Delaware | 001-36440 | 46-4987888 | ||||||||||||||||||
(State or other jurisdiction of incorporation) | (Commission file number) | (I.R.S. Employer Identification No.) | ||||||||||||||||||
5405 Windward Parkway | ||||||||||||||||||||
Suite 100 South | ||||||||||||||||||||
Alpharetta, | Georgia | 30004 | ||||||||||||||||||
(Address of principal executive offices) | (Zip code) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol | Name of exchange on which registered | ||||||
Common Stock - $0.01 Par Value | AVNS | New York Stock Exchange |
Exhibit No. | Description | |||||||
104 | Cover Page Interactive Data File (embedded within the inline XBRL document) |
AVANOS MEDICAL, INC. | ||||||||||||||
Date: | May 02, 2024 | By: | /s/ Mojirade James | |||||||||||
Mojirade James Senior Vice President and General Counsel |
Investor Contact: Michael Greiner | ||||||||
Avanos Medical, Inc. | ||||||||
470-562-2692 | ||||||||
Investor.Relations@Avanos.com | ||||||||
Media Contact: Katrine Kubis | ||||||||
Avanos Medical, Inc. | ||||||||
CorporateCommunications@Avanos.com |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Net Sales | $ | 166.1 | $ | 159.3 | |||||||
Cost of products sold | 71.3 | 67.9 | |||||||||
Gross Profit | 94.8 | 91.4 | |||||||||
Research and development expenses | 7.0 | 7.5 | |||||||||
Selling and general expenses | 83.6 | 88.8 | |||||||||
Other expense, net | 0.2 | 1.2 | |||||||||
Operating Income (Loss) |
4.0 | (6.1) | |||||||||
Interest income | 0.6 | 0.5 | |||||||||
Interest expense | (3.1) | (3.5) | |||||||||
Income (Loss) Before Income Taxes | 1.5 | (9.1) | |||||||||
Income tax (provision) benefit |
(1.0) | 1.3 | |||||||||
Income (Loss) from Continuing Operations | 0.5 | (7.8) | |||||||||
(Loss) Income from discontinued operations, net of tax | (1.4) | 7.3 | |||||||||
Net Loss | $ | (0.9) | $ | (0.5) | |||||||
Interest expense, net | $ | 2.5 | $ | 3.0 | |||||||
Income tax benefit |
0.5 | 0.1 | |||||||||
Depreciation and amortization | 11.4 | 12.1 | |||||||||
EBITDA | $ | 13.5 | $ | 14.7 | |||||||
Earnings (Loss) Per Share | |||||||||||
Basic | |||||||||||
Continuing operations | $ | 0.01 | $ | (0.17) | |||||||
Discontinued operations | (0.03) | 0.16 | |||||||||
Basic Loss Per Share | $ | (0.02) | $ | (0.01) | |||||||
Diluted | |||||||||||
Continuing operations | $ | 0.01 | $ | (0.17) | |||||||
Discontinued operations | (0.03) | 0.16 | |||||||||
Diluted Loss Per Share | $ | (0.02) | $ | (0.01) | |||||||
Common Shares Outstanding | |||||||||||
Basic | 46.2 | 46.6 | |||||||||
Diluted | 46.7 | 46.6 |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Net Sales | $ | 16.9 | $ | 32.4 | |||||||
Cost of products sold | 15.9 | 19.3 | |||||||||
Gross Profit | 1.0 | 13.1 | |||||||||
Research and development expenses | — | 0.4 | |||||||||
Selling, general and other expenses | — | 3.9 | |||||||||
Other expense, net | 2.9 | 0.1 | |||||||||
Operating (Loss) Income | (1.9) | 8.7 | |||||||||
(Loss) Income from discontinued operations before income taxes | (1.9) | 8.7 | |||||||||
Income tax benefit (provision) from discontinued operations | 0.5 | (1.4) | |||||||||
(Loss) Income from discontinued operations, net of tax | $ | (1.4) | $ | 7.3 | |||||||
(Loss) Earnings Per Share | |||||||||||
Basic | $ | (0.03) | $ | 0.16 | |||||||
Diluted | $ | (0.03) | $ | 0.16 |
Gross Profit | |||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||||||
Continuing Operations |
Discontinued Operations |
Total | Continuing Operations |
Discontinued Operations |
Total | ||||||||||||||||||||||||||||||
As reported | $ | 94.8 | $ | 1.0 | $ | 95.8 | $ | 91.4 | $ | 13.1 | $ | 104.5 | |||||||||||||||||||||||
Restructuring and transformation charges | 0.7 | — | 0.7 | — | — | — | |||||||||||||||||||||||||||||
Post-RH Divestiture transition charges | 0.5 | — | 0.5 | — | — | — | |||||||||||||||||||||||||||||
Intangibles amortization | 3.4 | — | 3.4 | 3.6 | — | 3.6 | |||||||||||||||||||||||||||||
As adjusted non-GAAP | $ | 99.4 | $ | 1.0 | $ | 100.4 | $ | 95.0 | $ | 13.1 | $ | 108.1 | |||||||||||||||||||||||
Gross profit margin, as reported | 57.1 | % | 5.9 | % | 52.3 | % | 57.4 | % | 40.4 | % | 54.5 | % | |||||||||||||||||||||||
Gross profit margin, as adjusted | 59.8 | % | 5.9 | % | 54.9 | % | 59.6 | % | 40.4 | % | 56.4 | % |
Operating Profit (Loss) | |||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||||||
Continuing Operations |
Discontinued Operations |
Total | Continuing Operations |
Discontinued Operations |
Total | ||||||||||||||||||||||||||||||
As reported | $ | 4.0 | $ | (1.9) | $ | 2.1 | $ | (6.1) | $ | 8.7 | $ | 2.6 | |||||||||||||||||||||||
Acquisition and integration-related charges | 0.3 | — | 0.3 | 1.5 | — | 1.5 | |||||||||||||||||||||||||||||
Restructuring and transformation charges(a) |
2.9 | — | 2.9 | 8.9 | — | 8.9 | |||||||||||||||||||||||||||||
Post-RH Divestiture transition charges | 1.0 | — | 1.0 | — | — | — | |||||||||||||||||||||||||||||
Post-RH Divestiture restructuring | 0.7 | — | 0.7 | — | — | — | |||||||||||||||||||||||||||||
EU MDR Compliance(b) |
1.3 | — | 1.3 | 1.1 | — | 1.1 | |||||||||||||||||||||||||||||
Intangibles amortization | 6.1 | — | 6.1 | 5.8 | 0.5 | 6.3 | |||||||||||||||||||||||||||||
As adjusted non-GAAP | $ | 16.3 | $ | (1.9) | $ | 14.4 | $ | 11.2 | $ | 9.2 | $ | 20.4 |
Income (Loss) Before Taxes | |||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||||||
Continuing Operations |
Discontinued Operations |
Total | Continuing Operations |
Discontinued Operations |
Total | ||||||||||||||||||||||||||||||
As reported | $ | 1.5 | $ | (1.9) | $ | (0.4) | $ | (9.1) | $ | 8.7 | $ | (0.4) | |||||||||||||||||||||||
Acquisition and integration-related charges | 0.3 | — | 0.3 | 1.5 | — | 1.5 | |||||||||||||||||||||||||||||
Restructuring and transformation charges | 2.9 | — | 2.9 | 8.9 | — | 8.9 | |||||||||||||||||||||||||||||
Post-RH Divestiture transition charges | 1.0 | — | 1.0 | — | — | — | |||||||||||||||||||||||||||||
Post-RH Divestiture restructuring | 0.7 | — | 0.7 | — | — | — | |||||||||||||||||||||||||||||
EU MDR Compliance | 1.3 | — | 1.3 | 1.1 | — | 1.1 | |||||||||||||||||||||||||||||
Intangibles amortization | 6.1 | — | 6.1 | 5.8 | 0.5 | 6.3 | |||||||||||||||||||||||||||||
As adjusted non-GAAP | $ | 13.8 | $ | (1.9) | $ | 11.9 | $ | 8.2 | $ | 9.2 | $ | 17.4 |
Tax (Provision) Benefit | |||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||||||
Continuing Operations |
Discontinued Operations |
Total | Continuing Operations |
Discontinued Operations |
Total | ||||||||||||||||||||||||||||||
As reported | $ | (1.0) | $ | 0.5 | $ | (0.5) | $ | 1.3 | $ | (1.4) | $ | (0.1) | |||||||||||||||||||||||
Tax effects of adjusting items | (2.7) | — | (2.7) | (3.5) | (1.1) | (4.6) | |||||||||||||||||||||||||||||
As adjusted non-GAAP | $ | (3.7) | $ | 0.5 | $ | (3.2) | $ | (2.2) | $ | (2.5) | $ | (4.7) | |||||||||||||||||||||||
Effective tax rate, as reported | 66.7 | % | 26.3 | % | 125.0 | % | 14.3 | % | 16.1 | % | 25.0 | % | |||||||||||||||||||||||
Effective tax rate, as adjusted | 26.8 | % | 26.3 | % | 26.9 | % | 26.8 | % | 27.2 | % | 27.0 | % |
Net Income (Loss) | |||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||||||
Continuing Operations |
Discontinued Operations |
Total | Continuing Operations |
Discontinued Operations |
Total | ||||||||||||||||||||||||||||||
As reported | $ | 0.5 | $ | (1.4) | $ | (0.9) | $ | (7.8) | $ | 7.3 | $ | (0.5) | |||||||||||||||||||||||
Acquisition and integration-related charges | 0.3 | — | 0.3 | 1.5 | — | 1.5 | |||||||||||||||||||||||||||||
Restructuring and transformation charges | 2.9 | — | 2.9 | 8.9 | — | 8.9 | |||||||||||||||||||||||||||||
Post-RH Divestiture transition charges | 1.0 | — | 1.0 | — | — | — | |||||||||||||||||||||||||||||
Post-RH Divestiture restructuring | 0.7 | — | 0.7 | — | — | — | |||||||||||||||||||||||||||||
EU MDR Compliance | 1.3 | — | 1.3 | 1.1 | — | 1.1 | |||||||||||||||||||||||||||||
Intangibles amortization | 6.1 | — | 6.1 | 5.8 | 0.5 | 6.3 | |||||||||||||||||||||||||||||
Tax effects of adjusting items | (2.7) | — | (2.7) | (3.5) | (1.1) | (4.6) | |||||||||||||||||||||||||||||
As adjusted non-GAAP | $ | 10.1 | $ | (1.4) | $ | 8.7 | $ | 6.0 | $ | 6.7 | $ | 12.7 | |||||||||||||||||||||||
Diluted earnings (loss) per share, as reported | $ | 0.01 | $ | (0.03) | $ | (0.02) | $ | (0.17) | $ | 0.16 | $ | (0.01) | |||||||||||||||||||||||
Diluted earnings (loss) per share, as adjusted | $ | 0.22 | $ | (0.03) | $ | 0.19 | $ | 0.13 | $ | 0.14 | $ | 0.27 |
Selling, General and Administrative Expenses |
|||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||||||
Continuing Operations |
Discontinued Operations |
Total | Continuing Operations |
Discontinued Operations |
Total | ||||||||||||||||||||||||||||||
As reported | $ | 83.6 | $ | — | $ | 83.6 | $ | 88.8 | $ | 3.9 | $ | 92.7 | |||||||||||||||||||||||
Acquisition and integration-related charges | (0.3) | — | (0.3) | (0.2) | — | (0.2) | |||||||||||||||||||||||||||||
Restructuring and transformation charges | (2.1) | — | (2.1) | (8.9) | — | (8.9) | |||||||||||||||||||||||||||||
Post-RH Divestiture transition charges | (0.4) | — | (0.4) | — | — | — | |||||||||||||||||||||||||||||
Post-RH Divestiture restructuring | (0.7) | — | (0.7) | — | — | — | |||||||||||||||||||||||||||||
EU MDR Compliance | (1.3) | — | (1.3) | (1.1) | — | (1.1) | |||||||||||||||||||||||||||||
Intangibles amortization | (2.7) | — | (2.7) | (2.2) | (0.5) | (2.7) | |||||||||||||||||||||||||||||
As adjusted non-GAAP | $ | 76.1 | $ | — | $ | 76.1 | $ | 76.4 | $ | 3.4 | $ | 79.8 | |||||||||||||||||||||||
SG&A as a percentage of revenue, as reported |
50.3 | % | — | % | 45.7 | % | 55.7 | % | 12.0 | % | 48.4 | % | |||||||||||||||||||||||
SG&A as a percentage of revenue, as adjusted |
45.8 | % | — | % | 41.6 | % | 48.0 | % | 10.5 | % | 41.6 | % |
EBITDA | |||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||||||
Continuing Operations |
Discontinued Operations |
Total | Continuing Operations |
Discontinued Operations |
Total | ||||||||||||||||||||||||||||||
Net income (loss) | $ | 0.5 | $ | (1.4) | $ | (0.9) | $ | (7.8) | $ | 7.3 | $ | (0.5) | |||||||||||||||||||||||
Interest expense, net | 2.5 | — | 2.5 | 3.0 | — | 3.0 | |||||||||||||||||||||||||||||
Income tax (provision) benefit | 1.0 | (0.5) | 0.5 | (1.3) | 1.4 | 0.1 | |||||||||||||||||||||||||||||
Depreciation | 5.3 | — | 5.3 | 4.9 | 0.9 | 5.8 | |||||||||||||||||||||||||||||
Amortization | 6.1 | — | 6.1 | 5.8 | 0.5 | 6.3 | |||||||||||||||||||||||||||||
EBITDA | 15.4 | (1.9) | 13.5 | 4.6 | 10.1 | 14.7 | |||||||||||||||||||||||||||||
Acquisition and integration-related charges | 0.3 | — | 0.3 | 1.5 | — | 1.5 | |||||||||||||||||||||||||||||
Restructuring and transformation charges | 2.9 | — | 2.9 | 8.9 | — | 8.9 | |||||||||||||||||||||||||||||
Post-RH Divestiture transition charges | 1.0 | — | 1.0 | — | — | — | |||||||||||||||||||||||||||||
Post-RH Divestiture restructuring | 0.7 | — | 0.7 | — | — | — | |||||||||||||||||||||||||||||
EU MDR Compliance | 1.3 | — | 1.3 | 1.1 | — | 1.1 | |||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 21.6 | $ | (1.9) | $ | 19.7 | $ | 16.1 | $ | 10.1 | $ | 26.2 |
Free Cash Flow | |||||||||||
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Cash used in operating activities | $ | (8.0) | $ | (6.8) | |||||||
Capital expenditures | (4.1) | (4.0) | |||||||||
Free Cash Flow | $ | (12.1) | $ | (10.8) |
Estimated Range | |||||||||||
Diluted earnings per share (GAAP) | $ | 0.63 | to | $ | 0.87 | ||||||
Intangibles amortization | 0.37 | to | 0.34 | ||||||||
Restructuring and transformation charges | 0.08 | to | 0.06 | ||||||||
Post RH-Divestiture transition charges | 0.12 | to | 0.10 | ||||||||
Other | 0.10 | to | 0.08 | ||||||||
Adjusted diluted earnings per share (non-GAAP) | $ | 1.30 | to | $ | 1.45 |
March 31, 2024 |
December 31, 2023 |
||||||||||
ASSETS | |||||||||||
Current Assets | |||||||||||
Cash and cash equivalents | $ | 75.8 | $ | 87.7 | |||||||
Accounts receivable, net | 131.3 | 142.8 | |||||||||
Inventories | 165.6 | 163.2 | |||||||||
Prepaid and other current assets | 28.6 | 28.8 | |||||||||
Assets held for sale | 66.5 | 64.5 | |||||||||
Total Current Assets | 467.8 | 487.0 | |||||||||
Property, Plant and Equipment, net | 116.2 | 117.2 | |||||||||
Operating Lease Right-of-Use Assets | 24.2 | 26.8 | |||||||||
Goodwill | 794.9 | 796.1 | |||||||||
