Avanos Medical, Inc. Announces Fourth Quarter and Full-Year 2023 Results
"We were very pleased with the overall execution on our transformation initiative last year, which sets the foundation for more profitable growth in 2024 and for reaching our mid-term financial targets in 2025," said
2023 Financial Highlights
- Fourth quarter net sales from continuing operations totaled
$173.3 million , a 4.6% decrease from the prior year. For the full-year, net sales from continuing operations decreased 1.6% to$673.3 million . - Fourth quarter diluted earnings per share from continuing operations were
$0.24 compared to diluted earnings per share of$0.21 per share a year ago, and fourth quarter adjusted diluted earnings per share from continuing operations were$0.36 compared to$0.45 in the prior year. 2023 full-year diluted loss per share from continuing operations were$0.21 compared to diluted earnings per share of$0.46 in the prior year, and adjusted diluted earnings per share from continuing operations were$1.03 compared to$1.00 in 2022. - Fourth quarter free cash flow was an outflow of
$3.4 million following an inflow of$25.2 million in the third quarter and compared to$28.8 million in the fourth quarter of last year. 2023 full-year free cash flow was$14.6 million compared to$71.6 million in 2022.
During 2023, we completed a number of important steps in furtherance of the three-year transformation initiative that we initiated in
On
On
Fourth Quarter 2023 Operating Results From Continuing Operations
In the fourth quarter of 2023, net sales totaled
Gross margin for the fourth quarter was 54.8% compared to 56.7% a year ago. Adjusted gross margin was 58.6% compared to 58.9% in the prior year. Gross profit margin decreased primarily due to product mix, partially offset by favorable currency exchange rates and manufacturing efficiencies.
Selling and general expenses as a percentage of net sales was 43.0% compared to 43.3% in the prior year period, primarily due to non-recurring expenses associated with our ongoing Transformation Process, the Diros acquisition and the Divestiture, as well as compliance costs associated with the EU Medical Device Regulation (the "EU MDR").
Operating profit in the quarter was
Adjusted EBITDA for the quarter was
Full-Year 2023 Operating Results From Continuing Operations
Net sales decreased 1.6% to
Gross margin for 2023 was 56.4% compared to 57.6% in 2022. Adjusted gross margin was 59.1%, down from 59.9% last year due primarily to unfavorable product mix, partially offset by improved manufacturing efficiencies.
Selling and general expenses as a percentage of net sales were 49.8% compared to 47.7% in the prior year period, driven by higher selling costs, along with non-recurring expenses associated with our ongoing Transformation Process, the Divestiture and the Diros acquisition, as well as compliance costs associated with the EU MDR.
Operating income in 2023 was
For the full-year, adjusted EBITDA totaled
Cash Flow and Balance Sheet
Cash from operations less capital expenditures, or free cash flow, for the fourth quarter of 2023 was an outflow of
At year-end 2023, the Company's cash balance was
Discontinued Operations
Net sales from discontinued operations were
2024 Outlook
The Company expects 2024 net sales to be between
Non-GAAP Financial Measures
This press release and the accompanying tables include the following financial measures that have not been calculated in accordance with accounting principles generally accepted in the
- Adjusted net income
- Adjusted diluted earnings per share
- Adjusted gross and operating profit
- Adjusted effective tax rate
- Adjusted EBITDA
- Free cash flow
These non-GAAP financial measures exclude the following items, as applicable, for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures:
- Incremental expenses associated with altering operations in response to the COVID-19 pandemic.
- Expenses associated with restructuring and transformation activities, including IT-related charges.
- Expenses associated with post-divestiture transition activities.
- The amortization of intangible assets associated with prior business acquisitions.
- Expenses associated with certain litigation matters.
- Compliance with the EU MDR.
- Certain acquisition and integration charges related to the acquisition of OrthogenRx and Game Ready.
- The tax effects of certain adjusting items.
- The benefit associated with tax effects of the CARES Act.
- The positive or negative effect of changes in currency exchange rates during the year.
The Company provides these non-GAAP financial measures as supplemental information to our GAAP financial measures. Management and the Company's Board of Directors use net sales on a constant currency basis, adjusted net income, adjusted diluted earnings per share, adjusted operating profit, adjusted EBITDA, and free cash flow to (a) evaluate the Company's historical and prospective financial performance and its performance relative to its competitors, (b) allocate resources and (c) measure the operational performance of the Company's business units and their managers. Management also believes that the use of an adjusted effective tax rate provides improved insight into the tax effects of the Company's ongoing business operations.
Additionally, the Compensation Committee of the Company's Board of Directors will use certain of the non-GAAP financial measures when setting and assessing achievement of incentive compensation goals. These goals are based, in part, on the Company's net sales on a constant currency basis and adjusted EBITDA, which will be determined by excluding certain items that are used in calculating these non-GAAP financial measures.
Our competitors may define these non-GAAP financial measures differently, and as a result, our measure of these non-GAAP financial measures may not be directly comparable to those of other companies. Items excluded from these non-GAAP financial measures are significant components in understanding and assessing financial performance. These non-GAAP financial measures are supplemental measures of operating performance that do not represent, and should not be considered in isolation or as an alternative to, or substitute for, the financial statement data presented in our consolidated financial statements as indicators of financial performance. These non-GAAP financial measures have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP financial measures as supplemental information.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the attached financial tables.
