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Avanos Medical Stock Down as Q2 Earnings Miss Estimates, Margins Down
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Key Takeaways
{\"0\":\"AVNS posted Q2 adjusted EPS of $0.17, down 50% year over year and missing estimates by 5.6%.\",\"1\":\"Revenue rose 1.9% to $175M, driven by SNS and RFA sales but offset by pain recovery weakness.\",\"2\":\"Gross margin fell 390 bps to 55.7% as $8M in tariffs and cost pressures hit near-term profitability.\"}
Avanos Medical, Inc. (AVNS - Free Report) reported second-quarter 2025 adjusted earnings per share (EPS) from continuing operations of 17 cents, down 50% year over year. The bottom line missed the Zacks Consensus Estimate by 5.6%.
GAAP loss per share from continuing operations in the quarter under review was $1.66 against the year-ago period’s EPS of 9 cents.
Avanos’ Revenues
Revenues grossed $175 million in the reported quarter, up 1.9% year over year. The metric beat the Zacks Consensus Estimate by 4.7%.
Organic sales were up 2% year over year.
The top line was boosted bycontinued strong demand and volume across AVNS’ Specialty Nutrition Systems ("SNS") portfolio and positive momentum in radiofrequency ablation ("RFA") generator sales, which resulted in more RFA procedures. This was partially offset by lower volume in our surgical pain and recovery portfolio.
Shares of the company lost nearly 12.1% at yesterday’s close. The company’s shares have plunged 37.9% in the year-to-date period compared with the industry’s decline of 8.9%. The broader S&P 500 Index has increased 7.3% in the same time frame.
Image Source: Zacks Investment Research
AVNS’ Segmental Analysis
Avanos generates revenues from three segments — SNS, Pain Management and Recovery (PM&R) and Corporate and Other.
PM&R segment’s revenues in the second quarter of 2025 were $61 million, down 2.9% year over year. This figure compares to our second-quarter projection of $71 million.
The PM&R segment’s volume growth was offset by unfavorable currency effects and the effects of certain revenue streams that Avanos strategically decided not to pursue this year. Net sales of radiofrequency ablation (RFA) products grew 13.7% year over year to $35.8million, reflecting momentum in RFA generator sales. This resulted in more procedures, especially in the ESENTEC and TRIDENT product lines. Net sales in the surgical pain and recovery unit declined 9.4% year over year to $25.2million, in line with AVNS’ expectations.
SNS segment’s revenues in the second quarter of 2025 were $102.7 million, up 5.1% year over year. The segment recorded a 4.4% volume growth driven by continued strong demand across both Avanos’ enteral feeding and neonate solutions categories.
Enteral feeding unit’s revenues were $74.5 million in the second quarter of 2025 (up 2.5% year over year), while Neonate solutions unit’s revenues were $28.2 million (up 12.8% year over year).
Corporate and Other segment’s revenues were $11.3 million, down 23.1% year over year. The segment includes the Hyaluronic Acid (HA) injections and intravenous infusion product lines, which declined primarily due to continued pricing pressures in Avanos' three- and five-shot HA categories.
However, in July, AVNS announced the divestiture of its HA product line to Channel-Markers Medical, LLC, a privately held company. This transaction aligns with the company’s ongoing transformation, which is focused on advancing its strategic segments in PM&R and SNS.
Avanos’ Margin Analysis
In the quarter under review, Avanos’ adjusted gross profit declined 4.7% year over year to $97.4 million. The adjusted gross margin contracted 390 basis points (bps) to 55.7%. We had projected a gross margin of 56.4% for the second quarter.
Selling and general expenses increased 3.2% year over year to $83.5million. Research and development expenses decreased 7.9% year over year to $5.8 million. Adjusted operating expenses of $89.3 million increased 2.4% year over year.
Adjusted operating profit totaled $12.2 million, reflecting a 44% decrease from the prior-year quarter. The adjusted operating margin in the second quarter contracted 580 bps to 6.9%.
AVNS’ Financial Update
The company exited second-quarter 2025 with cash and cash equivalents worth $90.3 million compared with $97 million at the first-quarter end. Total debt at second-quarter 2025-end was $105.1 million compared with $107.4 million at the first-quarter end.
Cumulative net cash provided by operating activities at the end of the second quarter of 2025 totaled $32.5 million compared with $19.8 million in the prior-year period.
AVANOS MEDICAL, INC. Price, Consensus and EPS Surprise
The company continues to estimate its net sales for the full year in the range of $665 million to $685 million. The Zacks Consensus Estimate currently stands at $677.1 million.
