Full-Year Revenue Beat
Net sales for fiscal 2025 were $701 million, exceeding the range revised after Q3 and providing momentum into 2026.
Avanos Medical
· AVNS
February 24th, 2026
Summary
- Earnings Call Date:
- 2026-02-24
- Change Since:
- +82.92%
- Next Earnings Date:
- 2026-08-11
Earnings Call Sentiment
PositiveThe call conveyed solid operational execution and portfolio reshaping that produced revenue outperformance, margin expansion in key segments, strong cash generation, and successful M&A integration (Nexus). However, a material near-term headwind from tariffs (approximately $30M expected in 2026) and lingering softness in certain product lines (surgical pain, GAME READY, HA/IV exits) will weigh on margins in the near term. Management presented a credible mitigation path (China exit, production shift to Mexico/SE Asia, cost containment, pricing) and provided constructive 2026 guidance, indicating confidence in returning to margin improvement in H2 2026 and beyond.
Company Guidance
Avanos guided 2026 net sales of $700–720 million and adjusted diluted EPS of $0.90–$1.10, assuming consolidated mid‑single‑digit organic growth (~5%) with SNS growing mid‑to‑high single digits and PM&R low‑to‑mid single digits; Corporate & Other revenue is expected to be about $1 million and foreign exchange is assumed near current levels. The company expects approximately $30 million of tariff P&L costs (about $12 million incremental versus 2025, with roughly two‑thirds China‑related) but forecasts gross margin to pause in H1 and to see favorable momentum beginning in H2 and continuing into 2027 as syringe production exits China to Mexico by June. Planned capital expenditures are about $25 million (≈$7 million lower than 2025 but slightly above normalized levels to support the China exit), the annual effective tax rate is ~29%, and management highlighted a strong balance sheet (≈$90 million cash, $100 million debt, leverage well below 1x) and ongoing cost‑savings to drive operating margin improvement.
Adjusted Earnings Performance
Delivered $0.94 of adjusted diluted EPS for the full year and $0.29 of adjusted diluted EPS in Q4; full-year adjusted EBITDA was $87 million and Q4 adjusted EBITDA was $28 million.
Strong Specialty Nutrition Systems (SNS) Growth
SNS grew over 8% organically in 2025 (full year). Short-term enteral feeding posted double-digit organic growth globally; long-term feeding grew high single digits; neonatal solutions grew over 6%.
Improved Segment Profitability in Pain Management & Recovery
Pain Management & Recovery operating profit improved to 4% for the full year, a 270-basis-point increase versus prior year, driven by top-line gains and cost management.
Radiofrequency Ablation (RFA) Outperformance
RFA business delivered full-year double-digit organic growth with sustained growth in RFA generator capital sales and expansion of installed base (ESENTEC and TRIDENT product lines noted).
Successful Portfolio Actions and M&A Integration
Completed divestiture of hyaluronic acid business, exited GAME READY rental portion, acquired Nexus Medical (integration described as going very well). Nexus contributed ~ $5 million of revenue and is expected to be a double-digit grower in 2026.
Solid Cash Generation and Strong Balance Sheet
Generated $21 million free cash flow in the quarter and $43 million for the full year. Cash on hand was $90 million with $100 million of debt outstanding and leverage sustainably below 1x.
Tariff Mitigation Progress and Operational Actions
Management executing tariff mitigation steps (cost containment, pricing, temporary exemptions, lobbying) and is confident in plan to exit China syringe manufacturing by June and shift production to Mexico and Southeast Asia.
2026 Guidance Supports Continued Growth
Projected 2026 net sales of $700–$720 million with adjusted diluted EPS guidance of $0.90–$1.10; consolidated organic growth guidance near mid-single-digits (SNS mid- to high-single digits; PM&R low- to mid-single digits).
Operator
Good morning, ladies and gentlemen, and welcome to Avanos Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Also note that this call is being recorded on February 24, 2026. I would now like to turn the conference over to Jason Pickett, Vice President, Corporate Finance and Treasurer.
Jason Pickett
Good morning, everyone, and thanks for joining us. It's my pleasure to welcome you to Avanos' 2025 Fourth Quarter and Full Year Earnings Conference Call. Presenting today will be Dave Pacitti, CEO; and Scott Galovan, Senior Vice President and CFO. Dave will review our fourth quarter and full year results and the current business environment. Scott will share additional details regarding these topics and provide our 2026 planning assumptions. We will finish the call with Q&A. A presentation for today's call is available on the Investors section of our website, avanos.com. As a reminder, our comments today contain forward-looking statements related to the company, our expected performance and current economic conditions, including risks relating to ongoing tariff negotiations and our industry.
No assurance can be given as to future financial results. Actual results could differ materially from those in the forward-looking statements. For more information about forward-looking statements and the risk factors that could influence future results, please see today's press release and risk factors described in our filings with the SEC. Additionally, we will be referring to adjusted results and outlook. The press release has information on these adjustments and reconciliations to co...
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