AVNS - Earnings call transcript Q1 2021

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

Operator

Good day. And welcome to the Avanos Medical First Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask question. [Operator Instructions] Please note, this event is being recorded. to of conference Investor like Crawford, to now President Vice Relations. would turn over the Dave I Please go ahead.

Dave Crawford

Avanos earnings review Good an begin morning, morning Senior to and the Vice pleasure business us. are update It’s first everyone, and and CFO. thanks on welcome for Joe Woody, President you our Michael me and call. with With conference joining CEO; my XXXX this quarter Greiner, to our review will Joe planning priorities our will available then of call website, section progress and an presentation provide is against we’re environment. A the today’s for the current first XXXX our XXXX avanos.com. update the making finish with our and Q&A. Investors on call quarter Michael on We’ll

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

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

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

Now, the over I’ll turn to Joe. call

Joe Woody

to pandemic. by you challenging morning, Good on team’s respond everyone, resiliency dynamics your Dave. brought our Thanks, Avanos. to business the and for the encouraged and in they as by thank our I’m interest continued execution strong

Our to of meet the needs customers. the employees patients we remain as and matter things focused the dedication that to getting our back

the resulting with quarter from earnings to elective uncertainty procedures. on and our corresponding last some impact the mentioned began As negative we rising hospitalizations and headwinds call,

our franchise we exited momentum topline a of began to Pain we the return saw increasing as procedures electric However, Management reaccelerate. as quarter, across

see year. the believe full to of procedure remain the to we expected accelerate, likely we’re increasing electric volume end its potential continue ahead, while until to volume and encouraged to the Looking below

business the we better in the the to of and presented environment, examined our ablation are by pandemic. confidence gradual challenges direction As we sight have business of of gaining line the

we in basis financial Based result, compared the feel share. X% share expect currency we on on constant to a diluted we As prior positioned for year. adjusted to X% his $X.XX expect per increase to earn guidance will earnings net current a remarks. to to to information between additional Also XXXX. well sales financial Michael on guidance projections, of provide our $X.XX

Council across Equity our inequality. we departments. The quarter issues employees’ and Diversity, DE&I upon regarding the the better our We Together understand consisting Stand all established Inclusion will During perspectives global our gender of Council racial XX and to build employees first of initiative

to DE&I work. want us remains a the our organization Our critical initiative check all to where employees for culture and effort

per treatment to Digestive the deliver Health we direct sales growth were continue of into In the DOJ of related mixed discussing increased measures investigation that part agreement their are our business Lastly, potential with with and our we share. resolution earned by S&IP provide mid in transportation control With the partially year, cost Health Chronic year. diluted by to Care the prior positively and by drivers the divested other with an that We million, the unchanged an pandemic single-digit a impacted our anticipate let of of quarter similar MicroCool or $X.XX compared first surgical in the while costs. in that adjusted XXXX. gowns finalizing impacted on background, disciplined we DOJ creation. Results results and of we $XXX as earnings review update patients overall. franchise were business a me in were QX our were totaled you Sales value were last Earnings QX. Respiratory offset to now when

the by suppressed growth and the However, ON-Q was build Despite uplift and therapy. as a I slightly spiked related a In as across cold impacted an normal a used significantly caused at Separately, some precautionary to start new for we the COVID-related quarter foundation the to Overall pandemic significant throughout quarter the remained where and our reduced flu the Management. measures taken ON-Q sales require overall early sales earlier, as Pain Pain as accelerate headwind stated therefore of stay. flu was impacted season therapy where as regions. wave to growth seasonal hospitalizations grew down the a percentage procedural the performed of to outpatient season. elective the volume continue quarter less procedures in Management, was returned. headwinds is The as on biggest cold pandemic, surgeries of it sequentially hospital COOLIEF our solid

me let this value our of areas four an creation. Finally, regarding our provide update on you progress quarter

driving As a capital and deploying gross growth towards reminder, flow the cash operating strengthening and margins, consistent our free areas four are profile, our generation M&A. expanding

both strengthen we as to share in and our and First, driving our by profile, we CORTRAK gaining NeoMed growth our growing adoption portfolios. maintained market momentum look

On We are record as our conversions. address hardware the we’re radio units increasing important enteral as discussed We’ve also our progress needs. conducted. our on to feeding, are quarter upon for frequency ablation with we expand NeoMed executing target feeding the adoption the the strategy to being independent this nasal sales neonatal, gastric along and further NeoMed evidence reach making in delivered goal first previous have differentiation this effort to COOLIEF standard-of-care to therapy, for for of studies for CORTRAK the physician-led demonstrate establish calls, to CORTRAK clinical

independent two COOLIEF were on published. publications physician-led quarter, the During

better cold use patients was outcome of for knee from radio osteoarthritis. concluded that predictive suffering the first of frequency The a

for knee reducing large retrospective that COOLIEF another Additionally, and pain series was clinically effective concluded disability. both managing

on each single-digit international high during our across expansion growth our Finally, we to regions we the initiatives, continue execute organic of achieved quarter.

