MWN AI Summary *
Avanos Medical, Inc. (NYSE: AVNS) reported its financial results for the second quarter of 2024, reflecting a total net sales increase of 1.4% year-over-year to $171.7 million. CEO Joe Woody expressed satisfaction with the company's performance at mid-year, particularly highlighting strong growth in the Digestive Health segment, especially from NeoMed neonatal and pediatric feeding solutions, which contributed to high-single-digit growth rates. Pain Management and Recovery also showed improvement, with sequential month-over-month gains.
In terms of profitability, net income from continuing operations reached $4.3 million, a significant turnaround from a loss of $4.3 million in the same quarter last year. Adjusted net income totaled $15.8 million, up from $11.2 million a year prior, leading to an adjusted diluted earnings per share of $0.34 compared to $0.24 in 2023.
The company's gross margin for Q2 was 55.7%, down from 57.7% a year ago, attributed primarily to costs associated with a transformation initiative and a restructuring process post-divestiture of its respiratory health business. Operating expenses as a percentage of net sales improved to 47.1%, down from 54.9%, highlighting cost-saving measures implemented.
Avanos anticipates revenue for the year will range between $685 million and $705 million, expecting adjusted diluted earnings per share to fall between $1.30 and $1.45. The report indicates overall positive momentum as Avanos continues to refine its operations while addressing significant healthcare needs across its product offerings.
MWN AI Analysis *
Avanos Medical, Inc. (NYSE: AVNS) recently reported its second-quarter 2024 results, revealing modest revenue growth of 1.4% year-on-year, totaling $171.7 million. The company's performance is primarily driven by the strong demand in its Digestive Health segment. Notably, net income from continuing operations climbed to $4.3 million, a significant turnaround from a loss in the previous year, benefitting from cost-control measures amidst ongoing transformation initiatives.
As a financial analyst, the key takeaway from Avanos' performance is its ability to pivot from losses to profits, aided by an efficient transformation strategy that has reduced selling and general expenses as a percentage of net sales to 47.1%. This reflects improved operational discipline which could provide a competitive advantage. Furthermore, the adjusted EBITDA rose to $26.8 million from $22.9 million, indicating operational efficiency and the potential for stronger cash generation.
However, investors should be cautious about the drop in gross margin from 57.7% to 55.7%. This reduction, attributed to costs related to its strategic transformation and competitive pricing pressures, might indicate pressures on profitability moving forward. Furthermore, a decrease in sales of hyaluronic acid products raises concerns about segment vulnerability.
With the company's expectation for a mid-single-digit revenue growth for the remainder of the year, along with adjusted diluted earnings per share anticipated between $1.30 and $1.45, there remains room for upside, especially if cost-control measures yield further fruit.
In conclusion, while Avanos Medical exhibits signs of recovery and growth potential, investors should monitor segment performance closely, particularly in Pain Management, and remain vigilant about cost pressures that could affect margins in the near future. For those willing to take on a moderate risk, Avanos could be a compelling candidate, particularly as it stabilizes and seeks to leverage its operational strengths.
* MWN AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
PR Newswire
ALPHARETTA, Ga. , July 31, 2024 /PRNewswire/ -- Avanos Medical, Inc. (NYSE: AVNS) today reported second quarter 2024 financial results.
"We are pleased with our second quarter results and the cumulative progress we have made at the mid-year point," said Joe Woody , Avanos's chief executive officer. Woody continued, "Digestive Health continues to lead in delivering high-single digit growth while Pain Management and Recovery performance is improving with quarter-over-quarter sequential growth, and we are seeing meaningful progress on our other transformation objectives, all of which are expected to support mid-single digit growth for the remainder of the year. We are proud of these accomplishments and pleased that our solutions have been utilized to treat over 900,000 patients so far this year."
Second Quarter 2024 Financial Highlights
- Total net sales from continuing operations were $171.7 million , a 1.4% increase from the comparable prior year period.
- Net income from continuing operations for the quarter was $4.3 million , compared to net loss from continuing operations of $4.3 million a year ago.
- Adjusted net income from continuing operations totaled $15.8 million , compared to $11.2 million a year ago.
- Diluted earnings per share from continuing operations was $0.09 , compared to diluted loss per share of $0.09 a year ago.
- Adjusted diluted earnings per share from continuing operations was $0.34 , compared to $0.24 a year ago.
- Adjusted EBITDA was $26.8 million , compared to $22.9 million a year ago.
Second Quarter 2024 Operating Results From Continuing Operations
For the three months ended June 30, 2024 , net sales totaled $171.7 million , an increase of 1.4% compared to the prior year period, due to continued strong demand and volume in our Digestive Health portfolio, primarily from our NeoMed neonatal and pediatric feeding solutions, as well as continued demand for Game Ready. This was partially offset by reduced demand for our hyaluronic acid ("HA") products. Favorable volume overall was partially offset by pricing and currency translation effects.
Gross margin during the second quarter of 2024 was 55.7%, compared to 57.7% in the prior year period. Adjusted gross margin was 59.6% compared to 59.9% last year. Gross profit margin decreased primarily due to costs related to the priorities of our three-year transformation initiative (the "Transformation Process") and plant separation costs associated with the divestiture of our respiratory health ("RH") business (the "Divestiture"). In addition, lower pricing for our HA products was partially offset by favorable volume and product mix.
