Net Sales

+0.8% (Q1 2025: $167.5M vs. Q1 2024: $166.1M)

Modest organic growth driven by continued demand in key segments such as Specialty Nutrition Systems, where a 2.8% adjusted organic growth was noted. This slight increase builds on the previous period’s stable performance. " "

Operating Income

Increased from $4.0M to $10.3M (157% YoY increase)

Improved operating efficiency and tighter cost management, including lower restructuring and SG&A expenses in Q1 2025, led to a significant rebound compared to the constrained performance in Q1 2024. " "

Net Income

Turned positive to $6.6M vs. a $(0.9)M loss in Q1 2024

Improvement in cost control and better operating performance helped reverse the loss seen in the previous quarter. Enhanced revenue management and lower non-recurring expenses played key roles in turning net income positive. " "

Gross Profit

Decreased by 5.6% (from $94.8M to $89.8M)

Margin pressure emerged due to unfavorable pricing and increased cost inputs, contrasting with the previous period’s higher profit despite similar volume levels. The decline suggests that cost and pricing challenges were more acute in Q1 2025. " "

Operating Cash Flow

Improved from –$8.0M to $25.7M

Better working capital management and improved net income drove cash flow improvements. The shift from negative to positive operating adjustments indicates that the turnaround in operating performance from Q1 2024 played a major role. " "

Cash

Increased from $75.8M to $97.0M

Higher operating cash flow coupled with lower financing outflows enhanced the cash balance. The increase builds on improvements from the prior period and reflects better liquidity management in Q1 2025. " "

Total Assets

Declined by ~33% (from $1,661.3M to $1,107.8M)

A significant reduction in asset base occurred, building on prior period impairments and divestitures. The carry-forward impact of earlier asset write-downs, along with additional adjustments in Q1 2025, accounts for the sizeable drop. " "

Total Liabilities

Dropped by ~38% (from $433.4M to $268.4M)

Substantial deleveraging driven by debt repayments and elimination of divestiture-related liabilities from earlier periods resulted in a pronounced decline. This reduction reflects ongoing efforts to strengthen the balance sheet relative to the previous quarter. " "

Revenue (Net Sales / Revenue Estimate)

FY 2025

$665 million to $685 million "

$665 million to $685 million "

no change

Adjusted EPS

FY 2025

$1.05 to $1.25 "

$0.75 to $0.95 "

lowered

Free Cash Flow

FY 2025

“Expected to be similar to 2024 levels, excluding the $17M tax receivable” "

$65 million "

cannot compare

Tariff Impact

FY 2025

“Neutral view on tariffs with no significant impact factored in” "

~$15 million in incremental tariff‐related manufacturing costs " "

lowered

Specialty Nutrition Systems Segment Growth

FY 2025

“Anticipated to grow mid‐single digits organically” "

“Expected to deliver mid-single-digit organic revenue growth” " "

no change

Pain Management and Recovery Segment Growth

FY 2025

“Expected to deliver flat to low-single-digit organic growth” "

“Expected to achieve flat to low single-digit growth” "

no change

Corporate and Other Segment

FY 2025

“Anticipated to decline by over 20%” "

no current guidance

no current guidance

Currency Headwinds

FY 2025

“100 basis point impact on reported revenue due to a stronger U.S. dollar” "

no current guidance

no current guidance

Capital Expenditures (CapEx)

FY 2025

“Expected to increase by $5 million to $10 million in 2025 compared to 2024” "

no current guidance

no current guidance

Annual Effective Tax Rate

FY 2025

“Anticipated to be approximately 27%” "

no current guidance

no current guidance

HA and Intravenous Infusion Products

FY 2025

“Combined expected decline of 20% in these categories” "

no current guidance

no current guidance

Tariff Exposure and Mitigation Strategies

In Q4 2024, the company provided a relatively neutral view on tariffs while monitoring exposures across products sourced from Mexico, Canada, and China, and discussed relocation plans to avoid tariffs. " " In Q2–Q3 2024 there was little detail on incremental cost impacts.

In Q1 2025, Avanos detailed $15 million in incremental tariff-related costs, higher tariffs on China-origin products, and a plan to transition syringe manufacturing out of China by the first half of 2026. The discussion was more granular and highlighted a material negative impact on earnings. " "

Increased emphasis and negativity around tariff impacts with a stronger focus on mitigation measures and future transition – a shift toward more detailed and urgent cost concerns.

Pain Management Portfolio Performance and Supply Constraints

During Q2–Q4 2024, the pain management portfolio was discussed with mixed sentiment. Q3 2024 highlighted supply constraints and transient execution issues (e.g., ON‑Q product backorders), while Q4 2024 noted volume declines offset by some recovery in surgical and interventional segments. " " "

In Q1 2025, the portfolio showed normalized organic growth of 2.4% with strong performance in segments such as the Radio Frequency Ablation and Ambit product lines. Supply constraints were not emphasized, indicating that earlier execution and supply issues have been largely resolved. " "

Improved performance and resolution of supply issues in key sub‑segments, with sentiment turning more positive compared to earlier periods marked by operational challenges.

