Good morning, and welcome to the AngioDynamics Fiscal Year 2020 Second Quarter Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded.

The news release detailing the fiscal 2020 second quarter results crossed the wire earlier this morning and is available on the Company’s website. This conference call is also being broadcast live over the Internet at the Investors section of the Company’s website at www.angiodynamics.com.

And the webcast replay of the call will be available at the same site approximately one hour after the end of today’s call.

Before we begin, I would like to caution listeners that during the course of this conference call, the Company will make projections or forward-looking statements regarding future events, including statements about expected revenue, adjusted earnings, and gross margins for fiscal year 2020.

Management encourages you to review the Company’s past and future filings with the SEC, including without limitation the Company's forms 10-Q and 10-K, which identify specific factors that may cause the actual results or events to differ materially from those described in the forward-looking statements.

A slide package offering insight into the Company's financial results is also available on the Investors section of the Company's website under Events & Presentations. This presentation should be read in conjunction with the press release discussing the Company's operating results and financial performance during this morning's conference call.

I'd now like to turn the call over to Jim Clemmer, AngioDynamics' President and Chief Executive Officer. Mr.

Clemmer?.

internal research and development, M&A and clinical and regulatory pathway expansion. A great example of execution through our internal R&D efforts is our AngioVac Generation 3 cannula insert kit that we launched late last quarter.

AngioVac Gen 3 drove our ninth consecutive quarter of double-digit procedure and revenue growth in our thrombus management category. With respect to M&A, this morning, we announced the acquisition of the C3 Wave PICC tip location system. This wireless app-based ECG system eliminates the need for a confirmatory chest X-ray during PICC tip placement.

The system has received FDA 510k, CE, Health Canada, and other international approvals. This product can be used as an aid when inserting PICCs at the bedside and fills a technology gap in our VA portfolio that has been a contributing factor in the decline of our PICC revenue over the past several years.

As a result, we believe that this tip location system will allow for greater patient access to our unique BioFlo PICCs. In addition, we are continuously evaluating opportunities t o reshape our portfolio. Our balance sheet allows us to remain opportunistic with regard to M&A that will enhance our existing oncology and thrombus management portfolios.

We are also prepared to augment these existing portfolios with equally disruptive and innovative technology as evidenced by our acquisition of Eximo Medical. We have already made significant progress integrating this acquisition into AngioDynamics.

We have begun building out a dedicated sales force to put this unique and highly innovative laser atherectomy technology in the hands of clinicians. We have also been working hard to build out a robust and scalable supply chain to ensure that our physicians' needs are met in a timely manner with high quality products.

We remain on pace to continue to make our expected investments to ensure that we are prepared to properly launch this product into the marketplace. We have also been spending more time in the field with key opinion leaders discussing the opportunities and use cases of the Eximo laser atherectomy product.

Hearing what these physicians have to say after using the product, we’re even more excited about the application of Eximo's unique technology and the competitive positioning in a large and growing market. One of these KOLs, Dr.

John Rundback, a radiologist at Holy Name Medical Center in Teaneck, New Jersey, co-authored the results of Eximo's initial IDE study and recently spoke with us about the distinct advantages of Eximo's laser atherectomy product.

Specifically, he highlighted Eximo's proprietary technology that allows the device to provide more energy than competing lasers, enabling more effective removal of both calcified and non-calcified lesions, while also more effectively preventing destruction of the surrounding vessel walls.

As clinicians gain a better understanding of the improved outcomes and ease of use afforded by this technology compared to the current standard of care, we anticipate a meaningful increase in adoption and revenue over the coming years. As Dr.

Rundback highlighted, this novel laser technology enables clinicians to perform atherectomy across both laser and mechanical procedures in a way that is more versatile and less risky than other methods and we remain confident that clinicians will see value in this product.

As we continue to make solid progress building out our internal infrastructure, we remain on track to execute a commercial launch towards the end of our fiscal year. The third driver of our transformation is clinical and regulatory pathway expansion.

The NanoKnife DIRECT study is an example of our ability to leverage our developing clinical and regulatory talents. As of today, 13 study sites have secured IRB approval and we anticipate up to an additional five sites achieving IRB approval by the end of our fiscal year.

