Avanos Medical Stock Dips Despite Q4 Earnings Beat, Revenues Up Y/Y

Avanos Medical, Inc. AVNS reported fourth-quarter 2025 adjusted earnings per share (EPS) from continuing operations of 29 cents, down 32.6% year over year. However, the bottom line beat the Zacks Consensus Estimate of 24 cents by 20.8%.

GAAP loss per share from continuing operations in the quarter under review was 3 cents compared with the year-ago period’s loss per share of $8.63.

Avanos’ Revenues

Revenues totaled $180.9 million in the reported quarter, up 0.7% year over year. The metric beat the Zacks Consensus Estimate by 2.7%.

The top line gained fromhigher volume across both its Specialty Nutrition Systems ("SNS") and Pain Management and Recovery ("PM&R") segments.

However, shares of the company lost nearly 10% in yesterday’s trading. The company ’s shares have plunged 37.9% in the year-to-date period compared with the industry’s decline of 8.9%. The broader S&P 500 Index has increased 7.3% in the same time frame.

AVNS’ Segmental Analysis

Avanos generates revenues from three segments — SNS, PM&R and Corporate and Other.

PM&R segment’s revenues in the fourth quarter of 2025 totaled $61.6 million, up 1.3% year over year. This figure compares to our projection of $57.7 million.

The PM&R segment’s volume growth in Radio Frequency Ablation ("RFA") was partially offset by reduced volume in our surgical pain and recovery product lines. Net sales of RFA products grew 8.2% year over year to $36.9million, reflecting momentum in RFA generator sales. Net sales in the surgical pain and recovery unit declined 7.5% year over year to $24.7million, primarily due to lower volume in the Game Ready product line.

SNS segment’s revenues totaled $115.1 million, up 8.7% year over year. This figure compares to our fourth-quarter projection of $98.1 million.

The segment recorded 7.9% volume growth, driven by continued strong demand across both Avanos’ enteral feeding and neonate solutions categories, especially long-term feeding products and US CORTRAK standard of care offerings.

Enteral feeding unit’s revenues totaled $83 million for the fourth quarter of 2025 (up 10.7% year over year), while Neonate solutions unit’s revenues amounted to $32.1 million (up 3.9% year over year).

Corporate and Other segment’s revenues totaled $4.2 million, down 67.4% year over year. The segment includes the Hyaluronic Acid (HA) injections and intravenous infusion product lines.

In July, AVNS announced the divestiture of its HA product line to Channel-Markers Medical, LLC, a privately held company. This transaction aligns with the company’s ongoing transformation, which is focused on advancing its strategic segments in PM&R and SNS.

Avanos’ Margin Analysis

In the quarter under review, Avanos’ adjusted gross profit declined 8.4% year over year to $96.6 million. The adjusted gross margin contracted 530 basis points (bps) to 53.4%. We had projected a gross margin of 56% for the fourth quarter.

Selling and general expenses decreased 1.1% year over year to $78.8million. Research and development expenses increased 7% year over year to $6.1 million. Adjusted operating expenses of $84.9 million decreased 0.6% year over year.

Adjusted operating profit totaled $22.6 million, reflecting a 5.4% decrease from the prior-year quarter’s level. The adjusted operating margin contracted 80 bps to 12.5%.

AVNS’ Financial Update

The company exited fourth-quarter 2025 with cash and cash equivalents worth $89.8 million compared with $70.5 million at the end of the third quarter. Total debt at fourth-quarter 2025-end was $100.1 million compared with $102.8 million at the end of the third quarter.

Cumulative net cash provided byoperating activities at the end of the fourth quarter of 2025 totaled $74.7 million compared with $100.7million in the prior-year period.

Avanos’ 2026 Guidance

AVNS has provided its 2025 salesand earnings outlook.

The company expects full-year 2026 net sales to be in the range of $700-$720 million. The Zacks Consensus Estimate is currently pegged at $696.8 million.

Avanos anticipates 2026 adjusted EPS between 90 cents and $1.10. The Zacks Consensus Estimate is currently pegged at $1.08.

Our Take

Avanos Medical exited 2025 with better-than-expected performance, wherein both sales and earnings surpassed their respective estimates. Organic growth in the company’s strategic segments reached 6% for the year, supported by improving trends in both core divisions.

SNS remained the primary growth engine, delivering more than 8% organic growth for the year. Short-term enteral feeding posted double-digit gains globally, driven by continued expansion of the U.S. CORTRAK standard-of-care program and strong uptake of the CORGRIP 2 retention system. Long-term feeding grew at a high-single-digit rate, supported by solid demand trends and the successful U.K. go-direct transition. Neonatal solutions also outpaced the market, and the recently acquired Nexus Medical business performed better than expected, contributing roughly $5 million in 2025 revenue with expectations for double-digit growth in 2026. Despite tariff headwinds compressing margins modestly, SNS maintained a healthy 19% operating margin for the year.

PM&R posted normalized organic growth of 2.3% in 2025, with momentum improving as the year progressed. Radiofrequency ablation continued to stand out with double-digit growth, supported by capital generator placements that expanded the installed base and future procedural volumes. International reimbursement tailwinds aided COOLIEF adoption in markets such as the U.K. and Japan. While Surgical Pain remained pressured due to slower-than-anticipated NOPAIN Act implementation, and GAME READY revenue was modestly lower year over year, segment operating profit improved 270 basis points to 4%, highlighting effective cost management and mix benefits.

Tariffs remain a meaningful near-term headwind, with management guiding to approximately $30 million of impact in 2026, up from 2025 levels. However, mitigation efforts are advancing, including a full exit from China-based syringe manufacturing by June 2026, with production shifting to Mexico and Southeast Asia.

The company also secured Nairobi protocol exemptions for long-term feeding tubes and expects broad USMCA coverage for products manufactured in Mexico. Although gross margin expansion may pause in the first half of 2026 due to tariff timing, management expects margin improvement to resume in the second half and continue into 2027. With mid-single-digit organic growth projected for 2026 and disciplined capital allocation supported by a strong balance sheet, Avanos appears positioned for steady earnings expansion despite external pressures.

AVNS’ Zacks Rank and Stocks to Consider

Avanos currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Cardinal Health, Inc. CAH, GE HealthCare Technologies Inc. GEHC and McKesson Corporation MCK.

Cardinal Health, carrying a Zacks Rank of 2 (Buy), reported second-quarter fiscal 2026 adjusted EPS of $2.63, beating the Zacks Consensus Estimate by 9.9%. Revenues of $65.63 billion outpaced the consensus mark by 0.9%.

Cardinal Health has a long-term estimated growth rate of 15%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.3%.

GE HealthCare reported fourth-quarter 2025 adjusted EPS of $1.44, beating the Zacks Consensus Estimate by 1%. Revenues of $5.69 billion surpassed the Zacks Consensus Estimate by 1.9%. It currently carries a Zacks Rank #2.

GE HealthCare has a long-term estimated growth rate of 9.1%. GEHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.5%.

McKesson reported third-quarter fiscal 2026 adjusted EPS of $9.34, beating the Zacks Consensus Estimate by 0.4%. Revenues of $106.16 billion surpassed the Zacks Consensus Estimate by 0.5%. It currently carries a Zacks Rank #2.

McKesson has a long-term estimated growth rate of 15.9%. MCK’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.6%.