Conference Call Webcast
About
Forward-Looking Statements
This press release contains information that includes or is based on "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as "may", "believe", "will", "expect", "project", "estimate", "anticipate", "plan", or "continue" and similar expressions, among others. Forward-looking statements are based on the current plans and expectations of management and are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in such statements. Such factors include, but are not limited to: weakening of economic conditions that could adversely affect the level of demand for our products; pricing pressures generally, including cost-containment measures that could adversely affect the price of or demand for our products; shortages in drugs used in our Surgical Pain and Recovery products or other disruptions in our supply chain; the ongoing conflicts between
AVANOS MEDICAL, INC. |
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Three Months Ended |
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Year Ended |
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|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
$ 173.3 |
|
$ 181.6 |
|
$ 673.3 |
|
$ 684.1 |
Cost of products sold |
78.3 |
|
78.7 |
|
293.6 |
|
289.9 |
Gross Profit |
95.0 |
|
102.9 |
|
379.7 |
|
394.2 |
Research and development expenses |
6.8 |
|
7.2 |
|
27.2 |
|
29.2 |
Selling and general expenses |
74.5 |
|
78.7 |
|
335.0 |
|
326.5 |
Other expense (income), net |
2.5 |
|
0.4 |
|
13.3 |
|
3.0 |
Operating Income |
11.2 |
|
16.6 |
|
4.2 |
|
35.5 |
Interest income |
1.0 |
|
0.7 |
|
2.9 |
|
1.2 |
Interest expense |
(3.3) |
|
(3.0) |
|
(15.0) |
|
(10.0) |
Income Before Income Taxes |
8.9 |
|
14.3 |
|
(7.9) |
|
26.7 |
Income tax benefit (provision) |
2.1 |
|
(4.6) |
|
(2.0) |
|
(5.2) |
Income (Loss) from Continuing Operations |
11.0 |
|
9.7 |
|
(9.9) |
|
21.5 |
(Loss) Income from discontinued operations, net of tax |
(0.5) |
|
7.2 |
|
(51.9) |
|
29.0 |
Net Income (Loss) |
$ 10.5 |
|
$ 16.9 |
|
$ (61.8) |
|
$ 50.5 |
|
|
|
|
|
|
|
|
Interest expense, net |
2.3 |
|
2.3 |
|
12.1 |
|
8.8 |
Income tax (provision) benefit |
(3.4) |
|
7.0 |
|
2.9 |
|
14.7 |
Depreciation and amortization |
11.5 |
|
13.4 |
|
46.1 |
|
47.7 |
EBITDA |
$ 20.9 |
|
$ 39.6 |
|
$ (0.7) |
|
$ 121.7 |
|
|
|
|
|
|
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|
Earnings (Loss) Per Share |
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|
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|
Basic |
|
|
|
|
|
|
|
Continuing operations |
$ 0.24 |
|
$ 0.21 |
|
$ (0.21) |
|
$ 0.46 |
Discontinued operations |
$ (0.01) |
|
$ 0.15 |
|
$ (1.11) |
|
$ 0.62 |
Basic (Loss) Earnings Per Share |
$ 0.23 |
|
$ 0.36 |
|
$ (1.32) |
|
$ 1.08 |
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
Continuing operations |
$ 0.24 |
|
$ 0.21 |
|
$ (0.21) |
|
$ 0.46 |
Discontinued operations |
$ (0.01) |
|
$ 0.15 |
|
$ (1.11) |
|
$ 0.61 |
Diluted (Loss) Earnings Per Share |
$ 0.23 |
|
$ 0.36 |
|
$ (1.32) |
|
$ 1.07 |
|
|
|
|
|
|
|
|
Common Shares Outstanding |
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|
|
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|
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|
Basic |
46.2 |
|
46.5 |
|
46.6 |
|
46.9 |
Diluted |
46.6 |
|
47.0 |
|
46.6 |
|
47.3 |
AVANOS MEDICAL, INC. |
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Three Months Ended |
|
Year Ended |
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|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
$ 7.0 |
|
$ 35.9 |
|
$ 100.9 |
|
$ 135.9 |
Cost of products sold |
11.0 |
|
21.9 |
|
68.8 |
|
80.1 |
Gross Profit |
(4.0) |
|
14.0 |
|
32.1 |
|
55.8 |
Research and development expenses |
— |
|
0.3 |
|
0.8 |
|
1.4 |
Selling, general and other expenses |
(0.7) |
|
3.9 |
|
11.2 |
|
15.4 |
Pretax gain (loss) on classification as discontinued operations |
(1.5) |
|
— |
|
70.8 |
|
— |
Other expense, net |
— |
|
0.2 |
|
0.3 |
|
0.5 |
Operating (loss) income |
(1.8) |
|
9.6 |
|
(51.0) |
|
38.5 |
Income tax benefit (provision) from discontinued operations |
1.3 |
|
(2.4) |
|
(0.9) |
|
(9.5) |
(Loss) Income from discontinued operations, net of tax |
$ (0.5) |
|
$ 7.2 |
|
$ (51.9) |
|
$ 29.0 |
AVANOS MEDICAL, INC. |
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Gross Profit |
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Three Months Ended |
|
Three Months Ended |
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|
Continuing
|
|
Disc. Operations |
|
Total |
|
Continuing
|
|
Disc. Operations |
|
Total |
As reported |
$ 95.0 |
|
$ (4.0) |
|
$ 91.0 |
|
$ 102.9 |
|
$ 14.0 |
|
$ 116.9 |
Acquisition and integration-related charges |
0.4 |
|
— |
|
0.4 |
|
— |
|
— |
|
— |
Restructuring and transformation charges |
2.4 |
|
— |
|
2.4 |
|
— |
|
— |
|
— |
Divestiture related charges |
— |
|
1.4 |
|
1.4 |
|
— |
|
— |
|
— |
EU MDR Compliance |
— |
|
— |
|
— |
|
(0.2) |
|
— |
|
(0.2) |
Intangibles amortization |
3.8 |
|
— |
|
3.8 |
|
4.3 |
|
— |
|
4.3 |
As adjusted non-GAAP |
$ 101.6 |
|
$ (2.6) |
|
$ 99.0 |
|
$ 107.0 |
|
$ 14.0 |
|
$ 121.0 |
Gross profit margin, as reported |
54.8 % |
|
(57.1) % |
|
50.5 % |
|
56.7 % |
|
39.0 % |
|
53.7 % |
Gross profit margin, as adjusted |
58.6 % |
|
(37.1) % |
|
54.9 % |
|
58.9 % |
|
39.0 % |
|
55.6 % |
|
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Gross Profit |
||||||||||
|
Year Ended |
|
Year Ended |
||||||||
|
Continuing
|
|
Disc. Operations |
|
Total |
|
Continuing
|
|
Disc. Operations |
|
Total |
As reported |
$ 379.7 |
|
$ 32.1 |
|
$ 411.8 |
|
$ 394.2 |
|
$ 55.8 |
|
$ 450.0 |
Acquisition and integration-related charges |
0.4 |
|
— |
|
0.4 |
|
1.4 |
|
— |
|
1.4 |
Restructuring and transformation charges |
3.0 |
|
— |
|
3.0 |
|
— |
|
— |
|
— |
Divestiture related charges |
— |
|
1.4 |
|
1.4 |
|
— |
|
— |
|
— |
EU MDR Compliance |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
Intangibles amortization |
14.6 |
|
— |
|
14.6 |
|
14.4 |
|
— |
|
14.4 |
As adjusted non-GAAP |
$ 397.7 |
|
$ 33.5 |
|
$ 431.2 |
|
$ 410.0 |
|
$ 55.8 |
|
$ 465.8 |
Gross profit margin, as reported |
56.4 % |
|
31.8 % |
|
53.2 % |
|
57.6 % |
|
41.1 % |
|
54.9 % |
Gross profit margin, as adjusted |
59.1 % |
|
33.2 % |
|
55.7 % |
|
59.9 % |
|
41.1 % |
|
56.8 % |
AVANOS MEDICAL, INC. |
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Operating Profit (Loss) |
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|
Three Months Ended |
|
Three Months Ended |
||||||||
|
Continuing
|
|
Disc. Operations |
|
Total |
|
Continuing
|
|
Disc. Operations |
|
Total |
As reported |
$ 11.2 |
|
$ (1.8) |
|
$ 9.4 |
|
$ 16.6 |
|
$ 9.6 |
|
$ 26.2 |
Acquisition and integration-related charges |
0.9 |
|
— |
|
0.9 |
|
0.4 |
|
— |
|
0.4 |
Restructuring and transformation charges(a) |
5.2 |
|
— |
|
5.2 |
|
— |
|
— |
|
— |
Divestiture related charges |
0.9 |
|
— |
|
0.9 |
|
— |
|
— |
|
— |
Estimated loss on Divestiture |
— |
|
(1.5) |
|
(1.5) |
|
— |
|
— |
|
|
EU MDR Compliance(b) |
0.9 |
|
— |