Selling and general expenses as a percentage of net sales was 47.1% for the second quarter of 2024, compared to 54.9% for the second quarter of 2023. On an adjusted basis, selling and general expenses as a percentage of net sales was 43.0% for the second quarter of 2024, compared to 45.1% for the second quarter of 2023. Selling and general expenses decreased primarily due to savings realized from the execution on our Transformation Process and disciplined spending.
Operating profit in the second quarter of 2024 was $6.3 million , compared to operating loss of $2.1 million in the prior year period, primarily due to higher sales volume along with lower selling and general expenses related to the execution on Transformation Process and restructuring priorities. On an adjusted basis, operating profit totaled $21.8 million , compared to $18.4 million a year ago.
Adjusted EBITDA from continuing operations was $26.8 million in the three months ended June 30, 2024 , compared to $22.9 million in the three months ended June 30, 2023 .
First Six Months of 2024 Operating Results
For the six months ended June 30, 2024 , net sales were $337.8 million , an increase of 2.8% compared to the prior year period, primarily due to strong demand for our Digestive Health products and Game Ready products. This was partially offset by lower demand and pricing for our HA products.
Gross margin was 56.4%, compared to 57.6%last year. Adjusted gross margin was 59.7%compared to 59.8% last year and was impacted by the same items noted above for the second quarter.
Selling and general expenses as a percentage of net sales were 48.7% for the six months ended June 30, 2024 , compared to 55.3% for the prior year period. The decrease was primarily due to disciplined spending, partially offset by non-recurring expenses associated with our ongoing Transformation Process and the Divestiture. On an adjusted basis, selling and general expenses as a percentage of net sales was 44.4% for the first six months of 2024, compared to 46.5% in the prior year period.
Operating profit was $10.3 million , compared to an operating loss of $8.2 millionin the prior year period, primarily due to increased demand for our Digestive Health products and lower selling and general costs, partially offset by lower volume and pricing of our HA products. On an adjusted basis, operating profit was $38.1 millioncompared to $29.6 milliona year ago.
Adjusted EBITDA for the six months ended June 30 , 2024was $48.4 million , compared to $39.0 millionin the prior year period.
Cash Flow and Balance Sheet
Cash from operations less capital expenditures, or free cash flow, for the second quarter was an inflow of $21.9 million , driven primarily by cash flow provided by operating activities, compared to an outflow of $6.6 million a year ago. The Company's cash balance at June30, 2024 was $92.2 million , compared to $87.7 million at year-end 2023.
Total debt outstanding, net of unamortized discounts, was $175 .1million at June30, 2024, compared to $168 .0million at December31, 2023.
Discontinued Operations
Net sales from discontinued operations were $13.6 million in the three months ended June 30, 2024 , compared to $30.4 million in the three months ended June 30 , 2023.Net sales from discontinued operations were $30.5 million in the six months ended June 30, 2024 , compared to $62.8 million in the six months ended June 30, 2023 .
2024 Outlook
For the year, the Company anticipates revenue from continuing operations of between $685 million and $705 million from continuing operations, adjusted gross margins from continuing operations of between 59.5% and 60.5% and adjusted diluted earnings per share from continuing operations of between $1.30 and $1.45 .
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 EBITDA; and
- 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 European Union Medical Device Regulation ("EU MDR") compliance.
- 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 its 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 the Company's 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 the Company's 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 . The conference call can be accessed live over the internet at https://avanos.investorroom.com or via telephone by dialing 800-836-8184 in the United States . A replay of the call will be available at noon ET today by calling 888-660-6345 in the United States and entering passcode 70891#.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 technology company focused on delivering clinically superior solutions that will help patients get back to the things that matter. Headquartered in Alpharetta, Georgia , Avanos is committed to addressing some of today's most important healthcare needs, including providing a vital lifeline for nutrition to patients from hospital to home, and reducing the use of opioids while helping patients move from surgery to recovery. Avanos develops, manufactures and markets its recognized brands globally and holds leading market positions in multiple categories across its portfolio. For more information, visit www.avanos.com and follow Avanos Medical on X (@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. 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; shortage in drugs used in our Surgical Pain and Recovery products or other disruptions in our supply chain; the ongoing regional conflicts between Russia and Ukraine and in the Middle East ; our ability to successfully execute on or achieve the expected benefits of our transformation initiative or our divestiture, acquisition or merger transactions; inflationary pressures; financial conditions affecting the banking system and the potential threats to the 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 reimbursem*nt 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. The information contained herein speaks only as of the date of this release and we undertake no obligation to update forward-looking statements, except as may be required by the securities laws.
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-Q.
