AVNS - Earnings call transcript Q4 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the Avanos' Fourth Quarter 2019 Earnings Call. All participants will be in listen only mode. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Dave Crawford. Please go ahead.

Dave Crawford

thanks us. and everyone morning for joining Good It's fourth quarter to welcome the Avanos you to earnings my pleasure conference call. With and Joe Senior me Woody, CEO; and are this Michael Vice CFO. President morning Greiner, update Joe will overview our priorities. XXXX our followed by of on begin an business an with review offer Then earnings our and details financial Michael will for XXXX. on performance outlook our results, We'll finish the call with Q&A. is section of avanos.com. A Investors' presentation our the for available on today's call website,

economic our comments strategic Company, today contain and related assurance statements No the performance, results financial could as reminder, forward-looking our differ those to can expected statement. materially a forward-looking conditions Actual given industry. our from As be the in results.

For SEC. influence described risk information factors factors forward-looking please risk our release the that future with filings and more in could the statements see about and results, today's press

we'll to referring has financial on these The results comparable and outlook. measures. information and GAAP be Additionally, to reconciliations adjustments press release adjusted

call Now I'll Joe. the over turn to

Joe Woody

Avanos. your morning Good the everyone Dave. immersing in the who the Greiner welcoming team Thanks, to year you at joined been beginning and for start himself has busy Michael of by interest I'd and thank like in the management excited portfolio at growth. earnings change have experience business. deep we're driving board we're and a accelerating Michael him on when focused revenue and in to time optimization, on and and has efficiencies

earnings $X.XX executing sales diluted we Now of fourth earned increased and results strategic our our $XXX on made per million, progress strong focus share. We I'll fourth key with the and of ended the XX% a quarter, to sales against turn and the adjusted goals. areas growing quarter we to year

and increased $X.XX X% earned earnings adjusted For the per of we share. sales $XXX diluted to million year,

missed organic Chronic delivered our solid expected, performance During organic from positive management the Care In growth. third in sales recaptured by business our double-digit continued In was declined as line delivers growth quarter. the partially low-single-digits Pain driven business, fact quarter COOLIEF. Pain benefited our expectations. quarter, backorders. the from Interventional Growth for top with in-line Pain mid-single-digit by growth Acute ON-Q sales our

As neurological authority. RF marketing perform new therapy lesion to for to cleared procedures. peristaltic we of designed physicians cables This generator newly pump new fully of RF System This for Radiofrequency enables commitment easy-to-use and a full innovation announced yesterday, XX-Watt system a the generator COOLIEF marketplace the demonstrates RF our comprised FDA procedures. cooled introduce as our spectrum advanced the to

upcoming Physicians We're excited of Interventional to debut the at our system Society Meeting. American new Pain Annual

show reported differentiation During in as studies. we clinical the for to COOLIEF continue several quarter,

meeting from the Pain of of clinical at XXth Annual the First, Pain Medicine the a XX-month reported and we to COOLIEF results hyaluronic acid. comparing Society Regional study American Medicine, Anesthesia

that up months. demonstrated pain results XX study COOLIEF clinically participants to that experienced relevant who These lasted relief received

In addition, trial two medical pain data the to possible treatment. COOLIEF on newly compared COOLIEF single to was of is XX up practice. a that clinical from steroid in a injection published the journal a demonstrates months relief with data pain years This published

centered to year At XXXX our full focused plan to what we Therefore, on potential. but takes below business we're time, achieving expectations. earnings long-term Company that with our it execute its XXXX, the not ensure near-term goals last were on that results positioning only recognized set long-term around our our meet balancing growth. of doing objectives, and revenue to we Turning some to same the priorities for the reaches

our and product recent Three, for XXXX momentum integrate efficiencies four IT generate internationally. realize both And four, free our acquisitions. our Our Two, across domestically sales positive categories, build priorities cash One, from are. system. four flow.

our of each our top beginning categories. priorities about focus these accelerating with bit across a on line cover I'll Now, growth

our management Let's pain with business. begin

elastomeric less use electronic pumps, see of a in of Summit portfolio for and electronic portfolio compelling acute the our demands pain. we a to the complemented of the in reduction Through and and offers acquisition continue pumps have We of offering opioids solution customers. our to

relationships received far, addition customers. with ON-Q So helped reinforce been us this has well and

