Core Insights - Avanos Medical, Inc. reported a significant decline in adjusted earnings per share (EPS) for Q2 2025, with a 50% year-over-year drop to 17 cents, missing the Zacks Consensus Estimate by 5.6% [1][6] - The company's revenues increased by 1.9% year-over-year to $175 million, surpassing the Zacks Consensus Estimate by 4.7%, driven by strong demand in the Specialty Nutrition Systems (SNS) and radiofrequency ablation (RFA) segments [2][6] Revenue Analysis - Revenues for the SNS segment reached $102.7 million, up 5.1% year-over-year, with volume growth of 4.4% attributed to strong demand in enteral feeding and neonate solutions [9] - The Pain Management and Recovery (PM&R) segment reported revenues of $61 million, down 2.9% year-over-year, affected by unfavorable currency effects and strategic decisions to forgo certain revenue streams [7][8] - Corporate and Other segment revenues fell by 23.1% year-over-year to $11.3 million, primarily due to pricing pressures in the Hyaluronic Acid (HA) product lines [10] Margin and Profitability - Adjusted gross profit decreased by 4.7% year-over-year to $97.4 million, with the adjusted gross margin contracting by 390 basis points to 55.7% [12] - Selling and general expenses rose by 3.2% year-over-year to $83.5 million, while adjusted operating profit fell by 44% to $12.2 million, leading to an adjusted operating margin contraction of 580 basis points to 6.9% [12][13] Financial Position - At the end of Q2 2025, the company had cash and cash equivalents of $90.3 million, down from $97 million at the end of Q1 2025, with total debt slightly reduced to $105.1 million [14] - Cumulative net cash provided by operating activities increased to $32.5 million compared to $19.8 million in the prior-year period [14] Guidance and Outlook - Avanos has reiterated its 2025 outlook, estimating net sales between $665 million and $685 million, with a Zacks Consensus Estimate of $677.1 million [15] - The company anticipates adjusted EPS for 2025 to be between 75 and 95 cents, with the current consensus at 92 cents [15] Strategic Developments - In July, Avanos announced the divestiture of its HA product line to Channel-Markers Medical, aligning with its strategic focus on enhancing its PM&R and SNS segments [11] - The company is facing a volatile tariff environment, estimating an additional $15 million in manufacturing costs for 2025, primarily due to tariffs on products sourced from Mexico and China [18]