ANGIODYNAMICS INC (ANGO) stock intrinsic value fair value estimate & owner earnings analysis

AngioDynamics is a New York medical device maker that sells to hospitals, mostly in the United States. It has two halves. Med Tech ($150.0M of sales in the year ended May 2026, up 18.4%, 63.6% gross margin) holds its three growth products: the Auryon laser for clearing blocked leg arteries, the AngioVac and AlphaVac systems for removing blood clots, and NanoKnife, which destroys tumours with electrical pulses. Med Device ($170.2M, up 2.6%, 46.7% gross margin) is the older line of ports, catheters and venous products. Total sales were $320.2M. The company has no bank debt, about $54M of cash, and an undrawn $25M credit line with JPMorgan. The business has changed shape twice. It sold its profitable fluid-management business (NAMIC) in May 2019 and its dialysis and BioSentry lines to Merit Medical in June 2023. Before 2019 it produced about $22-29M a year of owner earnings (cash from operations after stock pay, capital spending needed to stay in business, and with working-capital swings removed). Since 2020 it has produced none: every year from 2021 to 2026 lost between $7M and $16M on that basis. We start from the median of those years, about -$0.32 a share (-$13M a year). We leave out 2024, which was distorted by the Merit sale and a $19.3M legal settlement with BD. We count stock pay as a real cost. We treat placement consoles loaned to hospitals as capital spending, because they are needed to keep selling the disposables. Why the losses could turn. Two dated facts in the 2026 annual report point to change. First, the move of most manufacturing out of Queensbury, NY to contract manufacturers cost $13.1M in 2026 and $13.8M in 2025. The company says this work finishes in the quarter ending August 2026, so those costs should stop. Second, the company expects the move to save $15M a year starting in fiscal 2027. We do not take that figure at face value. The finish date has already slipped from the March 2026 quarter to the August 2026 quarter, so we give partial credit. Beyond that, Med Tech has grown 18-19% a year for two years, and it has new support behind it: Medicare coverage for NanoKnife in prostate and liver cancer (Palmetto, effective July 5, 2026), two-year prostate results published from the PRESERVE trial, a wider FDA-cleared use for AlphaVac, and new trials starting (AMBITION BTK, RECOVER-AV, PAVE, APEX-Return, RELIEF BPH). The company also carries $189M of federal tax losses, which should keep it from paying much cash tax for years once it turns profitable. Base case, about $10.61 a share. Med Tech growth slows from 14% next year to 6% by year ten. Med Device shrinks about 1% a year as ports soften. Restructuring costs end after one more quarter. Savings reach $4M next year and $12M a year from year three, against $15M promised. Operating costs grow at 80% of the sales growth rate. That is only slightly better than 2026, when costs rose 8.8% against 9.5% sales growth. On that path owner earnings go from about -$13M to roughly +$4M in fiscal 2027, +$25M by year three and about $43M by year ten on roughly $530M of sales. After year ten we hold earnings flat for ten years, then fade them to zero over another ten. The reasoning: the clearances, coverage and trial data behind these products last, but device product cycles do not, and the company's own record is one of repeatedly selling or dropping product lines. Bear case, about $0.74 a share. Med Tech growth drops to mid-single digits as larger competitors push in clot removal and artery clearing. Med Device shrinks 3% a year. Only about $6M of the savings arrive, and costs keep rising as fast as sales, just as they did from 2021 to 2026, when Med Tech grew but the losses did not narrow. In this case the company hovers around breakeven, never uses its tax losses, and its earning power fades out over ten years. It is barely worth anything as a business, though it does not owe more than it is worth, because it has no bank debt. Bull case, about $19.88 a share. Med Tech keeps growing 18% next year and slows to 8% only by year ten, helped by the NanoKnife prostate coverage and wider AlphaVac use. Med Device holds flat. The full $15M of savings arrives by year two, and costs grow at 70% of the sales rate. Owner earnings reach about $77M by year ten, and we hold them for fifteen years before fading. The wide gap between these cases comes from one question. Will the growth products finally make the company profitable, or will spending keep pace with sales as it has for six years? The whole case rests on the restructuring savings and the end of plant-closure costs showing up in the fiscal 2027 results. If fiscal 2027 cash flow is still negative after capital spending once those costs have stopped, the base case is wrong and the bear case is the better guide. All value comes from future earnings. We did not add the cash to the value, and we did not subtract anything for debt, because there is none.