|
0.9 |
|
1.5 |
|
— |
|
1.5 |
Litigation and legal |
1.5 |
|
— |
|
1.5 |
|
— |
|
— |
|
— |
Other items(c) |
— |
|
— |
|
— |
|
3.8 |
|
— |
|
3.8 |
Intangibles amortization |
6.5 |
|
— |
|
6.5 |
|
7.2 |
|
0.5 |
|
7.7 |
As adjusted non-GAAP |
$ 27.1 |
|
$ (3.3) |
|
$ 23.8 |
|
$ 29.5 |
|
$ 10.1 |
|
$ 39.6 |
|
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|
Operating Profit |
||||||||||
|
Year Ended |
|
Year Ended |
||||||||
|
Continuing
|
|
Disc. Operations |
|
Total |
|
Continuing
|
|
Disc. Operations |
|
Total |
As reported |
$ 4.2 |
|
$ (51.0) |
|
$ (46.8) |
|
$ 35.5 |
|
$ 38.5 |
|
$ 74.0 |
Acquisition and integration-related charges |
3.3 |
|
— |
|
3.3 |
|
3.4 |
|
— |
|
3.4 |
Restructuring and transformation charges(a) |
28.2 |
|
— |
|
28.2 |
|
— |
|
— |
|
— |
Divestiture related charges |
6.0 |
|
0.8 |
|
6.8 |
|
— |
|
— |
|
— |
Estimated loss on Divestiture |
— |
|
70.8 |
|
70.8 |
|
— |
|
— |
|
— |
EU MDR Compliance(b) |
3.7 |
|
— |
|
3.7 |
|
6.9 |
|
— |
|
6.9 |
Litigation and legal |
10.0 |
|
— |
|
10.0 |
|
— |
|
— |
|
— |
Other items(c) |
— |
|
— |
|
— |
|
3.8 |
|
— |
|
3.8 |
Intangibles amortization |
24.3 |
|
0.8 |
|
25.1 |
|
23.6 |
|
2.1 |
|
25.7 |
As adjusted non-GAAP |
$ 79.7 |
|
$ 21.4 |
|
$ 101.1 |
|
$ 73.2 |
|
$ 40.6 |
|
$ 113.8 |
|
|
|
|
|
|
|
(a) |
Expenses incurred for the Transformation Process are included in "Costs of products sold," "Research and development," "Selling and general expenses" and "Other expense, net" on the Condensed Consolidated Income Statements. |
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(b) |
In the three months ended |
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(c) |
Other items in the three months and year ended |
AVANOS MEDICAL, INC. |
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Income (Loss) Before Taxes |
||||||||||
|
Three Months Ended |
|
Three Months Ended |
||||||||
|
Continuing
|
|
Disc. Operations |
|
Total |
|
Continuing
|
|
Disc. Operations |
|
Total |
As reported |
$ 8.9 |
|
$ (1.8) |
|
$ 7.1 |
|
$ 14.3 |
|
$ 9.6 |
|
$ 23.9 |
Acquisition and integration-related charges |
0.9 |
|
— |
|
0.9 |
|
0.4 |
|
— |
|
0.4 |
Restructuring and transformation charges |
5.2 |
|
— |
|
5.2 |
|
— |
|
— |
|
— |
Divestiture related charges |
0.9 |
|
— |
|
0.9 |
|
— |
|
— |
|
— |
Estimated loss on divestiture |
— |
|
(1.5) |
|
(1.5) |
|
— |
|
— |
|
— |
EU MDR Compliance |
0.9 |
|
— |
|
0.9 |
|
1.5 |
|
— |
|
1.5 |
Litigation and legal |
1.5 |
|
— |
|
1.5 |
|
— |
|
— |
|
— |
Other items |
— |
|
— |
|
— |
|
3.8 |
|
— |
|
3.8 |
Intangibles amortization |
6.5 |
|
— |
|
6.5 |
|
7.2 |
|
0.5 |
|
7.7 |
As adjusted non-GAAP |
$ 24.8 |
|
$ (3.3) |
|
$ 21.5 |
|
$ 27.2 |
|
$ 10.1 |
|
$ 37.3 |
|
|||||||||||
|
(Loss) Income Before Taxes |
||||||||||
|
Year Ended |
|
Year Ended |
||||||||
|
Continuing
|
|
Disc. Operations |
|
Total |
|
Continuing
|
|
Disc. Operations |
|
Total |
As reported |
$ (7.9) |
|
$ (51.0) |
|
$ (58.9) |
|
$ 26.7 |
|
$ 38.5 |
|
$ 65.2 |
Acquisition and integration-related charges |
3.3 |
|
— |
|
3.3 |
|
3.4 |
|
— |
|
3.4 |
Restructuring and transformation charges |
28.2 |
|
— |
|
28.2 |
|
— |
|
— |
|
— |
Divestiture related charges |
6.0 |
|
0.8 |
|
6.8 |
|
— |
|
— |
|
— |
Estimated loss on Divestiture |
— |
|
70.8 |
|
70.8 |
|
— |
|
— |
|
— |
EU MDR Compliance |
3.7 |
|
— |
|
3.7 |
|
6.9 |
|
— |
|
6.9 |
Litigation and legal |
10.0 |
|
— |
|
10.0 |
|
— |
|
— |
|
— |
Intangibles amortization |
24.3 |
|
0.8 |
|
25.1 |
|
23.6 |
|
2.1 |
|
25.7 |
Other items |
— |
|
