Avanos Medical (NYSE:AVNS) management said it delivered “solid” fourth-quarter and full-year 2025 results, pointing to progress on its strategic priorities and continued strength in its Specialty Nutrition Systems (SNS) business, while also outlining plans to mitigate tariff impacts and improve operating efficiency.
2025 results: sales topped revised range; earnings at high end
Chief Executive Officer Dave Pacitti said Avanos generated full-year net sales of $701 million, exceeding the range the company revised after the third quarter. He added that Avanos finished at the high end of its revised earnings guidance range, delivering $0.94 in adjusted diluted earnings per share for the year.
In the quarter, Avanos reported $0.29 in adjusted diluted EPS and $28 million of adjusted EBITDA. Adjusted gross margin was 53.4% and adjusted SG&A was 39.1% of revenue. For the full year, adjusted EBITDA was $87 million, adjusted gross margin was 54.6%, and adjusted SG&A was 42% of revenue.
Business trends: SNS outpaced markets; RFA remained a standout
Pacitti said the SNS portfolio delivered “strong above market” performance in 2025, growing over 8% organically year over year. He cited strength across long-term, short-term, and neonatal enteral feeding, including support from Avanos’s “Go Direct” transition in the U.K. that was executed in the third quarter of 2025.
Management highlighted the short-term enteral feeding portfolio as a key growth driver, posting double-digit organic growth globally in 2025 compared with 2024. Pacitti pointed to ongoing U.S. expansion of the CORTRAK standard-of-care offering, and said adoption of the CORGRIP tube retention system—launched in late 2024—came in higher than anticipated and added momentum.
In Pain Management & Recovery (PM&R), Pacitti said normalized organic sales were up 2.3% in 2025 excluding foreign exchange and the impact of product exits. The company’s radiofrequency ablation (RFA) business delivered double-digit organic growth for the year, supported by growth in generator capital sales and product lines including ESENTEC and TRIDENT. Management also said it was encouraged by international COOLIEF trends, citing “reimbursement tailwinds” in geographies including the U.K. and Japan.
However, Avanos said its surgical pain business declined year over year. Pacitti noted that implementation of reimbursement under the NOPAIN Act has taken longer than anticipated, though he said the company is encouraged by a growing number of claims submitted since implementation and emphasized Avanos has “some of the few devices approved” under the legislation, including ON-Q and ambIT offerings.
Game Ready revenue was down year over year but held to similar levels through 2025, according to Pacitti. He said the company transitioned the U.S. rental portion of the business to WRS Group and realigned selling efforts toward core sports and rehab channels, actions management expects will enhance profitability.
Tariffs and mitigation: China exit targeted by June
Tariffs were a central theme of the call. Pacitti said tariff impacts in 2025 “obscured” profitability, but the company took steps to mitigate the effects and expects to see benefits starting in 2026. He also said Avanos is evaluating potential impacts of recent Supreme Court rulings related to tariffs and is monitoring subsequent actions by the administration.
On the Q&A, management reiterated that 2026 guidance assumes about $30 million of tariff profit-and-loss costs, which CFO Scott Gallivan said is a $12 million increase from 2025. Management said about two-thirds of the $30 million impact is China-related, with most of the cost tied to neonatal products sourced from China.
Pacitti said the “big date” is the company being out of China by June for its syringe manufacturing and sourcing, adding that Avanos now has a higher degree of confidence in executing that plan. He said product will be delivered from Mexico and another site in Cambodia.
Management also addressed exemptions and trade frameworks. Gallivan said Avanos has a Nairobi Protocol-related tariff exemption in place for long-term feeding tubes produced in Mexico, and the company has USMCA coverage for about 60% to 70% of products made in Mexico, with expectations that syringes moved to Mexico would also qualify.
Portfolio actions and financial position
Avanos said 2025 included several portfolio-shaping moves: divesting its hyaluronic acid business, exiting the rental portion of the Game Ready business, acquiring Nexus Medical into the neonatal portfolio, and announcing an exit from IV therapy scheduled to be completed in the first quarter of 2026. Gallivan said the integration of Nexus has been “very successful,” and Pacitti said Nexus is performing better than expected and fits well with Avanos’s neonatal sales channel. Management reiterated that Nexus contributed the previously communicated $5 million of revenue in 2025 and is expected to be a double-digit grower in 2026.
Gallivan said the balance sheet remains strong, with $90 million of cash and $100 million of debt as of Dec. 31, and leverage “meaningfully below one turn” for several quarters. The company reported $21 million in free cash flow for the fourth quarter and $43 million for the full year, which management said was higher than anticipated due mainly to timing of one-time cash charges and tax payments.
2026 outlook: mid-single-digit organic growth; EPS range includes higher tariffs
For 2026, Avanos guided to net sales of $700 million to $720 million, with SNS expected to grow mid to high single digits organically and PM&R expected to grow low to mid single digits organically. Management said Corporate and Other revenue would be about $1 million as the company completes its IV therapy exit in the first quarter.
Adjusted diluted EPS guidance was $0.90 to $1.10. Gallivan said the company expects a pause in gross margin improvement in 2026 due to tariffs, but anticipates improved gross margin momentum beginning in the second half of the year and continuing into 2027 as tariff mitigation actions take effect.
Other planning assumptions included capital expenditures of about $25 million and an annual effective tax rate of approximately 29%. Management said 2026 foreign exchange rates are expected to be near current levels.
Avanos said it will participate in the Citizens Bank Investor Conference in March and plans to host an Investor Day in New York on June 23.
About Avanos Medical (NYSE:AVNS)
Avanos Medical is a global medical technology company that develops and markets a broad portfolio of medical devices intended to improve patient outcomes in hospital, outpatient and post-acute care settings. The company’s products focus on three core therapy areas—pain management, enteral feeding and respiratory care—designed to help clinicians manage post-operative pain, deliver nutrition support and assist breathing for patients across a variety of acute and chronic conditions.
In its pain management segment, Avanos offers both non-opioid drug delivery systems and cryoanalgesia devices, including ambulatory infusion pumps and cooled radiofrequency ablation platforms.
