ANGO — Q1 FY2027 Financial Report Analysis

Overview

AngioDynamics makes medical devices for interventional radiologists, vascular surgeons and cancer specialists. Its fiscal year runs June to May, so the quarter ended August 31, 2026 is the first quarter of fiscal 2027. Sales rose 6.9% to $80.9 million and the GAAP net loss narrowed from $10.9 million to $7.1 million ($0.17 a share, from $0.26). The improvement came from gross margin, the share of sales left after the cost of making the products, which jumped 4.1 points to 59.4%. About a third of that jump came from things that won't repeat or won't last (a $1.2 million tariff refund, and a margin level management itself says will fall in the second half). Management left its full-year guidance unchanged and, the same day, named Eric Honroth as the new CEO from November 2, 2026, replacing Jim Clemmer.

At a glance

• Med Tech sales up 13.2% to $39.9 million. The company's newer, faster-growing products (Auryon, NanoKnife, AlphaVac/AngioVac) are now 49.3% of sales, up from 46.6% a year ago.
• Gross margin 59.4%, up from 55.3%. Without $1.2 million of tariff refunds it would have been 57.8%, and full-year guidance of 54%-55% implies roughly 52%-54% for the remaining three quarters.
• Operating cash outflow of $15.3 million. Cash fell from $53.9 million to $34.0 million in one quarter, mostly from paying down payroll accruals and other bills; the company has no debt.

Results vs. a year ago

Operating margin is the share of revenue left (or, here, lost) after running the business, before interest and tax. Adjusted figures are the company's own measures that remove intangible amortization and "acquisition, restructuring and other items"; adjusted EBITDA also adds back depreciation and stock-based pay.

Where the growth came from

Med Tech (+$4.7 million). Per the 10-Q, Auryon (a laser device that clears blockages in leg arteries) added $2.4 million, NanoKnife (which destroys tumors with electrical pulses instead of heat) added $1.9 million "driven by increased disposable and capital sales," and the thrombus management platform (devices that suck out blood clots) added $0.4 million.

Inside thrombectomy the two products went in opposite directions: AlphaVac grew 37.4% (up $1.2 million), while AngioVac fell 5.9% against what the earnings release calls "a tough comparison" (though it grew 9.1% from the previous quarter). Thrombolytic product sales (used to deliver clot-dissolving drugs) fell $0.4 million. NanoKnife's growth came mainly from prostate procedures, with probes (the single-use part) up 24.1% and capital (the generator itself) up 53.5%. Capital sales matter because each installed generator then buys probes for years.

Med Device (+$0.5 million). The older catheter, port and oncology business is held flat on purpose. Core products added $1.6 million and Microwave ablation $0.5 million, offset by other Oncology (-$0.7 million), Ports (-$0.6 million) and Venous (-$0.3 million). The company also had a $2.7 million order backlog at quarter end, mostly in Core and Port products, meaning some demand could not be shipped in the quarter.

By region, US sales rose 6.9% to $71.1 million and international sales 6.4% to $9.8 million.

Why margins widened

Gross profit rose $6.2 million, or 14.8%, more than twice as fast as sales. The 10-Q breaks the increase down:

The Med Device segment benefits most from moving production to outside manufacturers (+$3.2 million there), which lifted its gross margin from 49.3% to 52.7%. Med Tech's margin rose from 62.2% to 66.2%, mainly on volume, price and mix.

Below gross profit, costs rose more slowly but still took about half the gain. The three main operating costs (R&D, sales and marketing, G&A) rose $3.3 million, or 7.1%, slightly faster than sales. R&D was up $1.6 million, of which $1.2 million was "timing of certain projects and clinical spend associated with ongoing clinical trials." Sales and marketing was up $1.9 million, mostly pay and benefits (+$1.0 million). G&A was roughly flat.

