Avanos Medical Reports 2.2% Increase in Net Sales, Faces Operating Loss in 2024

Avanos Medical, Inc. reported a modest increase in net sales for the fiscal year ending December 31, 2024, reaching $687.8 million, up 2.2% from $673.3 million in 2023. The growth was primarily driven by a 6.7% increase in the Digestive Health segment, which generated $396.4 million in sales, while the Pain Management and Recovery segment saw a decline of 3.4%, totaling $291.4 million. The company faced challenges with pricing pressures, particularly in its hyaluronic acid products, which contributed to a decrease in gross profit margin from 56.4% in 2023 to 55.4% in 2024.

Significant operational changes included the completion of the divestiture of Avanos' Respiratory Health business to SunMed Group Holdings for $110 million in cash, finalized on October 2, 2023. This divestiture is part of a broader three-year transformation initiative aimed at streamlining operations and focusing on core product categories. Additionally, Avanos acquired Diros Technology, Inc. for approximately $53 million in July 2023, enhancing its portfolio in radiofrequency ablation products for chronic pain management.

The company reported a substantial operating loss of $396.2 million in 2024, compared to an operating profit of $4.2 million in 2023. This loss was largely attributed to a goodwill impairment charge of $336.5 million, reflecting a decrease in market capitalization and revised future projections for certain product lines. Research and development expenses decreased slightly to $26.2 million, while selling and general expenses fell to $318.5 million, down from $335 million in the previous year, indicating some success in cost management efforts.

As of December 31, 2024, Avanos had a total employee count of over 2,200, with a focus on enhancing employee engagement and retention through various initiatives. The company continues to face challenges related to supply chain disruptions and inflationary pressures, which have impacted operational costs. Looking ahead, Avanos anticipates that its ongoing transformation process will yield benefits by the end of 2025, although it remains cautious about market conditions and competitive pressures that could affect future performance.

In terms of financial outlook, Avanos maintains a cautious stance, emphasizing the need to navigate ongoing economic uncertainties, including potential impacts from inflation and changes in healthcare regulations. The company is committed to executing its strategic initiatives while managing its financial health, as evidenced by its liquidity position, which includes $107.7 million in cash and cash equivalents as of year-end 2024.