Avanos Medical's Q2 2025: Unraveling Contradictions in HA Impact, SNS Growth, and Currency Headwinds

Hyaluronic Acid (HA) business impact, Specialty Nutrition Systems (SNS) growth expectations, currency headwinds impact, HA divestiture impact, and Hydrocephalus (HA) impact on revenue and business health are the key contradictions discussed in Avanos Medical's latest 2025Q2 earnings call.



Strong Performance in Strategic Segments:
- Avanos Medical's Specialty Nutrition Systems (SNS) and Pain Management and Recovery (PM&R) segments delivered robust growth, with SNS reporting a 5% organic increase and PM&R achieving 3.4% organic growth in Q2.
- Growth was driven by increased demand for long-term enteral feeding products, new product innovations, and strategic market expansion in SNS, and sustained growth in radiofrequency ablation (RFA) products and international expansion in PM&R.

Radiofrequency Ablation (RFA) Business Momentum:
- Avanos' RFA business posted nearly 14% growth in Q2 compared to the previous year, with significant increases in RFA generator capital sales.
- This momentum is attributed to a renewed ambulatory surgical center (ASC) strategy, the deployment of a new sales structure, and increased procedure volumes in product lines such as ESENTEC and TRIDENT.

Hyaluronic Acid (HA) Divestiture and Financial Impact:
- Avanos successfully divested its hyaluronic acid product line, which declined by over 20% in Q2.
- The divestiture represented a strategic shift towards focusing on SNS and PM&R segments and is expected to have a limited impact on Avanos' bottom line, as the main challenges in HA were related to pricing rather than volumes.

Financial Guidance and Tariff Management:
- Avanos reaffirmed its full-year revenue estimate of $665 million to $685 million, inclusive of the impact of the HA divestiture, with adjusted earnings per share ranging from $0.75 to $0.95.
- Despite ongoing tariff pressures, the company is effectively managing these challenges through strategies such as internal cost containment, pricing actions, and supply chain investments, which are expected to mitigate the impact on profitability and free cash flow.