Avanos Medical (AVNS) Q1 2025 earnings summary

Executive summary

• Q1 2025 delivered strong results, led by Specialty Nutrition Systems (SNS) growth and improved Pain Management and Recovery (PM&R) performance, with margin expansion and commercial execution.

• Net income rose to $6.6 million from a prior-year loss, with adjusted net income at $12.0 million; operating income increased to $10.3 million, reflecting restructuring and transformation benefits.

• New CEO and Interim CFO appointed, bringing commercial and financial expertise.

• Transformation initiatives and portfolio optimization, including divestitures and cost management, are supporting growth and profitability.

Financial highlights

• Q1 2025 net sales were $168 million, up 2.8% organically year-over-year; SNS net sales grew 6.9% to $101.1 million, while PM&R net sales were $56.2 million.

• Adjusted EBITDA was $22 million; adjusted diluted EPS was $0.26, up from $0.22; gross margin (as adjusted) was 56.7%; SG&A as a percentage of revenue was 43.4%.

• Free cash flow for Q1 was $19 million; cash flow from operations was $25.7 million; cash on hand at quarter-end was $97 million; debt outstanding was $107 million.

• Operating income improved to $10.3 million from $4.0 million; adjusted operating income was $17.1 million, up from $16.3 million.

Outlook and guidance

• Full-year 2025 revenue guidance maintained at $665–$685 million.

• Adjusted EPS guidance lowered to $0.75–$0.95 due to tariffs and executive transition costs, with mitigation plans in place.

• SNS expected to deliver mid-single-digit organic growth; PM&R to see low single-digit growth.

• Post-divestiture restructuring plan expected to be substantially complete by year-end 2025, with up to $16 million in cash expenses.