Within are customers our industry-wide the to ON-Q, impacted brand win back pre-filler disruption. strong by leveraging we

to While through this of number customers of headwind, remains we to sequentially shifting a resulted and are sourcing near in customers mid-term double-digit growth The improvement. signs seeing Leiters again of volume the Leiters.

digits purchases who of customers increased XXXX double prior ON-Q Leiters year. by by to in Additionally, have to moved the compared overall

plan to double growth. and evidence we to In clinical Interventional in marketing digit maintain invest continue COOLIEF's Pain, to

demonstrates comparing mentioned year, both COOLIEF alternative As we knee in building of while in to the journals to studies the treatment of payers orthopedic a differentiating and I earlier, COOLIEF we're COOLIEF acid publications of OA hyaluronic expect pain. of that patients the value evidence from This clinical compendium strong several therapies.

reaching symposiums. new doctors also medicine sports participation including and We're through orthopedists our in audiences and conferences

to of COOLIEF front build demand focusing campaign. social marketing last ad increasing on and awareness the our through On TV on driving campaign, year's media direct-to-patient we're

generation Care, leading remains a is Chronic growing next our positions. The positions innovation our balloon SF to stable and indicator level. upcoming of launch strong cash when of guards represents in balloon tube focus recommended has visual the a including SF Chronic demonstrates provides below fundamentals dislodgment growth generation. our cue enteral flow revenue market health. that the investment tube helps leading our maintain how respiratory Mic-Key us and our through Mic-Key significant feeding business Turning and against digestive XX% on Care and market

to our categories, to our health, strategic commitment each we international In of to Across important open and that our we of plan growth addition and the acquisition Endoclear innovation continue our our portfolio. a provides growth growth. an our in accelerated XXXX, demonstrates view recent respiratory Asia-Pacific of Latin catalyst product in we digits double region as EMEA short In fell long America. term for

Asia-Pac we established team. that more EMEA will are but new and longer compared regions, to can it across enhance We with recognize teams that our America performance these take confident the in Latin

of yields with more are our customer more more performing in quickly platform synergies. Both IT us to of and of priority to relationships. our integration positioning helping Summit. expectations is us efficient the Game acquisitions second A NeoMed acquisitions, line Our NeoMed Summit our targeted strengthen stable and recent and realize integration Ready,

near-term our as acquisitions, growth. M&A a future in is Although overall team integrating evaluate continues our catalyst focus a long-term opportunities. backdrop, identify development business With potential remains our that future recent on to and

Our is IT working last recapture priority inefficiencies positive third cash year. time in to free our capital in over stabilizing as the we we the experienced to return progress will business XXXX, systems, flow

normalized implementation In capital spending. addition IT of behind us, with expect the a to to level return we

completion divestiture, combined these IT year's or factors SMIP in a cash of last we position decline following Finally, expect and for unusual the to positive three be non-recurring year. us the costs implementation flow

cost efficiencies quarter team efforts operational system this priority final the roadmap stabilize process. Our thank IT for is inroads faced global IT the throughout and We've address environment challenges issues. savings. I and have in our to realize a of a Implementation our detailed their made addressing was remaining to huge significant the undertaking to planned and last want and we

year, work we to While no and through first levels have the the issues in additional normalized half surfaced. backorder certain closed have inefficiencies of

We scale of necessary across acquisitions, completed steps launched deploy global course the growth and and IT XXXX, business. categories. fundamentally significant We took our the and transform to to over capital business the for increasing we our drive systems. new three S&IP invested the summary, separation of future In

shareholder guidance. to strategy confident deliver I'm We XXXX to financial priorities in have our place on the and ability right create value, our in and

Now, I'll turn the call Michael. to over

Michael Greiner

Joe, Thanks, everyone. morning good and

the past XXXX spent excited of growth the team each face. short forward the me the focus Let two to and months and business of team. our and Avanos be a My start on strategy to in team more I I've the challenges by dedication and been about of priorities on opportunities place. our leadership execute with the time accelerating learn members team with rest here talent partnering the across saying, part look impressed businesses. their the accomplish meeting with on to of I'm Joe we and and I to our

let a quarter our Now, begin of with results. me review fourth

year. mix to compared prior we of sales by volume, minimal to delivered the and compared Joe prior have driven As a million, the was XX% increased sales year. price while growth $XXX sales increase impact Organic shared, X%

