AVNS Stock Gains Post Q4 Earnings & Revenue Beat, Margins Contract

Avanos Medical, Inc. AVNS reported fourth-quarter 2024 adjusted earnings per share (EPS) from continuing operations of 43 cents, up 19.4% year over year. The bottom line surpassed the Zacks Consensus Estimate by 7.5%.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.GAAP loss per share from continuing operations in the quarter under review was $8.63 against the year-ago period’s EPS of 24 cents.Full-year 2024 adjusted EPS was $1.35, up 31.1% from a year ago. The metric topped the Zacks Consensus Estimate by 2.3%.Avanos’ RevenuesRevenues grossed $179.6 million in the reported quarter, up 3.6% year over year. The metric beat the Zacks Consensus Estimate by 1.1%.Organic sales were up 5% year over year.Per management, the top line was boosted by continued strong performance in AVNS’ digestive health portfolio, particularly from the NeoMed neonatal and pediatric feeding solutions, and higher volume in the interventional pain portfolio. However, this was partially offset by unfavorable pricing in the Hyaluronic Acid (HA) portfolio sales and lower volume in the Pain Management and Recovery portfolio, particularly related to the Game Ready cold compression systems.Full-year 2024 revenues were $687.8 million, reflecting a 2.2% increase from the comparable 2023 figure on a reported basis. The metric beat the Zacks Consensus Estimate by 0.3%.Shares of the company gained nearly 0.4% at yesterday’s close.AVNS’ Segmental AnalysisAvanos provides a portfolio of innovative product offerings that focus on Pain Management and Recovery and Digestive Health.Pain Management and Recovery’s net revenues of $73.8 million decreased 5.9% year over year on a reported basis. This figure compares to our fourth-quarter projection of $78.4 million.Per management, the normalized organic sales for the fourth quarter were down 3%, excluding the impact of foreign exchange and the previously announced decision to discontinue certain low-growth, low-margin products. AVNS’ overall surgical pain business, while down compared with the prior year, rebounded from a weaker third-quarter performance, with the combined On-Q, AMBIT portfolio growing 13% sequentially.Digestive Health’s net revenues of $105.8 million improved 11.6% year over year on a reported basis. This figure compares to our fourth-quarter projection of $99.3 million.Per management, the segment’s enteral feeding portfolio continued to deliver strong results, growing 12% organically year over year. The segment’s growth was supported by the NEOMED product line as AVNS continues to take advantage of the strong demand for ENFit conversions in North America while capturing opportunities from a competitor's backorder.Management confirmed that effective the first quarter of 2025, Avanos will be reporting under three operating segments. The enteral feeding portfolio will be renamed as the Specialty Nutrition System segment, the interventional pain and pain management and recovery portfolios will be combined into a single Pain Management and Recovery segment and the HA injections and intravenous infusion product lines will be combined and reported in the Corporate and Other segment.Avanos Medical, Inc. Price, Consensus and EPS Surprise Avanos Medical, Inc. price-consensus-eps-surprise-chart | Avanos Medical, Inc. QuoteAvanos’ Margin AnalysisIn the quarter under review, Avanos’ gross profit rose 3.2% to $98 million. The gross margin contracted 25 basis points (bps) to 54.6%. We had projected a gross margin of 59.1% for the fourth quarter.Selling and general expenses increased 6.9% to $79.7 million. Research and development expenses decreased 16.2% year over year to $5.7 million. Adjusted operating expenses of $85.4 million increased 5%.Adjusted operating profit totaled $12.6 million, reflecting an 8% decrease from the prior-year quarter. The adjusted operating margin in the fourth quarter contracted 89 bps to 7%.AVNS’ Financial UpdateThe company exited 2024 with cash and cash equivalents worth $107.7 million compared with $87.7 million at the end of 2023. Total debt at 2024-end was $134.7 million compared with $168 million at 2023-end.Cumulative net cash provided by operating activities at the end of 2024 totaled $100.7 million compared with $32.4 million in the prior-year period.Avanos’ GuidanceAVNS has initiated its 2025 outlook.The company estimates its net sales for the full year in the range of $665 million to $685 million. The Zacks Consensus Estimate currently stands at $719.5 million.For the full year, the Specialty Nutrition Systems segment will likely be up mid-single digits organically, while the Pain Management & Recovery segment is expected to reflect flat to low-single-digit growth organically. The Corporate and Other categories segment will likely be down 20%.Avanos anticipates 2025 adjusted EPS between $1.05 and $1.25. The Zacks Consensus Estimate is currently pegged at $1.73.Our TakeAvanos’ ended the fourth quarter of 2024 with better-than-expected results. Strong overall top-line results and its continued strength in the Digestive Health segment in the quarter were encouraging. The robust growth in NeoMed neonatal and pediatric feeding solutions was promising. Strength in the legacy enteral feeding business during the quarter was also encouraging.Yet, Avanos’ unfavorable pricing in the HA portfolio sales and lower volume in the Pain Management and Recovery portfolio, particularly related to the Game Ready cold compression systems, was discouraging. The contraction of both margins does not bode well. Management’s expectation of a temporary pause in margin improvement in 2025 due to a challenging market environment for some of its product categories, as well as currency headwinds and other global macroeconomic factors, like tariffs, raise our apprehension.AVNS’ Zacks Rank and Stocks to ConsiderAvanos currently carries a Zacks Rank #4 (Sell).Some better-ranked stocks in the broader medical space that have announced quarterly results are Cardinal Health, Inc. CAH, ResMed Inc. RMD and Boston Scientific Corporation BSX.Cardinal Health, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2025 adjusted EPS of $1.93, beating the Zacks Consensus Estimate by 10.3%. Revenues of $55.26 billion outpaced the consensus mark by 0.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Cardinal Health has a long-term estimated growth rate of 10.7%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%.ResMed reported second-quarter fiscal 2025 adjusted EPS of $2.43, beating the Zacks Consensus Estimate by 5.7%. Revenues of $1.28 billion surpassed the Zacks Consensus Estimate by 1.6%. It currently carries a Zacks Rank #2.ResMed has a long-term estimated growth rate of 16%. RMD’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.9%.Boston Scientific reported fourth-quarter 2024 adjusted EPS of 70 cents, beating the Zacks Consensus Estimate by 7.7%. Revenues of $4.56 billion surpassed the Zacks Consensus Estimate by 3.5%. It currently carries a Zacks Rank #2.Boston Scientific has a long-term estimated growth rate of 13.3%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.3%.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Boston Scientific Corporation (BSX): Free Stock Analysis Report Cardinal Health, Inc. (CAH): Free Stock Analysis Report ResMed Inc. (RMD): Free Stock Analysis Report AVANOS MEDICAL, INC. (AVNS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks