AngioDynamics Inc (ANGO) 2017 Q1 法說會逐字稿

Good day and welcome to the AngioDynamics 2017 fiscal year first-quarter earnings call. Today's conference is being recorded. At this time I would like to turn the conference over to Jim Polson. Please go ahead.

Good morning and thank you for joining AngioDynamics earnings conference call for the first quarter of the 2017 fiscal year. AngioDynamics leadership will provide an update on the business and review financial results of our fiscal 2017 first quarter which ended on August 31, 2016. The news release detailing the first-quarter results crossed the wire earlier this morning and is available on the Company's website. A replay of this call will also be archived on the Company website.

During the course of this conference call the Company will make projections or forward-looking statements regarding future events including statements about revenue and earnings for the fiscal year 2017 second-quarter and full-year ending May 31, 2017. 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 the actual results or events to differ materially from those described in the forward-looking statements.

This morning we are joined by Jim Clemmer, Chief Executive Officer, and Michael Greiner, Chief Financial Officer of AngioDynamics.

With that, I will turn the call over to Jim Clemmer who will offer his insights on the first quarter. Jim?

Thanks, Jim. Good morning, everyone, and welcome to our first-quarter earnings call. I am pleased with our performance this quarter which lays the foundation for continued positive momentum into the second quarter and the remainder of fiscal our 2017.

We have generated strong sales this quarter of $88.1 million, up 5% year-over-year and our adjusted EPS was $0.17.

In addition to delivering a strong financial performance, we continued to generate strong cash flow with $7.4 million in operating cash flow during the quarter. Our growth in the first quarter was driven by the core business in our Peripheral Vascular franchise. During the quarter, we earned an additional $4 million in revenue as a result of the Cook Medical recall.

While we do not currently have any transparency into when or if Cook will come back into the market this recall continues to present us with opportunities. We have taken proactive steps to retain our existing customers and convert new customers.

As we have discussed during our last earnings call, we have taken a measured approach to responding to the demand by enhancing our supply chain without compromising our high standards of quality. We have added capacity to our process including suppliers, capital and labor. Despite the uncertainty around this recall, we believe that we have made the right moves to allow us to retain many of these new customers going forward with good service and our high-quality products.

Elsewhere in our PV franchise, our venous business was flat year-over-year with the procedure kits being slightly up. AngioVac sales were down 6% year-over-year; however, we did see procedural volume growth in the first quarter.

Our Vascular Access franchise also performed well during the quarter including growth of BioFlo mid-lines and dialysis catheters. BioFlo now represents 45% of our franchise sales compared to 39% a year ago. We will continue to focus on marketing this truly unique technology that offers superior outcomes for patients and economic value to the healthcare system.

We think over time as the healthcare market moves from fee-for-service to bundled payments, you are going to see increased demand for products that can reduce costs to providers like the Endexo technology found in our BioFlo portfolio. We have reset our Vascular Access business using BioFlo as our base story and what we want to do is go back to the market with why people should consider BioFlo as the best choice for any patient who needs a pick, port, midline or dialysis catheter.

Moving forward, we will look to clarify our strategy as it relates to the long-term growth opportunity.

In our Oncology/Surgery franchise, we are pleased with growth in both NanoKnife and Microwave products, especially in disposables. We are also pleased to announce that VOLTA, a new radiofrequency ablation device, received approval for use in Japan. The registration came at the end of Q1 with the first order shipping to our distributor during the second quarter where the revenue will be realized.

Since the start of my time at AngioDynamics, I have been working with our team in taking a disciplined approach to better align our resources. During the quarter, we made progress across a number of areas that have been identified as critical in making AngioDynamics a better operating Company, a key priority for me over these past few months.

A few examples are we removed quarterly incentives from our sales and marketing teams because we believe this will lead to more predictable revenue flow. We are also going through an SKU rationalization exercise to unlock significant operational efficiencies in our supply chain. Finally, again, continuing to take a measured approach as to our response to the Cook recall.

These investments that we have made are sustainable and will improve our ability to operate more efficiently even when this current spike in demand normalizes.