— |
|
— |
|
3.8 |
|
— |
|
3.8 |
Loss on extinguishment of debt |
— |
|
— |
|
— |
|
1.1 |
|
— |
|
1.1 |
As adjusted non-GAAP |
$ 67.6 |
|
$ 21.4 |
|
$ 89.0 |
|
$ 65.5 |
|
$ 40.6 |
|
$ 106.1 |
AVANOS MEDICAL, INC. |
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Tax Benefit (Provision) |
||||||||||
|
Three Months Ended |
|
Three Months Ended |
||||||||
|
Continuing
|
|
Disc. Operations |
|
Total |
|
Continuing
|
|
Disc. Operations |
|
Total |
As reported |
$ 2.1 |
|
$ 1.3 |
|
$ 3.4 |
|
$ (4.6) |
|
$ (2.4) |
|
$ (7.0) |
Tax effects of adjusting items |
(10.3) |
|
— |
|
(10.3) |
|
(1.9) |
|
(0.9) |
|
(2.8) |
Effects of the CARES Act and other |
— |
|
— |
|
— |
|
0.5 |
|
— |
|
0.5 |
As adjusted non-GAAP |
$ (8.2) |
|
$ 1.3 |
|
$ (6.9) |
|
$ (6.0) |
|
$ (3.3) |
|
$ (9.3) |
Effective tax rate, as reported |
23.6 % |
|
72.2 % |
|
(47.9) % |
|
32.2 % |
|
(25.0) % |
|
29.3 % |
Effective tax rate, as adjusted |
33.2 % |
|
39.4 % |
|
32.3 % |
|
22.1 % |
|
(32.7) % |
|
24.9 % |
|
|||||||||||
|
Tax Provision |
||||||||||
|
Year Ended |
|
Year Ended |
||||||||
|
Continuing
|
|
Disc. Operations |
|
Total |
|
Continuing
|
|
Disc. Operations |
|
Total |
As reported |
$ (2.0) |
|
$ (0.9) |
|
$ (2.9) |
|
$ (5.2) |
|
$ (9.5) |
|
$ (14.7) |
Tax effects of adjusting items |
(17.8) |
|
(4.4) |
|
(22.2) |
|
(9.5) |
|
(0.4) |
|
(9.9) |
Effects of the CARES Act and other |
— |
|
— |
|
— |
|
(3.3) |
|
— |
|
(3.3) |
As adjusted non-GAAP |
$ (19.8) |
|
$ (5.3) |
|
$ (25.1) |
|
$ (18.0) |
|
$ (9.9) |
|
$ (27.9) |
Effective tax rate, as reported |
25.3 % |
|
1.8 % |
|
4.9 % |
|
19.5 % |
|
24.7 % |
|
22.5 % |
Effective tax rate, as adjusted |
29.3 % |
|
24.8 % |
|
28.2 % |
|
27.5 % |
|
24.4 % |
|
26.3 % |
AVANOS MEDICAL, INC. |
|||||||||||
|
|||||||||||
|
Net Income (Loss) |
||||||||||
|
Three Months Ended |
|
Three Months Ended |
||||||||
|
Continuing
|
|
Disc. Operations |
|
Total |
|
Continuing
|
|
Disc. Operations |
|
Total |
As reported |
$ 11.0 |
|
$ (0.5) |
|
$ 10.5 |
|
$ 9.7 |
|
$ 7.2 |
|
$ 16.9 |
Acquisition and integration-related charges |
0.9 |
|
— |
|
0.9 |
|
0.4 |
|
— |
|
0.4 |
Restructuring and transformation charges |
5.2 |
|
— |
|
5.2 |
|
— |
|
— |
|
— |
Divestiture related charges |
0.9 |
|
— |
|
0.9 |
|
— |
|
— |
|
— |
Estimated loss on divestiture |
— |
|
(1.5) |
|
(1.5) |
|
— |
|
— |
|
— |
EU MDR Compliance |
0.9 |
|
— |
|
0.9 |
|
1.5 |
|
— |
|
1.5 |
Litigation and legal |
1.5 |
|
— |
|
1.5 |
|
— |
|
— |
|
— |
Other items |
— |
|
— |
|
— |
|
3.8 |
|
— |
|
3.8 |
Intangibles amortization |
6.5 |
|
— |
|
6.5 |
|
7.2 |
|
0.5 |
|
7.7 |
Tax effects of adjusting items |
(10.3) |
|
— |
|
(10.3) |
|
(1.9) |
|
(0.9) |
|
(2.8) |
Tax effects of the CARES Act and other |
— |
|
— |
|
— |
|
0.5 |
|
— |
|
0.5 |
As adjusted non-GAAP |
$ 16.6 |
|
$ (2.0) |
|
$ 14.6 |
|
$ 21.2 |
|
$ 6.8 |
|
$ 28.0 |
Diluted (loss) earnings per share, as reported |
$ 0.24 |
|
$ (0.01) |
|
$ 0.23 |
|
$ 0.21 |
|
$ 0.15 |
|
$ 0.36 |
Diluted earnings per share, as adjusted |
$ 0.36 |
|
$ (0.04) |
|
$ 0.32 |
|
$ 0.45 |
|
$ 0.15 |
|
$ 0.60 |
|
|||||||||||
|
Net (Loss) Income |
||||||||||
|
Year Ended |
|
Year Ended |
||||||||
|
Continuing
|
|
Disc. Operations |
|
Total |
|
Continuing
|
|
Disc. Operations |
|
Total |
As reported |
$ (9.9) |
|
$ (51.9) |
|
$ (61.8) |
|
$ 21.5 |
|
$ 29.0 |
|
$ 50.5 |
Acquisition and integration-related charges |
3.3 |
|
— |
|
3.3 |
|
3.4 |
|
— |
|
3.4 |
Restructuring and transformation charges |
28.2 |
|
— |
|
28.2 |
|
— |
|
— |
|
— |
Divestiture related charges |
