Acquisitions and Divestitures - Avanos Medical, Inc. reported a purchase price of approximately $53.0 million for the acquisition of Diros Technology Inc., with an additional contingent cash consideration of up to $7.0 million based on performance objectives[14]. - The company completed the acquisition of OrthogenRx, Inc. for a purchase price of $130.0 million, aimed at expanding its portfolio in knee pain treatments[15]. - Avanos divested its Respiratory Health business for $110.0 million in cash, part of a three-year transformation process initiated in January 2023 to focus on core markets[16][17]. - The company acquired $33.4 million of goodwill in conjunction with the acquisition of Diros Technology Inc.[279]. - The total purchase price for the OrthogenRx Acquisition was $130.0 million in cash, with an additional $30.0 million contingent on net sales growth during 2022 and 2023[309]. Financial Performance - Net sales for the year ended December 31, 2024, were $687.8 million, a slight increase from $673.3 million in 2023[229]. - Gross profit for 2024 was $381.3 million, compared to $379.7 million in 2023, indicating a stable gross margin[229]. - The company reported a net loss of $392.1 million in 2024, significantly higher than the net loss of $61.8 million in 2023[231]. - Operating loss for 2024 was $396.2 million, a decline from an operating income of $4.2 million in 2023[229]. - The company’s accumulated deficit grew to $707.0 million in 2024 from $314.9 million in 2023, highlighting ongoing financial challenges[234]. - Total stockholders' equity decreased to $828.5 million in 2024 from $1,236.3 million in 2023, reflecting the impact of net losses[234]. - The company incurred a goodwill and intangibles impairment of $436.7 million in 2024, which significantly impacted overall financial performance[229]. - Cash provided by operating activities increased to $100.7 million in 2024 from $32.4 million in 2023[237]. - The total income (loss) before income taxes was $(403.3) million, a significant decline from $(7.9) million in 2023[327]. - The effective tax rate for 2024 was 4.2%, compared to (25.3)% in 2023, indicating a substantial change in tax liabilities[330]. Research and Development - Research and development costs were $26.2 million in 2024, down from $27.2 million in 2023 and $29.2 million in 2022, indicating a trend in cost management[25]. - The company launched two new products in the global market in 2024, reflecting ongoing innovation efforts[24]. - Research and development expenses decreased to $26.2 million in 2024 from $27.2 million in 2023[229]. - Research and development expenses are expensed as incurred, primarily consisting of salaries, product trial costs, and laboratory fees[262]. Market and Sales Strategy - Approximately 50% of net sales in North America were made through distributors in 2024, with sales to McKesson Corporation and Medline Industries accounting for 18% and 17% of consolidated net sales, respectively[20]. - In 2024, approximately 28% of global net sales were contracted through Group Purchasing Organizations (GPOs), highlighting the importance of these agreements in sales strategy[22]. - The company faced significant competition in both U.S. and international markets, particularly from major players like Boston Scientific Corporation and Medtronic plc in its key segments[23]. - Digestive Health product sales increased to $396.4 million in 2024 from $371.6 million in 2023, while Pain Management and Recovery sales decreased to $291.4 million from $301.7 million[365]. - The company had net sales to external customers in the United States of $529.1 million in 2024, up from $467.0 million in 2023[371]. Compliance and Regulatory Environment - Compliance with healthcare regulations significantly increases the time, difficulty, and costs associated with obtaining and maintaining product approvals, particularly in the U.S. where 510(k) clearance is required[31]. - The EU Medical Device Regulation (EU MDR) adopted in 2021 mandates re-certification of many products to enhanced standards, with a transition period ending December 31, 2027, or December 31, 2028, depending on device classification[33]. - The company is committed to compliance with environmental, health, and safety regulations, although future changes in laws may incur additional costs[41]. Employee and Demographics - Employee demographics as of December 31, 2024, show a total of 2,227 global employees, with 55.6% located in Mexico and 35.3% in the United States[43]. - Women represent 49.6% of global salaried employees, while 30.8% of U.S. salaried employees are ethnically diverse[52]. - The company has implemented a multi-tiered employee retention strategy, including enhanced compensation and flexible work arrangements[47]. Financial Risks and Currency Management - A one percentage point increase in SOFR could result in an incremental interest expense of $3.8 million if the senior secured revolving credit facility of $375 million is fully drawn for the entire year[220]. - A 10% change in foreign currency exchange rates could impact the consolidated financial position by approximately $0.9 million based on balance sheet transactional exposures as of December 31, 2024[223]. - A 10% change in exchange rates could affect stockholders' equity by approximately $15.3 million due to translation adjustments of non-U.S. operations[225]. - The company employs derivative instruments for risk management purposes to mitigate foreign currency and commodity price risks[218]. - The company began entering into derivative instruments to hedge forecasted cash flows in Mexican pesos, with a derivative liability of $0.6 million as of December 31, 2024[358]. - The aggregate notional values of outstanding foreign currency swap contracts designated as cash flow hedges were $3.6 million as of December 31, 2024[359]. Assets and Liabilities - Total assets decreased to $1,154.2 million in 2024 from $1,692.4 million in 2023, reflecting a significant reduction in goodwill and intangible assets[233]. - Cash and cash equivalents increased to $107.7 million in 2024 from $87.7 million in 2023, indicating improved liquidity[233]. - The liability for estimated distributor rebates rose to $13.3 million in 2024 from $10.4 million in 2023, reflecting approximately 54% of consolidated net sales[256]. - The liability for estimated incentives increased to $10.9 million in 2024 from $7.3 million in 2023, with approximately 28% of consolidated net sales contracted through group purchasing organizations[257]. - Total estimated liabilities for accrued rebates and incentives were $24.3 million, up from $17.8 million in 2023[366]. Impairments and Restructuring - In the fourth quarter of 2024, the company recorded an impairment loss of $100.2 million on the HA asset group due to lower net sales and margin expectations[276]. - During the fourth quarter of 2024, the company recorded a goodwill impairment of $336.5 million, reflecting a decrease in market capitalization[277]. - The total restructuring costs for the year ended December 31, 2024, amounted to $8.1 million, with $8.9 million incurred for the post-RH Divestiture Restructuring Plan[281]. - The company expects to incur between $10.0 million and $11.0 million in cash expenses related to the post-RH Divestiture restructuring plan, expected to be completed by the end of 2025[282]. - The restructuring liability balance at the end of 2024 was $3.8 million, compared to $2.3 million at the end of 2023[288].