We are very pleased with the pace at which leading institutions are committing to our comprehensive clinical study and securing IRB approval. This pace and commitment supports our expectation that we will enroll the required 250 patients in the registry arm of the study over the coming 2.5 years.

Separately, we are pleased to announce that our prostate safety study has secured central IRB approval. This will keep us on pace to complete this study by the end of the fiscal year. We look forward to providing you additional updates on both of these exciting NanoKnife related studies over the coming quarters.

Lastly, we are pleased to announce that during the quarter, the American Medical Association CPT Editorial Panel posted two newly approved Category III CPT physician billing codes for irreversible electroporation.

The AMA's approval of these physician billing codes recognizes the unique features of IRE and NanoKnife for patients with pancreatic and other serious cancers. The new codes enable physicians to distinguish this innovative technology when reporting IRE, which will also help generate new clinical data.

I want to specifically recognize the Society of Interventional Radiology and the American College of Surgeons, who co-sponsored the application for new codes to the American Medical Association.

We look forward to continuing to work with key specialty societies, our physician customers, patient advocacy groups and other stakeholders to advance access to the life changing benefits of NanoKnife.

We continue to build momentum, while putting a foundation in place to support higher organic revenue growth and the integration of Eximo, and as we expect to build further momentum into the back half of the year our team continues to execute against our strategic initiatives.

Now before I turn the call over to Steve, I would like to take a moment and thank Michael Greiner for his many outstanding contributions during his time as part of the AngioDynamics' leadership team.

As I frequently mentioned, this is a very different company than it was even two or three years ago, and Michael played a very large and valuable role in that transformation. I want to wish Michael and his family well, and we wish him much success going forward in his new role.

With that, I would like to turn the call over to Steve Trowbridge, our General Counsel and Interim Chief Financial Officer..

Thanks, Jim, and good morning, everyone. Before I begin, please remember that we post a presentation on our Investor Relations website summarizing the key items associated with our quarterly and year-to-date results, as well as our financial guidance.

Unless otherwise noted, all prior year results and comparisons exclude the contribution of our Namic Fluid Management business. Additionally, we’ve anniversaried the acquisitions of BioSentry and RadiaDyne, and all results discussed today are on an organic basis.

Our net sales for the second quarter of fiscal 2020 were $70 million, which is flat compared to a year-ago. Excluding the fiscal 2019 revenue contribution from the Asclera -- Asclera therapy product, which we stopped distributing during the fourth quarter of fiscal year 2019 revenue growth for the second quarter was 2.5%.

Our AngioVac, NanoKnife and Alatus and IsoLoc balloon products exhibited solid growth during the quarter. These pockets of growth were partially offset by declines in our PICCs and port products. Our total VIT business grew 0.6% year-over-year and when excluding Asclera, grew 6.5% led by strong growth in AngioVac.

AngioVac procedural volume remained strong with procedures increasing 31% year-over-year, representing our ninth consecutive quarter of double-digit volume and revenue growth. Our core business also returned to growth during the quarter. This combined with the strength of AngioVac is an encouraging sign as we enter the back half of the year.

Vascular access revenue declined roughly 4% during the second quarter as growth in sales of our dialysis products was more than offset by declines in sales of PICCs and Ports.

As Jim mentioned earlier, we are very excited about the acquisition of the C3 Wave tip location system and expect that filling this technology gap will have a positive impact on our PICC business going forward. In addition, as we discussed last quarter, we were awarded the GPO agreement with Premier for ports.

This agreement allows us to leverage Premier's extensive membership network of approximately 4,000 U.S hospitals and 165,000 other providers to sell our BioFlo, Vortex and Xcela products, and we expect this agreement to drive growth in the back half of the year.

Revenue from our Oncology business increased 5.1%, primarily related to growth from NanoKnife and balloons. This growth was somewhat offset by a continued anticipated decline in sales of our radio frequency ablation product.

NanoKnife's growth in the quarter was strong, driven by a significant capital sales, partially offset by a quarter-over-quarter decline in probe sales.

