Dive Brief:

• Medical device maker AngioDynamics reported a net loss of $0.5 million in the first quarter of fiscal 2019, missing some analyst's expectations. It posted a net loss of $36,000 in the first quarter of 2018.

• With revenue essentially flat from the previous year, the company's gross margins increased from 48.2% to 52.1% year over year. It said it expects to increase margins, and finish the fiscal year between 54% and 56%.

• Company officials said AngioDynamics' two recent acquisitions, RadiaDyne's OARtrac and the BioSentry Tract Sealant System from Surgical Solutions, signal a shift in investment to the oncology section of the business.

Dive Insight:

Several factors influenced AngioDynamics performance in the first quarter outside of sales. One was the acquisitions of RadiaDyne and Surgical Solutions.

RadiaDyne makes balloon stabilization devices, which help to keep organs from moving around during radiation procedures.It also makes OARtrac, a FDA-cleared system that gives physicians real-time dosing data in the application of adaptive radiotherapy.

Surgical Solutions' BioSentry Tract Sealant is a hydrogel plug, which closes the area around a puncture of the lungs during a biopsy. Such a seal reduces the risk of pneumothorax, aka a collapsed lung, which occurs when air leaks out of a patient’s lung and into the surrounding abdomen.

Grenier said he does not expect these acquisitions to produce earnings in 2019, but expects to see them experience 50% revenue growth in fiscal year 2020. The acquisitions are both in the oncology business, indicating that AngioDynamics is shifting focus increasingly to that area.

"Today, now we’re really an oncology company," CEO James Clemmer told analysts on the earnings call. Still, oncology represented only $11.6 million of the company’s $85.3 revenue in the first quarter, with vascular interventions, therapies and access making up the other $73.8 million.

The other factor that impacted AngioDynamics'  performance in the quarter was the payment of nearly $13 million to the U.S. government to settle allegations that it caused healthcare providers to submit false claims to federal healthcare programs over the use of two medical devices.

AngioDynamics posted gross margins of 52.1% in the first quarter, up 3.8% from last year.

"This improvement was primarily attributable to all the work we’ve done over the past 18 months around facility consolidations, the expiration of a royalty arrangement, and our continued operational and supply chain improvements," Grenier said.

He said he expected margins to be higher in the next three quarters, resulting in an expected gross margin between 54-56% for the fiscal year.

Sales of AngioDynamics stock fell nearly 11% following its earnings release, to $21.60.