6.0 |
|
0.8 |
|
6.8 |
|
— |
|
— |
|
— |
Estimated loss on divestiture |
— |
|
70.8 |
|
70.8 |
|
— |
|
— |
|
— |
EU MDR Compliance |
3.7 |
|
— |
|
3.7 |
|
6.9 |
|
— |
|
6.9 |
Litigation and legal |
10.0 |
|
— |
|
10.0 |
|
— |
|
— |
|
— |
Other items |
— |
|
— |
|
— |
|
3.8 |
|
— |
|
3.8 |
Intangibles amortization |
24.3 |
|
0.8 |
|
25.1 |
|
23.6 |
|
2.1 |
|
25.7 |
Loss on extinguishment of debt |
— |
|
— |
|
— |
|
1.1 |
|
— |
|
1.1 |
Tax effects of adjusting items |
(17.8) |
|
(4.4) |
|
(22.2) |
|
(9.5) |
|
(0.4) |
|
(9.9) |
Tax effects of the CARES Act and other |
— |
|
— |
|
— |
|
(3.3) |
|
— |
|
(3.3) |
As adjusted non-GAAP |
$ 47.8 |
|
$ 16.1 |
|
$ 63.9 |
|
$ 47.5 |
|
$ 30.7 |
|
$ 78.2 |
Diluted (loss) earnings per share, as reported |
$ (0.21) |
|
$ (1.11) |
|
$ (1.32) |
|
$ 0.46 |
|
$ 0.61 |
|
$ 1.07 |
Diluted earnings per share, as adjusted |
$ 1.03 |
|
$ 0.35 |
|
$ 1.38 |
|
$ 1.00 |
|
$ 0.65 |
|
$ 1.65 |
AVANOS MEDICAL, INC. |
|||||||||||
|
|||||||||||
|
Selling, General and Administrative Expenses |
||||||||||
|
Three Months Ended |
|
Three Months Ended |
||||||||
|
Continuing
|
|
Disc. Operations |
|
Total |
|
Continuing
|
|
Disc. Operations |
|
Total |
As reported |
$ 74.5 |
|
$ (0.7) |
|
$ 73.8 |
|
$ 78.7 |
|
$ 3.9 |
|
$ 82.6 |
Acquisition and integration-related charges |
(0.5) |
|
— |
|
(0.5) |
|
(0.4) |
|
— |
|
(0.4) |
Restructuring and transformation charges |
(2.0) |
|
— |
|
(2.0) |
|
— |
|
— |
|
— |
Divestiture related charges |
(0.9) |
|
0.8 |
|
(0.1) |
|
— |
|
— |
|
— |
EU MDR Compliance |
(0.9) |
|
— |
|
(0.9) |
|
(1.7) |
|
— |
|
(1.7) |
Other items |
— |
|
— |
|
|
|
(2.7) |
|
— |
|
(2.7) |
Intangibles amortization |
(2.7) |
|
— |
|
(2.7) |
|
(2.8) |
|
(0.5) |
|
(3.3) |
As adjusted non-GAAP |
$ 67.5 |
|
$ 0.1 |
|
$ 67.6 |
|
$ 71.1 |
|
$ 3.4 |
|
$ 74.5 |
SG&A as a percentage of revenue, as reported |
43.0 % |
|
(10.0) % |
|
40.9 % |
|
43.3 % |
|
10.9 % |
|
38.0 % |
SG&A as a percentage of revenue, as adjusted |
38.9 % |
|
1.4 % |
|
37.5 % |
|
39.2 % |
|
9.5 % |
|
34.2 % |
|
|||||||||||
|
Selling, General and Administrative Expenses |
||||||||||
|
Year Ended |
|
Year Ended |
||||||||
|
Continuing
|
|
Disc. Operations |
|
Total |
|
Continuing
|
|
Disc. Operations |
|
Total |
As reported |
$ 335.0 |
|
$ 11.2 |
|
$ 346.2 |
|
$ 326.5 |
|
$ 15.4 |
|
$ 341.9 |
Acquisition and integration-related charges |
(1.5) |
|
— |
|
(1.5) |
|
(2.0) |
|
— |
|
(2.0) |
Restructuring and transformation charges |
(22.5) |
|
— |
|
(22.5) |
|
— |
|
— |
|
— |
Divestiture related charges |
(6.0) |
|
— |
|
(6.0) |
|
— |
|
— |
|
— |
EU MDR Compliance |
(3.7) |
|
— |
|
(3.7) |
|
(7.0) |
|
— |
|
(7.0) |
Other items |
— |
|
— |
|
— |
|
(2.7) |
|
— |
|
(2.7) |
Intangibles amortization |
(9.7) |
|
(0.8) |
|
(10.5) |
|
(9.2) |
|
(2.1) |
|
(11.3) |
As adjusted non-GAAP |
$ 291.6 |
|
$ 10.4 |
|
$ 302.0 |
|
$ 305.6 |
|
$ 13.3 |
|
$ 318.9 |
SG&A as a percentage of revenue, as reported |
49.8 % |
|
11.1 % |
|
44.7 % |
|
47.7 % |
|
11.3 % |
|
41.7 % |
SG&A as a percentage of revenue, as adjusted |
43.3 % |
|
10.3 % |
|
39.0 % |
|
44.7 % |
|
9.8 % |
|
38.9 % |
AVANOS MEDICAL, INC. |
|||||||||||
|
|||||||||||
|
EBITDA |
||||||||||
|
Three Months Ended |
|
Three Months Ended |
||||||||
|
Continuing
|
|
Disc. Operations |
|
Total |
|
Continuing
|
|
Disc. Operations |
|
Total |
Net income (loss) |
$ 11.0 |
|
$ (0.5) |
|
$ 10.5 |
|
$ 9.7 |
|
$ 7.2 |
|
$ 16.9 |
Interest expense, net |
2.3 |
|
— |
|
2.3 |
|
2.3 |
|
— |
|
2.3 |
Income tax benefit (provision) |
