Angiodynamics Inc: Form 10-Q for the period ended Feb 29, 2024

The following information should be read together with the consolidated financial statements and the notes thereto and other information included elsewhere in this quarterly report on Form 10-Q. The following discussion should be read in conjunction with the Company's 2023 Annual Report on Form 10-K, and the consolidated financial statements and notes thereto included elsewhere in the Form 10-Q.

Disclosure Regarding Forward-Looking Statements

This quarterly report on Form 10-Q, including the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements regarding AngioDynamics' expected future financial position, results of operations, cash flows, business strategy, budgets, projected costs, capital expenditures, products, competitive positions, growth opportunities, plans and objectives of management for future operations, as well as statements that include the words such as "expects," "reaffirms," "intends," "anticipates," "plans," "believes," "seeks," "estimates," "projects," "optimistic," or variations of such words and similar expressions, are forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Investors are cautioned that actual events or results may differ materially from AngioDynamics' expectations, expressed or implied. Factors that may affect the actual results achieved by AngioDynamics include, without limitation, the ability of AngioDynamics to develop its existing and new products, technological advances and patents attained by competitors, infringement of AngioDynamics' technology or assertions that AngioDynamics' technology infringes the technology of third parties, the ability of AngioDynamics to effectively compete against competitors that have substantially greater resources, future actions by the FDA or other regulatory agencies, domestic and foreign health care reforms and government regulations, results of pending or future clinical trials, overall economic conditions (including inflation, labor shortages and supply chain challenges including the cost and availability of raw materials), the results of on-going litigation, challenges with respect to third-party distributors or joint venture partners or collaborators, the results of sales efforts, the effects of product recalls and product liability claims, changes in key personnel, the ability of AngioDynamics to execute on strategic initiatives, the effects of economic, credit and capital market conditions, general market conditions, market acceptance, foreign currency exchange rate fluctuations, the effects on pricing from group purchasing organizations and competition, the ability of AngioDynamics to obtain regulatory clearances or approval of its products, or to integrate acquired businesses. Other risks and uncertainties include, but are not limited to, the factors described from time to time in our reports filed with the Securities and Exchange Commission (the "SEC").

Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this quarterly report on Form 10-Q will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, investors are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date stated, or if no date is stated, as of the date of this report. AngioDynamics disclaims any obligation to update the forward-looking statements.

Disclosure Regarding Trademarks

This report includes trademarks, tradenames and service marks that are our property or the property of other third parties. Solely for convenience, such trademarks and tradenames sometimes appear without any “™” or “®” symbol. However, failure to include such symbols is not intended to suggest, in any way, that we will not assert our rights or the rights of any applicable licensor, to these trademarks and tradenames. For a complete listing of all our trademarks, tradenames and service marks please visit www.angiodynamics.com/IP (http://www.angiodynamics.com/IP). Information on our website or connected to our website is not incorporated by reference into this Quarterly Report on Form 10-Q.

Executive Overview

AngioDynamics is a leading and transformative medical technology company focused on restoring healthy blood flow in the body's vascular system, expanding cancer treatment options and improving quality of life for patients. We design, manufacture and sell a wide range of medical, surgical and diagnostic devices used by professional healthcare providers for vascular access, for the treatment of peripheral vascular disease and for use in oncology and surgical settings. Our devices are generally used in minimally invasive, image-guided procedures. Many of our products are intended to be used once and then discarded, or they may be temporarily implanted for short- or long-term use.

Our business operations cross a variety of markets. Our financial performance is impacted by changing market dynamics, which have included an emergence of value-based purchasing by healthcare providers, consolidation of healthcare providers, the increased role of the consumer in health care decision-making and an aging population, among others. In addition, our growth is impacted by changes within our sector, such as the merging of competitors to gain scale and influence; changes in the regulatory environment for medical devices; and fluctuations in the global economy.

Our sales and profitability growth also depends, in part, on the introduction of new and innovative products, together with ongoing enhancements to our existing products. Expansions of our product offerings are created through internal and external product development, technology licensing and strategic alliances. We recognize the importance of, and intend to continue to make investments in research and development activities and selective business development opportunities to provide growth opportunities.

We sell our products in the United States primarily through a direct sales force, and outside the U.S. through a combination of direct sales and distributor relationships. Our end users include interventional radiologists, interventional cardiologists, vascular surgeons, urologists, interventional and surgical oncologists and critical care nurses. We expect our businesses to grow in both sales and profitability by expanding geographically, penetrating new markets, introducing new products and increasing our presence internationally.

