ANGIODYNAMICS INC 10-K

Item 9A. Controls and Procedures. Evaluation of disclosure controls and procedures As of the end of the period covered by this report, our management, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting for our Company. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States and includes those policies and procedures that: • Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; • Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that our receipts and expenditures are being made only in accordance with authorizations of our management and members of our Board of Directors; and • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management has assessed the effectiveness of our internal control over financial reporting as of May 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on this evaluation, management concluded that our internal control over financial reporting was effective as of May 31, 2023. The effectiveness of our internal control over financial reporting as of May 31, 2023 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which appears herein. Changes in Internal Control over Financial Reporting There was no change in our internal control over financial reporting for the fiscal year ended May 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 45 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of AngioDynamics, Inc. Latham, New York Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of AngioDynamics, Inc. and subsidiaries (the “Company”) as of May 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended May 31, 2023, of the Company and our report dated August 3, 2023, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Boston, Massachusetts August 3, 2023 46 Item 9B. Other Information. None. Item 9C. Foreign Jurisdictions that Prevent Inspections. Not applicable. 47 Part III Certain information required by Part III is omitted from this Annual Report on Form 10-K because we will file a definitive proxy statement within 120 days after the end of our fiscal year end pursuant to Regulation 14A (the “Proxy Statement”) for our Annual Meeting of Stockholders, currently scheduled for October 2023. The information included in the Proxy Statement under the respective headings noted below is incorporated herein by reference. Item 10. Directors, Executive Officers and Corporate Governance. Information required in this Annual Report on Form 10-K with respect to Executive Officers is contained in the discussion titled “Executive Officers of the Company” in Part I of this Annual Report on Form 10-K. The balance of the information required by Item 10 is incorporated herein by reference to our Proxy Statement under the heading “Election of Directors”. Item 11. Executive Compensation. The information required by this caption is incorporated herein by reference to our Proxy Statement under the heading “Executive Compensation”. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this caption is incorporated herein by reference to our Proxy Statement under the heading “Ownership of Securities”. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this caption is incorporated herein by reference to our Proxy Statement under the heading “Certain Relationships and Related Transactions”. Item 14. Principal Accounting Fees and Services. The information required by this caption is incorporated herein by reference to our Proxy Statement under the headings “Audit Matters—Principal Accounting Fees and Services and—Policy on Audit Committee Pre-approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm”. 48 Part IV Item 15. Exhibits, Financial Statement Schedules. (a)(1) Financial Statements The following consolidated financial statements and supplementary data of Registrant and its subsidiaries required by Part II, Item 8, are included in Part IV of this report: Report of Independent Registered Public Accounting Firm (PCAOB I D 34 ) 50 Consolidated Statements of Operations—Year ended May 31, 2023, 2022 and 2021 52 Consolidated Statements of Comprehensive Loss - Year ended May 31, 2023, 2022 and 2021 53 Consolidated Balance Sheets—May 31, 2023 and May 31, 2022 54 Consolidated Statements of Stockholders’ Equity—Year ended May 31, 2023, 2022 and 2021 55 Consolidated Statements of Cash Flows—Year ended May 31, 2023, 2022 and 2021 56 Notes to Consolidated Financial Statements 58 (2) Financial Statement Schedules The following consolidated financial statement schedule is included in Part IV of this report: Schedule II—Valuation and qualifying accounts 81 All other schedules are omitted because they are not applicable, not required, or because the required information is included in the consolidated financial statements or notes thereto. (b) Exhibits 82 49 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of AngioDynamics, Inc. Latham, New York Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of AngioDynamics, Inc. and subsidiaries (the "Company") as of May 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, for each of the three years in the period ended May 31, 2023, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of May 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended May 31, 2023, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of May 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 3, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which it relates. Inventories – Excess Quantities and Obsolescence — Refer to Notes 1 & 6 Critical Audit Matter Description The Company evaluates inventory each reporting period for excess quantities and obsolescence, establishing reserves when necessary based upon historical experience, assessment of economic conditions, and expected demand. Once recorded, these reserves are considered permanent adjustments to the carrying value of inventory. As of May 31, 2023, the Company has inventories of $55.3 million, net of excess quantities and obsolescence reserves. We identified the reserve for excess quantities and obsolete inventory as a critical audit matter because of the significant estimates and assumptions management makes to quantify and to record the reserve, including the determination of expected demand. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the methodology and the reasonableness of assumptions including expected demand. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the reserve for excess quantities and obsolete inventory including management’s estimate of expected demand, included the following, among others: • We tested the design and effectiveness of controls over inventory, including those over the estimation of reserves for excess quantities and obsolescence. • We evaluated the reasonableness of the Company's excess and obsolete inventory policy, considering historical experience and the underlying assumptions. 50 • We tested the calculation of the excess and obsolete reserve pursuant to the Company's policy, on a sample basis, including the completeness and accuracy of the data used in the calculation. • We performed a retrospective review by comparing management’s prior year projections of future demand by product, with actual product sales in the current year to identify potential bias in the inventory reserve. • We held discussions with senior financial and operating management to determine whether any strategic, regulatory, or operational changes in the business were consistent with the projections of future demand that were utilized as the basis for the reserves recorded. Valuation of Goodwill for the Med Device Reporting Unit - Refer to Notes 1 & 9 At May 31, 2023, the Company's goodwill specific to the Med Device reporting unit was $40 million. As discussed in Note 1 of the consolidated financial statements, goodwill is not amortized but rather is tested for impairment at least annually or more frequently if impairment indicators arise. In connection with the Company’s determination that assets held for sale criteria was met as of May 31, 2023 with regard to a portion of its Med Device reporting unit, the Company identified a triggering event requiring further assessment relating to the recoverability of its goodwill and therefore after performing its annual test on its measurement date of April 30, 2023, performed an updated goodwill impairment test as of May 31, 2023. The Company determined the amount of goodwill attributable to the disposal group and to the portion of the remaining Med Device reporting unit on a relative fair value basis. The Company recorded a goodwill impairment charge of $14.5 million relating to its Med Device reporting unit for the year ended May 31, 2023. Auditing the annual goodwill impairment involves significant audit effort, as well as a degree of complexity and auditor judgment due to the estimation required in determining the fair value of the reporting units or components thereof. In particular, the fair value estimates involve judgmental assumptions including the amount and timing of expected future cash flows from revenue growth rates, EBITA margins, weighting of fair values, and discount rates. The audit effort involved the use of professionals with specialized skill and knowledge. How the Critical Audit Matter Was Addressed in the Audit The primary procedures we performed to address this critical audit matter included: • We tested the effectiveness of internal controls over the Company’s annual goodwill impairment analysis and its conclusions related to its updated goodwill assessment as of May 31, 2023. This included controls over management’s review of the revenue growth rates, EBITA margins, weighting of the fair values, and discount rates used in the valuation models. • We performed risk assessment procedures over the Company’s goodwill impairment analysis, and evaluated the sensitivity of certain business assumptions, including ◦ Revenue growth rates ◦ EBITA margins ◦ Weighting of fair values ◦ Discount rates used in the valuation models • We considered the historical accuracy of management's estimates and evaluated the forecasts for reasonableness, comparing to historical results and internal communications to management and the Board of Directors, as well as information generated from analyst and industry reports for the Company and certain of its peer companies. • With the assistance of our fair value specialists, we evaluated the revenue growth rates, EBITA margins, weighting of fair values, and discount rates and reasonableness of the valuation methodology, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing to those selected by management. We considered the existence of contradictory evidence based on consideration of internal communication to management and the Board of Directors, Company press releases, and analysts' reports, as well as any changes within the business. /s/ Deloitte & Touche LLP Boston, Massachusetts August 3, 2023 We have served as the Company’s auditor since 2016. 51 AngioDynamics, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Year ended May 31, 2023 2022 2021 Net sales $ 338,752 $ 316,219 $ 291,010 Cost of sales (exclusive of intangible amortization) 164,506 150,487 134,222 Gross profit 174,246 165,732 156,788 Operating expenses Research and development 29,883 30,739 36,390 Sales and marketing 104,249 95,301 81,306 General and administrative 40,003 38,451 35,918 Amortization of intangibles 18,790 19,458 18,136 Goodwill impairment 14,549 — — Change in fair value of contingent consideration 2,320 1,212 89 Acquisition, restructuring and other items, net 15,633 9,042 20,232 Total operating expenses 225,427 194,203 192,071 Operating loss ( 51,181 ) ( 28,471 ) ( 35,283 ) Other expenses Interest expense, net ( 2,702 ) ( 688 ) ( 861 ) Other income (expense), net ( 554 ) ( 790 ) 92 Total other expenses, net ( 3,256 ) ( 1,478 ) ( 769 ) Loss before income tax benefit ( 54,437 ) ( 29,949 ) ( 36,052 ) Income tax benefit ( 1,995 ) ( 3,402 ) ( 4,504 ) Net loss $ ( 52,442 ) $ ( 26,547 ) $ ( 31,548 ) Loss per share Basic $ ( 1.33 ) $ ( 0.68 ) $ ( 0.82 ) Diluted $ ( 1.33 ) $ ( 0.68 ) $ ( 0.82 ) Weighted average shares outstanding Basic 39,480 39,009 38,342 Diluted 39,480 39,009 38,342 The accompanying notes are an integral part of these consolidated financial statements. 52 AngioDynamics, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) Year ended May 31, 2023 2022 2021 Net loss $ ( 52,442 ) $ ( 26,547 ) $ ( 31,548 ) Other comprehensive income (loss), before tax: Foreign currency translation gain (loss) ( 6,080 ) ( 1,796 ) 4,494 Other comprehensive income (loss), before tax ( 6,080 ) ( 1,796 ) 4,494 Income tax benefit (expense) related to items of other comprehensive income (loss) — — — Other comprehensive income (loss), net of tax ( 6,080 ) ( 1,796 ) 4,494 Total comprehensive loss, net of tax $ ( 58,522 ) $ ( 28,343 ) $ ( 27,054 ) The accompanying notes are an integral part of these consolidated financial statements. 