AngioDynamics Inc (ANGO) 2013 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the AngioDynamics second-quarter 2013 financial earnings conference call. During today's presentation, all participants will be in a listen-only mode. Following the presentation, the conference will be opened for your questions.

(Operator Instructions)

Today's conference is being recorded, January 3, 2013. I would now like to turn the conference over to Bob Jones of EVC Group. Please go ahead.

Thank you, Alicia, and thank you for joining us for the AngioDynamics conference call this afternoon to review the financial results for the fiscal 2013 second quarter, which ended on November 30, 2012. The news release announcing the results was issued this afternoon after the markets closed, and is available on AngioDynamics' website at AngioDynamics.com. A replay of this call will be archived on the Company's website.

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-Q, 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 question-and-answer 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. And with that, I'd like to turn this call over to Joe DeVivo, Chief Executive Officer.

Thank you very much, Bob. So, good afternoon, everyone. Happy New Year. It will be a great year for AngioDynamics. I would like to welcome you to our second quarter fiscal-year 2013 conference call. With me is Mark Frost, our incoming Chief Financial Officer, so let's all welcome Mark.

The second quarter was an encouraging quarter for AngioDynamics. Around the Company, we began to see signs our new Organization is starting to deliver, whether it was our new sales force starting to play some offense and beginning new account evaluations after a good four months of transition and relearning, or our operations teams finding more and more costs to drive out, our marketing teams getting used to the benefits of our combined product offerings, our quality teams accelerating our QMS implementation, or our finance teams beginning to drive cash performance. All-in-all, it was a consistent quarter of improvement.

Our research and development teams brought to life some new growth opportunities, one which we will unveil at our upcoming Analyst Day in January. What's more important is we began to see signs of what type of Company we will be able to become. We generated overall 3% top line growth worldwide to $87 million, and on guidance. We delivered an adjusted EBITDA of almost $14 million or $0.39 per share, and generated $11 million in cash, resulting in an adjusted EPS of $0.10 per share, ahead of expectations. Overall, our Company performed well.

Of course, the first half of our year has not been without challenges. We initially attributed a very slow start to our fiscal year to our organizational changes, of course, in our US sales force. While that remains the main contributor, with our peer companies also now reporting soft sales in the US for the periods June through September, we realized we were not alone in seeing the softness in the US market. The weakness in interventional cardiology procedure volumes were also noted for many companies. Now, we were also adversely affected by Hurricane Sandy, which we estimate cost us about $500,000 to $700,000 in US revenues for the second quarter. While we originally planned being a bit ahead of where we are today, all-in all, our teams delivered a respectable top line, bottom line, and cash performance in the first half of 2013 fiscal.

Where the US was weak, international continued its double-digit growth, delivering another 20%-plus performance for their 10th consecutive quarter, our channel development is increasingly contributing to our overall top line growth. I am extremely pleased and proud of our international team here at AngioDynamics. Globally, our EVLT business also delivered double-digit growth, as we saw the business in Europe stabilize, while it also began to reaccelerate in the US after a slow first quarter.

What is also notable is the progress we made with our GPO and IDN strategy. Our team is engaged with a number of hospital groups today, looking for new vendor relationships as an alternative to their incumbent. What we've noticed is our consolidated Vascular Access portfolio, as well as our fluid management business, makes AngioDynamics a more viable and, quite frankly, sizeable partner. These relationships take time to develop, of course, and will contribute to the top line, but it will take time. That said, we are at the table more than we ever were, and I believe account conversions and corporate agreements will be a growth driver in the future.

Our oncology business also continues its quarterly double-digit growth contributions, in the face of more and more challenging comparables. Our second full quarter selling Microsulis Acculis MTA microwave ablation system internationally has been a big success, and they again delivered above plan. The strategic fit of microwave ablation technology, coupled with radio frequency ablation and NanoKnife's irreversible electroporation is a compelling value proposition for customers, as they choose the best technology for them and their patients.