The current macroeconomic environment continues to impact our business and may continue to pose future risks. The Company's ability to manufacture products, the reliability of our supply chain, labor shortages, backlog and inflation (including the cost and availability of raw materials, direct labor and shipping) have impacted our business, trends that may continue. Accordingly, management continues to evaluate the Company’s liquidity position, communicate with and monitor the actions of our customers and suppliers, and review our near-term financial performance.

On June 8, 2023, the Company completed the sale of the dialysis and BioSentry businesses to Merit Medical Systems, Inc. The Company also entered into various agreements to facilitate the transition to Merit, including a Transition Services Agreement and Contract Manufacturing Agreement. Total consideration received by the Company for the Divestiture was $100.0 million in cash and resulted in a pre-tax book gain of $47.8 million.

On June 8, 2023 and in connection with the completion of the Divestiture, the Company repaid all amounts outstanding under its existing Credit Agreement, and as a result, the Credit Agreement was extinguished.

On January 5, 2024, the Company announced a restructuring of its manufacturing footprint and a shift to an outsourced model (the "Plan"). This Plan will transfer all product manufacturing processes to third-party manufacturers. The restructuring activities associated with the Plan are expected to be completed in the third quarter of fiscal year 2026 and will allow the Company to more effectively compete in chosen markets and fundamentally change its corporate gross margin profile.

On February 15, 2024, the Company completed the sale of the PICC and Midline businesses to Spectrum Vascular. The Company also entered into various agreements to facilitate the transition to Spectrum, including a Transition Services Agreement and Contract Manufacturing Agreement. Total consideration received by the Company for the Divestiture was $34.5 million in cash and resulted in a pre-tax book gain of $6.7 million. Included in the agreement is a $5.5 million earn-out related to the sales of divested products over a two year period and a milestone payment of $5.0 million paid upon final transfer of the manufacturing to a third-party.

In the third quarter of fiscal year 2024, the Company concluded that the sustained decline in our stock price was a triggering event for the Med Tech reporting unit. The Company utilized the income approach to determine the fair value of the remaining Med Tech reporting unit. Based on the results of this evaluation, the Company recorded a goodwill impairment charge of $159.5 million for the quarter ended February 29, 2024 to write down the carrying value of the Med Tech reporting unit to fair value.

On March 31, 2024, the Company and BD entered into a Settlement Agreement as described in Note 14 "Commitments and Contingencies" set forth in the Notes to our consolidated financial statements in this Quarterly Report on Form 10 -Q. The Company will make a one-time lump sum payment to BD in the amount of $7.0 million, $3.0 million of which will be payable within 5 business days, and the remainder of which will be payable in installments over the next 12 months. The Company will also make six minimum annual payments to BD of $2.5 million through February, 2029, and potential additional payments if six percent (6%) of annual net sales of AngioDynamics’ port products exceed the minimum payment. The parties will participate in the pending appeal before the Federal Circuit of the case titled C.R. Bard, Inc. and Bard Peripheral Vascular, Inc. v. AngioDynamics, Inc. (C.A. 15-00218–JFB; and CAFC appeal No. 23-2056) and a contingent payment of $3.0 million will be due from AngioDynamics to BD if the Federal Circuit reverses or vacates the District Court’s findings of invalidity with respect to the patent claims at issue in the case. Neither party admitted any liability and the agreement contains mutual covenants not to sue and releases. The agreement contains mutual covenants not to sue and releases. As of February 29, 2024, the present value of the lump sum and minimum annual payments of $19.3 million was recorded in "Acquisition, restructuring and other items, net" on the accompanying consolidated statements of operations and a long-term asset of $1.3 million, other current liabilities of $8.5 million and other long-term liabilities of $12.0 million was recorded on the consolidated balance sheets.