We remain focused on driving future utilization and while sales of disposable probes in the quarter were soft, the significant amount of capital sales coupled with the pace of leading hospitals engagement with our DIRECT study that Jim mentioned earlier are both strong indicators of commitment to the NanoKnife platform, and we expect probe sales to grow in the back half.

Moving down the income statement. Our gross margin for the second quarter of fiscal 2020 was 59.3%, up 140 basis points compared to a year ago, driven primarily by productivity and supply chain improvements, as well as positive product mix.

Our research and development expenses during the second quarter of fiscal 2020 were $7.8 million or 11.1% of sales compared to $7.1 million or 10.1% of sales a year-ago. As we have previously messaged, we are continuing to invest strategically in R&D and clinical to support the growth of our leading technologies.

We continue to expect R&D spend to be between $32 million and $34 million in fiscal year 2020, including investments related to our acquisition of Eximo. SG&A expense for the second quarter of fiscal 2020 increased to $31.1 million, representing 44.4% of sales compared to $28.5 million, representing 40.8% of sales a year-ago.

We continue to anticipate SG&A spend between $126 million and $130 million for fiscal year 2020. This increase in spend will support our upcoming product launches as well as the needed investments for a commercial release of Eximo in the back half of our fiscal year.

Our adjusted net income for the second quarter of fiscal 2020 was $2.2 million or $0.06 per share compared to adjusted net income of $2.9 million or $0.07 per share in the second quarter of last year. Adjusted EBITDA in the second quarter of fiscal 2020 was $6.4 million compared to $9 million in the second quarter of fiscal 2019.

In the second quarter of fiscal '20, we began with roughly $83.6 million in cash and we used $5.9 million of cash in operating activities. Our free cash flow was $3.3 million. During the second quarter, we used $45.8 million of cash on hand to fund the acquisition of Eximo Medical that we discussed during last quarter's call.

As of November 30, 2019, we had $41.2 million in cash and cash equivalents and no debt. With regards to our financial guidance for fiscal 2020, we continue to expect net sales in the range of $280 million to $286 million and gross margin in the range of 58% to 59%. We also continue to anticipate adjusted EPS in the range of $0.10 to $0.15.

To provide further context around the earnings guidance, we acknowledge that our year-to-date earnings are already near the top end of our full year guidance range. As we discussed last quarter, we anticipate increasing investment over the back half of the fiscal year with respect to building the Eximo commercial team and supply chain infrastructure.

These investments remain in line with our original plan and we will impact earnings most significantly during the third quarter of fiscal 2020. With that, I would like to turn the call back to the operator to open the call for questions..

Thank you. [Operator Instructions] Thank you. Our first question is from the line of Jason Mills with Canaccord Genuity. Please proceed with your question..

Hi. Good morning, gentlemen. Thank you for taking the questions.

Can you hear me okay, Jim?.

Hi, Jason. We can. Good morning..

Good. Happy New Year to you. So a bunch of questions. Certainly some green shoots this quarter. Let me run through a couple, and I will get back in queue. First, I wanted to touch on the acquisition of the tip location system. In the quarter, Vascular access probably wasn't up to your expectations.

How quickly will the tip location system -- systems addition to your portfolio turn that business around? And I guess as you look over the next, say couple of years, what sort of growth profile do you expect out of that business in total with the addition of this system?.

Yes. So a couple of good questions, Jason. So a couple of things in the vascular access portfolio, this year we will grow our ports. The first half of the year, ports are behind prior year. In the second half, we have the Premier contract kicking in as we previously identified and communicated.

And we know that our port business will pick up in the second half and have good momentum into next year. Also with PICCs, we think the acquisition of the C3 Wave system is really important for us. It won't really affect our numbers this year, Jason, we will integrate the product into our technology, into our portfolio.

But as we grow, it's really important to us because we want to do both tip location and navigation. Today, the products are ready for tip location. It's not yet ready for navigation, we will continue that development during the process. So we expect over time, we will guide you more clearly to '21 in our 3-year guidance soon.

But we expect our whole vascular access portfolio to grow in the low single digits over the next few years..

Okay, great. That's helpful color.