This quarter, top line NanoKnife growth was lower than usual, due to a few delayed capital deals, but our pipeline, I'll tell you, is rich, and we fully expect to meet our full-year goals. NanoKnife electrodes were up 30% year over year worldwide, which is representative of, of course, growing procedural revenue and volume. Clinical papers continue to come out in peer reviewed journals on NanoKnife's clinical progress. Also this quarter, we are meeting with the FDA to discuss a new pancreas IDE submission, which we will submit once they agree to our new protocol.

The one area where we must improve is in our US Vascular Access business. We have had now two quarters of pro forma year-over-year decline, so while we've made progress and have an exciting new product with BioFlo, we're clearly not there yet. Our US Vascular Access sales force has had the most attrition of our US businesses, not quite 20% but just about, and currently needs the most attention of the three. I attribute our temporary challenges in this area to -- one, the lack of a tip location product on the market today. Two, continued price competition in the dialysis market, and three, a need for greater training of our Organization, quite frankly.

To date, we've mostly filled the vacancies as a result of this attrition. We have recently conducted a national training meeting to reinforce product training to our sellers of new lines, and we've stepped up our global marketing efforts of BioFlo, and are on schedule, through research and development, to put BioFlo on not only ports, but our dialysis products, which we expect to be available in the first quarter of fiscal 2014. Also, we just executed a global distribution deal for a tip location technology that we expect to launch in early fiscal 2014. Our challenges in this business are temporary, and I firmly believe that we will be a double-digit grower in this business in the future.

I will say, the early signs of BioFlo's clinical acceptance are awesome. We are seeing early clinical success, consistent with the results I shared with you a couple quarters back. More importantly, they're happening at big-name institutions. Today, over 100 hospitals nationwide have either converted to, or are in the process of evaluating BioFlo, only after being on the market for two months. As this technology increases adoption in the PICC business, and gets launched next year with dialysis and ports, watch out. We have had short-term challenges, but we're addressing all the issues, and building towards future growth.

Turning to our acquisition of Vortex Medical and the AngioVac product, our sales and marketing teams in our Peripheral Vascular franchise have been preparing for a full launch in this fiscal fourth quarter of 2013. 2Q sales were negligible, as we only had the product for 30 days, and our sales force wasn't close to being trained. We will be extensively training our entire PV sales force throughout the third quarter, as well as hiring a dedicated clinical specialist team to support the expected uplift in adoption. Last month at the [VEEP] meeting in New York City, there were several presentations by key thought leaders. We are very pleased with the early reception of this device, and expect it to be a key contributor to our growth going forward. We look forward to demonstrating the device for you at our upcoming Analyst Day in January.

On the litigation front, I want to give you an update. First, as we previously announced, we were awarded $16.5 million plus interest against biolitec in an indemnification case. The judgment has recently been entered in New York, and within the month we will be clear to pursue all available US assets of biolitec, in an attempt to satisfy our judgment. We also continue to aggressively pursue them in our Massachusetts case, seeking to include the assets of the German parent company, biolitec AG, as we do not believe the US assets alone will satisfy these damages.

Second, as many of you are aware, Bard had filed suit pretty much against all port manufacturers, for the marking of power injection on ports. AngioDynamics filed a request with the PTO for reexamination of Bard's patents. Our argument and request was granted, and virtually all of the claims in Bard's patents were rejected. The case has now been stayed indefinitely, pending the resolution of the PTO process. This is a terrific victory for our legal team.

With that, and before I turn it over to Mark Frost, our incoming CFO, I would like to take a moment to thank Joe Gersuk for his extremely valuable and steady leadership through five challenging years in AngioDynamics' history. His wisdom, decision-making, and integrity will remain a bedrock throughout the Company. Joe, thank you very much for your service.

So now, I'd like to turn it over to Mark Frost to help us lead ourselves into the next era for this Company. Mark?

Thank you, Joe, and good afternoon, ladies and gentlemen. It has been a whirlwind past month, and I must admit that I'm still drinking from the fire hose. There certainly is enormous opportunity, and of course, challenges, both on the revenue and operational fronts at AngioDynamics, which I will look forward to sharing our progress as we move forward.

