Avanos Medical(US:AVNS)2025-11-05 12:01Financial Performance - Net sales for Q3 2025 totaled $177.8 million, a 4.3% increase compared to the prior year period, driven by higher volume in both Specialty Nutrition Systems and Pain Management and Recovery segments [5]. - Adjusted net income for Q3 2025 was $10.1 million, down from $16.7 million a year ago, while adjusted diluted earnings per share decreased to $0.22 from $0.36 [8]. - The company reported a net loss of $1.4 million for Q3 2025, compared to net income of $5.9 million in the same period last year [8]. - Operating profit for Q3 2025 was $0.1 million, significantly lower than the $12.0 million reported in the prior year, with adjusted operating profit at $15.2 million compared to $25.3 million last year [6]. - For the nine months ended September 30, 2025, net sales were $520.3 million, an increase from $508.2 million in the same period of 2024 [34]. - The total net income for the nine months ended September 30, 2025, was $5.2 million, with a reported loss of $71.6 million [46]. - The company reported a basic loss per share of $0.03 for the three months ended September 30, 2025, compared to earnings of $0.10 per share in the same period of 2024 [34]. - The diluted earnings per share, as adjusted, for the three months ended September 30, 2025, was $0.33 [46]. Segment Performance - Specialty Nutrition Systems segment achieved net sales of $114.0 million, reflecting a $15.8 million increase and 14.0% volume growth due to strong demand in enteral feeding and neonate solutions [9]. - Pain Management & Recovery segment net sales were $59.0 million, a $1.2 million increase, with Radio Frequency Ablation products growing 10.5% [11]. - Specialty Nutrition Systems reported total net sales of $114.0 million for the three months ended September 30, 2025, a 16.1% increase compared to $98.2 million in the same period of 2024 [60]. - Enteral feeding sales increased by 14.9% to $82.7 million in Q3 2025, while neonate solutions grew by 19.5% to $31.3 million [60]. - Pain Management & Recovery segment saw total net sales of $59.0 million, a slight increase of 2.1% from $57.8 million in Q3 2024 [60]. - Surgical pain and recovery sales decreased by 7.9% to $24.4 million, while Radiofrequency Ablation sales increased by 10.5% to $34.6 million [60]. - Year-to-date net sales for Specialty Nutrition Systems increased by 9.4%, driven by a 9.1% volume increase [60]. - The Pain Management & Recovery segment experienced a year-to-date sales growth of 1.6%, with a volume increase of 2.4% [60]. - Corporate and other segment's year-to-date sales declined by 40.6%, primarily due to the withdrawal from certain revenue streams [61]. Guidance and Future Outlook - The company raised and narrowed its 2025 estimated revenue guidance to between $690 million and $700 million, and adjusted diluted earnings per share guidance to a range of $0.85 to $0.95 [21]. - The company plans to continue focusing on restructuring and transformation charges, with an estimated range of $0.10 to $0.12 for post RH-Divestiture restructuring charges in 2025 [54]. Cash Flow and Debt - Cash flow from operations for the nine months ended September 30, 2025, was $46.5 million, an increase from $42.8 million a year ago [19]. - Total debt outstanding as of September 30, 2025, was $102.8 million, down from $134.7 million at the end of 2024 [19]. - Free cash flow for the three months ended September 30, 2025, was $7.0 million, a decrease from $20.0 million in the same period of 2024 [52]. - Cash provided by operating activities for the nine months ended September 30, 2025, was $46.5 million, compared to $42.8 million in the same period of 2024 [52]. Expenses and Impairments - Selling, General and Administrative (SG&A) expenses for the three months ended September 30, 2025, were $74.3 million, representing 43.6% of revenue [48]. - The company incurred a goodwill impairment of $77.0 million for the nine months ended September 30, 2025 [34]. - The corporate and other segment reported a significant operating loss of $24.9 million in Q3 2025, compared to a loss of $7.4 million in Q3 2024, largely due to a $77.0 million goodwill impairment [60]. - The effective tax rate for the nine months ended September 30, 2025, as reported was 46.4% [44]. - Acquisition and integration-related charges for the three months ended September 30, 2025, amounted to $1.6 million [46]. - Research and development expenses for the three months ended September 30, 2025, were $6.0 million, a decrease of 16.7% from $7.2 million in the same period of 2024 [34]. - Capital expenditures for the three months ended September 30, 2025, were $7.0 million, compared to $3.0 million in the same period of 2024 [52]. Profitability Metrics - Gross profit for the three months ended September 30, 2025, was $86.0 million, resulting in a gross profit margin of 48.4%, down from 54.5% in the same period of 2024 [34][38]. - EBITDA for the three months ended September 30, 2025, was $9.5 million, down from $21.5 million in the same period of 2024 [34]. - The adjusted non-GAAP operating income for the three months ended September 30, 2025, was $15.2 million, compared to $25.3 million for the same period in 2024 [40]. - For the three months ended September 30, 2025, the adjusted non-GAAP income before taxes was $20.6 million, compared to a loss of $1.2 million as reported [42]. - The company reported total assets of $1,067.7 million as of September 30, 2025, down from $1,154.2 million at the end of 2024 [56]. - The SG&A expenses as a percentage of revenue, as adjusted, for the nine months ended September 30, 2025, was 39.7% [48]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $71.5 million, up from $58.8 million in the same period of 2024, reflecting a growth of approximately 21.5% [50].