AngioDynamics Inc (ANGO) 2012 Q4 法說會逐字稿

Hello everyone. This is Joe DeVivo and we're just getting ready for our conference call. We sent the information across the wire about an hour ago, and we are just waiting for it to get posted. For some reason it is not, so we're going to wait a couple of minutes until you have the information.

There is also a slide presentation we will be going through. And so since there is a lot of detail, we want to wait until you all have it. So just give us a few more minutes and then we will get started. Thanks.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the AngioDynamics fourth-quarter 2012 earnings conference call. During today's presentation all parties are in a listen only mode. Following the presentation the conference will be open for questions. (Operator Instructions).

This conference is being recorded today, July 12, 2012. I would now like to turn the conference over to Mr. Bob Jones. Please go ahead.

Thank you, Operator. And welcome to the AngioDynamics conference call to review the results of the fiscal 2012 fourth quarter and full year ended May 31, 2012. As Joe DeVivo just had mentioned, we had sent the news release to the wire services and it is in process of being distributed, but in the interest of time we did want to begin the call.

This call is being broadcast live with accompanying presentation -- a slide presentation which are now available on the AngioDynamics website. A replay of the call will also be archived on the Company's website. To access both the live webcast and the archived replay, including the presentation slides, please go to the Investor section under Events and Presentations.

If you are listening by telephone, to view the slide presentation navigate to the live webcast as noted and choose the no audio, slides only option to view the slides in conjunction with the live conference call.

Before we get started, during the course of this conference call the Company will make projections and forward-looking statements regarding future events, including statements about revenue and earnings for fiscal 2013. We encourage you to review the Company's past and future filings with the SEC including, without limitation, the Company's Forms 10-K and 10-K, which identify specific factors that may cause actual results or events to differ materially from those described in forward-looking statements.

Finally, during the Q&A period today we would like to request each caller to limit themselves to two questions, and encourage callers to requeue to ask additional questions. We appreciate everyone's cooperation with this procedure.

Now I would like to turn the call over to Joe DeVivo, President and Chief Executive Officer.

All right, guys, well, thank you for joining us today. We have no idea why the release is not across the wire, there is nothing unusual, aside from the fact that it is not across.

But we have a really detailed presentation for you, really detailed slides that will go through the business and growth rates, et cetera, et cetera. So we think it is worth not waiting for -- to see why the wire service hasn't put it across. We have a lot of tables and reconciliations and maybe they have some formatting issues. But just so you know right now there is nothing abnormal, there is nothing with the business, everything is fine. Actually, everything is great.

And let me go through and talk to you and start my prepared remarks. So with that, so good afternoon and welcome to our fourth-quarter and fiscal year-end 2012 conference call. With me on this call is Joe Gersuk, our CFO.

I will first provide some highlights of the fiscal year and then Joe will provide details on the financial results for the quarter and for the year.

Before taking questions, I want to take the opportunity to share with you our vision and outlook for fiscal 2013 and beyond. Before I get into that I just want to you to know this call is really intended to communicate with detail our strategy and the components which will drive our growth. There will be more thorough presentation than the past, given the importance of the acquisition of Navilyst, and the first view as to how we look like a consolidated organization. So we would appreciate your attention, and also we would appreciate your patience as we provide you with a lot of great information.

Today it is a new day for AngioDynamics. We are bigger, stronger, more competitive, more talented, more focused than we have been in years. Already we are seeing the benefits of the integration. We have a new management team comprised of experienced AngioDynamics and Navilyst executives, and also new members of the -- to the combined Company.

Operations are improving; savings are being realized; our product development pipeline is robust and the deal pipeline is active as we again become a Company led by innovation. Ahead of us is a clear path to success through the execution of our integration plan, which is well underway. And our 2013 operating plan, which we are in the initial stages of delivering on, is also underway.

Longer-term our goal is to grow the topline by a minimum of 10% annually, while improving EPS by at least 15% each year. We intend to exit 2013 well on our way towards achieving this goal.

Now you can see on this next slide AngioDynamics has a new logo and a new branding treatment, which visually casts a image for the Company. And we are bringing to the Company proud and successful legacy in this new brand to AngioDynamics. It is crisp, modern, unique and is a beacon to the new successful days that are to come here at AngioDynamics.

Moving forward we intend to continue to cost effectively drive innovation to our growing number of customers of our peripheral vascular, vascular access and interventional oncology products. We will spend time during this call giving you clearer direction in these areas with unprecedented transparency, show you detail on what level of revenue we expect to accomplish in our key product segments. Show you growth rates, which will build to our guidance, and also share with you some of the structural makeup which will help us better meet our customers' needs.

So first let's go through our fourth-quarter accomplishments. In Q4 we closed the acquisition of Navilyst Medical on time and commenced integration on schedule. We accelerated the momentum of our VenaCure EVLT business, and exited 2012 with a 17% worldwide growth rate, performing over 90,000 procedures during the fiscal year. That is a record for the Company, and it leads to a full-year revenue growth for EVLT of 14%.

NanoKnife recovered from our temporary stop in shipments to complete software upgrades, and achieved its first $4 million revenue quarter with an excellent balance of sales between the US and international. As I mentioned on previous calls, for NanoKnife calendar 2012 would all be about data. The Journal of the American College of Surgery published two peer-reviewed studies highlighting safety of NanoKnife near vital structures, as well as safety of NanoKnife in the pancreas. We expect more peer-reviewed publications to follow this year and into next year.

We signed an exclusive distribution deal with Microsulis to enter the microwave ablation business, thus strengthening the global leadership for AngioDynamics and interventional oncology. We launched the Navilyst Embarc microcatheter and Charter guidewire for use in embolic procedures, a key reentry to the embolic market for AngioDynamics.

We won an exclusive GPO agreement in Canada with HealthPRO, given by the early success of BioFlo, which we believe will increase sales in Canada this year by 30% alone.

Lastly, we hired a new chief technology officer, George Bourne, who has extensive experience from Boston Scientific and Navilyst, with direct experience in vascular access and interventional oncology, and he is reengineering our research and development organization to bring to the market new innovative products that deliver sustainable organic growth for the Company in the future.

All in all not a bad quarter. So turning to integration. Some investors and analysts have expressed concern about the size of the deal we did and the risks associated with combining the organization into one company. While I understand their concern, it is their concern, not my concern. This is not my first rodeo, and we have a seasoned team with significant integration experience in place.

We have had a lot of time to plan and we made the most of it. At transaction close the integration plans were announced, and we hit the ground running. My leadership team was announced, as well as their respective organizations. A new quality organization was launched. Changes made in operations, sales forces reorganized in the US and in international. Three new global businesses launched, and new 2013 budgets rolled out a composting for the Company all of the $5 million to $7 million in synergies that we expect in fiscal year 2013.