I'll now move to the discussion of the second-quarter results and fiscal-year 2013 guidance. Comparison of the year-over-year performance is adjusted to include Navilyst and exclude LC Beads from last year's numbers. The schedule on page 12 of the release provides this analysis at the product line level. The 3% pro forma sales increase represents a substantial improvement on the 1% pro forma sales decrease we reported in the first quarter, and is indicative of improved sales force productivity following the merger. Second-quarter sales growth was led by 22% constant-currency growth in our international business, and 12% growth in oncology.

The growth in international markets was driven by strong results in Canada, where we now have a direct sales operation, and a recent contract win with a large group purchasing organization, as well as increased microwave product sales under our international distribution agreement from Microsulis. In oncology, the 12% growth was primarily attributable to microwave product sales. NanoKnife sales were $3.2 million in the quarter, flat from the second quarter a year ago. Double-digit probe growth was offset by lumpiness in generator sales, as seven NanoKnife generators were sold this quarter, and eight in the second quarter a year ago. We now have 68 installed base sites in place today, which we define as a hospital which has purchased NanoKnife products in the past six months, compared with 47 sites a year ago, and remain optimistic about achieving our NanoKnife sales plan for the fiscal year.

On the Peripheral Vascular side, we are pleased to see the improved performance with 3% pro forma growth in the quarter. We continue to train the sales force, and as they continue to move up the learning curve, we expect to see progressively improving comparisons in future quarters. As we look to the second half of the fiscal year, the new BioFlo PICC, and the newly-acquired AngioVac product will begin to contribute to revenue growth within their respective vascular components. Pricing pressure moderated in the quarter, as average selling prices across the Company were essentially unchanged from a year ago. This compares favorably to the 2% price erosion we have seen each quarter for the past few years.

Continuing down the income statement for the quarter, gross profit totaled $44.1 million, or 50.7% of sales. As you see on our income statement, the cost of the Quality Call To Action program was negligible this quarter, as the incremental remediation work has essentially ended.

Operating expenses totaled $39 million or 44.8% of sales, reflecting some operating leverage within the quarter. Expenses included $2.3 million of acquisition and restructuring items, of which $1 million is associated with the Navilyst and Vortex acquisitions, while the remainder primarily relates to restructuring costs associated with the reorganization and consolidation of the R&D group, where we are in process of closing our Fremont, California R&D office, and moving most of our product development functions to Marlborough, Massachusetts.

We are also pleased to report that all of our targeted integration goals for the first half of fiscal-year 2013 have been achieved. This includes a 68-person reduction in headcount since the transaction closed in May. When we initially announced the acquisition, we indicated we expected to achieve cost synergies of $5 million to $7 million in fiscal-year 2013, and $10 million to $15 million in fiscal-year 2014. Based on actions to date, and our visibility into actions planned for the next 18 months, we are now comfortable projecting cost synergies of $7 million to $10 million in fiscal-year 2013 and at least $15 million in fiscal-year 2014.

GAAP EPS was $0.06, while pro forma EPS was $0.10 per share, which reflects a truer operating performance of the business. For the first half, our pro forma EPS was $0.20 compared to $0.14 in the prior year. The reconciliation items are detailed in the GAAP to non-GAAP schedules included in the release. Our adjusted EPS number still includes a significant intangible amortization cost, so it understates our full operating performance. We are assessing the concept of introducing a new non-GAAP measure, adjusting out amortization, similar to what some of our competitors provide in their financial reporting.

A financial measure which does provide a more complete view of the Company's solid performance is our EBITDA results. For the quarter, we generated $11.4 million or $0.32 a share, compared to $7.1 million or $0.28 a share. Adjusted EBITDA was $13.8 million or $0.39 a share, versus $7.8 million or $0.31 a share, a 26% per share improvement over prior-year results. A detailed reconciliation is provided in our news release.

A noteworthy highlight was the $11.1 million of cash flow from operations we generated in the quarter, despite the special items. This compared with $2.7 million of cash flow last year. We expect cash flow from operations to continue to improve as we move throughout the fiscal year.

