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Avanos (AVNS) Q2 Earnings Top Estimates, FY22 View Lowered
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Avanos Medical, Inc. (AVNS - Free Report) reported second-quarter 2022 adjusted earnings per share (EPS) of 41 cents, up 95.2% year over year. The bottom line surpassed the Zacks Consensus Estimate by 5.1%.
Our projection of adjusted EPS of 41 cents matched the company-reported figure.
GAAP EPS in the quarter under review was 24 cents, down 69.2% year over year.
Revenues
Revenues grossed $203 million in the reported quarter, up 8.9% year over year. The metric, however, missed the Zacks Consensus Estimate by 2.5%.
The second-quarter revenue compares to our estimate of $207.6 million.
The top line was primarily driven by incremental revenues resulting from the acquisition of OrthogenRx, Inc. Strong demand and volume for Digestive health and Interventional pain products were also recorded.
Q2 Segmental Analysis
Avanos provides a portfolio of innovative product offerings that focuses on Pain Management and Chronic Care.
Pain Management’s net revenues of $90.7 million surged 28.8% on a year-over-year basis. Excluding the OrthogenRx buyout, the business recorded revenues of $69 million.
This figure compares to our Pain Management segment’s Q2 projection of $77.2 million.
Chronic Care’s net revenues of $112.3 million declined 3.2% year over year despite strength in Digestive Health. NeoMed neonatal and pediatric feeding solutions grew 27% from continued conversion to ENFit.
This figure compares to our Chronic Care segment’s Q2 projection of $130.4 million.
Avanos Medical, Inc. Price, Consensus and EPS Surprise
In the quarter under review, Avanos’ gross profit rose 34.1% to $114.9 million. Gross margin expanded a huge 1062 basis points (bps) to 56.6%.
We projected 51.4% of gross margin for Q2.
Selling and general expenses rose 13.6% to $87.1 million. Research and development expenses remained flat year over year at $8 million. Adjusted operating expenses of $95.1 million increased 12.3% year over year.
Adjusted operating profit totaled $19.8 million, reflecting a huge improvement from the prior-year quarter’s adjusted operating profit of $1 million. Adjusted operating margin in the second quarter expanded 922 bps to 9.8%.
Adjusted operating margin, according to our model was 13.7% for Q2.
Financial Update
The company exited second-quarter 2022 with cash and cash equivalents worth $106.5 million compared with $104.3 million at the end of first quarter. Total debt at the end of second-quarter 2022 was $254 million compared with $254.4 million at the end of first quarter.
Cumulative net cash provided by operating activities at the end of second-quarter 2022 totaled $28.8 million compared with net cash used in operating activities of $12 million in the prior-year quarter.
Guidance
Avanos has lowered its full-year 2022 outlook.
The company now expects full-year net sales in the range of $815 million and $835 million (reflecting organic growth of 1-4%), lower than the previous outlook of net sales of $830-$850 million (suggesting organic growth of 3-6%). The Zacks Consensus Estimate for the same currently stands at $840.7 million.
The company now anticipates full-year 2022 adjusted EPS between $1.45 and $1.65, lower than the earlier projection of $1.55 and $1.75. The Zacks Consensus Estimate for the same currently stands at $1.66.
Our Take
Avanos exited the second quarter of 2022 with better-than-expected earnings. The year-over-year improvement in the overall top and bottom lines was impressive. Strength exhibited by Avanos’ core Pain Management segment, along with improvements in Interventional Pain solutions is encouraging. The continued strong demand for Digestive Health products and robust sales of NeoMed are promising. Expansion of both margins bodes well.
Yet, lower-than-expected revenues and the year-over-year decline in the Chronic Care segment are disappointing. Lower volume in Respiratory Health products is worrying as well. Avanos lowering its full-year outlook raises apprehension as well. Supply constraints, macroeconomic uncertainties and inflation impacting Avanos’ business are concerning as well.
Zacks Rank and Stocks to Consider
Avanos currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated (DGX - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Zimmer Biomet Holdings, Inc. (ZBH - Free Report) .
Quest Diagnostics, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quest Diagnostics has an earnings yield of 6.9% compared with the industry’s 3.9%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.
AMN Healthcare, sporting a Zacks Rank #1, reported second-quarter 2022 adjusted EPS of $3.31, which beat the Zacks Consensus Estimate by 11.8%. Revenues of $1.43 billion outpaced the consensus mark by 4.8%.
AMN Healthcare has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed estimates in all the trailing four quarters, the average being 15.7%.
Zimmer Biomet reported second-quarter 2022 adjusted EPS of $1.82, which surpassed the Zacks Consensus Estimate by 11.7%. Second-quarter revenues of $1.78 billion outpaced the Zacks Consensus Estimate by 3.5%. It currently has a Zacks Rank #2.
Zimmer Biomet has an estimated long-term growth rate of 5%. ZBH’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 7.4%.
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Avanos (AVNS) Q2 Earnings Top Estimates, FY22 View Lowered
Avanos Medical, Inc. (AVNS - Free Report) reported second-quarter 2022 adjusted earnings per share (EPS) of 41 cents, up 95.2% year over year. The bottom line surpassed the Zacks Consensus Estimate by 5.1%.
Our projection of adjusted EPS of 41 cents matched the company-reported figure.
GAAP EPS in the quarter under review was 24 cents, down 69.2% year over year.
Revenues
Revenues grossed $203 million in the reported quarter, up 8.9% year over year. The metric, however, missed the Zacks Consensus Estimate by 2.5%.
The second-quarter revenue compares to our estimate of $207.6 million.
The top line was primarily driven by incremental revenues resulting from the acquisition of OrthogenRx, Inc. Strong demand and volume for Digestive health and Interventional pain products were also recorded.
Q2 Segmental Analysis
Avanos provides a portfolio of innovative product offerings that focuses on Pain Management and Chronic Care.
Pain Management’s net revenues of $90.7 million surged 28.8% on a year-over-year basis. Excluding the OrthogenRx buyout, the business recorded revenues of $69 million.
This figure compares to our Pain Management segment’s Q2 projection of $77.2 million.
Chronic Care’s net revenues of $112.3 million declined 3.2% year over year despite strength in Digestive Health. NeoMed neonatal and pediatric feeding solutions grew 27% from continued conversion to ENFit.
This figure compares to our Chronic Care segment’s Q2 projection of $130.4 million.
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 34.1% to $114.9 million. Gross margin expanded a huge 1062 basis points (bps) to 56.6%.
We projected 51.4% of gross margin for Q2.
Selling and general expenses rose 13.6% to $87.1 million. Research and development expenses remained flat year over year at $8 million. Adjusted operating expenses of $95.1 million increased 12.3% year over year.
Adjusted operating profit totaled $19.8 million, reflecting a huge improvement from the prior-year quarter’s adjusted operating profit of $1 million. Adjusted operating margin in the second quarter expanded 922 bps to 9.8%.
Adjusted operating margin, according to our model was 13.7% for Q2.
Financial Update
The company exited second-quarter 2022 with cash and cash equivalents worth $106.5 million compared with $104.3 million at the end of first quarter. Total debt at the end of second-quarter 2022 was $254 million compared with $254.4 million at the end of first quarter.
Cumulative net cash provided by operating activities at the end of second-quarter 2022 totaled $28.8 million compared with net cash used in operating activities of $12 million in the prior-year quarter.
Guidance
Avanos has lowered its full-year 2022 outlook.
The company now expects full-year net sales in the range of $815 million and $835 million (reflecting organic growth of 1-4%), lower than the previous outlook of net sales of $830-$850 million (suggesting organic growth of 3-6%). The Zacks Consensus Estimate for the same currently stands at $840.7 million.
The company now anticipates full-year 2022 adjusted EPS between $1.45 and $1.65, lower than the earlier projection of $1.55 and $1.75. The Zacks Consensus Estimate for the same currently stands at $1.66.
Our Take
Avanos exited the second quarter of 2022 with better-than-expected earnings. The year-over-year improvement in the overall top and bottom lines was impressive. Strength exhibited by Avanos’ core Pain Management segment, along with improvements in Interventional Pain solutions is encouraging. The continued strong demand for Digestive Health products and robust sales of NeoMed are promising. Expansion of both margins bodes well.
Yet, lower-than-expected revenues and the year-over-year decline in the Chronic Care segment are disappointing. Lower volume in Respiratory Health products is worrying as well. Avanos lowering its full-year outlook raises apprehension as well. Supply constraints, macroeconomic uncertainties and inflation impacting Avanos’ business are concerning as well.
Zacks Rank and Stocks to Consider
Avanos currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated (DGX - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Zimmer Biomet Holdings, Inc. (ZBH - Free Report) .
Quest Diagnostics, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quest Diagnostics has an earnings yield of 6.9% compared with the industry’s 3.9%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.
AMN Healthcare, sporting a Zacks Rank #1, reported second-quarter 2022 adjusted EPS of $3.31, which beat the Zacks Consensus Estimate by 11.8%. Revenues of $1.43 billion outpaced the consensus mark by 4.8%.
AMN Healthcare has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed estimates in all the trailing four quarters, the average being 15.7%.
Zimmer Biomet reported second-quarter 2022 adjusted EPS of $1.82, which surpassed the Zacks Consensus Estimate by 11.7%. Second-quarter revenues of $1.78 billion outpaced the Zacks Consensus Estimate by 3.5%. It currently has a Zacks Rank #2.
Zimmer Biomet has an estimated long-term growth rate of 5%. ZBH’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 7.4%.