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Avanos Medical (AVNS) Q1 Earnings Lag Estimates, Revenues Top

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Avanos Medical, Inc. (AVNS - Free Report) reported adjusted earnings per share (EPS) of 16 cents in first-quarter 2020, which missed the Zacks Consensus Estimate of 17 cents by 5.9%. However, the bottom line improved 6.7% from the prior-year quarter.

Revenues of this Zacks Rank #3 (Hold) company were $180.4 million, which beat the Zacks Consensus Estimate by 4%. The top line also improved 9.9% on a year-over-year basis.

Q1 Segmental Analysis

Chronic Care

Net revenues at this segment of $115.7 million rose 15.7% year over year.

Pain Management

The segment reported net revenues of $64.7 million. The metric inched up 0.8% on a year-over-year basis.

AVANOS MEDICAL INC Price, Consensus and EPS Surprise

 

AVANOS MEDICAL INC Price, Consensus and EPS Surprise

AVANOS MEDICAL INC price-consensus-eps-surprise-chart | AVANOS MEDICAL INC Quote

Margin Analysis

Adjusted gross profit came in at $105.6 million, up 4.5% from the prior-year quarter figure. Adjusted gross margin was 58.5% of net revenues, down 310 bps year over year.

Research and development expenses totaled $9.4 million, down 7.8% year over year. Selling, general and administrative expenses amounted to $91.1 million, down14.4%.

Adjusted operating profit in the first quarter was $14.4 million, up 38.5% from the year-ago quarter.

Financial Update

As of Mar 31, 2020, cash and cash equivalents totaled $187.7 million, down 8.6% from year-end 2019.

Net cash used in operating activities for the three months ended Mar 31, 2020, totaled $5.8 million, compared with $23.1 million in the prior-year quarter.

Guidance

In view of the rapidly evolving healthcare environment and the ongoing uncertainties related to the COVID-19 pandemic, the company has withdrawn its previously issued (provided on Feb 25, 2020) full-year 2020 outlook.

Summing Up

Avanos exited the first quarter on a mixed note. The company continues to gain from core segments — Chronic Care and Pain Management. NeoMed and Summit buyouts contributed 7% to the results. The company saw higher sales volume in Interventional Pain from COOLIEF through mid-March. Further, rise in global demand in Respiratory Health owing to the pandemic positively impacted the performance.

However, the contraction in gross margin remains a worrisome. The company witnessed lower volume in Acute Pain and Digestive Health. Moreover, being a pure-play MedTech company, it faces stiff competition from other industry players.

Key Picks

Some better-ranked stocks in the broader medical space are Aphria Inc. (APHA - Free Report) , Biogen Inc. (BIIB - Free Report) and Eli Lilly and Company (LLY - Free Report) .

Aphria reported third-quarter fiscal 2020 adjusted EPS of 2 cents, beating the Zacks Consensus Estimate of a loss of 4 cents. Net revenues of $64.4 million surpassed the consensus mark by 14.6%. The company carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Biogen currently carries a Zacks Rank #2. It reported first-quarter 2020 adjusted EPS of $9.14, surpassing the Zacks Consensus Estimate by 18.1%. Revenues of $3.53 billion outpaced the consensus mark by 3.2%.

Eli Lilly reported first-quarter 2020 EPS of $1.75, outpacing the Zacks Consensus Estimate by 12.9%. Revenues of $145.3 million surpassed the consensus estimate by 6.3%. The company currently sports a Zacks Rank #1.

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