(2.1) |
|
(1.3) |
|
(3.4) |
|
4.6 |
|
2.4 |
|
7.0 |
Depreciation |
5.0 |
|
— |
|
5.0 |
|
4.2 |
|
1.5 |
|
5.7 |
Amortization |
6.5 |
|
— |
|
6.5 |
|
7.2 |
|
0.5 |
|
7.7 |
EBITDA |
22.7 |
|
(1.8) |
|
20.9 |
|
28.0 |
|
11.6 |
|
39.6 |
Acquisition and integration-related charges |
0.9 |
|
— |
|
0.9 |
|
0.4 |
|
— |
|
0.4 |
Restructuring and transformation charges |
5.2 |
|
— |
|
5.2 |
|
— |
|
— |
|
— |
Divestiture related charges |
0.9 |
|
— |
|
0.9 |
|
— |
|
— |
|
— |
Estimated loss on divestiture |
— |
|
(1.5) |
|
(1.5) |
|
— |
|
— |
|
— |
EU MDR Compliance |
0.9 |
|
— |
|
0.9 |
|
1.5 |
|
— |
|
1.5 |
Other items |
— |
|
— |
|
— |
|
3.8 |
|
— |
|
3.8 |
Litigation and legal |
1.5 |
|
— |
|
1.5 |
|
— |
|
— |
|
— |
Adjusted EBITDA |
$ 32.1 |
|
$ (3.3) |
|
$ 28.8 |
|
$ 33.7 |
|
$ 11.6 |
|
$ 45.3 |
|
|||||||||||
|
EBITDA |
||||||||||
|
Year Ended |
|
Year Ended |
||||||||
|
Continuing
|
|
Disc. Operations |
|
Total |
|
Continuing
|
|
Disc. Operations |
|
Total |
Net (loss) income |
$ (9.9) |
|
$ (51.9) |
|
$ (61.8) |
|
$ 21.5 |
|
$ 29.0 |
|
$ 50.5 |
Interest expense, net |
12.1 |
|
— |
|
12.1 |
|
8.8 |
|
— |
|
8.8 |
Income tax benefit (provision) |
2.0 |
|
0.9 |
|
2.9 |
|
5.2 |
|
9.5 |
|
14.7 |
Depreciation |
19.2 |
|
1.8 |
|
21.0 |
|
18.0 |
|
4.0 |
|
22.0 |
Amortization |
24.3 |
|
0.8 |
|
25.1 |
|
23.6 |
|
2.1 |
|
25.7 |
EBITDA |
47.7 |
|
(48.4) |
|
(0.7) |
|
77.1 |
|
44.6 |
|
121.7 |
Acquisition and integration-related charges |
3.3 |
|
— |
|
3.3 |
|
3.4 |
|
— |
|
3.4 |
Restructuring and transformation charges |
28.2 |
|
— |
|
28.2 |
|
— |
|
— |
|
— |
Divestiture related charges |
6.0 |
|
0.8 |
|
6.8 |
|
— |
|
— |
|
— |
Estimated loss on divestiture |
— |
|
70.8 |
|
70.8 |
|
— |
|
— |
|
— |
EU MDR Compliance |
3.7 |
|
— |
|
3.7 |
|
6.9 |
|
— |
|
6.9 |
Other items |
— |
|
— |
|
— |
|
3.8 |
|
— |
|
3.8 |
Litigation and legal |
10.0 |
|
— |
|
10.0 |
|
— |
|
— |
|
— |
Adjusted EBITDA |
$ 98.9 |
|
$ 23.2 |
|
$ 122.1 |
|
$ 91.2 |
|
$ 44.6 |
|
$ 135.8 |
AVANOS MEDICAL, INC. |
|||||||
|
|||||||
|
Free Cash Flow |
||||||
|
Three Months Ended |
|
Year Ended |
||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Cash provided by operating activities |
$ 2.5 |
|
$ 33.7 |
|
$ 32.4 |
|
$ 90.9 |
Capital expenditures |
(5.9) |
|
(4.9) |
|
(17.8) |
|
(19.3) |
Free Cash Flow |
$ (3.4) |
|
$ 28.8 |
|
$ 14.6 |
|
$ 71.6 |
2024 OUTLOOK |
|||
|
|||
|
|
||
Diluted earnings per share (GAAP) |
$ 0.63 |
to |
$ 0.87 |
Intangibles amortization |
0.37 |
to |
0.34 |
Restructuring and transformation charges |
0.08 |
to |
0.06 |
Divestiture related charges |
0.12 |
to |
0.10 |
Other |
0.10 |
to |
0.08 |
Adjusted diluted earnings per share (non-GAAP) |
$ 1.30 |
to |
$ 1.45 |
AVANOS MEDICAL, INC. |
|||
|
|||
|
As of |
||
|
2023 |
|
2022 |
ASSETS |
|
|
|
Current Assets |
|
|
|
Cash and cash equivalents |
$ 87.7 |
|
$ 127.7 |
Accounts receivable, net of allowances |
142.8 |
|
167.9 |
Inventories |
163.2 |
|
132.3 |
Prepaid expenses and other current assets |
28.8 |
|
13.9 |
Assets held for sale |
64.5 |
|
182.3 |
Total Current Assets |
487.0 |
|
624.1 |
Property, Plant and Equipment, net |
117.2 |
|
118.6 |
Operating Lease Right of Use Assets |
26.8 |
|
27.5 |
|
796.1 |
|
760.3 |
Other Intangible Assets, net |
239.5 |
|
234.2 |
Deferred Tax Assets |
6.5 |
|
4.6 |
Other Assets |
19.3 |
|
17.6 |
TOTAL ASSETS |
$ 1,692.4 |
|
$ 1,786.9 |
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current Liabilities |
|
|
|
Current portion of long-term debt |
$ 8.6 |
|
$ 6.2 |
