recognized $ 0.7 million and $ 0.9 million of operating lease expense, respectively, which includes immaterial short-term leases.

The expenses on the Consolidated Statement of Operations were classified as follows:

Three Months Ended Nine Months Ended

(in thousands) Feb 28, 2021

Feb 29, 2020 Feb 28, 2021 Feb 29, 2020

Three Months Ended

(in thousands) Aug 31, 2021

Cost of sales $ 219 $ 201

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General and administrative 330 295

$ 794 $ 925 $ 2,416 $ 2,469

The following table presents supplemental cash flow and other information related to leases for the nine months ended:

(in thousands) Feb 28, 2021 Feb 29, 2020

The following table presents supplemental cash flow and other information related to leases for the three months ended:

(in thousands) Aug 31, 2021 Aug 31, 2020

Cash paid for amounts included in the measurement of lease liabilities

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patents held by Bard (US Patent Nos.

7,785,302, 7,959,615 (“615”) and 7,947,022).

7,785,302 (“’302 Patent”), 7,959,615 (“’615 Patent”) and 7,947,022(“’022 Patent”)).

The case was stayed pending reexamination in the US Patent and Trademark Office ("USPTO").

Following the reexamination proceedings, and the parties’ related appeals to the Federal Circuit which resulted in further proceedings at the USPTO, certain claims of the ‘615 Patent were held invalid, while the remaining claims of the ‘615 Patent and the other two patents were upheld over the prior art references considered in the reexamination proceedings.

Thereafter, on November 16, 2020, the court granted the Company’s motion to transfer the case from the District of Utah to the United States District Court for the District of Delaware (“District of Delaware”).

The parties filed a proposed scheduling order on March 12, 2021.

Thereafter, the case was transferred from the District of Utah to the United States District Court for the District of Delaware ("District of Delaware").

A scheduling order was entered on March 23, 2021.

The Company filed a Motion to Amend its Answer and Counterclaims on April 14, 2021.

This motion seeks to add counterclaims for infringement of U.S.

and 10,632,295, as well as a counterclaim of inequitable conduct, and remains pending.

On July 22, 2021, in another case against a different defendant the District of Utah invalidated multiple claims of the ‘302, ‘022, and ‘615 Patents under 35 USC §101, including claims asserted against the Company.

Following the Utah court’s decision, the Company filed a Motion for Judgment on the Pleadings (which remains pending) based on collateral estoppel on August 9, 2021.

Bard filed its opposition brief on September 2, 2021 and the Company filed a reply on September 9, 2021.

The parties also filed a stipulation to stay all deadlines pending resolution of the Company’s Motion for Judgment on the Pleadings, which the Court entered on August 16, 2021.

The Company believes these claims are without merit and intends to defend them vigorously.

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The case proceeded through trial which began on March 4, 2019.

On day four of the jury trial, at the close of Bard’s case, the Court granted the Company's oral motion for judgment as a matter of law as well as its motions for summary judgment on the grounds that the asserted patents are invalid, ineligible, not infringed and not willfully infringed.

At the close of Bard’s case, the Court granted the Company's oral motion for judgment as a matter of law as well as its motions for summary judgment on the grounds that the asserted patents are invalid, ineligible, not infringed and not willfully infringed.

On May 10, 2019, the Company filed a motion for attorney fees and non-taxable expenses under 35 USC Sec.

285, which remains stayed in the case.

Bard appealed the judgment to the Federal Circuit and on November 10, 2020, the Federal Circuit reversed the judgment in part with respect to Section 101, and vacated and remanded the trial court’s invalidity and non-infringement judgments.

The Company filed a combined Petition for rehearing and rehearing en banc on December 10, 2020, which was denied on January 15, 2021.

Bard appealed the judgment to the Federal Circuit and on November 10, 2020, the Federal Circuit reversed the judgment in part with respect to Section 101 (subject matter eligibility), and vacated and remanded the trial court’s invalidity and non-infringement judgments.

The Company filed a combined Petition

for rehearing and rehearing en banc on December 10, 2020, which was denied on January 15, 2021.

The Federal Circuit issued its mandate on January 22, 2021.

On March 15, 2021, the District of Delaware entered an order requiring the parties to submit status reports and denied as moot the Company’s motion for attorney’s fees and expenses.

The matter remains pending.

The parties submitted status reports on March 29, 2021 and the Court subsequently held two status conferences on July 27, 2021 and August 20, 2021.

The parties agreed to schedule trial the week of May 9, 2022 and filed a joint letter indicating the same on September 3, 2021.

The Court has not yet docketed the trial and the matter remains pending.

The Company maintains its belief that Bard’s claims are without merit.

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8,025,639, 9,603,992 (“’992”) and 9,603,993 (“’993”).

The Company has not yet answered, and the matter remains pending.

On May 20, 2021, the Company filed a Motion to Dismiss Bard’s claims with respect to the ’992 and ’993 patents.

On July 22, 2021, the Company submitted the Utah court’s decision invalidating claims of the related ‘302, ‘022, and ‘615 Patents as supplemental authority in support of its Motion to Dismiss.