Care in Pain the of franchises. Management quarter. same internationally, both growth regions have time, we first our our of we across level the growth achieve For seen this Also, and Chronic all in

second in area cost margin focuses driving gross and on and operating encouraged spending. discipline an on by our expansion. emphasis the I’m Our continued efficiency

growth transportation continue to related rate. from conversions. the additional increased NeoMed anticipate facilitate these costs costs incurred We slower at in we However, albeit second to quarter, distribution account

As of the our the more or our meeting needs. value creation, looking business, advance customer’s efficiencies throughout we culture, into processes of lens embedding with all approach we’re enhancing goal at by this effectively

expectation available Our third compensation. preliminary approximately relating as pathway certain internal agreement is Taking the Cash driven $XX the well DOJ, flow. and with refunds, to now quarter delivering I million into expected that anticipated Flow consideration cash our previously cost in to the Act. we discipline from of tax the earnings outflows U.S. free as by will the mentioned, flow. Cash generate savings derived receiving repeatable CARES cash be an anticipate as approved consistent met million we for through provisions primarily our flow $XX

continue for deployment M&A. examine to Finally, capital we

robust our existing remains tucking we footprint, dialogue pipeline and growth topline M&A generate of number synergies Our and with potential would leverage enhance a active maintain profile. our targets, which

along our expansion in creation, and value of This we me areas optimistic disciplined as about we and portfolio gives the prospect strong of strong. can deliver our in well-positioned ensuring to leading our our strategies capital. I’m return XXXX beyond. execution will advance XXXX, market margin on four these of remained confidence each of with While bolstering targets, focus Overall, we remain assessment in a robust remains on our across generate portfolio growth we

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

Michael Greiner

Joe. Thanks,

and As these we know you team headwinds on challenges. battle execution to range overcoming a remains that continue of yet focused the and

our Asia-Pacific for across continued Double-digit technology of in our NeoMed came sales along Middle results. of review $XXX and for with Unfavorable we down Care ENFit international slightly cold exchange X% new CORTRAK monitor due Total increase our the sales regions with relationship by Health due standard-of-care quarter, sales the between of channel a our begin from and benefit year. growth saw quarter Europe. allowances to and earlier. single-digit rates. unchanged Also, higher distributors paid was by were mentioned X% CORTRAK, growth was our to of and sales sales performance performance first to execution X% the Let’s while than to of our from Digestive weaker we impact price continue and products. price last and normal flu to Respiratory trace $XXX grew season. and volume Chronic from discounts offset share the million gains continuation slightly from a conversions Health strategy, driven -- in The to East mid partnerships normal resulted as compared the to our demand Meanwhile, in growth timing bolstered pandemic-related We sales than saw primarily customers. X%. favorable to Double-digit the million customers.

Thus, not Health from does is headwind past appear being additional the anticipate year, while expect currently has there by impact While additional from several do held growth an declining added over inventory some levels. next we analysis rebalancing Respiratory been to it variability, distributors distributors. quarters, an the do not their we over that inventory for hospitalizations the

change $XX year. some The we ON-Q, procedures is cancellation procedures of million the X% sales, correlated length an the to of performance, lower largest heavily stay Moving The lower of delivered efficiency. Management, as was as which procedural to impacted patient requiring Pain hospital. prior in elective compared well to

a that for prior increased this ON-Q procedural customers we volume for flat quarter and as growth year. to saw sequential to through the partnership elective by Leiters we’re to compared in the Leiters ON-Q the benefit respect the COOLIEF, encouraged as a double were essentially results by digits With Joe mentioned, as sales As option. continues hospitalization of pre-fill to Despite declined increased. quarter challenge

unfavorable first growth our is A March units from Pain well. Ready, growth While anticipated. rental of Management to Game in the in expand we where in growth double-digit directly Avanos for was months, was significant progressing saw efforts as highlight two the