Current portion of operating lease obligation |
12.8 |
|
12.0 |
Trade accounts payable |
56.3 |
|
67.9 |
Accrued expenses |
93.2 |
|
97.8 |
Liabilities held for sale |
63.7 |
|
7.1 |
Total Current Liabilities |
234.6 |
|
191.0 |
Long-Term Debt |
159.4 |
|
226.3 |
Operating Lease Obligation |
28.3 |
|
32.5 |
Deferred Tax Liabilities |
23.8 |
|
25.4 |
Other Long-Term Liabilities |
10.0 |
|
20.5 |
TOTAL LIABILITIES |
456.1 |
|
495.7 |
Stockholders' Equity |
1,236.3 |
|
1,291.2 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 1,692.4 |
|
$ 1,786.9 |
AVANOS MEDICAL, INC. |
|||||||
|
|||||||
|
Three Months Ended |
|
Year Ended |
||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Operating Activities |
|
|
|
|
|
|
|
Net income (loss) |
$ 10.5 |
|
$ 16.9 |
|
$ (61.8) |
|
$ 50.5 |
Depreciation and amortization |
11.5 |
|
13.4 |
|
46.1 |
|
47.7 |
Loss on RH disposal |
(1.4) |
|
— |
|
70.8 |
|
— |
Net loss on asset dispositions |
0.8 |
|
1.1 |
|
1.9 |
|
1.1 |
Changes in operating assets and liabilities |
(3.0) |
|
(1.6) |
|
(18.0) |
|
(24.3) |
Deferred income taxes and other |
(15.9) |
|
3.9 |
|
(6.6) |
|
15.9 |
Cash Provided by Operating Activities |
2.5 |
|
33.7 |
|
32.4 |
|
90.9 |
Investing Activities |
|
|
|
|
|
|
|
Capital expenditures |
(5.9) |
|
(4.9) |
|
(17.8) |
|
(19.3) |
Proceeds from the RH divestiture |
89.0 |
|
— |
|
89.0 |
|
— |
Acquisition of assets and investments in businesses |
(2.1) |
|
— |
|
(49.6) |
|
(116.1) |
Cash Provided by Used in Investing Activities |
81.0 |
|
(4.9) |
|
21.6 |
|
(135.4) |
Financing Activities |
|
|
|
|
|
|
|
Proceeds from issuance of secured debt |
— |
|
— |
|
— |
|
250.0 |
Secured debt repayments |
(1.6) |
|
(1.6) |
|
(4.7) |
|
(126.6) |
Revolving credit facility proceeds |
— |
|
— |
|
55.0 |
|
150.0 |
Revolving credit facility repayments |
(95.0) |
|
(20.0) |
|
(115.0) |
|
(170.0) |
Purchase of treasury stock |
(6.2) |
|
(0.4) |
|
(19.1) |
|
(45.5) |
Payment of debt issuance costs |
— |
|
— |
|
— |
|
(2.9) |
Proceeds from the exercise of stock options |
(0.2) |
|
0.1 |
|
1.3 |
|
1.7 |
Payment of contingent consideration liabilities |
(1.5) |
|
— |
|
(11.7) |
|
— |
Cash (Used in) Provided by Financing Activities |
(104.5) |
|
(21.9) |
|
(94.2) |
|
56.7 |
Effect of Exchange Rate Changes on Cash and Cash Equivalents |
1.6 |
|
3.8 |
|
0.2 |
|
(3.0) |
Increase in Cash and Cash Equivalents |
(19.4) |
|
10.7 |
|
(40.0) |
|
9.2 |
Cash and Cash Equivalents - Beginning of Period |
107.1 |
|
117.0 |
|
127.7 |
|
118.5 |
Cash and Cash Equivalents - End of Period |
$ 87.7 |
|
$ 127.7 |
|
$ 87.7 |
|
$ 127.7 |
AVANOS MEDICAL, INC. |
|||||||||||
|
|||||||||||
|
Three Months Ended |
|
|
|
Year Ended |
|
|
||||
|
2023 |
|
2022 |
|
Change |
|
2023 |
|
2022 |
|
Change |
Digestive health |
$ 94.8 |
|
$ 92.9 |
|
2.0 % |
|
$ 371.6 |
|
$ 340.4 |
|
9.2 % |
Pain Management and Recovery: |
|
|
|
|
|
|
|
|
|
|
|
Surgical pain and recovery |
35.6 |
|
41.3 |
|
(13.8) % |
|
139.2 |
|
160.1 |
|
(13.1) % |
Interventional pain |
42.9 |
|
47.4 |
|
(9.5) % |
|
162.5 |
|
183.6 |
|
(11.5) % |
Total Pain Management and recovery |
78.5 |
|
88.7 |
|
(11.5) % |
|
301.7 |
|
343.7 |
|
(12.2) % |
Total |
$ 173.3 |
|
$ 181.6 |
|
(4.6) % |
|
$ 673.3 |
|
$ 684.1 |
|
(1.6) % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
Volume |
|
Pricing/Mix |
|
Currency |
|
Other |
|
|
|
(4.6) % |
|
(4.3) % |
|
(0.8) % |
|
0.5 % |
|
— % |
|
|
|
(1.6) % |
|
(1.7) % |
|
0.3 % |
|
(0.2) % |
|
— % |
|
|
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SOURCE