AngioDynamics Inc. ANGO reported adjusted earnings of 15 cents per share in the third quarter of fiscal 2016, which beat the Zacks Consensus Estimate by a couple cents and also increased 25% on a year-over-year basis.Earnings also surpassed AngioDynamics’ guided range of 10–14 cents. The year-over-year growth in earnings can be primarily attributed to higher sales and expanding margins. Sales inched up 1% on a year-over-year basis to $87.4 million and were higher than the Zacks Consensus Estimate of $85 million. Angiodynamics Inc. (ANGO) EPS BNRI & Surprise Percent - Last 5 Quarters | FindTheCompany Sales also beat management’s guided range of $84–$87 million. Adjusted for constant currency and the impact of the recalled Morpheus PICC product, sales increased 3% from the year-ago quarter.International net sales were $17.2 million, slightly down from $17.3 million reported in the year-ago quarter. On a constant currency basis, international sales grew 3%. U.S. sales increased 1.6% to $69.5 million.Segment DetailsPeripheral Vascular (PV) business sales increased 7.8% year over year to $49.8 million, driven by strong growth from thrombus management and venous. AngioVac sales improved 28% on a year-over-year basis primarily buoyed by an increase in procedures and easy year-ago quarter comparison.However, management noted that the stellar growth performance will not be easy to maintain in the near term, as the market for the product continues to develop. On a year-to-date basis, AngioVac sales grew 13%.AngioDynamic generated nearly $1 million of Sotradecol revenues in the reported quarter, which was originally anticipated in the fourth quarter.Meanwhile, the company entered into an agreement with Merz North America to serve as the exclusive distributor of Asclera, a polidocanol injection within the vein market in the U.S. used for the treatment of spider and varicose veins.Sales from the company’s Fluid Management (FM) business increased 7% in the U.S. while venous laser sales surged 30% in the quarter.Vascular Access (VA) sales declined 5.7% year over year to $24.9 million. Excluding the Morpheus product line, VA sales dropped 2%. BioFlo sales grew 21% in PICCs, 33% in ports and 68% in dialysis. BioFlo now represents 42% of total VA sales and 73% of PICC revenues, 17% of ports and 19% of dialysis.AngioDynamics no longer expects FDA approval for Celerity Navigation this fiscal. We believe that the delay will increase challenges for the company in its non-BioFlo VA business, which has been a drag for quite some time.Sales at the Oncology/Surgery business decreased 8.4% from the year-ago quarter to $12 million. NanoKnife disposables rose 10% worldwide including 14% in the U.S. Microwave disposables were up 16% worldwide and 21% in the U.S. However, NanoKnife capital sales continued to disappoint in the quarter.Operational DetailsAdjusted gross margin expanded 30 basis points (bps) to 49.8% in the quarter. Operational excellence program and changes in inventory reserves contributed 100 bps of improvement, which was largely offset by 50 bps of price and 30 bps of foreign currency headwinds.Adjusted EBITDA was almost $14 million as compared with $13.3 million in the year-ago quarter. The company spent $750K per quarter on its sales force, which has been offset by other cost reductions including currency benefit.During the quarter, AngioDynamics decided to temporarily halt the final transition of manufacturing from Queensbury to Glens Falls. However, the company has recommenced the consolidation process which is scheduled to complete in fiscal 2017.GuidanceManagement revised its net sales projection for fiscal 2016, which is now expected in the range of $347–$350 million, as compared to the previous guidance of $353–$359 million. The new projection reflects growth of 1%–3%, excluding the impact of the Morpheus product discontinuation and currency headwinds.Apart from challenges associated with the VA business and lower NanoKnife capital sales, delay in regulatory clearances in the Asian markets dragged down the guidance.Adjusted earnings in fiscal 2016 are projected in the band of 54–58 cents per share compared with the previous range of 59–63 cents.Sales for the fourth quarter of fiscal 2016 are expected in the range of $87–$90 million, while adjusted earnings are likely to be between 14 cents and 18 cents.The earnings growth rate is expected to be higher than the growth in sales, primarily because of cost curtailment initiatives. Management maintains its free cash flow projection at $30 million for fiscal 2016.Management believes that the company’s gross margin will improve by roughly 100–200 bps in the fourth quarter of the current fiscal, owing to increased sales of higher margin products.Our TakeWe believe that an expanding portfolio that includes products like AngioVac, Bioflo and NanoKnife significantly enhances AngioDynamics’ market opportunities. The company continues to enjoy healthy demand for its coveted NanoKnife system for treating tumors.However, we are not encouraged by management’s trimmed guidance. We feel this might weigh on investor confidence. The delay in Celerity with navigation approval, weakness at the VA segment and lack of NanoKnife capita sales are headwinds that will impact results in the near term.Zacks Rank and Other Key PicksCurrently, AngioDynamics holds a Zacks Rank #2 (Buy). Other favourably ranked stocks in the medical space are LeMaitre Vascular LMAT, Orthofix International OFIX and AMAG Pharmaceuticals AMAG. All the stocks sport a Zacks Rank #1 (Strong Buy). Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ANGIODYNAMICS (ANGO): Free Stock Analysis Report AMAG PHARMA INC (AMAG): Free Stock Analysis Report ORTHOFIX INTL (OFIX): Free Stock Analysis Report LEMAITRE VASCLR (LMAT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research