As we continue to realign our leadership team here at AngioDynamics, I am delighted to welcome our new CFO, Michael Greiner. When looking for the ideal CFO candidate for AngioDynamics, we wanted to fill the role with a candidate that could both oversee and efficiently manage the financial organization while also providing strategic leadership to help advance our long-term growth.

Michael's broad experience across all aspects of corporate finance and accounting combined with his experience at large organizations across a variety of industries, uniquely positions him for this role and I look forward to working with him more closely to deliver more sustainable growth and stronger financial performance.

With that, I would like to turn the call over to Michael. I've asked him to introduce himself and then provide a financial update.

Thanks Jim for that generous introduction and good morning to everyone on the call.

I am very excited to be joining Angio at this stage of our lifecycle. After a little over a month, I can attest to the fact that there are many tremendous people who work here combined with some great franchises. I feel it is an important part of my role to help us become a better operating Company and capital allocator. By strengthening our processes and structure and focusing more on operating excellence, I believe we can take advantage of the growth opportunities in front of us and as a result, we will have an even more solid cash flow story and become a consistent performer.

To that end, there are certain rhythms around guidance and metrics that I believe we can and should adjust to allow was to focus on long-term value creation. We also want to be thoughtful and provide our stakeholders with metrics and information that will allow them to properly gauge our progress towards these longer-term objectives.

I look forward to working with Jim and our team to determine what these shifts will entail and of course, we will provide appropriate lead time for the analyst community to comment and adjust.

As Jim mentioned, from a topline perspective, total revenue for the quarter was $88.1 million, up 5% year-over-year. Overall, growth for the first quarter was created by our core business in the Peripheral Vascular franchise as well as solid volume growth in some of our Vascular Access and Oncology/Surgery products.

Gross margin for the first quarter was 51.1%. That is 30 basis points over the fourth quarter of fiscal 2016. This is primarily driven by our ability to leverage increased volume due to the Cook Medical recall. Gross margins were 70 basis points lower than the prior year first quarter and that was driven by pricing pressure and the mix of products sold.

That being said, we will continue to focus on growth opportunities and are confident we can increase gross margins across each of our operating businesses.

Net income for the first quarter was $1.3 million compared to a net loss of $0.8 million in the same quarter last year. Adjusted net income was $6.4 million and adjusted EPS was $0.17 compared to adjusted net income of $4 million and adjusted EPS of $0.11 in the same quarter last year.

Adjusted EBITDA was $14.9 million; that is up 28% year-over-year. This was due to higher revenue, lower sales and marketing expenses and the absence of the medical device tax which appeared in the year-ago quarter.

In particular, our strong cash flow performance during the first quarter was in line with our expectations. We generated $7.4 million in operating cash flow and $7 million in free cash which includes over $400,000 in capital expenditures. We ended the quarter with $37.4 million in cash and cash equivalents and gross debt of $118.9 million excluding the net impact of deferred financing costs.

This cash flow generation strengthens our balance sheet while providing us with more flexibility to make strategic growth investments.

Now I will give an overview of the first-quarter results for each of our franchises.

Our Peripheral Vascular franchise had a solid quarter with $51.4 million in revenue. That is up 9% year-over-year driven primarily by growth in the core business. We continue to see opportunities to expand our core, venous and thrombus management businesses.

In our Vascular Access franchise, revenue was $25 million, up 1% year-over-year. We saw strong sales of BioFlo in midlines and dialysis.

Looking at our sales mix and pricing, we believe we are trending for flat to slightly positive growth in this franchise throughout the remainder of the fiscal year.

Our Oncology/Surgery franchise generated $11.1 million in revenue. That is down 2% compared to the year ago first quarter primarily driven by lower RF sales. However, we are encouraged by the growth we saw in NanoKnife and Microwave particularly in disposable sales which means utilization is increasing.

We also filed a 510k application for Solero, our next-generation Microwave device, which we feel will be a growth driver for the franchise when approved. We expect that approval for Solero to be in the 2017 fiscal year.

Finally, our revenue internationally was $15.7 million, up 7% year-over-year driven by increased demand for our core products as a result of the Cook recall we mentioned.

As stated in the press release, foreign currency translation did not have a material impact on the quarter.

