x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 11-3146460 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
14 Plaza Drive Latham, New York | 12110 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Name of each exchange on which registered | |
Common stock, par value $.01 | NASDAQ Global Select Market | |
Preferred Stock Purchase Rights | NASDAQ Global Select Market |
Large accelerated filer | ¨ | Accelerated filer | x | |||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | |||
Emerging growth company | o |
Class | Outstanding as of April 3, 2018 | |
Common Stock, par value $.01 | 36,804,506 |
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Item 6. |
Three Months Ended | Nine Months Ended | |||||||||||||||
Feb 28, 2018 | Feb 28, 2017 | Feb 28, 2018 | Feb 28, 2017 | |||||||||||||
Net sales | $ | 83,851 | $ | 85,602 | $ | 255,968 | $ | 262,729 | ||||||||
Cost of sales (exclusive of intangible amortization) | 38,403 | 41,810 | 126,560 | 128,895 | ||||||||||||
Gross profit | 45,448 | 43,792 | 129,408 | 133,834 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 6,457 | 5,951 | 19,005 | 18,573 | ||||||||||||
Sales and marketing | 18,009 | 19,418 | 56,378 | 58,343 | ||||||||||||
General and administrative | 7,723 | 7,051 | 23,319 | 23,090 | ||||||||||||
Amortization of intangibles | 4,191 | 4,360 | 12,433 | 12,886 | ||||||||||||
Change in fair value of contingent consideration | 31 | 122 | 218 | (15,386 | ) | |||||||||||
Acquisition, restructuring and other items, net | 4,177 | 1,750 | 11,932 | 12,028 | ||||||||||||
Total operating expenses | 40,588 | 38,652 | 123,285 | 109,534 | ||||||||||||
Operating income | 4,860 | 5,140 | 6,123 | 24,300 | ||||||||||||
Other (expenses) income: | ||||||||||||||||
Interest expense, net | (740 | ) | (627 | ) | (2,223 | ) | (2,156 | ) | ||||||||
Other income (expense), net | (49 | ) | 44 | 238 | (269 | ) | ||||||||||
Total other expenses, net | (789 | ) | (583 | ) | (1,985 | ) | (2,425 | ) | ||||||||
Income before income tax expense | 4,071 | 4,557 | 4,138 | 21,875 | ||||||||||||
Income tax expense (benefit) | (9,948 | ) | 1,670 | (10,095 | ) | 3,954 | ||||||||||
Net income | $ | 14,019 | $ | 2,887 | $ | 14,233 | $ | 17,921 | ||||||||
Earnings per share | ||||||||||||||||
Basic | $ | 0.38 | $ | 0.08 | $ | 0.38 | $ | 0.49 | ||||||||
Diluted | $ | 0.37 | $ | 0.08 | $ | 0.38 | $ | 0.48 | ||||||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 37,122 | 36,625 | 37,031 | 36,557 | ||||||||||||
Diluted | 37,442 | 37,126 | 37,358 | 37,068 |
Three Months Ended | Nine Months Ended | ||||||||||||||
Feb 28, 2018 | Feb 28, 2017 | Feb 28, 2018 | Feb 28, 2017 | ||||||||||||
Net income | $ | 14,019 | $ | 2,887 | $ | 14,233 | $ | 17,921 | |||||||
Other comprehensive income (loss), before tax: | |||||||||||||||
Unrealized gain (loss) on marketable securities | 21 | (2 | ) | 66 | — | ||||||||||
Foreign currency translation | 188 | (41 | ) | 621 | (906 | ) | |||||||||
Other comprehensive income (loss), before tax | 209 | (43 | ) | 687 | (906 | ) | |||||||||
Income tax expense related to items of other comprehensive income | — | — | — | — | |||||||||||
Other comprehensive income (loss), net of tax | 209 | (43 | ) | 687 | (906 | ) | |||||||||
Total comprehensive income, net of tax | $ | 14,228 | $ | 2,844 | $ | 14,920 | $ | 17,015 |
Feb 28, 2018 | May 31, 2017 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 52,292 | $ | 47,544 | |||
Marketable securities | 1,281 | 1,215 | |||||
Accounts receivable, net of allowances of $2,438 and $2,945, respectively | 41,827 | 44,523 | |||||
Inventories | 56,564 | 54,506 | |||||
Prepaid income taxes | 103 | 336 | |||||
Prepaid expenses and other | 4,502 | 5,790 | |||||
Total current assets | 156,569 | 153,914 | |||||
Property, plant and equipment, net | 43,058 | 45,234 | |||||
Other assets | 3,038 | 1,886 | |||||
Intangible assets, net | 134,512 | 145,675 | |||||
Goodwill | 361,252 | 361,252 | |||||
Total assets | $ | 698,429 | $ | 707,961 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 16,350 | $ | 18,087 | |||
Accrued liabilities | 30,973 | 38,804 | |||||
Current portion of long-term debt | 5,000 | 5,000 | |||||
Current portion of contingent consideration | 2,080 | 9,625 | |||||
Total current liabilities | 54,403 | 71,516 | |||||
Long-term debt, net of current portion | 87,798 | 91,320 | |||||
Deferred income taxes | 15,962 | 26,112 | |||||
Contingent consideration, net of current portion | 1,149 | 3,136 | |||||
Other long-term liabilities | 789 | 850 | |||||
Total liabilities | 160,101 | 192,934 | |||||
Commitments and contingencies (Note 12) | |||||||
Stockholders' equity | |||||||
Preferred stock, par value $.01 per share, 5,000,000 shares authorized; no shares issued and outstanding | — | — | |||||
Common stock, par value $.01 per share, 75,000,000 shares authorized; 37,544,506 and 37,210,091 shares issued and 37,174,506 and 36,840,091 shares outstanding at February 28, 2018 and May 31, 2017, respectively | 370 | 367 | |||||
Additional paid-in capital | 541,282 | 532,705 | |||||
Retained earnings (accumulated deficit) | 3,027 | (11,007 | ) | ||||
Treasury stock, 370,000 shares at February 28, 2018 and May 31, 2017, respectively | (5,714 | ) | (5,714 | ) | |||
Accumulated other comprehensive loss | (637 | ) | (1,324 | ) | |||
Total Stockholders’ Equity | 538,328 | 515,027 | |||||
Total Liabilities and Stockholders' Equity | $ | 698,429 | $ | 707,961 |
Nine Months Ended | |||||||
Feb 28, 2018 | Feb 28, 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 14,233 | $ | 17,921 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 17,395 | 18,455 | |||||
Stock based compensation | 5,821 | 5,078 | |||||
Change in fair value of contingent consideration | 218 | (15,386 | ) | ||||
Deferred income taxes | (10,150 | ) | 3,624 | ||||
Change in accounts receivable allowances | (35 | ) | (605 | ) | |||
Fixed and intangible asset impairments and disposals | 30 | 3,822 | |||||
Write-off of other assets | — | 2,685 | |||||
Other | (635 | ) | (535 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 2,897 | 6,898 | |||||
Inventories | (1,913 | ) | (2,585 | ) | |||
Prepaid expenses and other | (548 | ) | (1,215 | ) | |||
Accounts payable, accrued and other liabilities | (9,797 | ) | (1,405 | ) | |||
Net cash provided by operating activities | 17,516 | 36,752 | |||||
Cash flows from investing activities: | |||||||
Additions to property, plant and equipment | (1,647 | ) | (2,258 | ) | |||
Acquisition of intangibles | (1,265 | ) | — | ||||
Proceeds from sale or maturity of marketable securities | — | 450 | |||||
Net cash used in investing activities | (2,912 | ) | (1,808 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from issuance of and borrowings on long-term debt | — | 116,471 | |||||
Repayment of long-term debt | (3,750 | ) | (139,131 | ) | |||
Deferred financing costs on long-term debt | — | (1,335 | ) | ||||
Payment of acquisition related contingent consideration | (9,500 | ) | (9,850 | ) | |||
Repurchase of common stock | — | (7,840 | ) | ||||
Proceeds from exercise of stock options and employee stock purchase plan | 2,560 | 10,269 | |||||
Net cash used in financing activities | (10,690 | ) | (31,416 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 834 | (290 | ) | ||||
Increase in cash and cash equivalents | 4,748 | 3,238 | |||||
Cash and cash equivalents at beginning of period | 47,544 | 32,333 | |||||
Cash and cash equivalents at end of period | $ | 52,292 | $ | 35,571 | |||
Supplemental disclosure of non-cash investing and financing activities: | |||||||
Contractual obligations for acquisition of fixed assets | $ | 95 | $ | 99 |
Common Stock | Additional paid in capital | Retained earnings (accumulated deficit) | Accumulated other comprehensive loss | Treasury Stock | |||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Total | |||||||||||||||||||||||||
Balance at May 31, 2017 | 37,210,091 | $ | 367 | $ | 532,705 | $ | (11,007 | ) | $ | (1,324 | ) | (370,000 | ) | $ | (5,714 | ) | $ | 515,027 | |||||||||||
Net income | 14,233 | 14,233 | |||||||||||||||||||||||||||
Adjustment from the adoption of ASU 2016-09 | 199 | (199 | ) | — | |||||||||||||||||||||||||
Exercise of stock options | 118,377 | 1 | 1,295 | 1,296 | |||||||||||||||||||||||||
Issuance/Cancellation of restricted stock units | 126,095 | 1 | 1 | ||||||||||||||||||||||||||
Purchases of common stock under ESPP | 89,943 | 1 | 1,262 | 1,263 | |||||||||||||||||||||||||
Stock-based compensation | 5,821 | 5,821 | |||||||||||||||||||||||||||
Other comprehensive income, net of tax | 687 | 687 | |||||||||||||||||||||||||||
Balance at February 28, 2018 | 37,544,506 | $ | 370 | $ | 541,282 | $ | 3,027 | $ | (637 | ) | (370,000 | ) | $ | (5,714 | ) | $ | 538,328 |
Feb 28, 2018 | May 31, 2017 | ||||||
(in thousands) | |||||||
Raw materials | $ | 22,135 | $ | 17,563 | |||
Work in process | 10,783 | 12,602 | |||||
Finished goods | 23,646 | 24,341 | |||||
Inventories | $ | 56,564 | $ | 54,506 |
February 28, 2018 | |||||||||||
Gross carrying value | Accumulated amortization | Net carrying value | |||||||||
(in thousands) | |||||||||||
Product technologies | $ | 147,178 | $ | (66,470 | ) | $ | 80,708 | ||||
Customer relationships | 56,487 | (22,325 | ) | 34,162 | |||||||
Trademarks | 28,400 | (11,208 | ) | 17,192 | |||||||
Licenses | 5,752 | (4,186 | ) | 1,566 | |||||||
Distributor relationships | 1,250 | (366 | ) | 884 | |||||||
$ | 239,067 | $ | (104,555 | ) | $ | 134,512 |
May 31, 2017 | |||||||||||
Gross carrying value | Accumulated amortization | Net carrying value | |||||||||
(in thousands) | |||||||||||
Product technologies | $ | 147,172 | $ | (59,696 | ) | $ | 87,476 | ||||
Customer relationships | 56,375 | (19,194 | ) | 37,181 | |||||||
Trademarks | 28,400 | (9,069 | ) | 19,331 | |||||||
Licenses | 4,487 | (3,821 | ) | 666 | |||||||
Distributor relationships | 1,250 | (229 | ) | 1,021 | |||||||
$ | 237,684 | $ | (92,009 | ) | $ | 145,675 |
(in thousands) | |||
Remainder of 2018 | $ | 4,040 | |
2019 | 16,566 | ||
2020 | 15,013 | ||
2021 | 13,854 | ||
2022 | 12,970 | ||
2023 and thereafter | 72,069 | ||
$ | 134,512 |
Feb 28, 2018 | May 31, 2017 | ||||||
(in thousands) | |||||||
Payroll and related expenses | $ | 7,232 | $ | 11,383 | |||
Royalties | 1,247 | 2,885 | |||||
Accrued severance | 2,634 | 2,075 | |||||
Sales and franchise taxes | 664 | 856 | |||||
Outside services | 1,880 | 1,622 | |||||
Litigation matters | 12,500 | 12,500 | |||||
Acculis recall liability | — | 2,563 | |||||
Other | 4,816 | 4,920 | |||||
$ | 30,973 | $ | 38,804 |
(in thousands) | |||
Remainder of 2018 | $ | 1,250 | |
2019 | 5,000 | ||
2020 | 7,500 | ||
2021 | 11,250 | ||
2022 | 68,750 | ||
Total term loan | 93,750 | ||
Revolving facility | — | ||
Total debt | 93,750 | ||
Less: Unamortized debt issuance costs | (952 | ) | |
Total | 92,798 | ||
Less: Current portion of long-term debt | (5,000 | ) | |
Total long-term debt, net | $ | 87,798 |
Three Months Ended | Nine Months Ended | ||||||||||
(in thousands) | Feb 28, 2018 | Feb 28, 2017 | Feb 28, 2018 | Feb 28, 2017 | |||||||
Basic | 37,122 | 36,625 | 37,031 | 36,557 | |||||||
Effect of dilutive securities | 320 | 501 | 327 | 511 | |||||||
Diluted | 37,442 | 37,126 | 37,358 | 37,068 | |||||||
Securities excluded as their inclusion would be anti-dilutive | 1,259 | 1,040 | 1,139 | 973 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(in thousands) | Feb 28, 2018 | Feb 28, 2017 | Feb 28, 2018 | Feb 28, 2017 | |||||||||||
Net sales | |||||||||||||||
Peripheral Vascular | $ | 48,517 | $ | 48,929 | $ | 149,751 | $ | 154,654 | |||||||
Vascular Access | 23,279 | 23,680 | 69,091 | 72,238 | |||||||||||
Oncology/Surgery | 12,055 | 12,993 | 37,126 | 35,837 | |||||||||||
Total | $ | 83,851 | $ | 85,602 | $ | 255,968 | $ | 262,729 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(in thousands) | Feb 28, 2018 | Feb 28, 2017 | Feb 28, 2018 | Feb 28, 2017 | |||||||||||
Net sales | |||||||||||||||