As we sit today, we have eliminated headcount costs which immediately, aside from the one-time cost, impact positively the expense structure of the Company. Day one our combined customer services teams started to receive combined purchase orders from customers. Orders received, orders shipped, all is good.

In addition to the immediate changes we made, we launched our projects to realize longer-term efficiencies, which as new systems are implemented, savings through efficiency will be realized. They include conversion to a single Oracle platform, a Companywide ERP implementation, consolidating a Companywide QMS system, creating a single functional shared services organization, and accelerating our operational excellence programs.

So now let's turn our attention to our Quality Call to Action. To date we continue to deliver on all the commitments we have made to the FDA to remediate the Form 43 observations we received in February. We continue to build our QMS and expect to use significantly fewer resources as fiscal year 2013 progresses.

As you see on this slide, we have made progress in our commitment to quality, which of course resulted in near-term charges to gross margins. In the fourth-quarter gross margins as a percentage of revenue was reduced by 4.3%, as evidenced by our commitment. Based on the progress to date, looking at the slide, we expect QCTA expenses to be declining through our fiscal year, which is a very good sign.

Another key development of our QCTA comes through the integration of Navilyst into AngioDynamics. Our operations leadership team from Navilyst has taken over the QCTA effort. Navilyst has a strong record in quality, and each of the key leadership positions today are led by a key member, who comes to us from the Navilyst team.

There is experienced as well as proven processes which are being implemented real-time, accelerating the timeline to complete remediation and success. The Senior Director, for example, of Manufacturing for Navilyst is now also running Queensbury and Glens Falls facilities, making a real impact and real change. I have complete confidence today in his organization, and in our new VP of Quality, who also comes from Navilyst.

With this backdrop, I will now turn it over to Joe who will provide more detail on the fourth quarter and full year 2012. Joe.

Thank you, Joe, and good afternoon ladies and gentlemen. We closed the fiscal year with solid fourth-quarter topline performance, reporting 3% net sales growth, inclusive of the Navilyst contribution following the closing of the acquisition on May 22. To measure the underlying condition of the business we exclude the $4.8 million Navilyst contribution, as well as the $8.2 million in LC Bead sales a year ago, to arrive at a 10% growth rate for our core business in the quarter.

At the same time we acknowledge the 10% growth rate is compared to a weak fourth-quarter performance a year ago. So while we do not suggest that our underlying business is growing at a 10% rate as we exit fiscal 2012, there were a number of strengths evident this quarter which fuel our optimism entering the new fiscal year.

These include the laser vein ablation business with strong double-digit growth in unit volume and dollar sales of our 1470 lasers and procedure kits. We believe we have a sustainable competitive advantage in the vein ablation market based on the strength of our product line, our sales force that is highly skilled in selling a laser solution, and excellent marketing programs which support and help grow profitable physician practices.

Secondly, NanoKnife is back in the US market and delivered $2 million in sales in the six weeks it was available for shipment in the US. Worldwide NanoKnife sales were $4.1 million in the quarter, as a total of eight hospitals became commercial sites and seven generators were purchased. We ended the fiscal year with a total of 52 commercial revenue sites, which we define as a hospital that has purchased NanoKnife products in the past six months.

Our optimism for NanoKnife is fueled by recent publications that speak to the clinical successes of the technology, the increased market awareness of its potential, and our strong funnel of hospitals and physicians interested in learning about its benefits.

Thirdly, our international business enjoyed another strong quarter with 22% constant currency growth, excluding the Navilyst contribution. Our international business has averaged 20% year-over-year growth for the past five quarters, and is poised to accelerate following a recent launch of the microwave product line for international sales, and with the addition of the Navilyst international business.

Navilyst brings a direct sales operation in Canada, making it our fifth international market where AngioDynamics sells directly. And, fourth, our US vascular business performed well this quarter growing 10%, primarily on the strength of the vein ablation sales mentioned earlier.

You may recall from our third-quarter call that vascular sales declined due to product supply outages in the aftermath of our recent voluntary recall. The resolution of these supply chain issues during the quarter set the stage for the excellent vascular sales report -- result reported today.

And the final comment with respect to the sales picture is to note that pricing pressure was again a factor this quarter as ASPs in the vascular division declined by 3% year-over-year, and for the Company as a whole the ASPs declined -- the decline was 2%.

Continuing down the income statement, gross profit totaled $31.2 million, or 54% of sales in the quarter, including $1.4 million in costs for the Quality Call to Action program and $921,000 in product recalls, reducing the margin by 4.3 percentage points.

Excluding these items, as well as the impact from Navilyst, our gross margin was 59.7% for the quarter. This reflects a 2 percentage point improvement from the prior year, as we continue to make progress with the material cost reduction program and initiatives to improve manufacturing utilization.

Operating expenses totaled $38 million in the fourth quarter. We incurred $8.8 million of acquisition, restructuring and other items this quarter, of which $7.4 million is associated with the Navilyst acquisition and restructuring actions. Other items include professional fees for the recently announced Microsulis strategic relationship and the transfer of laser manufacturing from the UK to our Queensbury, New York, facility.

Non-GAAP earnings were $0.10 per share, excluding our Quality Call to Action program, product recall costs, and acquisition and restructuring and other costs, which reflects the true operating performance of the business, absent the special items, all of which are detailed in the GAAP to non-GAAP reconciliation schedules included in today's earnings release.

On a GAAP basis we reported a $0.27 loss per share. We are pleased to report that Navilyst was immediately accretive to earnings in the quarter, contributing $0.01 to earnings per share, excluding its acquisition and restructuring costs.

During the final week of the fourth quarter we reduced the headcount of the combined Company makes by 28 heads, and we are well on our way to achieving the $5 million to $7 million net synergy goal we indicated on announcing this acquisition in January.

Turning to our fiscal year results, we note the 4% growth in net sales, excluding Navilyst and LC Bead, and 3% growth in vascular sales, which is a substantial improvement on the prior-year's result. The standout performance for the year, of course, was our international business, which successfully added a direct sales operation in the Netherlands and grew 22% for the year on a constant currency basis.

Gross margin, adjusted for Navilyst and the cost of quality investments and recalls, was 59.5% for the year compared with 58.3% in fiscal 2011. The $0.20 reported loss per share becomes $0.43 in earnings per share, excluding all of the items.