NeoMed and that growth. X% of contributed acquisitions Our of Summit

we Care, in we reducing level. our as Chronic growth management, Pain In to encouraged mid-single-digit expectations. mentioned sales year was with made progress Joe the ending returned at we're growth to organic normalize earlier, that In backorders as close in-line positive a

in quarter by Within pain ON-Q management, as declined low-single-digits. we're signs to the business in of see sales continuing improvement our

more As work growth. to XXXX, to there's we ahead ON-Q return us enter for

continues moved customers partnership benefit through increased Our by Sales to for quarter Leiters Leiters option. this to with double-digits, sequentially. the who

implementation. to work our by this double-digits increased stems Pain, and IT second headwinds our from continued performance Asia sales execution Finally, increased quarter. team region for the resolve strong as moving grow Interventional sales by was COOLIEF Positive some driven to the system consecutive by Pacific quarter. double-digits the that mid-single-digits where International of to continued

business consistent in deliver we're year. mid-single-digit international growth coming our growth can key remains for Overall, we catalyst Avanos, confident a and the

requires gross For distribution quarter's XX%, implementation costs in-line and with from to points, manufacturing disrupting margin prior margin Sequentially, the last year. backorders. recovery that expanded basis was quarter, adjusted IT the increasing reflecting the XXX our minimize facilities

million savings shift. operating in driven continue XXs we Adjusted low mission the quarter for ahead, overtime $XX with profit the expansion see margin the gross year, volume. IT assuming adjusted business the profit while compared Looking for to the system. reflects step $XX of cost on to totaled last to up sales opportunity our totaled by from adjusted up million, $XX adjusted new The EBITDA million the compared million incremental higher EBITDA depreciation in operating of impact $XX and

EBITDA to year net to expect and diluted income per share Adjusted we continue $X.XX of $XX adjusted faster ago. accelerate totaled growth. compared million a a to million $X.XX earned than we XXXX, compared In to earnings ago, EPS $XX year growth

sales million, full brief net sales XXXX. recap the includes from a to Summit, which increase a almost of for X% and Now, compared increase Ready, that This of contributed growth. $XXX year NeoMed our all Game results,

up Pain driven ago. Performance the year by and COOLIEF XX% compared growth from was mix gross unfavorable Chronic sales in by a Organic X% margin continued was XX% growth price while to impacted in Adjusted selling year and Care. Interventional volume demand for X%. strong negatively was

IT acquisitions year XX offset adjusted of implementation million quarter's Adjusted profile. margin impact the Our XX margin net operating of compared were gross the XXXX. lower as XXXX as to savings profits cost for last with well reflects million in recent the programs totaled a that by impact

on Shifting and the other to regarding significant our strategic to us cash balance with position opportunistic in M&A available be allow year we million and of will hand capital financial that XXX sheet, ended investments. a solid

both cash see free we related our increases While saw inventory in from flow, implementation. improvement to and sequential we stemming did receivable in IT issues accounts

our for strategic to priority particularly system something efficiencies focused the realizing team I'm implementation the related and stabilizing IT is we've mentioned, year frontend and with commercial Joe made As on, and for continues impacts. the a advances significant prioritize the

challenges the that greater XXXX, manual of are As teams will in intervention we first our our during and visibility for working resolve drive each business. appropriate system, half IT providing more we these business capital into the effectively eliminating and the on outcomes our manage to be our levels of focus can for businesses so the

today positioned progress As cost the Company, in mentioned, is the year and system successfully challenges us. be our near capital as well operational deliver to The with appropriate the better me we acquisitions. behind previously the confidence half these Once gives current integrate that for of I structure second and made is primary the to my as mentioned, stabilized, IT stabilize as focus to term efficiencies team working went mostly has our the future will environment. establish

and the on year. X% to business, planning on outlook compared Now, our to net X% key a assumptions. current constant basis in expect to to let's move sales trends currency XXXX our Based we increase prior