United States | $ | 65,787 | $ | 67,656 | $ | 203,020 | $ | 211,295 | |||||||
International | 18,064 | 17,946 | 52,948 | 51,434 | |||||||||||
Total | $ | 83,851 | $ | 85,602 | $ | 255,968 | $ | 262,729 |
• | Level 1 - Inputs to the valuation methodology are quoted market prices for identical assets or liabilities. |
• | Level 2 - Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs. |
• | Level 3 - Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk. |
Fair Value Measurements using inputs considered as: | Fair Value at February 28, 2018 | ||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | ||||||||||||
Financial Assets: | |||||||||||||||
Marketable securities | |||||||||||||||
U.S. government agency obligations | $ | — | $ | — | $ | 1,281 | $ | 1,281 | |||||||
Total Financial Assets | $ | — | $ | — | $ | 1,281 | $ | 1,281 | |||||||
Financial Liabilities: | |||||||||||||||
Contingent consideration for acquisition earn out | $ | — | $ | — | $ | 3,229 | $ | 3,229 | |||||||
Total Financial Liabilities | $ | — | $ | — | $ | 3,229 | $ | 3,229 | |||||||
Fair Value Measurements using inputs considered as: | Fair Value at May 31, 2017 | ||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | ||||||||||||
Financial Assets: | |||||||||||||||
Marketable securities | |||||||||||||||
U.S. government agency obligations | $ | — | $ | — | $ | 1,215 | $ | 1,215 | |||||||
Total Financial Assets | $ | — | $ | — | $ | 1,215 | $ | 1,215 | |||||||
Financial Liabilities: | |||||||||||||||
Contingent consideration for acquisition earn out | $ | — | $ | — | $ | 12,761 | $ | 12,761 | |||||||
Total Financial Liabilities | $ | — | $ | — | $ | 12,761 | $ | 12,761 |
Three Months Ended February 28, 2018 | |||||||
Financial Assets | Financial Liabilities | ||||||
(in thousands) | Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | |||||
Balance, November 30, 2017 | $ | 1,260 | $ | 3,198 | |||
Total gains or losses (realized/unrealized): | |||||||
Change in present value of contingent consideration | — | 31 | |||||
Included in other comprehensive income (loss) | 21 | — | |||||
Currency gain (loss) from remeasurement | — | — | |||||
Proceeds from sale or maturity of marketable securities | — | — | |||||
Transfers in and/or (out) of Level 3 | — | — | |||||
Contingent consideration payments | — | — | |||||
Balance, February 28, 2018 | $ | 1,281 | $ | 3,229 |
Nine Months Ended February 28, 2018 | |||||||
Financial Assets | Financial Liabilities | ||||||
(in thousands) | Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | |||||
Balance, May 31, 2017 | $ | 1,215 | $ | 12,761 | |||
Total gains or losses (realized/unrealized): | |||||||
Change in present value of contingent consideration | — | 218 | |||||
Included in other comprehensive income (loss) | 66 | — | |||||
Transfers in and/or (out) of Level 3 | — | — | |||||
Contingent consideration payments | — | (9,750 | ) | ||||
Balance, February 28, 2018 | $ | 1,281 | $ | 3,229 |
Fair value at | Valuation | ||||||||
(in thousands) | Feb 28, 2018 | Technique | Unobservable Input | Range | |||||
Revenue based payments | $ | 3,229 | Discounted cash flow | Discount rate | 4% | ||||
Probability of payment | 100% | ||||||||
Projected fiscal year of payment | 2019-2020 |
February 28, 2018 | |||||||||||||||
(in thousands) | Amortized cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
Available-for-sale securities: | |||||||||||||||
Government agency obligations | $ | 1,350 | $ | — | $ | (69 | ) | $ | 1,281 | ||||||
$ | 1,350 | $ | — | $ | (69 | ) | $ | 1,281 |
May 31, 2017 | |||||||||||||||
(in thousands) | Amortized cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
Available-for-sale securities: | |||||||||||||||
Government agency obligations | $ | 1,350 | $ | — | $ | (135 | ) | $ | 1,215 | ||||||
$ | 1,350 | $ | — | $ | (135 | ) | $ | 1,215 |
Three Months Ended | Nine Months Ended | ||||||||||||||
(in thousands) | Feb 28, 2018 | Feb 28, 2017 | Feb 28, 2018 | Feb 28, 2017 | |||||||||||
Legal | $ | 2,319 | $ | 1,528 | $ | 7,299 | $ | 5,162 | |||||||
Intangible and other asset impairment | — | — | — | — | |||||||||||
Other asset write-off | — | 4 | — | 5,604 | |||||||||||
Restructuring | 1,548 | 208 | 4,184 | 208 | |||||||||||
Other | 310 | 10 | 449 | 1,054 | |||||||||||
Total | $ | 4,177 | $ | 1,750 | $ | 11,932 | $ | 12,028 |
Type of cost | Total estimated amount expected to be incurred (in millions) | |
Termination benefits | $1.75 to $2.25 | |
Plant consolidation (1) | $2.25 to $2.50 | |
Regulatory filings | $0.75 to $1.00 | |
Contract cancellations | $0.75 to $1.00 | |
Other | $0.75 to $1.00 | |
$6.25 to $7.75 |
Three Months Ended February 28, 2018 | ||||||||||||||||||||||||
Termination Benefits | Plant Consolidation | Regulatory Filings | Contract Cancellation Costs | Other Costs | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Balance at November 30, 2017 | $ | 1,745 | $ | 55 | $ | — | $ | — | $ | 24 | $ | 1,824 | ||||||||||||
Charges | 304 | 1,182 | 43 | — | 19 | 1,548 | ||||||||||||||||||
Non-cash adjustments | — | 39 | — | — | — | 39 | ||||||||||||||||||
Cash payments | (464 | ) | (1,175 | ) | (27 | ) | — | (40 | ) | (1,706 | ) | |||||||||||||
Balance at February 28, 2018 | $ | 1,585 | $ | 101 | $ | 16 | $ | — | $ | 3 | $ | 1,705 |
Nine Months Ended February 28, 2018 | ||||||||||||||||||||||||
Termination Benefits | Plant Consolidation | Regulatory Filings | Contract Cancellation Costs | Other Costs | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Balance at May 31, 2017 | $ | 851 | $ | 111 | $ | — | $ | — | $ | — | $ | 962 | ||||||||||||
Charges | 1,499 | 2,574 | 43 | — | 68 | 4,184 | ||||||||||||||||||
Non-cash adjustments | — | (276 | ) | — | — | — | (276 | ) | ||||||||||||||||
Cash payments | (765 | ) | (2,308 | ) | (27 | ) | — | (65 | ) | (3,165 | ) | |||||||||||||
Balance at February 28, 2018 | $ | 1,585 | $ | 101 | $ | 16 | $ | — | $ | 3 | $ | 1,705 |
Three months ended February 28, 2018 | ||||||||||||
(in thousands) | Foreign currency translation gain (loss) | Unrealized gain (loss) on marketable securities | Total | |||||||||
Balance at November 30, 2017 | $ | (872 | ) | $ | 26 | $ | (846 | ) | ||||
Other comprehensive income before reclassifications, net of tax | 188 | 21 | 209 | |||||||||
Amounts reclassified from accumulated other comprehensive income | — | — | — | |||||||||
Net other comprehensive income | $ | 188 | $ | 21 | $ | 209 | ||||||
Balance at February 28, 2018 | $ | (684 | ) | $ | 47 | $ | (637 | ) |
Nine months ended February 28, 2018 | ||||||||||||
(in thousands) | Foreign currency translation gain (loss) | Unrealized gain (loss) on marketable securities | Total | |||||||||
Balance at May 31, 2017 | $ | (1,305 | ) | $ | (19 | ) | $ | (1,324 | ) | |||
Other comprehensive income before reclassifications, net of tax | 621 | 66 | 687 | |||||||||
Amounts reclassified from accumulated other comprehensive income | — | — | — | |||||||||
Net other comprehensive income | $ | 621 | $ | 66 | $ | 687 | ||||||
Balance at February 28, 2018 | $ | (684 | ) | $ | 47 | $ | (637 | ) |
Recently Issued Accounting Pronouncements - Adopted | |||
Standard | Description | Date Adopted | Effect on the Consolidated Financial Statements |
ASU 2016-09, Compensation - Stock Based Compensation (Topic 718: Improvements to Employee Share-Based Payment Accounting) | This ASU simplifies and improves various aspects of ASC 718 for share-based payments, including income tax items and the classification of these items on the statement of cash flows. | June 1, 2017 | The Company now recognizes unrealized excess tax benefits and will classify such benefits as an operating activity in the statement of cash flows on a prospective basis. Due to the full valuation allowance on our federal and state income taxes, the adoption of ASU 2016-09 did not impact our accounting for income taxes. |
The Company elected the accounting policy change to account for forfeitures as they occur. This was adopted using the modified retrospective transition method by means of a cumulative-effect adjustment to equity as of June 1, 2017. The adoption of ASU 2016-09 did not materially impact the Company's consolidated statements of income, consolidated balance sheet, equity or cash flows. | |||
ASU 2017-04, Intangibles - Goodwill and Other (Topic 350) | This ASU simplifies the subsequent measurement of goodwill by eliminating steps from the goodwill impairment test. | June 1, 2017 | This adoption did not have an impact on the Company's financial statements. |
ASC Update No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. Update No. 2015-11 | This ASU more closely aligns the measurement of inventory in U.S. GAAP with the measurement of inventory in International Financial Reporting Standards by requiring companies using the first-in, first-out and average costs methods to measure inventory using the lower of cost and net realizable value, where net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. | June 1, 2017 | This adoption did not have an impact on the Company's financial statements. |
Recently Issued Accounting Pronouncements - Not Yet Applicable or Adopted | |||
Standard | Description | Effective Date | Effect on the Consolidated Financial Statements |
ASU No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09) | This ASU provides a single, comprehensive accounting model for revenues arising from contracts with customers that supersedes most of the existing revenue recognition guidance, including industry-specific guidance. Under this model, revenue is recognized at an amount that an entity expects to be entitled to upon transferring control of goods or services to a customer, as opposed to when risks and rewards transfer to a customer under existing revenue recognition guidance. | June 1, 2018 | The Company has established an implementation team which includes third-party specialists to assist in the evaluation and implementation of the new standard. The Company is currently in the process of performing an assessment of the impact of the standards on its contract portfolio by reviewing the Company’s current accounting policies and practices and to identify potential differences that would result from applying the requirements of the new standard to its revenue contracts. At this time, the Company does not anticipate a significant impact to its financial statements upon adoption of the new standard. However, the assessment is ongoing and further analysis of contracts may identify a more significant impact. The Company currently expects, in part due to the limited anticipated impact, it will utilize the modified retrospective approach of adopting the ASU. In addition, during fiscal year 2018 the Company plans to identify and implement, if necessary, appropriate changes to its business processes, systems and controls to support recognition and disclosure under the new standard. |
ASU 2016-02, Leases (Topic 842) | This ASU increases transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and liabilities. | June 1, 2019 | The Company is currently in the process of evaluating the impact of this ASU on its consolidated financial statements. |
ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15) | This ASU identifies how certain cash receipts and cash payments are presented and classified in the Statement of Cash Flows under Topic 230. | June 1, 2018 | The Company is currently in the process of evaluating the impact of this ASU on its consolidated financial statements. |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations. |
• | Revenue decreased by 2.0% to $83.9 million |
• | Gross margin as a percentage of sales increased by 300 bps to 54.2% |
• | Operating income decreased by $0.3 million to $4.9 million |
• | Earnings per share increased by $0.30 to $0.38 |
• | Revenue decreased by 2.6% to $256.0 million |
• | Gross margin as a percentage of sales decreased by 0.3% to 50.6% |
• | Operating income decreased by $18.2 million to $6.1 million |