53 AngioDynamics, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS (in thousands, except share data) May 31, 2023 May 31, 2022 Assets Current Assets Cash and cash equivalents $ 44,620 $ 28,825 Accounts receivable, net of allowances of $ 2,150 and $ 1,939 , respectively 52,826 52,304 Inventories 55,325 51,392 Prepaid expenses and other 4,617 10,824 Current assets held for sale 6,154 — Total current assets 163,542 143,345 Property, plant and equipment, net 44,384 45,005 Intangible assets, net 111,144 152,380 Goodwill 159,238 201,058 Other assets 10,676 10,963 Non-current assets held for sale 43,653 — Total Assets $ 532,637 $ 552,751 Liabilities and Stockholders' Equity Current Liabilities Accounts payable $ 40,445 $ 28,047 Accrued liabilities 26,617 34,842 Current portion of contingent consideration 14,761 8,783 Other current liabilities 2,002 2,652 Total current liabilities 83,825 74,324 Long-term debt 49,818 25,000 Deferred income taxes 12,813 16,037 Contingent consideration, net of current portion 4,535 8,165 Other long-term liabilities 3,350 4,736 Total Liabilities 154,341 128,262 Commitments and Contingencies (Note 17) Stockholders’ Equity Preferred stock, par value $ 0.01 per share, 5,000,000 shares authorized; no shares issued and outstanding — — Common stock, par value $ 0.01 per share, 75,000,000 shares authorized; 39,981,422 and 39,541,173 shares issued and 39,611,422 and 39,171,173 shares outstanding at May 31, 2023 and 2022, respectively 382 380 Additional paid-in capital 599,206 586,879 Accumulated deficit ( 210,855 ) ( 158,413 ) Treasury stock, 370,000 shares, at cost at May 31, 2023 and 2022, respectively ( 5,714 ) ( 5,714 ) Accumulated other comprehensive income (loss) ( 4,723 ) 1,357 Total Stockholders' Equity 378,296 424,489 Total Liabilities and Stockholders' Equity $ 532,637 $ 552,751 The accompanying notes are an integral part of these consolidated financial statements. 54 AngioDynamics, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except share data) Common Stock Additional paid in capital Accumulated deficit Accumulated other comprehensive income (loss) Treasury Stock Total Shares Amount Shares Amount Balance at May 31, 2020 38,448,536 $ 374 $ 561,871 $ ( 100,318 ) $ ( 1,341 ) ( 370,000 ) $ ( 5,714 ) 454,872 Net loss ( 31,548 ) ( 31,548 ) Exercise of stock options 123,536 1 1,929 1,930 Issuance/cancellation of restricted stock units 184,685 ( 223 ) ( 223 ) Purchase of common stock under Employee Stock Purchase Plan 164,194 2 1,305 1,307 Stock-based compensation 8,625 8,625 Other comprehensive income, net of tax 4,494 4,494 Balance at May 31, 2021 38,920,951 $ 377 $ 573,507 $ ( 131,866 ) $ 3,153 ( 370,000 ) $ ( 5,714 ) $ 439,457 Net loss ( 26,547 ) ( 26,547 ) Exercise of stock options 162,721 1 2,706 2,707 Issuance/cancellation of restricted stock units 299,544 ( 1,900 ) ( 1,900 ) Issuance/cancellation of performance share units 59,371 — Purchase of common stock under Employee Stock Purchase Plan 98,586 2 1,874 1,876 Stock-based compensation 10,692 10,692 Other comprehensive loss, net of tax ( 1,796 ) ( 1,796 ) Balance at May 31, 2022 39,541,173 $ 380 $ 586,879 $ ( 158,413 ) $ 1,357 ( 370,000 ) $ ( 5,714 ) $ 424,489 Net loss ( 52,442 ) ( 52,442 ) Exercise of stock options 21,617 1 155 156 Issuance/cancellation of restricted stock units 239,028 ( 720 ) ( 720 ) Issuance/cancellation of performance share units 29,826 ( 312 ) ( 312 ) Purchase of common stock under Employee Stock Purchase Plan 149,778 1 2,046 2,047 Stock-based compensation 11,158 11,158 Other comprehensive loss, net of tax ( 6,080 ) ( 6,080 ) Balance at May 31, 2023 39,981,422 $ 382 $ 599,206 $ ( 210,855 ) $ ( 4,723 ) ( 370,000 ) $ ( 5,714 ) $ 378,296 The accompanying notes are an integral part of these consolidated financial statements. 55 AngioDynamics, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Year ended May 31, 2023 2022 2021 Cash flows from operating activities: Net loss $ ( 52,442 ) $ ( 26,547 ) $ ( 31,548 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 30,873 29,349 25,916 Non-cash lease expense 2,484 2,439 2,456 Goodwill impairment 14,549 — — Stock based compensation 11,158 10,692 8,625 Change in fair value of contingent consideration 2,320 1,212 89 Deferred income tax provision ( 2,311 ) ( 3,708 ) ( 4,805 ) Changes in accounts receivable allowances 695 118 207 Asset impairments and disposals 291 391 14,228 Other ( 513 ) ( 93 ) ( 147 ) Changes in operating assets and liabilities: Accounts receivable ( 1,299 ) ( 17,151 ) ( 4,162 ) Inventories ( 8,198 ) ( 2,796 ) 11,539 Prepaid expenses and other 332 ( 5,012 ) ( 3,181 ) Accounts payable, accrued and other liabilities 2,139 3,912 4,876 Net cash provided by (used in) operating activities 78 ( 7,194 ) 24,093 Cash flows from investing activities: Additions to property, plant and equipment ( 3,812 ) ( 4,297 ) ( 5,187 ) Additions to placement and evaluation units ( 5,394 ) ( 11,410 ) ( 8,524 ) Cash paid for acquisitions — ( 3,600 ) — Acquisition of intangibles ( 540 ) — — Net cash used in investing activities ( 9,746 ) ( 19,307 ) ( 13,711 ) Cash flows from financing activities: Proceeds from issuance of and borrowings on long-term debt 70,000 — — Repayment of long-term debt ( 45,000 ) — ( 20,000 ) Proceeds from borrowings on long-term debt — 5,000 — Deferred financing costs on long-term debt ( 751 ) — — Proceeds from exercise of stock options and employee stock purchase plan 1,171 2,683 3,014 Net cash provided by (used in) financing activities 25,420 7,683 ( 16,986 ) Effect of exchange rate changes on cash and cash equivalents 43 ( 518 ) 330 Increase (decrease) in cash and cash equivalents 15,795 ( 19,336 ) ( 6,274 ) Cash and cash equivalents at beginning of year 28,825 48,161 54,435 Cash and cash equivalents at end of year $ 44,620 $ 28,825 $ 48,161 The accompanying notes are an integral part of these consolidated financial statements. 56 AngioDynamics, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued) (in thousands) Year ended May 31, 2023 2022 2021 Supplemental disclosure of non-cash investing and financing activities: Increase (decrease) in accounts payable for purchases of fixed assets $ 124 $ 14 $ ( 139 ) Cash paid during the year for: Interest $ 2,577 $ 562 $ 731 Income taxes 342 329 313 The accompanying notes are an integral part of these consolidated financial statements. 57 AngioDynamics, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION, BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Description of Business The consolidated financial statements include the accounts of AngioDynamics, Inc. and its wholly owned subsidiaries, (collectively, the "Company", "we", "our", or "us"). The Company is a leading and transformative medical technology company focused on restoring healthy blood flow in the body's vascular system, expanding cancer treatment options and improving the quality of life for patients. Accounting Principles The consolidated financial statements and accompanying notes have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). Principles of Consolidation The consolidated financial statements include the accounts of AngioDynamics and its subsidiaries (all of which are wholly owned). All intercompany balances and transactions have been eliminated. Use of Estimates The preparation of consolidated financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Estimates also affect reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all unrestricted highly liquid investments with an initial maturity of less than three months at the date of purchase to be cash equivalents. The Company maintains cash and cash equivalent balances with financial institutions in the United States in excess of amounts insured by the Federal Deposit Insurance Corporation. Fair Value Instruments The carrying amount of the Company's cash and cash equivalents, accounts receivable, accounts payable and long-term debt approximates fair value due to the short-term nature or market interest rates of these items. The Company bases the fair value of short-term investments on quoted market prices or other relevant information generated by market transactions involving identical or comparable assets. The Company measures and records derivative financial instruments at fair value. See Note 5, "Fair Value of Financial Instruments" set forth in the Notes to our consolidated financial statements included in this Annual Report on Form 10-K, for further discussion of financial instruments that are carried at fair value on a recurring and nonrecurring basis. Accounts Receivable Accounts receivable, principally trade receivables, are generally due within 30 to 90 days and are stated at amounts due from customers, net of an allowance for estimated sales returns and doubtful accounts. The Company performs ongoing credit evaluations of customers and adjusts credit limits based upon payment history and the customer’s current creditworthiness, as determined by a review of their current credit information. The Company continuously monitors aging reports, collections and payments from customers, and a provision for estimated credit losses is maintained based upon historical experience and any specific customer collection issues that have been identified. While such credit losses have historically been within expectations and the provisions established, the Company cannot guarantee that the same credit loss rates will be experienced in the future. The Company writes off accounts receivable when they are determined to be uncollectible. Inventories Inventories are stated at the lower of cost or net realizable value based on the first-in, first-out cost method and consist of raw materials, work in process and finished goods. The standard cost of finished goods and work-in-process inventory is composed of material, labor and manufacturing overhead, which approximates actual cost. In addition to stating inventory at the 58 lower of cost or net realizable value, we also evaluate inventory each reporting period for excess quantities and obsolescence, establishing reserves when necessary based upon historical experience, assessment of economic conditions and expected demand. Once recorded, these reserves are considered permanent adjustments to the carrying value of inventory. An increase to inventory reserves results in a corresponding increase in cost of revenue. Inventories are written off against the reserve when they are physically disposed. Property, Plant and Equipment Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Placement and evaluation units represent capital equipment placed at customer locations under placement or evaluation agreements for which depreciation expense is included in cost of sales on the Consolidated Statements of Operations. Refer below for useful lives by category: Estimated useful lives Building and building improvements 4 to 39 years Computer software and equipment 2 to 5 years Machinery and equipment 5 to 8 years Placement and evaluation units 5 years The Company evaluates property, plant and equipment for impairment periodically to determine if changes in circumstances or the occurrence of events suggest the carrying value of the asset or asset group may not be recoverable. Expenditures for repairs and maintenance are charged to expense as incurred. Renewals and betterments are capitalized. Goodwill and Intangible Assets Intangible assets other than goodwill, indefinite lived intangible assets and in process research and development ("IP R&D") are amortized over their estimated useful lives, which range between two to eighteen years , on a straight-line basis over the expected period of benefit. The Company periodically reviews the estimated useful lives of 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 may not be recoverable. Such conditions could include significant adverse changes in the business climate, current-period operating or cash flow losses, significant declines in forecasted operations, or a current expectation that an asset group will be disposed of before the end of its useful life. When testing for impairment of definite-lived intangible assets held for use, the Company groups assets at the lowest level for which cash flows are separately identifiable. Prior to the first quarter of fiscal year 2023, the Company managed its operations as one reporting unit. At the beginning of the first quarter of fiscal year 2023, the Company began to manage its operations as two operating segments and two reporting units, namely Med Tech and Med Device (see Note 18 "Segments and Geographic Information" set forth in the Notes to our consolidated financial statements included in this Annual Report on Form 10-K). The Company operates as two reporting units and two asset groups. If a triggering event is deemed to exist, the Company performs an undiscounted operating cash flow analysis to determine if an impairment exists. If an intangible asset 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 and other intangible assets that have indefinite useful lives are not amortized, but rather, are tested for impairment annually or more frequently if impairment indicators arise. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. Goodwill and intangible assets have been recorded at either incurred or allocated cost. Allocated costs were based on respective fair market values at the date of acquisition. For goodwill, the impairment test requires a comparison of the estimated fair value of each reporting unit to which the goodwill is assigned to the carrying value of the assets and liabilities of those reporting units. The determination of reporting units also requires management judgment. The Company considers whether a reporting unit exists within a reportable segment based on the availability of discrete financial information. The Company operates as two operating segments with two reporting units and consequently evaluates goodwill for impairment based on an evaluation of the fair value of each reporting unit. If the carrying value of the reporting units exceed the fair value, the carrying value is reduced to its fair value through an adjustment to the goodwill balance, resulting in an impairment charge. As detailed in Note 9, "Goodwill and Intangible Assets" set forth in the Notes to our consolidated financial statements included in this Annual Report on Form 10-K, the Company recorded a goodwill impairment loss of $ 14.5 million for the year ended May 31, 2023 as the fair value of the Med Device reporting unit was less than its carrying value. 59 Contingent Consideration The fair value of the liability for contingent consideration recorded on the acquisition date for a business combination is based on probability weighted estimated cash flow streams, discounted back to present value using a discount rate determined in accordance with accepted valuation methods and reflective of the risk associated with the estimated cash flow streams. The liability for contingent consideration is remeasured to fair value at each reporting period with changes recorded in earnings until the contingency is resolved. Revenue Recognition The Company recognizes revenue when it transfers control of promised goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those goods and services. See Note 4, “Revenue from Contracts with Customers” set forth in the Notes to our consolidated financial statements included in this Annual Report on Form 10-K for further discussion on revenue. Research and Development Research and development costs, including salaries, consulting fees, building costs, utilities and administrative expenses that are related to developing new products, enhancing existing products, validating new and enhanced products, managing clinical, regulatory and medical affairs are expensed as incurred. Income Taxes The Company calculates income tax expense for each jurisdiction in which it operates. This involves estimating actual current taxes due plus assessing temporary differences arising from differing treatment for tax and accounting purposes that are recorded as deferred tax assets and liabilities. The Company periodically evaluates deferred tax assets, capital loss carryforwards and tax credit carryforwards to determine their recoverability based primarily on the Company's ability to generate future taxable income and capital gains. Where it is more-likely-than-not these will not be recovered, the Company estimates a valuation allowance and records a corresponding additional tax expense in the Consolidated Statements of Operations. The Company recognizes and measures uncertain tax positions taken or expected to be taken in a tax return utilizing a two-step approach. The Company first determines if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is that the Company measures the tax benefit as the largest amount that is more likely than not to be realized upon ultimate settlement. The Company recognizes interest and penalties related to uncertain tax positions in the provision for income taxes on the Consolidated Statements of Operations. Stock-Based Compensation Stock-based compensation expense reflects the fair value of stock-based awards measured at the grant date and recognized over the relevant service period. The expense recognized includes the impact of forfeitures as they occur. The Company estimates the fair value of each stock-based award on the measurement date using either the current market price of the stock, the Black-Scholes option valuation model, or the Monte Carlo Simulation valuation model. The Black-Scholes and Monte Carlo Simulation valuation models incorporate assumptions as to stock price volatility, the expected life of options or restricted stock units, a risk-free interest rate and dividend yield. The Company recognizes stock-based compensation expense related to options, restricted stock units and market based performance stock units on a straight-line basis over the service period of the award, which is generally 4 years for options and restricted stock units and 3 years for market based performance stock units. Foreign Currency Translation The functional currency of the Company's foreign subsidiaries is the local currency in which the subsidiary operates. For foreign operations where the local currency is considered to be the functional currency, the Company translates assets and liabilities into U.S. dollars at the exchange rate on the balance sheet date. The Company translates income and expense items at average rates of exchange prevailing during each period. The Company accumulates translation adjustments in accumulated other comprehensive loss, a component of stockholders’ equity. Transaction gains or losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in Other income (expense), net in the Consolidated Statements of Operations as incurred. 60 Derivative Financial Instruments The Company is exposed to market risks, including changes in foreign currency and interest rates. The Company periodically enters into certain derivative financial instruments to hedge the underlying economic exposure. Derivative instruments are presented in the consolidated financial statements at their fair value. Changes in the fair value of derivative financial instruments are either recognized periodically in income or in stockholders’ equity as a component of accumulated other comprehensive income (loss) depending on whether the derivative financial instrument qualifies for hedge accounting and, if so, whether it qualifies as a fair value or cash flow hedge. Generally, the changes in the fair value of derivatives accounted for as fair value hedges are recorded in income along with the portions of the changes in the fair value of hedged items that relate to the hedged risks. Changes in the fair value of derivatives accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in accumulated other comprehensive income (loss). There were no derivative instruments held by the Company as of May 31, 2023 and 2022. Contingencies The Company is subject to various legal proceedings that arise in the ordinary course of business, including patent infringement and product liability matters. The Company records accruals for contingencies when it is probable the liability has been incurred and the amount can be reasonably estimated. Legal fees are expensed as incurred. Insurance recoveries related to potential claims are recognized up to the amount of the recorded liability when coverage is confirmed and the estimated recoveries are probable of payment. These recoveries are not netted against the related liabilities for financial statement presentation. Recently Issued Accounting Pronouncements Recently Issued Accounting Pronouncements - Adopted Standard Description Effective Date Effect on the Consolidated Financial Statements ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance This ASU increases the transparency of government assistance to include the disclosure of (1) the types of assistance, (2) an entity's accounting for the assistance, and (3) the effect of the assistance on an entity's financial statements. June 1, 2022 The Company adopted the new standard in the first quarter of fiscal year 2023 and it did not have an impact on the Company's consolidated financial statements. Recently Issued Accounting Pronouncements - Not Yet Applicable or Adopted Standard Description Effective Date Effect on the Consolidated Financial Statements ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers This ASU improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. June 1, 2023 The Company plans to adopt the new standard in the first quarter of fiscal year 2024 and does not expect there to be a material impact to the consolidated financial statements. 61 2. ACQUISITIONS Camaro Support Catheter Asset Acquisition On July 27, 2021, the Company acquired the Camaro support catheter (rebranded as Syntrax) from QX Medical, LLC for an aggregate purchase price of $ 4.0 million, which included an upfront payment of $ 3.6 million and $ 0.4 million in purchase price holdbacks, along with $ 1.0 million of potential future contingent consideration related to revenue milestones. This acquisition supports the Auryon product family and the Company's strategic plan. The Company accounted for this acquisition as an asset purchase. The Company recorded the amount paid at closing as inventory and fixed assets of $ 0.1 million and an intangible asset product technology of $ 3.9 million. The intangible asset will be amortized over 15 years. The contingent consideration is comprised of revenue milestones and will be accounted for when the contingency is resolved or becomes probable and reasonably estimable. 3. ASSETS HELD FOR SALE During the fourth quarter of fiscal year 2023, the Company was in discussions with Merit to sell the dialysis product portfolio and BioSentry tract sealant system biopsy businesses. This qualified for held for sale accounting and the Company determined that the fair value of the net assets being sold exceeded the carrying value as of May 31, 2023. The transaction was finalized on June 8, 2023. The following table summarizes the major classes of assets held for sale: (in thousands) As of May 31, 2023 Current assets: Inventories $ 4,154 Prepaid expenses and other 2,000 Total current assets held for sale $ 6,154 Non-current assets: Property, plant and equipment, net $ 44 Intangible assets, net 17,629 Goodwill 25,980 Total non-current assets held for sale $ 43,653 4. REVENUE FROM CONTRACTS WITH CUSTOMERS Revenue Recognition Under ASC 606, Revenue from Contracts with Customers , revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company has one primary revenue stream which is the sales of its products. Disaggregation of Revenue The following tables summarize net sales by Med Tech, Med Device and by geography: Year ended May 31, 2023 Year ended May 31, 2022 (in thousands) United States International Total United States International Total Net sales Med Tech $ 84,332 $ 12,355 $ 96,687 $ 69,939 $ 8,778 $ 78,717 Med Device 198,381 43,684 242,065 196,024 41,478 237,502 Total $ 282,713 $ 56,039 $ 338,752 $ 265,963 $ 50,256 $ 316,219 62 Year ended May 31, 2021 (in thousands) United States International Total Net sales Med Tech $ 46,440 $ 9,291 $ 55,731 Med Device 190,603 44,676 235,279 Total $ 237,043 $ 53,967 $ 291,010 Net Product Revenue The Company's products consist of a wide range of medical, surgical and diagnostic devices used by professional healthcare providers for vascular access, for the treatment of peripheral vascular disease and for use in oncology and surgical settings. The Company's products are generally used in minimally invasive, image-guided procedures. Most of the Company's products are intended to be used once and then discarded, or they may be implanted for short or long term use. The Company sells its products to its distributors and to end users, such as interventional radiologists, interventional cardiologists, vascular surgeons, urologists, interventional and surgical oncologists and critical care nurses. Contracts and Performance Obligations The Company contracts with its customers based on customer purchase orders, which in many cases are governed by master purchasing agreements. The Company’s contracts with customers are generally for product only, and do not include other performance obligations such as services or other material rights. As part of its assessment of each contract, the Company evaluates certain factors including the