During the quarter, we used $15.1 million to acquire Vortex Medical and their AngioVac technology. We ended the quarter with $24 million in cash and investments, and $146.3 million of debt outstanding. Also of note on the balance sheet, we've recorded a liability of $60.5 million, which is the estimated present value of the contingent consideration relating to the Vortex acquisition. The earn-out consideration is based on our projection of the net sales of the AngioVac system during the 10 years following the closing, and is subject to guaranteed minimum payments of approximately $8 million a year for the next five years.

I'll now turn to a discussion of our guidance for fiscal 2013. As you can see from our news release, we have slightly lowered our revenue expectation from 5% pro forma growth to 4% at the revenue midpoint. This change recognized the slow start to the fiscal year in the first quarter, and our belief that it's going to take more time to accelerate the revenue trajectory. However, as you can also see, we have maintained pro forma operating income and EPS expectations at the same level. It is primarily through the increase in projected fiscal-year 2013 cost synergies that we are able to maintain earnings guidance in the face of the reduction in sales expectations for the year. Some of the expense reductions were non-cash, leading to our revised EBITDA projections. As I indicated earlier, we do expect to continue to improve our cash generation over the rest of the fiscal year.

With that, I'll turn the call back to Joe for his final comments.

Great job, Mark. Thank you, and welcome again. So, in conclusion, we're making progress. I like our team, I like our Company, and I like our future. We've made bold moves, and while it's not all perfect, we are seeing early signs of results. We have successfully navigated a very complicated integration, and we all have our eyes looking forward. It's not going to happen overnight, but it's happening, and as we deliver on our commitments for technologies in hand, we are investing in exciting growth products for our future.

This fiscal 2013 has been a transformative year for the Company. As we increase our growth throughout the rest of the year, we remain committed to be a top line growth Company, which generates accelerating EPS and strong cash flow.

With that, operator, I'd like to open it up for questions.

(Operator Instructions)

Our first question comes from the line of Jayson Bedford with Raymond James. Please go ahead.

Joe, you threw out a teaser on the tip location technology. Can you just give us a little more detail on that transaction, and what needs to be done for you to start selling the product?

Well, we have a distribution deal with a partner, and when the product is available, we'll sell it. I think we'll announce the deal more specifically when it's time to launch the product, which we expect in the first fiscal quarter of 2014, but that's really all I'm prepared to say at the moment. While, for what's material for today is we have a solution, and we expect that solution to be on the market at a time in the beginning of next year when it will be very helpful for us, so we will announce the details of that deal when we launch the product.

And then it sounds like the Microsulis deal is working out pretty well. Can you just quantify the contribution from Microsulis in the quarter, and then secondly, you seemed to mention, mentioned a couple times the strength of the Canadian or the contribution from Canada in terms of the international sales. What exactly did you do there, if you could just remind me, from a sales force perspective?

Well first of all, and I'll deal with the second one first, up in Canada, we've been going direct when Navilyst had gone direct in Canada, based upon their launch of BioFlo, and winning of an award as we had released earlier, and that team is delivering, and that contract that we won is delivering top line growth for us, and we continue to bring more products direct in that market, so it has really become a nice contributor for us and a part of our growth. Second question was Microsulis. I don't know, we haven't broken out individual revenue. We probably aren't going to break it out, solely for what we will talk about in the future, is thermal ablation, because quite frankly, there may be a better cannibalization between RF and Microsulis. The revenue contribution is way net positive, but in the future, I think we'll be talking about thermal ablation numbers, as those product lines are very close.

Okay, thanks, I'll get back in queue.

Thank you. Our next question comes from the line of Brooks West with Piper Jaffrey. Please go ahead.

Just a couple. I'm trying to relate the Q2 performance to the guidance. Access was a little light, and Joe, you covered the reasons for that. Is that the primary reason for the reduction in the full-year guidance? And then I had a couple follow-ups to that.