Now turning to guidance. Our expectations for the 2017 fiscal year have not changed since the last quarter. Moving forward, we have decided against providing specific revenue and EPS guidance on a quarterly basis. As I mentioned previously, we believe this aligns better with our overall strategic approach to focus on long-term value creation. However, we will continue providing annual financial guidance while discussing strategically where we see the business moving in coming quarters.

Our Q1 numbers are encouraging and as our new strategic initiatives take root, I am very optimistic about our continued performance opportunities ahead throughout 2017 and beyond.

Thank you. I look forward to speaking and meeting with many of you over the coming months. And with that, I will turn the call back to Jim for final remarks.

Thank you, Michael. We had a good start to our year. In the months ahead, we will be working as a team to address several key areas in order to achieve sustainable growth and stronger financial performances. We will look to expand our margins by maximizing cost efficiencies. We will begin prioritizing key international markets that show growth opportunities for our high-margin products. And finally, we will maintain our strong key free cash flow and thoughtfully invest our dollars in the business to spur organic growth.

I anticipate that we will have opportunities ahead of us to decide how and where we will strategically deploy the capital. As we move through fiscal 2017, we remain committed to executing on our long-term strategy to pursue initiatives where we have a clear competitive advantage, focus on operational efficiency and develop products that improve patient outcomes and lessen the burden on the caregiver and the healthcare system.

We will make the right decisions now to help grow revenues and generate positive cash flows for the Company in both the near and the long term. We will form a stronger platform to deliver long-term financial performance and create value for our stakeholders.

Thank you for joining us this morning. And Matt will now open up the floor to questions.

(Operator Instructions). Brooks West, Piper Jaffray.

Thanks for taking the questions. I wanted to start just with Cook and I know there is some uncertainty around the duration of the opportunity. But as you look at -- it looked like $4 million this quarter, I think you said $2 million to $3 million last quarter. Are you approaching the scale of the opportunity with the recall?

Secondly, as you think about your guidance of $355 million to $360 million, how much of the Cook recall is anticipated within that guidance range?

So a couple of questions I will try to handle for you. First, I think you asked, Brooks, about now we've got about $7 million is the math you used there which is pretty accurate in Cook. Really what I mentioned on the call and what we have done really in the last quarter is build out what we think is a more sustainable platform in our supply chain. We have now lined up our raw material and finished component suppliers to work with us at increased volume and forecast rates and we have kind of taken two swings at how we use our own labor and our resources to maximize efficiencies while getting more production through our system. So that has worked well.

So we feel like we are in good position not only to keep our current customers satisfied but to maintain this additional demand and hopefully keep a bunch of it going forward. Again, the question mark here is we are not hearing a lot from Cook about their intentions to return to the market. But at this case here at AngioDynamics, we are treating this business as something that we will be able to maintain long-term and make sure that customers understand that we are ready to supply them and continue to supply them long-term.

Second, Brooks, I forget exactly what you asked.

Just in terms of what the guidance anticipates. Should we think about, is it $15 million, $16 million in the guidance for Cook or is the guidance for the base business and Cook is upside? Just how should we think about that?

So when we gave guidance earlier this year, there was not a lot in the Cook; we talked about it earlier. And we don't want -- I don't want to throw any numbers back and forth with you now because we are still uncertain. There is also some things I touched upon in what we are doing now.

In the very short period of time of me being here, changing quickly the course of action that was set for us before when you change a compensation plan to selling and marketing people pretty quickly. And in the past it had quarterly incentives for people to do things and I've taken those out trying to flatten out our revenue curve on a true demand based pull cycle. That takes -- there's some risk when you do that. So I want to measure that risk as it goes through our system.

Second, I mentioned too, we have a terrific opportunity here, if we choose to take it, and we are going to, to reduce a lot of SKUs and a lot of the burden that we have in our supply chain. That is going to come with some revenue volatility when you do that.

So we have a lot of SKUs. For many years our Company has kind of said yes to everything. And in some of our categories like our Fluid Management, we make custom kits for healthcare networks that really need customization. But at some point we've got to make sure we are the right supplier for those customers going forward and they are the right customers for us going forward.

