What changed in this filing

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Item 1. Financial Statements

2024-10-03 compared with 2024-04-09 · 115 added, 237 removed, 507 unchanged (41% of the section changed)

4 unchanged sentences

(in thousands of dollars, except per share data)

Three Months Ended Nine Months Ended

Feb 29, 2024 Feb 28, 2023 Feb 29, 2024 Feb 28, 2023

Three Months Ended

Aug 31, 2024 Aug 31, 2023

Net sales $ 67,491 $ 78,679

6 unchanged sentences

Amortization of intangibles 2,570 3,625

Goodwill impairment 159,476 — 159,476 —

Change in fair value of contingent consideration 76 ( 130 )

2 unchanged sentences

Gain on sale of assets — 47,842

Operating loss ( 199,896 ) ( 8,928 ) ( 177,986 ) ( 30,344 )

Operating income (loss) ( 13,098 ) 35,030

Other expense:

Interest income (expense), net 394 ( 736 ) 1,047 ( 1,801 )

Interest income, net 606 119

Other expense, net ( 173 ) ( 288 )

Total other income (expense), net 433 ( 169 )

Loss before income tax benefit ( 199,740 ) ( 9,664 ) ( 177,497 ) ( 32,572 )

Income tax benefit ( 12,004 ) ( 179 ) ( 6,597 ) ( 1,597 )

Net loss $ ( 187,736 ) $ ( 9,485 ) $ ( 170,900 ) $ ( 30,975 )

Loss per share

Income (loss) before income tax benefit ( 12,665 ) 34,861

Income tax expense (benefit) 133 ( 11,023 )

Net income (loss) $ ( 12,798 ) $ 45,884

Earnings (loss) per share

Basic $ ( 0.31 ) $ 1.15

7 unchanged sentences

and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands of dollars)

Three Months Ended Nine Months Ended

Feb 29, 2024 Feb 28, 2023 Feb 29, 2024 Feb 28, 2023

Net loss $ ( 187,736 ) $ ( 9,485 ) $ ( 170,900 ) $ ( 30,975 )

Three Months Ended

Aug 31, 2024 Aug 31, 2023

Net income (loss) $ ( 12,798 ) $ 45,884

Other comprehensive income (loss), before tax:

1 unchanged sentence

Other comprehensive income (loss), before tax 1,098 ( 930 )

Income tax expense related to items of other comprehensive loss — — — —

Income tax expense related to items of other comprehensive income (loss) — —

Other comprehensive income (loss), net of tax 1,098 ( 930 )

Total comprehensive loss, net of tax $ ( 185,834 ) $ ( 13,047 ) $ ( 168,983 ) $ ( 36,182 )

Total comprehensive income (loss), net of tax $ ( 11,700 ) $ 44,954

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

4 unchanged sentences

(in thousands of dollars, except share data)

Feb 29, 2024 May 31, 2023

Aug 31, 2024 May 31, 2024

Current assets

4 unchanged sentences

Prepaid expenses and other 13,326 12,971

Current assets held for sale — 6,154

Total current assets 172,594 193,253

1 unchanged sentence

Intangible assets, net 75,774 77,383

Goodwill — 159,238

Other assets 10,883 11,369

Non-current assets held for sale — 43,653

Total assets $ 293,628 $ 317,671

6 unchanged sentences

Total current liabilities 76,699 91,155

Long-term debt — 49,818

Deferred income taxes 4,626 4,852

Contingent consideration, net of current portion — 4,535

Other long-term liabilities 15,721 16,078

5 unchanged sentences

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

40,794,533 and 39,981,422 shares issued and 40,424,533 and 39,611,422 shares outstanding at February 29, 2024 and May 31, 2023, respectively

41,446,390 and 40,801,597 shares issued and 41,004,249 and 40,431,597 shares outstanding at August 31, 2024 and May 31, 2024, respectively

Additional paid-in capital 613,730 610,484

Accumulated deficit ( 408,002 ) ( 395,204 )

Treasury stock, 370,000 shares at February 29, 2024 and May 31, 2023, respectively

Treasury stock, 442,141 and 370,000 shares at August 31, 2024 and May 31, 2024, respectively

( 6,265 ) ( 5,714 )

Accumulated other comprehensive income ( 2,806 ) ( 4,723 )

Accumulated other comprehensive loss ( 3,267 ) ( 4,365 )

