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Avanos (AVNS) Preliminary Q4 Revenues Dampened by Lower Sales
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Avanos Medical, Inc. (AVNS - Free Report) recently announced preliminary revenues for fourth-quarter 2023. The preliminary results drove up the company’s shares by 0.2% in the after-hours trading session.
Per the preliminary report, fourth-quarter 2023 net sales are estimated to be in the range of $170 million-$173 million, down 6.5-4.5% year over year. The Zacks Consensus Estimate of $178 million lies above the preliminary figure.
Net sales for the company’s hyaluronic acid (HA) pain relief injection product line are expected to be slightly above $10 million for the fourth quarter of 2023. However, this is $4 million lower than Avanos anticipated.
Per management, the net sales in the fourth quarter are likely to be below the company’s expectations due to underperformance by its HA pain relief injection products (primarily resulting from continued pricing pressure due to the Medicare reimbursement changes). The quarterly results were also adversely impacted by Avanos’ lower-than-anticipated sales across its North America Digestive Health products, primarily due to a major distributor's ordering pattern change.
Although Avanos witnessed improvements in North America Pain Management and Recovery sales, it was below internal expectations. Management expects that these lower-than-expected net sales will negatively impact adjusted gross margin, adjusted EBITDA margin and adjusted earnings per share for the fourth quarter and the full year.
Per the preliminary report, 2023 net sales are estimated to be between $670 million and $673 million. The Zacks Consensus Estimate of $678.1 million lies above the preliminary figure.
Guidance
Avanos has provided its full-year 2024 revenue guidance. Management is expected to provide further details regarding its outlook for 2024 on its fourth-quarter 2023 earnings call.
Total revenues are expected to lie in the range of $685 million-$705 million. The Zacks Consensus Estimate is pegged at $714 million.
A Brief Q4 Analysis
On the third-quarter earnings call in November 2023, management confirmed that the early performance of Avanos’ newly acquired Trident product line has been solid. Management was also upbeat about the U.S. market launch. Management had also confirmed on the call that it anticipated a continued reduction in supply-chain disruptions and strong demand for Avanos’ products.
During the quarter, Avanos witnessed continued strength in the Digestive Health segment. Robust growth in NeoMed and CORTRAK was also recorded.
At the time of the release of its preliminary fourth-quarter 2023 results, Avanos’ management commented that despite the results being below expectations, the execution of the three-year transformation initiative throughout 2023 was encouraging. Management believes that this would likely drive the company to a strong position by 2025.
The company’s preliminary projection of lower-than-expected net sales raises our apprehension about the stock.
Price Performance
Shares of the company have gained 10.9% between Oct 1 and Dec 31, 2023, compared with the industry’s 10.1% rise and the S&P 500’s 10.6% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Currently, Avanos carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Merit Medical Systems, Inc. (MMSI - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 17.3%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 36.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita has gained 10.8% compared with the industry’s 11.9% rise between Oct 1 and Dec 31, 2023.
Merit Medical, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 11.5%. MMSI’s earnings surpassed estimates in each of the trailing four quarters, with the average being 14.4%.
Merit Medical has gained 10.1% compared with the industry’s 2.1% rise between Oct 1 and Dec 31, 2023.
Integer Holdings, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 11.9%.
Integer Holdings has gained 26.3% compared with the industry’s 10.1% rise between Oct 1 and Dec 31, 2023.
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Avanos (AVNS) Preliminary Q4 Revenues Dampened by Lower Sales
Avanos Medical, Inc. (AVNS - Free Report) recently announced preliminary revenues for fourth-quarter 2023. The preliminary results drove up the company’s shares by 0.2% in the after-hours trading session.
The company is scheduled to release fourth-quarter results on Feb 20.
Per the preliminary report, fourth-quarter 2023 net sales are estimated to be in the range of $170 million-$173 million, down 6.5-4.5% year over year. The Zacks Consensus Estimate of $178 million lies above the preliminary figure.
Net sales for the company’s hyaluronic acid (HA) pain relief injection product line are expected to be slightly above $10 million for the fourth quarter of 2023. However, this is $4 million lower than Avanos anticipated.
Per management, the net sales in the fourth quarter are likely to be below the company’s expectations due to underperformance by its HA pain relief injection products (primarily resulting from continued pricing pressure due to the Medicare reimbursement changes). The quarterly results were also adversely impacted by Avanos’ lower-than-anticipated sales across its North America Digestive Health products, primarily due to a major distributor's ordering pattern change.
Although Avanos witnessed improvements in North America Pain Management and Recovery sales, it was below internal expectations. Management expects that these lower-than-expected net sales will negatively impact adjusted gross margin, adjusted EBITDA margin and adjusted earnings per share for the fourth quarter and the full year.
Per the preliminary report, 2023 net sales are estimated to be between $670 million and $673 million. The Zacks Consensus Estimate of $678.1 million lies above the preliminary figure.
Guidance
Avanos has provided its full-year 2024 revenue guidance. Management is expected to provide further details regarding its outlook for 2024 on its fourth-quarter 2023 earnings call.
Total revenues are expected to lie in the range of $685 million-$705 million. The Zacks Consensus Estimate is pegged at $714 million.
A Brief Q4 Analysis
On the third-quarter earnings call in November 2023, management confirmed that the early performance of Avanos’ newly acquired Trident product line has been solid. Management was also upbeat about the U.S. market launch. Management had also confirmed on the call that it anticipated a continued reduction in supply-chain disruptions and strong demand for Avanos’ products.
During the quarter, Avanos witnessed continued strength in the Digestive Health segment. Robust growth in NeoMed and CORTRAK was also recorded.
At the time of the release of its preliminary fourth-quarter 2023 results, Avanos’ management commented that despite the results being below expectations, the execution of the three-year transformation initiative throughout 2023 was encouraging. Management believes that this would likely drive the company to a strong position by 2025.
The company’s preliminary projection of lower-than-expected net sales raises our apprehension about the stock.
Price Performance
Shares of the company have gained 10.9% between Oct 1 and Dec 31, 2023, compared with the industry’s 10.1% rise and the S&P 500’s 10.6% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Currently, Avanos carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Merit Medical Systems, Inc. (MMSI - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 17.3%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 36.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita has gained 10.8% compared with the industry’s 11.9% rise between Oct 1 and Dec 31, 2023.
Merit Medical, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 11.5%. MMSI’s earnings surpassed estimates in each of the trailing four quarters, with the average being 14.4%.
Merit Medical has gained 10.1% compared with the industry’s 2.1% rise between Oct 1 and Dec 31, 2023.
Integer Holdings, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 11.9%.
Integer Holdings has gained 26.3% compared with the industry’s 10.1% rise between Oct 1 and Dec 31, 2023.