Avanos Medical (AVNS) Q4 2025 earnings summary

Executive summary

• FY25 net sales reached $701 million, surpassing revised guidance, with adjusted diluted EPS at $0.94 and adjusted EBITDA at $87 million, driven by 6% organic growth in strategic segments.

• Strategic focus on Specialty Nutrition Systems (SNS) and Pain Management & Recovery (PM&R) segments, supported by portfolio reshaping actions including divestitures and the acquisition of Nexus Medical.

• Transformation initiatives are expected to deliver $15–$20 million in annualized savings by end of 2026.

• Tariff mitigation initiatives are on track, with a full exit from China syringe manufacturing expected by June 2026.

Financial highlights

• Q4 net sales were $180.9 million, up 0.7% year-over-year; full-year net sales rose 1.9% to $701.2 million.

• Q4 adjusted diluted EPS was $0.29; adjusted EBITDA $28 million; adjusted gross margin 53.4%.

• Full-year adjusted EBITDA was $86.8 million; adjusted gross margin for the year was 54.6%; adjusted SG&A as a percentage of revenue was 42%.

• Free cash flow for the year was $43.1 million, down from $82.9 million prior year, but exceeded expectations due to timing of one-time charges and tax payments.

Outlook and guidance

• 2026 net sales expected between $700 million and $720 million; adjusted diluted EPS guidance for 2026 is $0.90–$1.10.

• SNS segment projected to grow mid to high single digits organically; PM&R segment low to mid single digits.

• Full-year tariff P&L costs expected to be ~$30 million, up $12 million from 2025, with majority impacting neonatal products.

• Gross margin improvement anticipated in the second half of 2026 and into 2027 as tariff mitigation takes effect.

• Capital expenditures for 2026 expected at $25 million, supporting supply chain initiatives.