Avanos Medical, Inc. Announces Fourth Quarter and Full-Year 2024 Results

ALPHARETTA, Ga., Feb. 26, 2025 /PRNewswire/ -- Avanos Medical, Inc. (NYSE:AVNS) today reported fourth quarter and full-year 2024 results.

"We are pleased with our fourth quarter results, which delivered 5% organic growth and continued execution on each of our transformation initiative priorities," said Michael Greiner, Avanos's interim chief executive officer. Greiner continued, "For the full year, we generated $83 million of free cash flow and $108 million of adjusted EBITDA. We currently have net debt of approximately $20 million. We believe our strong financial position will enable us to execute on our internal investment and other capital allocation priorities in 2025 and beyond."

2024 Financial Highlights

• Fourth quarter net sales from continuing operations totaled $179.6 million, a 3.6% increase from the prior year. For the full-year, net sales from continuing operations increased 2.2% to $687.8 million.
• Fourth quarter diluted loss per share from continuing operations was $8.63 compared to diluted earnings per share of $0.24 per share a year ago. On an adjusted basis, fourth quarter diluted earnings per share from continuing operations improved to $0.43 compared to $0.36 in the prior year.
• 2024 full-year diluted loss per share from continuing operations was $8.40 compared to diluted loss per share of $0.21 in the prior year. On an adjusted basis, diluted earnings per share from continuing operations improved to $1.35 compared to $1.03 in 2023.
• Fourth quarter free cash flow was $53.1 million compared to an outflow of $3.4 million in the fourth quarter of last year.
• 2024 year-to-date free cash flow improved to $82.9 million compared to $14.6 million in 2023.
• As of December 31, 2024, our net debt was $27.0 million compared to $80.3 million in the prior year.

In the fourth quarter, we completed our obligations to perform certain manufacturing services on behalf of the buyer of our former respiratory health ("RH") business, and the assets formerly classified as "held for sale" were transferred to the buyer on October 1, 2024. The completion of this sale was a key component of our three-year transformation process (the "Transformation Process"), which is aimed at accelerating our effort to focus our product portfolio.

Fourth Quarter 2024 Operating Results From Continuing Operations

In the fourth quarter of 2024, net sales totaled $179.6 million, a 3.6% increase compared to the prior year, primarily due to continued strong performance in our life-sustaining digestive health portfolio, particularly from our NeoMed neonatal and pediatric feeding solutions, along with higher volume in our interventional pain portfolio, partially offset by unfavorable pricing in our Hyaluronic Acid ("HA") portfolio sales and lower volume in our clinically-proven and opioid-sparing Pain Management and Recovery portfolio, particularly related to our Game Ready cold compression systems.

Gross margin for the fourth quarter was 54.6% compared to 54.8% a year ago. Adjusted gross margin was 58.7% compared to 58.6% in the prior year. Gross margin was impacted by savings realized from the transformation process partially offset by costs associated with divestiture separation costs, post-divestiture restructuring costs and lower pricing in sales of HA products.

Selling and general expenses as a percentage of net sales was 44.4% compared to 43.0% in the prior year period, primarily due to non-recurring expenses associated with our ongoing Transformation Process, the RH business divestiture and compliance costs associated with the EU Medical Device Regulation (the "EU MDR"). On an adjusted basis, selling and general expenses as a percentage of net sales was 41.6% compared to 38.9% in the same period last year.

Operating loss in the quarter was $418.5 million compared to operating profit of $11.2 million in the fourth quarter of 2023. On an adjusted basis, operating profit was $23.9 million compared to $27.1 million a year ago.

Net loss from continuing operations was $397.0 million, compared to net income from continuing operations of $11.0 a year ago.

Adjusted EBITDA for the quarter was $28.6 million compared to $32.1 million in the prior year.

Full-Year 2024 Operating Results From Continuing Operations

Net sales increased 2.2% to $687.8 million in 2024 primarily due to higher volume across our digestive health and interventional pain portfolios partially offset by unfavorable pricing on sales of HA products.