tax expect we earn to XX%. currency into on of and to an rate per planning to $X.XX expected And our guidance. adjusted assumptions foreign is anticipated two, impact year, two $X following translation are between XX% adjusted share. is and sales diluted the For earnings XXXX. between effective have range not incorporated One, earnings The and

potential. to excited team this full I'm its part be conclusion, help driving business value creating In outcomes and look forward of that to the realize

are of to implementation the we drivers to drivers long-term We the value on with start additional associated and the we IT system. believe new identify create shareholder focused will leverage our once right capabilities I

we're for Operator, questions. ready

Operator

question go first question-and-answer We Please now Instructions] Larry ahead. with Raymond the will Kirsch begin session. Our [Operator comes James. from

Larry Kirsch

Joe, question I starting out guess you. first just with

getting them then, there up, So, customers of away, customers it guess competitive probably factors as I guess challenges that are back there's onto On-Q a certainly sounds I you like the out I tally Leiters, just are discussed. and there. dynamic had as And some onto in pump, see I impacting that number pricing moving On-Q switched

the business into different pump then growth in So still could the I mode about back get have you second the year? dynamics And follow-up. the to a the in you talk and expect half whether of

Joe Woody

Larry. Thanks,

filling really couple Acute So example that, XXXB's to the did And PharMEDium, when North things, we for low around And a America as a basis, low-single-digit Pain a biggest is that the Pain Acute and definitely that a issue improvement. business moving an Leiters. do with and see return we're of we in growth. growth strong over the the quarter outlined we another customers on two we've mid-single-digit, show was global that was sequential negative

We those double-digit there. I slides think in customers. the about talked amongst we've growth got

that, to our middle summer, reception. growth, for move real we and Leiters and will pump, electronic aim It's we lot that come again growth we and a are the in positive the think possible set business. some acquisition of that the level queue year QX customers on and is into even customers to strong, HX to into we're Customers we larger this of as up seeing that Summit back. get Secondary wanting some seeing kind into the of be for

improvement. So, I possible think we it's are and showing

Larry Kirsch

I Okay, here. other definitely ones quick that's And helpful. two guess

at that's that's out are it should again, ERP on like thinking LRP point. you implementation there. the Certainly, could out the do just are sitting doable to, And you just So secondly, this the half those about how know still extended those? I LRP, that you then inefficiencies speak But sitting how first perhaps we still from would the the if feel maybe be goals past what Michael, and in anticipating or just that there? get not are

Joe Woody

the what and think lot come second a a to of I going say IT on couple to to been by and doing is, bull he that the work grabbed I'll back horns really do things question. I'm Michael the then has in your inefficiencies wants

Michael Greiner

Thanks, Larry.

analysis focused some first in back very we self-inflicted prepared remarks, of about we're half the on as in We have in we the the half talked So, fool the of ensuring last had year, frontend faults. don't of activities, be front, commercial incredibly been manufacturing whether on on those the core and customers. and the just we year diligent our kind has team chain of or do that related on with supply the

do broadly the training of had excited we really is, the But the of make across more to first I types we're don't spent money get the anticipate sure the first I'm to in haven't half the a to of but to of choices for with which of is to forward first to some down place, the for what And information needs be going the to system leveraging system half what start the second that any those able year. lot this that's all year. use looking and that using have will create the we in make issues, be half That's to able analysis frontend to customers available, strategic it Company.

people, in that need of seats we using another so We we've did one new have couple lot the a or the moved training system training many the out of that reason the and using intended. on that the of gate identified, bunch of as of seems for things one it reinvigorate we're as a simple folks as those people system and years that a are ago, to

Joe Woody

you question And guidance LRP just the or you Larry, can have. repeat question the

Larry Kirsch

Yes.

again, that to should just we LRP arms that, an objectives put context given about trying right my out to sitting the whether as thinking is? LRP into that be there be obviously, was, there is, around again, was Joe Just three wrap try and, question, the where Will those is still business year Now that now doable. just update?