• | Earnings per share decreased by $0.11 to $0.38 |
• | Cash flow from operations decreased by $19.2 million to $17.5 million |
Three months ended | |||||||||
Feb 28, 2018 | Feb 28, 2017 | % Growth | |||||||
Net Sales by Product Category | |||||||||
Peripheral Vascular | $ | 48,517 | $ | 48,929 | (1)% | ||||
Vascular Access | 23,279 | 23,680 | (2)% | ||||||
Oncology/Surgery | 12,055 | 12,993 | (7)% | ||||||
Total | $ | 83,851 | $ | 85,602 | (2)% | ||||
Net Sales by Geography | |||||||||
United States | $ | 65,787 | $ | 67,656 | (3)% | ||||
International | 18,064 | 17,946 | 1% | ||||||
Total | $ | 83,851 | $ | 85,602 | (2)% | ||||
• | Consolidated and U.S. net sales decreased from the prior year as a result of lower net sales across all Global Business Units. |
• | Total Peripheral Vascular sales decreased $0.4 million primarily attributable to decreased sales volume of Venous products of $2.7 million due to reimbursement challenges. This decrease was offset by strong performance in our Fluid Management and core product lines, which increased $1.2 million and $0.7 million, respectively. The increase in Fluid Management was attributed to the Fluid Management dedicated sales team being fully staffed and promoting new custom kits. |
• | U.S. Peripheral Vascular sales decreased $1.2 million due to decreased sales volume of Venous products. This decreased sales volume in the U.S. was offset by an increase in volume in Fluid Management and Thrombus Management categories. International Peripheral Vascular sales increased $0.8 million due to increased sales volume in Fluid Management. |
• | Total Vascular Access sales decreased $0.4 million primarily in our non-BioFlo businesses. Our BioFlo product lines, other than BioFlo PICCs, increased $0.8 million year over year. This was offset by decreased sales of BioFlo PICCs of $1.1 million. BioFlo product lines comprise 48% of our overall vascular access sales, compared to 49% a year ago. |
• | U.S. Vascular Access sales declined by 3% due to softness across the non-BioFlo portfolio. This was partially offset by growth in Midline and BioFlo Dialysis products which continue to gain traction in the marketplace. |
• | International Vascular Access sales increased by $0.1 million. |
• | Total Oncology/Surgery sales decreased $0.9 million year over year primarily due to decreased sales in Radiofrequency Ablation and NanoKnife disposables. The decrease in Radiofrequency Ablation was primarily due to the discontinuation of this product line in Japan. In the prior year there was a $1.7 million sale to introduce Radiofrequency Ablation into the Japanese market. This was partially offset by the successful launch of our Solero product line, which generated $0.5 million of growth year over year, and increased sales of NanoKnife generators. |
• | U.S. Oncology/Surgery decreased by 2%, driven by decreased sales in Radiofrequency Ablation and NanoKnife disposables partially offset by increased sales in NanoKnife generators of $0.5 million. |
• | International Oncology/Surgery sales decreased by $0.9 million year over year as a result of decreased Radiofrequency sales of $1.9 million offset by Solero Microwave capital and disposable sales growth of $0.5 million and NanoKnife generators sales growth of $0.6 million. |
Three months ended | |||||||||||
Feb 28, 2018 | Feb 28, 2017 | % Change | |||||||||
Gross profit | $ | 45.4 | $ | 43.8 | 4 | % | |||||
Gross profit % of sales | 54.2 | % | 51.2 | % | |||||||
Research and development | $ | 6.5 | $ | 6.0 | 8 | % | |||||
% of sales | 7.7 | % | 7.0 | % | |||||||
Selling and marketing | $ | 18.0 | $ | 19.4 | (7 | )% | |||||
% of sales | 21.5 | % | 22.7 | % | |||||||
General and administrative | $ | 7.7 | $ | 7.1 | 8 | % | |||||
% of sales | 9.2 | % | 8.2 | % |
• | Net productivity of approximately $1.8 million, the expiration of a royalty agreement in September of approximately $1.5 million and currency of $0.6 million. These increases were partially offset by volume, mix and freight of approximately $2.4 million. |
• | Timing of project spend in the third quarter of fiscal year 2018 compared to prior year was up $0.1 million along with increased compensation and benefits associated with additional headcount of $0.4 million. |
• | Compensation and benefits decrease of approximately $1.8 million, which was primarily the result of decreased variable compensation of $0.7 million and open headcount of $0.5 million. In addition, severance expense was down $0.6 million from the third quarter of the prior year. |
• | Open headcount resulted in increased travel of $0.2 million and recruiting expense of $0.2 million. |
• | Lower consulting spend of $0.2 million. |
• | Compensation and benefits increase of approximately $1.4 million was primarily the result of increased headcount year over year of $0.4 million and increased benefits expense of $0.9 million. |
• | The increase in compensation and benefits was partially offset by lower depreciation of $0.2 million, a decrease in bad debt expense of $0.2 million, a decrease in recruiting expense of $0.2 million and a decrease in travel expense of $0.1 million. |
Three months ended | ||||||||||||
Feb 28, 2018 | Feb 28, 2017 | $ Change | ||||||||||
Amortization of intangibles | $ | 4.2 | $ | 4.4 | $ | (0.2 | ) | |||||
Change in fair value of contingent consideration | $ | — | $ | 0.1 | $ | (0.1 | ) | |||||
Acquisition, restructuring and other items, net | $ | 4.2 | $ | 1.8 | $ | 2.4 | ||||||
Other expense | $ | (0.8 | ) | $ | (0.6 | ) | $ | (0.2 | ) |
• | The decrease of $0.2 million is primarily related to intangible assets that became fully amortized during the prior year. |
• | The decrease is due to the fact that in the second quarter of fiscal year 2018, the final minimum payment was made on the AngioVac product contingent consideration. The normal amortization of the present value discount on the contingent liabilities is now less than $0.1 million per quarter. |
• | There was $1.5 million of expense related to the plant consolidation that was announced in the third quarter of fiscal year 2017. The expense consisted mainly of severance of $0.3 million and costs to move the product lines including equipment transfer expenses, accelerated depreciation for assets that will not be transferred, validation of products and other start up costs of $1.2 million. This is compared to $0.2 million of severance in the prior year. |
• | Legal expenses, related to litigation that is outside of the normal course of business, of $2.3 million were recorded in the current year compared to $1.5 million in the prior year. |
• | The increase in other expenses from the prior year is due to the increased interest expense of $0.2 million. |
Three months ended | ||||||||
Feb 28, 2018 | Feb 28, 2017 | |||||||
Income tax expense (benefit) | $ | (9.9 | ) | $ | 1.7 | |||
Effective tax rate including discrete items | (244.4 | )% | 36.6 | % |
Nine months ended | |||||||||
Feb 28, 2018 | Feb 28, 2017 | % Growth | |||||||
Net Sales by Product Category | |||||||||
Peripheral Vascular | $ | 149,751 | $ | 154,654 | (3)% | ||||
Vascular Access | 69,091 | 72,238 | (4)% | ||||||
Oncology/Surgery | 37,126 | 35,837 | 4% | ||||||
Total | $ | 255,968 | $ | 262,729 | (3)% | ||||
Net Sales by Geography | |||||||||
United States | $ | 203,020 | $ | 211,295 | (4)% | ||||
International | 52,948 | 51,434 | 3% | ||||||
Total | $ | 255,968 | $ | 262,729 | (3)% | ||||
• | Consolidated net sales decreased from the prior year as a result of decreased net sales from Peripheral Vascular and Vascular Access. This decrease was partially offset by 4% year over year growth in our Oncology/Surgery Global Business Unit. |
• | Total Peripheral Vascular sales decreased $4.9 million primarily attributable to decreased sales volume of Venous and Angiographic products of $8.6 million. The decrease in our Venous product line of $6.1 million is due to reimbursement challenges. The decrease in our Angiographic product line of $2.5 million is related to the prior year volume from backorders related to a competitor recall. These decreases were offset by strong performance in our Fluid Management product line, which increased $2.8 million year over year. The increase in Fluid Management was attributed to the Fluid Management dedicated sales team being fully staffed and promoting new custom kits. |
• | U.S. Peripheral Vascular sales decreased $4.6 million and international Peripheral Vascular sales decreased $0.3 million, which was primarily due to decreased sales volume of Venous and Angiographic core products. This decreased sales volume was offset by an increase in volume in Fluid Management and Thrombus Management categories. |
• | Total Vascular Access sales decreased $3.1 million primarily due to declines in our non-BioFlo businesses. Our BioFlo product lines, other than PICC sales, increased $2.2 million year over year, while BioFlo PICC sales decreased $2.2 million. BioFlo product lines now comprise 49% of our overall Vascular Access sales, compared to 47% a year ago. |
• | U.S. Vascular Access sales declined by 5% due to softness across the non-BioFlo portfolio offset by Midline and BioFlo Ports and BioFlo Dialysis which continue to gain traction in the marketplace. |
• | International Vascular Access sales decreased by $0.1 million. |
• | Total Oncology/Surgery sales increased $1.3 million year over year primarily due to the successful launch of our Solero product line, which generated $3.7 million of growth year over year. |
• | U.S. Oncology/Surgery declined by 3%, driven primarily by the timing of NanoKnife disposable sales of $0.7 million and market challenges in the Radiofrequency Ablation product line which decreased sales by $1.3 million. This was partially offset by increased Microwave capital and disposable sales of $1.3 million. |
• | International Oncology/Surgery sales increased $1.8 million year over year as a result of increased Microwave capital and disposable sales of $2.4 million and NanoKnife capital and disposable sales of $0.5 million. This was partially offset by decreased Radiofrequency Ablation sales of $1.3 million. The decrease in Radiofrequency Ablation was |
Nine months ended | |||||||||||
Feb 28, 2018 | Feb 28, 2017 | % Change | |||||||||
Gross profit | $ | 129.4 | $ | 133.8 | (3 | )% | |||||
Gross profit % of sales | 50.6 | % | 50.9 | % | |||||||
Research and development | $ | 19.0 | $ | 18.6 | 2 | % | |||||
% of sales | 7.4 | % | 7.1 | % | |||||||
Selling and marketing | $ | 56.4 | $ | 58.3 | (3 | )% | |||||
% of sales | 22.0 | % | 22.2 | % | |||||||
General and administrative | $ | 23.3 | $ | 23.1 | 1 | % | |||||
% of sales | 9.1 | % | 8.8 | % |
• | In second quarter of fiscal year 2018, the Company decided to discontinue selling our Radiofrequency Ablation product in Japan which resulted in a $1.7 million inventory provision. Volume softness, product mix and pricing headwinds of approximately $7.3 million were offset by the expiration of a royalty agreement of approximately $2.3 million and net productivity of approximately $2.1 million. |
• | Timing of project spend in the third quarter of fiscal year 2018 compared to prior year was up $0.4 million along with increased compensation and benefits associated with additional headcount of $0.1 million. This was partially offset by a decrease in recruiting expense of $0.2 million. |
• | R&D expense as a percentage of sales increased slightly year over year as a result of the higher R&D expense along with lower sales in the third quarter of fiscal year 2018. |
• | Compensation and benefits decrease of approximately $2.6 million was primarily the result of decreased variable compensation of $2.2 million and open headcount of $0.4 million. |
• | Open headcount resulted in increased travel of $0.4 million and recruiting expense of $0.3 million. |
• | Lower consulting spend of $0.5 million was partially offset by increased samples expense related to the Solero launch of $0.2 million. |