What the headline numbers hide

• The best gross margin of the year is probably behind it. Q1's 59.4% sits far above the full-year guidance of 54%-55%, which management reiterated. For the year to land in that range, the other three quarters have to average roughly 52%-54%. The earnings release says outright that "the Company expects gross margin to be lower in the second half of fiscal 2027 than in the first half." The $1.2 million tariff refund also won't repeat; without it the margin was 57.8%.
• Cash conversion is poor this quarter, but in the same way as last year. The company lost $7.1 million on paper but $15.3 million in cash from operations. Adding back non-cash charges (depreciation and amortization of $5.5 million, stock-based pay of $4.5 million) would have taken it near break-even; what drove the outflow was $17.4 million of lower payables and accruals. The biggest single piece was accrued payroll, down from $24.9 million to $14.4 million between May and August. The same pattern happened a year ago (operating outflow of $15.9 million), so it reads as seasonal, not a new problem. Including $2.8 million spent on Auryon units placed at hospitals and $0.4 million on equipment, cash fell $19.9 million in the quarter.
• The GAAP-to-adjusted gap is $5.3 million of net loss. Adjusted net loss of $1.8 million excludes $2.7 million of intangible amortization and $2.2 million of "acquisition, restructuring and other items," then adjusts tax as if the company paid a 23% rate. That $2.2 million is not really one-off: these items cost $17.6 million in fiscal 2026 and $15.6 million in fiscal 2025. This quarter's mix was CEO-transition costs (up $0.8 million), litigation (up $0.2 million) and lower plant-closure costs (down $1.7 million).
• The restructuring is running a quarter later. The 10-Q now says the manufacturing restructuring announced in January 2024 should be finished in the second quarter of fiscal 2027; our annual report noted first-quarter timing from the 10-K.
• No help from buybacks or tax. Share count rose 2.1% to 42.0 million, so the per-share loss improved slightly less than the dollar loss. The tax line was a $0.2 million benefit versus a $0.1 million expense, too small to matter.
• Working capital is mixed. Receivables fell 7.1% from May to $44.9 million, while inventory rose 4.8% to $55.0 million, which fits the $2.7 million order backlog and the shift to outside manufacturers.

Did last time's read hold up?

Our fiscal 2026 annual report said the test for fiscal 2027 was whether the $15 million of promised annual savings from the factory restructuring would show up in costs, or be spent elsewhere as fiscal 2026's gross-profit gains had been. Q1 is a partial yes: savings from moving to outside manufacturers added $2.9 million to gross profit, and this time the operating loss did shrink ($7.3 million from $10.7 million), unlike fiscal 2026 when it didn't move at all. But core operating costs still rose $3.3 million, about the same as the outsourcing gain. We also flagged NanoKnife as the product to watch after 64.5% growth in fiscal Q4; it grew 29.0% this quarter, slower but still the fastest-growing line.

Takeaway: Gross margin jumped 4.1 points and the loss narrowed by a third, but management kept its full-year guidance (adjusted EPS of -$0.29 to -$0.24) unchanged after a -$0.04 quarter. That means it expects the remaining three quarters to lose a combined $0.20 to $0.25 a share, much worse than Q1. Q1's margin was lifted by a tariff refund and a peak that management expects to fade, so the reiterated guidance, not the Q1 beat, is the better guide to the year.

Outlook

Guidance as of October 8, 2026 (reiterated, unchanged from July 14):

Sales are on track: Q1 was 23.9% of the guidance midpoint, close to the 23.6% share Q1 made up of fiscal 2026 sales. Med Tech at 13.2% sits inside its 12%-15% range. The profit lines are where the guidance looks cautious: after $5.0 million of adjusted EBITDA in Q1, the full-year range leaves only $8.0 to $11.0 million for the remaining three quarters. The company expects tariffs to cost about as much as in fiscal 2026, excluding refunds.

Two other items to watch:

• CEO change. Eric Honroth, most recently Global President, Life Science at Getinge and previously at Abbott Vascular, Becton Dickinson, CareFusion and Boston Scientific, takes over on November 2, 2026. New CEOs often reset guidance or priorities within a quarter or two, so the fiscal Q2 report is the first one to read for that.
• NanoKnife beyond cancer. The FDA approved an investigational device exemption (IDE, permission to run a clinical trial with an unapproved use) for the RELIEF study of NanoKnife in benign prostatic hyperplasia (an enlarged prostate). It is a 40-patient feasibility study at up to five US sites, so it has no effect on near-term sales.

Our view: the sales mix keeps moving the right way, with Med Tech now about half the company at a 66% gross margin. But the company's own guidance assumes the rest of the year gives back much of Q1's margin, and the cash balance ($34.0 million, no debt, plus a revolving credit facility) dropped by more than a third in one seasonally weak quarter. The second quarter will show whether gross margin holds nearer 57% than 53%; if it does, the guidance is likely too low.

Source: AngioDynamics Form 10-Q for the quarter ended August 31, 2026 (filed October 8, 2026); product-line growth rates, adjusted measures and guidance are from the company's earnings release of the same date (Form 8-K, Exhibit 99.1).