Despite Market Pullback, AngioDynamics Posts Margin Expansion in Q2 Fiscal 2026

AngioDynamics (ANGO) delivered mixed signals to the market this earnings season. While the company crushed expectations on revenue and margin performance, investors punished the stock with a near 13.5% sell-off. Here’s what drove the divergence between operational success and stock underperformance.

The Numbers That Matter

On a pro-forma basis, AngioDynamics generated net sales of $79.4 million in the second quarter of fiscal 2026, representing 8.8% year-over-year growth and beating consensus estimates by 4.5%. The company swung to breakeven adjusted EPS, a stark improvement from the prior-year’s 4-cent loss and well ahead of the expected 10-cent loss.

What really caught analysts’ attention was the gross margin story. Pro-forma gross profit climbed 14% to $44.8 million, while gross margin expanded 170 basis points to 56.4%—beating the projected 54.2% by a meaningful margin. This improvement underscores ANGO’s success with manufacturing optimization and product mix enhancement.

Geographic and Segment Breakdown

Domestically, U.S. revenues totaled $67.6 million, up 7.8% year-over-year and outpacing the $62.3 million estimate. International operations contributed $11.8 million, matching the 8.8% growth rate and exceeding the $10.2 million projection.

The Med Tech segment emerged as the growth driver with pro-forma sales of $35.7 million, up 13% and surpassing the $32.7 million expectation. Auryon, AngioDynamics’ flagship atherectomy platform, delivered $16.3 million in revenue—an 18.6% year-over-year jump that marks its 18th consecutive quarter of double-digit expansion. NanoKnife chipped in $7.3 million (up 22.2%), while mechanical thrombectomy revenues reached $11 million with notable strength in AlphaVac, which surged 40.2% to $3.5 million.

Med Device revenues totaled $43.8 million, up 5.6% versus the prior year and exceeding the $39.9 million projection.

Why the Stock Got Hammered

Despite beating on nearly every metric, shares cratered. The culprit appears twofold: (1) operating expenses on a pro-forma basis remained essentially flat year-over-year at $50.9 million, meaning margin expansion didn’t flow through to the bottom line, and (2) the company guided to fiscal 2026 revenue of $312-$314 million (up from $308-$313 million), but net margin expectations remain pressured by tariff headwinds estimated at $4-6 million.

Operating loss on a pro-forma basis improved to $6.1 million from $11.1 million a year ago, but the company projects adjusted EPS between 23 cents and 33 cents of losses for full-year fiscal 2026—potentially disappointing investors betting on profitability inflection.

Balance Sheet and Forward Guidance

Cash and equivalents reached $41.6 million, up from $38.8 million last quarter, with zero debt on the balance sheet. Operating cash burn improved to $11.3 million cumulatively versus $15.8 million a year ago.

Looking ahead, AngioDynamics expects Med Tech revenue growth in the 14-16% range, while Med Device is now guided to flat-to-1% growth. Management’s continued acknowledgment of tariff impacts suggests near-term margin challenges persist despite operational improvements.

The Bottom Line

AngioDynamics proved its operational execution this quarter—strong revenue growth, impressive margin expansion, and Auryon’s sustained momentum paint a picture of a company successfully shifting its mix toward higher-margin platforms. Yet the market’s response reflects concern about when operational leverage actually translates to earnings. Until ANGO reaches true profitability or demonstrates clearer bottom-line acceleration, the stock may face headwinds despite improving fundamentals.