In evaluating the operating performance of our business, management focuses on company-wide and segment revenue and gross margin and company-wide operating income, earnings per share and cash flow from operations. A summary of these key financial metrics for the three and nine months ended February 29, 2024 compared to the three and nine months ended February 28, 2023 are as follows:

Three months ended February 29, 2024:

• Revenue decreased by 6.9% to $75.2 million
• Med Tech growth of 13.0% and Med Device declined by 14.7%
• Gross profit decreased 250 bps to 47.7%
• Med Tech gross profit decreased 320 bps to 61.4% and Med Device gross profit decreased 400 bps to 40.5%
• Net loss increased by $178.3 million to $187.7 million
• Loss per share increased by $4.43 to $4.67

Nine months ended February 29, 2024:

• Revenue decreased by 6.0% to $232.9 million
• Med Tech growth of 9.8% and Med Device declined by 12.2%
• Gross profit decreased 170 bps to 49.9%
• Med Tech gross profit decreased 100 bps 62.8% and Med Device gross profit decreased 330 bps to 43.5%
• Net loss increased by $139.9 million to $170.9 million
• Loss per share increased by $3.47 to $4.26
• Cash used in operations increased by $17.3 million to $33.2 million

For the three and nine months ended February 29, 2024, the decrease in revenue is partially due to the sale of the PICCs, Midline, dialysis and BioSentry businesses which impacted sales by $9.6 million and $25.6 million compared to the three and nine months ended February 28, 2023, respectively. Our Med Tech revenue, comprised of Auryon, the thrombus management platform and NanoKnife, grew 13.0% in the third quarter of fiscal year 2024. The growth in Auryon and NanoKnife was partially offset by continued softness in the thrombus management platform. Our Med Device revenue declined by 14.7% in the third quarter of fiscal year 2024 driven mainly by the sale of the PICCs, Midlines, dialysis and BioSentry businesses.

Results of Operations

For the three months ended February 29, 2024, the Company reported net loss of $187.7 million, or diluted loss per share of $4.67, on net sales of $75.2 million, compared with a net loss of $9.5 million, or a loss of $0.24 per diluted share, on net sales of $80.7 million during the same quarter of the prior year. For the nine months ended February 29, 2024, the Company reported net loss of $170.9 million, or diluted loss per share of $4.26, on net sales of $232.9 million, compared with a net loss of $31.0 million, or a loss of $0.79 per diluted share, on net sales of $247.7 million during the same quarter of the prior year.

Net sales - Net sales are derived from the sale of products and related freight charges, less discounts, rebates and returns.

(in thousands)

26

Table of Content

(in thousands)

For the three months ended February 29, 2024, net sales decreased $5.5 million to $75.2 million compared to the three months ended February 28, 2023. For the nine months ended February 29, 2024, net sales decreased $14.7 million to $232.9 million compared to the nine months ended February 28, 2023. At February 29, 2024, the Company had a backlog of $1.2 million, a decrease of $0.9 million from November 30, 2023.

The Med Tech segment net sales increased $3.0 million and $6.9 million for the three and nine months ended February 29, 2024 compared to the three and nine months ended February 28, 2023, respectively. The change in sales for both periods was primarily driven by:

• Increased Auryon sales of $1.5 million and $5.0 million compared to the three and nine months ended February 28, 2023, respectively;
• Decreased sales of the thrombus management platform of $0.5 million and $1.8 million compared to the three and nine months ended February 28, 2023, respectively. This was driven by AngioVac sales remaining consistent and decreasing $1.2 million compared to the three and nine months ended February 28, 2023, respectively. This was also driven by AlphaVac sales decreasing $0.9 million and $0.6 million, respectively; and
• Increased NanoKnife sales of $1.9 million and $3.5 million compared to the three and nine months ended February 28, 2023, respectively, which was driven by increased capital and disposable sales for the three and nine months ended February 29, 2024.

The Med Device segment net sales decreased $8.5 million and $21.6 million for the three and nine months ended February 29, 2024 compared to the three and nine months ended February 28, 2023, respectively. The backlog, which primarily impacted sales of Core and Vascular Access products, was $1.2 million, a decrease of $0.9 million from November 30, 2023.

The change in sales for the three months ended February 29, 2024 compared to the three months ended February 28, 2023, respectively, was primarily driven by:

• Decreased sales of PICCs and Midline products of $1.6 million and $0.5 million, respectively, which was due to the divestiture of these businesses on February 15, 2024;
• Decreased sales of dialysis and BioSentry products of $5.7 million and $1.8 million, respectively, which was due to the divestiture of these businesses on June 8, 2023;
• Decreased sales of RadioFrequency Ablation and Syntrax of $0.9 million and $0.1 million, respectively. These products were discontinued as of February 29, 2024; and
• Increased sales of Core, Venous and Ports of $1.2 million, $1.2 million and $0.4 million, respectively. This increase was partially offset by decreased sales of Microwave and Other VA and Oncology products of $0.4 million and $0.5 million, respectively.

