Avanos Corporation's Q2 2025 Earnings Call Transcript Revealed
Avanos Medical Inc. Reports Q2 Results and Outlook
Avanos Medical Inc., a leading medical device company, has announced its financial results for the second quarter of 2025 and provided an outlook for the remainder of the year.
The company reported total net sales of $175 million for Q2 2025, a 1.9% increase from the prior year quarter. This growth was primarily driven by strong performance in the Specialty Nutrition Systems segment and the Pain Management & Recovery segment. Despite the revenue growth, Avanos posted a net loss of $76.8 million due to a $77 million goodwill impairment charge related to the Pain Management & Recovery segment.
The divestiture of the Hyaluronic Acid product line was successfully completed in 2025, aligning the company's focus on its core business sectors. The impact of this divestiture has been incorporated into the full-year guidance, which remains unchanged, indicating confidence in the company's core growth areas.
Key points for the 2025 fiscal year outlook are as follows:
- Revenue guidance: $665–$685 million
- Adjusted diluted EPS: $0.75–$0.95 (includes HA divestiture effects)
- Q2 net sales: $175 million (+1.9% y/y)
- Q2 net loss: $76.8 million (due to goodwill impairment)
- Divestiture: HA product line sold, aligning focus on Specialty Nutrition and Pain Management & Recovery segments
CEO David Pacitti cited ongoing cost containment, supply chain adjustments, and progress on transformation priorities as foundational to sustaining the 2025 financial targets.
The Specialty Nutrition segment saw a 5% organic growth year-over-year in Q2 2025, while the Neonatal solutions and short-term internal feeding portfolio reported over 12% and double-digit global growth, respectively. The Pain Management segment, while seeing a decrease compared to the prior year, performed generally in line with expectations. The operating profit for the pain management and recovery segment, excluding the noncash goodwill impairment charge, grew nearly $2 million year-over-year during the second quarter.
The company is encouraged by the progress of the COOLIEF offering internationally, leveraging reimbursement tailwinds in several geographies, including The United Kingdom and Japan. The Radiofrequency ablation (RFA) growth year-over-year increase was nearly 14%.
Avanos anticipates generating approximately $40 million of free cash flow for the year, including the impact of tariffs. Incurred tariffs for the fiscal second quarter ended June 30, 2025, were over $8 million. The company is implementing strategies focused on tariff mitigation, including internal cost containment, pricing actions where appropriate, leveraging previously issued temporary tariff exemptions for portions of the portfolio, and lobbying efforts with Advamed and other third parties.
The company has closed two transactions supporting the Specialty Nutrition Systems strategy and remains active on acquisitions aligned with returns criteria. Notably, Avanos has accelerated supply chain investments and is targeting a complete exit from China-sourced NeoMed products by 2026.
The company's cash and debt position as of June 30, 2025, was $90 million cash on hand and $105 million debt outstanding. The implementation of the reimbursement decision afforded by the No Pain Act is taking longer than anticipated, and more effort is being devoted to understanding and addressing coverage denials.
In conclusion, Avanos Medical Inc. is focused on its core business sectors and is making significant strides in cost containment, supply chain adjustments, and transformation priorities. The company remains confident in its ability to achieve its 2025 financial targets.
[1] Avanos Medical Inc. (2025). Form 10-Q for the Quarter Ended June 30, 2025. [2] Avanos Medical Inc. (2025). Second Quarter 2025 Earnings Release. [3] Avanos Medical Inc. (2025). Second Quarter 2025 Earnings Conference Call. [4] Avanos Medical Inc. (2025). Press Release: Avanos Medical Completes Divestiture of Hyaluronic Acid Business. [5] Avanos Medical Inc. (2025). Investor Presentation: Fiscal Year 2025 Outlook.
- Avanos Medical Inc., a medical device company, reported a 1.9% increase in Q2 earnings, but still posted a net loss due to a goodwill impairment charge.
- The company's strong performance was primarily in the Specialty Nutrition Systems and Pain Management & Recovery segments.
- The divestiture of the Hyaluronic Acid product line was completed, aligning the company's focus on its core business sectors.
- Revenue guidance for the 2025 fiscal year is $665–$685 million, with adjusted diluted EPS of $0.75–$0.95, taking into account the impact of the divestiture.
- The Specialty Nutrition segment saw a 5% organic growth, while Neonatal solutions and short-term internal feeding portfolio reported over 12% and double-digit global growth, respectively.
- Avanos anticipates generating approximately $40 million of free cash flow for the year, despite tariffs amounting to over $8 million in Q2 2025.
- The company is implementing strategies for tariff mitigation, including internal cost containment, pricing actions, leveraging temporary tariff exemptions, and lobbying efforts.
- Focused on its core business sectors, Avanos is making significant strides in cost containment, supply chain adjustments, and transformation priorities, remaining confident in its ability to achieve its 2025 financial targets.