Total Stockholders’ Equity 196,582 205,586

6 unchanged sentences

(in thousands of dollars)

Nine Months Ended

Feb 29, 2024 Feb 28, 2023

Three Months Ended

Aug 31, 2024 Aug 31, 2023

Cash flows from operating activities:

Net loss $ ( 170,900 ) $ ( 30,975 )

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

Net income (loss) $ ( 12,798 ) $ 45,884

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

Depreciation and amortization 6,785 6,688

4 unchanged sentences

Change in fair value of contingent consideration 76 ( 130 )

Impairment loss on indefinite-lived intangible assets 159,476 —

Deferred income taxes ( 339 ) ( 11,415 )

12 unchanged sentences

Additions to placement and evaluation units ( 1,313 ) ( 767 )

Acquisition of intangibles ( 3,250 ) ( 540 )

Proceeds from sale of assets — 100,000

Net cash provided by (used in) investing activities 126,053 ( 8,218 )

Net cash (used in) provided by investing activities ( 2,405 ) 98,442

Cash flows from financing activities:

Repayment of long-term debt — ( 50,000 )

Proceeds from borrowings on long-term debt — 70,000

Deferred financing costs on long-term debt — ( 751 )

Payment of acquisition related contingent consideration — ( 10,000 )

Repurchase of common stock ( 552 ) —

Proceeds from exercise of stock options and employee stock purchase plan 43 410

Net cash (used in) provided by financing activities ( 59,248 ) 25,420

Net cash used in financing activities ( 509 ) ( 59,590 )

Effect of exchange rate changes on cash and cash equivalents 116 13

Increase in cash and cash equivalents 33,831 1,286

Increase (decrease) in cash and cash equivalents ( 21,051 ) 12,966

Cash and cash equivalents at beginning of period 76,056 44,620

14 unchanged sentences

Balance at May 31, 2024 40,801,597 $ 385 $ 610,484 $ ( 395,204 ) $ ( 4,365 ) ( 370,000 ) $ ( 5,714 ) $ 205,586

Net income 45,884 45,884

Issuance/Cancellation of restricted stock units 386,031 ( 280 ) ( 280 )

Issuance/Cancellation of performance share units 87,377 ( 210 ) ( 210 )

Purchases of common stock under ESPP 131,811 1 899 900

Stock-based compensation 4,144 4,144

Other comprehensive loss, net of tax ( 930 ) ( 930 )

Balance at August 31, 2023 40,586,641 $ 383 $ 603,759 $ ( 164,971 ) $ ( 5,653 ) ( 370,000 ) $ ( 5,714 ) $ 427,804

Net loss ( 12,798 ) ( 12,798 )

1 unchanged sentence

Issuance/Cancellation of performance share units 60,731 ( 347 ) ( 347 )

Stock-based compensation 1,877 1,877

Other comprehensive income, net of tax 945 945

Balance at November 30, 2023 40,594,406 $ 383 $ 605,284 $ ( 194,019 ) $ ( 4,708 ) ( 370,000 ) $ ( 5,714 ) $ 401,226

Net loss ( 187,736 ) ( 187,736 )

Issuance/Cancellation of restricted stock units 49,701 ( 9 ) ( 9 )

Purchases of common stock under ESPP 151,918 2 709 711

Stock-based compensation 3,205 3,205

Common stock repurchased ( 1 ) ( 72,141 ) $ ( 551 ) ( 552 )

Other comprehensive income, net of tax 1,098 1,098

Balance at February 29, 2024 40,794,533 $ 385 $ 608,588 $ ( 381,755 ) $ ( 2,806 ) ( 370,000 ) $ ( 5,714 ) $ 218,698

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Balance at August 31, 2024 41,446,390 $ 386 $ 613,730 $ ( 408,002 ) $ ( 3,267 ) ( 442,141 ) $ ( 6,265 ) $ 196,582

Common Stock Additional

1 unchanged sentence

comprehensive

income (loss) Treasury Stock

loss Treasury Stock

Shares Amount Shares Amount Total

Balance at May 31, 2023 39,981,422 $ 382 $ 599,206 $ ( 210,855 ) $ ( 4,723 ) ( 370,000 ) $ ( 5,714 ) $ 378,296

Net loss ( 13,004 ) ( 13,004 )

Exercise of stock options 6,617 ( 29 ) ( 29 )

Net income 45,884 45,884

Issuance/Cancellation of restricted stock units 386,031 ( 280 ) ( 280 )

