Avanos Medical's Insider Buying: A Director's Bet on Undervalued Healthcare Innovation

In the world of healthcare investing, insider buying often serves as a subtle yet powerful signal. When executives and directors of a company use their own capital to accumulate shares, it can indicate a belief in the company's intrinsic value, especially during periods of market undervaluation. Gary Blackford, a director and 10% owner of Avanos Medical (AVNS), has recently made a bold move that aligns with this principle. On August 13, 2025, Blackford executed a strategic purchase of 60,000 shares of AVNS stock—20,000 directly and 40,000 indirectly through a family trust—spending a total of $659,300. This transaction marked an 84% increase in his direct holdings, bringing his total beneficial ownership to 91,593 shares.

A Director's Confidence in AVNS's Fundamentals

Blackford's purchase occurred amid a backdrop of mixed financial signals for Avanos Medical. While the company reported a Q2 2025 net loss of $76.8 million due to a goodwill impairment charge, it also delivered strong operational performance. Adjusted earnings per share (EPS) came in at $0.17, exceeding the $0.15 forecast, and revenue hit $175 million, surpassing the projected $165.8 million. The stock was trading at a free cash flow yield of 18%, a compelling metric for value-oriented investors.

The timing of Blackford's purchase is particularly noteworthy. The shares were acquired at an average price of $10.97–$10.99, just days before the stock experienced a further decline. This suggests a belief that the market was underestimating Avanos's long-term potential, especially given its recent strategic moves, including the divestiture of its Hyaluronic Acid product line to streamline operations.

Insider Buying vs. Institutional Moves

While Blackford's accumulation reflects optimism, it contrasts with the actions of other stakeholders. Kerr Holbrook, Avanos's SVP and Chief Commercial Officer, sold 7,000 shares during the same period, a move attributed to personal liquidity needs. Meanwhile, institutional investors displayed divergent strategies: Exoduspoint Capital Management, LP, increased its stake by 4,002.6%, while others like RGM Capital, LLC, nearly exited their positions. This divergence highlights the complexity of investor sentiment but underscores the significance of insider buying as a signal of conviction.

Why This Matters for Investors

Blackford's 84% increase in holdings is not just a personal investment—it's a strategic indicator. Insiders, particularly those with deep ties to a company's operations, often have access to non-public information and a long-term perspective. By purchasing shares at a time when the stock was trading at a 18% free cash flow yield and a market cap of $513.21 million, Blackford is effectively betting on Avanos's ability to navigate short-term challenges and deliver value.

For investors seeking undervalued opportunities in the healthcare sector, AVNS presents a compelling case. The company's strong balance sheet (current ratio of 2.64) and positive earnings surprise in Q2 2025 suggest resilience. Moreover, the divestiture of the Hyaluronic Acid line indicates a focus on core growth areas, which could enhance profitability in the long term.

A Call to Action

While no investment is without risk, the combination of insider buying, strong free cash flow, and a robust earnings report creates a favorable risk-reward profile. Avanos Medical's stock appears to be trading at a discount to its intrinsic value, particularly for investors who can look beyond the goodwill impairment and focus on the company's operational strengths.

In a market where short-term volatility often overshadows long-term fundamentals, Gary Blackford's actions serve as a reminder: when insiders with skin in the game are buying, it's worth paying attention. For those willing to take a contrarian approach, AVNS could represent a rare opportunity to invest in a healthcare company with a strong foundation and a director who's betting on its future.

In conclusion, Avanos Medical's recent insider activity, coupled with its financial performance and strategic clarity, makes it a stock worth considering for investors seeking undervalued healthcare plays. As the market continues to reassess its prospects, the message from the boardroom is clear: the best time to buy may be when the noise is loudest.