So when you do that, Brooks, I've got some volatility in our revenue curve that at this point I don't want to start forecasting really deeply with the benefit of Cook but some risks into what we are doing now which I think will make us a better Company going forward.

Great. Thanks, Jim. I appreciate the questions.

Matthew Mishan, KeyBanc Capital Markets.

Good morning, Jim. Welcome, Michael. You had a nice sales beat in the quarter especially versus guidance. I thought the EPS beat was impressive as well. Can you talk a little bit about the flow through of the sales beat down to EPS and really what drove the EPS beat?

So I will give you a quick highlight and I will ask Michael to chime in. Really, Matt, again I think what it shows is something that I identified early on and I think I spoke to you about it when I joined Angio, is I really believe we have a platform here that when we maximize our efficiencies and get our Company operating at a higher level throughout our supply chain, we have the opportunity then to create leverage. So anytime we can get additional revenues even in mid single-digit rates, we are going to create leverage here from an operating standpoint.

So today we are working on getting our Company even more sophisticated as we build that out to bring more leverage in. It is a work in progress. We are still early but I think maybe this will send you a sign as to what we think we can do in the future. Michael, any comments?

No, I agree with that and I think when you look at it whether it is cost of sales or adjusting our fixed cost structure in SG&A as we increase those dollars, many of those dollars drop to the bottom line. Specifically in SG&A and selling and marketing, we are very thoughtful about where some of our dollars were spent as well as we had some open [hedge] and we are analyzing whether or not some of those hedge throughout the organization given the performance we saw in the first quarter are hedges that we need to add in the future -- or there are ways that obviously as Jim is having us look at the entire Company, are there ways that we can re-organize ourselves to a more nimble, leaner fixed cost structure.

Okay, great. And then I think for me the biggest surprise in the quarter was the return to growth on Vascular Access and congrats to that team. Is that more of stabilization on easier comps or is there some changes you have made outside of the discontinuation of Celerity? What really drove that change in growth there?

It is a good question, Matt. There is not one thing I will point to. Let me give a couple. You talked about pulling the Celerity program out of our system. Obviously I think it helped us focus on a couple of things that we were going to do. In the past Celerity was there kind of the elephant in the room as to we always knew it wasn't right, we had to flush it out. Now our team is focused, the selling and marketing team can focus on really the BioFlo story as I talked about.

Our sales team did a great job this quarter. We know that without a tip location device, we are fighting with that one tool we would love to have in our bag. Yet, they have done a really effective job following the marketing team's lead and telling be BioFlo story. We know it works. Our customers are really providing compelling data of what BioFlo does when it is used in a clinical setting.

So really, Matt, hats off to what we have done here in a quick short amount of time and it encourages us to know really when we do a better job of explaining the story, I think we will have really good results.

All right, thank you very much.

Jason Mills, Canaccord Genuity.

Good morning. Jim, let's start with a philosophical question, then maybe drill down into the quarter and the business going forward. So philosophically, you are doing a lot of things. You are benefiting from the Cook recall which is nice at this point in time. But as you look out over the next couple of years, how do you envision formulating the Company, do you see yourself doing acquisitions and divestitures to grow the topline faster? Are you going to be more focused on the bottom line and cash flow generation with maybe modest topline improvements?

Just as you sort of mold the Company in your vision and I know it has been a relatively short period of time at this point so you are still implementing your vision, how should we see this Company look in the next two to three years?

Thanks for asking. It is a good question. You summarized some of the things that you and I have discussed in the past. So out of the gate, I want to make sure that we take advantage of the platform we have. Again, we have great products. We compete in spaces that are very attractive to companies that we enjoy competing against so do others. So we are in good spots.

What we are going to do here first is make sure we trust our own strategic planning going forward. So we are taking a lot of time as a management team, really challenging ourselves, carving out where we are today, where we think we should be in the future. We are going to take a harder look at portfolio management here than maybe was done in the past. And through that may come some items that we decide to look at M&A for whether we want to bring things in or out of the portfolio.