4 unchanged sentences

Balance at August 31, 2023 40,586,641 $ 383 $ 603,759 $ ( 164,971 ) $ ( 5,653 ) ( 370,000 ) $ ( 5,714 ) $ 427,804

Net loss ( 8,486 ) ( 8,486 )

Exercise of stock options 15,000 184 184

Issuance/Cancellation of restricted stock units 11,393 ( 36 ) ( 36 )

Stock-based compensation 3,350 3,350

Other comprehensive loss, net of tax ( 1,095 ) ( 1,095 )

Balance at November 30, 2022 39,874,144 $ 381 $ 593,482 $ ( 179,903 ) $ ( 288 ) ( 370,000 ) $ ( 5,714 ) $ 407,958

Net loss ( 9,485 ) ( 9,485 )

Issuance/Cancellation of restricted stock units 9,394 ( 36 ) ( 36 )

Purchases of common stock under ESPP 92,884 1 976 977

Stock-based compensation 1,803 1,803

Other comprehensive loss, net of tax ( 3,562 ) ( 3,562 )

Balance at February 28, 2023 39,976,422 $ 382 $ 596,225 $ ( 189,388 ) $ ( 3,850 ) ( 370,000 ) $ ( 5,714 ) $ 397,655

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

4 unchanged sentences

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended February 29, 2024 and February 28, 2023, the Consolidated Balance Sheet as of February 29, 2024, the Consolidated Statements of Cash Flows for the nine months ended February 29, 2024 and February 28, 2023, and the Consolidated Statements of Stockholders’ Equity for the nine months ended February 29, 2024 and February 28, 2023 have been prepared by the Company and are unaudited.

The Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Income (Loss) for the three months ended August 31, 2024 and 2023, the Consolidated Balance Sheet as of August 31, 2024, the Consolidated Statements of Cash Flows for the three months ended August 31, 2024 and 2023, and the Consolidated Statements of Stockholders’ Equity for the three months ended August 31, 2024 and 2023 have been prepared by the Company and are unaudited.

The Consolidated Balance Sheet as of May 31, 2024 was derived from audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary to state fairly the financial position, changes in stockholders’ equity and comprehensive income, results of operations and cash flows as of and for the period ended February 29, 2024 (and for all periods presented) have been made.

The unaudited interim consolidated financial statements for the three and nine months ended February 29, 2024 and February 28, 2023 include the accounts of AngioDynamics, Inc.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary to state fairly the financial position, changes in stockholders’ equity and comprehensive income, results of operations and cash flows as of and for the period ended August 31, 2024 (and for all periods presented) have been made.

The unaudited interim consolidated financial statements for the three months ended August 31, 2024 and 2023 include the accounts of AngioDynamics, Inc.

and its wholly owned subsidiaries (collectively, the "Company", "we", "our" or "us").

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Total consideration received by the Company for the Divestiture in the third quarter of fiscal year 2024 was $ 34.5 million in cash and resulted in a pre-tax book gain of $ 6.7 million.

Included in the agreement is a $ 5.5 million earn-out related to the sales of divested products over a two year period and a milestone payment of $ 5.0 million paid upon final transfer of the manufacturing to a third-party.

Included in the agreement is a $ 5.5 million earn-out related to the sales of divested products over a two-year period and a milestone payment of $ 5.0 million paid upon final transfer of the manufacturing to a third-party that Spectrum will pay to the Company upon achievement.

The Company and Spectrum entered into various agreements to facilitate the transition of the divested businesses to Spectrum, including a Transition 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.

The following table summarizes the major classes of assets sold on the date of the sale:

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

Three Months Ended February 29, 2024 Three Months Ended February 28, 2023

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

Med Tech $ 22,033 $ 3,811 $ 25,844 $ 20,381 $ 2,493 $ 22,874

Med Device 40,309 9,029 49,338 47,239 10,599 57,838

Total $ 62,342 $ 12,840 $ 75,182 $ 67,620 $ 13,092 $ 80,712

Nine Months Ended February 29, 2024 Nine Months Ended February 28, 2023

Three Months Ended August 31, 2024 Three Months Ended August 31, 2023

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

8 unchanged sentences

Contracts and Performance Obligations

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The Company contracts with its customers based on customer purchase orders, which in many cases are governed by master purchasing agreements.

2 unchanged sentences

For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations.

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Transaction Price and Allocation to Performance Obligations

12 unchanged sentences

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.

