AngioDynamics Closes Vortex Buyout

Provider of therapeutic and diagnostic devices to treat peripheral vascular and other non-coronary diseases, AngioDynamics (ANGO - Analyst Report) has completed its previously announced acquisition of privately-owned Vortex Medical.

As a concern which works towards innovation and production of medical devices for vascular occlusion, Massachusetts-based Vortex is a strategic fit for AngioDynamics’ peripheral vascular product portfolio.

Vortex markets the patented AngioVac system which includes the U.S. Food and Drug Administration (FDA) cleared AngioVac Cannula and Circuit. AngioVac Cannula and Circuit are awaiting European CE Mark approval. The system has the potential to become the gold standard of care for the treatment of vascular occlusion.

The acquisition is expected to be dilutive to AngioDynamics’ fiscal 2013 reported earnings by 9 cents. The company expects fiscal 2013 adjusted earnings per share in the range of 40 cents to 42 cents.

Following the first quarter results and the expected dilutive impact of the acquisition on earnings per share for fiscal 2013, the Zacks Consensus Estimate for fiscal 2013 decreased 9 cents to 40 cents per share, owing to five downward estimate revisions. The current estimate implies year-over-year decline of 6.51%.

AngioDynamics envisages incremental revenues of $1 million in fiscal 2013. However, the company expects an approximately $5 million decrease in operating income along with a trivial impact on EBITDA.

For fiscal 2014, the buyout will be accretive to AngioDynamics’ top as well as bottom line. The company expects the acquisition to boost sales by $10 million in fiscal 2014 and improve adjusted EBITDA by $5 million.

Annual net revenues of the AngioVac system could exceed $50 million within the next five years. Thus, the acquisition will bolster revenues for AngioDynamics’ peripheral vascular division under its vascular segment which faced a tough first quarter in fiscal 2013. The company plans to expand the AngioVac label with a full launch expected in the fourth quarter of fiscal 2013.

The company retains 18% share in a billion dollar market which continues to grow in the mid-to-upper single digits. However, AngioDynamics’ product lines face strong challenges from the competitive offerings of its larger rivals such as Boston Scientific Corporation (BSX - Analyst Report) and CR Bard Inc. (BCR - Analyst Report).

AngioDynamics currently carries a Zacks #3 Rank, which translates into a short-term Hold rating. We have a long-term ‘Neutral’ recommendation on the stock.