• | Compensation and benefits increase of approximately $1.3 million was primarily the result of increased headcount year over year of $0.8 million which was partially offset by a decrease in bonus expense of $0.4 million. In addition, benefits expense increased $0.8 million due to significant favorability in the prior year. |
• | Higher professional fees of $0.3 million. |
• | These increases were partially offset by lower depreciation of $0.6 million, a decrease in bad debt expense of $0.2 million, a decrease in recruiting expense of $0.6 million and a decrease in travel expense of $0.1 million. |
Nine months ended | ||||||||||||
Feb 28, 2018 | Feb 28, 2017 | $ Change | ||||||||||
Amortization of intangibles | $ | 12.4 | $ | 12.9 | $ | (0.5 | ) | |||||
Change in fair value of contingent consideration | $ | 0.2 | $ | (15.4 | ) | $ | 15.6 | |||||
Acquisition, restructuring and other items, net | $ | 11.9 | $ | 12.0 | $ | (0.1 | ) | |||||
Other expense | $ | (2.0 | ) | $ | (2.4 | ) | $ | 0.4 |
• | The decrease of $0.5 million is primarily related to intangible assets that became fully amortized during the second quarter of the prior year. |
• | In the prior year, a gain of $13.4 million was taken on the AngioVac product as a result of decreases in future sales projections that eliminated any payments above the minimums and a gain of $3.1 million on the TiLo product as the milestone will not be achieved. The normal amortization of the present value discount on the contingent liabilities was approximately $0.1 million per quarter for the first two quarters of fiscal year 2018. In the third quarter the amortization is now less than $0.1 million as the final minimum payment was made on AngioVac in the second quarter of fiscal 2018. |
• | In the prior year there was a $2.0 million write-off of Embomedics due to termination of the agreement and $3.6 million related to the decision to discontinue our investment in the TiLo product. |
• | There was $4.2 million of expense related to the plant consolidation that was announced in the third quarter of fiscal year 2017. The expense consisted mainly of severance of $1.5 million and costs to move the product lines including equipment transfer expenses, accelerated depreciation for assets that will not be transferred, product validation and other start up costs of $2.6 million. In the prior year, there was $0.2 million recorded for severance as of the end of the third quarter. |
• | Legal expenses, related to litigation that is outside of the normal course of business, of $7.3 million were recorded in the current year compared to $5.2 million in the prior year. |
• | The decrease of $0.4 million was due to the prior year write-off of $0.7 million of deferred financing fees related to the original credit facility, offset partially by higher interest expense as a result of increased interest rates. |
Nine months ended | ||||||||
Feb 28, 2018 | Feb 28, 2017 | |||||||
Income tax expense (benefit) | $ | (10.1 | ) | $ | 4.0 | |||
Effective tax rate including discrete items | (244.0 | )% | 18.1 | % |
Nine Months Ended | |||||||
(in thousands) | Feb 28, 2018 | Feb 28, 2017 | |||||
Cash provided by (used in): | |||||||
Operating activities | $ | 17,516 | $ | 36,752 | |||
Investing activities | (2,912 | ) | (1,808 | ) | |||
Financing activities | (10,690 | ) | (31,416 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 834 | (290 | ) | ||||
Net change in cash and cash equivalents | $ | 4,748 | $ | 3,238 |
• | With regards to working capital, the Company continues to focus on optimizing days sales outstanding (DSO) which contributed to $2.9 million of working capital improvement. This working capital improvement was offset by increased inventory on hand of $1.9 million and $9.8 million of higher payments for accounts payable and accrued liabilities from May 31, 2017 through February 28, 2018. |
• | $1.6 million in fixed asset additions compared to $2.3 million in the prior year. |
• | In the third quarter of fiscal year 2018, we entered into a distribution and license agreement where we recorded the upfront license of $1.3 million as an intangible asset that will be amortized over 36 months. |
• | $3.8 million in repayments on long-term debt, consistent with the required amortization payment on the Term Loan, in the first nine months of fiscal year 2018 compared to $22.7 million in the first nine months of fiscal year 2017. The prior year payments include a $16.5 million payment to pay down the Revolving Facility in full. |
• | $2.6 million of proceeds from stock option and ESPP activity compared to $10.3 million in the first nine months of the prior year. The large decrease is related to the exercise of stock based awards from executive management turnover that took place in fiscal year 2017. |
• | $9.5 million payment on earn-out liabilities in the first nine months of fiscal year 2018 compared to $9.9 million in the first nine months of fiscal year 2017. |
• | $7.8 million from the repurchase of common shares in the first nine months of fiscal year 2017. There were no repurchases of common shares in the first nine months of fiscal year 2018. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
Item 4. | Controls and Procedures. |
Item 1. | Legal Proceedings. |
Item 1A. | Risk Factors. |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
Issuer Purchases of Equity Securities | |||||||||||||
Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Programs (2) | Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under Plans or Programs | |||||||||
December 1 - December 31, 2017 | — | $ | — | — | $ | — | |||||||
January 1 - January 31, 2018 | 981 | $ | 16.59 | — | $ | — | |||||||
February 1 - February 28, 2018 | — | $ | — | — | $ | — | |||||||
Total | 981 | $ | 16.59 | — | — |
(1) | Reflects shares withheld to satisfy minimum statutory tax withholding amounts due from employees related to the vesting of restricted shares from equity-based awards. |
(2) | The Company has $11.4 million available to repurchase under the Repurchase Program that was approved by the Board of Directors for the twenty-four month period ending November 6, 2018. |
Item 3. | Defaults on Senior Securities. |
Item 4. | Mine Safety Disclosures. |
Item 5. | Other Information. |
Item 6. | Exhibits. |
No. | Description | ||
31.1 | |||
31.2 | |||
32.1 | |||
32.2 | |||
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Schema Document | ||
101.CAL | XBRL Calculation Linkbase Documents | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||
101.LAB | XBRL Labels Linkbase Documents | ||
101.PRE | XBRL Presentation Linkbase Documents |
ANGIODYNAMICS, INC. | ||||
(Registrant) | ||||
Date: | April 5, 2018 | / S / JAMES C. CLEMMER | ||
James C. Clemmer, President, Chief Executive Officer (Principal Executive Officer) | ||||
Date: | April 5, 2018 | / S / MICHAEL C. GREINER | ||
Michael C. Greiner, Executive Vice President, Chief Financial Officer (Principal Financial and Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of AngioDynamics, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and | |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): | |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
1. | I have reviewed this quarterly report on Form 10-Q of AngioDynamics, Inc.; | |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and | |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): | |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
1. | the quarterly report on Form 10-Q of the Company for the fiscal quarter ended February 28, 2018 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and | |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/ s / James C. Clemmer | |
James C. Clemmer, President, Chief Executive Officer |
1. | the quarterly report on Form 10-Q of the Company for the fiscal quarter ended February 28, 2018 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and | |
2. | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/ s / Michael C. Greiner | |
Michael C. Greiner, Executive Vice President and Chief Financial Officer |
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Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Feb. 28, 2018 |
Apr. 03, 2018 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Feb. 28, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | ANGO | |
Entity Registrant Name | ANGIODYNAMICS INC | |
Entity Central Index Key | 0001275187 | |
Current Fiscal Year End Date | --05-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 36,804,506 |
Consolidated Condensed Statements of Income (Loss) (unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2018 |
Feb. 28, 2017 |
Feb. 28, 2018 |
Feb. 28, 2017 |
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Income Statement [Abstract] | ||||
Net sales | $ 83,851 | $ 85,602 | $ 255,968 | $ 262,729 |
Cost of sales (exclusive of intangible amortization) | 38,403 | 41,810 | 126,560 | 128,895 |
Gross profit | 45,448 | 43,792 | 129,408 | 133,834 |
Operating expenses | ||||
Research and development | 6,457 | 5,951 | 19,005 | 18,573 |
Sales and marketing | 18,009 | 19,418 | 56,378 | 58,343 |
General and administrative | 7,723 | 7,051 | 23,319 | 23,090 |
Amortization of intangibles | 4,191 | 4,360 | 12,433 | 12,886 |
Change in fair value of contingent consideration | 31 | 122 | 218 | (15,386) |
Acquisition, restructuring and other items, net | 4,177 | 1,750 | 11,932 | 12,028 |
Total operating expenses | 40,588 | 38,652 | 123,285 | 109,534 |
Operating income | 4,860 | 5,140 | 6,123 | 24,300 |
Other (expenses) income | ||||
Interest expense, net | (740) | (627) | (2,223) | (2,156) |
Other income (expense), net | (49) | 44 | 238 | (269) |
Total other expenses, net | (789) | (583) | (1,985) | (2,425) |
Income before income tax expense | 4,071 | 4,557 | 4,138 | 21,875 |
Income tax expense (benefit) | (9,948) | 1,670 | (10,095) | 3,954 |
Net income | $ 14,019 | $ 2,887 | $ 14,233 | $ 17,921 |
Income (loss) per share | ||||
Basic (in usd per share) | $ 0.38 | $ 0.08 | $ 0.38 | $ 0.49 |
Diluted (in usd per share) | $ 0.37 | $ 0.08 | $ 0.38 | $ 0.48 |
Basic weighted average shares outstanding (in shares) | 37,122 | 36,625 | 37,031 | 36,557 |
Diluted weighted average shares outstanding (in shares) | 37,442 | 37,126 | 37,358 | 37,068 |
Consolidated Condensed Statements of Comprehensive Income (Loss) (unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2018 |
Feb. 28, 2017 |
Feb. 28, 2018 |
Feb. 28, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 14,019 | $ 2,887 | $ 14,233 | $ 17,921 |
Other comprehensive income (loss), before tax: | ||||
Unrealized gain (loss) on marketable securities | 21 | (2) | 66 | 0 |
Foreign currency translation | 188 | (41) | 621 | (906) |
Other comprehensive income (loss), before tax | 209 | (43) | 687 | (906) |
Income tax expense related to items of other comprehensive income | 0 | 0 | 0 | 0 |
Other comprehensive income (loss), net of tax | 209 | (43) | 687 | (906) |
Total comprehensive income, net of tax | $ 14,228 | $ 2,844 | $ 14,920 | $ 17,015 |
Consolidated Condensed Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Thousands |
Feb. 28, 2018 |
May 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 2,438 | $ 2,945 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 37,544,506 | 37,210,091 |
Common stock, shares outstanding | 37,174,506 | 36,840,091 |
Treasury stock, shares | 370,000 | 370,000 |
Consolidated Condensed Financial Statements |
9 Months Ended |
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Feb. 28, 2018 | |
Accounting Policies [Abstract] | |