AVANOSMEDICAL, INC. | |||||||
CONDENSED CONSOLIDATED INCOME STATEMENTS | |||||||
(unaudited) | |||||||
(in millions, except per share amounts) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Net Sales | 171.7 | 169.4 | 337.8 | 328.7 | |||
Cost of products sold | 76.1 | 71.6 | 147.4 | 139.5 | |||
Gross Profit | 95.6 | 97.8 | 190.4 | 189.2 | |||
Research and development expenses | 6.3 | 6.8 | 13.3 | 14.3 | |||
Selling and general expenses | 80.9 | 93.0 | 164.5 | 181.8 | |||
Other expense, net | 2.1 | 0.1 | 2.3 | 1.3 | |||
Operating Income (Loss) | 6.3 | (2.1) | 10.3 | (8.2) | |||
Interest income | 3.0 | 0.5 | 3.6 | 1.0 | |||
Interest expense | (3.1) | (3.5) | (6.2) | (7.0) | |||
Income (Loss) Before Income Taxes | 6.2 | (5.1) | 7.7 | (14.2) | |||
Income tax (provision) benefit | (1.9) | 0.8 | (2.9) | 2.1 | |||
Income (Loss) from Continuing Operations | 4.3 | (4.3) | 4.8 | (12.1) | |||
Loss from discontinued operations, net of tax | (2.5) | (63.8) | (3.9) | (56.5) | |||
Net Income (Loss) | 1.8 | (68.1) | 0.9 | (68.6) | |||
Interest expense, net | 0.1 | 3.0 | 2.6 | 6.0 | |||
Income tax provision (benefit) | 1.0 | (1.6) | 1.5 | (1.5) | |||
Depreciation and amortization | 11.3 | 11.5 | 22.7 | 23.6 | |||
EBITDA | 14.2 | (55.2) | 27.7 | (40.5) | |||
Earnings (Loss) Per Share | |||||||
Basic | |||||||
Continuing operations | 0.09 | (0.09) | 0.10 | (0.26) | |||
Discontinued operations | (0.05) | (1.37) | (0.08) | (1.21) | |||
Basic Earnings (Loss) Per Share | 0.04 | (1.46) | 0.02 | (1.47) | |||
Diluted | |||||||
Continuing operations | 0.09 | (0.09) | 0.10 | (0.26) | |||
Discontinued operations | (0.05) | (1.37) | (0.08) | (1.21) | |||
Diluted Earnings (Loss) Per Share | 0.04 | (1.46) | 0.02 | (1.47) | |||
Common Shares Outstanding | |||||||
Basic | 45.9 | 46.8 | 46.1 | 46.7 | |||
Diluted | 46.3 | 46.8 | 46.6 | 46.7 |
AVANOSMEDICAL, INC. | |||||||
Discontinued Operations Summary | |||||||
(unaudited) | |||||||
(in millions, except per share amounts) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Net Sales | 13.6 | 30.4 | 30.5 | 62.8 | |||
Cost of products sold | 15.6 | 18.6 | 31.5 | 37.9 | |||
Gross Profit | (2.0) | 11.8 | (1.0) | 24.9 | |||
Research and development expenses | — | 0.2 | — | 0.6 | |||
Selling, general and other expenses | — | 3.8 | — | 7.7 | |||
Pretax loss on classification as discontinued operations | — | 72.3 | — | 72.3 | |||
Other expense, net | 1.4 | 0.1 | 4.3 | 0.2 | |||
Loss from discontinued operations before income taxes | (3.4) | (64.6) | (5.3) | (55.9) | |||
Income tax benefit (provision) from discontinued operations | 0.9 | 0.8 | 1.4 | (0.6) | |||
(Loss) from discontinued operations, net of tax | (2.5) | (63.8) | (3.9) | (56.5) | |||
(Loss) Per Share | |||||||
Basic | (0.05) | (1.37) | (0.08) | (1.21) | |||
Diluted | (0.05) | (1.37) | (0.08) | (1.21) |
AVANOSMEDICAL, INC. | |||||||||||
NON-GAAPRECONCILIATIONS | |||||||||||
(unaudited) | |||||||||||
(in millions) | |||||||||||
Gross Profit | |||||||||||
Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | ||||||||||
Continuing | Discontinued | Total | Continuing | Discontinued | Total | ||||||
As reported | 95.6 | (2.0) | 93.6 | 97.8 | 11.8 | 109.6 | |||||
Acquisition and integration-related charges | 0.1 | — | 0.1 | — | — | — | |||||
Restructuring and transformation charges | 0.3 | — | 0.3 | 0.1 | — | 0.1 | |||||
Post-RH Divestiture transition charges | 0.4 | — | 0.4 | — | — | — | |||||
Post-RH Divestiture restructuring | 2.2 | — | 2.2 | — | — | — | |||||
Intangibles amortization | 3.6 | — | 3.6 | 3.6 | — | 3.6 | |||||
As adjusted non-GAAP | 102.2 | (2.0) | 100.2 | 101.5 | 11.8 | 113.3 | |||||
Gross profit margin, as reported | 55.7% | (14.7)% | 50.5% | 57.7% | 38.8% | 54.9% | |||||
Gross profit margin, as adjusted | 59.6% | (14.7)% | 54.1% | 59.9% | 38.8% | 56.7% |
Gross Profit | |||||||||||
Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | ||||||||||
Continuing | Discontinued | Total | Continuing | Discontinued | Total | ||||||