That was, I would say, the main contributor. The second contributor was we expected to grow our fluid management business and we've seen even at accounts where we have had stable price, we've just seen weaknesses in overall procedures over the Summer, and into the beginning part of the second quarter, so I think both of those areas, being our overall Vascular Access business, which is market and channel-driven and the fact we've been without a tip location product. Coupled with just the slowdown what we've seen in overall cardiology procedures. I think those two things, because we had growth put on both of those businesses and when you look right now, we're slightly in the red, and you add on top of the growth and I'd say that's where the biggest dump is.

Okay, thanks. and then on the BSC agreement, that added about a $1.25 million, $1.5 million versus our model. Just trying to quantify is that $2.5 million the go-forward number, or how should we think about that? And then I want to relate the revenue questions I just asked to gross margins, obviously gross margin is a little light and reduced in the guidance going forward. Thanks.

Yes, sure. Regarding BSC, I really hate that we've pulled that out, because I really don't want to talk about a non-strategic OEM agreement, but the revenue is material, and I appreciate the question, and I knew it would come up. That business used to be a $14 million business for Navilyst and it had been declining, so we just figured it would go away, but we have an open relationship and a good relationship. Whatever BSC wants to buy, based upon prior relationship, we will sell them. And it's kind of hard to predict. So yes, it was a little bit more than we expected, it's so hard to predict what they will buy in the future, and I just wish it wasn't that much a contributor. But I don't think it's unreasonable to think that will continue, but we're not banking on it. It kind of delivers a little bit of incremental for us.

And then just the primary driver of the gross margin weakness.

Well I think our original plan had us at a higher revenue level, and that higher revenue level simply drove higher gross margin, and it takes time to pull that cost out. The sales, when the sales are a little softer than you anticipated, and especially there was a few deals on the Nano side that got pushed off to next quarter, and that's a real high contributor of gross margin, but I'd say it's a contributor of that. And a couple of deals that just didn't close, which normally -- which had in the past, and some absorption in the plant.

Okay, did you call out, sorry to sneak one more in. Did you call out the overall NanoKnife revenue number?

$3.2 million. We did.

Thanks.

Thank you. Our next question comes from the line of Matt Hewitt with Craig-Hallum Capital Group. Please go ahead.

Welcome, Mark. First question, on BioFlo, it sounds like you've had a pretty positive reception right out of the gates, and I'm wondering if you could provide any incremental color on how that's going, what your sales team is telling you? And then also, as we look out, I think you mentioned 2014 for ports and the dialysis products, have those applications been submitted to the FDA, or where do you stand in that time frame?

Great questions and thanks, Matt. So first of all, BioFlo, it has, the product has had some pent-up demand, and so when it was approved, the sellers were on it right away. The whole process of getting into the PICC business is a long evaluation process, and one which just simply takes time, so we didn't expect to be in a hundred accounts, that's maybe two to three accounts per seller already doing an evaluation, which is very positive. And as I said in my script, we're getting some "oh my gods" in the clinical work, we had shown some reductions in thrombosis rates and DVT rates, and others. And at some pretty big institutions that do a good job keeping the records, we're seeing that the product is a real deal so we just need time for the organization to be able to get through value access committees, time to create new procedure kits, time to do those clinical evaluations, but if you measure the success based upon the flurry of early activity, it's very positive.

Now obviously, at the same time, we've lost a couple big accounts by not having a tip location device, and so while we have an uplift on BioFlo sales, we've had a wait in some accounts that said look, sorry. We want to move it out of the IR, and do bedside kits for nurses, and boy, that's been rough. And what's that done, even for BioFlo, is it's limited our target market, because unless you have a tip location technology for some of those accounts, it's hard for them to move it back in IR. So we're excited that barrier over the next several months will be lifted, and we think the dynamic that's going to drive the Vascular Access market, that dynamic that's going to drive the PICC market will shift away from tip location and back to the best catheters in the market, that fortunately, AngioDynamics has. The applications for the ports and dialysis will be happening very shortly, and it's exactly what's in our timeline, and given the fact that the main application was approved for PICCs, the rest we think, it is not elementary. There's some things that we do have to test out, but we're willing to commit to those dates.

