AngioDynamics Wins GPO Contract - Analyst Blog

By Zacks | October 11, 2012 AAA

Therapeutic and diagnostic devices maker AngioDynamics (ANGO) recently won a contract with HealthTrust Purchasing Group, a group purchasing organization ("GPO") that supports roughly 1,400 hospitals. The contract will cover AngioDynamics' vascular access products, including chronic and acute dialysis catheters.

The HealthTrust agreement became effective from October 1, and is expected to leverage AngioDynamics' top-line growth. Per the agreement, the vascular access products to be covered by HealthTrust include DuraFlow, DuraFlow 2 and EvenMore chronic hemodialysis catheters, DuraMax chronic dialysis catheter, and the Schon XL acute hemodialysis catheter.

AngioDynamics had earlier been in similar contracts, with HealthTrust covering its peripheral vascular and fluid management offerings. Despite being able to sell off a bulk of its manufactured products, pricing pressure from the GPO could adversely affect selling prices and corresponding profitability of the company.

New York-based AngioDynamics specializes in the design, development, manufacture, and marketing of therapeutic and diagnostic devices to treat peripheral vascular disease as well as other non-coronary diseases. With a market-cap of $393.2 million, the company has approximately 1,400 employees and 7 operating locations worldwide.

We believe AngioDynamics is well positioned for sustained growth driven by strong market adoption of the NanoKnife system and its focus on interventional peripheral products. The recently concluded Navilyst acquisition in May, 2012 is expected to boost earnings by at least 8 cents in fiscal 2013.
 
However, management expects the proposed Vortex Medical acquisition to be dilutive to AngioDynamics' reported earnings by 9 cents for fiscal 2013, as the company expects an approximate $5 million decrease in operating income along with a trivial impact on EBITDA.

In addition, AngioDynamics' product line face strong challenges from the competitive offerings of its larger rivals such as Boston Scientific Corporation (BSX) and CR Bard Inc. (BCR). We are currently 'Neutral' on AngioDynamics, which carries a short-term Zacks #3 Rank (Hold rating).
 

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