both the from European in and addition, North of sports In American the benefited business markets. return

performed to therapies franchise. believe effective opioid additional return sparing continue procedures growth this meet elective needs We and being of for hospital for management in the support will the pain patient’s

statement, decreased Moving XX% last compared adjusted year. to margin XX%, gross to down income the

expected on unfavorable lower indicated product mix. given variances gross we manufacturing and timing margin earnings the call, As our was be previous of to

addition, in allowances of by as than States in gross the well transportation costs as demand, declines paid higher to In higher customer and impacted China NeoMed customers. was to discounts margin meet United price also quarter bring timing the to normal the products from to

margins expect as earnings regain Health our to adjusted We levels. levels Adjusted products gross mentioned to to and we demand margin and our year-end XXXX range gross normalizes growth during pre-COVID to expected partially improve XXXX Management margin in continue Pain call. still for between are Respiratory as

second adjusted will continue to will year, was we transportation quarter. by meaningful the year. the million, Adjusted a half driven $X is second in adjusted by totaled $XX $XX million, lower to as earned just totaled Performance compared operating EBITDA anticipate primarily million per we offset Adjusted million ago the totaled occur we the which sales expense million gross profit incur reviewed. of I in now NeoMed in margin, meet to margin adjusted year. $XX operating the $XX compared However, partially $X.XX share. last million, reductions, income and the diluted demand compared to to gross for year net higher during improvement Adjusted of $XX costs prior the earnings

and turning cash to statement. flow sheet balance Now the

As healthy cash go-forward key free Joe a generating a priority. and meaningful remains sheet keeping mentioned, balance flow

hand, due CARES preliminary the timing with free flow mentioned, short-term outflow in an million continues last consideration Act. million as of are made our DOJ, balance $XXX with strategic $X related cash our repayment restructuring with year, we which during into Our credit This solid represented improvement quarter to sheet ended quarter. provide the cash to employee severance and $XXX Overall, we to Free quarter. taking flow on the related and confident of as versus outstanding $XX we from $X year an flexibility incentives us our this on generating revolving approximately the due of facility. as to refunds payments is debt of of million million well of as announced to cash payments end million Joe remains settlement includes

returning at remains, year. on Chronic the sales of normal basis compared Finally, while we an last a increase approximate year X% rollout the end of of prior Based the international of this business, in return elective of expectation procedures time. discussed the from us including quarter. enable the trends impact the currency to some provide to the exit Coronavirus of net constant our elective outlook the a current to and Care success year through on XXXX unpredictability vaccine X% expect business by includes level, a procedures full to This non-strategic XX-basis-point

impact Additionally, year noted than usual the how comparables. call, variable earnings prior of on our more as impact on sales results quarterly will year-end we given be and that our sales our COVID quarter-over-quarter will

between adjusted the of year and share. earn $X.XX per $X.XX For expect we to diluted earnings

in meaningful forward. We our this flow the we’ve to and expect confident made Operator, higher focus free gross the significant margin to expansion, in of a is the on and strategy manner year from higher with execute on the disciplined a our this and progress please I’m on through of a pathway. based we and on deliver for deploy in pacing along our the going strong valuation In the capital controlling half ability earnings year cash questions. duration to off line year open operating second expenses. continued for the are and sales start closing, perspective,

Operator

question ahead. first comes Our Misra Ravi Please from with Berenberg. go Instructions] [Operator

Ravi Misra

morning. taking Oh! Hi. you questions. Thank the Good for

So, from just a couple me. of questions

Joe, front, guidance kind year. assuming by and just the end of the wondering of you’re Mike On the normalization

a of low does your the to midpoint the -- of more that guidance mean, in more have contemplated what’s high you help about high Can aggressive rebound wondering, of what on Just Thanks, or kind of couple the ups? the I end? high you and get us think include of kind end? should of kind getting and procedures follow terms of end aggressive I

Joe Woody

view be. range, range. may come and it to the our our Care sort greater can end guidance faster generally, And high It’s than the electives back, Hey, morning. Ravi. it. low the way is high add I’ll the of a that, Good is then, Joe. be the to end but couple say things below pain Chronic likely I of at of the But end would to Michael, want really of better a that

looking things the we are the improvement, on at going do to half electives year. believe are we hospitalizations, in of the less second the So, obviously improve really

don’t the We’re watching lot Michael, indication full of there? the speed have across have to that that’s And our anything a we from customers. there, you because do add Board

Michael Greiner

low both just the electives Joe the side. the mentioned, the that as continued say $XX. question in just year some range, assumes back the would end these to some returning I not to cost hit half Yeah. of And your Ravi, in headwinds order on of

go be of half the for things that’s range, would us So fairly conservative the a low have to the not in end of back lot to there. right year

Joe Woody

Agree.

Ravi Misra

then Great. I -- Thanks. my all if ask maybe of help just, follow-ups you can kind And together.

understand, can Just strong. if you help pretty us your international growth was

margin help it breakthrough can to how you us for of there average? terms you. it updates kind Just the of and understand Thank of any to that’s on then, designation the finally, in on kind compares progress the And corporate the impact me. overall product

Joe Woody

performance. and into focus geographical about to continuing So bringing I’ll we’ve enter able the good We real into the as markets start conduct on those new talking international expansion M&A markets. well see that QX just business, been a through and with been that there’s

in up standards. managing and out distributors job Asia-Pac, and more that cases education done think and studies. And of very eliminating our medical nice I focused direct EMEA some to in clinical on distributors of a getting them, then aren’t that going living they’re team’s

And therapy both that and in so EMEA that that’s really they’re adoption getting. Asia-Pac they’re

is in high bit toward margin a Michael people, for we we’re in he tenure, a a -- lot in about that the talk my Early investment single-digit wants think structure contribution. And like to it’s mid us. grower did the single-digit, again, working that So, looking lever little important non-pandemic of situation area. a and the we an in on

Michael Greiner

Yeah.

Chronic Ravi, have internationally our the pain Care do majority are expand now we right as to revenue we footprint. remember, looking of So good

margin Chronic So key that a just and by long-term. some for definition, is Joe by our right lower portfolio we alluded large to, And Care gross profile. investments doing think are we as then the internationally are

are the margin operating So profile both levels slightly and margin the our than the gross overall lower consolidated levels margin overall companies. at

Ravi Misra

that designation just through on device then break changes… And

Joe Woody

Oh! Sorry.

Yeah. that. about Sorry

We knee. electronic our total nerve really [ph] are product on progressing and block well focused

in now. We’re patients

impressed with very the We’re results.

and has Investor would time development rollout there. year, call which the working to ball maybe we the view well that of portion of Day, gone toward the end or would we’re that now how When FDA reimbursement applications on an [ph] obviously about the it, -- so we and approval an LRP And LRP. have the new

We’re that and it highlight going more to in talk about that meeting.

Ravi Misra

Thanks.

Joe Woody

Yeah.

Operator

go question ahead. comes next The James. Please with Larry Keusch Raymond from

Larry Keusch

the start bit was for taking was morning, you’re to of and sort to that guess provide XXXX and waiting sorry, would rates, question. I laggard ON-q? Because little Good to pieces I’m a first thinking of a this I’m for assume your thinking to I the it COOLIEF moving quarter the just that grower come I’m through back? Is -- year? I about bit procedures just Hey. given and exiting should the beginning trying pretty you’re a commentary lower how that I’m thanks business. everyone. about on that, Thanks of various curious guidance for guess, now anticipating I that. a the these parse be the is as the off, for than for substantial

Joe Woody

of channel that the of in half with ON-Q headed obviously And on, comparator I the moving ahead mean, saw pleased do outpatient we the progression. we That’s We’ve going good some March. with with we’re and things see than second the positive to what’s Yes. related again, our growth bit with some hospital COOLIEF acceleration. businesses what ON-Q, in little Larry. to where it’s And respect a partners of back for hospital in commentary. be substantial the continued with seen into ON-Q, lies the the bulk grower. But will because coming we’re the of department a right, But and COOLIEF. slower growth, that’s obviously,

It’s I to -- surgical And ambulatory with back my setting. fast think the just half relation think, unknowns another the on procedures, with last thing the the as we that biggest as some as is do to were I happen. did range. how they you did back heat might year, again things caught hospitals opposed of come the -- think come in about slow then if bit little a with fast mind all the the second and going they in to wave of saying even that and the

So we’re the add. that’s first did the And extent know, does to I But manner, I to -- a Michael, think has Michael, more say, us. that much being there. questions. back that couple faster But life Larry, know, a cautious I the question, in I come upside at may don’t nothing do have you you anything for have

Larry Keusch

do. I Yeah.

of Just two guess, that back more. till you of Thanks expect for the end commentary potential the Joe, about, on volume that. to year. again, your topic the come don’t I full until