Joe Woody

Morgan. for over of business and our be EBITDA bit years. the possible that low we Definitely, is XXs digit single We of at example, the a JP that high XXs, operating mid margin communicated for a believe that definitely number in and can and

Obviously a fortune to our we we be enhance to did that being though communicate timeframe with originally can M&A we changed do obviously over laid dealing big the longer of period acute out, and there and that. going What the change than time want also performance that's pain dislodgement market has in there. which we're the

in our And that we probably chance after know, the a likely strategic with through with we uh, not to through couple of belt and about talking so, And in initially LRP. his Michael but strategic his is we'll the you board what process our only Get cycle quarters go numbers business, a and under a then. also is do want us. of summer ingrain update gives directors to, refresh, be the new run then

Operator

KeyBanc. Next with question go Mishan Please comes ahead. from Matthew

Matthew Mishan

And thank the you taking for questions.

first one growth the a Just is revenue this currency the for clarification. constant contribution to M&A year? What a

Joe Woody

for about talking You're XXXX?

Matthew Mishan

Yes.

Joe Woody

Matt. points X.X of growth, About

Matthew Mishan

excellent. Okay,

So, X.X organic. it's to about X.X

Joe Woody

good A range, absolutely.

Matthew Mishan

did Michael, And And last year just several how I guess then how Joe, kind the approach this you in plan? versus put of guidance much years? cushion you this have

Joe Woody

the some think it's add outlined sort talked QX, things view release or it we've couple was a that some infusion. his was in coming about important seasonality. And recovery point the nice I and strong, in about outside I eyes there But but and it's Michael There growth Care, A in you of in. Chronic then backlog. know, was think on about IV having and let an say things Michael of put can our if because you

sort unusual we the have That the organic factors, that X% still think growth in you ended said, out seasonality we if organic X% but year business. the to take we of implied growth, the

our in top a businesses and care with and risks to double remaining single balance see at You the We obviously mid we opportunities are happy chronic line grower. the have COOLIEF digits, digit.

a a more high being international time. over digit our bit change still of on think single can it a outlook There's We just mid to of in get little digit grower. single

catalyst actually it's business. a So for our

the So the top some that on thinking of was line.

Let Michael and maybe sort bit. you he's little give EPS viewing his also how views a of

Michael Greiner

Okay, great. Joe. Thanks

Joe to over saying. two the a to We've just learned what think last years. I was add lot

of have experienced? of that in to lot What understand. made of and that the month were What things effort some we a capture And really competitive a some who is Warren, could did been puts sure we of I the with were some dynamics? you as let's are So job What last the of for make great first handful the months. avoided? as know takes the the interim

we that we and go capture sure as the make Let's takes XXXX. puts into

answer various So, by I is we do think stretch if that's your are also good putting half we've super factors in, as do we no are the a of year headed, I of tailwinds understand we what that at could the back especially job where guidance the the the some that to some question we was year. make get kick looking downsides to what attractive and of as sure the that but but out are enter headwinds, conservative, of think, done very

Joe Woody

far, have Last on thing to I we've Medtronic here against say, prepared that And we're and do have compete that entering Pain. well so Matt, also think to I Acute would we consider. but then you proven

we risk. opportunities, that that we're have in an fact, upsides the balancing do all for So, actually,

Matthew Mishan

where the still And low And are Do that you you I think XX% XXXX? be clarify guys does a think you're plus to plan for wanted XXs to at just a margin imply made company. point gross margin? you gross you going that

Joe Woody

XXth Michael that the but of distribution that's efficiencies got share his things, in working lot views, costs be lot COGS We've to a is of we example. have on. think a we're same won't I impossible. welcomed some of

that's thoughts? I want possible. think Michael, to So you add your

Michael Greiner

that there's that upwards initiatives think against. more points we're or XXX I basis Yes, of cost of executing savings

a headwinds, is we did, to a some all we course, acquisitions all that low And those couple below that But obviously, sense it's headwinds, through. I with realistic. think the including margin with are a basis little Now, our margin. which XX% as gross above player we some have level, of about midterm, points revenue absolutely absolutely bit there gross the are come opportunities hundred the think for corporate

Operator

with Our comes Chris Stephens. next question from Cooley

Chris Cooley

the as want accounts it just receivable fourth circle Just comments in back quarter. pertains and on to increase to your the inventory during

the hoping about transitory that LRP much was kind think the tabled is the help And flow cash how could Just when frame XQ? it us while you till of the thoughts fall, late in XXXX? like of we guidance we year just cadence terms the in summer, amount go of for could both of on cash flows see cash we as through flow, and early the there sounds

Joe Woody

did take a that? been tips do of Yes, take as obviously a working have fewer in He's $XX million you improvement as and then Michael But and that. to But costs. this hard want let about couple unusual sequential area really Michael, to well. we

Michael Greiner

capital Yes, manual there's are capital things we that's to we're forward. the some working I think a sustainable But built wanting a not related couple on to have that obviously things working systems be move solution. starting ensure the aren't that the near-term, to workarounds and that anything in

we're we and XXXX appropriately. the putting being flow is timely that as payables that positive sure the look into free full fixes we're cash able I and reasons have that collections that system, we to the AR, the our So on have confidence one managing of having make year for through ensure

products regards stage. any inventory, is one year of this short to thing With at we're to fall not going do

So to meeting if we're that. build sure demands, extra front little time a to end we will make we have given any have at that do

any not with capital on commitments to improvement we're regards this inventory working making year. So

AR AP, are putting those fixes, with and you are I do anticipate that. asset categories. seeing in absolutely in the current liability and of and we we improvements sustainable facilities Although both will focused current on tell But definitely manufacturing

Chris Cooley

and I squeeze quick questions one helpful. really If That's other back the get could queue. just I'll in

you're terms additional or us end you're of candidly there. the patterns color the curious environment COOLIEF Just types Could greatest Thanks. growth in quarter, of to in see the purchasing give we double-digit in any seeing as of utilization? sensing some where or market if growth? been about accounts Just, you growth change the there's the amount think to continuing that

Joe Woody

helping obviously growth growing the us business of still growth and to osteoarthritis CMS in behind I the areas, these outline. And we still business. the would reimbursement be the customer try of the interventional And is which itself to towards even a but primary drawing but working knee. specialists, the center, there's that So in ambulatory spine our are get higher think Not but studies pain in of that greater the is scenes of received is surgeons the the greater for area, last lot of the we're surgical end reimbursement portion the that. positive an orthopedic catalyst year that the

Operator

you'd ask then question, please press like to if one. And a star

from Kristen comes go with question Barclays. next Stewart Our ahead. Please

Kristen Stewart

just kind reinvested into million restructuring I wondering and of be business? just forward numbers bit. just through kind that to with what go million to been help to terms going last some of comes was the million I some if $X moving XXXX going know follow-up. And much how the we think really that we've seen will actually number or reinvested $XX need about be terms a million. I And The are investments identified of that for will you a probably have be us of for in to XXXX, Thanks. just that have being then of should line in $XX little year or through previously How of of flow-through to the and the forward, maybe numbers savings. frame the could $XX reinvested? earmarked in will bottom that that just was be

Joe Woody

Yes, Kristen.

really things. they've Morgan but other we XXXX. couple primarily getting on of system, we year. Michael at until costs to little And Just COGS-related the about to short-term costs you point coming to really each headwinds think being stabilized I want And bit in IT a been talked in date weigh like our JP obviously areas. the incentive in to want inflection in going we but And Michael, a add? obviously have do in we've was this, been

Michael Greiner

I be anticipate Yes. think mean just numbers No, just right, wise of offsetting Joe that's quite there'll million as cost XXXX. But in to those. a $XX million I Joe. bit savings of referenced, of $XX

so good that net So and be some will million XXXX, line $XX and or $XX then that bit in will less of of the sight have to savings million drop we to most quite a bottom-line.

Operator

comes David Morgan Our go Please next question with Stanley. ahead. from Lewis

David Lewis

few Just maybe a for me here.

Joe. first Just for

what's Just were the of for of market? COOLIEF XXXX, And product? for made entering in guidance in what sort that growth Medtronic assumptions for around terms the embedded

Joe Woody

I So, we double-digit strong seen when advanced. last is are press competition further night date, we a not David, a believe we think We've console To has have continuing in that release growth COOLIEF. COOLIEF. introduced with from even now new and technology

to? fact right knee, further treatment the -- technology growth. the OA there only now anything that and approved about between we're feel we for pretty is the we COOLIEF So of COOLIEF that -- in wanted It looks that strong you

Michael Greiner

No.

Joe Woody

is just Michael with agreeing me.

David Lewis

of may two both think said have I'll Okay. third think I but And this, for fourth. I versus year, the back half growth quarter ask you Joe, about the fourth quarter, the the X% in more just them upfront. in me, organic the

For 'XX, said And this EBIT about you GM. think Is around Michael, think the margin growth entering is how implies in of guidance came way you XXXX, second the right business X%. out organic for low-XXs half then flat your of sort to that XXXX?

something about of points to SG&A so way here think right XX% deleverage range? the is two around Thanks much. the So

Joe Woody

more you're organic call. talk effect without take QX, our Yes, in you a think it is and the and we QX little looking David. through business And bit side factors X% about We on I'll Obviously, But of earlier on take year. implied did like about as into the is the QX. we of we especially IV about the call the being first there what X% the X%, part go and part a and pain entering the Michael the infusion think do that when growth point. unusual seasonality will our second organic business, in QX at the for on take

entering So that's we see Michael? how the And then year.

Michael Greiner

Yes.

anticipate directionally points. think an And were We I do teens on math. XXX to basis So EBITDA of increase on margin grow the we EBITDA anticipate you your double-digits. do correct to about strongly assessment absolute double-digits, value

Operator

question with next go Ravi Our from ahead. comes Berenberg. Please Misra

Unidentified Analyst

is my Hi, Ravi. Emily on taking this for for Thanks question.

Just they are those about you what XX-Watt benefits for just with and bring? start Can FDA-approved briefly new COOLIEF the what to new the system. talk features

Joe Woody

our for in Yes. the This interface customers. utilization a faster the is more allow Joe. does It It throughput broad procedures a probes. for better of of has

think of sort just procedure. for state art the faster as So console to and a allow better of going that's it a of

given have So we're entrant a that excited technology. now jump it's the about in COOLIEF it, think especially in in another We we Medtronic. fact

Unidentified Analyst

more, was Was Thank had anticipated. for we And any about XXXX? Okay. if think could can how we I one just than you. there reason R&D this you. bit ask and R&D a for lower Thank

Joe Woody

And what be I At are. to an can we're same wants our also Just looking alongside to BioQ. a things. obviously innovation of in we any X% something. It project just say target quarter of sales spend. think is for change invest Michael reviewing their at to returns projects But and open due the essentially, couple time, And at R&D. like given

Pain into know Do that business. in that X% But X% range. and intention of state want to -- art our to to electronic investment maintain the of ago you is to million a the $X add? couple quarters Acute the So was a to get pump

Michael Greiner

add. to nothing No,

Operator

Our Wise next from go Please Stifel. comes question ahead. with Rick

Drew Ranieri

you as meet the growth evolving progress. And I how rates IT and on your and and and potential Michael. continuing continuing maybe stabilization in could and system revenue we Drew the XXXX about talk their just the Rick. Joe just or about are integration Could growth stabilizes, integration, Should thoughts we the think an transactions? your on It's to M&A as could profitability for expectations profitability IT start on M&A see acceleration steps where you potentially prior XXXX? to with Ranieri of capture to Hi, for wanted synergies?

Joe Woody

structure. three have you into of we IT HX, CORPAK sort is the as some Michael, we're the half. acquisitions. on profitability, enhance as is do sales going integrations And that we and an example the those that NeoMed benefits the and as the gross project really our can things So, We can year of stabilize the doing we're on -- major of that I teams certainly we and think as good own and system on we happen the those that side. for ending we plus this way view really benefits of example think But obviously bulk begin get the imagine, these second gross margin margin of a anything? synergies is the

Michael Greiner

insights business synergy I the really Yes. Joe, and year, system leverage in the from as we you also of cost think a earlier standpoint, to synergy about integrations the that half to a I all revenue as things to of But is processes. start mentioned then that outcomes. will our leverage are new be that most I the going systems asked hopefully the front-end and ability especially back as to our revenue outcomes, standpoint, we'll those cost-focused integrations, the types are of some synergies. system those lead systems-related, on our of positive analysis have an from

