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AVNS Gains After Posting Q1 Earnings Miss & Revenue Beat, Margins Down
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Key Takeaways
AVNS' Q1 revenues rose 8.8% y/y on strong SNS demand, while adjusted EPS missed estimates.
SNS sales jumped 22.7%, driven by enteral feeding and neonate solutions volume growth.
Avanos agreed to a $1.272B all-cash acquisition by affiliates of American Industrial Partners.
Avanos Medical, Inc. (AVNS - Free Report) reported first-quarter 2026 adjusted earnings per share (EPS) from continuing operations of 22 cents, down 15.4% year over year. The bottom line missed the Zacks Consensus Estimate of 23 cents.
GAAP EPS from continuing operations in the quarter under review was 11 cents compared with the year-ago period’s EPS of 14 cents.
Avanos’ Q1 Revenues
Revenues totaled $182.2 million in the reported quarter, up 8.8% year over year. The metric beat the Zacks Consensus Estimate by 7.6%.
The top line gained from higher volume across its Specialty Nutrition Systems (SNS) segments.
Shares of the company gained nearly 0.1% during after-market trading following the first-quarter results on Monday. The company’s shares have jumped 120.1% in the year-to-date period against the industry’s decline of 15.7%. The broader S&P 500 Index has increased 6.8% in the same time frame.
Image Source: Zacks Investment Research
AVNS’ Segmental Analysis
Avanos generates revenues from three segments: SNS, PM&R, and Corporate and Other.
The SNS segment’s revenues in the first quarter of 2026 totaled $124 million, up 22.7% year over year. This figure beat our first-quarter projection of $107 million.
The segment recorded 19% volume growth, driven by continued strong demand across both our enteral feeding and neonate solutions.
The Enteral feeding unit’s revenues totaled $84.6 million for the first quarter of 2026 (up 13.6% year over year), while the Neonate solutions unit’s revenues amounted to $39.4 million (up 48.1% year over year).
The PM&R segment’s revenues totaled $56.3 million, up 0.2% year over year. However, the figure missed our projection of $62 million.
The PM&R segment’s volume growth in Radio Frequency Ablation (RFA) was partially offset by reduced volume in surgical pain and recovery product lines. Net sales of RFA products grew 8.8% year over year to $34.5 million, reflecting momentum in RFA generator sales. Net sales in the surgical pain and recovery unit declined 11% year over year to $21.8 million.
The Corporate and Other segment’s revenues totaled $1.9 million, down 81.4% year over year.
Avanos’ Q1 Margin Analysis
In the quarter under review, Avanos’ adjusted gross profit increased 2.4% year over year to $97.3 million. The adjusted gross margin contracted 330 basis points (bps) to 53.4%. We had projected a gross margin of 54.2% for the first quarter.
Selling and general expenses increased 2.6% year over year to $77.7 million. Research and development expenses decreased 3.7% year over year to $5.2 million. Adjusted operating expenses of $81.1 million increased 4.1% year over year.
Adjusted operating profit totaled $16.2 million, reflecting a 5.3% decrease from the prior-year quarter’s level. The adjusted operating margin contracted 130 bps to 8.9%.
AVNS’ Financial Update
The company exited first-quarter 2026 with cash and cash equivalents worth $65.6 million compared with $89.8 million at the end of 2025. Total debt at first-quarter 2026-end was $98.2 million compared with $100.5 million at the end of 2025.
Cumulative net cash used in operating activities at the end of the first quarter of 2026 totaled $12.3 million against the net cash provided by operating activities of $25.7 million in the prior-year period.
Avanos’ 2026 Guidance
AVNS has provided its 2026 sales and 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 $702.3 million.
Avanos anticipates 2026 adjusted EPS between 90 cents and $1.10. The Zacks Consensus Estimate is currently pegged at $1.07.
AVANOS MEDICAL, INC. Price, Consensus and EPS Surprise
Avanos ended the first quarter of 2026 with top-line momentum surpassing estimates despite a softer earnings performance. Total net sales growth driven primarily by continued strength in the SNS segment. However, adjusted EPS missed estimates due to margin pressure and weakness within the PM&R business. The contraction of the gross margin and adjusted operating margin in the quarter was also disappointing.
SNS remained the company’s primary growth engine. Performance was supported by 19% volume growth, fueled by strong demand across enteral feeding and neonate solutions. Segment operating income increased to $23.1 million, representing a healthy 18.6% operating margin, highlighting execution strength and favorable product mix trends.
In contrast, Pain Management & Recovery (PM&R) remained challenged, with overall revenues being relatively flat year over year. While radiofrequency ablation solutions grew, surgical pain and recovery revenues declined due to lower procedure volumes. The segment posted an operating loss of $1.8 million compared to a modest operating profit last year, reflecting demand softness and an unfavorable mix.
The quarter was marked by a major strategic development, as Avanos announced a definitive agreement to be acquired by affiliates of American Industrial Partners in an all-cash transaction valued at approximately $1.272 billion, offering shareholders a substantial premium to recent trading levels.
The acquisition is expected to provide AVNS with greater operational flexibility and a stronger long-term strategic focus. Operating as a private company may allow Avanos to accelerate investments in innovation, optimize its business structure and execute growth initiatives.
AVNS’ Zacks Rank & 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 West Pharmaceutical Services, Inc. (WST - Free Report) , Intuitive Surgical (ISRG - Free Report) and Cardinal Health, Inc. (CAH - Free Report) .
West Pharmaceutical reported first-quarter 2026 EPS of $2.13, which beat the Zacks Consensus Estimate by 26.8%. Revenues of $844.9 million surpassed the Zacks Consensus Estimate by 8.5%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
West Pharmaceutical has a long-term estimated growth rate of 13.9%. WST’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 19.37%.
Intuitive Surgical reported first-quarter 2026 adjusted EPS of $2.50, beating the Zacks Consensus Estimate by 20.19%. Revenues of $2.77 billion surpassed the Zacks Consensus Estimate by 6.2%. It currently carries a Zacks Rank of 2 (Buy).
Intuitive Surgical has a long-term estimated growth rate of 14.6%. ISRG’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 16.82%.
Cardinal Health, carrying a Zacks Rank of 2 at present, reported third-quarter fiscal 2026 adjusted EPS of $3.17, which beat the Zacks Consensus Estimate by 13.2%. Revenues of $60.94 billion missed the Zacks Consensus Estimate by 2.3%.
Cardinal Health has a long-term estimated growth rate of 15.7%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.27%.
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AVNS Gains After Posting Q1 Earnings Miss & Revenue Beat, Margins Down
Key Takeaways
Avanos Medical, Inc. (AVNS - Free Report) reported first-quarter 2026 adjusted earnings per share (EPS) from continuing operations of 22 cents, down 15.4% year over year. The bottom line missed the Zacks Consensus Estimate of 23 cents.
GAAP EPS from continuing operations in the quarter under review was 11 cents compared with the year-ago period’s EPS of 14 cents.
Avanos’ Q1 Revenues
Revenues totaled $182.2 million in the reported quarter, up 8.8% year over year. The metric beat the Zacks Consensus Estimate by 7.6%.
The top line gained from higher volume across its Specialty Nutrition Systems (SNS) segments.
Shares of the company gained nearly 0.1% during after-market trading following the first-quarter results on Monday. The company’s shares have jumped 120.1% in the year-to-date period against the industry’s decline of 15.7%. The broader S&P 500 Index has increased 6.8% in the same time frame.
Image Source: Zacks Investment Research
AVNS’ Segmental Analysis
Avanos generates revenues from three segments: SNS, PM&R, and Corporate and Other.
The SNS segment’s revenues in the first quarter of 2026 totaled $124 million, up 22.7% year over year. This figure beat our first-quarter projection of $107 million.
The segment recorded 19% volume growth, driven by continued strong demand across both our enteral feeding and neonate solutions.
The Enteral feeding unit’s revenues totaled $84.6 million for the first quarter of 2026 (up 13.6% year over year), while the Neonate solutions unit’s revenues amounted to $39.4 million (up 48.1% year over year).
The PM&R segment’s revenues totaled $56.3 million, up 0.2% year over year. However, the figure missed our projection of $62 million.
The PM&R segment’s volume growth in Radio Frequency Ablation (RFA) was partially offset by reduced volume in surgical pain and recovery product lines. Net sales of RFA products grew 8.8% year over year to $34.5 million, reflecting momentum in RFA generator sales. Net sales in the surgical pain and recovery unit declined 11% year over year to $21.8 million.
The Corporate and Other segment’s revenues totaled $1.9 million, down 81.4% year over year.
Avanos’ Q1 Margin Analysis
In the quarter under review, Avanos’ adjusted gross profit increased 2.4% year over year to $97.3 million. The adjusted gross margin contracted 330 basis points (bps) to 53.4%. We had projected a gross margin of 54.2% for the first quarter.
Selling and general expenses increased 2.6% year over year to $77.7 million. Research and development expenses decreased 3.7% year over year to $5.2 million. Adjusted operating expenses of $81.1 million increased 4.1% year over year.
Adjusted operating profit totaled $16.2 million, reflecting a 5.3% decrease from the prior-year quarter’s level. The adjusted operating margin contracted 130 bps to 8.9%.
AVNS’ Financial Update
The company exited first-quarter 2026 with cash and cash equivalents worth $65.6 million compared with $89.8 million at the end of 2025. Total debt at first-quarter 2026-end was $98.2 million compared with $100.5 million at the end of 2025.
Cumulative net cash used in operating activities at the end of the first quarter of 2026 totaled $12.3 million against the net cash provided by operating activities of $25.7 million in the prior-year period.
Avanos’ 2026 Guidance
AVNS has provided its 2026 sales and 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 $702.3 million.
Avanos anticipates 2026 adjusted EPS between 90 cents and $1.10. The Zacks Consensus Estimate is currently pegged at $1.07.
AVANOS MEDICAL, INC. Price, Consensus and EPS Surprise
AVANOS MEDICAL, INC. price-consensus-eps-surprise-chart | AVANOS MEDICAL, INC. Quote
Our Take on AVNS’ Q1 Results
Avanos ended the first quarter of 2026 with top-line momentum surpassing estimates despite a softer earnings performance. Total net sales growth driven primarily by continued strength in the SNS segment. However, adjusted EPS missed estimates due to margin pressure and weakness within the PM&R business. The contraction of the gross margin and adjusted operating margin in the quarter was also disappointing.
SNS remained the company’s primary growth engine. Performance was supported by 19% volume growth, fueled by strong demand across enteral feeding and neonate solutions. Segment operating income increased to $23.1 million, representing a healthy 18.6% operating margin, highlighting execution strength and favorable product mix trends.
In contrast, Pain Management & Recovery (PM&R) remained challenged, with overall revenues being relatively flat year over year. While radiofrequency ablation solutions grew, surgical pain and recovery revenues declined due to lower procedure volumes. The segment posted an operating loss of $1.8 million compared to a modest operating profit last year, reflecting demand softness and an unfavorable mix.
The quarter was marked by a major strategic development, as Avanos announced a definitive agreement to be acquired by affiliates of American Industrial Partners in an all-cash transaction valued at approximately $1.272 billion, offering shareholders a substantial premium to recent trading levels.
The acquisition is expected to provide AVNS with greater operational flexibility and a stronger long-term strategic focus. Operating as a private company may allow Avanos to accelerate investments in innovation, optimize its business structure and execute growth initiatives.
AVNS’ Zacks Rank & 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 West Pharmaceutical Services, Inc. (WST - Free Report) , Intuitive Surgical (ISRG - Free Report) and Cardinal Health, Inc. (CAH - Free Report) .
West Pharmaceutical reported first-quarter 2026 EPS of $2.13, which beat the Zacks Consensus Estimate by 26.8%. Revenues of $844.9 million surpassed the Zacks Consensus Estimate by 8.5%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
West Pharmaceutical has a long-term estimated growth rate of 13.9%. WST’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 19.37%.
Intuitive Surgical reported first-quarter 2026 adjusted EPS of $2.50, beating the Zacks Consensus Estimate by 20.19%. Revenues of $2.77 billion surpassed the Zacks Consensus Estimate by 6.2%. It currently carries a Zacks Rank of 2 (Buy).
Intuitive Surgical has a long-term estimated growth rate of 14.6%. ISRG’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 16.82%.
Cardinal Health, carrying a Zacks Rank of 2 at present, reported third-quarter fiscal 2026 adjusted EPS of $3.17, which beat the Zacks Consensus Estimate by 13.2%. Revenues of $60.94 billion missed the Zacks Consensus Estimate by 2.3%.
Cardinal Health has a long-term estimated growth rate of 15.7%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.27%.