It and back more your through about I’ll for, second that wait let’s year? ask think you just question a normalized. kind and factor like As is, things, gating you most of probably hey, than really companies assess till feels of are bit little I kind the see we of there? SG&A assuming. happens feels the think coming anticipating driving year? And I the is, half the that what should just different guess end do much What’s is, sounds mean, assumption? are what how the Michael, commentary just is It like it biggest is other that what second the

Joe Woody

example, we’re a in more Ready again quickly outpatient generally, setting, coming -- quickly sites come Game therapy a they very is coming that’s and done together an done the the at is bit as there in COOLIEF and lot different getting setting. -- for it’s in back it’s us complex, are sports it’s outpatient in pain, So, little growth --

executives. -- conservative again, it, And talked customers our that this hospital sort to and So think us bit we is that XX%, decision at May, knee be space. on we’re our our little be more upon own feel quickly talking based We June, climb. of comes July, base. that for and be XX% then if a sort in we could hospital now -- like customer the an surgeons right use back, But, consultants. maybe in will just that range of and our some should and HX call We’ve good outside strong, to in potential this and

Michael Greiner

Yeah.

to we upside revisit some of range. I we occur and we one were range believe this the want if and various downside come And back come would things consider didn’t appropriately were is, to think, looking to occur, sensitivities Larry, capture things of us the this some that quicker. at that allows if were things and obviously, back to to when

thought on more high believe quarter. are of SG&A, permanent If as our just out were -- of that’s second far So we’ve about percentage back we as how part investment as We the considering. second some term regards that a would long-term operating range of longer the in which quarters, as in probably just year, and temporarily, the notice, again, enter there. XX%s the putting revenue we the increase before investments, do it to those as is of opportunities had in get our three we goal last quarter to With are of the do you XX%s, XX%, the SG&A way. SG&A our start we north we ultimately goals the half thinking, here side of high to a the there

investments doing So in that of the also $X.XX will year. to $X.XX back we SG&A of be the some considers these half that

Larry Keusch

Thanks, guys. Terrific. Okay. Appreciate it.

Joe Woody

you. Thank

Operator

ahead. with Matt go next comes question The Mishan from KeyBanc. Please

Matt Mishan

Hey. guys. Good morning,

Joe Woody

Good morning.

Matt Mishan

a morning are comprehension this DOJ long Friday in morning. listening of week. heard times couple skills strong that the it’s not after a So But I My a presentation.

a sitting million that I on have change million? did Clark? it And there? flow cash free that your still you $XX for year Kimberly expectations do $XXX was over, go liability just you can first, Just, previously? think Is the

Michael Greiner

Right.

we then That resolution. would did that if KC, we’re last… a say I -- I’ll you’re and what We referring or now. in go settled anticipate think continuously was things with But really potential I and was that the agree a be of We much think couple no more So QX discussing won’t issues basically, principle further DOJ in KCI. to indemnification with I have QX QX. the there. we And finalized for a

Joe Woody

Yes. year. Last

Michael Greiner

million… Matt, change cash flow from You’re free in the correct, $XXX

Joe Woody

Yes.

Michael Greiner

-- …to the with million relates what will amount $XX settlement believe ultimately DOJ. settlement to the we be

Joe Woody

IT mean, this ourselves, one in big a and about understand going other step thing, where we’d just divest putting I I to with -- into heading always us this if moving growth. think positioning divestiture IT. forward. step couples is the I behind back and this, then you bit, think And business get And with about of a to will the And little getting lot out place system things a talked get cost this we’ve where obviously and we’re a stronger we where the might deployment and be of

So more in agreement. ability of clear execute as our a to manner big any type is as

Michael Greiner

is Removing overhangs important. think we Yeah. these

Matt Mishan

year? believe trends. margin still How from think they’ve And previously think to the XX of I somewhere that that said I gross you’re the case? improved been between and the Is XX. XQ just Excellent. you you rest then, Okay. it is? that,

Joe Woody

Yeah.

of going is these as the XXs things I’ll detail, upfront. we that would about the you ago light through are HX. in couple lot about high is And be little year only business. a and a that would in strong take you for QX these us It QX have low related Michael, very here be bit and and hear we in competence. that XXs talked things temporary, were really some second QX a say in We but more and So, in to a about then a pandemic we and

flip progression lot in side So I a business we’ve the had it. that, on think of the of

at of In the growing SG&A. the talked call, sort a quarter. this little Michael did can EBITDA look it about bit the way for You had

more as we the a shape. talk to direction, maybe, should be want we it. moving plans in the may Michael, about and good little in sales the we right which But for coming on, get this you detail So have

Michael Greiner

a manner, The few question. the -- a with. some price have than then basis basis in the the the points Great XX%, over been items half temporal opportunity through. greatest XXX product to revaluation greater reality around points sudden almost year have and of half working variances were for the manufacturing XXX year transitory the some mix, in of Matt. the for anticipated costs temporary important things this long-term half -- quarters incurring NeoMed we’re freight and us second all has year, that NeoMed, unfortunately, we that just didn’t That but when issue is manufactured. first So happened items, that we’re NeoMed events us is where right? the Yeah, from inflicted, dealing prospects them our for growth margin gross for than also, suppress gangrenous Neo China higher you self range second is become look margins, a we’re our at last that But XX% of there’s which of of of company, gross taken the a fixing, freight

half. second anticipate things first quarter, second not So about half product although about to second you of improvement half the good -- we’re the what portions quarter we going improvements year feel our second good think the margins we directly of in half, to know mix. temporary see especially headwinds to to we the really year, do primarily improve given When improvement, gross related the that first the relate of but in significant the into significant

Matt Mishan

you Okay. to there XX% plus here? from back Like, margins the pathway pathway what’s -- -- gross a would is what

Michael Greiner

or a we two margins. this believe that in -- we the quarter gross in of plus the And will Yes. see Absolutely. back will year half that show XX% those

Matt Mishan

then unfavorable what call the you then and Okay. quarter? and allowances That’s discounts -- great. And in

Michael Greiner

Yeah.

Matt Mishan

what on those elaborate bit little a Could you were?

Joe Woody

sort with discounts of negative Just, to generally, customers. we’re plus on business X% X%, and our do of timing some this with our overall rebates off price. of And not has more -- has been backing

long-term this either. see don’t I So

Michael Greiner

products, -- price. the just the we changes was, There to the price had giving and respiratory we back revenue that place first these in how timely to or year to didn’t given the different that to related It what away the not timing in related Yeah. criteria not refunds of half was business go we had the more the was measurement that up get issue of capture in we in quarter -- some of changes saw. as others not are a we in catch and knowing that

Matt Mishan

guys? And for has COOLIEF Okay. needle you and the that ASCs moves reimbursement then the for

Joe Woody

I wouldn’t an the we the in say, yeah, half having of I talked about that impact year. back think,

they’re all as about go want way the efficient QX some a think We’re to go I structured that into how it. we’ll you get be and into of which there. you and QX, and looking ASCs see to the doing assessment the full breakdown would But we of and that benefit about ones profitable

Matt Mishan

And Ready, forefront? Okay. just Ready Game while, were time you a that is all think, I mean, the what’s product mentioned Ready like due in I to, of first lastly, a the then a new is sudden changed or Game at Game --

Joe Woody

that with the nice couple So put things. as injuries. with as making together are have program One, job up business, part off definitely customers our drop-ship better also and come Ready. team that rental very But as on back of focused a with, also a and did also and the synergies year sports that we that connection to as we been a the sports have finish where last there bringing making efficient speed the well Game

momentum. we’re So, really and with happy there three that things

Matt Mishan

very Okay. Thank much. you

Joe Woody

Thank you.

Operator

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

Rick Wise

morning. Good

Joe Woody

Hi, Rick.

Rick Wise

trends off, plan, question, no, try of question a company to a stronger doing? mode shorter better term sort sort half. softer, the get that’s or help margin And were two-month April you perspective, many part But a I’ve of been two first you clearly higher nice sort to it How said, model on have to going are every like with second of are continued us look a the the sales like a February, March this sequentially in into to they like on -- are little right to first, accelerated case, those quarter second they second others, snapback, asking quarter thing, as to are start expecting second lot is thought or Joe, so just sounds a for or a correctly? we just you sales quarter, path January, recovery understand same the quarter as the if just And we or path?

Joe Woody

we HX improvement we see that think Rick, Obviously, that QX sequential as expected. our I Respiratory business mean, way it I from about some are QX. we’re is Health a will seeing noting stronger like in kind of of kind the seeing is Sure. to and and in feel performer

strong department. business, and as Digestive outpatient in in Our we the business talked and improvement starting call, business but the well. because Pain is also And about in are faster hospital Health the in off performing pretty consistent, International, the we it’s ON-Q seeing earlier improvement Interventional

in right headed there’ll things direction, So in even clearly much be are do think stronger HX. the but we

Michael Greiner

comparable quarter. Remember standpoint, to just from a second year attractive will both very ON-Q last COOLIEF comparables has and versus

good is there QX see the So be Sequentially, last catheters good that as strong Rick, and well to respiratory which nice starting QX our we to those as business very a numbers. is mentioned, had closed also year. will suction improvement that recall and in flipside particular, then some Joe are

those at of So beginnings will much tougher comps year. pandemic the last be the

Rick Wise

you. Is already to right the the as to say? hospital seeing. specifically, aspect, appreciating second better that should trends Got just in way in so see On-Q ON-Q quarter the because you’ve the recovery we emphasized, And of you’re

Joe Woody

versus one correct. orthopedic can hospital with at of somewhat it that That’s level, that ways Yes. are I the evaluate ASC think, evaluated aligned procedures Yeah. sort we of is, investors And as the comeback that, that. in we

Rick Wise

always just is systems Avanos come something pipeline sell, it sort leverage internal an comments, floodgates, why potentially that you terms I’m potential valuations clear too I in and and have haven’t outsider, mean, whatever into intriguing, or about robust very what felt of sorts fascinated. timing, now of you’re or faster. growth be your back And of that and two always Joe, it’s release to it. until obvious, I’m exciting, analyst, understand us mean, better right was it M&A to always the as What understand Got from help even aspects. or pipeline. about you Is or I And and it’s just recovery you your which -- moved very might the people to I I’m appreciate an to as you. go willingness it’s IT to know, things obviously, very price, just complex trying But outlook? I it I waited all been could high? want

Joe Woody

told Yeah. been and we investors, It’s on we we subside. And some more of where that’s really pandemic our disciplined approach had highly focused. be execution other would focused and we’ve to that what waiting our obviously, for issues the

sort high we’re But we’ve it, delivered of, last now that call six in think over let’s the gear. I quarters.

valuation, privately a We’re we are in the of that that private of having creative. we kind hanging our see potential different that’s hold same and with terms you for Where look them multiples And want of of the us that equity, around the with deals. be talking because going we’re back that not we not enhance have and of kind places to will in couple businesses areas participate some to owned at to to targets. business

So forward think -- with we good come come past. we’ve value, in I going forward been deals, whether with do we’re with the when doing to

Rick Wise

Got that. on follow-up you. to just And

much across should more that could year of the you So or this that line hopeful optimistic one or we Thanks. too get finish is be doubtful? these cautiously

Joe Woody

and for these. too. a That’s got hard sure would a never pushing one really track to I good we too mean, But do I -- do land. you much. see We’ve could predict love we to record. where I’d we’ll are

where we at end land the see the year. we’ll So of

Rick Wise

Sounds great. Thank you again.

Joe Woody

you. Thank

Operator

Please The next go with Marissa ahead. Morgan question from Stanley. Bych comes

Marissa Bych

on and next overhead for would like further $X to other to back any of last transportation this seems of $X higher you of than impact of It consensus much. very quarter million million the lingering margins, push thanks really wanted and the kind in about was the that COGS but from year was question. morning just Good else relative total call gross Thank go I’m a or taking and there the to higher relative like out? you sorry COVID-XX expense kind COGS the transportation were anything NeoMed little one-time I impact. impacts that to What Hi. estimates.

Joe Woody

just I go and make going bit little positive a I the talk ahead. want of Michael, But to NeoMed, a comment about to about is think, this. the this side

Michael Greiner

Yeah.

with $X about related the revaluation third that that a million So had that question. just at little to dollars manufacturing the and price we impact absolute we that bit we NeoMed, if talked another you’re related Marissa a the of looking third of variances so had then Matt’s about for to or

So value but of then that match, layout a if there that you some higher was COGS the three absolute million was standpoint. and miss from those are chunks and $X primary up

Joe Woody

why the And just side it. on of

[Technical But imagine then think ahead the These the thing to be China XXXX. California converted can supply half we second in chain. ports our crazy going things you right prices payoff do, expectations the if will of NeoMed I this is on have right are the a Difficulty] and in customers now. and

absolutely that the but obviously So think transportation. as little happy QX, bit about in the for is not sustainable not second thing subside do half. of We in in a doing quite of much that growth right but more price it, have more to may I business, the the

Marissa Bych

would on Great. my Okay. COOLIEF. one just And be follow-up

more accounts is the into reacceleration thank relative can touched much. in by a April the more in this. or you accounts any you on that had? how very You March? growth you’ve And saw detail driven to existing in growth strong But improved that give us growth new that on the has of you more COOLIEF And