customer’s ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations. Transaction Price and Allocation to Performance Obligations Transaction prices of products are typically based on contracted rates. Product revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products to a customer, net of any variable consideration as described below. If a contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised products underlying each performance obligation. The Company has standard pricing for its products and determines standalone selling prices based on the price at which the performance obligation is sold separately. Revenue Recognition Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which occurs at a point in time, and may be upon shipment from the Company’s manufacturing site or delivery to the customer’s named location, based on the shipping terms of a contract. In determining whether control has transferred, the Company considers if there is a present right to payment from the customer and when physical possession, legal title and risks and rewards of ownership have transferred to the customer. The Company typically invoices customers upon satisfaction of identified performance obligations. As the Company’s standard payment terms are 30 to 90 days from invoicing, the Company does not provide any significant financing to its customers. The Company enters into agreements to place placement and evaluation units (“units”) at customer sites, but the Company retains title to the units. For the duration of these agreements the customer has the right to use the unit at no upfront charge in connection with the customer’s ongoing purchase of disposables. These types of agreements include an embedded operating lease for the right to use the units. In these arrangements, revenue recognized for the sale of the disposables is not allocated between the disposal revenue and lease revenue due to the insignificant value of the units in relation to the total agreement value. Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue. Variable Consideration Reserves: Revenue from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established for discounts, returns, rebates and allowances that are offered within 63 contracts between the Company and its customers. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as a contra asset. Rebates and Allowances: The Company provides certain customers with rebates and allowances that are explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized. The Company establishes reserves for such amounts, which is included in accrued expenses in the accompanying Consolidated Balance Sheets. These rebates and allowances result from performance-based offers that are primarily based on attaining contractually specified sales volumes. The Company is also required to pay administrative fees to group purchasing organizations. Product Returns: The Company generally offers customers a limited right of return. Product returns after 30 days must be pre-approved by the Company and customers may be subject to a 20 % restocking charge. To be accepted, a returned product must be unadulterated, undamaged and have at least twelve months remaining prior to its expiration date. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company currently estimates product return liabilities using its historical product return information and considers other factors that it believes could significantly impact its expected returns, including product recalls. During the year ended May 31, 2023, such product returns were not material. Contract Balances with Customers A receivable is generally recognized in the period the Company ships the product. Payment terms on invoiced amounts are based on contractual terms with each customer and generally coincide with revenue recognition. Accordingly, the Company does not have any contract assets associated with the future right to invoice its customers. In some cases, if control of the product has not yet transferred to the customer or the timing of the payments made by the customer precedes the Company’s fulfillment of the performance obligation, the Company recognizes a contract liability that is included in deferred revenue in the accompanying Consolidated Balance Sheets. The following table presents changes in the Company’s receivables, contract assets and contract liabilities with customers: (in thousands) May 31, 2023 May 31, 2022 Receivables $ 52,826 $ 52,304 Contract assets $ — $ — Contract liabilities $ 499 $ 526 During the years ended May 31, 2023 and 2022, the Company had additions to contract liabilities of $ 0.7 million and $ 2.2 million, respectively. This was offset by $ 0.7 million and $ 2.1 million in revenue that was recognized during the years ended May 31, 2023 and 2022, respectively. Costs to Obtain or Fulfill a Customer Contract Under ASC 606, the Company may recognize an asset for incremental costs of obtaining a contract with a customer if it expects to recover those costs. The Company’s sales incentive compensation plans qualify for capitalization since these plans are directly related to sales achieved during a period of time. However, the Company has elected the practical expedient under ASC 340-40-25-4 to expense the costs as they are incurred within selling and marketing expenses since the amortization period is less than one year. The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. Shipping and handling costs, associated with the distribution of finished products to customers, are recorded in costs of goods sold and are recognized when the related finished product is shipped to the customer. Amounts charged to customers for shipping are recorded in net sales. 5. FAIR VALUE OF FINANCIAL INSTRUMENTS On a recurring basis, the Company measures certain financial assets and financial liabilities at fair value based upon quoted market prices, where available. Where quoted market prices or other observable inputs are not available, the Company applies valuation techniques to estimate fair value. FASB ASC Topic 820, Fair Value Measurements and Disclosures, establishes a three-level valuation hierarchy for disclosure of fair value measurements. The categorization of financial assets and financial liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined as follows: • Level 1 - Inputs to the valuation methodology are quoted market prices for identical assets or liabilities. 64 • Level 2 - Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs. • Level 3 - Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk. 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 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: (in thousands) Level 1 Level 2 Level 3 Fair Value at May 31, 2023 Financial Liabilities Contingent consideration for acquisition earn outs $ — $ — $ 19,296 $ 19,296 Total Financial Liabilities $ — $ — $ 19,296 $ 19,296 Fair Value Measurements using inputs considered as: (in thousands) Level 1 Level 2 Level 3 Fair Value at May 31, 2022 Financial Liabilities Contingent consideration for acquisition earn outs $ — $ — $ 16,948 $ 16,948 Total Financial Liabilities $ — $ — $ 16,948 $ 16,948 There were no transfers between Level 1, 2 and 3 for the years ended May 31, 2023 and 2022. The following tables present the changes in fair value components of Level 3 instruments: Financial Liabilities (in thousands) Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Balance at May 31, 2022 $ 16,948 Change in present value of contingent consideration (1) 2,320 Currency gain from remeasurement 28 Balance at May 31, 2023 $ 19,296 (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. Financial Liabilities (in thousands) Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Balance at May 31, 2021 $ 15,741 Change in fair value of contingent consideration (1) 1,212 Currency loss from remeasurement ( 5 ) Balance at May 31, 2022 $ 16,948 (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. 65 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. Payment of the additional consideration is generally contingent on the acquired company reaching certain performance milestones, including attaining specified revenue levels or product development targets. Contingent consideration is recorded at the estimated fair value of the contingent payments on the acquisition date. 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 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 May 31, 2023: (in thousands) Fair Value Valuation Technique Unobservable Input Range Revenue based payments $ 19,296 Discounted cash flow Discount rate 5 % Probability of payment 80 % - 100 % Projected fiscal year of payment 2024 - 2025 At May 31, 2023, 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 2024 to 2029 in order for the associated consideration to be paid. Items Measured at Fair Value on a Nonrecurring Basis The Company recorded a goodwill impairment charge of $ 14.5 million for the year ended May 31, 2023 to write down the carrying value of the Med Device reporting unit to fair value. During the fourth quarter of fiscal year 2021, the Company made the decision to abandon the OARtrac product technology and trademark. This resulted in an impairment charge of $ 14.0 million. There were no other items measured at fair value on a nonrecurring basis during the year ended May 31, 2023 or May 31, 2022. 6. INVENTORIES Inventories are stated at lower of cost and net realizable value (using the first-in, first-out method). Inventories consisted of the following: (in thousands) May 31, 2023 May 31, 2022 Raw materials $ 28,679 $ 28,251 Work in process 6,708 7,186 Finished goods 19,938 15,955 Total $ 55,325 $ 51,392 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 May 31, 2023 and 2022 was $ 3.1 million and $ 3.7 million, respectively. 7. PREPAID EXPENSES AND OTHER Prepaid expenses and other consisted of the following: 66 (in thousands) May 31, 2023 May 31, 2022 Deposits $ 894 $ 2,106 Employee Retention Tax Credit — 4,194 Software licenses 1,501 1,255 License fees 217 172 Trade shows 448 328 Rent 191 240 Other prepaid taxes 264 328 Other 1,102 2,201 Total $ 4,617 $ 10,824 8. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment are summarized as follows: (in thousands) May 31, 2023 May 31, 2022 Building and building improvements $ 29,660 $ 29,425 Computer software and equipment 27,435 27,292 Machinery and equipment 17,023 15,453 Placement and evaluation units 26,355 21,009 Construction in progress 2,444 2,402 102,917 95,581 Less accumulated depreciation ( 59,026 ) ( 51,069 ) 43,891 44,512 Land and land improvements 493 493 $ 44,384 $ 45,005 Depreciation expense for fiscal years 2023, 2022 and 2021 was $ 11.9 million, $ 7.6 million and $ 5.7 million, respectively. 9. GOODWILL AND INTANGIBLE ASSETS Goodwill Goodwill is not amortized, but rather, is tested for impairment annually or more frequently if impairment indicators arise. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. The Company has historically performed its annual goodwill assessment during the third quarter of each fiscal year. During the fourth quarter of fiscal year 2022, the Company changed its annual impairment assessment date from December 31 to April 30 to more closely align the impairment assessment date with the Company's long term planning and forecasting process. Prior to the first quarter of fiscal year 2023, the Company managed its operations as one reporting unit. At the beginning of the first quarter of fiscal year 2023, the Company began to manage its operations as two operating segments and two reporting units, namely Med Tech and Med Device (see Note 18 "Segments and Geographic Information" set forth in the Notes to our consolidated financial statements included in this Annual Report on Form 10-K). As a result of this change, goodwill was required to be allocated to each reporting unit and an interim goodwill impairment assessment was performed at the Company and reporting unit levels. To determine the fair value of the individual reporting units and the entire company as of June 1, 2022, the Company utilized the income approach. The income approach is based on the projected cash flows discounted to their present value using discount rates, that in the Company's judgment, consider the timing and risk of the forecasted cash flows using internally developed forecasts and assumptions. Under the income approach, the discount rate used is the average estimated value of a market participant’s cost of capital and debt, derived using customary market metrics. Other significant assumptions include revenue growth rates, profitability projections, and terminal value growth rates. The market approach was also considered; however, the income approach was chosen as the Company determined it is a better representation of both the Med Tech and Med Device reporting units' projected long-term performance. The fair value of each 67 reporting unit and the Company as a whole was assessed to determine if there was any impairment. The Company compared each reporting unit's fair value to the adjusted carrying value to conclude that there was no impairment for either reporting unit or the Company as a whole. The adjusted carrying value of each reporting unit was used to calculate the Company's book value to compare to its market capitalization at the assessment date. Based on the results of this evaluation, there were no adjustments to goodwill for either reporting unit or the Company as a whole as of August 31, 2022. The Company's annual testing for impairment of goodwill was completed as of April 30, 2023. To determine the fair value of the two reporting units as of April 30, 2023, the Company utilized the income approach for Med Tech and a combination of the income approach and market approach for Med Device. The income approach is based on the projected cash flows discounted to their present value using discount rates, that in the Company's judgment, consider the timing and risk of the forecasted cash flows using internally developed forecasts and assumptions. Under the income approach, the discount rate used is the average estimated value of a market participant’s cost of capital and debt, derived using customary market metrics. Other significant assumptions include revenue growth rates, profitability projections, and terminal value growth rates. The market approach estimates fair values based on the determination of appropriate publicly traded market comparison companies and market multiples of revenue and earnings derived from those companies with similar operating and investment characteristics. The market approach was also considered; however, the income approach was chosen as the Company determined it is a better representation of the Med Tech reporting units' projected long-term performance. For Med Device, both the income and market approaches were considered. The fair value of each reporting unit was assessed to determine if there was any impairment. The Company compared each reporting unit's fair value to the adjusted carrying value to conclude that there was no impairment for either reporting unit. Based on the results of this evaluation, there were no adjustments to goodwill for either reporting unit as of April 30, 2023. The Company concluded that the sale of the dialysis product portfolio and BioSentry tract sealant system biopsy businesses to Merit Medical Systems, Inc. was a triggering event for the Med Device report unit. As the Company concluded that this was the sale of a business, goodwill was allocated to the sale based on the relative fair value of the dialysis and BioSentry businesses and is included in assets held for sale as of May 31, 2023. To determine the fair value of the remaining Med Device reporting unit as of May 31, 2023, the Company utilized the income approach, as it was determined to be a better representation of the remaining Med Device reporting unit's projected long-term performance. Based on the results of this evaluation, the Company recorded a goodwill impairment charge of $ 14.5 million for the year ended May 31, 2023 to write down the carrying value of the Med Device reporting unit to fair value. The impairment loss is disclosed separately on the face of the accompanying consolidated statements of operations. There were no adjustments to goodwill for the Med Tech reporting unit for the year ended May 31, 2023 other than foreign currency translation adjustments. There were no adjustments to goodwill for the year ended May 31, 2022 other than foreign currency translation adjustments. Goodwill for each reporting unit is allocated as follows: Year ended May 31, 2023 (in thousands) Med Tech Med Device Total Balance June 1, 2022 $ 160,529 $ 40,529 $ 201,058 Goodwill impairment — ( 14,549 ) ( 14,549 ) Assets held for sale — ( 25,980 ) ( 25,980 ) Foreign currency translation adjustments ( 1,291 ) — ( 1,291 ) Balance May 31, 2023 $ 159,238 $ — $ 159,238 Even though the Company determined that there was no goodwill impairment as of April 30, 2023 for the Med Tech reporting unit, 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 April 30, 2024. 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. 68 In connection with the triggering event for the Med Device reporting unit as of May 31, 2023, long-lived assets were tested for impairment. As a result of the undiscounted cash flow analysis that was performed, there were no impairments identified as of May 31, 2023. During the fourth quarter of fiscal year 2021, the Company made the decision to abandon the OARtrac product technology and trademark. This resulted in an impairment charge of $ 14.0 million. The impairment charge is recorded in "Acquisition, restructuring and other items, net", on the Consolidated Statements of Operations (see Note 19 "Acquisition, restructuring and other items, net" as set forth in the Notes to the consolidated financial statements in this Annual Report on Form 10-K). Intangible assets consisted of the following: May 31, 2023 (in thousands) Gross carrying value Accumulated amortization Net carrying value Product technologies $ 211,751 $ ( 118,314 ) $ 93,437 Customer relationships 57,509 ( 40,755 ) 16,754 Trademarks 7,450 ( 6,660 ) 790 Licenses 4,837 ( 4,674 ) 163 $ 281,547 $ ( 170,403 ) $ 111,144 May 31, 2022 (in thousands) Gross carrying value Accumulated amortization Net carrying value Product technologies $ 239,467 $ ( 112,141 ) $ 127,326 Customer relationships 60,115 ( 38,003 ) 22,112 Trademarks 9,950 ( 7,185 ) 2,765 Licenses 4,837 ( 4,660 ) 177 $ 314,369 $ ( 161,989 ) $ 152,380 Amortization expense was $ 18.8 million, $ 19.5 million and $ 18.1 million for fiscal years 2023, 2022 and 2021, respectively. Expected future amortization expense related to the intangible assets for each of the following fiscal years is as follows: (in thousands) 2024 $ 14,399 2025 14,380 2026 14,199 2027 14,057 2028 10,827 2029 and thereafter 43,282 $ 111,144 10. INCOME TAXES The components of loss before income tax benefit are as follows: Year ended May 31, (in thousands) 2023 2022 2021 Loss before tax expense: U.S. $ ( 45,240 ) $ ( 28,495 ) $ ( 31,595 ) Non-U.S. ( 9,197 ) ( 1,454 ) ( 4,457 ) $ ( 54,437 ) $ ( 29,949 ) $ ( 36,052 ) 69 Income tax benefit is comprised of the following: Year ended May 31, (in thousands) 2023 2022 2021 Current U.S. 129 120 100 Non U.S. 187 186 201 316 306 301 Deferred U.S. ( 207 ) ( 3,415 ) ( 3,375 ) Non U.S. ( 2,104 ) ( 293 ) ( 1,430 ) ( 2,311 ) ( 3,708 ) ( 4,805 ) Income tax benefit $ ( 1,995 ) $ ( 3,402 ) $ ( 4,504 ) Temporary differences that give rise to deferred tax assets and liabilities are summarized as follows: (in thousands) May 31, 2023 May 31, 2022 Deferred tax assets Net operating loss carryforward $ 40,460 $ 40,759 Stock-based compensation 4,263 4,617 Federal and state R&D tax credit carryforward 7,311 6,320 Inventories 724 853 Expenses incurred not currently deductible 6,986 1,914 Accrued liabilities 78 72 Gross deferred tax asset 59,822 54,535 Deferred tax liabilities Depreciation and amortization 46,828 50,320 46,828 50,320 Valuation allowance ( 25,759 ) ( 20,203 ) Net deferred tax liability $ ( 12,765 ) $ ( 15,988 ) The net deferred tax liability in the U.S. as of May 31, 2023 and 2022 principally relates to tax amortization of intangibles that have an indefinite reversal period for book purposes, also known as a “naked credit deferred tax liability”, that cannot be considered as a source of income to recover the deferred tax asset. In addition, included in the net deferred tax liability as of May 31, 2023 and 2022 is a net deferred tax liability of $ 5.8 million and $ 8.8 million, respectively that was related to the stock acquisition of Eximo Medical Ltd. primarily related to book intangibles partially offset by tax net operating losses and capitalized R&D expenditures. The Company's U.S. Federal net operating loss carryforwards as of May 31, 2023 after considering IRC Section 382 limitations are $ 169.7 million. The expiration of the Federal net operating loss carryforwards are as follows: $ 5.2 million between 2023 and 2024, $ 79.4 million between 2028 and 2037 and $ 85.1 million indefinitely. The Company's state net operating loss carryforwards as of May 31, 2023 after considering remaining IRC Section 382 limitations are $ 24.1 million which expire in various years from 2029 to 2042. The Company has Israel tax net operating losses of $ 16.3 million that can be carried forward indefinitely. Beginning in 2018, except for the Global Intangible Low-Taxed Income, the Company will no longer record United States federal income tax on its share of the income of its foreign subsidiaries, nor will it record a benefit for foreign tax credits related to that income. Upon distribution of these earnings in the form of dividends or otherwise, the Company would be subject to withholding taxes payable, where applicable, to foreign countries, but would have no further federal income tax liability. The Company intends to indefinitely reinvest the unremitted foreign earnings of all other subsidiaries as of May 31, 2023, as well as all subsequent earnings generated by all of our foreign subsidiaries. Determining the amount of unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practical. 70 The Company regularly assesses its ability to realize its deferred tax assets. Assessing the realization of deferred tax assets requires significant management judgment. In determining whether its deferred tax assets are more likely than not realizable, the Company evaluated all available positive and negative evidence, and weighted the evidence based on its objectivity. Evidence the Company considered included its history of net operating losses, which resulted in the Company recording a full valuation allowance for its deferred tax assets in fiscal year 2016, except the naked credit deferred tax liability. 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 May 31, 2023. The Company will continue to assess the level of the valuation allowance required. If sufficient positive evidence exists in future periods to support a release of some or all of the valuation allowance, such a release would likely have a material impact on the Company’s results of operations. The Company's consolidated income tax expense has differed from the amount that would be provided by applying the U.S. Federal statutory income tax rate to the Company's income before income taxes for the following reasons: Year ended May 31, (in thousands) 2023 2022 2021 Income tax benefit at federal statutory tax rate of 21.0%, 21.0% and 21.0%, respectively $ ( 11,432 ) $ ( 6,289 ) $ ( 7,571 ) State income taxes, net of Federal tax benefit ( 353 ) ( 536 ) ( 462 ) Impact of Non-U.S. operations 14 199 ( 293 ) Research and development tax credit ( 991 ) 395 ( 1,303 ) Meals and entertainment 258 179 116 Goodwill impairment 3,055 — — Non-deductible executive compensation 366 686 107 Change in valuation allowance 5,556 3,168 3,921 Stock based compensation 505 ( 1,616 ) 526 Other 1,027 412 455 Income tax benefit $ ( 1,995 ) $ ( 3,402 ) $ ( 4,504 ) The following table provides a reconciliation of the beginning and ending amount of unrecognized tax benefits: Year ended May 31, (in thousands) 2023 2022 2021 Unrecognized tax benefits balance at June 1 $ 464 $ 464 $ 464 Decrease in gross amounts of tax positions related to prior years due to U.S. tax reform — — — Decrease due to lapse in statute of limitations — — — Unrecognized tax benefits balance at May 31 $ 464 $ 464 $ 464 The table above includes unrecognized tax benefits associated with the calculation of limitations placed on the utilization of tax attributes related to an acquired company. If recognized, $ 0.5 million would result in adjustments to other tax accounts. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. There are no accrued interest and penalties recognized in the Consolidated Balance Sheets as of May 31, 2023 and May 31, 2022. The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business the Company is subject to examination by taxing authorities throughout the world. Fiscal years 2020 through 2022 remain open to examination by the various tax authorities. The Company does not anticipate that the amount of unrecognized tax benefits will significantly change in the next twelve months. 