Consolidated Condensed Financial Statements | CONSOLIDATED FINANCIAL STATEMENTS The consolidated balance sheet as of February 28, 2018, the consolidated statement of stockholders’ equity for the nine months ended February 28, 2018 and the consolidated statements of income, consolidated statements of comprehensive income for the three and nine months ended February 28, 2018 and 2017, and consolidated statements of cash flows for the nine months ended February 28, 2018 and 2017 have been prepared by us and are unaudited. The consolidated balance sheet as of May 31, 2017 was derived from audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary to state fairly the financial position, changes in stockholders’ equity and comprehensive income, results of operations and cash flows as of and for the period ended February 28, 2018 (and for all periods presented) have been made. The unaudited interim consolidated financial statements for the three and nine months ended February 28, 2018 and 2017 include the accounts of AngioDynamics, Inc. and its wholly owned subsidiaries, collectively, the “Company”. All intercompany balances and transactions have been eliminated. Reclassifications A reclassification was made to conform the prior year consolidated financial statements to reclassify bad debt expense from sales and marketing to general and administrative. The amount of the reclassification related to the three and nine months ended February 28, 2017 is $0.1 million and $0.1 million, respectively. |
Inventories |
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Feb. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | INVENTORIES Inventories are stated at lower of cost and net realizable value (using the first-in, first-out method). As of February 28, 2018 and May 31, 2017, inventories consisted of the following:
The Company periodically reviews for both obsolescence and loss of value. The Company makes assumptions about the future demand for and market value of the inventory. Based on these assumptions, the Company estimates the amount of obsolete, expiring and slow moving inventory. The total inventory reserve at February 28, 2018 and May 31, 2017 was $6.8 million and $7.3 million, respectively. Of the $6.8 million reserve for fiscal year 2018, $1.5 million relates to the inventory reserve for Acculis inventory as a result of the recall announced in the fourth quarter of fiscal year 2017 and $0.7 million relates to a specific reserve related to the termination of an agreement with a Japanese distributor in the second quarter of fiscal year 2018. Of the $7.3 million in the prior year, $2.4 million relates to the inventory reserve for Acculis inventory as a result of the recall. |
Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSETS Intangible assets other than goodwill are amortized over their estimated useful lives on either a straight-line basis or proportionately to the benefit being realized. Useful lives range from two to eighteen years. The Company periodically reviews the estimated useful lives of our intangible assets and review such assets or asset groups for impairment whenever events or changes in circumstances indicate that the carrying value of the assets or asset groups may not be recoverable. If an intangible asset or asset group is considered to be impaired, the amount of the impairment will equal the excess of the carrying value over the fair value of the asset. Goodwill is not amortized, but rather, is tested for impairment annually or more frequently if impairment indicators arise. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. The Company's annual testing for impairment of goodwill was completed as of December 31, 2017. The Company operates as a single operating segment with one reporting unit and consequently evaluates goodwill for impairment based on an evaluation of the fair value of the Company as a whole. The Company determines the fair value of the reporting unit based on the market valuation approach and concluded that it was not more-likely-than-not that the fair value of the Company's reporting unit was less than its carrying value. Even though the Company determined that there was no goodwill impairment as of December 31, 2017, the future occurrence of a potential indicator of impairment, such as a significant adverse change in legal, regulatory, business or economic conditions or a more-likely-than-not expectation that the reporting unit or a significant portion of the reporting unit will be sold or disposed of, would require an interim assessment for the reporting unit prior to the next required annual assessment as of December 31, 2018. The Company continued to assess for potential impairment through February 28, 2018 and noted no events that would be considered a triggering event. There were no adjustments to goodwill for the nine months ended February 28, 2018. As of February 28, 2018 and May 31, 2017, intangible assets consisted of the following:
Amortization expense for the three months ended February 28, 2018 and 2017 was $4.2 million and $4.4 million, respectively. Amortization expense for the nine months ended February 28, 2018 and 2017 was $12.4 million and $12.9 million, respectively. Expected future amortization expense related to the intangible assets is as follows:
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Accrued Liabilities |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities | ACCRUED LIABILITIES As of February 28, 2018 and May 31, 2017, accrued liabilities consisted of the following:
In the fourth quarter of fiscal year 2017, the Company issued a voluntary recall of its Acculis probes that were sold over the past two years and recorded a liability of $2.6 million. In the third quarter of fiscal year 2018, the Company completed the replacement of Acculis probes that were returned with Solero probes. |
Long Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long Term Debt | LONG TERM DEBT On November 7, 2016, the Company entered into a Credit Agreement (the “Credit Agreement”) with the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A. and Keybank National Association as co-syndication agents, and JPMorgan Chase Bank, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Keybank National Association as joint bookrunners and joint lead arrangers. The Credit Agreement provides for a $100.0 million senior secured term loan facility (“Term Loan”) and a $150.0 million senior secured revolving credit facility, which includes up to a $20.0 million sublimit for letters of credit and a $5.0 million sublimit for swingline loans (the “Revolving Facility”, and together with the Term Loan, the “Facilities”). On November 7, 2016, the Company borrowed $100.0 million under the Term Loan and approximately $16.5 million under the Revolving Facility to repay the balance of $116.5 million under the former credit agreement. As of February 28, 2018 and May 31, 2017 the carrying value of long-term debt approximates its fair market value. The interest rate on the Term Loan at February 28, 2018 was 3.07%. The Company was in compliance with the Credit Agreement covenants as of February 28, 2018. The Company's maturities of principal obligations under the Credit Agreement are as follows, as of February 28, 2018:
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Income Taxes |
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Feb. 28, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate for the full fiscal year adjusted for any discrete events, which are recorded in the period that they occur. The estimated annual effective tax rate prior to discrete items was 4.9% in the third quarter of fiscal 2018, as compared to 42.9% for the same period in fiscal 2017. The Company’s effective tax rate differs from the U.S. statutory rate primarily due to a U.S. valuation allowance, foreign taxes and state taxes. The change from the prior quarter fiscal year 2017 is principally related to the enactment of the Tax Cuts and Jobs Act (“Tax Reform Act”) as it relates to amortization of goodwill for tax purposes which will no longer be treated as a permanent item in our tax provision. On December 22, 2017, the President of the United States signed into law the Tax Reform Act. The legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system, expanding the tax base and imposing a tax deemed repatriated earnings of foreign subsidiaries. The Tax Reform Act permanently reduces the U.S. corporate federal income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. The Company has recognized the impact of the Tax Reform Act in these unaudited consolidated financial statements and related disclosures. Staff Accounting Bulletin No. 118 (“SAB 118”) provides Companies with guidance on accounting for the impact of the Tax Reform Act. Specifically, SAB 118 provides for a measurement period, not to exceed one year, that begins on the date of enactment of December 22, 2017, and ends when the Company has obtained, prepared, and analyzed information needed to complete accounting requirements. In accordance with SAB 118, the Company recorded provisional amounts reflecting the impact of the Tax Reform Act in these unaudited consolidated financial statements and related disclosures. As a result of the Tax Reform Act, in the third quarter of fiscal 2018, the Company has recognized a discrete tax benefit in the amount of $9.3 million due to the revaluation of the Company's indefinite lived deferred tax liability related to amortizable goodwill to reflect the lower statutory rate. Because the remaining U.S. deferred tax assets are offset by a full valuation allowance, the reduction in net deferred tax assets for the lower rate was fully offset by a corresponding reduction in valuation allowance resulting in no additional tax provision. The Tax Reform Act changed the NOL carryover rules and created a new limitation on their use. NOLs created in fiscal 2018 and beyond may be carried forwarded indefinitely but are limited to 80% of taxable income in any year. As a result of this change, the Company believes it is appropriate to offset some of its indefinite lived deferred tax liability against its deferred tax assets, and as a result, recognized an estimated $0.8 million discrete benefit in the third quarter of fiscal 2018. Additionally, this change impacts the Company's effective tax calculation on a go forward basis as the amortization of goodwill for tax purposes will no longer be treated as a permanent item in our tax provision. The Tax Reform Act imposes a one-time transition tax on the deemed repatriation of post-1986 undistributed foreign subsidiaries’ earnings. Based on the information available as of December 31, 2017, the Company estimated undistributed foreign earnings of approximately $4.8 million. The taxable income arising from this deemed repatriation is expected to result in the utilization of net operating loss carryforwards and other tax credits, offset by changes in the valuation allowance, resulting in no net impact to tax expense. In accordance with SAB 118, the estimated income tax impact associated with the one-time transition tax of zero represents our best estimate based on interpretation of the U.S. legislation as we are still accumulating data to finalize the underlying calculation. In accordance with SAB 118, estimated income tax impact associated with the one-time transition tax is considered provisional and will be finalized prior to the end of the measurement period. The ultimate impact may differ from these provisional amounts, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Reform Act. A valuation allowance is established if it is more likely than not that all, or a portion of the deferred tax asset will not be realized. The Company has established that it is more likely than not that some, or all of their deferred tax assets will not be recognized in future years. Consequently, the Company continues to maintain a full U.S. valuation allowance on its net deferred tax assets. Management will continue to reevaluate the positive and negative evidence at each reporting period and if future results as projected in the U.S. and our tax planning strategies are favorable, the valuation allowance may be removed, which could have a favorable material impact on our results of operations in the period in which it is recorded. |