Other Intangible Assets, net | 232.8 | 239.5 | |||||||||
Deferred Tax Assets | 6.3 | 6.5 | |||||||||
Other Assets | 19.1 | 19.3 | |||||||||
TOTAL ASSETS | $ | 1,661.3 | $ | 1,692.4 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current Liabilities | |||||||||||
Current portion of long-term debt | $ | 9.4 | $ | 8.6 | |||||||
Current portion of operating lease liabilities | 11.5 | 12.8 | |||||||||
Trade accounts payable | 57.0 | 56.3 | |||||||||
Accrued expenses | 75.1 | 93.2 | |||||||||
Liabilities held for sale | 52.2 | 63.7 | |||||||||
Total Current Liabilities | 205.2 | 234.6 | |||||||||
Long-Term Debt | 167.2 | 159.4 | |||||||||
Operating Lease Liabilities | 26.6 | 28.3 | |||||||||
Deferred Tax Liabilities | 23.6 | 23.8 | |||||||||
Other Long-Term Liabilities | 10.8 | 10.0 | |||||||||
TOTAL LIABILITIES | 433.4 | 456.1 | |||||||||
Stockholders’ Equity | 1,227.9 | 1,236.3 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,661.3 | $ | 1,692.4 |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Operating Activities | |||||||||||
Net loss | $ | (0.9) | $ | (0.5) | |||||||
Depreciation and amortization | 11.4 | 12.1 | |||||||||
Loss on asset dispositions | 0.3 | — | |||||||||
Changes in operating assets and liabilities, net of acquisition | (22.0) | (19.3) | |||||||||
Deferred income taxes and other | 3.2 | 0.9 | |||||||||
Cash Used in Operating Activities | (8.0) | (6.8) | |||||||||
Investing Activities | |||||||||||
Capital expenditures | (4.1) | (4.0) | |||||||||
Proceeds from RH Divestiture post-closing settlement | 2.1 | — | |||||||||
Cash Used in Investing Activities | (2.0) | (4.0) | |||||||||
Financing Activities | |||||||||||
Secured debt repayments | (1.6) | (1.6) | |||||||||
Revolving credit facility proceeds | 20.0 | — | |||||||||
Revolving credit facility repayments | (10.0) | (20.0) | |||||||||
Purchase of treasury stock | (9.1) | (1.1) | |||||||||
Proceeds from the exercise of stock options | 0.5 | 0.6 | |||||||||
Payment of contingent consideration liabilities | (0.5) | — | |||||||||
Cash Used in Financing Activities | (0.7) | (22.1) | |||||||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (1.2) | 0.9 | |||||||||
Decrease in Cash and Cash Equivalents | (11.9) | (32.0) | |||||||||
Cash and Cash Equivalents - Beginning of Period | 87.7 | 127.7 | |||||||||
Cash and Cash Equivalents - End of Period | $ | 75.8 | $ | 95.7 |
Three Months Ended March 31, | |||||||||||||||||||||||||||||
2024 | 2023 | Change | |||||||||||||||||||||||||||
Digestive Health | $ | 94.7 | $ | 88.8 | 6.6 | % | |||||||||||||||||||||||
Pain Management and Recovery: | |||||||||||||||||||||||||||||
Surgical pain and recovery | $ | 31.2 | $ | 34.7 | (10.1) | % | |||||||||||||||||||||||
Interventional pain | 40.2 | 35.8 | 12.3 | % | |||||||||||||||||||||||||
Total Pain Management and Recovery | 71.4 | 70.5 | 1.3 | % | |||||||||||||||||||||||||
Total Net Sales | $ | 166.1 | $ | 159.3 | 4.3 | % | |||||||||||||||||||||||
Total | Volume | Pricing/Mix | Currency | Other(a) |
|||||||||||||||||||||||||
Net sales - percentage change | 4.3 | % | 5.2 | % | (1.1) | % | 0.1 | % | 0.1 | % |