Avanos Medical-Avanos Q3 Earnings Meet Estimates, Sales Miss, Gross Margin Contracts

Core Viewpoint - Avanos Medical, Inc. reported a mixed performance in Q3 2024, with adjusted EPS showing a year-over-year increase, but revenues declining slightly, indicating challenges in certain product lines while maintaining strength in others [1][2][12]. Financial Performance - Adjusted EPS from continuing operations was 36 cents, a 20% increase year over year, meeting the Zacks Consensus Estimate [1] - Revenues totaled $170.4 million, down 0.5% year over year, missing the Zacks Consensus Estimate by 2.7% [2] - Organic sales increased by 1.1% year over year [2]. Segment Analysis - Pain Management and Recovery segment reported net revenues of$ 72.2 million, a decrease of 5.4% year over year [6] - Digestive Health segment saw net revenues of $98.2 million, improving by 3.4% year over year, with organic growth of almost 3% [6][7]. Margin Analysis - Gross profit fell by 2.7% to$ 92.9 million, with gross margin contracting by 130 basis points to 54.5% [8] - Selling and general expenses decreased by 5.6% to $74.3 million, while research and development expenses increased by 18% year over year to$ 7.2 million [8]. Financial Update - Cash and cash equivalents at the end of Q3 were $89 million, down from$ 92.2 million at the end of Q2 [10] - Total debt decreased to $162 million from$ 175.1 million at the end of Q2 [10]. Guidance - The company expects net sales for the full year 2024 to be in the range of $683-$ 688 million, below the Zacks Consensus Estimate of $695.1 million [11] - Adjusted EPS for 2024 is anticipated to be between$ 1.30 and $1.45, with the Zacks Consensus Estimate at$ 1.39 [11]. Market Performance - Avanos shares have declined by 17.1% year to date, contrasting with the industry growth of 5.4% and the S&P 500 Index gain of 22.5% [4].