But we are going to do that first when we have stabilized the foundation, make sure we can get our operational efficiencies right. I think we can get some leverage from an operating standpoint, provide some gross margin and cash. Once we do that and stabilize the plan, we will have opportunities for organic growth and the organic growth rates in our markets as you know our low to mid single digits. So they are going to be a spot we want to get to.

But I think beyond that, we have the leverage that a strong balance sheet gives us and the strong cash generation that we will have, will give us the opportunity then to look at M&A as an opportunity to enhance that.

So I guess in a three-part prong, it is stabilize the business, make sure we are getting efficiencies dropping to the P&L. Second, raise our organic growth levels here by better execution on our current portfolio. Then third, look outside of the building for opportunities if that makes sense.

I would just going to add to that that one of the things we also want to make sure is as we get into a phase for M&A we can very effectively bring on that M&A. So get the scale and leverage off of a great operating company, more cash dropping to the bottom line, reinvest that additional cash over time.

That is helpful. Do you expect to focus on the same call points, physician call points, hospital call points that you are today or should we expect to hear from you operational or strategic initiatives that differ from the current targeted call points that you have today? Will you become more focused, will you try to go after different call points?

And I guess as a second part to that question, your salesforce prior to your joining, Jim, went through several strategic changes in terms of how they were organized and perhaps that had the undesirable effect of making them less productive as they were sort of not sure from year to year which way they were going to go. Maybe speak to us a minute about your vision for your salesforce because that certainly seemed to show up this quarter with good SG&A leverage relative to sort of what we have seen in the past.

Then I have one quick follow-up. Thanks.

Sure. Let me try to tackle what you threw on the table. First of all, I think if you look at what we did, I changed the sales compensation plan after being here for only a couple of months because I didn't like the way it was structured. Our sales team showed tremendous resilience. Our leadership team is very strong and what you identified too, these folks have been bounced around a little bit as our Company was changing its strategy in the last couple of years. So I give our selling and marketing teams a lot of credit for being resilient and adapting to the changes that the Company has thrown their way including the ones that I threw at them this summer.

So I like the way they have adapted. It shows their effectiveness, what they can do in a market like this. That being said, historically, and I have been in this business for over 25 years, I have seen some companies that I will call serial kind of reorg companies and they don't ever get traction. So I want to pinpoint that we are on the right spot. Even if we are not exactly perfectly aligned, I want to stop some of the disruption, let our folks focus on the tasks at hand, minimize some of the changes if we can. If I see a radical change that makes sense, sure, we will do it. But sometimes stability brings as much performance as moving around the ball very quickly does.

You asked again about where we are located, where we will be in the future? Again I like where we are at. We are trusted and relied upon by people like the IR docs and the IR suite. We are a trusted partner in their toolbox when they give care. We like those places.

But we also know that things are shifting. You look at even how PICCs were administered many years ago to how they are administered now. The customers have decided that some care will be done in different places. So we are not going to wait for those shifts to occur, we are going to try to predict some ourselves and be innovative going forward.

So I don't want to let the cat out of the bag here, but we are going to look outside of the walls we already control and let our innovation dictate how we can perform better with our current customers.

Finally, one last point too, not just with our portfolio or call points here in the US, we have been for too long a US centric company. We're going to treat our external marketplaces a little differently than we have in the past. We are going to take our emerging markets with a higher level of focus than they have been in the past and build a plan around how to service those markets better and to hopefully get growth.

That is helpful and encouraging. Last question from me more product specific, Jim, AngioVac, it participates in a market that as you look at sort of other companies are doing quite well, the market is developing, you are seeing a paradigm perhaps change in terms of how acute thrombus is dealt with on the commission level. Why isn't this gaining traction a little bit more quickly? And how do you envision reinvigorating the growth and opportunities with AngioVac?

A good question, a challenging one to be honest with you. I think you know that already. So I will be honest with you, I have probably been stubborn through the Company here in my first six months, I have been stubbornly asking a lot of questions around AngioVac because I want to make sure I am convinced when I see the results of it being used in clinical settings, I'm truly convinced of what the technology offers because it works and works well.