Avanos continues to anticipate 2025 adjusted EPS between 75 and 95 cents. The Zacks Consensus Estimate is currently pegged at 92 cents.
Our Take
Avanos ended the second quarter of 2025 with mixed results and decent top-line growth. The strength in the SNS segment and RFA product sales of the PM&R segment in the quarter was encouraging.
Yet, Avanos’ weakness in the PM&R segment and the surgical pain and recovery unit of the same segment was discouraging. Weaknesses in HA injections and intravenous infusion product lines were also disappointing. The contraction of the gross and operating margin does not bode well.
Per management, Avanos Medical continues to face a volatile tariff environment in 2025, with management estimating approximately $15 million in incremental manufacturing costs for the year—primarily tied to products sourced from Mexico and China. In the second quarter alone, the company incurred over $8 million in tariffs, partly due to shipments that were still subject to the previous 145% tariff rate on China-origin goods before the U.S. administration reduced it to 30%. These costs are being absorbed into the cost of goods sold, affecting near-term profitability.
To mitigate the impact, Avanos is implementing a multi-pronged strategy including internal cost containment, pricing actions, use of temporary tariff exemptions, lobbying efforts, and an accelerated plan to exit China-sourced NeoMed products by the second half of 2026.
AVNS’ Zacks Rank and Stocks to Consider
Avanos currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Medpace Holdings, Inc. (MEDP - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Medpace Holdings, sporting a Zacks Rank of 1 (Strong Buy), reported second-quarter 2025 EPS of $3.10, beating the Zacks Consensus Estimate by 3.3%. Revenues of $603.3 million outpaced the consensus mark by 11.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medpace Holdings has a long-term estimated growth rate of 11.4%. MEDP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 13.9%.
West Pharmaceutical reported second-quarter 2025 adjusted EPS of $1.84, beating the Zacks Consensus Estimate by 21.9%. Revenues of $766.5 million surpassed the Zacks Consensus Estimate by 5.4%. It currently flaunts a Zacks Rank #1.
West Pharmaceutical has a long-term estimated growth rate of 8.5%. WST’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 16.8%.
Boston Scientific reported second-quarter 2025 adjusted EPS of 75 cents, beating the Zacks Consensus Estimate by 4.2%. Revenues of $5.06 billion surpassed the Zacks Consensus Estimate by 3.5%. It currently carries a Zacks Rank #2 (Buy).
Boston Scientific has a long-term estimated growth rate of 14%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.1%.
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Avanos Medical Stock Down as Q2 Earnings Miss Estimates, Margins Down
Key Takeaways
Avanos Medical, Inc. (AVNS - Free Report) reported second-quarter 2025 adjusted earnings per share (EPS) from continuing operations of 17 cents, down 50% year over year. The bottom line missed the Zacks Consensus Estimate by 5.6%.
GAAP loss per share from continuing operations in the quarter under review was $1.66 against the year-ago period’s EPS of 9 cents.
Avanos’ Revenues
Revenues grossed $175 million in the reported quarter, up 1.9% year over year. The metric beat the Zacks Consensus Estimate by 4.7%.
Organic sales were up 2% year over year.
The top line was boosted bycontinued strong demand and volume across AVNS’ Specialty Nutrition Systems ("SNS") portfolio and positive momentum in radiofrequency ablation ("RFA") generator sales, which resulted in more RFA procedures. This was partially offset by lower volume in our surgical pain and recovery portfolio.
Shares of the company lost nearly 12.1% at yesterday’s close. The company’s shares have plunged 37.9% in the year-to-date period compared with the industry’s decline of 8.9%. The broader S&P 500 Index has increased 7.3% in the same time frame.
Image Source: Zacks Investment Research
AVNS’ Segmental Analysis
Avanos generates revenues from three segments — SNS, Pain Management and Recovery (PM&R) and Corporate and Other.
PM&R segment’s revenues in the second quarter of 2025 were $61 million, down 2.9% year over year. This figure compares to our second-quarter projection of $71 million.
The PM&R segment’s volume growth was offset by unfavorable currency effects and the effects of certain revenue streams that Avanos strategically decided not to pursue this year. Net sales of radiofrequency ablation (RFA) products grew 13.7% year over year to $35.8million, reflecting momentum in RFA generator sales. This resulted in more procedures, especially in the ESENTEC and TRIDENT product lines. Net sales in the surgical pain and recovery unit declined 9.4% year over year to $25.2million, in line with AVNS’ expectations.
SNS segment’s revenues in the second quarter of 2025 were $102.7 million, up 5.1% year over year. The segment recorded a 4.4% volume growth driven by continued strong demand across both Avanos’ enteral feeding and neonate solutions categories.