And then on the Eximo product line, as you build towards a full commercial launch there, could you give us a bit more color and how you're thinking about the commercial infrastructure necessary to compete in a market that you know as well as I is somewhat of a brute force marketing -- market requires a fairly stout direct sales team.

And I think that was one of the questions we got a lot from investors is just how is AngioDynamics going to compete with the number of sales reps in the aggressiveness of some of these sales teams around the country with Eximo.

Could you touch on that a little bit? Also maybe touch on with respect to Eximo, what would be a reasonable sort of first year revenue after launch? What range if you're willing to sort of quantify that? I got one more follow-up, I'll get back in the queue..

Sure. Okay. Yes. There are lot of stuff, Jason.

As we mentioned, almost three months ago to the day when we made the acquisition, we really -- Eximo Medical is really a technology company based in Tel Aviv, amazing technology, did a great job not just with the science behind their device, but getting a strong indication stream approved on their FDA Approval, really amazing.

Now, there is only one commercial person in the U.S on the Eximo team and that person remains with us, very highly skilled and knows the space well. Since then, in the past 90 days, we did what we said we would do it at that call.

We've added now another commercial leader to help balance out the workload, the high-end and we've also hired and trained our first series of sales reps and even field support people for clinical support. We remain on track with where we guided. That’s why, we spent a lot of money right now with very little revenue coming in.

We remain on track by the end of this quarter to hit our internal goal for sales reps in the field and then by our next fiscal quarter by May 31, we have a goal there.

And Jason, for competitive reasons, we've not yet identified exactly where those people will be and how many and we will give more clarity to spring around that, but we have the kind of the idea that we had that we communicated on a rough schedule to you in October are now being executed.

We've not yet given guidance towards our revenue other than if you go back to that call that we had together a few months ago, I think we mentioned we expect 8% to 10% market share by the end of year three, we remain confident with those rough numbers..

Just a little bit finer point in that. Sorry, Jason. Just to put a little bit of a finer point on that, I want to reiterate what Jim said. By the end of three years, we're targeting that 8% to 10%. You clearly see a ramp up so that we are exiting year two at a higher rate than year one.

So you can think about the ramp in the way you normally would as you would go up that curve and we acknowledge that this is a high touch business. We understand that.

And I think that the impacts to our fiscal 2020 earnings guidance that we had modified last quarter based on the acquisition reflect that and all the work that we've done in the first quarter here and expect to do in the back half of the year building up that commercial team is aimed at addressing exactly what you said, which is making sure we've got the infrastructure in place to have sales as well as clinical specialists, supporting -- fully supporting our launch..

[Indiscernible] color. Thank you. Lastly for me, AngioVac, great growth and the procedure growth equally is fantastic, not all that surprising. The diligence we've done suggests the venous space is indeed growing quite fast itself.

Could you comment about where you're seeing, I guess, in what sorts of accounts you are seeing the best uptake of AngioVac and what you're seeing or hearing from physicians with respect to treating pulmonary embolisms and VTE in general with these [indiscernible] mechanical thrombectomy technologies? Where do you see this going?.

So, Jason, we agree that the mechanical thrombectomy market will grow at a healthy pace as physicians and clinicians gain more confidence and the device is available, not just our device, which is unique and special, but there is, we know, a couple other good devices on the market.

I think the people will trust mechanical thrombectomy as a treatment choice. Now getting back specifically to our device. We are really pleased with the launch of AngioVac 3.0. Our marketing teams and our research and development teams listened carefully to our customers who asked us and guided us in the development of the 3.0 device.

So as you mentioned about new customers coming on, there are really two buckets, Jason. We have some that had tried our 2.0 device before. That really, kind of, put it aside a little bit, waiting for some improvements that we deliver to them in 3.0, and that's one bucket.

And the second bucket is, people that have not yet tried our device now are looking at it because of still be unique capabilities with our perfusion system, the way we can reduce blood loss and go after really large thrombus and clear it. So we are really pleased with the initial launch of the 3.0.

We also, as we’ve guided, we’ve other R&D projects that are in our pipeline will be coming out over the next couple of years that will make the device even more applicable to more physicians and maybe allow more treatment.