Turning to the other financial statements attached to the release. Cash flow from operations was $10.8 million for the fiscal year compared with $33.9 million last year. This year's lower level of cash flow from operations mainly reflects the lower net income as a result of the acquisition and restructuring programs, as well as the costs associated with the Quality Call to Action program and product recall.

As mentioned earlier, on May 22 we completed the acquisition of Navilyst Medical. The transaction was financed through the issuance of approximately 9.5 million shares of our common stock, $150 million in drawn acquisition debt financing, and $94 million of balance sheet cash. Based on the closing price of our stock of $12.44 on the day prior to the transaction, the purchase price was approximately $362 million or $355 million, net of the acquired cash.

In addition, during the quarter we invested $5 million in the form of an equity investment in Microsulis Medical Ltd., a UK entity, through the purchase of senior preferred stock, representing a 14.3% ownership position. We also received exclusive international distribution rights to sell their microwave products through December of 2013, and an exclusive option through September of 2013 to purchase all of the global assets of Microsulis.

For the year we spent $2.1 million under the stock repurchase program, purchasing 142,000 shares of stock. We did not purchase any shares during the fourth quarter in contemplation of the Navilyst acquisition, and the buyback authorization expired on May 31, 2012.

We ended the year with $40.1 million in cash and investments, and $150 million of debt outstanding. Interest on the debt facility is LIBOR based and the covering current borrowing rate is 2.74%. In late June we entered into an interest rate swap to lock in a fixed borrowing rate of 3.24% for the next four years on $100 million of the debt. On this basis our blended borrowing costs today is just under 3.1%.

Our debt service requirement in fiscal 2013 and 2014 is $7.5 million per year, and we are comfortable with our ability to readily service this debt.

As for fiscal year 2013 we have included a table in the release which includes GAAP and non-GAAP guidance. On slide 14 of our presentation you will note the details of fiscal 2012 pro forma operating results calculated on the basis that AngioDynamics and Navilyst were combined throughout fiscal year 2012, with the elimination of the financial impact of LC Bead, and excluding acquisition and restructuring and noted items.

On that pro forma basis the combined entity would have generated $344 million in sales and $0.27 in EPS, and that is a relevant starting point for considering our fiscal 2013 guidance and performance.

Joe will now address the outlook for fiscal 2013 and beyond in his continuing remarks. And I will now turn the call back to Joe.

Thanks, Joe. And everybody just so you know, the release did cross the wire. It is sitting there. Sorry, I don't know why it was delayed, but it is what it is. The results and the message are all the same.

So now I'm going to take a little bit of time to look forward. Our mission is to become a world-class medical device company, delivering innovative solutions to our customers in peripheral vascular, vascular access and oncology/surgery, while delivering to investors growth, both topline and bottom-line, a minimum of 10% to 15%, respectively.

We will grow in each one of our franchises through research and development, business development and clinical development of data to prove that our technologies are cost effective and clinically valuable. Each business has their investment area which will drive future growth for the Company.

For peripheral vascular we are actively developing an automated fluid management system to reignite our market-leading fluid management business. We are executing on a comprehensive venous strategy as much of the growth in new innovations, we believe, will occur on the venous side peripheral vascularly over the next five years.

We have active programs in thrombus management, in both thrombolysis as well as thrombectomy, and are actively reviewing plans for next generation of venous ablation to augment our market-leading EVLT laser system.

For vascular access it is BioFlo, BioFlo, BioFlo. I will review the technology in more detail in a moment, but we intend to make BioFlo a cornerstone for us. And the closer we have reviewed technology it is one of the gems that come out of this transaction.

We are also actively pursuing a tip location technology, which is needed in the marketplace, and we look forward to communicating our progress soon.

For the oncology franchise our top priority is to develop evidence to establish NanoKnife as a standard of care in pancreas ablation, add microwave into our thermal ablation strategy, and continue to do tuck-ins as well as R&D expenditures to fill out the interventional oncology offering.

So as we go to slide 13, for the first time we are breaking out the size and growth rates of each of our global businesses. As you can see here in fiscal year 2012, consolidated pro forma -- if AngioDynamics and Navilyst were combined -- so we can get real look at the bead rate of the business, we would have done together $180 million in peripheral vascular, $114 million in vascular access worldwide, and $41 million in oncology/surgery. So, of course, without the LCD business, combined AngioDynamics and Navilyst, if they were combined in 2012, would have done $344 million together, representing the current bead rate of the business.

Next to each of those business numbers you will see what we believe those businesses will grow in 2013, given our current portfolio of products. We are increasing our revenue guidance from the $360 million to a range up of $360 million to $363 million for fiscal year 2013. Our guidance implies revenue growth of 5% over the pro forma run rate I just described.

We will revisit this again at the end of the presentation. So let's turn now to the next slide, so we can share with you another level of detail showing the breakdown of the key product lines and our expected growth rates for 2013.

So as I mentioned, peripheral vascular business delivered $180 million worth of revenue in pro forma 2012. Our peripheral vascular business is made up of three categories -- fluid management, which is now our largest product line, that we expect in 2013 to grow between 2% and 4%. Our EVLT business, which is our fastest-growing line -- or aside from NanoKnife, of course, but fasters growing in peripheral vascular, which is expected to grow 17% to 19%. And our core products, which we anticipate to be about flat to 2%, which in many categories were declining, so it is a good turnaround. That brings in a blended growth rate in fiscal 2013 for the peripheral Vascular of about 5% to 7%.

Now I want to relate a story to you from one of our sellers, which I believe conveys the power of the new -- of new access that fluid management gives us into the cath lab. One of our new PV sales representatives went into the cath lab and introduced himself to interventional cardiologists as the new fluid management rep. And he was given very valuable time to make a new contact.

Our rep proceeded to take out our angiographic catheter portfolio and showed it to him, and he was impressed with the new variety of curvatures and links and new things that he hadn't seen before for peripheral vascular.

Now can you believe that new product line we have had for about 20 years. And our Company is named after the line. The interested cardiologist sent the rep to the vascular lab to check which products they currently had in inventory and then discuss which codes he would like to try on his next case. I thought that was pretty cool.

As the call was about to wind up, the rep turned around and said -- hey, you know, you might want to consider building a venous ablation practice in your office. And the cardiologist, who was rushing out to another appointment paused and asked the rep to come back, and said -- I have been doing thinking of doing that for a year. Can you show me how?

Now that cardiologist is now booked into a training program for EVLT. And this is not an isolated incident, as cardiologists are now looking to expand their practice more and more into the peripheral vascular arena, and just the beginning of our channel strategy proving itself out. It shows that the market position and scale of fluid management can help the entire portfolio.