Joe Woody

thank It’s Marissa. actually March Yeah. from It’s you, Yeah. into accelerated -- April.

even we’re during we the did So And year number a seeing continue. pandemic. sell of consoles capital last that

imagine, new the there’s But and of patients backlog are spine but of a in as customers. accounts osteoarthritis new the with are knee even coming there through. -- also new coming our So with technology, you can

two really just And some obviously, we’ve have we it’s customers generally, done well easy as but new things. well. with So then, parables,

question. we’re ready I think for the next

Operator

next you [Operator question. comes Mr. open question go your Cooley, with and Chris your from Instructions] ask Please is line ahead. Our Cooley Stephens. may

Chris Cooley

am you. the Thank Congratulations a solid you on Can apologize trunk [ph]. headed on quarter. I

talk a year. from some perspective, me, two at conservancy clarification thinking this Just about first, versus quick about transition wins point you your could

predominantly that commentary about these be showing strength the to clear businesses, that obviously, really related centers portfolio some want ON-Q Just to now. plus

efficiencies kind think op just guidance you Is longer know Just distance and and the when pricing to clarify the of targets follow-up still could seen about you bigger efficiencies. you. is talked characteristics, term XX% and these on the want longer previously? [inaudible] about were operating margin you that about that from we we that’s bit flow Matt’s into kind op as term I a now, giving term, think greater there conceptually IT preclude especially things structured you stepping businesses versus we as here new power up striking cash Just systems, of of have Thank picture, margin just one you’re well? question with longer question to us my type about greater think now, business margins to for cash where margin wanted thinking flow not gross just think -- just little anything earlier question that? operating help realizing be and

Joe Woody

some let But, and are about. margin couple Chris. about then flow to things excited a respect I’ll the be a some one, things of the and things, generally, elements rate. Thanks, about to Leiters talk And we’re happy we say Michael following the ON-Q cash and at ON-Q, continues significant with growing with that

adding We’re new customers.

we wise, the medium a had is, same percentage As business approaching actually now. managed long-term we’re that under level that,

we’re again, relationships orthopedic the is channel and used putting to ON-Q about And time. that that solution elastomeric We that the are beneficial getting and that pump up of and where, starting in looking a can partners over Summit excited sign those greater of to customers for portion us of growth want the place electronic be we’re pump. very that versus more there out see to

in So I heading we’re direction. the right think

about I the that’ll be hospital think faster, want electives to a us. the plus Michael, back come did to for that. in And you extent talk then that

Michael Greiner

Yeah.

is where Just that believe term the half the back the on we have opportunities. longer and revenue the ultimately in is We selling said, being quarters about that where term in we high of we’ve fall now we’ve some That think three smart for term. that, longer year, is in in margins, SG&A that that had a may spends marketing live being XX%. talked should longer row we

QX or we’ve where QX some high the higher tailwinds into a We’ve is talked bit year had see these that the half plus of may temporary SG&A of things we got going things. for Similarly gross these about. a temporal where little so points basis we’ve of And back margin, than XX%s. the XXX

in quarters maybe do we QX anticipate greater or being or QX XX%. both So seeing than

where there key pieces in pieces few M&A, is, these the how building as as expenses, can about fall, opportunity in marginal to new your around operating around, that, issue operating to itself we Chris, continuing how lends probably, smart you of higher yet, into we’re an mentioned various think margin when some quarters a have where the the we than margins, but take more So given a well LRP. that ultimately as together Joe organization? next longer as as question of even that gross can even want and learn To margins well what there perfectly these holistic as efficiencies I view, the with three-year to see this we get it better could fit than previously. we over to But is term. be spend talked some out all we’ll lay that we’ve in have

Chris Cooley

much. Thank very you

Joe Woody

Thank you.

Operator

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

Joe Woody

just thank everybody expansion attractive margin priorities that cash portfolio the committed our continued want for environment, executing we’re creating growth, positive confident you. resistance in and interest we in combined we’re in deep an are value. and Thank markets flow uncertain today free with XXXX. I sales And I’m well your to while we detailed to for shareholder Avanos. in

year. you. look to that Thank forward I continuing So to throughout the out report

Operator

for Thank presentation. you today’s The now attending concluded. has conference

disconnect. now may You

Avanos Medical (AVNS) 7 May 212021 Q1 Earnings call transcript