And we also remain committed to looking at M&A as an opportunity to bring in potentially outside science to our bag, and Steve -- I'll let Steve talk about the PE and VTE..

Yes. To reiterate what Jim said, we are really pleased with the growth that AngioVac has shown, and what's -- it's really exciting about us -- is really exciting to us about that is, it's primarily in the space that we've been playing.

So we've seen physicians come in primarily playing in the right heart as well as some vegetation, tricuspid valve vegetation.

With the R&D programs that we have in place and with leveraging our clinical and regulatory experience that Jim talked about in his prepared remarks, we see additional areas to move into with AngioVac that we haven't tapped into yet.

So we see AngioVac very similar to the way we see NanoKnife as a platform to drive future growth through the medium and long-term as well as -- while we continue to see real nice growth currently in the market that is playing in..

Thanks folks..

Thank you. Our next question comes from the line of Matthew Mishan with KeyBanc Capital Markets. Please proceed with your questions..

Good morning and thank you for taking the questions. Just first, Jim, on the NanoKnife clinical trial, you’re making very good progress in enrolling sites.

I'm just curious where you are with the randomized control arm? I think that's the more difficult part of enrolling the study?.

Steve?.

Yes, Matt, thanks for the question. So we haven't talked about specific enrollment on either of the registry or the RCT side. What we're focusing on is getting the sites up and running and that’s what we've been disclosing.

As you know, it's a tough process in terms of getting patients in with a long protracted inclusion and exclusion assessment process. They have to make sure that they're properly staged and then there is three months of induction chemotherapy and then you have to restage and go from there. So it does have some longer lead-time to get the patients in.

There's no doubt that the RCT side is moving slower than the registry side, but that's to be expected. We haven't seen anything that tells us that it's going to be harder than we thought on the RCT side. So it's really progressing along with our expectations.

Again, as we are focusing getting the hospitals through the IRB process, which can be very long and protracted and we're really excited with the momentum that we made with getting those 13 sites in today and then moving on to the site-specific enrollment efforts throughout the back half of this year and into the rest of the process of running the trial..

As a follow-up to it, of the 13 study sites that have been -- have approved -- have been approved, is one of them approved as like a randomized control site or is that still up, are you still working on that?.

No. A number of them are approved on both the RCT and the registry side. So I think the majority of those sites are approved for both. Some sites are just registry sites and some slides are actually just RCT sites and we do have a mix, but it's not like we only have one or two..

Okay, excellent. And then just looking at the guidance, if I think about the second half sales growth that you're going to need to get just even the lower end of the guidance, it's up in that 6-ish -- 6.5% range.

Where is the inflection coming from for you in the second half and are you still expecting 20% oncology growth for the year or has that changed?.

So, Matt, you’re right. So in each of our three businesses, we know exactly where -- and your numbers are correct.

We agree with your numbers, you identified for the second half and we know exactly whereby each of the three businesses -- again, I will give you a quick synopsis in the Vascular Access business we have that Premier contract kicking in as we speak, actually started in November and its compliance base as you know, with two of those three arms there, but they have a 90-day window to get compliant and that's happening as we speak.

So we are pleased with the adoption there as well as a couple of small products also being launched in our VA business. So we know that they will do what we expect.

Second, in VIT, we've taken our venous business as you know for the last couple of years have been highly challenge and has been a negative drain to revenue and this year through, we have a great technology radio our laser, but our sales and marketing teams have performed really well.

We've gotten that business now to flat and maybe some slight growth going forward. They've done a great job there, because that's been a drag on our growth. They will perform well in the second half. And third, then we talked about thrombus, Matt, we are on a really good trajectory.

Our thrombus business is very strong with our AngioVac 3.0 launch and some other things in that space we will have what we need there.

Then third, turning to oncology, yes, we will have really strong growth in oncology, primarily in three areas, the two acquisitions we made last year, BioSentry and RadiaDyne with balloons and the gel are going to perform well in the second half.