Enteral feeding unit’s revenues were $74.5 million in the second quarter of 2025 (up 2.5% year over year), while Neonate solutions unit’s revenues were $28.2 million (up 12.8% year over year).
Corporate and Other segment’s revenues were $11.3 million, down 23.1% year over year. The segment includes the Hyaluronic Acid (HA) injections and intravenous infusion product lines, which declined primarily due to continued pricing pressures in Avanos' three- and five-shot HA categories.
However, in July, AVNS announced the divestiture of its HA product line to Channel-Markers Medical, LLC, a privately held company. This transaction aligns with the company’s ongoing transformation, which is focused on advancing its strategic segments in PM&R and SNS.
Avanos’ Margin Analysis
In the quarter under review, Avanos’ adjusted gross profit declined 4.7% year over year to $97.4 million. The adjusted gross margin contracted 390 basis points (bps) to 55.7%. We had projected a gross margin of 56.4% for the second quarter.
Selling and general expenses increased 3.2% year over year to $83.5million. Research and development expenses decreased 7.9% year over year to $5.8 million. Adjusted operating expenses of $89.3 million increased 2.4% year over year.
Adjusted operating profit totaled $12.2 million, reflecting a 44% decrease from the prior-year quarter. The adjusted operating margin in the second quarter contracted 580 bps to 6.9%.
AVNS’ Financial Update
The company exited second-quarter 2025 with cash and cash equivalents worth $90.3 million compared with $97 million at the first-quarter end. Total debt at second-quarter 2025-end was $105.1 million compared with $107.4 million at the first-quarter end.
Cumulative net cash provided by operating activities at the end of the second quarter of 2025 totaled $32.5 million compared with $19.8 million in the prior-year period.
AVANOS MEDICAL, INC. Price, Consensus and EPS Surprise
AVANOS MEDICAL, INC. price-consensus-eps-surprise-chart | AVANOS MEDICAL, INC. Quote
Avanos’ Guidance
AVNS has reiterated its 2025 outlook.
The company continues to estimate its net sales for the full year in the range of $665 million to $685 million. The Zacks Consensus Estimate currently stands at $677.1 million.
Avanos continues to anticipate 2025 adjusted EPS between 75 and 95 cents. The Zacks Consensus Estimate is currently pegged at 92 cents.
Our Take
Avanos ended the second quarter of 2025 with mixed results and decent top-line growth. The strength in the SNS segment and RFA product sales of the PM&R segment in the quarter was encouraging.
Yet, Avanos’ weakness in the PM&R segment and the surgical pain and recovery unit of the same segment was discouraging. Weaknesses in HA injections and intravenous infusion product lines were also disappointing. The contraction of the gross and operating margin does not bode well.
Per management, Avanos Medical continues to face a volatile tariff environment in 2025, with management estimating approximately $15 million in incremental manufacturing costs for the year—primarily tied to products sourced from Mexico and China. In the second quarter alone, the company incurred over $8 million in tariffs, partly due to shipments that were still subject to the previous 145% tariff rate on China-origin goods before the U.S. administration reduced it to 30%. These costs are being absorbed into the cost of goods sold, affecting near-term profitability.
To mitigate the impact, Avanos is implementing a multi-pronged strategy including internal cost containment, pricing actions, use of temporary tariff exemptions, lobbying efforts, and an accelerated plan to exit China-sourced NeoMed products by the second half of 2026.
AVNS’ Zacks Rank and Stocks to Consider
Avanos currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Medpace Holdings, Inc. (MEDP - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Medpace Holdings, sporting a Zacks Rank of 1 (Strong Buy), reported second-quarter 2025 EPS of $3.10, beating the Zacks Consensus Estimate by 3.3%. Revenues of $603.3 million outpaced the consensus mark by 11.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medpace Holdings has a long-term estimated growth rate of 11.4%. MEDP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 13.9%.
West Pharmaceutical reported second-quarter 2025 adjusted EPS of $1.84, beating the Zacks Consensus Estimate by 21.9%. Revenues of $766.5 million surpassed the Zacks Consensus Estimate by 5.4%. It currently flaunts a Zacks Rank #1.
West Pharmaceutical has a long-term estimated growth rate of 8.5%. WST’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 16.8%.
Boston Scientific reported second-quarter 2025 adjusted EPS of 75 cents, beating the Zacks Consensus Estimate by 4.2%. Revenues of $5.06 billion surpassed the Zacks Consensus Estimate by 3.5%. It currently carries a Zacks Rank #2 (Buy).
Boston Scientific has a long-term estimated growth rate of 14%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.1%.