Avanos Medical, Inc.

Fourth quarter net sales were approximately $181 million. Adjusted diluted EPS was $0.29, adjusted EBITDA was $28 million, adjusted gross margin was 53.4%, and adjusted SG&A was 39.1% of revenue. For full-year 2025, net sales were $701 million and adjusted diluted EPS was $0.94. Full-year adjusted EBITDA was $87 million, adjusted gross margin was 54.6%, and adjusted SG&A was 42% of revenue. Management guided 2026 net sales to $700 million to $720 million and adjusted diluted EPS to $0.90 to $1.10, with full-year tariff P&L costs of about $30 million, capital expenditures of $25 million, and an effective tax rate of about 29%.

Dave Pacitti framed 2025 as a year of strategic repositioning, saying Avanos exited the year as a more focused and cost-efficient company. He highlighted above-market growth in Specialty Nutrition Systems, improving trends in Pain Management and Recovery, and early success from Nexus Medical, while emphasizing that tariff mitigation initiatives are firmly on track. His tone was constructive and confident, especially around the China exit, improved operating efficiency, and the company’s ability to create shareholder value through its strategic imperatives.

Scott Galovan focused on the financial mechanics behind the outlook: 2025 full-year adjusted EBITDA was $87 million, free cash flow was $43 million, and the company ended the year with $90 million of cash and $100 million of debt. He said 2026 guidance assumes about $30 million of tariff expense, roughly $12 million more than 2025, with pressure concentrated in neonatal products sourced from China. He also said capex should fall to $25 million from 2025 levels, while gross margin improvement is expected to pause in the first half and improve in the second half as tariff mitigation benefits build.

Analysts focused heavily on tariffs, asking what milestones to watch and how the Supreme Court ruling and potential exemptions could affect 2026. Management said the key milestone is being fully out of China by June, and noted that about 2/3 of the estimated $30 million tariff impact is China-related; they also said Nairobi remains in place for long-term feeding tubes and that USMCA covers about 60% to 70% of products made in Mexico. Questions also centered on the quality of revenue growth and operating leverage, and management replied that consolidated organic growth is around 5% with mid- to high-single-digit SNS growth and low- to mid-single-digit PM&R growth, while earnings should grow faster than sales thanks to cost actions and volume.