Secondarily, our microwave business got off to a little slower start than we thought, where we are really winning some large customers, we think you will see that in the second half. Then third NanoKnife. Really, really strong adoption of our new NanoKnife 3.0 as seen by a lot of hardware and capital sales and purchases in the first half of the year.

The second half, Matt, we're going to continue with a strong demand and capital and we will see our probes increase. We think as people now aligned to do some of the treatments for patients that will be in the registry or the RCT. So we're very confident, Matt, with the numbers you identified for the second half..

Okay. And then just on Solero, why is it -- why has it started off slow, I mean if I look at Solero, it's basically flat for the first half of the year versus RF being down in the '20s.

How should be thinking about the relationship between you adding microwave business versus RF coming down?.

Yes, a little bit -- as I said early, it's little under our expectations. One of the things that we're doing, Matt, internally is in the past, we competed with Solero around the edges, smaller sites -- smaller treatment sites, because I think we were always worried a little bit about competing with two really big guys with J&J and Medtronic.

And now the team we've brought on knows the space well, our technology is really superior, we need to do a better job of communicating that. So the sales teams in the last six months or so has been targeting larger centers, larger sites going head-to-head against J&J, Medtronic based upon how our technology works and why it's different.

So when you gain the larger sites, the upside is great, but it takes a bit longer for that process. So we're slightly behind where we expected, we're completely with you, but we're confident in our pipeline to know the second half will be strong..

Do you have orders for those sites or are you still in the process of -- and they just haven't shipped yet, or are you still in the process of trying to win that business?.

Little bit of both, Matt, but I don't want to mislead you. It's not like we get an order and have it ship. That's not too much of our business, I want to be clear with you. We have hardware produced, we have probes available or applicators in this case. But no, if you go through the purchasing cycle, we know where we are in our pipeline.

We measure very closely. So I don't want to mislead you, say, we have a bunch of teed up orders we haven't shipped that wouldn't be fair. We just know the process of our pipeline, it's timing related..

Okay. Understood. And last question, I am going to jump out, on the tip location, you previously discontinued efforts several years ago, PICCs continue to erode.

I guess why is now the right time to come back in and trying to stabilize and with this product?.

It's a really good time for us, a couple of things you identified. When I first arrived at AngioDynamics a few years ago I communicated to our external parties why we discontinued our internal development on tip location. There were some challenges there from a technology standpoint and from an IP standpoint, frankly.

And we know that our other competitors had bought up some of the other existing opportunities to market. So we kind of took a time out and pushed out to the side while we did other things develop other platforms here. So for us, two things occurred, Matt. One is we then got back because R&D process had worked well.

We launched AngioVac 3.0, NanoKnife 3.0, even some other products in the VA bag are being launched and we also know now exactly why and how our growth has been inhibited in the PICC area.

Part of that again is due to our lack of a tip location and navigation system and the other part, we believe very, very clearly and I will remind you again why we filed a suit against Bard because we know that they are unfairly restricting trade access for our customers to have access in that market and as you know, as we've publicly communicated on the lawsuit we placed on Bard.

So we have a couple different things restricting it, Matt, but we're highly confident. We also have a sales and marketing team that has delivered in that space and grown other categories that are very well. So the timing was right.

We got a great technology, it worked out really well, again tip location over right away for us to use, it will continue and finish development on the navigation asset..

All right. Thanks, Jim and congratulations, Steve, on the new role..

Thank you, Matt..

[Operator Instructions] The next question is from the line of Jayson Bedford with Raymond James. Please proceed with your question..

Hi. Good morning and Happy New Year, guys. Few questions and I will kind of jump all over the place a little bit here.

But on the tip location device, when was it approved and did Medcomp actually launch the device?.

So it's been approved by 18 months ago, I think, Jason, and they have had the device in the market for about 18 months..

Okay.

And I assume it's agnostic to what type of PICC or will this be dedicated to Angio PICCs?.

So the Medcomp system is an open system and it was approved as an open system. We will keep it that way. We will certainly be selling it with Angio PICCs , but it will also be open to be used with other PICCs as well. The way that we think the whole market should be..

Fair enough.

On Nano, the new sites that you've added to the trial, are they new to the therapy or the existing users that have decided to participate in the trial?.