Avanos Medical Inc. (NYSE:AVNS) Q4 2024 Earnings Conference Call February 26, 2025 9:00 AM ET Company Participants Scott Galovan - Vice President of Strategy & Corporate Development Michael Greiner - Interim Chief Executive Officer Conference Call Participants Danny Stauder - Citizens GMP Operator Good morning, ladies and gentlemen. Welcome to the Avanos Medical, Inc. fourth quarter 2024 earnings call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question an ...

Avanos Medical (AVNS) came out with quarterly earnings of $0.43 per share, beating the Zacks Consensus Estimate of $0.40 per share. This compares to earnings of $0.36 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 7.50%. A quarter ago, it was expected that this medical technology company would post earnings of $0.36 per share when it actually produced earnings of $0.36, delivering no surprise.Over the last four quarters, the ...

Financial Performance - Fourth quarter net sales from continuing operations totaled $179.6 million, a 3.6% increase from the prior year[5] - For the full year, net sales from continuing operations increased 2.2% to $687.8 million[10] - Fourth quarter diluted loss per share from continuing operations was $8.63, compared to diluted earnings per share of $0.24 a year ago[5] - Adjusted EBITDA for the fourth quarter was $28.6 million, compared to $32.1 million in the prior year[9] - Free cash flow for the fourth quarter was $53.1 million, compared to an outflow of $3.4 million in the same quarter last year[15] - The company expects 2025 net sales to be between $665 million and $685 million, with adjusted diluted earnings per share expected to be between $1.05 to $1.25[18] - Operating loss in 2024 was $396.2 million, compared to operating profit of $4.2 million in the prior year[13] - The company reported a net loss of $397.3 million for the three months ended December 31, 2024, compared to a net income of $10.5 million in the same period of 2023[31] - The adjusted non-GAAP operating profit for the year ended December 31, 2024, was $79.6 million, a decrease of 21.4% from $101.1 million in 2023[40] - The company reported a total operating loss of $403.9 million for the year ended December 31, 2024, compared to a total loss of $46.8 million in 2023[40] Impairments and Charges - The company recorded a non-cash impairment charge of $436.7 million during the fourth quarter due to revised revenue and margin projections[14] - The company incurred a goodwill and intangibles impairment of $436.7 million for the year ended December 31, 2024[31] - Goodwill and intangibles impairment for the year ended December 31, 2024, amounted to $436.7 million, with no corresponding impairment reported in 2023[40] - The company incurred restructuring and transformation charges of $6.0 million for the three months ended December 31, 2024, compared to $5.2 million in the same period of 2023[37] - Acquisition and integration-related charges for the year ended December 31, 2024, were $4.2 million, up from $3.3 million in 2023[40] Sales and Revenue Breakdown - Digestive health segment reported net sales of $105.8 million for Q4 2024, an increase of 11.6% compared to $94.8 million in Q4 2023[58] - Total Pain Management and Recovery segment saw a decline in Q4 2024 net sales to $73.8 million, down 6.0% from $78.5 million in Q4 2023[58] - Total net sales for Q4 2024 reached $179.6 million, reflecting a 3.6% increase from $173.3 million in Q4 2023[58] - Year-to-date (YTD) total net sales for 2024 were $687.8 million, a 2.2% increase from $673.3 million in 2023[58] - The percentage change in net sales for QTD was driven by a volume increase of 6.2%, offset by a pricing/mix decline of 3.0%[58] - Interventional pain segment reported a slight increase in Q4 2024 net sales to $43.5 million, up 1.4% from $42.9 million in Q4 2023[58] - Surgical pain and recovery segment experienced a decline in Q4 2024 net sales to $30.3 million, down 14.9% from $35.6 million in Q4 2023[58] - The total pain management and recovery segment's YTD sales decreased to $291.4 million, down 3.4% from $301.7 million in 2023[58] Cash Flow and Debt - As of December 31, 2024, net debt was $27.0 million, down from $80.3 million in the prior year[5] - Cash provided by operating activities for the year ended December 31, 2024, was $100.7 million, up from $32.4 million in 2023[56] - The company had cash and cash equivalents of $107.7 million as of December 31, 2024, compared to $87.7 million in 2023[54] - Free cash flow for the three months ended December 31, 2024, was $53.1 million, compared to a negative free cash flow of $3.4 million in the same period of 2023[50] Margins and Expenses - Gross margin for 2024 was 55.4%, compared to 56.4% in 2023[11] - Gross profit for the same period was $98.0 million, compared to $95.0 million in 2023, reflecting a gross profit margin of 54.6%[31] - Selling, General and Administrative (SG&A) expenses for the three months ended December 31, 2024, were $79.7 million, up from $73.8 million in the same period of 2023[46] - SG&A as a percentage of revenue, as reported, was 44.4% for the three months ended December 31, 2024, compared to 40.9% in 2023[46] - The gross profit margin as adjusted for the year ended December 31, 2024, was 59.0%[35] Tax and Compliance - The effective tax rate for the year ended December 31, 2024, as reported, was 24.7%, compared to an effective tax rate of -4.9% for 2023[42] - The company expects continued focus on EU MDR compliance, with related costs of $6.2 million for the year ended December 31, 2024[44] - EU MDR Compliance related charges for the three months ended December 31, 2024, were $1.8 million, compared to $0.9 million in 2023[40]

Core Viewpoint - Avanos Medical, Inc. reported a challenging financial performance for the fourth quarter and full year of 2024, with significant losses attributed to transformation initiatives and impairment charges, while maintaining a focus on organic growth and cash flow generation [2][19]. Financial Highlights - Fourth quarter net sales reached $179.6 million, a 3.6% increase year-over-year, driven by strong performance in the digestive health portfolio and interventional pain portfolio [5][10]. - For the full year 2024, net sales from continuing operations increased by 2.2% to $687.8 million [11]. - The company generated $83 million in free cash flow for the year, with fourth quarter free cash flow of $53.1 million, a significant improvement from an outflow of $3.4 million in the previous year [2][15]. Operating Results - The gross margin for the fourth quarter was 54.6%, slightly down from 54.8% a year ago, while the adjusted gross margin improved to 58.7% [6][11]. - Operating loss for the fourth quarter was $418.5 million, compared to an operating profit of $11.2 million in the same quarter of 2023, primarily due to a goodwill impairment charge of $436.7 million [8][14]. - Adjusted EBITDA for the fourth quarter was $28.6 million, down from $32.1 million in the prior year [8]. Earnings Per Share - Fourth quarter diluted loss per share from continuing operations was $8.63, compared to earnings of $0.24 per share a year ago [10]. - For the full year, diluted loss per share from continuing operations was $8.40, compared to a loss of $0.21 in 2023, while adjusted diluted earnings per share improved to $1.35 from $1.03 [10][13]. Cash Flow and Balance Sheet - As of December 31, 2024, the company's cash balance was $107.7 million, up from $87.7 million at the end of 2023, with total debt of $134.7 million [16]. - Net debt decreased to $27 million from $80.3 million in the prior year, reflecting improved cash flow management [10]. 2025 Outlook - The company expects net sales for 2025 to be between $665 million and $685 million, with adjusted diluted earnings per share projected between $1.05 and $1.25 [18][19]. - The guidance reflects anticipated challenges in certain product categories and currency headwinds, with a commitment to long-term strategy and margin improvement [19].