As reported | 190.4 | (1.0) | 189.4 | 189.2 | 24.9 | 214.1 | |||||
Acquisition and integration-related charges | 0.1 | — | 0.1 | — | — | — | |||||
Restructuring and transformation charges | 1.0 | — | 1.0 | 0.1 | — | 0.1 | |||||
Post-RH Divestiture transition charges | 0.8 | — | 0.8 | — | — | — | |||||
Post-RH Divestiture restructuring | 2.2 | — | 2.2 | — | — | — | |||||
Intangibles amortization | 7.0 | — | 7.0 | 7.2 | — | 7.2 | |||||
As adjusted non-GAAP | 201.5 | (1.0) | 200.5 | 196.5 | 24.9 | 221.4 | |||||
Gross profit margin, as reported | 56.4% | (3.3)% | 51.4% | 57.6% | 39.6% | 54.7% | |||||
Gross profit margin, as adjusted | 59.7% | (3.3)% | 54.4% | 59.8% | 39.6% | 56.6% |
AVANOSMEDICAL, INC. | |||||||||||
NON-GAAPRECONCILIATIONS | |||||||||||
(unaudited) | |||||||||||
(in millions) | |||||||||||
Operating Profit (Loss) | |||||||||||
Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | ||||||||||
Continuing | Discontinued | Total | Continuing | Discontinued | Total | ||||||
As reported | 6.3 | (3.4) | 2.9 | (2.1) | 7.7 | 5.6 | |||||
Acquisition and integration-related charges | 2.2 | — | 2.2 | 0.3 | — | 0.3 | |||||
Restructuring and transformation charges | 1.6 | — | 1.6 | 9.8 | — | 9.8 | |||||
Post-RH Divestiture transition charges | 0.5 | — | 0.5 | — | — | — | |||||
Post-RH Divestiture restructuring | 3.4 | — | 3.4 | — | — | — | |||||
Divestiture related | — | — | — | 3.7 | — | 3.7 | |||||
Estimated loss on Divestiture | — | — | — | — | 72.3 | 72.3 | |||||
EU MDR Compliance | 1.5 | — | 1.5 | 0.9 | — | 0.9 | |||||
Intangibles amortization | 6.3 | — | 6.3 | 5.8 | 0.3 | 6.1 | |||||
As adjusted non-GAAP | 21.8 | (3.4) | 18.4 | 18.4 | 80.3 | 98.7 | |||||
Operating Profit (Loss) | |||||||||||
Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | ||||||||||
Continuing | Discontinued | Total | Continuing | Discontinued | Total | ||||||
As reported | 10.3 | (5.3) | 5.0 | (8.2) | 16.4 | 8.2 | |||||
Acquisition and integration-related charges | 2.5 | — | 2.5 | 1.8 | — | 1.8 | |||||
Restructuring and transformation charges | 4.5 | — | 4.5 | 18.7 | — | 18.7 | |||||
Post-RH Divestiture transition charges | 1.5 | — | 1.5 | — | — | — | |||||
Post-RH Divestiture restructuring | 4.1 | — | 4.1 | — | — | — | |||||
Divestiture related | — | — | — | 3.7 | — | 3.7 | |||||
Estimated loss on Divestiture | — | — | — | — | 72.3 | 72.3 | |||||
EU MDR Compliance | 2.8 | — | 2.8 | 2.0 | — | 2.0 | |||||
Intangibles amortization | 12.4 | — | 12.4 | 11.6 | 0.8 | 12.4 | |||||
As adjusted non-GAAP | 38.1 | (5.3) | 32.8 | 29.6 | 89.5 | 119.1 |
AVANOSMEDICAL, INC. | |||||||||||
NON-GAAPRECONCILIATIONS | |||||||||||
(unaudited) | |||||||||||
(in millions) | |||||||||||
Income (Loss) Before Taxes | |||||||||||
Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | ||||||||||
Continuing | Discontinued | Total | Continuing | Discontinued | Total | ||||||
As reported | 6.2 | (3.4) | 2.8 | (5.1) | (64.6) | (69.7) | |||||
Acquisition and integration-related charges | 2.2 | — | 2.2 | 0.3 | — | 0.3 | |||||
Restructuring and transformation charges | 1.6 | — | 1.6 | 9.8 | — | 9.8 | |||||
Post-RH Divestiture transition charges | 0.5 | — | 0.5 | — | — | — | |||||
Post-RH Divestiture restructuring | 3.4 | — | 3.4 | — | — | — | |||||
Divestiture related | — | — | — | 3.7 | — | 3.7 | |||||
Estimated loss on Divestiture | — | — | — | — | 72.3 | 72.3 | |||||
EU MDR Compliance | 1.5 | — | 1.5 | 0.9 | — | 0.9 | |||||
Intangibles amortization | 6.3 | — | 6.3 | 5.8 | 0.3 | 6.1 | |||||
As adjusted non-GAAP | 21.7 | (3.4) | 18.3 | 15.4 | 8.0 | 23.4 |
Income (Loss) Before Taxes | |||||||||||
Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | ||||||||||
Continuing | Discontinued | Total | Continuing | Discontinued | Total | ||||||
As reported | 7.7 | (5.3) | 2.4 | (14.2) | (55.9) | (70.1) | |||||
Acquisition and integration-related charges | 2.5 | — | 2.5 | 1.8 | — | 1.8 | |||||