Now let's turn to vascular access, currently our lowest growth business, which in my view may become the fastest-growing business by the end of the 2013. With revenues in our vascular access business of $114 million, growing about 3% to 5% currently. In fiscal 2012 it comprised about $54 million of in PICC, $32 million in ports, and $28 million in dialysis catheters.

With the consolidation of our two companies, we now have a more competitive and more complete offering than ever. Our key objectives for the year are, first off, to drive penetration into existing accounts, while identifying key targets for full-line conversions. For the first time we can do full conversions, because we have the complete offering that we didn't have in the past.

Our proprietary passive valve is a key driver for PICC business, while Vortex Smart Port offers differentiation in ports. Also we are actively pursuing, as I mentioned before, tip location technology, and will communicate that process.

So now you ask, what is going to turn this business into a 10% plus grower? That growth driver is BioFlo, and after FDA approval and a successful launch in the US. Upon that approval we will focus first on BioFlo for PICCs, and then we will focus on BioFlo for ports. And then we will bring the material into the dialysis business. This passive material will provide AngioDynamics with a truly disruptive technology and help drive share in vascular access. These growth rates, of course, so far do not contemplate the impact of BioFlo. We will deal with that when we -- after we receive our approval.

But let me tell you a little bit more about the BioFlo technology. Over the years many companies have tried to develop coatings to reduce thrombolytic events associated with the use of their devices. Until recently no anti-thrombolytic catheters have been launched in the market.

While infection is believed to be more often caused by clinical insertion techniques than the device itself, thrombus events are more directly associated to the performance of the device itself. That is what makes BioFlo so special, because BioFlo is not a coating, and it is not a material which has some agent impregnated into its pores with a half-life. BioFlo is made with a material called [Indecso], a fluorine-based additive to our existing materials which gravitates to the surfaces of a material, [it is additive].

What it does is create a passivating service, both inside and outside of the catheter. So what is important about a passivating surface? Well, a passive surface is believed to not get rejected by the body and doesn't incur the systemic rejection mechanisms. When it comes in contact with the blood the normal defense mechanisms are not activated, which minimizes platelet formation in the material.

Unlike a coating which will wear in several weeks, the passive surface [Indecso] brings to BioFlo may be a permanent attribute of the material and may last the entire time it is in the body. Pretty impressive.

It uses no heparin, no antibiotics, no coating, nothing foreign to elude into the bloodstream. So it all sounds good, but does this really work? From a single site, I'm just sharing with you an early experience from a single site at one of the earliest customers that we have had in Canada where the product has been actively launched.

And in their early clinical experience they did on their own comparing Bard's PowerPICC, which is the market leader, with our BioFlo with a passive valve in a single center experience which was not funded by the Company. As you can see, 60 patients were evaluated using Bard and 133 patients with BioFlo. The same nurses, same technique, same clinic, the only thing that was different was the PICC. In this series patients who had BioFlo experienced 48% reduction in occlusions; 38% reductions in t-PA use, 37% reduction in the incidence of deep vein thrombosis.

Now I have been around a while, and it is rare to see such an impact in a head-to-head comparison with the market leader. So now we are currently working with the site to get more of this data published, and as soon as possible upon US FDA approval, intend to fund a study that can repeat these results in a controlled perspective environment.

Today we are actively selling BioFlo PICCs in Canada, a late year launch in 2011 for Navilyst, and the first market to use the product clinically. We are on track to grow overall sales by 30% for the country in the year on the heels of an exclusive HealthPRO GPO award, driven by BioFlo. We are just now launching BioFlo in Europe.

So let's shift to oncology. As you can see here with the loss of LC Bead the business remains with $41 million in overall revenue, and an adjusted growth rate pulling the Bead out of 2012 of 9%. It is comprised of $23 million in thermal ablation revenues with an expected growth rate of about 6% to 8% in 2013; $12 million in NanoKnife revenues, which we would expect in 2013 to grow about 53% to 55%; and about $6 million in a bunch of other stuff, but including the Embarc catheter and charter guidewire, which we expect to be flat year-over-year, given some of the atrophy in some of the other legacy products.

Overall we expect our oncology business to grow 17% to 19% in 2013. For the oncology business our top priority is to establish NanoKnife as the standard of care for pancreas ablation through supporting clinical evidence and to initiate a major clinical study. I will review that in a minute.

We are adding microwave to sell our thermal ablation strategy. And with RF/microwave and NanoKnife platforms to sell in 2013 we will be the clear leader, not only in all ablation, but also in interventional oncology. We intend to market this total solution internationally to our customers. We will also continue to both organically and inorganically bring new interventional oncology opportunities into the bag.

So let's do a little bit more on NanoKnife. So as you all know, we have been working with the FDA for almost a year now for the approval of a safety study for a NanoKnife to be used in Stage III inoperable cancer patients. We have been working to answer important questions regarding the application. I believe we are near the end of the question process, although you can never tell.

Given the time that has passed, as well as the recently published data, the Company has shifted its strategy from requesting a safety study first to proposing going straight into a pivotal trial. We believe and hope the amount of the clinical evidence provided the FDA will warrant a direct study which is scientifically and clinically relevant.

We have recently submitted an IDE for a global multicenter prospective randomized controlled trial comparing the current standard of care for inoperable pancreatic patients to use gemcitabine versus NanoKnife plus gemcitabine, which is a -- which we would compare against the standard of care.

We proposed 190 patients with confirmed Phase III disease, with a primary endpoint of local progression-free survival. We would expect with approval of the IDE start time of the first half of 2013, with an open enrollment of about 24 months.

This study would be our pathway to truly comparing a medical device with a drug in a head-to-head survival comparison, and when completed we hope will prove a landmark study in the initial experiences -- if all these initial experiences hold true through this trial. It is exactly the study which needs to be done and the proper way to establish a new standard of care. We hope the FDA agrees, and we receive expediter review upon completion of the results.

Now that we have told you about our product growth drivers, let's talk about how we will be bringing these products to market. Before I review this US strategy, just a quick nod to our international strategy. With the acquisition we pick up a direct sales team in Canada and 51 new distributors worldwide that come to us from Navilyst. We currently do not foresee any major changes, aside from placing greater management attention on our new distribution partners, and finding ways to help our new partners grow their businesses.

We are direct in several European markets, and maintain focus distribution partners everywhere else in the world. Essentially we are organized to manage the oncology, fluid management and vascular distributors with great attention to assist them in any way to grow their business. We are excited to welcome them all to the AngioDynamics family.

Now to the US. So many of you have asked about our sales force structure and how we can win going forward. I have had a lot of time to think about this and a lot of time to test the model with our top sales and marketing executives throughout our integration planning process. I feel very confident in this model.

