Avanos Medical's 15min chart shows RSI Overbought, KDJ Death Cross formation.

Avanos Medical's 15-minute chart has exhibited signs of overbought conditions, as indicated by the Relative Strength Index (RSI) and the Kinetically Determined Jenga (KDJ) Death Cross, which occurred on August 12, 2025 at 12:30. This suggests that the stock price has risen too quickly and exceeds the fundamental support, potentially signaling a shift in momentum towards a downward trend and a decrease in stock value.

Avanos Medical, Inc. (AVNS) reported its second-quarter 2025 earnings, revealing a mixed performance with notable top-line growth but significant declines in earnings per share (EPS) and margins. The company's adjusted EPS from continuing operations fell 50% year over year to 17 cents, missing the Zacks Consensus Estimate by 5.6% [1]. GAAP loss per share from continuing operations was $1.66, compared to the year-ago period’s EPS of 9 cents.

Revenue for the quarter was $175 million, up 1.9% year over year, which exceeded the Zacks Consensus Estimate by 4.7%. The company's Specialty Nutrition Systems (SNS) portfolio and radiofrequency ablation (RFA) generator sales drove this growth. However, lower volume in the surgical pain and recovery portfolio offset these gains.

Segmental Analysis:
- The Pain Management and Recovery (PM&R) segment’s revenues were $61 million, down 2.9% year over year. Net sales of RFA products grew 13.7% year over year to $35.8 million, reflecting momentum in RFA generator sales. However, net sales in the surgical pain and recovery unit declined 9.4% year over year to $25.2 million.
- The SNS segment’s revenues were $102.7 million, up 5.1% year over year, driven by a 4.4% volume growth across both enteral feeding and neonate solutions categories.
- The Corporate and Other segment’s revenues were $11.3 million, down 23.1% year over year, primarily due to pricing pressures in the Hyaluronic Acid (HA) injections and intravenous infusion product lines. The company announced the divestiture of its HA product line to Channel-Markers Medical, LLC in July.

Margin Analysis:
- Adjusted gross profit declined 4.7% year over year to $97.4 million, with the adjusted gross margin contracting 390 basis points (bps) to 55.7%.
- Selling and general expenses increased 3.2% year over year to $83.5 million, while research and development expenses decreased 7.9% year over year to $5.8 million.
- Adjusted operating profit totaled $12.2 million, reflecting a 44% decrease from the prior-year quarter, with the adjusted operating margin contracting 580 bps to 6.9%.

Financial Update:
- The company exited the second quarter with $90.3 million in cash and cash equivalents, compared to $97 million at the first-quarter end.
- Total debt at the end of the second quarter was $105.1 million, compared to $107.4 million at the first-quarter end.
- Cumulative net cash provided by operating activities at the end of the second quarter totaled $32.5 million, compared to $19.8 million in the prior-year period.

Market Impact and Outlook:
Avanos Medical's stock has experienced significant volatility, with shares losing nearly 12.1% at yesterday’s close and plunging 37.9% year to date compared to the industry’s decline of 8.9%. The broader S&P 500 Index has increased 7.3% in the same time frame. The company's stock price has exhibited signs of overbought conditions, as indicated by the Relative Strength Index (RSI) and the Kinetically Determined Jenga (KDJ) Death Cross on August 12, 2025 at 12:30 [2].

Avanos Medical continues to face a volatile tariff environment in 2025, with management estimating approximately $15 million in incremental manufacturing costs for the year. The company is implementing a multi-pronged strategy to mitigate these costs, including internal cost containment, pricing actions, use of temporary tariff exemptions, lobbying efforts, and an accelerated plan to exit China-sourced NeoMed products by the second half of 2026.

The company's outlook for 2025 remains positive, with estimated net sales in the range of $665 million to $685 million and adjusted EPS between 75 and 95 cents. However, the mixed second-quarter results and margin contraction may signal near-term challenges.

References:
[1] https://www.tradingview.com/news/zacks:9982d36bf094b:0-avanos-medical-stock-down-as-q2-earnings-miss-estimates-margins-down/
[2] https://www.marketbeat.com/stocks/NYSE/AVNS/