We've seen both. We've seen both sites that are existing users that have gotten through their IRB process because they've got familiarity with the technology.

We've also seen sites that are coming on board now because of the fact that we have the IDE approved and that they're using the IDE as part of our proposed PMA to bring in the technology that maybe they had some institutional barriers before.

We've also seen some sites that haven't been Nano users at all that we're getting in as a control sites, which we need as part of our registry arm that are also flipping now and saying, hey, once I understand more about NanoKnife, let me get inside the NanoKnife part of it too. So we're seeing both of those and we like that encouraging sign..

Okay.

And I missed the comment on the disposables on Nano? Were they down year-over-year or quarter-over-quarter or both?.

It's both. It's both. So they were down quarter-over-quarter and they are down year-over-year..

Okay..

I'm sorry. Year-to-date and then quarter -- year-over-year..

Okay. BioSentry, down year-over-year. I think your expectations entering the year looks for faster growth.

Why is the growth slower and kind of what needs to happen for the growth to pick up?.

Two things, Jason. We changed again the go-to market model of BioSentry. They had two large distributors in their supply chain in their channel, and we decided to take those distributors out, remodel the acquisition, so we did that. So recently we took those distributors out.

It was an aggressive approach towards it, because we wanted to control the customers, control the pricing and we did so. We probably underestimated a little bit, how much product was in the supply chain and a little bit of disruption associated, Jayson. So -- but now it's completely done. We own it. So we know the second half.

We've already seen run rates, we've seen ordering patterns that give us high confidence to the numbers we expect in the second half..

Just to add a little more color to that, Jayson. We segment the customers for BioSentry into three different categories. So there's new customers, which we are absolutely bringing on since we purchased the product. We are bringing in new customers and we're seeing good volume that they're doing.

Existing customers that we're purchasing direct from BioSentry before we bought it. We are seeing growth there as well. That’s a very encouraging sign.

And then to Jim's last point, there's a number of ways that you can move from a distributor to direct model, we chose to do it pretty quickly, ripped the band aid off, could have made other choices, but we thought this was the right long-term choice.

And as we head into the second half of the year, we're absolutely seeing those customers that used to purchase from distributors coming back online. So when you put all three of those together with growth, we are very confident that we are going to see growth in the back half of the year..

Okay. That's helpful. And just my last one on AngioVac 3.0, I think the revenue growth for AngioVac was 53%. Volume growth, I think you mentioned at 31%.

Is the variance just price, or is there a capital component that I'm forgetting here?.

So -- there's not a capital component. Two things, there is a price. So the new AngioVac 3.0 is priced at a higher price point in the market. That’s some of it. And also, Jayson, I think we have new people coming on utilizing the product, as I said earlier. Sometimes they are buying a few devices before they do the first treatment.

So a little bit of both. Those will get closer together over time. We think -- and we're really, really focused on our procedural growth to us that's very important. But in this case, you are seeing really strong numbers on procedures and on the actual revenue and you identified pretty much why.

Again, ASP and again people buying the new technologies, stocking it on the shelf..

Thank you..

Thank you. I would now like to turn the call back over to Mr. Clemmer for any closing remarks..

So thank you for listening to our call today. We appreciate your interest in our company. If you go back to the comments that we've made publicly over the past 18 to 24 months, we talked about changing our portfolio as one of the most significant ways that we will drive value at AngioDynamics.

Over the past 18 months, we've now made five moves with our portfolio. We've divested one asset that we don't think we were the rightful owner of going forward, and we've acquired four assets. This morning with the C3 Wave tip being our fourth. Those are really important for us in a number of ways.

We are now competing in markets with higher total addressable markets for us to compete in, they're healthier and faster growing and they also offer us a chance to let our technology innovation shine.

So we're really pleased and hopefully you will see that our actions have at least met the words that we've used to identify our transition as a company and we couldn't do that without the scores of people that work here, people who've joined our company, being part of this, they drive, our outcomes with our patients and our outcomes with our customers and caregivers.

We are pleased with our results and we look forward to sharing you our Q3 soon. Thank you for your time this morning..

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation..