1. AVNS recorded 5% organic growth in Q4 2024. 2. The company generated $83 million in free cash flow in 2024. 3. AVNS faces a challenging market, forecasting 2025 sales of $665M-$685M. 4. Impairment charges of $436.7 million impacted 2024 results significantly. 5. Total debt reduced to $134.7 million as of Q4 2024.
The significant net loss and impairment charges overshadowed growth, impacting investor confidence.
Financial losses and impairment charges are critical for future projections, directly affecting AVNS’s valuation.
Immediate impacts from the financial report may affect stock price, but long-term potential remains.
ALPHARETTA, Ga., Feb. 26, 2025 /PRNewswire/ -- Avanos Medical, Inc. (NYSE: AVNS) today reported fourth quarter and full-year 2024 results.
"We are pleased with our fourth quarter results, which delivered 5% organic growth and continued execution on each of our transformation initiative priorities," said Michael Greiner, Avanos's interim chief executive officer. Greiner continued, "For the full year, we generated $83 million of free cash flow and $108 million of adjusted EBITDA. We currently have net debt of approximately $20 million. We believe our strong financial position will enable us to execute on our internal investment and other capital allocation priorities in 2025 and beyond."
In the fourth quarter, we completed our obligations to perform certain manufacturing services on behalf of the buyer of our former respiratory health ("RH") business, and the assets formerly classified as "held for sale" were transferred to the buyer on October 1, 2024. The completion of this sale was a key component of our three-year transformation process (the "Transformation Process"), which is aimed at accelerating our effort to focus our product portfolio.
In the fourth quarter of 2024, net sales totaled $179.6 million, a 3.6% increase compared to the prior year, primarily due to continued strong performance in our life-sustaining digestive health portfolio, particularly from our NeoMed neonatal and pediatric feeding solutions, along with higher volume in our interventional pain portfolio, partially offset by unfavorable pricing in our Hyaluronic Acid ("HA") portfolio sales and lower volume in our clinically-proven and opioid-sparing Pain Management and Recovery portfolio, particularly related to our Game Ready cold compression systems.
Gross margin for the fourth quarter was 54.6% compared to 54.8% a year ago. Adjusted gross margin was 58.7% compared to 58.6% in the prior year. Gross margin was impacted by savings realized from the transformation process partially offset by costs associated with divestiture separation costs, post-divestiture restructuring costs and lower pricing in sales of HA products.
Selling and general expenses as a percentage of net sales was 44.4% compared to 43.0% in the prior year period, primarily due to non-recurring expenses associated with our ongoing Transformation Process, the RH business divestiture and compliance costs associated with the EU Medical Device Regulation (the "EU MDR"). On an adjusted basis, selling and general expenses as a percentage of net sales was 41.6% compared to 38.9% in the same period last year.
Operating loss in the quarter was $418.5 million compared to operating profit of $11.2 million in the fourth quarter of 2023. On an adjusted basis, operating profit was $23.9 million compared to $27.1 million a year ago.
Net loss from continuing operations was $397.0 million, compared to net income from continuing operations of $11.0 a year ago.
Adjusted EBITDA for the quarter was $28.6 million compared to $32.1 million in the prior year.
Net sales increased 2.2% to $687.8 million in 2024 primarily due to higher volume across our digestive health and interventional pain portfolios partially offset by unfavorable pricing on sales of HA products.
Gross margin for 2024 was 55.4% compared to 56.4% in 2023. Adjusted gross margin was 59.0%, compared to 59.1% last year due primarily to unfavorable pricing on sales of HA products partially offset by efficiencies gained from the transformation process.
Selling and general expenses as a percentage of net sales were 46.3% compared to 49.8% in the prior year period, driven by non-recurring expenses associated with our ongoing Transformation Process, the RH business divestiture and our acquisition of Diros Technology Inc., as well as compliance costs associated with the EU MDR. On an adjusted basis, selling and general expenses were 42.5% of net sales compared to 43.3% of net sales in 2023.
Operating loss in 2024 was $396.2 million compared to operating profit of $4.2 million in the prior year. On an adjusted basis, operating profit was $87.3 million compared to $79.7 million in 2023.
We expect 2025 net sales to be between $665 million and $685 million, and adjusted diluted earnings per share are expected to be between $1.05 to $1.25.
Avanos interim chief executive officer Michael Greiner commented, "Our 2025 guidance reflects a challenging market environment for some of our product categories, as well as currency headwinds. We expect to see a pause in our margin improvements in 2025, but remain committed to executing our long-term strategy and delivering on our previously stated margin profile. While this guidance reflects near-term pressures, we are confident in our ability to reignite our margin expansion in 2026 and are focused on positioning the company for a stronger, more sustainable future."
Avanos Medical (NYSE: AVNS) is a medical device company focused on delivering clinically superior breakthrough solutions that will help patients get back to the things that matter. Headquartered in Alpharetta, Georgia, Avanos is committed to creating the next generation of innovative healthcare solutions which will address our most important healthcare needs, such as reducing the use of opioids while helping patients move from surgery to recovery. Avanos develops, manufactures and markets its recognized brands in more than 90 countries. For more information, visit www.avanos.com and follow Avanos Medical on Twitter (@AvanosMedical), LinkedIn and Facebook.
This press release contains information that includes or is based on "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as "may", "believe", "will", "expect", "project", "estimate", "anticipate", "plan", or "continue" and similar expressions, among others. Forward-looking statements are based on the current plans and expectations of management and are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in such statements.