Avanos Medical, Inc. Q1 FY2025 earnings call

• Dave Pacitti welcomed as new CEO, Jason Pickett as Interim CFO. - Transformation efforts laid foundation for growth. - Strong energy and strategic focus across the company. - Specialty Nutrition Systems continues to deliver above-market results. - Pain Management and Recovery making progress, with Radio Frequency Ablation showing strong organic gains. - Improved demand planning processes. - Plan to transition syringe manufacturing from China by H1 2026. - Disciplined cost management culture embedded.

Specialty Nutrition Systems portfolio grew almost 9% organically vs prior year, with operating profit nearly 21% (a 460 basis-point increase from prior year). Pain Management and Recovery segment had normalized organic sales up 2.4%, with Radio Frequency Ablation growing near double-digits, Surgical Pain down but in line, Game Ready low-single-digits. Hyaluronic Acid injections and intravenous infusion product lines in Corporate and other declined over 30% combined, primarily due to pricing pressures.

• Maintaining full-year revenue estimate of $665 million to $685 million. - Lowering 2025 adjusted earnings per share estimate range to $0.75 to $0.95 due to tariffs ($15M incremental costs) and one-time executive leadership change costs. - Anticipates softer Q2 for Specialty Nutrition Systems due to distributor order timing, but confident in year-long strength and market share gains in RFA segment.

• Tariffs pose material negative impact on earnings, with approximately $15 million in incremental tariff-related manufacturing costs expected for 2025. - Uncertainty around ultimate impact of tariffs on profitability and cash flow due to ongoing tariff negotiations.

Q: Rick Wise asked about Q2 specifics relative to Q1, including quantification of distributor order impact and cadence for the year.

A: Jason Pickett responded that distributor ordering patterns in Q1 benefited SNS, expecting Q2 to be down slightly but full-year guidance maintained.

Q: Danny Stauder asked about segment performance and free cash flow.

A: Jason Pickett discussed SNS growth, Pain Management and Recovery details, and that free cash flow for 2025 is estimated at $65 million excluding tariffs, with first quarter generating $19 million free cash flow.