The change in sales for the nine months ended February 29, 2024 compared to the nine months ended February 28, 2023, respectively, was primarily driven by:

• Decreased sales of PICCs and Midline products of $2.3 million and $0.2 million, respectively, which was due to the divestiture of these businesses on February 15, 2024;
• Decreased sales of dialysis and BioSentry products of $17.9 million and $5.2 million, respectively, which was due to the divestiture of these businesses on June 8, 2023;
• Decreased sales of RadioFrequency Ablation and Syntrax of $1.5 million and $0.1 million, respectively. These products were discontinued as of February 29, 2024; and
• Increased sales of Core, Ports, Venous and Microwave of $1.6 million, $2.4 million, $1.7 million and $0.3 million, respectively. This increase was partially offset by decreased sales of Other VA and Oncology products of $0.5 million.

Gross Profit

(in thousands)

Gross profit - Gross profit consists of net sales less the cost of goods sold, which includes the costs of materials, products purchased from third parties and sold by us, manufacturing personnel, royalties, freight, business insurance, depreciation of property and equipment and other manufacturing overhead, exclusive of intangible amortization.

Total Company gross profit decreased by $4.6 million and $11.7 million for the three and nine months ended February 29, 2024 compared to the three and nine months ended February 28, 2023, respectively. The change for both periods was primarily driven by:

• The sale of the PICCs, Midline, dialysis and BioSentry businesses, which negatively impacted gross profit by $5.4 million and $15.3 million, respectively;
• Sales volume, which positively impacted gross profit by $2.5 million and $6.5 million, respectively;
• Price, which positively impacted gross profit by $1.1 million and $1.1 million, respectively;
• Production volume and other costs, which negatively impacted gross profit by $1.9 million and $0.7 million, respectively and is inclusive of a $1.0 million recall reserve that was recorded in the third quarter of fiscal year 2024;
• Sales mix, which negatively impacted gross profit by $0.8 million and $1.7 million, respectively;
• Inflationary costs on raw materials, labor shortages and freight costs had a consistent impact on gross profit for the three months ended February 29, 2024 compared to the three months ended February 28, 2023, and which negatively impacted gross profit by $0.7 million for the nine months ended February 29, 2024 compared to the nine months ended February 28, 2023; and
• Incremental depreciation on placement units of $0.2 million and $0.8 million, respectively.

The Med Tech segment gross profit increased by $1.1 million and $3.6 million for the three and nine months ended February 29, 2024 compared to the three and nine months ended February 28, 2023, respectively. The change for both periods was primarily driven by:

• Sales volume, which positively impacted gross profit by $1.6 million and $4.4 million, respectively;
• Price and other incentives which positively impacted gross profit by $0.4 million and $1.5 million, respectively;
• Sales mix, which negatively impacted gross profit by $0.7 million and $1.5 million, respectively; and
• Incremental depreciation on placement units of $0.1 million and $0.5 million, respectively.

The Med Device segment gross profit decreased by $5.7 million and $15.3 million for the three and nine months ended February 29, 2024 compared to the three and nine months ended February 28, 2023, respectively. The change for both periods was primarily driven by:

• The sale of the PICCs, Midline, dialysis and BioSentry businesses, which negatively impacted gross profit by $5.4 million and $15.3 million, respectively;
• Sales volume, which positively impacted gross profit by $1.0 million and $2.3 million, respectively;
• Production volume, price and other incentives, which negatively impacted gross profit by $0.9 million and $0.2 million, respectively and is inclusive of a $1.0 million recall reserve that was recorded in the third quarter of fiscal year 2024;
• Sales mix, which negatively impacted gross profit by $0.4 million and $0.9 million, respectively;
• Inflationary costs on raw materials, labor shortages and freight costs had a consistent impact on gross profit for the three months ended February 29, 2024 compared to the three months ended February 28, 2023, and which negatively impacted gross profit by $0.9 million for the nine months ended February 29, 2024 compared to the nine months ended February 28, 2023; and
• Incremental depreciation on placement units remained consistent for the three months ended February 29, 2024 compared to the same period in the prior year, and negatively impacted gross profit by $0.2 million for the nine months ended February 29, 2024 compared to the same period in the prior year.

