Avanos Medical Gains on Q3 Earnings Beat, Raises '25 Sales View

Avanos Medical, Inc. AVNS reported third-quarter 2025 adjusted earnings per share (EPS) from continuing operations of 22 cents, down 38.9% year over year. However, the bottom line beat the Zacks Consensus Estimate of 16 cents by 37.5%.

GAAP loss per share from continuing operations in the quarter under review was 3 cents against the year-ago period’s EPS of 12 cents.

Avanos’ Revenues

Revenues totaled $177.8 million in the reported quarter, up 4.3% year over year. The metric beat the Zacks Consensus Estimate by 6.9%.

The top line gained from higher volume across both its Specialty Nutrition Systems ("SNS") and Pain Management and Recovery ("PM&R") segments.

Shares of the company gained nearly 0.1% in after-market trading during Nov. 5. The company’s shares have plunged 33.1% in the year-to-date period compared with the industry’s decline of 0.1%. The broader S&P 500 Index has increased 16.7% in the same time frame.

AVNS’ Segmental Analysis

Avanos generates revenues from three segments — SNS, PM&R and Corporate and Other.

PM&R segment’s revenues in the third quarter of 2025 totaled $59 million, up 2.1% year over year. This figure compares to our projection of $57.7 million.

The PM&R segment’s volume growth in Radio Frequency Ablation ("RFA") was partially offset by reduced volume in our surgical pain and recovery product lines. Net sales of RFA products grew 10.5% year over year to $34.6million, reflecting momentum in RFA generator sales. Net sales in the surgical pain and recovery unit declined 7.9% year over year to $24.4 million, primarily due to lower volume in the Game Ready product line.

SNS segment’s revenues totaled $114 million, up 16.1% year over year. This figure compares to our third-quarter projection of $98.1 million.

The segment recorded 14% volume growth, driven by continued strong demand across both Avanos’ enteral feeding and neonate solutions categories, especially long-term feeding products and US CORTRAK standard of care offerings.

Enteral feeding unit’s revenues totaled $82.7 million for the third quarter of 2025 (up 14.9% year over year), while Neonate solutions unit’s revenues amounted to $31.3 million (up 19.5% year over year).

Corporate and Other segment’s revenues totaled $4.8 million, down 66.7% year over year. The segment includes the Hyaluronic Acid (HA) injections and intravenous infusion product lines.

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% for the third 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’s level. The adjusted operating margin contracted 580 bps to 6.9%.

AVNS’ Financial Update

The company exited third-quarter 2025 with cash and cash equivalents worth $70.5 million compared with $90.3 million at the end of the second quarter. Total debt at third-quarter 2025-end was $102.8 million compared with $105.1 million at the end of the second quarter.

Cumulative net cash provided byoperating activities at the end of the third quarter of 2025 totaled $46.5 million compared with $42.8 million in the prior-year period.

Avanos’ Guidance Updated

AVNS has raised its 2025 salesoutlook while increasing the lower-end of the EPS guidance.

The company has raised its full-year net sales estimate to the range of $690-$700 million versus $665-$685 million previously. The Zacks Consensus Estimate is currently pegged at $684.98 million.

Avanos now anticipates 2025 adjusted EPS between 85 and 95 cents (previously 75 and 95 cents). The Zacks Consensus Estimate is currently pegged at 92 cents.

AVANOS MEDICAL, INC. Price, Consensus and EPS Surprise

AVANOS MEDICAL, INC. price-consensus-eps-surprise-chart | AVANOS MEDICAL, INC. Quote

Our Take

Avanos Medical delivered a strong third quarter, highlighting continued success in reshaping its portfolio and driving growth in priority segments. The Specialty Nutrition Systems business remained a standout performer, generating double-digit expansion across long-term, short-term, and neonatal feeding solutions.

New product adoption, particularly in the CORTRAK and CORGRIP platforms, reinforced Avanos’ leadership and helped capture share in a growing market. The Pain Management and Recovery portfolio also returned to growth, led by sustained momentum in radiofrequency ablation and improving international reimbursement trends for COOLIEF.

Strategic portfolio actions were another key focus in the quarter. Avanos continued divesting non-core assets and completed the acquisition of Nexus Medical, expanding its neonatal and pediatric footprint and adding an immediately accretive revenue stream. Cost-transformation initiatives are well underway, including organizational streamlining and a hybrid R&D model aimed at faster innovation and greater efficiency. Management expects to realize meaningful savings as these programs ramp up through 2026.

However, tariffs remain a drag on margins, but mitigation strategies, including supply-chain relocation, internal cost controls, and advocacy efforts, are progressing. Despite these pressures, Avanos raised full-year guidance and demonstrated strong cash discipline, underscoring a business positioned for healthier growth and improving profitability.

AVNS’ Zacks Rank and Stocks to Consider

Avanos currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are Solventum Corporation SOLV, Boston Scientific Corporation BSX and Alcon ALC.

Solventum, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 4.1%. SOLV’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 13.91%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Solventum’s shares have gained 3.8% compared with the industry’s 2.6% growth so far this year.

Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 16.4%. BSX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 7.36%.

Boston Scientific’s shares have gained 10.9% compared with the industry’s 0.6% growth so far this year.

Alcon, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 10.3%. ALC’s earnings surpassed estimates in three of the trailing four quarters and missed once, with the average surprise being 4.61%.

Alcon’s shares have declined 12.6% compared to a flat industry so far this year.

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This article originally published on Zacks Investment Research (zacks.com).

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