Restructuring and transformation charges | 4.5 | — | 4.5 | 18.7 | — | 18.7 | |||||
Post-RH Divestiture transition charges | 1.5 | — | 1.5 | — | — | — | |||||
Post-RH Divestiture restructuring | 4.1 | — | 4.1 | — | — | — | |||||
Divestiture related | — | — | — | 3.7 | — | 3.7 | |||||
Estimated loss on Divestiture | — | — | — | — | 72.3 | 72.3 | |||||
EU MDR Compliance | 2.8 | — | 2.8 | 2.0 | — | 2.0 | |||||
Intangibles amortization | 12.4 | — | 12.4 | 11.6 | 0.8 | 12.4 | |||||
As adjusted non-GAAP | 35.5 | (5.3) | 30.2 | 23.6 | 17.2 | 40.8 |
AVANOSMEDICAL, INC. | |||||||||||
NON-GAAPRECONCILIATIONS | |||||||||||
(unaudited) | |||||||||||
(in millions) | |||||||||||
Tax (Provision) Benefit | |||||||||||
Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | ||||||||||
Continuing | Discontinued | Total | Continuing | Discontinued | Total | ||||||
As reported | (1.9) | 0.9 | (1.0) | 0.8 | 0.8 | 1.6 | |||||
Tax effects of adjusting items | (4.0) | — | (4.0) | (5.0) | (2.9) | (7.9) | |||||
As adjusted non-GAAP | (5.9) | 0.9 | (5.0) | (4.2) | (2.1) | (6.3) | |||||
Effective tax rate, as reported | 30.6% | 26.5% | 35.7% | 15.7% | 1.2% | 2.3% | |||||
Effective tax rate, as adjusted | 27.2% | 26.5% | 27.3% | 27.0% | 26.3% | 26.8% |
Tax (Provision) Benefit | |||||||||||
Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | ||||||||||
Continuing | Discontinued | Total | Continuing | Discontinued | Total | ||||||
As reported | (2.9) | 1.4 | (1.5) | 2.1 | (0.6) | 1.5 | |||||
Tax effects of adjusting items | (6.7) | — | (6.7) | (8.5) | (4.0) | (12.5) | |||||
As adjusted non-GAAP | (9.6) | 1.4 | (8.2) | (6.4) | (4.6) | (11.0) | |||||
Effective tax rate, as reported | 37.7% | 26.4% | (62.5)% | 14.8% | (1.1)% | (2.1)% | |||||
Effective tax rate, as adjusted | 27.0% | 26.4% | 27.2% | 27.0% | 27.0% | 27.0% |
AVANOSMEDICAL, INC. | |||||||||||
NON-GAAPRECONCILIATIONS | |||||||||||
(unaudited) | |||||||||||
(in millions except per share amounts) | |||||||||||
Net Income (Loss) | |||||||||||
Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | ||||||||||
Continuing | Discontinued | Total | Continuing | Discontinued | Total | ||||||
As reported | 4.3 | (2.5) | 1.8 | (4.3) | (63.8) | (68.1) | |||||
Acquisition and integration-related charges | 2.2 | — | 2.2 | 0.3 | — | 0.3 | |||||
Restructuring and transformation charges | 1.6 | — | 1.6 | 9.8 | — | 9.8 | |||||
Post-RH Divestiture transition charges | 0.5 | — | 0.5 | — | — | — | |||||
Post-RH Divestiture restructuring | 3.4 | — | 3.4 | — | — | — | |||||
Divestiture related | — | — | — | 3.7 | — | 3.7 | |||||
Estimated loss on Divestiture | — | — | — | — | 72.3 | 72.3 | |||||
EU MDR Compliance | 1.5 | — | 1.5 | 0.9 | — | 0.9 | |||||
Intangibles amortization | 6.3 | — | 6.3 | 5.8 | 0.3 | 6.1 | |||||
Tax effects of adjusting items | (4.0) | — | (4.0) | (5.0) | (2.9) | (7.9) | |||||
As adjusted non-GAAP | 15.8 | (2.5) | 13.3 | 11.2 | 5.9 | 17.1 | |||||
Diluted earnings (loss) per share, as reported | 0.09 | (0.05) | 0.04 | (0.09) | (1.37) | (1.46) | |||||
Diluted earnings (loss) per share, as adjusted | 0.34 | (0.05) | 0.29 | 0.24 | 0.13 | 0.37 |
Net Income (Loss) | |||||||||||
Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | ||||||||||
Continuing | Discontinued | Total | Continuing | Discontinued | Total | ||||||
As reported | 4.8 | (3.9) | 0.9 | (12.1) | (56.5) | (68.6) | |||||
Acquisition and integration-related charges | 2.5 | — | 2.5 | 1.8 | — | 1.8 | |||||
Restructuring and transformation charges | 4.5 | — | 4.5 | 18.7 | — | 18.7 | |||||
Post-RH Divestiture transition charges | 1.5 | — | 1.5 | — | — | — | |||||
Post-RH Divestiture restructuring | 4.1 | — | 4.1 | — | — | — | |||||
Divestiture related | — | — | — | 3.7 | — | 3.7 | |||||
Estimated loss on Divestiture | — | — | — | — | 72.3 | 72.3 | |||||
EU MDR Compliance | 2.8 | — | 2.8 | 2.0 | — | 2.0 | |||||
Intangibles amortization | 12.4 | — | 12.4 | 11.6 | 0.8 | 12.4 | |||||
