Yahoo Finance Avanos (AVNS) Q1 Earnings and Revenues Fall Shy of Estimates
Avanos Medical, Inc. AVNS reported first-quarter 2023 adjusted earnings per share (EPS) of 27 cents, up 8% year over year. However, the bottom line missed the Zacks Consensus Estimate by a penny.
Our projection of adjusted EPS was 27 cents.
The GAAP loss per share in the quarter under review was a penny against the year-ago period’s EPS of 11 cents.
Revenues
Revenues grossed $191.7 million in the reported quarter, down 2.9% year over year. The metric lagged the Zacks Consensus Estimate by 1.5%.
First-quarter revenues compare to our estimate of $194.4 million.
Per management, the top line was hampered by a lower volume in pain management and respiratory health products. However, this was offset by a higher volume in digestive health products.
Excluding previously-announced product exits, net sales decreased 1% from the prior-year period.
Segmental Analysis
Avanos provides a portfolio of innovative product offerings that focuses on Pain Management and Chronic Care.
Pain Management’s net revenues of $70.5 million decreased 9.6% on a year-over-year basis. The segment saw soft results across the Surgical Pain, Game Ready and five-shot HA product categories, each of which was down at least 10% versus the prior year. However, Interventional Pain products categories grew 1% at constant exchange rate (CER).
The figure compares with our Pain Management segment’s first-quarter projection of $82.6 million.
Chronic Care’s net revenues of $121.2 million improved 1.5% year over year.
At CER, revenues were up more than 5%, owing to strength in Digestive Health. The business saw continued execution for NeoMed (which grew over 36%) and more than 5% gain in CORPAK standard-of-care offering.
The figure compares with our Chronic Care segment’s first-quarter projection of $111.8 million.
Avanos Medical, Inc. Price, Consensus and EPS Surprise
Avanos Medical, Inc. price-consensus-eps-surprise-chart | Avanos Medical, Inc. Quote
Margin Analysis
In the quarter under review, Avanos’ gross profit fell 1.9% to $104.5 million. However, the gross margin expanded 51 basis points (bps) to 54.5%.
Selling and general expenses rose 2.9% to $92.7 million. Research and development expenses increased 1.3% year over year to $7.9 million. Adjusted operating expenses of $100.6 million increased 2.8% year over year.
Adjusted operating profit totaled $3.9 million, reflecting a 55.2% decline from the prior-year quarter. The adjusted operating margin in the first quarter contracted 237 bps to 2%.
Financial Update
The company exited first-quarter 2023 with cash and cash equivalents worth $95.7 million compared with $127.7 million at the end of 2022. Total debt at the end of first-quarter 2023 was $210.9 million compared with $232.5 million at the end of 2022.
Net cash used in operating activities at the end of first-quarter 2023 totaled $6.8 million compared with net cash provided by operating activities of $1.8 million in the prior-year period.
Guidance
Avanos reiterated its 2023 adjusted EPS outlook.
The company anticipates 2023 adjusted EPS between $1.60 and $1.80. The Zacks Consensus Estimate for the same is pegged at $1.66.
AVNS anticipates low-single-digit organic revenue growth.
Our Take
Avanos’ solid adjusted EPS performance in the first quarter of 2023 was impressive. Strength in the Chronic Care segment from a solid Digestive health business was encouraging. Robust growth in NeoMed (fueled by strong execution of customer conversions to Avanos’ ENFit technology in North America) and CORTRAK was promising. The uptick in Interventional Pain Products categories at CER augurs well. The expansion of gross margin bodes well.
Yet, Avanos’ lower-than-expected results in the first quarter of 2023 were disappointing. The year-over-year decline in the Respiratory health business and Pain Management segment was worrying. The continued supply headwinds, particularly within Avanos’ surgical pain category, and management’s expectations that these headwinds will continue throughout the first part of 2023 raise our apprehension.
Zacks Rank and Key Picks
Avanos currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are AmerisourceBergen Corporation ABC, Intuitive Surgical, Inc. ISRG and Cardinal Health, Inc. CAH.
AmerisourceBergen, currently carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2023 adjusted EPS of $3.50, beating the Zacks Consensus Estimate by 6.4%. Revenues of $ $63.46 billion outpaced the consensus mark by 4.4%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AmerisourceBergen has a long-term estimated growth rate of 8.7%. ABC’s earnings surpassed estimates in all the trailing four quarters, the average being 3.1%.
Intuitive Surgical, having a Zacks Rank #2, reported first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate by 3.4%. Revenues of $1.70 billion outpaced the consensus mark by 6.9%.
Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 1.9%.
Cardinal Health reported third-quarter fiscal 2023 adjusted EPS of $1.74, beating the Zacks Consensus Estimate by 17.6%. Revenues of $50.49 billion surpassed the Zacks Consensus Estimate by 1.7%. It currently carries a Zacks Rank #2.
Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 12.3%.
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AVANOS MEDICAL, INC. (AVNS) : Free Stock Analysis Report
