U.S. markets closed
  • S&P 500

    3,831.39
    +6.06 (+0.16%)
     
  • Dow 30

    30,967.82
    -129.44 (-0.42%)
     
  • Nasdaq

    11,322.24
    +194.39 (+1.75%)
     
  • Russell 2000

    1,741.33
    +13.57 (+0.79%)
     
  • Crude Oil

    99.55
    -8.88 (-8.19%)
     
  • Gold

    1,763.80
    -37.70 (-2.09%)
     
  • Silver

    19.14
    -0.53 (-2.71%)
     
  • EUR/USD

    1.0266
    -0.0158 (-1.52%)
     
  • 10-Yr Bond

    2.8090
    -0.0800 (-2.77%)
     
  • GBP/USD

    1.1957
    -0.0148 (-1.22%)
     
  • USD/JPY

    135.8400
    +0.1800 (+0.13%)
     
  • BTC-USD

    20,265.97
    +487.74 (+2.47%)
     
  • CMC Crypto 200

    443.95
    +3.93 (+0.89%)
     
  • FTSE 100

    7,025.47
    -207.18 (-2.86%)
     
  • Nikkei 225

    26,423.47
    +269.66 (+1.03%)
     

Avanos Medical (AVNS) Q1 Earnings, Revenues Top Estimates

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·5 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Avanos Medical, Inc. AVNS reported first-quarter 2022 adjusted earnings per share (EPS) of 26 cents, up 13% year over year. The bottom line surpassed the Zacks Consensus Estimate by 8.3%.

GAAP EPS in the quarter under review was 12 cents against the year-ago quarter’s loss per share of 16 cents.

Revenues

Revenues grossed $197.4 million in the reported quarter, up 9.2% year over year. The metric surpassed the Zacks Consensus Estimate by 0.9%.

Organic revenue growth in constant currency for the quarter was 3%.

The top line was primarily driven by incremental revenues resulting from the acquisition of OrthogenRx, Inc. Strong demand and volume for Digestive health products were also recorded. However, lower demand and volume of respiratory health products offset this.

Q1 Segmental Analysis

Avanos provides a portfolio of innovative product offerings that focuses on Pain Management and Chronic Care.

Pain Management’s net revenues of $78 million surged 30.9% on a year-over-year basis. Excluding the OrthogenRx buyout, the business recorded revenues of $63 million, up by more than 6% compared with the prior-year period.

Chronic Care’s net revenues of $119.4 million declined 1.4% year over year despite strength in Digestive Health. NeoMed neonatal and pediatric feeding solutions grew 32% from continued conversion to ENFit.

Avanos Medical, Inc. Price, Consensus and EPS Surprise

Avanos Medical, Inc. Price, Consensus and EPS Surprise
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 rose 17.4% to $107.2 million. Gross margin expanded 378 basis points (bps) to 54.3%.

Selling and general expenses rose 22.8% to $90.1 million. Research and development expenses declined 6% year over year to $7.8 million. Adjusted operating expenses of $97.9 million increased 19.8% year over year.

Adjusted operating profit totaled $9.3 million, reflecting a 3.1% fall from the prior-year quarter’s level. Adjusted operating margin in the first quarter contracted 60 bps to 4.7%.

Financial Update

The company exited first-quarter 2022 with cash and cash equivalents worth $104.3 million compared with $118.5 million at the end of 2021. Long-term debt at the end of first-quarter 2022 was $254.4 million compared with $130 million at the end of 2021.

Net cash provided by operating activities at the end of first-quarter 2022 totaled $1.8 million compared with net cash used in operating activities of $3.3 million in the prior-year quarter.

In the first quarter of 2022, Avanos repurchased 588,293 shares of its common stock for $19.3 million, thereby completing its repurchases under a board-authorized $30 million repurchase program.

Guidance

Avanos has reiterated its full-year 2022 outlook.

The company continues to expect full-year net sales in the range of $830-$850 million, suggesting organic growth of 3-6%. The Zacks Consensus Estimate for the same currently stands at $841 million.

The company continues to anticipate full-year 2022 adjusted EPS between $1.55 and $1.75. The Zacks Consensus Estimate for the same currently stands at $1.66.

Our Take

Avanos exited the first quarter of 2022 with better-than-expected results. The year-over-year improvement in the overall top and bottom line was impressive. Strength exhibited by Avanos’ core Pain Management segment along with improvements in both Acute pain and Interventional Pain solutions is encouraging. The continued strong demand for Digestive Health products and robust sales of NeoMed are promising. Sustained robust growth for Coolief pain therapy, Game Ready cold and compression therapy systems, and ambIT pumps also raise optimism. Expansion of gross margin bodes well.

Yet, the year-over-year decline in the Chronic Care segment and lower volume in Respiratory Health products are worrying. Supply constraints and raw material shortages impacting Avanos’ business are concerning as well. Contraction in adjusted operating margin remains a woe.

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 Omnicell, Inc. OMCL, UnitedHealth Group Incorporated UNH and Alkermes plc ALKS.

Omnicell, carrying a Zacks Rank #2 (Buy), reported first-quarter 2022 adjusted EPS of 83 cents, which beat the Zacks Consensus Estimate by 16.9%. Revenues of $318.8 million outpaced the consensus mark by 0.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Omnicell has an estimated long-term growth rate of 16%. OMCL’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 13.4%.

UnitedHealth, having a Zacks Rank #2, reported first-quarter 2022 adjusted EPS of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 1.9%.

UnitedHealth has an estimated long-term growth rate of 14.8%. UNH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.7%.

Alkermes reported first-quarter 2022 adjusted EPS of 12 cents, which surpassed the Zacks Consensus Estimate of a penny. Revenues of $278.6 million outpaced the Zacks Consensus Estimate by 6.2%. It currently carries a Zacks Rank #2.

Alkermes has an estimated long-term growth rate of 25.1%. ALKS’ earnings surpassed estimates in the trailing four quarters, the average surprise being 350.5%.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report

Alkermes plc (ALKS) : Free Stock Analysis Report

Omnicell, Inc. (OMCL) : Free Stock Analysis Report

AVANOS MEDICAL, INC. (AVNS) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research