Gross margin for 2024 was 55.4% compared to 56.4% in 2023. Adjusted gross margin was 59.0%, compared to 59.1% last year due primarily to unfavorable pricing on sales of HA products partially offset by efficiencies gained from the transformation process.

Selling and general expenses as a percentage of net sales were 46.3% compared to 49.8% in the prior year period, driven by non-recurring expenses associated with our ongoing Transformation Process, the RH business divestiture and our acquisition of Diros Technology Inc., as well as compliance costs associated with the EU MDR. On an adjusted basis, selling and general expenses were 42.5% of net sales compared to 43.3% of net sales in 2023.

Operating loss in 2024 was $396.2 million compared to operating profit of $4.2 million in the prior year. On an adjusted basis, operating profit was $87.3 million compared to $79.7 million in 2023.

Net loss from continuing operations in 2024 was $386.3 million, compared to net loss from continuing operations of $9.9 million in the prior year.

For the full-year, adjusted EBITDA totaled $107.6 million, compared to $98.9 million in the prior year.

Non-Cash Goodwill and Intangible Assets Impairment

During the fourth quarter we revised our revenue and margin projections for our HA and intravenous infusion product lines downward. Consequently, we assessed certain intangibles and goodwill for impairment and recorded an impairment charge of $436.7 million.

Cash Flow and Balance Sheet

Cash from operations less capital expenditures, or free cash flow, for the fourth quarter of 2024 was an inflow of $53.1 million, compared to an outflow of $3.4 million a year ago. For 2024, free cash flow was $82.9 million, compared to $14.6 million in the prior year.

At year-end 2024, the Company's cash balance was $107.7 million compared to $87.7 million at year-end 2023. Total debt at the end of the fourth quarter totaled $134.7 million, consisting of borrowings of $110.2 million on the Company's term loan facility and $24.5 million on the revolving credit facility.

Discontinued Operations

Net sales from discontinued operations totaled $13.6 million in the three months ended December 31, 2024, compared to  $7.0 million in the three months ended December 31, 2023. Net sales from discontinued operations were $54.6 million in the year ended December 31, 2024, compared to $100.9 million in the year ended December 31, 2023.

2025 Outlook

We expect 2025 net sales to be between $665 million and $685 million, and adjusted diluted earnings per share are expected to be between $1.05 to $1.25.

Avanos interim chief executive officer Michael Greiner commented, "Our 2025 guidance reflects a challenging market environment for some of our product categories, as well as currency headwinds. We expect to see a pause in our margin improvements in 2025, but remain committed to executing our long-term strategy and delivering on our previously stated margin profile. While this guidance reflects near-term pressures, we are confident in our ability to reignite our margin expansion in 2026 and are focused on positioning the company for a stronger, more sustainable future."

Non-GAAP Financial Measures

This press release and the accompanying tables include the following financial measures that have not been calculated in accordance with accounting principles generally accepted in the U.S., or GAAP, and are therefore referred to as non-GAAP financial measures:

• Adjusted net income
• Adjusted diluted earnings per share
• Adjusted gross and operating profit
• Adjusted effective tax rate
• Adjusted selling, general and administrative expenses
• Adjusted EBITDA
• Free cash flow

These non-GAAP financial measures exclude the following items, as applicable, for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures:

• Certain acquisition and integration charges related to acquisitions.
• Expenses associated with restructuring and transformation activities, including the Divestiture in the fourth quarter of 2023.
• Expenses associated with EU MDR compliance.
• Impairment charges on Goodwill and Intangible assets.
• The amortization of intangible assets associated with prior business acquisitions.
• The tax effects of certain adjusting items.
• The benefit associated with the tax effects of the CARES Act.
• The positive or negative effect of changes in currency exchange rates during the year.