Operating Expenses and Other Income (Expense)

(in thousands)

Research and development expense - Research and development (“R&D”) expense includes internal and external costs to develop new products, enhance existing products, validate new and enhanced products, and manage clinical, regulatory and medical affairs.

R&D expense increased $1.3 million and $2.8 million for the three and nine months ended February 29, 2024 compared to the three and nine months ended February 28, 2023, respectively. The change for both periods was primarily driven by:

• The timing of certain projects and clinical spend associated with the ongoing clinical trials, which increased R&D expense by $0.6 million and $1.4 million, respectively; and
• Compensation and benefits expenses, which increased $0.8 million and $1.3 million, respectively.

Sales and marketing expense - Sales and marketing (“S&M”) expense consists primarily of salaries, commissions, travel and related business expenses, attendance at medical society meetings, product promotions and marketing activities.

S&M expense remained consistent for the three months ending February 29, 2024 compared to the three months ended February 28, 2023, and increased $0.3 million for the nine months ended February 29, 2024 compared to the nine months ended February 28, 2023. The change for both periods was primarily driven by:

• Compensation and benefits expense, which increased by $1.1 million and $3.1 million, respectively; and
• Trade show expenses, which decreased $0.1 million and increased $0.1 million, respectively. This was partially offset by travel and other selling expenses, which decreased $0.8 million and $2.7 million, respectively.

General and administrative expense - General and administrative (“G&A”) expense includes executive management, finance, information technology, human resources, business development, legal, and the administrative and professional costs associated with those activities.

G&A expense increased $1.7 million and $0.9 million for the three and nine months ended February 29, 2024 compared to the three and nine months ended February 28, 2023, respectively. The change for both periods was primarily driven by:

• Compensation and benefits expenses, which increased $1.5 million and $1.0 million, respectively; and
• Other outside consultant spend for legal and IT, which increased $0.1 million for the three months ending February 29, 2024 compared to the three months ended February 28, 2023 and remained consistent for the nine months ending February 29, 2024 compared to the nine months ended February 28, 2023, along with increased travel expenses of $0.3 million for the three months ending February 29, 2024.

Table of Content

(in thousands)

Amortization of intangibles - Represents the amount of amortization expense that was taken on intangibles assets held by the Company.

• Amortization expense decreased $1.5 million and $3.9 million for the three and nine months ended February 29, 2024 compared to the three and nine months ended February 28, 2023, respectively, due to the intangible assets that were included in the sale of the dialysis, BioSentry, PICCs and Midlines businesses and the abandonment of the Syntrax product line.

Goodwill impairment - Represents the impairment charge taken on goodwill.

• The Company recorded a non-cash goodwill impairment charge of $159.5 million for the three and nine months ended February 29, 2024 as the fair value of the Med Tech reporting unit was less than its carrying value.

Change in fair value of contingent consideration - Represents changes in contingent consideration driven by changes to estimated future payments on earn-out liabilities created through acquisitions and amortization of present value discounts on long-term contingent consideration.

• The change in the fair value for the three and nine months ended February 29, 2024 is related to the Eximo contingent consideration.

Acquisition, restructuring and other items, net - Represents costs associated with mergers and acquisitions, restructuring expenses, legal costs that are related to litigation that is not in the ordinary course of business, legal settlements and other one-time items.

Acquisition, restructuring and other items, net, increased by $32.0 million and $32.8 million for the three and nine months ended February 29, 2024, compared to the three and nine months ended February 28, 2023, respectively. The change for both periods was primarily driven by:

