Avanos Medical Reports Strong Q4 2024 Financial Growth Despite Challenges

Avanos Medical's Financial Results for Q4 and Full-Year 2024

Avanos Medical, Inc. released its financial results for the fourth quarter and full-year 2024, revealing a solid performance amidst a challenging market landscape. The company reported a remarkable 5% growth in organic sales during the fourth quarter, bringing in net sales of approximately $179.6 million, which represents a 3.6% increase from the previous year. For the entire year, net sales reached $687.8 million, up 2.2% compared to 2023.

Michael Greiner, Avanos's interim CEO, expressed satisfaction with these results, highlighting the company's strong cash flow position with $83 million generated in free cash flow and an adjusted EBITDA of $108 million, despite facing some headwinds in particular product lines. Notably, the company was able to navigate these market obstacles, continuing to execute its transformation initiatives and focusing on its priority areas.

Financial Highlights

- Fourth Quarter 2024: Net sales were $179.6 million, marking a 3.6% increase year-over-year.
- Full-Year 2024: Net sales grew by 2.2% to $687.8 million.
- Loss per Share: The fourth quarter experienced a diluted loss per share of $8.63, contrasting with earnings of $0.24 per share in the previous year, albeit adjusted figures indicated an improvement to $0.43 from $0.36.
- Cash Flow: Free cash flow improved significantly to $53.1 million from an outflow of $3.4 million in the same period last year.
- Year-end Debt: The company's net debt stands at approximately $20 million, down from $80.3 million year-over-year.

The company's growth in 2024 was primarily driven by robust performance in its life-sustaining digestive health portfolio, particularly in the NeoMed neonatal and pediatric feeding solutions, as well as volume increases in the interventional pain segment. However, challenges arose from pricing issues associated with the Hyaluronic Acid product sales and reduced volume in the Pain Management and Recovery portfolio, especially regarding the Game Ready cold compression systems.

Operational Dynamics

Despite the general growth, business operations revealed some challenges. The gross margin for Q4 was reported at 54.6%, a slight decline from the previous year's 54.8%. This dip was attributed to costs related to divestitures and restructuring executed in line with the company's transformation plans. Furthermore, the total operating loss for the quarter was reported as $418.5 million, a stark contrast to the $11.2 million profit from Q4 2023. Adjusted for various factors, operating profit for the same period came in at $23.9 million versus $27.1 million a year earlier.

Looking to the Future

For 2025, Avanos anticipates net sales to be between $665 million to $685 million. The guidance reflects the challenges inherent in certain product categories and potential currency headwinds. Greiner also noted a pause in margin improvements but emphasized the company's commitment to executing its long-term strategies, expecting to reignite margin expansion by 2026.

Conclusion

Avanos Medical emphasizes a transformative approach as it navigates through challenges while posting positive growth trends. The company remains focused on innovation and addressing vital healthcare needs, ensuring its commitment to producing clinically superior solutions. The developments in 2025 will be crucial as Avanos continues to adapt and navigate changing market landscapes, with an eye toward achieving greater stability and growth.