Avanos Medical, Inc. (AVNS) | Investment Case

1. Company Snapshot

1.a. Company Description

Avanos Medical, Inc., a medical technology company, focuses on delivering medical device solutions in North America, Europe, the Middle East, Africa, the Asia Pacific, and Latin America.It offers a portfolio of chronic care products that include digestive health products, such as Mic-Key enteral feeding tubes, Corpak patient feeding solutions, and NeoMed neonatal and pediatric feeding solutions; and respiratory health products, such as closed airway suction systems and other airway management devices under the Ballard, Microcuff, and Endoclear brands.The company also provides a portfolio of non-opioid pain solutions, including acute pain products, such as On-Q and ambIT surgical pain pumps, Game Ready cold, and compression therapy systems; and interventional pain solutions, which offers minimally invasive pain-relieving therapies, such as Coolief pain relief therapy.

It markets its products directly to hospitals and other healthcare providers, healthcare facilities, and other end-user customers, as well as through third-party wholesale distributors.The company was formerly known as Halyard Health, Inc.and changed its name to Avanos Medical, Inc.

in June 2018.Avanos Medical, Inc.was incorporated in 2014 and is headquartered in Alpharetta, Georgia.

Show Full description

1.b. Last Insights on AVNS

Avanos Medical's recent performance was negatively impacted by Q2 earnings missing estimates, with margins shrinking due to tariff pressures and a decline in profitability. The company's quarterly earnings of $0.17 per share fell short of the Zacks Consensus Estimate of $0.18 per share. Although Q2 revenue rose 2%, medical care costs and expenses weighed on the company's financials. Additionally, Avanos Medical's divestiture of its Hyaluronic Acid product line may have contributed to short-term uncertainty. Zacks ranked the stock as a Strong Sell in July.

1.c. Company Highlights

Last Price	11.26
Change Percentage	1.17%
Open	11.08
Previous Close	11.13
Market Cap ( Millions)	523
Volume	335867
Year High	19
Year Low	9.3
M A 50	11.42
M A 200	12.33

FCF Yield	14.33%
Dividend Yield	0.00%
ROE	-58.21%
Debt / Equity	17.19%
Net Debt / EBIDTA	-14.39%
Price To Book	0.67
Price Earnings Ratio	-1.11
Price To FCF	6.98
Price To sales	0.75
EV / EBITDA	-1.33

2. Avanos Delivers Strong Q3 2025 Earnings, Driven by Specialty Nutrition Systems Growth

Avanos reported a robust third quarter in 2025, with adjusted diluted earnings per share (EPS) of $0.22, significantly beating estimates of $0.12. The company's revenue growth was driven by its Specialty Nutrition Systems (SNS) segment, which delivered double-digit and above-market growth. Adjusted EBITDA was $20 million, with an adjusted gross margin of 52.8% and adjusted SG&A as a percentage of revenue of 40.6%. The strong sales momentum and effective cost discipline measures have led the company to raise and narrow its full-year revenue estimates to $690 million to $700 million and adjusted EPS estimate to $0.85 to $0.95 per share.

Publication Date: Nov -21

                                    📋 Highlights
                                    Revenue & EPS Guidance Raised:
                                                Full-year revenue now $690M–$700M (+10.6%–13.3% YoY), adjusted EPS $0.85–$0.95 (+14.3%–22.2% YoY).
SNS Segment Outperforms:
                                                14.5% organic growth (short-term enteral feeding and neonatal solutions up >10% globally).
Pain Management Recovery Gains:
                                                2.4% normalized organic growth, RFA business achieves double-digit YoY growth.
Cost Savings Plan:
                                                $15M–$20M annualized savings by 2026 from organizational restructuring and operational efficiency.
M&A & R&D Strategy:
                                                Hybrid R&D model (internal + external) and focus on SNS/Pain Management synergistic acquisitions.

                                

Segment Performance

The SNS portfolio delivered outstanding above-market results, growing 14.5% organically versus the prior year. The short-term enteral feeding portfolio posted another robust quarter of double-digit growth globally, while the neonatal solutions business delivered another excellent quarter, growing by double digits compared to the prior year. The Pain Management and Recovery portfolio normalized organic sales for the quarter were up 2.4%, excluding the impact of foreign exchange and the company's strategic decision to withdraw from certain low-growth, low-margin products.

Cost Improvement Plan

The company is implementing a cost improvement plan, expecting $15 million to $20 million in annualized cost savings by the end of 2026. The plan involves streamlining the overall organization and management structure to improve decision-making and accelerate processes. As David Pacitti mentioned, "We've been really focused on streamlining the overall organization, the management structure that we have, really trying to make it a much more effective and improve decision-making and also accelerate things within the organization."

Valuation and Outlook

With a current P/E Ratio of -1.08 and EV/EBITDA of -1.29, the market is pricing in significant challenges for the company. However, the strong Q3 performance and raised full-year estimates suggest a positive outlook. Analysts estimate next year's revenue growth at 2.2%. The company's focus on synergistic M&A opportunities, particularly in the SNS business, is expected to drive future growth. With a Free Cash Flow Yield of 14.82%, the stock may be attractive to investors looking for value. As the company continues to execute on its strategic imperatives, it is confident in enhancing the value of Avanos by delivering a more attractive growth profile.

3. NewsRoom

Envestnet Asset Management Inc. Has $2.57 Million Stock Position in Avanos Medical, Inc. $AVNS

Nov -17

Source: defenseworld.net

Financial Contrast: Avanos Medical (NYSE:AVNS) versus Inspira Technologies OXY B.H.N. (NASDAQ:IINN)

Nov -15

Source: defenseworld.net

Avanos Medical Gains on Q3 Earnings Beat, Raises '25 Sales View

Nov -06

Source: zacks.com

Avanos Medical, Inc. (AVNS) Q3 2025 Earnings Call Transcript

Nov -05

Source: seekingalpha.com

Avanos Medical (AVNS) Q3 Earnings and Revenues Beat Estimates

Nov -05

Source: zacks.com

Avanos Medical, Inc. Announces Third Quarter 2025 Results

Nov -05

Source: prnewswire.com

Avanos Medical, Inc. to Webcast Conference Call Discussing Third Quarter 2025 Financial Results

Oct -27

Source: prnewswire.com

WRS Group Announces Agreement to Acquire Avanos Medical's US Game Ready® Orthopedic Rental Business

Oct -23

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.73%)

6. Segments

Digestive Health

Expected Growth: 3.5%

Avanos Medical's Digestive Health segment growth of 3.5% is driven by increasing demand for its innovative enteral feeding tubes and chronic care products, expansion into emerging markets, and strategic partnerships. Additionally, growing awareness of digestive health issues and an aging population contribute to the segment's growth.

Pain Management and Recovery - Interventional Pain

Expected Growth: 4.2%

Avanos Medical's Interventional Pain Management and Recovery segment growth of 4.2% is driven by increasing demand for minimally invasive procedures, rising prevalence of chronic pain, and growing adoption of radiofrequency ablation and minimally invasive spine procedures. Additionally, expansion into new markets and strategic partnerships contribute to the segment's growth.

Pain Management and Recovery - Surgical Pain and Recovery

Expected Growth: 3.8%

Avanos Medical's Pain Management and Recovery segment, specifically Surgical Pain and Recovery, is driven by increasing demand for minimally invasive procedures, growing adoption of regional anesthesia, and a shift towards outpatient surgeries. Additionally, the rising prevalence of chronic pain and opioid abuse has led to increased focus on alternative pain management solutions, contributing to the 3.8% growth.

7. Detailed Products

Game Ready

A cold compression therapy system designed to reduce pain and swelling, and promote healing after surgery or injury.

CoolFlow

A cold compression wrap designed to provide targeted cold therapy to specific areas of the body.

On-Q

A pain management system that provides continuous nerve block therapy for post-operative pain relief.

MICROPORT Access Port

A fully implantable, subcutaneous access port designed for repeated access to the bloodstream.

BioFlo

A portfolio of vascular access products designed to reduce thrombus accumulation and maintain patency.

8. Avanos Medical, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Avanos Medical, Inc. operates in a niche market with limited substitutes, but the threat of substitutes is still present due to the increasing competition in the medical device industry.

Bargaining Power Of Customers

Avanos Medical, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products are critical to its customers' operations, making it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

Avanos Medical, Inc. relies on a few key suppliers for critical components, which gives these suppliers some bargaining power. However, the company's size and scale of operations mitigate this risk to some extent.

Threat Of New Entrants

The medical device industry has high barriers to entry, including regulatory hurdles and significant capital requirements, which makes it difficult for new entrants to enter the market.

Intensity Of Rivalry

The medical device industry is highly competitive, with several established players competing for market share. Avanos Medical, Inc. faces intense competition from companies such as Medtronic, Johnson & Johnson, and Stryker.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	12.76%
Debt Cost	5.72%
Equity Weight	87.24%
Equity Cost	8.82%
WACC	8.42%
Leverage	14.62%

11. Quality Control: Avanos Medical, Inc. passed 2 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

SI-BONE

A-Score: 4.7/10

Value: 7.0

Growth: 5.8

Quality: 5.6

Yield: 0.0

Momentum: 6.0

Volatility: 4.0

1-Year Total Return ->

908 Devices

A-Score: 4.3/10

Value: 7.2

Growth: 2.9

Quality: 4.8

Yield: 0.0

Momentum: 10.0

Volatility: 0.7

1-Year Total Return ->

Silk Road Medical

A-Score: 3.8/10

Value: 6.2

Growth: 5.6

Quality: 5.0

Yield: 0.0

Momentum: 5.0

Volatility: 1.0

1-Year Total Return ->

Avanos Medical

A-Score: 3.6/10

Value: 8.9

Growth: 2.3

Quality: 4.5

Yield: 0.0

Momentum: 0.5

Volatility: 5.7

1-Year Total Return ->

Cerus

A-Score: 3.5/10

Value: 5.6

Growth: 6.9

Quality: 3.4

Yield: 0.0

Momentum: 2.5

Volatility: 2.3

1-Year Total Return ->

TELA Bio

A-Score: 3.3/10

Value: 7.8

Growth: 5.8

Quality: 3.6

Yield: 0.0

Momentum: 1.0

Volatility: 1.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-6.51%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.42%

Avanos Medical, Inc. - US05350V1061

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on AVNS

1.c. Company Highlights

Less Volatile

Stable Momentum

Average Yield

Earnings Beats

Revenues Miss

Average Growth

Fairly Valued

Average Quality

Revenues Beats

Cheaper

Earnings Miss

Lower Growth

Weak Momentum

2. Avanos Delivers Strong Q3 2025 Earnings, Driven by Specialty Nutrition Systems Growth

Segment Performance

Cost Improvement Plan

Valuation and Outlook

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.73%)

6. Segments

Digestive Health

Expected Growth: 3.5%

Pain Management and Recovery - Interventional Pain

Expected Growth: 4.2%

Pain Management and Recovery - Surgical Pain and Recovery

Expected Growth: 3.8%

7. Detailed Products

Game Ready

CoolFlow

On-Q

MICRO*PORT* Access Port

BioFlo

8. Avanos Medical, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Avanos Medical, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

11.26$

Current Price

11.26$

Potential

-0.00%

Expected Cash-Flows

MICROPORT Access Port

12.e Scoring ^Insights

12.f DCF ^BETA