Our model is predicated on a matrix structure which creates dependency between three independent marketing departments, or what I call franchises. With one selling organization in the US led by one VP of Sales, one group of area sales directors, and one group or regional managers who are all focused not only on managing their teams, but creating alignment with their customers.

You see organizations in the past fully focused on the practicing clinician. We still have that today, of course, but for the future of a competitive health care environment our management teams must be able to represent and sell AngioDynamics value proposition to key stakeholders at the hospital, the IDN and the GPO level. Having one sales management team for all AngioDynamics we eliminate the silo effect that divisions bring and create the opportunity to drive synergy and leverage into the relationships.

For example, if we have a great relationship in oncology, we should be selling them other AngioDynamics products at the offer. Our prior siloed approach never really gave us the opportunity to attack these synergies.

Reporting to the regional manager will be three sets of specialists. Each regional manager will have a dedicated peripheral vascular specialist or several dedicated peripheral vascular specialists, vascular access specialists, as well as oncology specialists. The regional manager will be the key to marshal the local selling resources to serve the needs of the hospitals, while the sellers service individual clinical customers.

Now while the regional managers will be generalists and the reps specialists, the representatives will also have the support from each one of the focused marketing -- what I called franchises -- to ensure that we don't lose attention or commitment to any one business. This is the key to the matrix organization, interdependency between sales and marketing.

Now this is not an uncommon model. Companies at time put this in place when they want to break the silos in their organization and find ways to attract greater value and revenue synergies. I have managed this model before and we have implemented it now.

At this stage in our Company's growth I'm convinced this is the right thing to do as we build scale. It is always an option to divisionalize, but today this is best for us.

So now let's move to our 2013 guidance. As we start off, again, we had mentioned the $360 million mark. We feel a little more confident, and have updated to $360 million to $363 million, which represents 5% growth. And that brings our EPS guidance to $0.49 to $0.51 for the year.

As you can see on this chart, based upon comparing what the consolidated business would have been if it was in 2012, we show the growth rate, we show growth in operating income, we show growth in EBITDA, we show growth in EPS.

And that is done through driving sales synergies, meeting our cost targets, new product launches, but BioFlo is not in these numbers. And, also, we definitely intend to do additional tuck-ins and license deals and acquisitions to leverage this new channel that we really, really like.

What do we want to become in the future? As I have mentioned before, we think that we are going to be a 7% to 9% grower in 2014, and then we will be able to after that get to that 10% target to deliver for our investors and also for our customers.

We believe we will be able to at least grow our gross margin 50 basis points every year. And then, also, improve our operating income and EPS at a minimum in the mid-teens. And as well we continue to drive towards a (inaudible) standard of care, introducing new technologies, continue to increase our international expansion and footprint, and to continue to realize our long-term operational excellence initiatives.

So in conclusion, I feel really good about where we are. Most of this integration is already behind us. And with only the long-term projects continuing, we continue to live up to our Quality Call to Action commitment, our new organization structure is clear, and our focus and our sales and marketing teams are enthusiastically in place.

Our research and development and business development pipelines are active, and our future looks bright. Today we enter fiscal 2013 with confidence. Operator, we would be happy to open up the line now for questions.

(Operator Instructions). Jayson Bedford, Raymond James.

Thanks for taking the questions, guys. I apologize if this is in the release or the PowerPoint, but when I look at the $360 million to $363 million in fiscal 2013 revenue guidance, how much is Navilyst and how much is core AngioDynamics?

We don't have any way to really break that out in an estimate that is relatively -- because that could be very difficult to break out.

You know, there are elements of the business that are costing. There is ports and PICCs and dialysis products, and some products lines will be rationalized, so we really are looking at the business in totality, of course. Certainly the oncology/surgery number is the pure legacy angio business. But the other two really are going to reflect some dynamics as to how the businesses are being combined, so we don't think of it as being particularly relevant, respectfully.

You can see on slide 10, in 2012 obviously what the contribution is. But yes, as to Joe's point, because so many product lines are going to be rationalized and winners and losers and moving one from left to right it is not going to be a true indication of -- and we are not -- we have -- internally that is not how we are tracking this going forward.

Okay. I guess -- so when you look at the $0.49 to $0.51 in EPS, I guess it is not right to ask about the implied accretion from Navilyst -- a similar answer?

Yes, really. I mean, the businesses are really completely combined. We view it as a single business entity, if you will, with complete integration throughout the organization in virtually all functional areas. So it just isn't really able to discreetly segregate it out, and we're not even going to try to do that.

You saw that consolidated pro forma was about a $0.27. You saw that with beads -- I think with beads it is $0.43. But, you know, we don't have beads anymore, so you have to pull all that out, and when you do you get that number.

And so when you start from scratch, you roll the businesses up, you take all the costs out that we committed to, it gets to that $0.49 to $0.50. And we have a significant amount of amortization, $17 million of amortization in there. Without amortization it is $0.80. So that is how we look at it.

Okay.

As well I would just say that, for example, we will run with a single combined sales force in the US. And it is a little bit of a different approach overseas, so it really is fully integrated from an operating expense structure. And although we certainly will maintain and understand what our separate gross profit margins are on all of our product lines, but in terms of bottom-line performance it really is just a fully integrated enterprise.

The $5 million to $7 million in cost savings, what is left to do on that in terms of being able to realize that $5 million to $7 million, and in which line item do you think we will see those savings?

So much of what has been done has been the sales and marketing consolidation of the business. And then beyond that there has been some affected already in G&A, and some in R&D, and a minimal amount and the operations or the cost of goods sold activities.

And as we think about it going forward, our whole plan deals lightly with the cost of goods sold area, working on the Quality Call to Action and other programs, but the balance of what is yet to be achieved will be done on the operating expense side over the course of the year. But we have accomplished already the lion's share of that $5 million to $7 million range that we spoke about.

Okay, so is it fair to say you have basically already cut out, let's call it, net $4 million over the $5 million to $7 million already?

At least that amount.

Okay, and then just the last question would be the EBITDA guidance, it looks like $44 million to $45 million. For some reason, I remember a $60 million number thrown out. What is the delta between the two?

It is the GAAP versus the non-GAAP. So the adjusted non-GAAP would be the $60 million to $61 million. And the difference between the two would be the $16 million worth of costs associated with the transaction and the various items that are detailed in footnote C of the guidance table in the release.

And that is not a change. We have always -- when we put the $60 million out that was net items that we would have to experience to go through the integration. And even at that time when that number was out we didn't fully have a hard number as to what those one-time charges would be. So nothing has changed to our guidance.

Operator, can we move on?

Brooks West, Piper Jaffray.

Thanks for taking the question. Joe, did I hear you correctly that you said the BioFlo product is going to be the singular product that will get Angio to 10% topline growth?

I believe when we launch BioFlo in PICCs, ports and dialysis, our vascular access business will be a 10% grower.

Okay, with vascular access, but not the whole Company?

No, vascular access. That is why I broke out each of the businesses individually to show you where the contribution and growth rates are. Right now in general the vascular access business can be said to be a bit of a laggard to the overall growth. Because we have an EVLT and the peripheral factor vascular business and an NanoKnife in the oncology business, that growth driver in vascular access will be BioFlo once we get it approved.

Okay, and then any update on the FDA approval timeline there? And then I wanted to get your thoughts on the Teleflex Semprus BioSciences acquisition. And I got a couple more behind this.

Well, we think in this environment it is very difficult to give an FDA timeline. We think we are nearing the end; we hope we are. And we hope it is in the early part of 2013 that we would be able to get that clearance, and then we have to go through all the process of launch and whatnot. That is what our hope is. We don't believe we are early in the process. We definitely think we are late in the process, but we just can't predict when it will occur.

In the early part of calendar 2013 or fiscal 2013?

Fiscal.

Fiscal, okay.

It is just what we hope. I really don't know. We think we are at the end, but we're not there yet.

Okay. And then thoughts on the Semprus BioSciences?

Great validation for BioFlo. Great validation for the Navilyst deal. It makes our Navilyst deal look cheap.

Do you have a sense though from -- any your technology guys looked at in terms of comparability to BioFlo?

Actually, interestingly enough, our team has seen it and the Navilyst team, prior to the deal, have seen it, and it was not an option that we chose.

Okay. Let me (multiple speakers).

I am not saying anything bad about it; it is probably great, but we are thrilled with what we have.

Let me -- two other areas if I could. I just wanted to explore a little bit the thought process on going straight to pivotal on NanoKnife versus doing the safety study. I guess what gives you confidence in your interaction with the agency that they're going to be comfortable on the safety profile, and just a little bit more on that thought process and maybe an updated longer-term timeline there?

Well, given the amount of time this technology has been in the market, and given the peer-reviewed data and other experiences that exist, it is our view that safety is not the primary issue. And we think that the marketplace would dramatically benefit from -- as to the type of trial that would compare NanoKnife to the standard of care.

So it is -- it is a proposal that we are making. And we hope they agree with it. But we get so many questions as to what our strategy is that we felt we wanted to tell you what our strategy was.

Okay, I appreciate that. And then last, if I could --.

Brooks, we have got to get moving because we have a lot of other people on the line. So you have got one more?

Yes, just quarterly cadence with Navilyst on board, should we expect typical seasonality for the business or any changes there?

Yes, you know, for us, as you know, first quarter is very light given the summer months. So it is -- I think even in our press release I think there is a footnote which goes through a 23%, 25%, 25%, 27% type of weighing. So we're not going to be giving quarterly guidance -- but those numbers probably just it -- but we want to just give the annual guidance. But the first quarter always is a slow quarter just because of the months that fall into that fiscal calendar.

Jason Mills, Canaccord Genuity.

(technical difficulty).

Jason, we are having a problem with your phone.

I will dial back in. Thank you. Sorry.

Matt Hewitt, Craig-Hallum.

Thanks for the very detailed update and progress that you have made so far. My first question -- could you update us on NanoKnife? As far as the remediation was concerned it was going to take some time to get the systems that were in the field, get the new software uninstalled and get it back into the customer's hands. Could you update us where you are in that process?

Yes, I don't have the exact numbers in front of me, but in the quarter we -- I think it was near the end of April when we released the software. For the new systems that we shipped in the quarter we were able to upgrade those software. But with the 40 accounts I would probably say we got to more than half of them. And we are -- I don't think there is that many left now. I think we have probably gotten to all of them now. And we didn't ship needles to anyone who didn't have an upgrade.

So I think the team has responded unbelievably well. And I think the business rebounded very well, because we told them how long it would be. It was that time, so everyone dealt with it and now they're back up and doing procedures.

All right, that is great. And then just, I guess, my follow up. With the Supreme Court ruling here a few weeks ago, med device companies are now faced with 2.3% device tax, assuming that everything stays in place. Have you started the discussions with your team on how you plan to address that starting next year?

Those right now are internal discussions. Right now it is purely a part of our plan. It is a part of our guidance. We have it as an expense item in the second half of our fiscal year in all of our numbers. We know we're going to have to pay it.

I guess the big elephant in the room is are we going to be able to pass it on, and I think we know that that. We are already dealing in an environment of significant pricing compression and a lot of competition. So we will see, but we haven't come to a conclusion there.

All right, thanks for the update.

Charles Croson, Sidoti & Company.

Thanks for the detail there -- long conversations that are very helpful. Just a few questions then here. Starting with the BioFlo, you talked a lot about how this is going to be a game changer. But can you go towards more the market opportunity that you see there?

What do you --?

In terms of numbers. I am sorry.

Well, the PICC market, I don't have the exact market number for the PICC -- a $400 million market growing 9%. One where we are lagging the market right now. We don't have the tip location technology, which is definitely meaningful. And of course we don't have a coating which we think -- or a solution right now in thrombolytics, which we think is also meaningful.

So given the -- how novel this technology is and how valuable it would be across the entire portfolio, we most certainty -- and given also how well it works on a bench and now to our -- I don't want to say surprise, -- but it is when you see the type of clinical benefit and customers unsolicited coming to us with their experiences in that data, like what I just showed, it tells you that you have something.

And if you go and you identify what the cost of occlusion is in the hospital, what the cost is of delivering CPA, what the cost is of a GDP -- for these devices the market is substantial if we get this in the market and we execute. So it most certainly could be a growth driver beyond the 10%.

I see. Okay, thanks.

And that growth is not about the fact that we are going to just catch someone else's wave. That growth is -- we believe we will be taking market share.

Okay, that is helpful. And then if I heard this correctly, you're not including that in the F2013 guidance. Is that right?

No, because we don't have an FDA approval right now. We have, of course, BioFlo revenues from Canada, but it is on a small base. We are starting the process of a European launch, and so those numbers are in, but we think the fastest and the largest opportunity is in the US, and that would really power the business. And that is not in there, of course, because we don't have any approvals.

I see. And then just one -- channeling off on that one last thing then. So we could definitely see some upside in F2013. And then just looking at your estimates here for 10% growth in the vascular side, I am getting numbers anywhere from $6 million to $10 million or so just doing it a quick check. So is that how you guys are looking at it or will you be able to -- is that asking too much in terms of numbers?

It all depends on when in the year we get that approval and how quickly we can get it. If we got it tomorrow, I would feel pretty comfortable with those numbers. If we get it in six months, it is going to be whatever it is to ramp it up.

But a lot of people have questioned whether we have growth drivers in this business. We have gone in this call, we believe, above and beyond to be transparent -- to show your businesses, to show you what is growing, and also to give you some of our strategy.

And we will see on a quarter by quarter basis. We will report these numbers in general. And we will keep score. We think we are going to deliver. I feel very good with the organization and the quality of our teams. And the BioFlo -- there're a lot of things we don't control. And so we can't predict what we don't control, but we we do control is information that we have provided you today.

Okay, all right, thanks, Joe, I have more questions but I imagine there is a lot of guys in line, so I was just -- I will hop back in the queue.

Yes, get back in queue.

Thanks.

Jason Mills.

Joe, sorry about that. Can you hear me okay now?

Yes.

Okay, great. So if I was away and someone asked about this please just cut me off, but I will start with your largest business, the fluid management business. I think when you did the acquisition with Navilyst you talked about how the prior owner of that business had lost some share there. It seems like you are expecting to gain some of that back. But maybe juxtapose your current guidance, I think, low single-digit growth in fluid management with what the opportunity is it with respect to what was lost in that business during the stewardship of the previous owner?

Well, you know we are -- it is a very mature business and it is a very price sensitive business. And to be quite honest with you, in our view today it was not as much of a focus as it should have been with the prior owners. It is a great franchise and a great brand. We think it was growing 1% in their hands, and we think with our additional energy, with the amount of additional sellers that are going to be with the business, and also with the quality of our international organization, we just simply think in 2013 with basic blocking and tackling we are going to grow a little bit faster.

Are we excited about 2% to 4%? No. But we are going to invest -- we have some programs now from for some line extensions and some new additions to the -- to it that really wasn't funded before that we're going to make sure it is a priority. We have potentially in 2014 or 2015 a desire to launch a fully automated system, and enter that part of the market.

And also we have very strong relationships in IR and in vascular surgery that I think the prior management didn't spend time in with this product. So I am not blown away by 2% to 4%, but we think that we are going to get the business on a good footing, and then with that momentum and some new product launches, drive marketshare gains in 2014.

So it being the largest business and then also having a goal of growing total topline growth 10% at some point, it becomes hard, obviously, as you mentioned, if that is a low-single-digit grower. So I am just trying to get a sense for whether or not the fluid management business longer-term do you see it as a core franchise or is this a build it and potentially divest it type of business longer-term, or is it too early to tell at this point?

Well, no, it is a core franchise. And it is a core franchise because it is right in the sweet spot of our business. I would never have purchased Navilyst for the fluid management business as a stand-alone satellite that didn't have any synergy to my Company. But this gives us critical mass to really rationalize our sales channels. You rewind six months ago and nine months ago, a year ago, and the biggest frustration is that we have this very diluted channel. We have all these call points for one seller and we can't go deep anywhere.

Now fluid management is -- and like the example I gave you, and I can -- I have e-mails here that I can read off success stories already where an AngioDynamics rep, who really didn't have that much access into the cath lab, now walks in with a major fluid management business and they are opening up their bag -- are some of these old products or new products?

So the value for us is core. The NAMIC brand for us is core. And we can't look at the value of the NAMIC business based upon its growth alone, we have to look at it based upon what it can do for the other parts of our business.

Can it accelerate our EVLT growth? It is going to turn around. I mea n, our core products, angiographic products, our thrombolysis products were orphans because so many of those procedures were leaving into the IR suite, and they were draining. These were negative growth product lines. So now they have an opportunity and a whole new life because our channel is rationalized. And that is what I want you guys (multiple speakers).

Right.

I have mentioned it over and over again that we didn't buy fluid management to own the asset of fluid management in its isolation on its own. No one would have done that. But that we bought it for what it does for us. And when it does for us is it gets us into a channel that we don't -- that we really didn't have an excuse or reason to be.

Now being in that channel we continue now with our vascular access and oncology and peripheral vascular to service the IR and also service the vascular surgeon when necessary, but we now get into interventional oncology.

And if we didn't believe that being in interventional oncology with a market-leading brand, with the Rolls-Royce brand, not the me-too brand, not some other product -- NAMIC is the Rolls-Royce in this segment. And the only reason why it wasn't growing was because Navilyst was a vascular access company and they were selling PICC to nurses, they were not going into the cath lab.

And now we have both. And that is going to -- and we are going to turn it into a core part of our business. We are going to launch new products. And we do have a fabulous core competency in custom fitting, which is tremendously valuable to these hospitals, because we give them exactly what they want in our convenience kit.

So, no, it is a core -- I never would have paid the money we paid. I never would have done this deal if I didn't think it was a core part of a business. And I am telling you, it is already paying dividends from a standpoint of our sales force understanding that value.

And so that is why it we will report it separately. It is the biggest product line. We are not going to hide it someplace. We have not given you all these numbers and all these growth rates to make it easier on you to understand us -- and we felt that was always an issue. But it is going to be a core part of our business.

That is a very robust answer. Thank you so much for that. I have one final one for Joe Gersuk, just on the cadence of the gross margins as you roll through the year. I appreciate the guidance for the year, but how should we think about it first quarter through fourth quarter?

Yes, so 52% to 53% for the full year. But the QCTA cost, of which there is a couple of million dollars in the course of the year, but most of that will be spent in the first half of the year, and heaviest of all of the first quarter of the year. So it is likely to be low 52%s to start off the year and then rising over the course of the year.

Thank you. Very helpful answers, guys. Thanks, Joe.

Robert Goldman, CL King & Associates.

A couple of questions on the numbers (technical difficulty).

Pardon me. Give me one second. It looks like Mr. Golden has disconnected.

Well, if he comes back in please put him up next in queue, please.

(inaudible). Mr. Goldman, your line is open.

On the numbers, it looks like your non-GAAP operating profits in the quarter were down about 3%. If we take out the $0.01 from Navilyst -- the $0.01 per share -- it looks like the non-GAAP non-Navilyst operating profits would be down a little bit more than 10%. Perhaps you could speak to my number crunching if I got it right or wrong. And if I got it right, why the weakness in the core business?

So it would be $0.09 a share ex Navilyst, right?

No, I am looking at the operating profits, Joe. And I have got a separate question -- I might as well ask the separate question that it looks like your non-GAAP tax rate in the fourth quarter was about 16%, down from about 35% in the prior year. Maybe you could speak to that too, if I got it right, and if so, why the decline on the tax rate?

So it is two questions. It looks to me like the non-GAAP, non-Navilyst operating profits were down in excess of 10%, but the tax rate was halved versus the prior year.

Okay, so on the reconciliation of the operating income on page 8 of the release would show you a reconciliation of operating income to the non-GAAP, right? So you would have essentially flat year-over-year, right, $4.247 million to $4.281 million.

Right.

And you see then the reconciling items that would get you to those figures from the GAAP numbers.

I got you.

So that answers that one. And the tax rate, I think there is just massive complexity associated with the tax calculation that is intertwined with the acquisition and acquisition transaction fees and various other factors. So there is -- I just would say it is significantly complex, and I apologize I can't give you a better answer than that.

If I could then just follow up. Excepting, Joe, what you said on page 8, that the non-GAAP operating profits were sort of flat, if you take out the Navilyst component then the operating profit look like they would be down 5%, 6%, 7%. Am I looking at that correct?

No, but I don't have it in front of me, but our revenue at the end of the year with beads, if you're going to include that, was about $56 million, $57 million at the end of fiscal 2012, and that included beads. So you can't -- year-over-year, yes, we lost beads and we lost that $15 million of contribution, and we have known that for about six months.

Okay, it is the beads. Okay, that explains that then.

Yes, beads coming out of the business.

For pure, pure Angio we unfortunately have not -- I can't wait until we anniversary this damn deal and all this bead stuff, I am sick of talking about beads. But I know it is so confusing, and I am very sorry for that. We tried really hard in the releases to try to break all the stuff out.

We don't really see a reduction in our overall profitability, aside from [a jillion] one-time events, which I can't wait until we get all -- we absore the deal and get all these one-time events, we get rid of bead revenue, we get rid of all the transaction cost, and we just grow our business. But it is a much better business than it has ever been.

No, that is helpful. And tax rate, Joe, just finally, given the fourth quarter was complex, but a low tax rate, what is the tax rate guidance for 2013?

37%.

Got you. Okay, thank you.

Larry Haimovitch, HMTC.

A couple of quick questions. One was just asked -- the tax rate. What, Joe Gersuk, are you using for guidance for cash flow? And then what should we think of as a fully diluted number of shares outstanding?

So no specific guidance for cash flow from operations. It is a complex number, so we limit this guidance to the EBITDA figure there, which is in some ways is a proxy for cash.

Then what is the EBITDA number for the year in your forecast?

$60 million to $61 million on a non-GAAP basis and $44 million to $45 million on a GAAP basis. And then with respect to shares outstanding, about $36 million would be a good figure to use.

Okay. And the cash flow number is closer to the GAAP or the non-GAAP number, Joe? In other words, $60 million is non-GAAP -- $44 million I think you said was GAAP, which -- is the cash flow number -- which does the cash flow number correspond better to?

Closer on the GAAP -- on the GAAP figures, but again we aren't going to offer guidance on cash flow.

Right. So but it is reasonable just based on what you said that cash flow should be, let's say just picking a ballpark number, somewhere in the $45 million to $50 million area without -- I'm not trying to get a specific, exact number, I am just trying to get a real ballpark.

It is really -- it is affected by all of the one-time expenses in the year. That is why we went with -- to show the EBITDA number on a non-GAAP basis.

Right.

Even as you saw it in 2012, all the one-time expenses and all this other stuff, it is just a tough number right now to peg. (multiple speakers) we think it is a very strong cash generating business off of that $60 million EBITDA, but we still have all the one timers that make it difficult to phase the cash flow.

Well, that is why I asked the questions precisely because of what you just said, which is you have always been a very good cash flow generating company. It is obviously one of the real strengths of the Company, and it gives you a lot of flexibility to pay down your debt, buy back stock, do acquisitions, et cetera. So that is why I was trying to get a better handle on it.

Absolutely. And all of our assumptions haven't changed, we still will be a great cash flow generating company. You've just got to get past all of these ebbs and flows of our one timers. And hopefully one day I would love to be able to get into an earnings call and just talk about GAAP.

And, Joe -- either Joe, the presentation you made today was terrific in terms of the slides. Did I understand you to say you're going to continue to go through that level of detail either on a quarterly or annual basis?

It is my intent to be transparent with the business. The more I speak with investors, the more people just don't understand. And they don't see where our growth drivers are or there are a couple of lines that are weighing on the business.

For me right now I don't care what the competition does. If they want to know our numbers, they know our numbers. It is not going to affect me in the marketplace.

I am going to do whatever I can right now to be transparent, because I want our investor base to measure our progress for what it is, both good and bad. And be able to hopefully as we start delivering and things start clicking up, you get to see it more transparently. So it is my intent to run a transparent business and see -- and deliver something very similar to that.

Okay, great. Thanks very much.

Robert Goldman, CL King & Associates.

Just two other little details. First, the guidance of $0.49 to $0.51, does that include the amortization?

Yes, it does.

And on NanoKnife did you say the number of systems placed in the quarter or could you tell us that?

Yes, we did have that. We indicated that there were -- eight hospitals became commercial sites this quarter, and seven generators were purchased. And then we ended the fiscal year with 52 commercial sites, which we define as a hospital that has purchased products from us in the past six months.

And then would you care to say what the number of procedures were with NanoKnife in the quarter?

Now, we don't have them. There are more and more procedures that are done without any of our people involved at the time of the procedure, so it is just impossible to tell.

Sure. Okay, thank you.

We have no further questions. I would like to turn it back over to Mr. DeVivo. Please go ahead.

Okay, well, I know this is a long call. Sorry that release got hung up in the beginning. But as you see, the results are the results. I feel we have an organization today, especially in our sales and marketing organization, that is delivering for us now very consistently.

I am very pleased with our US and our international leadership. I think they are predicting the business well, developing talent well and growing well.

I believe we have integrated the businesses quite well in the early part, because we became very decisive in our integration planning and very decisive out of the gate.

Our sales force has their plans and know what they need to do for the year. Our marketing teams are deployed. Our Quality Call to Action continues as we elevate and improve our overall operations.

Everything is going. And it is not easy, but everything is going because we have a great team and we are executing. And it is one of the main focuses that I have as the CEO of this Company is to get to a consistent level of execution, which we are getting there towards, and to minimize the surprises and to deliver value for all of you.

We appreciate your attention on this call, and we will continue to update you and hopefully deliver for you in the future. So thank you.

Ladies and gentlemen, that does conclude the AngioDynamics fourth-quarter 2012 financial earnings conference call. Thank you for your participation. You may now disconnect.