Joe, you mentioned the tip, and it sounds like you've got a nice partnership in place. I'm just curious what drove the decision to go that direction versus acquisition?

Well, it's kind of tough to identify the single point but I think there's -- we have a two-phase approach. One phase is to have a solution that allows us to basically take the competitive advantage away from our competitors on tip, so we wanted to get the fastest thing that we can get to the marketplace, so we can spend more type selling BioFlo than being limited in the market. We will, at some point, and we are looking at other novel technologies, possibly with this partner or with others, that would be what we would call a more novel second generation device. We do think that what's going to drive this business are the clinical outcomes that a product like BioFlo brings, and that tip location will ultimately turn into a generic, like an ultrasound machine. Our competitors, especially Bard, has done a very good job with the quid pro quo, you have to use my PICC because it only works with this tip location device. They've done a good job selling it, its caused problems, but those days are numbered.

Last one for me, and I'll jump back in the queue. Given the modest reduction in the top line guidance, and I don't mean to put you on the spot, but just more out of curiosity, you had previously discussed something along the lines of 7% to 9% growth in 2014, 10% thereafter, getting to be a 10% grower, do you still feel comfortable with that trajectory? Or can we maybe assume you're flowing through a little bit lower expectations, given what we've seen so far this year?

Matt, the hardest thing for us to do is to really peg, with all of this change and whatnot, is to peg when the inflection point occurs. Everything that we've said over the last several quarters is absolutely in line with what we think we will do in the future. Simply, either its been a slower environment or our own, the amount of work it has been to just get this thing focusing forward has taken a lot of energy. I think the slope of the ramp is what we think it's going to be. The question is, is when has it started?

And I guess we were hoping we would hit the ground running, and I think most people would say, you're in for a lot of work, and I guess they were right, and that's the basic fact of it, but the shape of the business, AngioVac will deliver a lot of top line growth. We have, we think BioFlo, especially when we neutralize tip, is going to deliver top line growth. NanoKnife will continue, and EVLT will be the same type of contributor as it has in the past. And we're launching something, we'll show you at the Analyst day, that will launch some time late fiscal 2014 or this time next year, that I think is also going to really bend the growth curve for us, so it all depends. It all depends how patient you are, and how you look at the business. But we've made a lot of moves to make this a real strong growth Company that generates a lot of cash, and will create a great return for investors.

We've taken those bold moves, we've taken the criticism on the chin, and we're just going to deliver. The hardest thing to do is just, with all of the moving parts, pinpoint the exact moment in time. But everything we've said before and the slope of the graphs we think are the same. We just think we've had to push it back a little bit, because its just been a lot of work.

Understood and congratulations, you have made some very nice progress so far this year.

(Operator Instructions)

Our next question comes from the line of Larry Haimovitch with HMTC. Please go ahead.

Couple questions, mainly for Mark. I don't think I heard any conversation on the call about the medical excise tax, which we all, of course, dearly love. How are you going to deal with it? How are you going to account for it? Where will you put it in the P&L, and could you give us a ballpark of what you think it is on an annual basis?

Sure. It is incorporated into the guidance we've discussed. We are geared up to start paying in actually two weeks, unfortunately. So from a P&L standpoint, that's still being debated, looking at where the guidance is, whether it's a G&A or it's a cost of goods, so that's a process we're still going through with our auditors on where the right location is. I don't think we have provided guidance on a number yet, but it's not insignificant clearly, but it is fully baked into the expectations we've set, so we're covering it.

I think it was $6 million for the balance of this year is what we had said in the past. I'm not sure--

It's probably a lower number. But I'll have the exact number by the time I see you.

Well $350 million ballpark times 2.3%.

2%, yes.

So it's $7 million, yes, so $6 million or $7 million probably. It's a big hit.

Yes, it is.

Yes, it is. It's a big number.

My second question is again probably for Mark. The 3% worldwide number you provided, is that truly apples-to-apples? In other words, did you adjust for, you backed out, I think you sort of adjusted for the lost oncology sales. Did you adjust for Microsulis so it doesn't add incrementally and distort the sales? I just want to see if it's truly an apples-to-apples comparison, in every way we can look at that.

