Avanos Medical, Inc. reported mixed financial results for the third quarter and the first nine months of 2024, reflecting both challenges and improvements in its operations. For the three months ended September 30, 2024, net sales were $170.4 million, a slight decrease of 0.5% from $171.3 million in the same period of 2023. However, for the nine months ended September 30, 2024, net sales increased by 1.6% to $508.2 million, compared to $500.0 million in the prior year.
The company's profitability showed significant improvement, with operating income for Q3 2024 rising to $12.0 million, up from $1.2 million in Q3 2023. For the nine-month period, operating income reached $22.3 million, a turnaround from an operating loss of $7.0 million in the same period last year. Net income for Q3 2024 was $4.3 million, compared to a net loss of $3.7 million in Q3 2023. For the nine months, net income was $5.2 million, a substantial recovery from a net loss of $72.3 million in the previous year.
The Digestive Health segment contributed positively, with sales increasing to $98.2 million in Q3 2024 from $95.0 million in Q3 2023. Conversely, the Pain Management and Recovery segment saw a decline, with sales dropping to $72.2 million from $76.3 million year-over-year. The overall gross profit margin decreased due to restructuring initiatives and costs associated with the divestiture of the Respiratory Health business, which was sold for $110 million in October 2023 as part of a strategic transformation to focus on more profitable markets.
Avanos also completed the acquisition of Diros Technology Inc. on July 24, 2023, for approximately $53.0 million, which contributed $4.6 million in net sales for Q3 2024. The company incurred $1.5 million in acquisition-related costs during the same quarter.
As of September 30, 2024, total assets were reported at $1,656.2 million, down from $1,692.4 million at the end of 2023. Stockholders' equity slightly decreased to $1,229.7 million from $1,236.3 million. The accumulated deficit improved to $(309.7) million from $(314.9) million at the end of 2023.
The company is undergoing a restructuring plan post-divestiture, with expected cash expenses between $10.0 million and $11.0 million primarily for employee termination benefits. Additionally, Avanos is implementing a transformation process initiated in January 2023, aiming for gross savings of $45.0 million to $55.0 million by 2025.
About AVANOS MEDICAL, INC.
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