The parties agreed to submit supplemental briefing to address the Utah court’s decision.

Bard submitted its brief on August 12, 2021, and the Company submitted its reply on September 2, 2021.

The motion remains pending.

The Company maintains its belief that Bard’s claims are without merit.

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In this action, the Company alleges that Bard has illegally tied the sales of its tip location systems to the sales of its PICCs.

The Company alleges that this practice violates the federal antitrust laws and has had, and continues to have, an anti-competitive effect in the market for

The Company alleges that this practice violates the federal antitrust laws and has had, and continues to have, an anti-competitive effect in the market for PICCs.

The Company seeks both monetary damages and injunctive relief.

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On August 6, 2018 the court denied Bard’s motion in its entirety.

Discovery is largely complete, summary judgment, including all reply briefs, were fully briefed in October 2020, and the case will subsequently proceed to trial thereafter.

Merz North America Settlement

On May 16, 2019, Merz North America, Inc.

(“Merz”) commenced an action in the United States District Court for the Southern District of New York entitled Merz North America, Inc.

AngioDynamics, Inc.

In this action, Merz alleged breach of contract against AngioDynamics based on a March 1, 2016 Distribution Agreement.

On June 28, 2019, AngioDynamics reached a settlement with Merz.

AngioDynamics made a lump-sum payment of $ 2.5 million to Merz in return for dismissal of the case with prejudice during the first quarter of fiscal year 2020.

The case was subsequently dismissed.

Bard made a motion for summary judgment which was denied in its entirety in a decision issued by the Court on May 5, 2021.

Bard also raised a series of challenges targeted at one of AngioDynamics’ expert witnesses, which the Court denied in part and granted in part in decisions on May 5, 2021 and June 11, 2021.

Discovery is largely complete, and trial is scheduled to commence on July 5, 2022.

ACQUISITION, RESTRUCTURING, AND OTHER ITEMS, NET

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Acquisition, restructuring and other items, net, consisted of:

Three Months Ended Nine Months Ended

(in thousands) Feb 28, 2021 Feb 29, 2020 Feb 28, 2021 Feb 29, 2020

Three Months Ended

(in thousands) Aug 31, 2021 Aug 31, 2020

$ 2,084 $ 794

Mergers and acquisitions (2)

Transition service agreement (2)

( 323 ) ( 386 ) ( 1,032 ) ( 1,720 )

Divestiture (3)

8 781 393 2,241

Restructuring — — — 26

Other 356 627

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(1) Legal expenses related to litigation that is outside the normal course of business.

(2) Mergers and acquisitions expenses related to investment banking, legal and due diligence.

(2) Transition services agreement that was entered into as a result of the sale of the Fluid Management business.

(3) Divestiture expenses incurred to transition manufacturing from Glens Falls, NY to Queensbury, NY.

Included in the $ 2.0 million in legal for the nine months ended February 29, 2020 is a $ 0.4 million settlement received for the Biolitec bankruptcy litigation.

The settlement received partially offsets legal expenses paid related to the settlement proceedings.

ACCUMULATED OTHER COMPREHENSIVE INCOME

Changes in each component of accumulated other comprehensive income, net of tax, are as follows:

Three Months Ended Feb 28, 2021

(in thousands) Foreign currency translation income

Balance at November 30, 2020 $ 1,934

Other comprehensive income before reclassifications, net of tax 12

Amounts reclassified from accumulated other comprehensive loss —

Net other comprehensive income $ 12

Balance at February 28, 2021

Nine Months Ended Feb 28, 2021

Three Months Ended Aug 31, 2021

(in thousands) Foreign currency translation income

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Other comprehensive income before reclassifications, net of tax 590

Amounts reclassified from accumulated other comprehensive loss —

Net other comprehensive income $ 590

Balance at February 28, 2021

Balance at August 31, 2021

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

The following table provides a description of recent accounting pronouncements that may have a material effect on the Company's consolidated financial statements:

Recently Issued Accounting Pronouncements - Adopted

Standard Description Date Adopted Effect on the Consolidated Financial Statements

ASU 2018-13, Fair Value Measurement (Topic 820)

This ASU removes, modifies and adds various disclosure requirements related to fair value disclosures.

Disclosures related to transfers between fair value hierarchy levels will be removed and further detail around changes in unrealized gains and losses for the period and unobservable inputs used in determining level 3 fair value measurements will be added, among other changes.

June 1, 2020 The Company adopted the new standard in the first quarter of fiscal year 2021 and it did not have an impact on the Company's consolidated financial statements.

ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments

This ASU replaces the current incurred loss impairment methodology for financial assets measured at amortized cost with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information, including forecasted information, to develop credit loss estimates.

June 1, 2020 The Company adopted the new standard in the first quarter of fiscal year 2021 and it did not have an impact on the Company's consolidated financial statements.

There are no recently issued accounting pronouncements that have been adopted.

Recently Issued Accounting Pronouncements - Not Yet Applicable or Adopted

There are no other new accounting pronouncements issued that are expected to have a material impact on our consolidated financial statements.

There are no new accounting pronouncements issued that are expected to have a material impact on our consolidated financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements