Avanos Medical, Inc. (AVNS): history, ownership, mission, how it works & makes money

A Brief History of Avanos Medical, Inc.

Company Overview

Avanos Medical, Inc. (NASDAQ: AVNS) specializes in medical device products, primarily focusing on pain management and digestive health. As of September 30, 2024, the company reported total assets of $1,656.2 million, a decrease from $1,692.4 million at the end of 2023.

Financial Performance

For the third quarter of 2024, Avanos reported net sales of $170.4 million, which reflects a slight decrease of 0.5% compared to $171.3 million in the same period of 2023. Year-to-date (YTD) net sales for the nine months ended September 30, 2024, reached $508.2 million, marking a 1.6% increase from $500.0 million in the prior year period.

Operating Results

Avanos recorded an operating profit of $12.0 million for Q3 2024, compared to an operating profit of $1.2 million in Q3 2023. For the first nine months of 2024, the operating profit was $22.3 million, contrasting with a loss of $7.0 million in the same period of the previous year.

Geographic Sales Distribution

The following table illustrates net sales by geographic region for the three and nine months ended September 30, 2024, compared to the same periods in 2023:

Net Income and Earnings Per Share

For Q3 2024, Avanos reported a net income of $4.3 million, compared to a net loss of $3.7 million in Q3 2023. The earnings per share (EPS) for the third quarter of 2024 was $0.09 (diluted), compared to a loss of $0.08 per share in the prior year. For the nine months ended September 30, 2024, the net income was $5.2 million, a significant improvement from a net loss of $72.3 million in the same period of 2023.

Research and Development Investments

In the third quarter of 2024, Avanos invested $7.2 million in research and development, equating to 4.2% of net sales. For the nine months ended September 30, 2024, the R&D expenditure was $20.5 million, representing 4.0% of net sales.

Debt and Liquidity

As of September 30, 2024, Avanos held cash and cash equivalents of $89.0 million, an increase from $87.7 million at the end of 2023. The company has a total long-term debt of $152.6 million. The current portion of long-term debt was $9.4 million, with scheduled repayments outlined for the next few years.

Acquisitions and Strategic Initiatives

In June 2023, Avanos acquired Diros Technology Inc. for a total purchase price of $53.0 million, funded by the Revolving Credit Facility. The acquisition is expected to enhance Avanos's portfolio in chronic pain management.

A Who Owns Avanos Medical, Inc. (AVNS)

Shareholder Composition

As of 2024, Avanos Medical, Inc. (AVNS) has a diverse shareholder composition that includes institutional investors, individual shareholders, and company insiders. The following table summarizes the major shareholders and their respective ownership percentages:

Institutional Investors

Institutional investors hold a significant portion of Avanos Medical's shares. The largest institutional shareholder is The Vanguard Group, which manages approximately 15.4% of the company's outstanding shares. Other notable institutional shareholders include:

• BlackRock, Inc. - 10.2%
• State Street Corporation - 8.5%
• Invesco Ltd. - 6.1%

Insider Holdings

Insider ownership in Avanos Medical is relatively modest. Key executives and board members hold approximately 4.8% of the total shares. The following executives are notable for their ownership stakes:

• President & CEO - 0.5 million shares
• Chief Financial Officer - 0.3 million shares
• Board Chair - 0.4 million shares

Recent Stock Performance

As of the end of Q3 2024, Avanos Medical's stock price was $19.50 per share, reflecting a year-to-date increase of 14.3%. The stock has shown volatility in the market, influenced by factors such as quarterly earnings reports and industry trends.

Market Capitalization

Avanos Medical's market capitalization was approximately $900 million as of September 30, 2024. This figure is calculated based on the current share price multiplied by the total number of shares outstanding, which was 45.9 million shares.

Ownership Trends

Over the past year, there has been a noticeable shift in ownership among institutional investors, with an increase in holdings by large asset managers. This trend indicates growing confidence in the company’s strategic initiatives and financial recovery post-divestiture of non-core businesses.

Conclusion

Avanos Medical, Inc. remains a publicly traded company with a well-distributed ownership structure. The significant presence of institutional investors suggests a stable base of support for the company's long-term growth strategy.

Avanos Medical, Inc. (AVNS) Mission Statement

Avanos Medical, Inc. is dedicated to delivering clinically superior medical device solutions that help patients return to the things that matter most in their lives. The company focuses on addressing vital healthcare needs, such as providing essential nutrition to patients transitioning from hospital to home and reducing opioid use while facilitating recovery from surgery.

Financial Performance Overview

In the first nine months of 2024, Avanos reported net sales of $508.2 million, marking a 1.6% increase from $500.0 million in the same period in 2023. The breakdown of net sales by region is shown in the table below:

Cost Structure

The cost of products sold for the nine months ended September 30, 2024, was $224.9 million, resulting in a gross profit of $283.3 million and a gross profit margin of 55.7%.

Research and Development Investments

Avanos allocated $20.5 million to research and development in the first nine months of 2024, representing 4.0% of net sales. This reflects a commitment to innovation and product development in the medical device sector.

