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Avanos Medical (AVNS) Q3 Earnings and Revenues Top Estimates

Zacks Equity Research
·4 min read

Avanos Medical, Inc. (AVNS) reported adjusted earnings per share (EPS) of 21 cents in third-quarter 2020, beating the Zacks Consensus Estimate of an EPS of 14 cents by 50%. However, the bottom line declined 30% from the prior-year quarter.

Revenues of this Zacks Rank #4 (Sell) company were $185.7 million, which beat the Zacks Consensus Estimate by 11.9%. Also, the top line rose 8.3% on a year-over-year basis.

Q3 Segmental Analysis

Chronic Care

Net revenues at this segment of $119.3 million rose 21.7% year over year.

Pain Management

The segment reported net revenues of $66.4 million. The metric declined 9.5% on a year-over-year basis.

Margin Analysis

Gross profit was $96 million, up 0.8% from the prior-year quarter. Gross margin was 51.6% of net revenues, down 384 bps year over year.

Adjusted operating profit in the third quarter was $5 million, down 157.8% from the year-ago quarter. Adjusted operating margin came in at 2.8%, showing an expansion of 805 bps.

 

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

Financial Update

As of Sep 30, 2020 cash and cash equivalents totaled $180 million compared with $185 million as of Jun 30, 2020.

Cumulative net cash used in operating activities at the end of third quarter totaled $3.6 million, compared with net cash utilized in operating activities of $71.6 million in the prior-year quarter.

Guidance

In view of the ongoing uncertainty related to the COVID-19 pandemic, the company has withdrawn its 2020 outlook (provided on Feb 25, 2020). At this point, the company is unable to fully quantify the scope or duration of the impact of the pandemic on its financial results.

Summing Up

Avanos exited the third quarter on a strong note. The company continues to gain from its core segment — Chronic Care. CORPAK and NeoMed products contributed strongly to results. The acquisitions of NeoMed and Summit contributed 5% of growth in the quarter. Further, rise in global demand for Respiratory Health owing to the pandemic positively impacted the quarterly performance.

However, contraction in gross margin remains a worry. Also, the company’s Pain Management unit performed weakly. The company also witnessed lower volume in Acute Pain and Interventional Pain owing to fall in elective procedures. Moreover, being a pure-play MedTech company, it faces stiff competition from other industry players.

Key Picks

Some better-ranked stocks in the broader medical space that have announced their quarterly results are Thermo Fisher Scientific Inc. TMO, Align Technology, Inc. ALGN and AngioDynamics, Inc. ANGO, each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Thermo Fisher reported third-quarter 2020 adjusted EPS of $5.63, beating the Zacks Consensus Estimate by 28.8%. Revenues of $8.52 billion surpassed the consensus mark by 10%.

Align Technology reported third-quarter 2020 adjusted EPS of $2.25, which surpassed the Zacks Consensus Estimate by 281.4%. Revenues of $734.1 million outpaced the consensus mark by 38%.

AngioDynamics reported first-quarter fiscal 2021 adjusted EPS of 2 cents against the Zacks Consensus Estimate of a loss per share of 6 cents. Revenues of $70.2 million beat the consensus mark by 6.9%

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