In these arrangements, revenue recognized for the sale of the disposables is not allocated between the disposable 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.

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

During the nine months ended February 29, 2024, such product returns were not material.

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During the three months ended August 31, 2024 and 2023, such product returns were not material.

Contract Balances with Customers

2 unchanged sentences

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.

In some cases, if control of the

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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) Feb 29, 2024 May 31, 2023

(in thousands) Aug 31, 2024 May 31, 2024

Receivables $ 39,563 $ 43,610

1 unchanged sentence

Contract liabilities $ — $ 391

During the nine months ended February 29, 2024, the Company had additions to contract liabilities of $ 0.6 million.

This was offset by $ 0.3 million in revenue that was recognized during the nine months ended February 29, 2024.

During the three months ended August 31, 2024, the Company had additions to contract liabilities of $ 0.1 million.

This was offset by $ 0.1 million in revenue that was recognized during the three months ended August 31, 2024.

Costs to Obtain or Fulfill a Customer Contract

7 unchanged sentences

Inventories consisted of the following:

(in thousands) Feb 29, 2024 May 31, 2023

(in thousands) Aug 31, 2024 May 31, 2024

Raw materials $ 31,444 $ 30,736

5 unchanged sentences

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

The total inventory reserve at February 29, 2024 and May 31, 2023 was $ 3.6 million and $ 3.1 million, respectively.

GOODWILL AND INTANGIBLE ASSETS

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'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

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combination of the income approach and market approach for Med Device.

Based on the results of this evaluation, there were no adjustments to goodwill for either reporting unit as of April 30, 2023.

In the fourth quarter of fiscal year 2023, the Company concluded that the sale of the dialysis and BioSentry businesses to Merit Medical Systems, Inc.

was a triggering event for the Med Device reporting 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.

In the third quarter of fiscal year 2024, the Company concluded that the sustained decline in our stock price was a triggering event for the Med Tech reporting unit.

To determine the fair value of the remaining Med Tech reporting unit as of February 29, 2024, the Company utilized the income approach, as it was determined to be a better representation of the remaining Med Tech reporting unit's projected long-term performance.

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.

Based on the results of this evaluation, the Company recorded a goodwill impairment charge of $ 159.5 million for the quarter ended February 29, 2024 to write down the carrying value of the Med Tech reporting unit to fair value.

The impairment loss is disclosed separately on the face of the accompanying consolidated statements of operations.

Goodwill for each reporting unit is allocated as follows:

Nine months ended Feb 29, 2024

(in thousands) Med Tech Med Device Total

Balance, June 1, 2023 $ 159,238 $ — $ 159,238

Foreign currency translation adjustments ( 221 ) — ( 221 )

Balance, August 31, 2023 $ 159,017 $ — $ 159,017

Foreign currency translation adjustments 209 — 209

Balance, November 30, 2023 $ 159,226 $ — $ 159,226

Goodwill impairment ( 159,476 ) — ( 159,476 )

Foreign currency translation adjustments $ 250 $ — $ 250

Balance, February 29, 2024

The total inventory reserve at August 31, 2024 and May 31, 2024 was $ 3.2 million and $ 3.3 million, respectively.

INTANGIBLE ASSETS

Definite Lived Intangible Assets

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

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

Useful lives range from two to eighteen years .

1 unchanged sentence

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.

During the third quarter of fiscal year 2024, the Company made the decision to abandon the Syntrax product line.

This resulted in an impairment charge of $ 3.3 million for the Syntrax product technology intangible.

The impairment charge is recorded in "Acquisition, Restructuring and Other" in the consolidated financial statements included in this Form 10-Q (see Note 15 "Acquisition, Restructuring, and Other Items, Net" set forth in the Notes to our consolidated financial statements in this Quarterly Report on Form 10 -Q).

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$ 191,192 $ ( 113,809 ) $ 77,383

Amortization expense for the three months ended February 29, 2024 and February 28, 2023 was $ 3.3 million and $ 4.7 million, respectively.

Amortization expense for the nine months ended February 29, 2024 and February 28, 2023 was $ 10.5 million and $ 14.4 million, respectively.

Amortization expense for the three months ended August 31, 2024 and 2023 was $ 2.6 million and $ 3.6 million, respectively.

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

4 unchanged sentences

Accrued liabilities consisted of the following:

(in thousands) Feb 29, 2024 May 31, 2023

(in thousands) Aug 31, 2024 May 31, 2024

Payroll and related expenses $ 9,685 $ 15,640

4 unchanged sentences

Deferred Warranties 429 460

TSA Payable 5,794 6,259

Rebates 396 412

3 unchanged sentences

$ 34,108 $ 41,098

LONG-TERM DEBT

On June 8, 2023 and in connection with the completion of the dialysis and BioSentry divestiture, the Company repaid all amounts outstanding under its then existing Credit Agreement, dated as of August 30, 2022, with the lender parties thereto,

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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 (the "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.

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

The estimated annual effective tax rate prior to discrete items was 5.6 % as of the third quarter of fiscal year 2024, as compared to 5.2 % for the same period in fiscal year 2023.

The estimated annual effective

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tax rate prior to discrete items was 1.8 % as of the first quarter of fiscal year 2025, as compared to ( 32.0 )% for the same period in fiscal year 2024.

In fiscal year 2025, the Company’s effective tax rate differs from the U.S.

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

Therefore, the Company has provided a valuation allowance on its federal and state net operating loss carryforwards, federal and state R&D credit carryforwards and other net deferred tax assets as of February 29, 2024.

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

4 unchanged sentences

On November 14, 2023 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 1.5 million shares.

As of February 29, 2024, there was a maximum of 2.7 million shares of common stock available for future grant under the 2020 Plan.

As of August 31, 2024, there was a maximum of 0.9 million shares of common stock available for future grant under the 2020 Plan.

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

2 unchanged sentences

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 1.0 million shares.

As of February 29, 2024, there was a maximum of 2.9 million shares of common stock available for future grant under the employee stock purchase plan.

For the three months ended February 29, 2024 and February 28, 2023, share-based compensation expense was $ 2.6 million and $ 1.8 million, respectively.

For the nine months ended February 29, 2024 and February 28, 2023, share-based compensation expense was $ 8.6 million and $ 8.2 million, respectively.

During the nine months ended February 29, 2024 and February 28, 2023, the Company granted stock options and restricted stock units under the 2020 Plan to certain employees and members of the Board of Directors.

As of August 31, 2024, there was a maximum of 2.7 million shares of common stock available for future grant under the employee stock purchase plan.

For the three months ended August 31, 2024 and 2023, share-based compensation expense was $ 3.2 million and $ 4.1 million, respectively.

During the three months ended August 31, 2024 and 2023, the Company granted stock options and restricted stock units under the 2020 Plan to certain employees and members of the Board of Directors.

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

1 unchanged sentence

In July 2023, the Board of Directors approved a change in terms of restricted stock units granted to non-employee directors to provide for immediate vesting upon grant of the award.

During the nine months ended February 29, 2024 and February 28, 2023, the Company granted performance share units under the 2020 Plan to certain employees.

During the three months ended August 31, 2024 and 2023, the Company granted performance share units under the 2020 Plan to certain employees.

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

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The fair value of these awards is based on a Monte Carlo simulation model.

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As of February 29, 2024, there was $ 16.5 million of unrecognized compensation expense related to share-based payment arrangements.

As of August 31, 2024, there was $ 21.9 million of unrecognized compensation expense related to share-based payment arrangements.

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

The Company has sufficient shares to satisfy expected share-based payment arrangements.

On July 16, 2024, the Board of Directors approved a share repurchase program (the "Repurchase Program") under which they authorized the Company the option to repurchase up to $ 15.0 million of its outstanding common stock.

The timing and amount of any share repurchases under the authorization will be determined by management within certain parameters and based on market conditions and other considerations.

During the first quarter of fiscal year 2024, the Company repurchased

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72,141 shares of common stock in the open market at an aggregate cost of $ 0.5 million under the Repurchase Program.

As of August 31, 2024, $ 14.5 million remained available for repurchase under the Repurchase Program.

EARNINGS PER SHARE

3 unchanged sentences

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

Three Months Ended Nine Months Ended

(in thousands) Feb 29, 2024 Feb 28, 2023 Feb 29, 2024 Feb 28, 2023

Three Months Ended

(in thousands) Aug 31, 2024 Aug 31, 2023

Basic 40,653 39,842

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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 $ 324.8 million as of February 29, 2024.

Total assets were $ 293.6 million as of August 31, 2024.

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

Three Months Ended Nine Months Ended

(in thousands) Feb 29, 2024 Feb 28, 2023 Feb 29, 2024 Feb 28, 2023

Three Months Ended

(in thousands) Aug 31, 2024 Aug 31, 2023

Med Tech net sales $ 27,969 $ 25,860

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

Three Months Ended Nine Months Ended

(in thousands) Feb 29, 2024 Feb 28, 2023 Feb 29, 2024 Feb 28, 2023

Three Months Ended

(in thousands) Aug 31, 2024 Aug 31, 2023

United States $ 59,481 $ 64,399

1 unchanged sentence

Total $ 67,491 $ 78,679

For the three months ended February 29, 2024 and February 28, 2023, international sales as a percentage of total net sales were 17.1 % and 16.2 %, respectively.

For the nine months ended February 29, 2024 and February 28, 2023, international sales as a percentage of total net sales were 18.1 % and 15.9 %, respectively.

For the three months ended August 31, 2024 and 2023, international sales as a percentage of total net sales were 11.9 % and 18.1 %, 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.

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Fair Value Measurements using inputs considered as:

Fair Value at Feb 29, 2024

Fair Value at Aug 31, 2024

(in thousands) Level 1 Level 2 Level 3

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Total Financial Liabilities $ — $ — $ 4,728 $ 4,728

There were no transfers between Level 1, 2 and 3 for the three and nine months ended February 29, 2024 and February 28, 2023.

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There were no transfers between Level 1, 2 and 3 for the three months ended August 31, 2024 and 2023.

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

Three Months Ended Feb 29, 2024

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

Balance, November 30, 2023 $ 9,387

Change in present value of contingent consideration (1)

Currency gain from remeasurement 1

Contingent consideration payment —

Balance, February 29, 2024

Nine Months Ended Feb 29, 2024

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Three Months Ended Aug 31, 2024

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

1 unchanged sentence

Change in present value of contingent consideration (1)

Currency gain from remeasurement 1

Contingent consideration payment ( 10,000 )

Balance, February 29, 2024

Balance, August 31, 2024

(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.

7 unchanged sentences

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

The recurring Level 3 fair value measurements of the contingent consideration liabilities include the following significant unobservable inputs as of February 29, 2024:

The recurring Level 3 fair value measurements of the contingent consideration liabilities include the following significant unobservable inputs as of August 31, 2024:

(in thousands) Fair Value Valuation Technique Unobservable Input Range

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Projected fiscal year of payment 2025

At February 29, 2024, the amount of undiscounted future contingent consideration that the Company expects to pay as a result of all completed acquisitions is approximately $ 10.0 million.

At August 31, 2024, the amount of undiscounted future contingent consideration that the Company expects to pay as a result of all completed acquisitions is approximately $ 5.0 million.

The milestones, including revenue projections and technical milestones associated with the contingent consideration, must be reached in future periods ranging from fiscal years 2025 to 2029 in order for the associated consideration to be paid.

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

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The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

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

(in thousands) Balance Sheet Location Feb 29, 2024 May 31, 2023

(in thousands) Balance Sheet Location Aug 31, 2024 May 31, 2024

Operating lease ROU asset Other assets $ 5,313 $ 5,804

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

(in thousands) Feb 29, 2024

(in thousands) Aug 31, 2024

Remainder of 2025 $ 1,642

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Long-term lease obligations $ 3,490

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During the three months ended February 29, 2024 and February 28, 2023, the Company recognized $ 0.7 million and $ 0.7 million of operating lease expense, respectively, which includes immaterial short-term leases.

During the nine months ended February 29, 2024 and February 28, 2023, the Company recognized $ 1.9 million and $ 2.0 million of operating lease expense, respectively, which includes immaterial short-term leases.

During the three months ended August 31, 2024 and 2023, the Company recognized $ 0.7 million and $ 0.6 million of operating lease expense, respectively, which includes immaterial short-term leases.

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

Three Months Ended Nine Months Ended

(in thousands) Feb 29, 2024

Feb 28, 2023 Feb 29, 2024

Three Months Ended

(in thousands) Aug 31, 2024

Cost of sales $ 230 $ 197

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General and administrative 300 332

$ 650 $ 696 $ 1,904 $ 2,044

The following table presents supplemental cash flow and other information related to leases:

Nine Months Ended

(in thousands) Feb 29, 2024 Feb 28, 2023

Three Months Ended

(in thousands) Aug 31, 2024 Aug 31, 2023

Cash paid for amounts included in the measurement of lease liabilities

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Operating leases $ — $ 381

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COMMITMENTS AND CONTINGENCIES

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The Court entered Judgement on June 1, 2023 in favor of the Company.