Tax effects of adjusting items | (6.7) | — | (6.7) | (8.5) | (4.0) | (12.5) | |||||
As adjusted non-GAAP | 25.9 | (3.9) | 22.0 | 17.2 | 12.6 | 29.8 | |||||
Diluted earnings (loss) per share, as reported | 0.10 | (0.08) | 0.03 | (0.26) | (1.21) | (1.47) | |||||
Diluted earnings (loss) per share, as adjusted | 0.56 | (0.08) | 0.48 | 0.37 | 0.27 | 0.64 |
AVANOSMEDICAL, INC. | |||||||||||
NON-GAAPRECONCILIATIONS | |||||||||||
(unaudited) | |||||||||||
(in millions except per share amounts) | |||||||||||
Selling, General and Administrative Expenses | |||||||||||
Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | ||||||||||
Continuing | Discontinued | Total | Continuing | Discontinued | Total | ||||||
As reported | 80.9 | — | 80.9 | 93.0 | 3.8 | 96.8 | |||||
Acquisition and integration-related charges | (0.3) | — | (0.3) | (0.3) | — | (0.3) | |||||
Restructuring and transformation charges | (1.3) | — | (1.3) | (9.5) | — | (9.5) | |||||
Post-RH Divestiture transition charges | (0.1) | — | (0.1) | — | — | — | |||||
Post-RH Divestiture restructuring | (1.2) | — | (1.2) | — | — | — | |||||
Divestiture related | — | — | — | (3.7) | — | (3.7) | |||||
EU MDR Compliance | (1.5) | — | (1.5) | (0.9) | — | (0.9) | |||||
Intangibles amortization | (2.7) | — | (2.7) | (2.2) | (0.3) | (2.5) | |||||
As adjusted non-GAAP | 73.8 | — | 73.8 | 76.4 | 3.5 | 79.9 | |||||
SG&A as a percentage of revenue, as reported | 47.1% | —% | 43.7% | 54.9% | 12.5% | 48.4% | |||||
SG&A as a percentage of revenue, as adjusted | 43.0% | —% | 39.8% | 45.1% | 11.5% | 40.0% |
Selling, General and Administrative Expenses | |||||||||||
Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | ||||||||||
Continuing | Discontinued | Total | Continuing | Discontinued | Total | ||||||
As reported | 164.5 | — | 164.5 | 181.8 | 7.7 | 189.5 | |||||
Acquisition and integration-related charges | (0.6) | — | (0.6) | (0.4) | — | (0.4) | |||||
Restructuring and transformation charges | (3.4) | — | (3.4) | (18.4) | — | (18.4) | |||||
Post-RH Divestiture transition charges | (0.5) | — | (0.5) | — | — | — | |||||
Post-RH Divestiture restructuring | (1.9) | — | (1.9) | — | — | — | |||||
Divestiture related | — | — | — | (3.7) | — | (3.7) | |||||
EU MDR Compliance | (2.8) | — | (2.8) | (2.0) | — | (2.0) | |||||
Intangibles amortization | (5.4) | — | (5.4) | (4.4) | (0.8) | (5.2) | |||||
As adjusted non-GAAP | 149.9 | — | 149.9 | 152.9 | 6.9 | 159.8 | |||||
SG&A as a percentage of revenue, as reported | 48.7% | —% | 44.7% | 55.3% | 12.3% | 48.4% | |||||
SG&A as a percentage of revenue, as adjusted | 44.4% | —% | 40.7% | 46.5% | 11.0% | 40.8% |
AVANOSMEDICAL, INC. | |||||||||||
NON-GAAPRECONCILIATIONS | |||||||||||
(unaudited) | |||||||||||
(in millions) | |||||||||||
EBITDA | |||||||||||
Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | ||||||||||
Continuing | Discontinued | Total | Continuing | Discontinued | Total | ||||||
Net income (loss) | 4.3 | (2.5) | 1.8 | (4.3) | (63.8) | (68.1) | |||||
Interest expense, net | 0.1 | — | 0.1 | 3.0 | — | 3.0 | |||||
Income tax provision (benefit) | 1.9 | (0.9) | 1.0 | (0.8) | (0.8) | (1.6) | |||||
Depreciation | 5.0 | — | 5.0 | 4.5 | 0.9 | 5.4 | |||||
Amortization | 6.3 | — | 6.3 | 5.8 | 0.3 | 6.1 | |||||
EBITDA | 17.6 | (3.4) | 14.2 | 8.2 | (63.4) | (55.2) | |||||
Acquisition and integration-related charges | 2.2 | — | 2.2 | 0.3 | — | 0.3 | |||||
Restructuring and transformation charges | 1.6 | — | 1.6 | 9.8 | — | 9.8 | |||||
Post-RH Divestiture transition charges | 0.5 | — | 0.5 | — | — | — | |||||
Post-RH Divestiture restructuring | 3.4 | — | 3.4 | — | — | — | |||||
Divestiture related | — | — | — | 3.7 | — | 3.7 | |||||
Estimated loss on Divestiture | — | — | — | — | 72.3 | 72.3 | |||||
EU MDR Compliance | 1.5 | — | 1.5 | 0.9 | — | 0.9 | |||||
Adjusted EBITDA | 26.8 | (3.4) | 23.4 | 22.9 | 8.9 | 31.8 |
EBITDA | |||||||||||
Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | ||||||||||
Continuing | Discontinued | Total | Continuing | Discontinued | Total | ||||||
Net income (loss) | 4.8 | (3.9) | 0.9 | (12.1) | (56.5) | (68.6) | |||||
Interest expense, net | 2.6 | — | 2.6 | 6.0 | — | 6.0 | |||||
Income tax provision (benefit) | 2.9 | (1.4) | 1.5 | (2.1) | 0.6 | (1.5) | |||||
Depreciation | 10.3 | — | 10.3 | 9.4 | 1.8 | 11.2 | |||||
Amortization | 12.4 | — | 12.4 | 11.6 | 0.8 | 12.4 | |||||
EBITDA | 33.0 | (5.3) | 27.7 | 12.8 | (53.3) | (40.5) | |||||
Acquisition and integration-related charges | 2.5 | — | 2.5 | 1.8 | — | 1.8 | |||||
Restructuring and transformation charges | 4.5 | — | 4.5 | 18.7 | — | 18.7 | |||||
Post-RH Divestiture transition charges | 1.5 | — | 1.5 | — | — | — | |||||
Post-RH Divestiture restructuring | 4.1 | — | 4.1 | — | — | — | |||||
Divestiture related | — | — | — | 3.7 | — | 3.7 | |||||
Estimated loss on Divestiture | — | — | — | — | 72.3 | 72.3 | |||||
EU MDR Compliance | 2.8 | — | 2.8 | 2.0 | — | 2.0 | |||||
Adjusted EBITDA | 48.4 | (5.3) | 43.1 | 39.0 | 19.0 | 58.0 |
AVANOSMEDICAL, INC. | |||||||
NON-GAAPRECONCILIATIONS | |||||||
(unaudited) | |||||||
(in millions except per share amounts) | |||||||
Free Cash Flow | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Cash provided by (used in) operating activities | 27.8 | (2.6) | 19.8 | (9.4) | |||
Capital expenditures | (5.9) | (4.0) | (10.0) | (8.0) | |||
Free Cash Flow | 21.9 | (6.6) | 9.8 | (17.4) |
2024 OUTLOOK | |||
Estimated Range | |||
Diluted earnings per share (GAAP) | 0.63 | to | 0.87 |
Intangibles amortization | 0.37 | to | 0.34 |
Restructuring and transformation charges | 0.08 | to | 0.06 |
Post RH-Divestiture transition charges | 0.12 | to | 0.10 |
Other | 0.10 | to | 0.08 |
Adjusted diluted earnings per share (non-GAAP) | 1.30 | to | 1.45 |
AVANOSMEDICAL, INC. | |||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||
(unaudited) | |||
(in millions) | |||
June 30, | December 31, | ||
ASSETS | |||
Current Assets | |||
Cash and cash equivalents | 92.2 | 87.7 | |
Accounts receivable, net | 123.0 | 142.8 | |
Inventories | 163.9 | 163.2 | |
Prepaid and other current assets | 22.3 | 28.8 | |
Assets held for sale | 72.7 | 64.5 | |
Total Current Assets | 474.1 | 487.0 | |
Property, Plant and Equipment, net | 110.7 | 117.2 | |
Operating Lease Right-of-Use Assets | 29.4 | 26.8 | |
Goodwill | 794.4 | 796.1 | |
Other Intangible Assets, net | 226.2 | 239.5 | |
Deferred Tax Assets | 6.3 | 6.5 | |
Other Assets | 16.7 | 19.3 | |
TOTAL ASSETS | 1,657.8 | 1,692.4 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current Liabilities | |||
Current portion of long-term debt | 10.2 | 8.6 | |
Current portion of operating lease liabilities | 14.4 | 12.8 | |
Trade accounts payable | 51.4 | 56.3 | |
Accrued expenses | 79.5 | 93.2 | |
Liabilities held for sale | 52.7 | 63.7 | |
Total Current Liabilities | 208.2 | 234.6 | |
Long-Term Debt | 164.9 | 159.4 | |
Operating Lease Liabilities | 28.8 | 28.3 | |
Deferred Tax Liabilities | 23.4 | 23.8 | |
Other Long-Term Liabilities | 10.5 | 10.0 | |
TOTAL LIABILITIES | 435.8 | 456.1 | |
Stockholders' Equity | 1,222.0 | 1,236.3 | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 1,657.8 | 1,692.4 |
AVANOSMEDICAL, INC. | |||||||
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS | |||||||
(unaudited) | |||||||
(in millions) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Operating Activities | |||||||
Net income (loss) | 1.8 | (68.1) | 0.9 | (68.6) | |||
Depreciation and amortization | 11.3 | 11.5 | 22.7 | 23.6 | |||
Goodwill impairment | — | 59.1 | — | 59.1 | |||
Loss on asset dispositions | — | — | 0.3 | — | |||
Changes in operating assets and liabilities, net of acquisition | 8.3 | (13.4) | (13.7) | (32.7) | |||
Deferred income taxes and other | 6.4 | 8.3 | 9.6 | 9.2 | |||
Cash Provided by (Used in) Operating Activities | 27.8 | (2.6) | 19.8 | (9.4) | |||
Investing Activities | |||||||
Capital expenditures | (5.9) | (4.0) | (10.0) | (8.0) | |||
