Oct. 7--QUEENSBURY -- Earnings slid 4.5 percent in the first quarter for medical device maker AngioDynamics Inc. due to competitive pricing and increased operating expenses.

On Tuesday, the company reported a profit of $2.1 million, or 9 cents per share, for the quarter that ended Aug. 31. The results didn't stack up to the same period last year, but they did beat consensus estimates for earnings per share.

Revenue was also higher than expected, with a 13 percent increase in sales for the quarter, to $50.1 million. Company officials said the boost was concentrated in the oncology/surgery business unit, where revenue increased 25 percent.

AngioDynamics didn't get quite as much bang for its sales buck, however. The gross margin dropped almost 2 points, to about 60 percent.

In an investor conference call Tuesday, President and Chief Executive Jan Keltjens blamed the decline on increased expenses in sales and marketing, as well as an ongoing investment in the technology for its tumor-zapping NanoKnife device.

Keltjens also said that inventory was driven up by supply agreements, and he hopes to whittle down the excess. He expects inventory control and increased operational efficiency to improve the margin by the end of the fiscal year.

Keltjens cited as an example the recent relocation of manufacturing for FloMedica products, which the company acquired in January, from California to Queensbury.

"Albeit small, once completed, this transfer should contribute to increasing gross margins," Keltjens said.

Company officials pointed to the launch of four new products in the first quarter, and said they are on track to bring another seven to market in the fiscal year.

Since taking over the company on March 1, Keltjens has laid out a plan to bring focus to the various business units and increase manufacturing and supply chain efficiency.

He said the first-quarter sales growth was stronger than he expected.

"We like this quarter a lot, and we don't think it's a coincidence," Keltjens said.

Other highlights for the quarter included appointing a senior vice president for the peripheral vascular business unit, the treatment of 20 patients using the NanoKnife since mid-July, progress with FDA approval for the device, and site selection for a new headquarters in Latham.

Looking ahead, the firm plans to create an international business unit and has already tapped a manager to lead it. Keltjens said the appointment would be announced later this month.

AngioDynamics narrowed its fiscal 2010 guidance on earnings per share and revenue, raising the low end for both.

The company's stock fell 16 cents per share to close at $13.85 Tuesday, but recouped that loss and then some during after-hours trading. As of 6 p.m. Tuesday, the company's stock was up 25 cents from closing to $14.10.

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