• Legal expense, related to litigation that is outside of the normal course of business, which increased $20.7 million and $23.6 million, respectively was driven by the $19.3 million settlement between the Company and BD;
• Mergers and acquisition expense, which increased $0.1 million and $0.4 million, respectively;
• Plant closure expense, related to the restructuring of our manufacturing footprint which was announced on January 5, 2024, which increased $5.4 million and $6.1 million, respectively;
• An impairment of $3.4 million on the Syntrax product technology intangible asset and an inventory write-off of $2.9 million was taken in the third quarter of fiscal year 2024 related to the abandonment of the Syntrax and RF product lines;
• Transaction services agreements that were entered into as a result of the sale of the PICCs, Midline, dialysis and BioSentry businesses. The Company invoiced Spectrum $0.1 million and $0.1 million for the three and nine months ended February 29, 2024, respectively. The Company invoiced Merit Medical Systems, Inc. $0.2 million and $0.5 million for the three and nine months ended February 29, 2024, respectively;
• Manufacturing relocation expense related to the move of certain manufacturing lines from Queensbury, New York to a third party, which decreased $0.3 million and $0.5 million, respectively;
• The payment to the Israeli Innovation Authority of $3.5 million related to grant funds that were provided to Eximo to develop the Auryon laser prior to the acquisition in the second quarter of fiscal year 2020. These grant funds were fully repaid in the first quarter of fiscal year 2023 to satisfy the obligation which was otherwise being paid as a royalty based on a percentage of sales; and
• $0.9 million of deferred financing fees that were written-off in conjunction with the sale of the Dialysis and BioSentry businesses and concurrent extinguishment of the debt for the nine months ended February 29, 2024, compared to the same period in the prior year.

Other expense, net - Other expenses include interest expense, foreign currency impacts, bank fees, and amortization of deferred financing costs.

• The change in other expense of $0.9 million and $2.7 million for the three and nine months ended February 29, 2024, compared to the three and nine months ended February 28, 2023, respectively, is primarily due to decreased interest expense of $0.8 million and $1.7 million, respectively, increased interest income of $0.3 million and $1.0 million, respectively and unrealized foreign currency fluctuations of $0.2 million and $0.1 million, respectively.

Income Tax Benefit

(in thousands)

Our effective tax rate including discrete items for the three months ended February 29, 2024 and February 28, 2023 was 6.0% and 1.9%, respectively. Our effective tax rate including discrete items for the nine months ended February 29, 2024 and February 28, 2023 was 3.7% and 4.9%, respectively. In fiscal year 2024, the Company’s effective tax rate differs from the U.S. statutory rate primarily due to the impact of the valuation allowance, foreign taxes, and other non-deductible permanent items (such as non-deductible meals and entertainment, Section 162(m) excess compensation and non-deductible share-based compensation).

Liquidity and Capital Resources

We regularly review our liquidity and anticipated capital requirements and we believe that our current cash on hand provides sufficient liquidity to meet our anticipated needs for capital for at least the next 12 months.

Our cash and cash equivalents totaled $78.5 million as of February 29, 2024, compared with $44.6 million as of May 31, 2023. As of February 29, 2024 there was no outstanding debt as the Credit Agreement was extinguished in connection with the Divestiture (see Note 7 "Long-Term Debt" set forth in the Notes to our consolidated financial statements included in this Quarterly Report on Form 10-Q). As of May 31, 2023, total debt outstanding related to the Credit Agreement was $50.0 million. The fair value of contingent consideration liability as of February 29, 2024 and May 31, 2023, was $9.5 million and $19.3 million, respectively.

The table below summarizes our cash flows:

(in thousands)

During the quarters ended February 29, 2024 and February 28, 2023, cash flows consisted of the following:

Cash used in operating activities

Nine months ended February 29, 2024 and February 28, 2023:

• Net loss of $170.9 million and a net loss of $31.0 million, respectively, plus the non-cash items, primarily driven by depreciation and amortization and stock based compensation, along with the changes in working capital below, contributed to cash used in operations of $33.2 million and $15.9 million, respectively, for these periods.
• For the period ended February 29, 2024, working capital was unfavorably impacted by decreased accounts payable, accrued liabilities and other liabilities of $16.7 million, along with increased inventory and prepaid expenses of $6.8 million and $7.6 million, respectively. This was partially offset by decreased accounts receivable of $2.3 million.
• For the period ended February 28, 2023, working capital was unfavorably impacted by decreased accounts payable, accrued liabilities and other liabilities of $7.1 million, along with increased inventory and prepaid expenses of $12.3 million and $0.4 million, respectively. This was partially offset by decreased accounts receivable of $0.8 million.

Cash provided by (used in) investing activities

Nine months ended February 29, 2024 and February 28, 2023:

• $2.0 million and $2.8 million, respectively, of cash was used for fixed asset additions;
• $3.2 million and $4.9 million, respectively, of cash was used for Auryon placement and evaluation unit additions;
• $100.0 million of cash was received for the divestiture of the dialysis and BioSentry businesses in the first quarter of fiscal year 2024;
• $34.5 million of cash was received for the divestiture of the PICCs and Midline businesses in the third quarter of fiscal year 2024; and
• $3.3 million and $0.5 million, respectively, of cash was used for the acquisition of exclusive licenses.