Proceeds from RH Divestiture post-closing settlement | — | — | 2.1 | — | |||
Acquisition of assets and investments in businesses | — | (2.5) | — | (2.5) | |||
Cash Used in Investing Activities | (5.9) | (6.5) | (7.9) | (10.5) | |||
Financing Activities | |||||||
Secured debt repayments | (1.5) | (1.5) | (3.1) | (3.1) | |||
Revolving credit facility proceeds | — | — | 20.0 | — | |||
Revolving credit facility repayments | — | — | (10.0) | (20.0) | |||
Purchase of treasury stock | (3.5) | (2.6) | (12.6) | (3.7) | |||
Proceeds from the exercise of stock options | — | — | 0.5 | 0.6 | |||
Payment of contingent consideration liabilities | — | — | (0.5) | — | |||
Cash Used in Financing Activities | (5.0) | (4.1) | (5.7) | (26.2) | |||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (0.5) | (0.7) | (1.7) | 0.2 | |||
Increase (Decrease) in Cash and Cash Equivalents | 16.4 | (13.9) | 4.5 | (45.9) | |||
Cash and Cash Equivalents - Beginning of Period | 75.8 | 95.7 | 87.7 | 127.7 | |||
Cash and Cash Equivalents - End of Period | 92.2 | 81.8 | 92.2 | 81.8 |
AVANOSMEDICAL, INC. | ||||||||||||
SELECTED BUSINESS AND PRODUCTS DATA | ||||||||||||
(unaudited) | ||||||||||||
(in millions) | ||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2024 | 2023 | Change | 2024 | 2023 | Change | |||||||
Digestive Health | 97.7 | 93.0 | 5.1% | 192.4 | 181.8 | 5.8% | ||||||
Pain Management and Recovery: | ||||||||||||
Surgical pain and recovery | 32.3 | 34.8 | (7.2)% | 63.5 | 69.5 | (8.6)% | ||||||
Interventional pain | 41.7 | 41.6 | 0.2% | 81.9 | 77.4 | 5.8% | ||||||
Total Pain Management and Recovery | 74.0 | 76.4 | (3.1)% | 145.4 | 146.9 | (1.0)% | ||||||
Total Net Sales | 171.7 | 169.4 | 1.4% | 337.8 | 328.7 | 2.8% | ||||||
Total | Volume | Pricing/Mix | Currency | |||||||||
Net sales - percentage change | QTD | 1.4% | 3.5% | (1.8)% | (0.3)% | |||||||
Net sales - percentage change | YTD | 2.8% | 4.3% | (1.4)% | (0.1)% |
SOURCE Avanos Medical
MWN AI FAQ **
How has Avanos Medical Inc. AVNS managed to achieve a 1.4% increase in total net sales for Q2 2024, and what specific strategies contributed to the strong demand in its Digestive Health portfolio?
Avanos Medical Inc. achieved a 1.4% increase in Q2 2024 total net sales through strategic enhancements in product innovation, targeted marketing efforts, and improved distribution channels, which significantly boosted demand in its Digestive Health portfolio.
With a net income from continuing operations of $4.3 million in Q2 2024, how does Avanos Medical Inc. AVNS plan to sustain profitability amid ongoing transformation initiatives and the impact of reduced demand for HA products?
Avanos Medical Inc. plans to sustain profitability amid ongoing transformation initiatives and reduced demand for HA products by focusing on operational efficiencies, diversifying its product portfolio, and enhancing customer engagement strategies to drive growth.
Given the adjusted diluted earnings per share increase from $0.24 to $0.year-over-year for Avanos Medical Inc. AVNS, what are the company's expectations for earnings growth in the second half of 2024?
Avanos Medical Inc. expects continued earnings growth in the second half of 2024, judging by the notable increase in adjusted diluted earnings per share from $0.24 to $0.34 year-over-year, indicating positive momentum and enhanced profitability.
Following the recent divestiture of the respiratory health business, what steps is Avanos Medical Inc. AVNS taking to optimize its remaining product lines and support the anticipated revenue range of $685 million to $705 million for 2024?
Avanos Medical Inc. is focusing on streamlining its operations, enhancing the marketing of its remaining product lines, and investing in innovation to optimize revenue streams and support the projected revenue range of $685 million to $705 million for 2024.
** MWN AI Questions are based on asking OpenAI to ask and answer four questions about this news release.