71 11. ACCRUED LIABILITIES Accrued liabilities consist of the following: (in thousands) May 31, 2023 May 31, 2022 Payroll and related expenses $ 9,232 $ 20,232 Outside services 7,088 3,731 Royalties 2,874 2,986 Research and development 1,525 1,279 Accrued severance 262 59 Sales and franchise taxes 480 750 Rebates 469 511 Other 4,687 5,294 Total $ 26,617 $ 34,842 12. LONG-TERM DEBT On August 30, 2022, the Company repaid all amounts outstanding under its then existing credit agreement and entered into a new Credit Agreement (the "Credit Agreement") with its lenders, JPMorgan Chase Bank, N.A., as Administrative Agent, sole bookrunner, and sole lead arranger, and Bank of America, N.A. and KeyBank National Association, as Syndication Agents. The Credit Agreement provides for a $ 75.0 million secured revolving credit facility (the "Revolving Facility") and a $ 30.0 million delayed draw term loan (the "Delayed Draw Term Loan"), and also includes an uncommitted expansion feature that allows the Company to increase the total revolving commitments and/or add new tranches of term loans in an aggregate amount not to exceed $ 75.0 million. Each exercise of such expansion feature must be drawn in $ 5.0 million increments. The proceeds of the Revolving Facility may be used for general corporate purposes, including permitted acquisitions. The proceeds of the Delayed Draw Term Loan may be used for general corporate purposes, including primarily to finance the manufacturing costs of the Auryon laser capital equipment. The Credit Agreement has a five-year maturity. Interest on the Revolving Facility and Delayed Draw Term Loan will be based, at the Company's option, on a rate equal to (i) the Secured Overnight Financing Rate ("SOFR") plus 0.10 % (subject to a floor of 0 %), or (ii) if the Company elects to treat a borrowing as an ABR Borrowing, an alternate base rate based on SOFR, plus, in each case, an applicable margin of 1.25 %, 1.50 % or 1.75 %, depending on the leverage ratio. If any amounts are not paid when due, such overdue amounts will bear interest at an amount generally equal to 2.0 % plus the existing loan rate. The Credit Agreement also carries a commitment fee in the case of the Revolving Facility, and a ticking fee, in the case of the Delayed Draw Term Loans of 0.20 % to 0.25 % per annum on the unused portion. The Company's obligations under the Credit Agreement are unconditionally guaranteed, jointly and severally, by the Company's material direct and indirect domestic subsidiaries (the “Guarantors”). All obligations of the Company and the Guarantors under the Credit Agreement are secured by first priority security interests in substantially all of the assets of the Company and the Guarantors. The Credit Agreement includes customary representations, warranties and covenants, and acceleration, indemnity and events of default provisions, including, among other things, two quarterly financial covenants as follows: • Maximum leverage ratio of consolidated total indebtedness* to consolidated EBITDA* of not greater than 3.00 to 1.00 (during certain periods following material acquisitions the ratio shall be increased to 3.50 to 1.00). • Fixed charge coverage ratio of consolidated EBITDA minus consolidated capital expenditures* to consolidated interest expense* paid or payable in cash plus scheduled principal payments in respect of indebtedness under the Credit Agreement of not less than 1.25 to 1.00. * The definitions of consolidated total indebtedness, consolidated EBITDA, consolidated capital expenditures and consolidated interest expense are specifically defined in the credit agreement included as an exhibit to Form 8-K filed on August 31, 2022. As of May 31, 2023 there was $ 25.0 million outstanding on the Revolving Facility and $ 25.0 million outstanding on the Delayed Draw Term Loan and the interest rate at May 31, 2023 applicable to each was 6.73 %. As of May 31, 2023 and May 31, 2022, the carrying value of long-term debt approximated its fair market value. 72 (in thousands) May 31, 2023 Revolving Facility $ 25,000 Delayed Draw Term Loan 25,000 Less: unamortized debit issuance costs ( 182 ) Total long-term debt $ 49,818 The Company was in compliance with the Credit Agreement covenants as of May 31, 2023. On June 8, 2023, AngioDynamics used a portion of the consideration received from the sale of the dialysis and BioSentry businesses to repay all amounts owed under AngioDynamics’ existing Credit Agreement, and as a result, the Credit Agreement was extinguished. Pursuant to the terms of the Credit Agreement, AngioDynamics had the option to repay this facility prior to the maturity date without penalty. 13. RETIREMENT PLANS The Company has a 401(k) plan under which eligible employees can defer a portion of their compensation, part of which is matched by the Company. Matching contributions were $ 4.2 million, $ 4.3 million and $ 3.8 million in 2023, 2022 and 2021, respectively. There are also various immaterial foreign retirement plans. 14. STOCKHOLDERS’ EQUITY Capitalization On October 29, 2014, the Board of Directors approved the Amended and Restated Certificate of Incorporation (the “Amended Certificate”). Under the Amended Certificate, the authorized capital stock is 80,000,000 shares, consisting of 75,000,000 shares of common stock, par value $ .01 per share and 5,000,000 shares of preferred stock, par value $ .01 per share. The holders of common stock are entitled to one vote for each share held. Subject to preferences applicable to any outstanding shares of preferred stock, the holders of common stock are entitled to receive ratably dividends, if any, as may be declared by the Board of Directors out of funds legally available for dividend payments. If the Company liquidates, dissolves, or winds up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no pre-emptive rights or rights to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that the Company may designate in the future. The Board of Directors has the authority to (i) issue the undesignated preferred stock in one or more series, (ii) determine the powers, preferences and rights and the qualifications, limitations or restrictions granted to or imposed upon any wholly un-issued series of undesignated preferred stock and (iii) fix the number of shares constituting any series and the designation of the series, without any further vote or action by the Company's stockholders. Stock Options On October 13, 2020, the Company's shareholders approved the 2020 Stock and Incentive Award Plan (the “2020 Plan”). The 2020 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance share units, performance shares and other incentive awards to the Company's employees, directors and other service providers. On November 3, 2022 the Company's shareholders approved an amendment to the 2020 Plan to increase the reserve of shares of common stock available for future grants by 1,950,000 shares. As of May 31, 2023, there remained approximately 2.9 million shares available for future grants under the 2020 Plan. Prior to the adoption of the 2020 Plan, equity awards were issued under the 2004 Stock and Incentive Award Plan (the “2004 Plan”). The adoption of the 2020 Plan did not impact the administration of equity awards issued under the 2004 Plan but following the adoption of the 2020 Plan, equity award grants are no longer made under the 2004 Plan. 73 The following table summarizes information about stock option activity for the fiscal year ended May 31, 2023: Shares Weighted average exercise price Weighted average remaining contractual life Aggregate intrinsic value (in thousands) Outstanding at beginning of year - June 1, 2022 2,346,248 $ 17.13 Granted 187,826 $ 21.54 Exercised ( 47,824 ) $ 14.79 Forfeited ( 79,701 ) $ 20.02 Expired ( 200,000 ) $ 12.14 Outstanding at end of year - May 31, 2023 2,206,549 $ 17.90 5.89 $ — Options exercisable at year-end 1,408,208 $ 17.12 4.77 $ — Options expected to vest in future periods 798,341 $ 19.28 7.86 $ — Stock options are granted at exercise prices equal to the quoted market price of common stock at the date of the grant. Options vest 25 % per year over four years for employees. Stock options granted prior to May 1, 2007 and after June 1, 2017 expire on the tenth anniversary of the grant date. Stock options granted between May 1, 2007 through May 31, 2017 expire on the seventh anniversary of the grant date. The Company measures the fair value of each stock option grant at the date of grant using a Black-Scholes option pricing model. The weighted average grant-date fair value of options granted during the years ended May 31, 2023, 2022 and 2021 was $ 9.27 , $ 9.57 , and $ 3.97 , respectively. The following assumptions were used in arriving at the fair value of options granted during 2023, 2022 and 2021, respectively: risk-free interest rates of 3.20 %, 0.92 % and 0.34 %; expected volatility of 44 %, 41 %, and 39 %; and expected lives of 5.14 years, 5.05 years, and 4.96 years. The Company does not declare dividends therefore a dividend yield of zero was used for the years ended May 31, 2023, 2022 and 2021. Risk-free interest rates reflect the yield on zero-coupon U.S. Treasury bonds whose maturity period equals the expected term of the option. Expected volatilities are based on the historical volatility of the Company's stock. The expected option lives are based on historical experience of employee exercise behavior. The total intrinsic value of options exercised during the years ended May 31, 2023, 2022 and 2021 was $ 0.2 million, $ 1.6 million, and $ 0.8 million, respectively. As of May 31, 2023, there was $ 3.9 million of total unrecognized compensation cost related to non-vested options, which is expected to be recognized over a weighted average period of 2 years. Cash received from option exercises during 2023, 2022 and 2021 was $ 0.3 million, $ 2.7 million and $ 1.9 million, respectively. Due to the valuation allowance there was no tax benefit realized from stock option exercises during the years ended May 31, 2023, 2022 and 2021. Restricted Stock Unit and Performance Share Awards The Company grants restricted stock units to certain employees under the 2020 Plan, and historically under the 2004 Plan, which give the recipients the right to receive shares of Company stock upon vesting. The restricted stock unit awards vest in four equal annual installments beginning on the first anniversary of the grant date. Restricted stock unit awards granted to directors vest over one year . Unvested restricted stock unit awards will be forfeited if the recipient ceases to be employed by the Company. The following table summarizes information about restricted stock unit activity for the year ended May 31, 2023: Restricted Stock Units Weighted Average Grant-Date Fair Value Non-vested at beginning of year, June 1, 2022 670,017 $ 18.36 Granted 379,572 $ 19.99 Vested ( 275,007 ) $ 20.29 Canceled ( 38,562 ) $ 19.28 Non-vested at end of year, May 31, 2023 736,020 The fair value of each restricted stock unit is the market price of Company stock on the date of grant. The weighted average grant date fair value of restricted stock units granted during the years ended May 31, 2023, 2022 and 2021 was $ 19.99 , 74 $ 26.24 and $ 10.40 , respectively. The total intrinsic value of restricted stock units (meaning the fair value of the units on the date of vest) vesting during the years ended May 31, 2023, 2022 and 2021 was $ 5.6 million, $ 8.5 million, and $ 2.1 million, respectively. As of May 31, 2023, there was $ 9.1 million of total unrecognized compensation cost related to non-vested restricted stock awards, which is expected to be recognized over a weighted average period of 2 years. The Company grants performance share awards to certain employees under the 2020 Plan, and historically under the 2004 Plan, which gives the recipients the right to receive shares of Company stock if certain criteria is met. The following table summarizes information about performance unit award activity for the year ended May 31, 2023: Performance Unit Awards Weighted Average Grant-Date Fair Value Non-vested at beginning of year, June 1, 2022 449,473 $ 17.02 Granted 175,386 $ 21.53 Vested ( 45,008 ) $ 20.54 Canceled ( 31,321 ) $ 20.16 Non-vested at end of year, May 31, 2023 548,530 $ 19.23 During fiscal years 2023, 2022 and 2021, the Company granted performance unit awards. Performance unit awards subject to vesting are based on the Company's level of attainment of the performance targets which are set for each of the three performance years along with continued employment of the grantee. At the end of the three year period, the vested shares are subject to modification based on the Company’s TSR targets relative to the percentage appreciation of a specified index of companies for the respective three-year period. In order to estimate the fair value of such awards, a Monte Carlo Simulation valuation model on the date of the grant was used. For the years ended May 31, 2023, 2022 and 2021, the weighted average grant date fair market value for new grants was $ 23.71 , $ 28.93 and $ 9.72 , respectively. Compensation cost is recognized over the performance period which is typically three years . As of May 31, 2023, there was $ 2.4 million of unrecognized compensation cost which is expected to be recognized over a weighted average period of 1 year. Compensation Expense The following tables represents the break out of stock-based compensation included in the Company's Consolidated Statement of Operations: Year ended May 31, (in thousands) 2023 2022 2021 Cost of sales $ 793 $ 827 $ 768 Research and development 1,459 1,298 1,152 Sales and marketing 2,922 2,568 1,641 General and administrative 5,984 5,999 5,064 $ 11,158 $ 10,692 $ 8,625 The income tax benefit on the compensation expense recognized for all stock-based compensation arrangements was $ 2.6 million, $ 2.5 million and $ 2.0 million for the years ended May 31, 2023, 2022 and 2021, respectively. The income tax benefit for 2023, 2022 and 2021 are negated by the full valuation allowance recorded against the deferred tax assets. Employee Stock Purchase Plan The Employee Stock Purchase Plan (the “Stock Purchase Plan”) provides a means by which employees (the “participants”) are given an opportunity to purchase the Company's common stock through payroll deductions. A total of 5,000,000 shares of common stock have been reserved for issuance under the Stock Purchase Plan. Shares are offered through two purchase periods, each with duration of approximately 6 months, commencing on the first business day of the first and third fiscal quarters. An employee is eligible to participate in an offering period if, on the first day of an offering period, he or she has been employed in a full-time capacity for at least six months , with a customary working schedule of 20 or more hours per week and more than five months in a calendar year. Employees who own stock possessing 5 % or more of the total combined voting power or value of all classes of stock are not eligible to participate in the Stock Purchase Plan. The purchase price of the shares of common stock acquired on each purchase date will be the lower of (i) 85 % of the fair market value of a share of common 75 stock on the first day of the offering period or (ii) 85 % of the fair market value of a share of common stock on the last day of the purchase period, subject to adjustments made by the Board of Directors. The Stock Purchase Plan is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code. During the years ended May 31, 2017, 2019 and 2021, an additional 500,000 , 1,000,000 and 500,000 shares of the Company's common stock, respectively, were reserved for issuance under the Stock Purchase Plan. On November 3, 2022 the Company's shareholders approved an amendment to the employee stock purchase plan to increase the reserve of shares of common stock available for future grants by 1,000,000 shares. The Company uses the Black-Scholes option-pricing model to calculate the purchase date fair value of the shares issued under the Stock Purchase Plan and recognize expense related to shares purchased ratably over the offering period. During the years ended May 31, 2023, 2022 and 2021, 149,778 , 98,586 and 164,194 shares, respectively, were issued at an average price of $ 13.67 , $ 19.02 and $ 7.95 , respectively, under the Stock Purchase Plan. As of May 31, 2023, 3.2 million shares remained available for future purchases under the Stock Purchase Plan. 15. EARNINGS PER SHARE Basic earnings per share are based on the weighted average number of common shares outstanding. In addition, diluted earnings per share include the dilutive effect of potential common stock consisting of stock options, restricted stock units and performance stock units, provided that the inclusion of such securities is not anti-dilutive. In periods with a net loss, stock options and restricted stock units are not included in the computation of basic loss per share as the impact would be anti-dilutive. The following table reconciles basic to diluted weighted average shares outstanding: Year ended May 31, 2023 2022 2021 Basic 39,480,367 39,009,419 38,342,476 Effect of dilutive securities — — — Diluted 39,480,367 39,009,419 38,342,476 Securities excluded as their inclusion would be anti-dilutive 3,491,099 3,465,738 3,285,354 16. LEASES The Company determines if an arrangement is a lease at inception of the contract. The Company has operating leases for buildings, primarily for office space, R&D, manufacturing and warehousing. Operating lease right-of-use (“ROU”) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Many of the lease agreements contain renewal or termination clauses that are factored into the determination of the lease term if it is reasonably certain that these options would be exercised. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company elected the three practical expedients that permit an entity to (a) not reassess whether expired or existing contracts contain leases, (b) not reassess lease classification for existing or expired leases, and (c) not consider whether previously capitalized initial direct costs would be appropriate under the new standard. Further, the Company has elected to not recognize leases with terms of 12 months or less on the balance sheet, and elected to account for lease and non-lease components as a single component for certain classes of assets. The following table presents supplemental balance sheet information related to leases: 76 (in thousands) Balance Sheet Location May 31, 2023 May 31, 2022 Assets Operating lease ROU assets Other assets $ 5,113 $ 6,974 Liabilities Current operating lease liabilities Other current liabilities 1,922 2,560 Non-current operating lease liabilities Other long-term liabilities 3,316 4,703 Total lease liabilities $ 5,238 $ 7,263 The interest rate implicit in lease agreements is typically not readily determinable, and as such the Company used the incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The incremental borrowing rate is defined as the interest the Company would pay to borrow on a collateralized basis, considering factors such as length of lease term. The following table presents the weighted average remaining lease term and discount rate: May 31, 2023 May 31, 2022 Weighted average remaining term (in years) 3.05 3.25 Weighted average discount rate 4.1 % 3.8 % The maturities of the lease liabilities for each of the following fiscal years is: (in thousands) May 31, 2023 2024 $ 2,097 2025 1,621 2026 1,329 2027 375 2028 and thereafter 174 Total lease payments $ 5,596 Less: Imputed Interest 358 Total lease obligations $ 5,238 Less: Current portion of lease obligations 1,922 Long-term lease obligations $ 3,316 During the years ended May 31, 2023 and May 31, 2022, the Company recognized operating lease expense, which includes immaterial short-term leases, of $ 2.7 million and $ 2.8 million, respectively. The expenses on the Consolidated Statement of Operations were classified as follows: (in thousands) May 31, 2023 May 31, 2022 Cost of sales $ 881 $ 890 Research and development 193 257 Sales and marketing 162 160 General and administrative 1,458 1,495 $ 2,694 $ 2,802 8 The following table presents supplemental cash flow and other information related to leases: (in thousands) May 31, 2023 May 31, 2022 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 2,742 $ 2,723 ROU assets obtained in exchange for lease liabilities Operating leases 840 36 77 17. COMMITMENTS AND CONTINGENCIES Other Commitments and Contingencies The following table summarizes the Company's other future commitments and contingencies as of May 31, 2023: (in thousands) Total 2024 2025 2026 2027 2028 and thereafter Purchase obligations (1) $ 3,166 $ 3,166 $ — $ — $ — $ — Royalties (2) 39,840 3,640 3,640 3,640 3,640 25,280 $ 43,006 $ 6,806 $ 3,640 $ 3,640 $ 3,640 $ 25,280 (1) The non-cancelable inventory purchase obligations are not reflected on the Consolidated Balance Sheets under accounting principles generally accepted in the United States of America. (2) These are future minimum royalty payments. Legal Proceedings The Company is involved in various legal proceedings, including commercial, intellectual property, product liability, and regulatory matters of a nature considered normal for its business. The Company accrues for amounts related to these matters if it is probable that a liability has been incurred, and an amount can be reasonably estimated. The Company discloses such matters when there is at least a reasonable possibility that a material loss may have been incurred. However, the Company cannot predict the outcome of any litigation or the potential for future litigation. C.R. Bard, Inc. v. AngioDynamics, Inc. On January 11, 2012, C.R. Bard, Inc. (“Bard”) filed a suit in the United States District Court of Utah claiming certain of the Company's implantable port products infringe on three U.S. patents held by Bard (US Patent Nos. 7,785,302 ("302"), 7,959,615 (“615”) and 7,947,022 ("022")). 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, the case was transferred from the District of Utah to the United States District Court for the District of Delaware (“District of Delaware”). 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. On December 27, 2021, the District of Delaware stayed the case pending the Federal Circuit's resolution of Bard's appeal from the Utah Decision. On February 17, 2023, the Federal Circuit Reversed-in-Part, Vacated-in-Part, and Remanded the Utah Decision. The District of Delaware lifted the stay on February 28, 2023 and held a status conference on March 23, 2023. A scheduling order has been entered, and a jury trial is currently scheduled for April 29, 2024. The Company has not recorded an expense related to the outcome of this litigation because it is not yet possible to determine if a potential loss is probable nor reasonably estimable. On March 10, 2015, Bard and Bard Peripheral Vascular filed suit in the District of Delaware claiming certain of the Company's implantable port products infringe on three U.S. patents held by Bard (US Patent Nos. 8,475,417, 8,545,460, 8,805,478). The case proceeded through trial which began on March 4, 2019. 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. 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. Following remand from the Federal Circuit, a jury trial commenced in the District of Delaware beginning November 14, 2022. On November 22, 2022, a jury entered a verdict finding that certain of the Company’s implantable port products infringe certain claims of U.S. patents held by Bard. The issue of damages was bifurcated by the Court during trial and was not determined by the jury. On Jun e 1, 2023, following post-trial briefing, the Court issued its decision on the Company’s Renewed Judgement as a Matter of Law. The Court held the asserted patent claims were invalid as anticipated, indefinite, ineligible, and not willfully infringed. The Court entered Judgment the same day in favor of the Company. Bard has filed a Notice of Appeal to the Federal Circuit. The Company maintains its belief that Bard’s claims are without merit. The Company has not recorded an expense related to the outcome of this litigation because it is not yet possible to determine if a potential loss is probable nor reasonably estimable. On March 8, 2021, Bard filed suit in the District of Delaware asserting certain of the Company’s port products (including certain related infusion sets) infringe U.S. Patent Nos. 8,025,639, 9,603,992 and 9,603,993. On December 27, 2021, the District of Delaware stayed the case pending the Federal Circuit's resolution of Bard's appeal of the Utah decision invalidating 78 multiple claims of the ‘302, ‘022, and ‘615 patents under 35 USC §101. Following the Federal Circuit’s decision on appeal, the District of Delaware lifted the stay on February 28, 2023, and held a scheduling conference on March 23, 2023. A scheduling order has been entered, and a jury trial is currently scheduled for June 9, 2025. The Company maintains its belief that Bard's claims are without merit. The Company has not recorded an expense related to the outcome of this litigation because it is not yet possible to determine if a potential loss is probable nor reasonably estimable. 