Cash (used in) provided by financing activities

Nine months ended February 29, 2024 and February 28, 2023:

• $50.0 million repayment of the Credit Agreement in connection with the completion of the dialysis and BioSentry divestiture in the first quarter of fiscal year 2024;
• $70.0 million in proceeds on long-term debt less the repayment of $45.0 million associated with the then new Credit Agreement in the first quarter of fiscal year 2023;
• $0.8 million of deferred financing costs associated with the then new Credit Agreement in the first quarter of fiscal year 2023;
• $10.0 million contingent consideration payment made in the first quarter of fiscal year 2024; and
• $0.8 million and $1.2 million, respectively, of proceeds from stock option and ESPP activity.

On June 8, 2023 and in connection with the completion of the dialysis and BioSentry divestiture, the Company repaid all amounts outstanding under its existing Credit Agreement, and as a result, the Credit Agreement was extinguished. Pursuant to the terms of the Credit Agreement, AngioDynamics had the option to repay this facility prior to the maturity date without penalty.

We believe that our current cash balance, together with cash generated from operations will provide sufficient liquidity to meet our anticipated needs for capital for at least the next 12 months. If we seek to make acquisitions of other businesses or technologies in the future for cash, we may require external financing.

New Accounting Pronouncements

Information regarding new accounting pronouncements is included in Note 17 to our consolidated financial statements in this Quarterly Report on Form 10-Q.

Foreign Currency Exchange Rate Risk

We are exposed to market risk from changes in currency exchange rates and investments that could impact our results of operations and financial position.

We transact sales in currencies other than the U.S. Dollar, particularly the Euro, British Pound and Canadian Dollar. For the nine months ended February 29, 2024, approximately 3.73% of our sales were denominated in foreign currencies. We do not have expenses denominated in foreign currencies at the level of our sales and as a result, our profitability is exposed to currency fluctuations. When the U.S. Dollar strengthens, our sales and gross profit will be negatively impacted. In addition, we have assets and liabilities denominated in non-functional currencies which are remeasured at each reporting period, with the offset to changes presented as a component of Other (Expenses) Income. Significant non-functional balances include accounts receivable due from a sub-section of our international customers.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash and cash equivalents and trade accounts receivable.

The Company maintains cash and cash equivalents at various institutions and performs periodic evaluations of the relative credit standings of these financial institutions to ensure their credit worthiness.

Concentration of credit risk with respect to trade accounts receivable is limited due to the large number of customers that purchase products from the Company. No single customer represents more than 10% of total sales. The Company monitors the creditworthiness of its customers. As the Company’s standard payment terms are 30 to 90 days from invoicing, the Company does not provide any significant financing to its customers. Although the Company does not currently foresee a significant credit risk associated with the outstanding accounts receivable, repayment is dependent upon the financial stability of our customers.

Evaluation of disclosure controls and procedures

As of the end of the period covered by this report, our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting for the fiscal quarter ended February 29, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

In addition to information set forth in this report, you should carefully consider the factors discussed in “Part I, Item 1A. Risk Factors” of our annual report on Form 10-K for our fiscal year ended May 31, 2023 which set forth information relating to important risks and uncertainties that could materially adversely affect our business, financial condition or operating results. You should review and consider such Risk Factors in making any investment decision with respect to our securities. An investment in our securities continues to involve a high degree of risk.

On June 8, 2023, the Company completed the sale of the dialysis and BioSentry businesses to Merit Medical Systems, Inc. In connection with the completion of the sale, the Company repaid all amounts outstanding under its then existing Credit Agreement, and as a result, the Credit Agreement was extinguished. We believe that our current cash balance, together with cash generated from operations will provide sufficient liquidity to meet our anticipated needs for capital for at least the next 12 months. If we seek to make acquisitions of other businesses or technologies in the future for cash or if circumstances materially change, we may require additional financing for liquidity, capital requirements or growth initiatives. We may not be able to obtain financing on terms and at interest rates that are favorable to us or at all. Any inability by us to obtain financing in the future could have a material adverse effect on our business, financial position, results of operations and cash flows.