But I don't think we have done a great job here making sure it is the right product for us and being sold in the right circumstances. So we are going to be very careful in our predictions going forward to make sure we are putting it in the right settings. And maybe I'm just being a bit cautious there but we know when it is used, it does work, we have seen actually a pickup in the procedures that have been done yet I think in the past there was a little bit of extra product in the marketplace prepared for those cases. So we didn't see a bump up in sales that followed the procedures.

Over time we will be more clear with you but I wanted to leave you with a little bit of that, I am still challenging us going forward and we need to define our strategy in AngioVac better than we have.

Thanks, guys, for the answers. I will get back in queue.

Charles Haff, Craig-Callum.

Good money, guys, and congratulations on good performance. Thanks for taking my questions. I guess the first question I would have is some investors might see this nice quarterly beat and see the strength that you are discussing in your underlying business seeing the quality of the quarterly beat and the fact that you removed the quarterly incentives from the sales people, and then scratching their head and saying why are they giving us less clarity when it appears as though their visibility may be improving? And I mean less clarity by removing the quarterly guidance.

So can you just kind of expand on your prepared remarks a little bit and why you are removing the quarterly guidance a little bit so we have a better, a deeper appreciation of why you are doing that?

Sure, Charles. Thanks for listening. It is Jim. Thanks for calling. A couple of things. Again, since I have arrived and now with Michael's arrival, he and I have been talking with our other teammates here to make sure we are focused on long-term growth for this Company; stability and earning credibility with people outside of the company that we can deliver upon what we said we would do.

Sometimes when you are bouncing around trying to adjust quarters or predict quarters it is hard to do that in a Company like us that is going through the amount of change that I am actually challenging our Company with. So over time I know sitting in your seat you would like to see a little more clarity from us. We will try to be as transparent as we can. But we are also tried to focus on the internal workings of our Company a bit more. And over time our goal is not to give you guys confusion or cloud your look into what we are doing but I want to focus more on what we do then talk about what we are doing. And Michael, do you want to comment?

Yes. I think the other thing you guys have seen, we have all seen in our careers is there is more poor behaviors than good behaviors that come from companies trying to get to their quarterly outcomes. So we are just trying to take that particular possibility off of the table and allow us to ensure that if we need to invest something at the end of the quarter because we like the cash flow opportunities down the road, we can do that.

We don't have to have a conversation around should we do that, shouldn't we, where are we going to end up in the quarter? We think annual guidance of 12 months and continuing to reinforce that and/or increase or decrease on a quarterly basis to the extent that is relevant provides hopefully enough information that people can gauge how we are executing against the longer-term plans.

Great. I appreciate the candor and your response. The second question I had is around VOLTA. I don't know much about this product. Can you kind of describe this a little bit and what the timing is, what it does, that sort of stuff?

So VOLTA is enabling us to get into the Japanese market. We were approached by a distributor that used to distribute another company's products in this space and I think they lost distribution rights to another manufacturer. So they had a market that they had already served and there was a hole that they felt they could fill with a product that Angio had in our bag. We needed to make some tweaks and to adjust the product to file for registration for approval in Japan to service that market.

But really it is a good combination where an existing technology that was in our bag that needed to be adapted somewhat now marrying up with a really good supplier distribution partner in a location like Japan will come together and help both companies adapt to that market.

In this is RF for oncology?

Yes.

Okay.

Sorry about that. I skipped over that. Yes.

And then the last question, the next Microwave product that is coming out, can you kind of talk about how this product is different than Microsulis? I mean Microsulis has been very competitive and done very well since it was acquired. Maybe just kind of describe briefly the next generation Microwave?

I will do a little bit of that. It is really just a next-generation. As you know, what the Microsulis product does, the results are terrific but our customers, our doctors have told us it is not the easiest product to work with. So we are trying to enhance the physician experience and really raise the graphic interface and how the experience works for our users.

From the clinical performance, we have already reached a level we are very pleased with so are our users. But we have listened to our customers and they want a better experience while they are using the product. But really we updated a lot of the ways it will use, give feedback back to the physicians at the point of use.

So again, we filed for this product. We hopefully will receive approval and launch it during this fiscal year.

Okay, great. Thanks for taking my questions. I will talk to you more off-line. Thanks.

Jayson Bedford, Raymond James.