No, there is a bit of Microsulis in there, but it's really not that much. We're hitting our plan, but it's not a huge number, it's not the reason we're hitting our plan.

And then Vortex I'm assuming contributed, well probably didn't contribute anything.

30 days, it was very negligible.

Joe as I recall from the last call, forgive me if I'm taking too much time, cut me off, I realize I've asked more than two questions, but if I recall from the last call, Vortex, really we shouldn't expect to really start hitting its stride until fiscal 2014 when you have gotten the sales force really trained and gotten things really, your arms really around that. Is that basically your feeling on that, Joe?

Yes, as I mentioned in my comments, we have a very organized training process to bring the entire Peripheral Vascular sales force up to speed, and trained on the product. And the last training occurs right before the end of the second quarter or third quarter so fourth quarter will be our first quarter that we'll expect ä material result of the product. And as we had said, we're still believe we'll see $10 million worth of 2014 sales.

I have one more question, I don't know if there's anyone else in queue, I don't want to be a hog.

One more, Larry, and then we'll move on.

Thanks, Joe. Tuck-in acquisitions, obviously you aren't going to do anything huge at this point given what you did in the last several months. Are you still looking at various different tuck-ins or are you backed off now and just trying to get things more integrated and moving forward with what you had?

I'm not actively seeking anything prospectively, aside from closing our Microsulis deal so they can bring that into the US, because we like the Company, we like the product. And also, we just did our distribution deal. We always reserve the right to do smaller things. But I think in the macro sense of answering your question, Larry we've done a lot of reengineering for this business, because quite frankly, when I got here, aside from NanoKnife, there wasn't a lot of top line growth opportunities in our R&D stream. It's just that we've done a lot of things to reinforce our organization, reinforce our base, increase our share, and give us a much better ability to compete in the future, and then also invest in some novel technologies. One by bringing BioFlo in, and two by investing in AngioVac.

Our goal now, we have a great and I can't wait until Analyst day, because you're going to meet George Born, our Chief Technology and Operations Officer. He's going to show you not only a new product launch, but give you a little bit of a peek into what we're doing and I think you'll see that our intent for AngioDynamics growth from 2014 and beyond will primarily be organic. Organic, internal, novel growth, and the percentage of R&D that is going into all of our franchises for novel growth is much higher than it's ever been, where its historically been shoring up product lines and line extensions. So, I feel really good that we've bridged the gap. I felt, we have had to put this money to work, because growth today is a premium. And I think now, with everything solidifying we can start seeing early signs of us getting there, and that's our intent and our hope. And I wish I could predict it better, but I think the markets we're going into, and the products that we have, we will do a good job.

So all-in all, I don't have the type of appetite that I did earlier, feeling like I have to bring growth opportunities. Each one of my three franchises has significant growth opportunities in them, and the core franchise to compete in a more complex healthcare environment, so I feel relatively satiated there. If an opportunity comes up, and we think it's the right thing, we'll look at it. But we're not as, we don't feel the type of need as we did before. Our intent is George and our new R&D team will be delivering for us, and again, I can't wait for people to see what we're doing at our Analyst day.

What day is that again?

January 23rd.

Okay, good. Thanks, Joe.

Thank you. I'm showing no further questions in the queue at this time. I would like to turn the conference back to management for any final remarks.

Sure, well I guess I cut you off, Larry but anyway I just want to say that, thank you very much for listening to the call. We're making progress, we think the integration is behind us, and we're really focusing on our execution, and want to get our top line going and improve our profitability. I'm very excited to have Mark as a part of the team, and look forward also, as you look at our financials and go down and look at some future adjusted metrics, to really see the cash generation, and take amortization out and really see the contribution and the profit we'll be able to build in this business. We have a good business and a good future. So, with that, thank you very much and happy New Year.

Ladies and gentlemen, this does conclude the AngioDynamics second-quarter 2013 financial earnings conference call. Thank you for your participation. You may now disconnect.