Drew Ranieri

adoption to about adoption drive with is or near-term? does to XX-Watt start maybe happen adoption then it new ambulatory COOLIEF, system. really kind you new touch that accounts? And the getting just Got on it in converting accounts? the opportunity just drive it's or existing tell And surgical Can just And to in could there in XX-Watt how of quickly back you there, it. center? Is on the more the the from system us help about

Joe Woody

reimbursement. now see think to really the that the I think I you'll opportunity. want is the for are way ambulatory we have newer to things. more it People another the entrant upgrade I efficiencies. technology. differentiate going of some One is system market in also it's that think perspective, this center then surgical ourselves. And component From into about couple about a is, good a

for is orthopedic ambulatory surgical that makes think into So an us reimbursement for center. that to economic expand a once there sense, I example is surgeons, for opportunity there

Operator

Our [Operator Matthew question go KeyBanc. next with Mishan a ahead. Instructions] is from follow-up Please

Matthew Mishan

how a versus about COOLIEF -- of follow-up. couple you In talked specifically you in one talked surveys, the with taking you HLA more difference the the at months detail versus was a bit on Could year release acid the XX Thank relief the go for into hyaluronic a HLA? at script, versus mark COOLIEF the you pain six big little for in couple press or the months. about one

Joe Woody

the of pain Yes. study then a months. the at about study. XX corticosteroid midpoint went able on, to the that then we're showed Matt, talk And XX-month obviously the to it's as I similar very sort relief. And believe

few HA, pretty think work it's cases a some significant. think weeks in few I about may a strong, or if that And So pretty you months.

So there's economic think strong really I well. story a as

for catalyst surgical becomes in business that's that. studies clinical -- why going we're ambulatory reimbursement We're by The to doing center. and is the Again, oriented allow way. the in how data have for our that to going us are to a the

payers. So allow for a have better it's to to commercial us conversation going with

process, us but it's So a the for future. it's year in a several good thing

Matthew Mishan

Michael. Okay. And for then last one

you're think lot a a lot you closer talk at re-price the stuff to get the also, you XXXX Could momentum expectations is of how momentum, the a a end of on side. the XX% do debt potential to the with talking peers, I think tax about surprise? on of the to cost exiting also your bit XX% then rate And was I little of year? exiting long-term

Michael Greiner

I'll take first. one Matt. tax Great, the Yes.

we definitely that longer term range. anticipate one, tax the being XX%, in XX% So

variety credits. in loss with of as where here a We're years not foreign guilty. position. there well to couple standpoint, have a There's We a from from tax a things going on of able like tax things we're benefit

for temporal is little And just this so factor it's -- of our bit taxes. a a

will low. be Cash continue taxes, however, very to

so the to can I bounce to more opportunity. have modeling anticipate which debt, rate. to tax focus tax And what our rate on a the term effective bit. effective XX% With longer that's do than tend from But regards we XX% standpoint, I a around

fall to the You -- in re-price the debt ability at our around correctly state time period.

types Dave at that be our point. our from and I M&A from strategy M&A will closely like monitor where are larger of What capacity an the or and whether are needs opportunities. looks what standpoint tuck-in that markets

what will that incumbent from be be will that that upon anticipate all to of piece opportunity the we will that structure at capital do do in factors standpoint. But -- of re-price when all So look fall the our I those we arises.

Operator

This concludes our back conference like over Joe question-and-answer for turn Woody session. to would remarks. any to closing the I

Joe Woody

everybody want I your to in interest Avanos. thank for

have and value outlook I'm that for today I that our to the believe business deliver can confident well this shareholders. continue you outlined solid create against the outline. to we As our tell, are ability to the priorities of we and and fundamentals in in business positioned

the be will will meeting. Dave the at at And be our James Institutional section and that Michael upcoming week in Relations Conference us about I Miami the Global Beach. on at three in how Conference Healthcare can Information Raymond to Investor presentations the the be Orlando. after of found Also, believe the Barclays of access that's avanos.com. website

you. Thank

Operator

The you now today's presentation. attending Thank concluded. for conference is

You may now disconnect.

Avanos Medical (AVNS) 25 Feb 202019 Q4 Earnings call transcript