Good morning. Thanks for taking the questions. I guess just first on access, you stabilized this business. I think you cited growth in Midline and Dialysis but I think of these products as smaller contributors. So can you give us an idea of the performance in your core PICC and Port franchises?

Good morning. In our basic PICC, and you are right, we have an umbrella kind of around the PICC business that now includes the Midlines that were launched a bit over a year ago. The Midlines are doing very well. The basic -- the PICCs themselves were down, the PICCs declined in revenue over the quarter and the Midline growth more or less kind of offset the PICC declines. And all of the Midlines that we sell are BioFlo. Our PICCs are a combination of BioFlo and non-BioFlo products.

Our Ports are essentially flat and dialysis was down slightly for the quarter. So essentially the whole mix was really basically flat to the prior year. That performance being flat is actually ahead of where we have been in that business as you know. The business has been in decline for a bit so getting it to flat overall is actually a good achievement.

The exact number is we went from 24.6 to 25 overall.

So you said ports were flat, dialysis was down?

Yes.

Maybe, Jim, can you talk about the marketing message around PICCs versus Midlines? I am wondering with the tip location, are you pushing Midlines more?

Yes, so ports are slightly down; I was calling it flat, it is actually down slightly but roughly flat.

So a couple of things are happening at once. We know what BioFlo does. I'm not going to tell that story again but we are seeing customers move really the magic guidelines from Michigan are challenging healthcare facilities to rethink of when they are placing PICCs and for what level of dwelling, what dwelling time. There's times where each product has a certain need and maybe the hospital community, healthcare community has "over PICC-ed" for a while.

So now we are challenging that and choosing the right product for the right purpose and Midlines have a purpose that is very different from what a PICC is. And there are a lot of people now when they think about it they are going to place a Midline. The benefit to the user when they're placing the Midline, they don't need a location device so it is an easier procedure to place. For us that puts us at a much more level playing field as well. But then at that point, the customer is going to choose the very best product and obviously our Midlines are being very well received not just for the design of our technology but having Endexo which is our BioFlo underlying product, it is going to win in that circumstance.

That is helpful. Maybe just jumping over to Peripheral side, I don't want to pour cold water on obviously what was a very strong performance. But if I back out the incremental contribution from Cook, your PV business struggled to grow. So I'm just wondering is this a function of the added focus on the Cook business and going after that opportunity or are you seeing more of an increased competitive landscape?

A couple of things. The first one you hit. Our sales reps are pulled in a bunch of different directions by a market that is very uncertain and looking for help. So we weren't the only company trying to help out those Cook customers in that case but it took all lot of time from our sales reps working with those customers adapting them from a Cook catheter to our product and making sure they had a right product for the right use. So it take some time.

It is not an excuse but our sales team did a good job and really worked hard working with those customers.

Second, I mentioned earlier AngioVac revenue was down for the quarter. Again, we did see slight procedural growth which is good but the volume itself was down. The fluid management business was pretty flat. So it was a challenging quarter for that group. I think they did a really good job responding to the Cook marketplace. It is very difficult, required a lot of work but you are right. I will accept your challenge and the people managing that business for us will as well.

Over time if we can normalize this Cook business we will get back to focusing on growth and get our pieces of the PV franchise. We need to do a complete job there.

All right. Thanks, Jim.

It does appear we have no further questions at this time. I will now hand it back over to our speakers for any additional or closing remarks.

Thanks, Matt. Again, as we mentioned earlier, we are pleased with the level of performance for AngioDynamics this quarter. I am pleased again with the resilience of our Company and our people, the people that work on our selling and marketing teams that directly influence and contact our customers on a daily basis. I am pleased with the performance of the people in our supply chain and our operations that work very, very hard. And looking at something which benefited us like the Cook opportunity, that opportunity put tremendous strain on our folks in the operations group and they responded with that challenge, working harder, working smarter and building out a long-term plan to absorb that business and grow from there.

So I am pleased after a short six-month stint here at AngioDynamics in the performance of our Company and the resilience of our people. It gives me a bullish outlook to our Company going forward. Thanks again for joining us this morning. I look forward to speaking again.

That concludes today's conference. Thank you for your participation. You may now disconnect.