Share-Based Compensation |
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Feb. 28, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | SHARE-BASED COMPENSATION The Company has two stock-based compensation plans that provide for the issuance of up to approximately 9.5 million shares of common stock. The 2004 Stock and Incentive Award Plan (the "2004 Plan") provides for the grant of incentive options to our employees and for the grant of non-statutory stock options, restricted stock, stock appreciation rights, performance units, performance shares and other incentive awards to our employees, directors and other service providers. The Company also has an employee stock purchase plan. For the three months ended February 28, 2018 and 2017, share-based payment expense was $2.1 million and $1.7 million, respectively. For the nine months ended February 28, 2018 and 2017, share-based payment expense was $5.8 million and $5.1 million, respectively. During the nine months ended February 28, 2018 and 2017, the Company granted stock options and restricted stock units under the 2004 Plan to certain employees and members of the Board of Directors. Stock option awards are valued using the Black-Scholes option-pricing model and then amortized on a straight-line basis over the requisite service period of the award. Restricted stock unit awards are valued based on the closing trading value of the Company's shares on the date of grant and then amortized on a straight-line basis over the requisite service period of the award. In the nine months of fiscal year 2018, the Company granted market-based performance share awards under the 2004 Plan to certain employees. The awards may be earned by achieving relative performance levels over the three year requisite service period. The performance criteria are based on the total shareholder return ("TSR") of the Company's common stock relative to the TSR of the common stock of a pre-defined industry peer-group. The fair value of these awards are based on the closing trading value of the Company's shares on the date of grant and use a Monte Carlo simulation model. As of February 28, 2018, there was $15.0 million of unrecognized compensation expense related to share-based payment arrangements. These costs are expected to be recognized over a weighted-average period of approximately four years. The Company has sufficient shares to satisfy expected share-based payment arrangements. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | EARNINGS PER SHARE Basic earnings per share is based on the weighted average number of common shares outstanding without consideration of potential common stock. Diluted earnings per share includes the dilutive effect of potential common stock consisting of stock options, restricted stock units and performance stock units, provided that the inclusion of such securities is not anti-dilutive. In periods with a net loss, stock options and restricted stock units are not included in the computation of diluted loss per share as the impact would be anti-dilutive. The following table reconciles basic to diluted weighted-average shares outstanding for the three and nine months ended February 28, 2018 and 2017 (in thousands):
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Segment and Geographic Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment and Geographic Information | SEGMENT AND GEOGRAPHIC INFORMATION The Company considers the business to be a single operating segment engaged in the development, manufacture and sale of medical devices for vascular access, peripheral vascular disease, oncology and surgery on a global basis. The Company's chief operating decision maker, the President and Chief Executive Officer (CEO), evaluates the various global product portfolios on a net sales basis. Executives reporting to the CEO include those responsible for commercial operations, manufacturing operations, regulatory and quality and certain corporate functions. The CEO evaluates profitability, investment and cash flow metrics on a consolidated worldwide basis due to shared infrastructure and resources. The table below summarizes net sales by product category:
The table below presents net sales by geographic area based on external customer location (in thousands of dollars):
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Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | FAIR VALUE On a recurring basis, the Company measures certain financial assets and financial liabilities at fair value based upon quoted market prices, where available. Where quoted market prices or other observable inputs are not available, the Company applies valuation techniques to estimate fair value. FASB ASC Topic 820, Fair Value Measurements and Disclosures, establishes a three-level valuation hierarchy for disclosure of fair value measurements. The categorization of financial assets and financial liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined as follows:
The Company's financial instruments include cash and cash equivalents, marketable securities, accounts receivable, accounts payable and contingent consideration. The carrying amount of cash and cash equivalents, accounts receivable, and accounts payable approximates fair value due to the immediate or short-term maturities. The Company's recurring fair value measurements using significant unobservable inputs (Level 3) relate to our marketable securities, which are comprised of auction rate securities and contingent consideration. The following tables provide information by level for assets and liabilities that are measured at fair value on a recurring basis as of February 28, 2018 and May 31, 2017 (in thousands of dollars):
There were no transfers between Level 1, 2 and 3 for the three and nine months ended February 28, 2018. The table below presents the changes in fair value components of Level 3 instruments in the three and nine months ended February 28, 2018:
Contingent Consideration for Acquisition Earn Outs Some of our business combinations involve the potential for the payment of future contingent consideration upon the achievement of certain product development milestones or various other performance conditions. Payment of the additional consideration is generally contingent on the acquired company reaching certain performance milestones, including attaining specified revenue levels or product development targets. Contingent consideration is recorded at the estimated fair value of the contingent payments on the acquisition date. The fair value of the contingent consideration is remeasured at the estimated fair value at each reporting period with the change in fair value recognized as income or expense within change in fair value of contingent consideration in the consolidated statements of income. We measure the initial liability and remeasure the liability on a recurring basis using Level 3 inputs as defined under authoritative guidance for fair value measurements and is determined using a discounted cash flow model applied to projected net sales, using probabilities of achieving projected net sales and projected payment dates. Projected net sales are based on our internal projections and extensive analysis of the target market and the sales potential. Increases or decreases in any valuation inputs in isolation may result in a significantly lower or higher fair value measurement in the future. The recurring Level 3 fair value measurements of the contingent consideration liabilities include the following significant unobservable inputs as of February 28, 2018 (in thousands of dollars):
At February 28, 2018, the estimated potential amount of undiscounted future contingent consideration that we expect to pay as a result of all completed acquisitions is approximately $3.3 million, which represents the remaining contractual minimum payments. |
Marketable Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities | MARKETABLE SECURITIES Marketable securities, which can be government agency bonds, auction rate investments or corporate commercial paper, are classified as “available-for-sale securities” and are reported at fair value, with unrealized gains and losses excluded from operations and reported as accumulated other comprehensive income (loss), net of the related tax effects, in stockholders’ equity. Cost is determined using the specific identification method. We hold an investment in an auction rate security that is high credit quality and generally achieved with municipal bond insurance. Sell orders for any security traded through an auction process could exceed bids and, in such cases, the auction fails and we may be unable to liquidate our position in the security in the near term. We have not participated in any recent auctions. As of February 28, 2018 and May 31, 2017, we had $1.3 million and $1.2 million, respectively, in investments in one auction rate security. The authorities are current in their interest payments on the security. The auction rate security will mature in 2029. As of February 28, 2018 and May 31, 2017, marketable securities consisted of the following (in thousands of dollars):
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Commitments and Contingencies |
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Feb. 28, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Legal Proceedings The Company is involved in various legal proceedings, including commercial, intellectual property, product liability, and regulatory matters of a nature considered normal for its business. The Company accrues for amounts related to these matters if it is probable that a liability has been incurred, and an amount can be reasonably estimated. The Company discloses such matters when there is at least a reasonable possibility that a material loss may have been incurred. However, the Company cannot predict the outcome of any litigation or the potential for future litigation. C.R. Bard, Inc. v. AngioDynamics, Inc. On January 11, 2012, C.R. Bard, Inc. (“Bard”) filed a suit in the United States District Court of Utah claiming certain of our implantable port products infringe on three U.S. patents held by Bard (the "Utah Action"). Bard’s Complaint sought unspecified damages and other relief. The Court denied Bard’s motion for pre-trial consolidation with separate actions it filed on the same day against Medical Components, Inc. and Smiths Medical ASD, Inc., but had asked for supplemental briefing on the issue of whether to conduct a common Markman hearing. Meanwhile, we filed petitions for reexamination in the US Patent and Trademark Office ("PTO") seeking to invalidate all three patents asserted by Bard in the litigation. Our petitions were granted and 40 of Bard's 41 patent claims were rejected and, following further proceedings, the Patent Office issued a Final Rejection of all 40 claims subject to reexamination. Thereafter, Bard filed appeals to the PTO Board of Appeals and Interferences for all three reexams. The parties completed briefing on the appeals and oral argument was held on June 18, 2015. The Patent Office issued decisions in all three appeals. In one (issued on March 11, 2016 for US Patent No. 7,785,302), the rejections of six of the ten claims under reexamination were affirmed, but were reversed on four of the ten claims. In the second (issued on March 24, 2016 for U.S. Patent No. 7,959,615), the rejections of eight of the ten claims under reexamination were affirmed but the rejections of the other two of the ten claims were reversed. In the third (issued on March 29 for U.S. Patent No. 7,947.022) the rejections of all twenty claims under reexamination were affirmed. Thereafter, Bard filed Requests for Rehearing in all three reexamination appeals and the Company filed Requests for Rehearing in two of the reexamination appeals (the ‘302 and ‘615 patent reexaminations). Each party filed comments