The Company provides these non-GAAP financial measures as supplemental information to our GAAP financial measures. Management and the Company's Board of Directors use net sales on a constant currency basis, adjusted net income, adjusted diluted earnings per share, adjusted operating profit, adjusted EBITDA, and free cash flow to (a) evaluate the Company's historical and prospective financial performance and its performance relative to its competitors, (b) allocate resources and (c) measure the operational performance of the Company's business units and their managers. Management also believes that the use of an adjusted effective tax rate provides improved insight into the tax effects of the Company's ongoing business operations.

Additionally, the Compensation Committee of the Company's Board of Directors will use certain of the non-GAAP financial measures when setting and assessing achievement of incentive compensation goals. These goals are based, in part, on the Company's net sales on a constant currency basis and adjusted EBITDA, which will be determined by excluding certain items that are used in calculating these non-GAAP financial measures.

Our competitors may define these non-GAAP financial measures differently, and as a result, our measure of these non-GAAP financial measures may not be directly comparable to those of other companies. Items excluded from these non-GAAP financial measures are significant components in understanding and assessing financial performance. These non-GAAP financial measures are supplemental measures of operating performance that do not represent, and should not be considered in isolation or as an alternative to, or substitute for, the financial statement data presented in our consolidated financial statements as indicators of financial performance. These non-GAAP financial measures have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP financial measures as supplemental information.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the attached financial tables.

Conference Call Webcast

Avanos Medical, Inc. will host a conference call today at 9 a.m. ET. To instantly join the conference by phone, use the following link to register close to the start time: https://emportal.ink/3D1w3vk. After registering, the system will call you and automatically connect you to the conference call. Alternatively, you may join the call by dialing 1-646-357-8785 or 1-800-836-8184 in the United States. A simultaneous webcast of the call and presentation will be accessible via the Investors section of the Avanos Medical website, https://avanos.investorroom.com. A replay of the call will be available at noon ET today by calling 1-646-517-4150 or 1-888-660-6345 in the United States and entering passcode 27013#. A webcast of the call will also be archived in the Investors section on the Avanos website.

About Avanos Medical, Inc.

Avanos Medical (NYSE:AVNS) is a medical device company focused on delivering clinically superior breakthrough solutions that will help patients get back to the things that matter. Headquartered in Alpharetta, Georgia, Avanos is committed to creating the next generation of innovative healthcare solutions which will address our most important healthcare needs, such as reducing the use of opioids while helping patients move from surgery to recovery. Avanos develops, manufactures and markets its recognized brands in more than 90 countries. For more information, visit www.avanos.com and follow Avanos Medical on Twitter (@AvanosMedical), LinkedIn and Facebook.

Forward-Looking Statements

This press release contains information that includes or is based on "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as "may", "believe", "will", "expect", "project", "estimate", "anticipate", "plan", or "continue" and similar expressions, among others. Forward-looking statements are based on the current plans and expectations of management and are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in such statements. Such factors include, but are not limited to: weakening of economic conditions that could adversely affect the level of demand for our products; pricing pressures generally, including cost-containment measures that could adversely affect the price of or demand for our products; shortages in drugs used in our Surgical Pain and Recovery products or other disruptions in our supply chain; the ongoing conflicts between Russia and Ukraine and in the Middle East; new or increased tariffs or other trade restrictions; our ability to successfully execute on or achieve the expected benefits of the Transformation Process or our divestiture, acquisition or merger transactions; inflationary pressures; rising interest rates; financial conditions affecting the banking system and the potential threats to solvency of commercial banks; changes in foreign exchange markets; legislative and regulatory actions; unanticipated issues arising in connection with clinical studies and otherwise that affect U.S. Food and Drug Administration approval of new products; changes in reimbursement levels from third-party payors; a significant increase in product liability claims; the impact of investigative and legal proceedings and compliance risks; the impact of the federal legislation to reform the United States healthcare system; changes in financial markets; and changes in the competitive environment. Additional information concerning these and other factors that may impact future results is contained in our filings with the U.S. Securities and Exchange Commission, including our most recent Form 10-K and Quarterly Reports on Form 10-Q.

 

 

   

 

   

   

   

   

   

 

 

 

 

 

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SOURCE Avanos Medical