Avanos Medical Inc (AVNS) reports a 2% organic sales increase and strategic divestitures, while navigating challenges in tariffs and market pressures.

Summary Net Sales: $175 million for the second quarter, with organic sales up 2% compared to the previous year.Adjusted Diluted Earnings Per Share: $0.17.Adjusted EBITDA: $17 million.Adjusted Gross Margin: 55.7%.SG&A as a Percentage of Revenue: 45.2%.Non-Cash Impairment Charge: $77 million in the Pain Management and Recovery reporting unit.Specialty Nutrition Systems Organic Growth: 5% year-over-year.Pain Management and Recovery Organic Sales Growth: 3.4%.Radiofrequency Ablation Growth: Near 14% compared to the previous year.Operating Profit for Nutrition Systems: Nearly 18% for the second quarter.Operating Profit for Pain Management and Recovery: Grew nearly $2 million from a year ago, excluding the impairment charge.Cash on Hand: $90 million as of June 30.Debt Outstanding: $105 million as of June 30.Free Cash Flow: Negative $4 million for the quarter.2025 Full-Year Revenue Estimate: $665 million to $685 million.Tariff-Related Manufacturing Costs: Estimated $50 million for the year.2025 Adjusted Earnings Per Share Estimate: $0.75 to $0.95.

Release Date: August 05, 2025

Positive Points 
Avanos Medical Inc (<a>AVNS</a>, <a>Financial</a>) delivered strong second-quarter results with net sales of $175 million, reflecting a 2% organic sales growth compared to the previous year.The Specialty Nutrition Systems portfolio grew 5% organically, reaffirming Avanos Medical Inc (AVNS)'s leading position in enteral feeding.The Radiofrequency Ablation (RFA) business posted near 14% growth, driven by increased generator sales and higher procedure volumes.Avanos Medical Inc (AVNS) successfully closed the sale of its Hyaluronic Acid product line, aligning with its transformation strategy to focus on core sectors.The company maintained a strong balance sheet with $90 million in cash and $105 million in debt, providing strategic flexibility.

Negative Points 
Avanos Medical Inc (AVNS) recorded a non-cash impairment charge of $77 million in the Pain Management and Recovery unit due to market capitalization pressures.The Surgical Pain business experienced a decline, impacted by delays in implementing reimbursement decisions under the NOPAIN Act.The Game Ready portfolio reported slightly lower revenues compared to the previous year, indicating challenges in market performance.Free cash flow for the quarter was negative $4 million, influenced by tax payment timings and higher capital expenditures.The company faces ongoing challenges from tariffs, with $50 million in estimated incremental tariff-related costs for the year.

Q & A Highlights 
Q: Can you provide more details on the 2025 guidance, especially considering the HA divestiture? A: Scott Galovan, CFO, explained that despite the HA divestiture, Avanos is reaffirming its full-year guidance. Although they will not recognize five months of HA revenue, the performance of the Specialty Nutrition Systems (SNS) and Pain Management and Recovery (PM&R) segments remains strong. They are not disclosing the exact impact of the foregone HA revenue but are comfortable with the current guidance. 

Q: What is driving the growth in the RF ablation business, and how sustainable is it? A: David Pacitti, CEO, noted that Avanos is seen as a dedicated RF solution company with a strong three-tiered offering. The company is focused on the RF space, which has led to sustained growth. Jason Pickett, Interim CFO, added that the RF ablation business grew by 13.8% quarter-over-quarter, driven by increased generator sales and high-margin product pull-through. 

Q: How will the HA divestiture impact the income statement, particularly gross and operating margins? A: Jason Pickett, Interim CFO, stated that the HA divestiture will not have a material impact on the bottom line for the rest of the year. The company is making up for any lost revenue with strong performance in strategic segments. Scott Galovan, CFO, added that the challenge with HA was pricing, not volume, so the impact on profitability is limited. 

Q: Can you elaborate on the impact of currency headwinds and tariffs on your financial outlook? A: Jason Pickett, Interim CFO, mentioned that currency headwinds are not as significant as anticipated, which has been beneficial. Regarding tariffs, Avanos estimates $50 million in incremental tariff-related costs for the year, primarily from products originating in Mexico and China. The company is implementing strategies to mitigate these costs. 

Q: What are the expectations for the Specialty Nutrition Systems segment in 2025? A: Jason Pickett, Interim CFO, highlighted that the Specialty Nutrition Systems portfolio continues to deliver above-market results, with 5% organic growth. The company expects mid-single-digit organic revenue growth for this segment in 2025, driven by commercial execution, new product innovations, and global market expansion opportunities.

Avanos Medical Inc (AVNS) Q2 2025 Earnings Call Highlights: Stro

Avanos Medical Inc (AVNS) reported 2% organic sales growth in Q2 2025, with net sales of $175 million, adjusted diluted EPS of $0.17, and adjusted EBITDA of $17 million. The company faced a $77 million non-cash impairment charge in the Pain Management and Recovery unit, while Specialty Nutrition Systems grew 5% organically and Radiofrequency Ablation (RFA) grew 14% year-over-year. The company divested its Hyaluronic Acid product line and maintained a $90 million cash balance, though free cash flow was negative $4 million. 2025 full-year revenue guidance is $665 million to $685 million, with $50 million in estimated tariff-related costs.