in Opposition to the other party’s Rehearing Requests, The PTO denied all three Rehearing Requests - - on February 1, 2017 for the ‘302; on February 17, 2017 for the ‘022; and on February 21, 2017 for the ‘615, but modified its characterization of one prior art reference for the ‘302 and ‘022 decisions. Bard filed a Notice of Appeal to the Federal Circuit Court of Appeals in all three reexams and the Company filed Cross-Appeals for the ‘302 and the ‘615 reexams. The parties have completed the process of filing the various appellate briefs, starting with Bard’s Opening Brief (filed on August 30, 2017), the Company’s Responsive/Opening Brief (filed on November 9, 2017), Bard’s reply (filed on January 19, 2018) and our Reply Brief (filed on March 5, 2018). MedComp also filed an Amicus Brief in support of the Company on November 22, 2017. A date for the oral hearing has not yet been set. The Utah Action has been stayed pending final resolution of the PTO process. In the Federal Circuit appeal, Bard moved to substitute Bard Peripheral Vascular, Inc. (“BPV”) as the Appellant (because Bard assigned the Asserted Patents to BPV on July 12, 2017) or, alternatively, to add BPV as Co-Appellant. The Company opposed substitution; and the Federal Circuit added BPV as Co-Appellant. However, in the District court case, Bard moved only to substitute BPV as plaintiff, but the Company has opposed. The District Court denied Bard's motion to substitute on February 7, 2018. We believe these claims are without merit and intend to defend them vigorously. We have not recorded an expense related to the outcome of this litigation because it is not yet possible to determine if a potential loss is probable nor reasonably estimable. On March 10, 2015, C.R. Bard, Inc. ("Bard") and Bard Peripheral Vascular, Inc. (“BPV”) filed suit in the United States District Court for the District of Delaware claiming certain of our implantable port products infringe on three U.S. patents held by Bard (the “Delaware Action"). Bard's complaint seeks unspecified damages and other relief. The patents asserted in the Delaware Action are different than those asserted in the Utah Action. On June 1, 2015, the Company filed two motions in response to Bard’s Complaint - one sought transfer to the District of Utah where the Utah Action is currently pending, and the other sought dismissal of the entire complaint on grounds that none of the claims in the asserted patents is directed to patent eligible subject matter under Section 101 of the Patent Statute and in light of recent authority from the U. S. Supreme Court. On January 12, 2016, the Court issued a decision denying both motions. The Company then served an Answer and Counterclaim to which Bard served a Reply. On March 10, 2016, the Court held a Case Management Conference, and, on March 14, 2016, the Court entered a Scheduling Order which set, inter alia, a Markman hearing for March 10, 2017, a summary judgment hearing for December 8, 2017 and trial for March 12, 2018. The parties thereafter served various discovery requests on each other, produced documents to each other, conducted party and third-party depositions, etc.; on May 27, 2016 Bard served its Initial Infringement Contentions which identified all the port products accused of infringement; and, on June 24, 2016, the Company served its Initial Invalidity Contentions which detail various grounds for invalidating the three asserted patents. The Markman hearing was held on March 10, 2017 and the Court issued its Claim Construction Order on May 19, 2017. On May 19, 2017, Bard served its Final Infringement Contentions and on June 2, 2017, the Company served its Final Invalidity Contentions. In August, 2017, Judge Robinson (who had been assigned to the case) retired and the case was reassigned to Judge Bataillon (who normally sits in the District of Nebraska). The Scheduling Order has been amended and currently provides for briefing on Case-Dispositive Motions (and other pre-trial motions) between February 16, 2018 and April 27, 2018 (no oral argument date is currently set) and trial to commence July 23, 2018. The parties completed Expert Discovery on January 30, 2018; including: exchanging opening, rebuttal and supplemental expert reports on infringement, invalidity, and damages between September 1, 2017 and December 12, 2017, and conducted expert depositions between December 7, 2017 and January 30, 2018. Meanwhile, Bard also sought to substitute BPV as plaintiff in this case via a Supplemental Complaint, but stipulated that the Company could assert in Cross-Claims and/or Third-Party Complaint against C. R. Bard for its claims of inequitable conduct and unclean hands, which the Company has since done. BPV responded with a partial Motion to Dismiss and the Company has served an amended Answer, Counterclaims and Cross-Claims/Third-Party Complaint. Bard and BPV have since answered/responded to the Company’s Cross-Claims/Complaint without renewing the dismissal motion. We believe these claims are without merit and intend to defend them vigorously. We have not recorded an expense related to the outcome of this litigation because it is not yet possible to determine if a potential loss is probable nor reasonably estimable. AngioDynamics, Inc. v. C.R. Bard, Inc. On May 30, 2017, we commenced an action in the United States District Court for the Northern District of New York entitled AngioDynamics, Inc. v. C.R. Bard, Inc. and Bard Access Systems, Inc. (“Bard”). In this action, we allege that Bard has illegally tied the sales of its tip location systems to the sales of its PICCs. We allege that this practice violates the federal antitrust laws and has had, and continues to have, an anti-competitive effect in the market for PICCs. We seek both monetary damages and injunctive relief. Bard moved to dismiss on September 8, 2017 and the motion has been submitted to the court. The court has adjourned the initial conference in the case pending its resolution of the motion to dismiss. Governmental Investigations In June 2014 we received a subpoena from the U.S. Department of Justice (the “DOJ”) requesting documents in relation to a criminal and civil investigation the DOJ is conducting regarding BTG International, Inc.’s LC Bead® product beginning in 2003. RITA Medical Systems and AngioDynamics, Inc., after its acquisition of RITA, was the exclusive distributor of LC Beads in the United States from 2006 through December 31, 2011. We are cooperating fully with this investigation. In April 2015 we received a subpoena from the DOJ requesting documents in relation to a criminal and civil investigation the DOJ is conducting regarding purported promotion of certain of AngioDynamics’ VenaCure EVLT products for un-cleared indications. We are cooperating fully with this investigation. As of May 31, 2017, the Company accrued $12.5 million for these matters and in August 2017 the Company agreed in principle with the government to resolve these matters for approximately $12.5 million. |
Acquisition, Restructuring and Other Items, Net |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition, Restructuring and Other Items, Net | ACQUISITION, RESTRUCTURING, AND OTHER ITEMS, NET Acquisition, Restructuring and Other Items For the three and nine months ended February 28, 2018 and 2017 acquisition, restructuring and other items, net consisted of:
Restructuring The Company evaluates its performance and looks for opportunities to improve the overall operations of the Company on an ongoing basis. As a result of this evaluation, certain restructuring initiatives are taken to enhance the Company’s overall operations. Operational Consolidation On February 1, 2017, the Company announced to employees an operational consolidation plan (the “plan”) to consolidate our manufacturing facilities in Manchester, GA and Denmead, UK into the Glens Falls and Queensbury, NY facilities. This plan will streamline and optimize the manufacturing functions into one centralized location increasing the utilization of the Glens Falls and Queensbury facilities, optimizing inventory and reducing cost of goods sold through savings in overhead expenses and direct labor. The restructuring activities associated with the plan are expected to be completed in the fourth quarter of fiscal year 2018. The following table provides a summary of our estimated costs associated with the plan:
(1) Equipment transfer, validation and other start-up costs to prepare the facilities for the new product lines. The Company recorded restructuring charges related to the plan during the three and nine months ended February 28, 2018 of $1.5 million and $4.2 million, respectively. During the three and nine months ended February 28, 2017, the Company recorded $0.2 million and $0.2 million, respectively. Total restructuring charges recorded to date are $5.5 million. Termination benefits are only earned if an employee stays until their termination date; therefore, the expenses related to termination benefits are being recorded ratably over the service period. The table below presents the restructuring reserve for the three and nine months ended February 28, 2018:
The Company’s restructuring liability of $1.7 million is mainly comprised of accruals for termination benefits which are included in accrued expenses on the consolidated balance sheet. |
Accumulated Other Comprehensive Income |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income | ACCUMULATED OTHER COMPREHESIVE INCOME (LOSS) Changes in each component of accumulated other comprehensive income (loss), net of tax, are as follows for the three and nine months ended February 28, 2018:
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Recently Issued Accounting Pronouncements |
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Feb. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recently Issued Accounting Pronouncements | RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS The following table provides a description of recent accounting pronouncements that may have a material effect on the Company's consolidated financial statements:
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Recently Issued Accounting Pronouncements (Policies) |
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Feb. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recently Issued Accounting Pronouncements | RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS The following table provides a description of recent accounting pronouncements that may have a material effect on the Company's consolidated financial statements:
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Inventories (Tables) |
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Feb. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories | Inventories are stated at lower of cost and net realizable value (using the first-in, first-out method). As of February 28, 2018 and May 31, 2017, inventories consisted of the following:
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Goodwill and Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | As of February 28, 2018 and May 31, 2017, intangible assets consisted of the following:
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Schedule of Future Amortization Expense | Expected future amortization expense related to the intangible assets is as follows:
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Accrued Liabilities (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities | As of February 28, 2018 and May 31, 2017, accrued liabilities consisted of the following:
In the fourth quarter of fiscal year 2017, the Company issued a voluntary recall of its Acculis probes that were sold over the past two years and recorded a liability of $2.6 million. In the third quarter of fiscal year 2018, the Company completed the replacement of Acculis probes that were returned with Solero probes. |