Core Points - Avanos Medical, Inc. will host a conference call on February 26, 2025, at 9 a.m. ET to discuss its financial results and business highlights for Q4 and full year 2024 [1] - A news release detailing the financial results will be issued before the market opens on the same day [1] - The call will be led by Michael Greiner, interim CEO, and Scott Galovan, senior VP of strategy and corporate development [1] Access Information - Participants can join the conference call by registering through a provided link or by dialing specific phone numbers [2] - A simultaneous webcast will be available on the Avanos Medical website, with a replay accessible within two hours after the call [3] Company Overview - Avanos Medical is a medical technology company focused on providing clinically superior medical device solutions [4] - The company aims to address significant healthcare needs, including nutrition support for patients and reducing opioid use during recovery [4] - Avanos develops, manufactures, and markets its products globally, holding leading market positions in various categories [4]

Company Overview - Avanos Medical (AVNS) shares increased by 7.2% to $16.95, with a notable trading volume, contrasting with a 0.7% loss over the past four weeks [1] - The company is experiencing growing market optimism due to its strategic positioning in the medical device sector, impressive revenue growth, and consistent profitability [2] Financial Performance - Avanos is expected to report quarterly earnings of $0.40 per share, reflecting an 11.1% year-over-year increase, with revenues projected at $177.72 million, a 2.6% rise from the previous year [3] - The consensus EPS estimate for Avanos has remained unchanged over the last 30 days, indicating stability in earnings expectations [4] Market Sentiment - The recent surge in Avanos' stock price is attributed to increased demand for its advanced medical solutions and ongoing investments in product innovation [2] - Investors are optimistic about Avanos' ability to capture market share and drive future earnings growth as the healthcare sector prioritizes innovative and cost-effective solutions [2] Industry Context - Avanos Medical is part of the Zacks Medical - Instruments industry, which includes other companies like Alcon (ALC), that also experienced a stock increase of 2.7% [4] - Alcon's consensus EPS estimate has seen a slight decrease of 0.4% over the past month, indicating a stable outlook similar to Avanos [5]

Core Viewpoint - Avanos Medical, Inc. is positioned for growth due to its strong product line and focus on research and development, despite facing macroeconomic challenges and foreign exchange volatility [1][12][13] Company Performance - For the year-to-date period, Avanos' stock has decreased by 29.8%, while the industry rose by 3.5% and the S&P 500 grew by 12.1% [1] - The company reported a market capitalization of $744.5 million and an earnings yield of 10.7%, which is favorable compared to the industry's negative yield [2] Growth Drivers - Avanos has a solid product portfolio, particularly in Digestive Health and Pain Management, which includes products like MIC-KEY enteral feeding tubes and non-opioid pain solutions [3] - The Digestive Health segment showed strength with double-digit growth in the NeoMed product line and strong demand for ENFit conversions in North America [4][10] - The legacy enteral feeding business maintained healthy growth, and the company anticipates continued above-market growth due to product innovations and global market expansion [5] Sales and Revenue Insights - In Q3 2024, net sales decreased by 0.5% to $170.4 million, but organic sales increased by 1.1% despite unfavorable foreign currency translation effects [14] - The Pain Management and Recovery segment saw normalized organic sales rise approximately 1%, with growth in ambIT partially offsetting supplier constraints affecting On-Q growth [6] Research and Development Focus - Avanos is committed to R&D, with expenses increasing by 18% year over year to $7.2 million in Q3 2024, aiming to enhance product efficiency and security [9] Future Outlook - The Zacks Consensus Estimate for Avanos' earnings in 2025 has improved by nearly 3% to $1.73 per share, with first-quarter 2025 revenue estimates at $173.5 million, indicating a 4.5% year-over-year improvement [15]

Group 1 - Avanos Medical, Inc. (AVNS) has been added to the Zacks Rank 5 (Strong Sell) List, with a 5% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Atlanta Braves Holdings, Inc. (BATRK) is also on the Zacks Rank 5 (Strong Sell) List, experiencing a significant 187.1% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Elevance Health, Inc. (ELV) has seen a 10.9% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2]

Core Viewpoint - Avanos Medical, Inc. will have its interim CEO, Michael Greiner, participate in an analyst-led fireside chat at the Stifel 2024 Healthcare Conference on November 19, 2024 [1] Company Overview - Avanos Medical, Inc. is a medical technology company headquartered in Alpharetta, Georgia, focused on delivering clinically superior medical device solutions [3] - The company addresses critical healthcare needs, including providing nutrition support for patients transitioning from hospital to home and reducing opioid use during recovery [3] - Avanos develops, manufactures, and markets recognized brands globally, holding leading market positions across multiple categories [3]