Specialty Nutrition Systems Innovation and Growth (Digestive Health Growth and Product Launch Pipeline)

Q2–Q4 2024 consistently emphasized strong organic growth (ranging from 9% to almost 12% in the enteral feeding portfolio) and continuous product pipeline initiatives – including planned innovations and market expansion strategies – reinforcing their #1 market position. " " " "

Q1 2025 reaffirmed the segment’s strength with almost 9% organic growth, double-digit growth in the short‑term internal feeding portfolio (driven by the new CORGRIP 2 Retention System), and robust performance within neonatal solutions. "

Consistent robust growth and innovation with product pipeline announcements reinforcing market leadership; sentiment remains strongly positive and forward‑looking.

Hyaluronic Acid Business Challenges and Revenue Decline

Throughout Q2–Q4 2024, Avanos noted significant challenges in the HA business, with revenue declines (forecasted around 20% for 2024 and reported declines of over 30% in some quarters), persistent pricing pressures in the 3‑shot category, and strategic deemphasis of the portfolio. " " " " "

In Q1 2025, the HA business continued to report a decline of over 30% in revenue, driven by ongoing pricing pressures – especially in the 3‑shot category – with a focus on running the business from a cash optimization perspective. " "

Persistent negative sentiment with little improvement; the HA segment remains a drag on performance, continuing its downward trend with ongoing pricing challenges.

Sales Volatility and Supply Chain Challenges

Q2 and Q3 2024 discussions noted supply chain issues (such as backorders impacting the ON‑Q product line) and uneven sales performance, with Q3 highlighting lower-than‐expected organic growth and transient challenges affecting customer turnover. " " " Q4 2024 indirectly referenced macro uncertainties affecting sales.

In Q1 2025, Avanos acknowledged volatility due to distributor order timing and improvements in demand planning, while also addressing ongoing external challenges such as tariffs impacting supply planning. " "

Mixed signals – while internal supply chain and planning improvements are evident, external factors (tariffs and distributor timing) continue to introduce volatility, marking a cautiously optimistic but uncertain outlook.

One‑Time Leadership Costs and Executive Changes

In Q3 2024, CEO transition details were discussed with the announcement of Joe Woody’s retirement, the appointment of an interim CEO (Michael Greiner), and an interim CFO appointment. " There was no mention of one‑time costs at that time.

Q1 2025 introduced one‑time leadership change costs that will be incurred in Q2, which were not part of earlier guidance. This complements previous executive changes and now adds a financial impact to the leadership transition. "

Continued leadership transition with a new emphasis on capturing associated one‑time costs; this development accentuates the financial impact of ongoing executive restructuring.

Capital Allocation, Strong Balance Sheet, and M&A Opportunities

Across Q2–Q4 2024, Avanos consistently highlighted a strong balance sheet, robust free cash flow performance, disciplined share buybacks, and ongoing M&A efforts to optimize their portfolio, supported by concrete cash and debt metrics. " " "

Q1 2025 reiterated a strong financial position with $97 million in cash, ongoing strategic M&A (including closing two smaller transactions), and a clear focus on capital allocation to support transformation, with solid free cash flow generation. " "

Consistent financial discipline; the company’s strong balance sheet and proactive M&A activities continue undisturbed, reinforcing a positive outlook on capital allocation and strategic growth.

Operating Margin and Cost Management Initiatives

In Q2–Q4 2024, there was a steady narrative of improving margins through SG&A optimization, cost management programs, and operational efficiencies. Discussions mentioned adjusted gross margin targets and cost takeout measures that contributed to margin expansion. " " " "

Q1 2025 noted significant margin improvements – for example, the Specialty Nutrition Systems segment achieved nearly 21% operating profit (a 460‑basis point increase) and the Pain Management segment improved by 400 basis points, supported by robust cost management initiatives (e.g., process efficiencies and demand planning improvements). " "

Continued margin expansion through strategic cost management initiatives; the company remains focused on operational efficiencies with increasingly positive sentiment on margin improvement outcomes.

Revenue Guidance and Forecast Uncertainty

In Q2–Q4 2024, revenue guidance was framed with modest organic growth targets, while also mentioning uncertainties from macroeconomic factors, currency headwinds, and product‑specific risks. Guidance was provided on both full‑year and quarterly levels with acknowledgment of external risks. " " " "

Q1 2025 maintained revenue guidance of $665 million to $685 million with similar organic growth expectations, but with a more explicit discussion of tariff cost estimates, distributor order timing issues, and broader macro uncertainties impacting forecasts. " " "

Unchanged overall guidance but with a heightened focus on risks—especially tariffs—indicating more explicit acknowledgment of forecast uncertainty; the sentiment is cautiously optimistic with clear articulation of external challenges.