Long Term Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | The Company's maturities of principal obligations under the Credit Agreement are as follows, as of February 28, 2018:
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Basic to Diluted Weighted-Average Shares Outstanding | The following table reconciles basic to diluted weighted-average shares outstanding for the three and nine months ended February 28, 2018 and 2017 (in thousands):
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Segment and Geographic Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Net Sales by Product Category | The table below summarizes net sales by product category:
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Summary of Net Sales by Geographic Area | The table below presents net sales by geographic area based on external customer location (in thousands of dollars):
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Fair Value (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Assets and Liabilities Measured on a Recurring Basis | The following tables provide information by level for assets and liabilities that are measured at fair value on a recurring basis as of February 28, 2018 and May 31, 2017 (in thousands of dollars):
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Fair Value Measurements Using Significant Unobservable Inputs | The table below presents the changes in fair value components of Level 3 instruments in the three and nine months ended February 28, 2018:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary Showing the Recurring Fair Value Measurements of the Contingent Consideration Liability | The recurring Level 3 fair value measurements of the contingent consideration liabilities include the following significant unobservable inputs as of February 28, 2018 (in thousands of dollars):
|
Marketable Securities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities | As of February 28, 2018 and May 31, 2017, marketable securities consisted of the following (in thousands of dollars):
|
Acquisition, Restructuring and Other Items, Net (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | For the three and nine months ended February 28, 2018 and 2017 acquisition, restructuring and other items, net consisted of:
The following table provides a summary of our estimated costs associated with the plan:
The table below presents the restructuring reserve for the three and nine months ended February 28, 2018:
|
Accumulated Other Comprehensive Income (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in each component of accumulated other comprehensive income (loss), net of tax, are as follows for the three and nine months ended February 28, 2018:
|
Consolidated Condensed Financial Statements - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Feb. 28, 2017 |
Feb. 28, 2017 |
|
Accounting Policies [Abstract] | ||
Reclassification, Bad Debt Expense | $ 0.1 | $ 0.1 |
Inventories - Schedule of Inventories (Detail) - USD ($) $ in Thousands |
Feb. 28, 2018 |
May 31, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 22,135 | $ 17,563 |
Work in process | 10,783 | 12,602 |
Finished goods | 23,646 | 24,341 |
Inventories | $ 56,564 | $ 54,506 |
Inventories - Narrative (Detail) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Nov. 30, 2017 |
May 31, 2017 |
May 31, 2017 |
Feb. 28, 2018 |
|
Inventory Disclosure [Abstract] | ||||
Inventory valuation reserves | $ 7.3 | $ 7.3 | $ 6.8 | |
Inventory write-down | $ 0.7 | $ 1.5 | $ 2.4 |
Goodwill and Intangible Assets - Narrative (Detail) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Dec. 31, 2016 |
Feb. 28, 2018 |
Feb. 28, 2017 |
Feb. 28, 2018 |
Feb. 28, 2017 |
May 31, 2017 |
|
Finite-Lived Intangible Assets [Line Items] | ||||||
Goodwill impairment | $ 0 | |||||
Goodwill adjustments | $ 0 | |||||
Amortization of intangibles | $ 4,191,000 | $ 4,360,000 | $ 12,433,000 | $ 12,886,000 | ||
Maximum [Member] | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated useful life of intangible assets other than goodwill | 18 years | |||||
Minimum [Member] | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated useful life of intangible assets other than goodwill | 2 years |
Goodwill and Intangible Assets - Expected Future Amortization Expense (Detail) $ in Thousands |
Feb. 28, 2018
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remainder of 2017 | $ 4,040 |
2018 | 16,566 |
2019 | 15,013 |
2020 | 13,854 |
2021 | 12,970 |
2022 and thereafter | 72,069 |
Net carrying value, finite intangible items | $ 134,512 |
Accrued Liabilities - Summary of Accrued Liabilities (Detail) - USD ($) $ in Thousands |
Feb. 28, 2018 |
May 31, 2017 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Payroll and related expenses | $ 7,232 | $ 11,383 |
Royalties | 1,247 | 2,885 |
Accrued severance | 2,634 | 2,075 |
Sales and franchise taxes | 664 | 856 |
Outside services | 1,880 | 1,622 |
Accrued Litigation | 12,500 | 12,500 |
Accrued Acculis Recall | 0 | 2,563 |
Other | 4,816 | 4,920 |
Total | $ 30,973 | $ 38,804 |
Accrued Liabilities - Narrative (Detail) - USD ($) $ in Thousands |
Feb. 28, 2018 |
May 31, 2017 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Accrued Acculis recall | $ 0 | $ 2,563 |
Long Term Debt - Debt Outstanding (Detail) - USD ($) $ in Thousands |
Feb. 28, 2018 |
May 31, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Long term debt, gross | $ 93,750 | |
Unamortized debt issuance costs | (952) | |
Long term debt, net | 92,798 | |
Current portion of long term debt | (5,000) | $ (5,000) |
Long term debt, net of current maturities | 87,798 | |
Term Loan | Credit Facility | ||
Debt Instrument [Line Items] | ||
Remainder of 2018 | 1,250 | |
2019 | 5,000 | |
2020 | 7,500 | |
2021 | 11,250 | |
2022 | 68,750 | |
Long term debt, gross | 93,750 | |
Revolving Credit Facility | Credit Facility | ||
Debt Instrument [Line Items] | ||
Long term debt, gross | $ 0 |
Income Taxes - Additional Information (Detail) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Feb. 28, 2018 |
Nov. 30, 2017 |
Feb. 28, 2017 |
|
Income Tax Disclosure [Abstract] | |||
Estimated federal statutory income tax rate | 4.90% | 42.90% | |
Tax Cuts and Jobs Act, change in tax rate, deferred tax liability, income tax benefit | $ 9,300,000 | ||
Income tax expense (benefit), intangible assets | $ 800,000 | ||
Net operating loss carryover limitation, percentage of taxable income | 80.00% | ||
Tax Cuts and Jobs Act, transition tax for accumulated foreign earnings, liability | 4,800,000 | ||
Tax Cuts and Jobs Act, transition tax for accumulated foreign earnings, income tax expense | $ 0 |
Share-Based Compensation - Narrative (Detail) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2018 |
Feb. 28, 2017 |
Feb. 28, 2018 |
Feb. 28, 2017 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Amount of shares issuable through two stock-based compensation plans | 9.5 | 9.5 | ||
Charges against income for share-based payment arrangements | $ 2.1 | $ 1.7 | $ 5.8 | $ 5.1 |
Unrecognized compensation expenses related to share-based payment arrangements | $ 15.0 | $ 15.0 | ||
Recognition period | 4 years |
Earnings Per Share - Reconciliation of Basic to Diluted Weighted-Average Shares Outstanding (Detail) - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2018 |
Feb. 28, 2017 |
Feb. 28, 2018 |
Feb. 28, 2017 |
|
Earnings Per Share [Abstract] | ||||
Basic (shares) | 37,122 | 36,625 | 37,031 | 36,557 |
Effect of dilutive securities (shares) | 320 | 501 | 327 | 511 |
Diluted (shares) | 37,442 | 37,126 | 37,358 | 37,068 |
Securities excluded as their inclusion would be anti-dilutive (shares) | 1,259 | 1,040 | 1,139 | 973 |
Segment and Geographic Information - Summary of Net Sales by Product Category (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2018 |
Feb. 28, 2017 |
Feb. 28, 2018 |
Feb. 28, 2017 |
|
Segment Reporting Information [Line Items] | ||||
Net sales | $ 83,851 | $ 85,602 | $ 255,968 | $ 262,729 |
Peripheral Vascular [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 48,517 | 48,929 | 149,751 | 154,654 |
Vascular Access [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 23,279 | 23,680 | 69,091 | 72,238 |
Oncology/Surgery [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | $ 12,055 | $ 12,993 | $ 37,126 | $ 35,837 |
Segment and Geographic Information - Summary of Net Sales by Geographic Area (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2018 |
Feb. 28, 2017 |
Feb. 28, 2018 |
Feb. 28, 2017 |
|
Net Sales | ||||
Net sales | $ 83,851 | $ 85,602 | $ 255,968 | $ 262,729 |
Reportable Geographical Components [Member] | United States [Member] | ||||
Net Sales | ||||
Net sales | 65,787 | 67,656 | 203,020 | 211,295 |
Reportable Geographical Components [Member] | International [Member] | ||||
Net Sales | ||||
Net sales | $ 18,064 | $ 17,946 | $ 52,948 | $ 51,434 |
Fair Value - Additional Information (Detail) $ in Millions |
Feb. 28, 2018
USD ($)
|
---|---|
Fair Value Disclosures [Abstract] | |
Potential amount of undiscounted future contingent consideration | $ 3.3 |
Fair Value - Summary Showing the Recurring Fair Value Measurements of the Contingent Consideration Liability (Detail) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Feb. 28, 2018 |
Nov. 30, 2017 |
May 31, 2017 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair value | $ 3,229 | $ 3,198 | $ 12,761 |
Level 3 [Member] | Revenue Based Payments [Member] | Recurring [Member] | Contingent Consideration Earn Out Liability [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair value | $ 3,229 | ||
Discount rate | 4.00% | ||
Probability of payment | 100.00% |
Marketable Securities - Narrative (Detail) $ in Millions |
Feb. 28, 2018
USD ($)
Investment
|
May 31, 2017
USD ($)
|
---|---|---|
Marketable Securities [Abstract] | ||
Investments in auction rate securities that failed auctions | $ | $ 1.3 | $ 1.2 |
Number of investments (investment) | Investment | 1 |
Marketable Securities - Marketable Securities (Detail) - USD ($) $ in Thousands |
Feb. 28, 2018 |
May 31, 2017 |
---|---|---|
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | $ 1,350 | $ 1,350 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (69) | (135) |
Fair Value | 1,281 | 1,215 |
U.S. Government Agency Obligations [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost | 1,350 | 1,350 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (69) | (135) |
Fair Value | $ 1,281 | $ 1,215 |
Acquisition, Restructuring and Other Items, Net - Summary (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Feb. 28, 2018 |
Feb. 28, 2017 |
Feb. 28, 2018 |
Feb. 28, 2017 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Acquisition, restructuring and other items, net | $ 4,177 | $ 1,750 | $ 11,932 | $ 12,028 |
Legal Costs [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Acquisition, restructuring and other items, net | 2,319 | 1,528 | 7,299 | 5,162 |
Intangible Impairment [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Acquisition, restructuring and other items, net | 0 | 0 | 0 | 0 |
Other Asset Write-off [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Acquisition, restructuring and other items, net | 0 | 4 | 0 | 5,604 |
Facility Closing [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Acquisition, restructuring and other items, net | 1,548 | 208 | 4,184 | 208 |
Other Restructuring [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Acquisition, restructuring and other items, net | $ 310 | $ 10 | $ 449 | $ 1,054 |
Acquisition, Restructuring and Other Items, Net - Narrative (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 10 Months Ended | |||
---|---|---|---|---|---|---|
Feb. 28, 2018 |
Feb. 28, 2017 |
Feb. 28, 2018 |
Feb. 28, 2017 |
Nov. 30, 2017 |
May 31, 2017 |
|
Restructuring and Related Activities [Abstract] | ||||||
Restructuring charges | $ 1,548 | $ 200 | $ 4,184 | $ 200 | $ 5,500 | |
Restructuring liability | $ 1,705 | $ 1,705 | $ 1,824 | $ 962 |
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