Bard has appealed to the Federal Circuit, where Bard has its reply brief in support of its appeal due May 6, 2024.

A hearing date has not yet been set.

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.

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Under the terms of the Settlement Agreement, BD will grant a license to the Company under certain of BD’s port patents and AngioDynamics will grant BD a license under certain of the Company’s catheter patents.

The Company will make a one-time lump sum payment to BD in the amount of $ 7.0 million which will be payable in installments over the next 12 months.

The Company will make a one-time lump sum payment to BD in the amount of $ 7.0 million, $ 3.0 million which was paid within 5 business days of execution of the Settlement Agreement, and the remainder will be payable in installments over the next 12 months ending March 31, 2025.

The Company will also make six minimum annual payments to BD of $ 2.5 million through February, 2029, and potential additional payments if six percent ( 6 %) of annual net sales of the Company’s port products exceed the minimum payment.

The parties will participate in the pending appeal before the Federal Circuit of the case that was filed March 10, 2015 and a contingent payment of $ 3.0 million will be due from the Company to BD if the Federal Circuit reverses or vacates the District Court’s findings of invalidity with respect to the patent claims at issue in the case.

Appellate briefing is closed, but an argument date has not yet been set.

Neither party admitted any liability and the agreement contains mutual covenants not to sue and releases.

Port Product Claims

As of August 31, 2024, the Company is defending approximately 50 product liability claims involving the Company's port products (collectively, the “Port Product Claims”).

Port Product Claims are pending in various state and federal court jurisdictions, and a motion to transfer the Port Product Claims pursuant to 28 USC § 1407 for coordinated or consolidated pretrial proceedings is pending before the United States Judicial Panel on Multidistrict Litigation.

The Port Product Claims generally seek damages for personal injury allegedly resulting from use of the products.

The Company has limited information regarding the nature and quantity of certain of the Port Product Claims.

The Company continues to receive claims and lawsuits and may in future periods learn additional information regarding other unfiled or unknown claims, or other lawsuits, which could materially impact the Company’s estimate of the number of claims or lawsuits against the Company.

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

Three Months Ended Nine Months Ended

(in thousands) Feb 29, 2024 Feb 28, 2023 Feb 29, 2024 Feb 28, 2023

Three Months Ended

(in thousands) Aug 31, 2024 Aug 31, 2023

$ 507 $ 1,817

Mergers and acquisitions (2)

Plant closure (2)

5,426 — 6,115 —

Intangible and other asset impairment (4)

6,260 — 6,260 —

Transition service agreement (3)

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Manufacturing relocation (4)

— 324 587 1,062

Israeli Innovation Authority prepayment (7)

553 431 1,608 504

Other 722 953

Total $ 4,311 $ 3,212

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

For the three and nine months ended February 29, 2024, a $ 19.3 million settlement expense was recorded as a result of the Settlement Agreement that was entered into between the Company and BD.

(2) Mergers and acquisitions expense related to legal and due diligence.

(3) Included in the $ 6.1 million in plant closure for the nine months ended February 29, 2024 is $ 0.7 million that was previously included in manufacturing relocation.

(4) An impairment of $ 3.4 million on intangible and fixed assets and an inventory write-off of $ 2.9 million was taken in the third quarter of fiscal year 2024 relating to the abandonment of the Syntrax and RF product lines.

(2) Plant closure expense, related to the restructuring of our manufacturing footprint which was announced on January 5, 2024.

(3) Transition services agreements that were entered into with Merit and Spectrum.

(4) Expenses to relocate certain manufacturing lines out of Queensbury, NY.

(7) 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.

(8) Included in the $ 1.6 million in other for the nine months ended February 29, 2024 is $ 0.9 million of deferred financing fees that were written-off in conjunction with the sale of the Dialysis and BioSentry businesses and concurrent extinguishment of the debt.

Restructuring

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(1) Included in this estimate is approximately $ 13.6 million of non-cash charges for accelerated depreciation and building impairment.

The Company recorded restructuring charges related to the plan during the three and nine months ended February 29, 2024 of $ 5.4 million and $ 6.1 million, respectively.

The Company recorded restructuring charges related to the plan during the three months ended August 31, 2024 of $ 3.6 million .

Total restructuring charges recorded to date are $ 13.1 million.