Selling and General Expenses

Selling and general expenses totaled $238.8 million for the same period, accounting for 47.0% of net sales. This is a decrease from $260.5 million in 2023, illustrating the company's efforts in cost management.

Operating Profit Analysis

For the nine months ended September 30, 2024, Avanos achieved an operating profit of $22.3 million, compared to an operating loss of $7.0 million in 2023. This improvement reflects the effectiveness of the company's transformation initiatives.

Income Statement Summary

Net Income Performance

The net income for the nine months ended September 30, 2024, was $5.2 million, compared to a net loss of $72.3 million in 2023. This significant turnaround indicates positive financial momentum.

Cash and Liquidity Position

As of September 30, 2024, Avanos had cash and cash equivalents amounting to $89.0 million, up from $87.7 million at the end of 2023. This reflects a stable liquidity position to support ongoing operations and investments.

Capital Expenditures

For the nine months ended September 30, 2024, capital expenditures totaled $13.0 million, compared to $11.9 million in the previous year.

Debt Obligations

As of September 30, 2024, Avanos had total debt of $162.0 million, with an interest expense of $9.4 million incurred during the nine months of 2024.

Transformation Process and Future Outlook

Avanos is currently undergoing a Transformation Process aimed at enhancing operational efficiency and profitability. By the end of 2025, the company expects to achieve gross savings between $45.0 million and $55.0 million compared to 2022 levels.

How Avanos Medical, Inc. (AVNS) Works

Business Overview

Avanos Medical, Inc. operates in the medical device industry, focusing on pain management and digestive health products. The company develops, manufactures, and markets products to healthcare providers and patients worldwide. Its portfolio includes brands that hold leading market positions across various categories.

Financial Performance

As of September 30, 2024, Avanos reported net sales of $508.2 million for the nine months ended, reflecting a 1.6% increase compared to $500.0 million in the same period of 2023. The following table summarizes the financial performance:

Product Categories

Avanos operates primarily in two segments: Digestive Health and Pain Management and Recovery. The company’s product offerings include:

• Digestive Health: MIC-KEY enteral feeding tubes, Corpak patient feeding solutions, NeoMed neonatal and pediatric feeding solutions.
• Pain Management and Recovery: Surgical pain and recovery products like ON-Q and ambIT surgical pain pumps, Game Ready systems, and interventional pain solutions such as COOLIEF pain therapy.

Geographic Sales Distribution

Sales are distributed across various regions, with the following breakdown for the nine months ended September 30, 2024:

Operating Expenses

Avanos has been focused on controlling costs, with selling and general expenses decreasing to $238.8 million for the nine months ended September 30, 2024, down from $260.5 million in 2023. The following table outlines operating expenses:

Cash Flow and Liquidity

As of September 30, 2024, Avanos held $89.0 million in cash and cash equivalents, representing a slight increase from $87.7 million at the end of 2023. The company generated $42.8 million from operating activities during the nine months ended September 30, 2024.

Debt and Financing

Avanos has a credit agreement with total facilities of $500 million, consisting of a $125 million term loan and a $375 million revolving credit facility. As of September 30, 2024, the company had long-term debt of $152.6 million.

Recent Developments

On October 2, 2023, Avanos completed the divestiture of its RH business to SunMed Group Holdings for $110 million. This move is part of the company's transformation strategy aimed at focusing on core markets.

Future Outlook

The company anticipates total gross savings from its transformation initiatives of $45 million to $55 million by 2025, with significant savings expected in 2024.

How Avanos Medical, Inc. (AVNS) Makes Money

Revenue Streams

Avanos Medical, Inc. generates revenue primarily through its product portfolios in Digestive Health and Pain Management and Recovery. As of September 30, 2024, the total net sales were $508.2 million, reflecting a 1.6% increase from $500.0 million in the same period of 2023.

Geographic Breakdown of Sales

Sales distribution by geographic region for the nine months ending September 30, 2024, is detailed below:

Cost Structure

The cost of products sold for the nine months ending September 30, 2024, was $224.9 million, up from $215.3 million in 2023. The gross profit margin for the first nine months of 2024 was 55.7%, down from 56.9% in 2023.

Operating Profit and Expenses

Operating profit for the first nine months of 2024 was $22.3 million, a significant increase from a loss of $7.0 million in the same period of 2023. This reflects a successful transformation process and cost management efforts.

Research and Development

Research and development expenses for the first nine months of 2024 were $20.5 million, representing 4.0% of net sales, consistent with historical averages.

Net Income Performance

Net income for the nine months ending September 30, 2024, was $5.2 million, a recovery from a net loss of $72.3 million in the same period of the previous year.

Article updated on 8 Nov 2024

Resources:

• Avanos Medical, Inc. (AVNS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Avanos Medical, Inc. (AVNS)' financial performance, including balance sheets, income statements, and cash flow statements.
• SEC Filings – View Avanos Medical, Inc. (AVNS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.