18. SEGMENTS AND GEOGRAPHIC INFORMATION Segment information The Company regularly reviews its segments and the approach used by the chief operating decision maker, the President and Chief Executive Officer ("CEO"), and management to evaluate performance and allocate resources. Prior to the first quarter of fiscal year 2023, the Company considered 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. Commencing with the first quarter of fiscal year 2023, the Company began to manage its operations through two segments, Med Tech and Med Device to align with the transformation from a company with a broad portfolio of largely undifferentiated products to a more focused medical technology company. The CEO evaluates these two segments based on net sales and gross margin to, among other items, allocate resources and assess performance. Executives reporting to the CEO include those responsible for commercial operations, manufacturing operations, regulatory and quality and certain corporate functions. The CEO evaluates all other elements of profitability, investment and cash flow metrics on a consolidated global basis due to shared infrastructure and resources. The Company manages its assets on a total company basis, not by operating segment; therefore, the CEO does not review any asset information by operating segment and, accordingly, asset information is not reported or evaluated by operating segment. Total assets were $ 532.6 million as of May 31, 2023. The table below summarizes net sales and gross margin by Med Tech and Med Device including prior periods during which the Company considered the business to be a single operating segment, in order to conform to the current period presentation: Year ended May 31, (in thousands) 2023 2022 2021 Med Tech Net Sales $ 96,687 $ 78,717 $ 55,731 Gross Profit $ 61,966 $ 52,584 $ 39,544 Gross Margin 64.1 % 66.8 % 71.0 % Med Device Net Sales $ 242,065 $ 237,502 $ 235,279 Gross Profit $ 112,280 $ 113,148 $ 117,244 Gross Margin 46.4 % 47.6 % 49.8 % Total Net Sales $ 338,752 $ 316,219 $ 291,010 Gross Profit $ 174,246 $ 165,732 $ 156,788 Gross Margin 51.4 % 52.4 % 53.9 % Geographic information The table below summarizes net sales by geographic area based on external customer location: Year ended May 31, (in thousands) 2023 2022 2021 Net sales by Geography United States $ 282,713 $ 265,963 $ 237,043 International 56,039 50,256 53,967 Total $ 338,752 $ 316,219 $ 291,010 79 For fiscal years 2023, 2022 and 2021, international sales as a percentage of total net sales were 17 %, 16 % and 19 %, respectively. Sales to any one country outside the U.S., as determined by shipment destination, did not comprise a material portion of net sales in any of the last three fiscal years. In addition, no one customer represents more than 10% of consolidated net sales. 85 % of long-lived assets are located within the United States. 19. ACQUISITION, RESTRUCTURING AND OTHER ITEMS, NET Acquisition, restructuring and other items, net consisted of: Year ended May 31, (in thousands) 2023 2022 2021 Legal (1) $ 9,998 $ 7,625 $ 6,161 Mergers and acquisitions (2) 368 59 1 Transition service agreement (3) — — ( 1,032 ) Divestiture (4) — — 393 Intangible and other asset impairment (5) — — 13,953 Israeli Innovation Authority prepayment (6) 3,544 — — Manufacturing Relocation (7) 1,091 644 — Other 632 714 756 Total $ 15,633 $ 9,042 $ 20,232 (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. (3) Transition services agreement that was entered into as a result of the sale of the Fluid Management business. (4) Divestiture expenses incurred to transition manufacturing from Glens Falls, NY to Queensbury, NY. (5) During the fourth quarter of fiscal year 2021, the Company made the decision to abandon the OARtrac product technology and trademark. This resulted in an impairment charge of $ 14.0 million. (6) I n the first quarter of fiscal year 2023, a $ 3.5 million payment was made to the Israeli Innovation Authority to fully satisfy the obligation related to grant funds that were provided to Eximo for development of the Auryon laser prior to the acquisition in the second quarter of fiscal year 2020. (7) Expenses to relocate certain manufacturing lines from Queensbury, NY to Alajuela, Costa Rica. Included in legal for fiscal year 2021 is a $ 1.0 million settlement expense. The settlement received partially offset legal expenses paid related to the settlement proceedings. 20. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Changes in each component of accumulated other comprehensive income (loss), net of tax, are as follows: (in thousands) Foreign currency translation gain (loss) Balance at May 31, 2021 $ 3,153 Other comprehensive income, net of tax ( 1,796 ) Net other comprehensive loss $ ( 1,796 ) Balance at May 31, 2022 $ 1,357 Other comprehensive income, net of tax ( 6,080 ) Net other comprehensive loss $ ( 6,080 ) Balance at May 31, 2023 $ ( 4,723 ) 21. SUBSEQUENT EVENTS On June 8, 2023, the Company entered into an asset purchase agreement (the "Asset Purchase Agreement") with Merit Medical Systems, Inc. pursuant to which Merit acquired the dialysis product portfolio and BioSentry tract sealant system biopsy businesses for $ 100.0 million in cash. The Company and Merit entered into various agreements to facilitate the transition to Merit, including a Transactions Services Agreement and Contract Manufacturing Agreement. The Company determined that the sale of the businesses did not constitute a strategic shift that had a major effect on the Company’s operations or financial results and as a result, this transaction will not be classified as discontinued operations. 80 On June 8, 2023, AngioDynamics used a portion of the consideration received in connection with the Transaction to repay all amounts owed under AngioDynamics’ existing Credit Agreement, dated as of August 30, 2022, with the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A. and KeyBank National Association, as co-syndication agents, and JPMorgan Chase Bank N.A., as sole bookrunner and sole lead arranger, and as a result, the Credit Agreement was extinguished. Pursuant to the terms of the Credit Agreement, AngioDynamics had the option to repay this facility prior to the maturity date without penalty. AngioDynamics, Inc. and Subsidiaries (in thousands) SCHEDULE II -VALUATION AND QUALIFYING ACCOUNTS Description Balance at Beginning of Year Additions - Charged to costs and expenses Deductions Balance at End of Period Year Ended May 31, 2021 Allowance for deferred tax asset $ 13,114 $ 3,921 $ — $ 17,035 Allowance for sales returns and doubtful accounts $ 2,150 $ 1,833 $ ( 2,064 ) $ 1,919 Year Ended May 31, 2022 Allowance for deferred tax asset $ 17,035 $ 3,168 $ — $ 20,203 Allowance for sales returns and doubtful accounts $ 1,919 $ 343 $ ( 323 ) $ 1,939 Year Ended May 31, 2023 Allowance for deferred tax asset $ 20,203 $ 5,556 $ — $ 25,759 Allowance for sales returns and doubtful accounts $ 1,939 $ 457 $ ( 246 ) $ 2,150 81 EXHIBITS Incorporated by Reference Exhibit Number Description of Exhibits Form Exhibit Filing Date 2.2 Stock Purchase Agreement, dated as of October 8, 2012, by and among AngioDynamics, Inc., Vortex Medical, Inc. (“Vortex”), the stockholders of Vortex set forth on the signature pages thereto, the option holders of Vortex set forth on the signature pages thereto and CHTP Management Services, Inc., as sellers’ representative. 8-K 2.1 October 12, 2012 2.3 Asset Purchase Agreement dated as of April 17, 2019 by and between AngioDynamics, Inc. and Medline Industries Inc. 8-K 2.1 April 18, 2019 2.4 Asset Purchase Agreement dated as of June 8, 2023 by and between AngioDynamics, Inc. and Merit Medical Systems, Inc. 8-K 2.4 June 14, 2023 3.1.1 Amended and Restated Certificate of Incorporation. 10-Q 3.1 October 7, 2005 3.1.2 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of AngioDynamics, Inc. 10-K 3.1.2 August 10, 2015 3.2 Second Amended and Restated By-Laws, effective October 16, 2015. 8-K 10.1 October 21, 2015 10.1.3 AngioDynamics, Inc. 2004 Stock and Incentive Award Plan (as amended). DEF 14A August 30, 2018 10.1.6 AngioDynamics 2017 Total Shareholder Return Performance Unit Agreement Program. 10-Q 10.1 September 29, 2017 10.1.7 AngioDynamics 2018 Total Shareholder Return Performance Unit Agreement Program. 10-K 10.1.7 July 23, 2018 10.1.8 AngioDynamics 2019 Total Shareholder Return Performance Unit Agreement Program. 10-Q 10.1.8 January 8, 2020 10.1.9 AngioDynamics, Inc. 2020 Stock and Incentive Award Plan DEF 14A September 3, 2020 10.2 AngioDynamics, Inc. Employee Stock Purchase Plan (as amended). DEF 14A September 3, 2020 10.3 Form of Non-Statutory Stock Option Agreement pursuant to the AngioDynamics, Inc. Stock and Incentive Award Plan. 10-Q 10.1 October 12, 2004 10.3.1 Form of Non-Statutory Stock Option Agreement pursuant to the AngioDynamics, Inc. Stock and Incentive Award Plan. 10-K 10.3.1 July 23, 2018 10.4.3 Form of 2016 Performance Share Award Agreement pursuant to the AngioDynamics, Inc. 2004 Stock and Incentive Award Plan. 10-Q 10.2 October 5, 2016 10.4.4 Form of 2017 Performance Share Award Agreement pursuant to the AngioDynamics, Inc. 2004 Stock and Incentive Award Plan. 10-Q 10.2 September 29, 2017 10.4.5 Form of 2018 Performance Share Award Agreement pursuant to the AngioDynamics, Inc. 2004 Stock and Incentive Award Plan. 10-K 10.4.5 July 23, 2018 10.4.6 Form of 2020 Performance Share Award Agreement pursuant to the AngioDynamics, Inc. 2004 Stock and Incentive Award Plan 10-Q 10.4.6 January 8, 2021 10.4.7 Form of Performance Share Award Agreement pursuant to the 2020 Stock and Incentive Award Plan 10-Q 10.4.7 September 30, 2021 10.5 Form of Restricted Stock Award Agreement pursuant to the AngioDynamics, Inc. 2004 Stock and Incentive Award Plan. 8-K 10.3 May 12, 2005 10.6 Rita Medical Systems, Inc. 1994 Incentive Stock Plan. S-1 10.2 May 3, 2000 82 Incorporated by Reference Exhibit Number Description of Exhibits Form Exhibit Filing Date 10.7 Horizon Medical Products, Inc. 1998 Stock Incentive Plan. S-1 10.11 February 13, 1998 10.8 Rita Medical Systems, Inc. 2000 Stock Plan. S-1/A 10.3 June 14, 2000 10.9 Rita Medical Systems, Inc. 2000 Directors’ Stock Plan, as amended on June 8, 2005. S-8 99.2 July 8, 2005 10.10 Rita Medical Systems, Inc. 2005 Stock and Incentive Plan. S-8 99.1 July 8, 2005 10.11 Form of Indemnification Agreement of AngioDynamics, Inc. 8-K 10.1 May 12, 2006 10.11.1 Employment Agreement, dated April 1, 2016, between AngioDynamics, Inc. and James C. Clemmer. 8-K 10.1 April 6, 2016 10.12 Change in Control Agreement, dated April 1, 2016, between AngioDynamics, Inc. and James C. Clemmer. 8-K 10.2 April 6, 2016 10.12.2 Form of Severance Agreement of AngioDynamics, Inc. 10-K 10.12.2 August 10, 2020 10.13 Form of Change in Control Agreement. 10-K/A 10.13 January 12, 2015 10.14 Performance Share Award Agreement, with a grant date of April 4, 2016, between AngioDynamics, Inc. and James C. Clemmer. 8-K 10.3 April 6, 2016 10.15 AngioDynamics, Inc. Total Shareholder Return Performance Share Award Program - Performance Period Ending July 2019. 8-K 10.4 April 6, 2016 10.16 Stock Option Award Agreement, with a grant date of April 4, 2016, between AngioDynamics, Inc. and James C. Clemmer. 8-K 10.5 April 6, 2016 10.17 Restricted Stock Unit Award Agreement, with a grant date of April 4, 2016, between AngioDynamics, Inc. and James C. Clemmer. 8-K 10.6 April 6, 2016 10.18 Separation Agreement and General Release, dated April 22, 2016, between AngioDynamics, Inc. and Joseph M. DeVivo. 8-K 10.1 April 27, 2016 10.19 Amended and Restated Change in Control Agreement, by and between AngioDynamics, Inc. and James C. Clemmer. 8-K 10.1 February 3, 2021 10.2 Form of Amended and Restated Change in Control Agreement with AngioDynamics, Inc. 8-K 10.2 February 3, 2021 14 Code of Ethics. 10-K 14 October 1, 2021 21 Subsidiaries 23 Consent of Deloitte & Touche LLP, an independent registered public accounting firm. 31.1 Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS XBRL Instance Document 101.SCH XBRL Schema Document 101.CAL XBRL Calculation Linkbase Documents 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Labels Linkbase Documents 101.PRE XBRL Presentation Linkbase Documents 83 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANGIODYNAMICS, INC. Date: August 3, 2023 By: / S / H OWARD W. D ONNELLY Howard W. Donnelly, Chairman of the Board, Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: August 3, 2023 / S / H OWARD W. D ONNELLY Howard W. Donnelly, Chairman of the Board, Director Date: August 3, 2023 / S / J AMES C. C LEMMER James C. Clemmer, President, Chief Executive Officer (Principal Executive Officer) Date: August 3, 2023 / S / S TEPHEN A. T ROWBRIDGE Stephen A. Trowbridge, Executive Vice President, Chief Financial Officer, (Principal Financial and Accounting Officer) Date: August 3, 2023 / S / W ESLEY E. J OHNSON , J R . Wesley E. Johnson, Jr., Director Date: August 3, 2023 / S / D ENNIS S. M ETENY Dennis S. Meteny, Director Date: August 3, 2023 / S / J AN S. R EED Jan S. Reed, Director Date: August 3, 2023 / S / E ILEEN O. A UEN Eileen O. Auen, Director Date: August 3, 2023 / S / K AREN A. L ICITRA Karen A. Licitra, Director Date: August 3, 2023 / S / M ICHAEL E. T ARNOFF Michael E. Tarnoff, Director Date: August 3, 2023 / S / LORINDA A. BURGESS Lorinda A. Burgess Director 84