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benefits are only earned if an employee stays until their termination date;

Termination benefits are only earned if an employee stays until their termination date;

therefore, the expenses related to termination benefits are being recorded ratably over the service period.

The table below presents the restructuring reserve for the three and nine months ended February 29, 2024 :

Three Months Ended Feb 29, 2024

Termination Benefits Outside Consultants Validation Expenses Facilities Closeout Fees Regulatory Filings Other Total

(in thousands)

Balance at November 30, 2023 $ — $ 653 $ — $ — $ — $ 36 $ 689

Charges 227 647 37 4,500 10 5 5,426

Non-cash adjustments — — — ( 4,500 ) — — ( 4,500 )

Cash payments — ( 635 ) — — — ( 41 ) ( 676 )

Balance at February 29, 2024 $ 227 $ 665 $ 37 $ — $ 10 $ — $ 939

Nine Months Ended Feb 29, 2024

The table below presents the restructuring reserve for the three months ended August 31, 2024 :

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Three Months Ended Aug 31, 2024

Termination Benefits Outside Consultants Validation Expenses Facilities Closeout Fees Regulatory Filings Other Total

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Cash payments — ( 1,153 ) ( 387 ) — ( 19 ) ( 276 ) ( 1,835 )

Balance at February 29, 2024 $ 227 $ 665 $ 37 $ — $ 10 $ — $ 939

Balance at August 31, 2024

$ 855 $ 994 $ 682 $ — $ — $ 74 $ 2,605

ACCUMULATED OTHER COMPREHENSIVE LOSS

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

Three Months Ended Feb 29, 2024

(in thousands) Foreign currency translation income

Balance at November 30, 2023 $ ( 4,708 )

Other comprehensive income, net of tax 1,902

Net other comprehensive income $ 1,902

Balance at February 29, 2024

Nine Months Ended Feb 29, 2024

Three Months Ended Aug 31, 2024

(in thousands) Foreign currency translation income

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Net other comprehensive income $ 1,098

Balance at February 29, 2024

Balance at August 31, 2024

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Recently Issued Accounting Pronouncements - Adopted

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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 adopted the new standard in the first quarter of fiscal year 2024 and it did not have an impact on the Company's consolidated financial statements.

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

Recently Issued Accounting Pronouncements - Not Yet Applicable or Adopted

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This ASU improves the reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

June 1, 2024 The Company plans to adopt the new standard in the first quarter of fiscal year 2025 and does not expect there to be a material impact to the consolidated financial statements.

June 1, 2024 The Company plans to adopt the new standard for fiscal year 2025 and does not expect there to be a material impact to the consolidated financial statements.

ASU 2023-09, Income Taxes (Topic 740):

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There have been no material changes to our critical accounting policies since our Annual Report on Form 10-K for fiscal year ended May 31, 2024.

SUBSEQUENT EVENTS

On March 31, 2024, the Company and BD entered into a Settlement Agreement as described in Note 14 "Commitments and Contingencies" set forth in the Notes to our consolidated financial statements in this Quarterly Report on Form 10 -Q.

The Company will make a one-time lump sum payment to BD in the amount of $ 7.0 million, $ 3.0 million of which will be payable within 5 business days, and the remainder of which will be payable in installments over the next 12 months.

The Company will also make six minimum annual payments to BD of $ 2.5 million through February, 2029, and potential additional payments if six percent ( 6 %) of annual net sales of AngioDynamics’ port products exceed the minimum payment.

The parties will participate in the pending appeal before the Federal Circuit of the case titled C.R.

and Bard Peripheral Vascular, Inc.

AngioDynamics, Inc.

15-00218–JFB;

and CAFC appeal No.

23-2056) and a contingent payment of $ 3.0 million will be due from AngioDynamics to BD if the Federal Circuit reverses or vacates the District Court’s findings of invalidity with respect to the patent claims at issue in the case.

Neither party admitted any liability and the agreement contains mutual covenants not to sue and releases.

The agreement contains mutual covenants not to sue and releases.

As of February 29, 2024, the lump sum and the present value of the minimum annual payments of $ 19.3 million was recorded in "Acquisition, restructuring and other items, net" on the accompanying consolidated statements of operations and a long-term asset of $ 1.3 million, other current liabilities of $ 8.5 million and other long-term liabilities of $ 12.0 million was recorded on the consolidated balance sheets.

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

What changed 10-Q

Item 1. Financial Statements