Earnings call transcript Q4 2022

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Operator

Good day. And welcome to the Avanos Fourth Quarter 2022 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 questions. [Operator Instructions]

is event this note, being recorded. Please now Scott Galovan, would like and to to over conference the Senior turn M&A. I Vice Strategy President, Please ahead. go

Scott Galovan

my Woody, to and everyone, to conference and President, call. morning, and CFO will for Chief Michael earnings us. Good be Greiner, today Joe Vice thanks full year Officer. welcome and XXXX Avanos It’s you Presenting fourth CEO; quarter Transformation joining pleasure Senior

execution provide our additional review current and our an XXXX. assessment for quarter our fourth detail quarter discuss and will Joe and and business Then of assumptions. planning full the XXXX against our will objectives key year environment Michael our share regarding

our A We for the is today’s website, will call of on avanos.com. the finish with Q&A. presentation available section call Investors

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

statements. from Actual materially results could differ the those forward-looking in

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

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

over Now to I the will turn call Joe.

Joe Woody

morning, our year And XXXX. Thanks, operational Scott. the Good joining quarter review for full and everyone. and thank for us to you fourth financial results

execution from months operational very are nine our our results, which with both pleased We solid commercial on fourth the teams built and XXXX. of first during quarter

strong, demand financial remained impacts executed disruptions control we results. for environment well, chain our mitigating products dynamic, what remained persisted, could although, supply Although, focused manage. disruptive we and and we the The on to our and macro

supply will and XXXX headwinds, product availability We continue pressures present challenges. anticipate cost to pockets of chain

getting of to the on back As things customers. as matter meet our is patients the needs we that primary focus always, our

share the both X.X% growth cash For representing million, of negative adjusted exchange. We over the and total per growth, sales achieved we foreign organic XX% impact generated free of excluding $XX quarter, and of earnings million $X.XX of $XXX flow. diluted

year, of OrthogenRx grew earnings of full and diluted the $X.XX. we per including For acquisition our share the delivered of XX%, adjusted impact

a presentation. the gross will and in later the our ratio priorities margin in of against was for transformation position address with the confidently Michael X XX.X%, out results JPMorgan year execute year a these conference the improvement year we bit prior versus at the XXX-basis-point and under us ended times. These the a I we laid to Additionally, January. priorities leverage

will I XX% at and Digestive to constant our level. American next discussing minutes currency supply continued a maximize double with nearly by half the North across category The improvements growing allowed our NeoMed digits, positive results topping few grew trends conversions. XX%. Now portfolio franchise spend as our the the adjusted -- second basis, again Health On product product us ENFit

supply latter legacy maintained double-digit product the the Our quarter. fourth growth robust with mid-single-digit growth alleviated in global feeding in of its as North America part enteral line constraints year-over-year

X% by catheters X% prior overall, the our versus declined grew Even business year. closed though our respiratory suction over

viral full impact negative our in to experienced the for we Care for fourth systems fourth the grew quarter, quarter the catheter year, third and noted we As with the business excluding of closed season foreign specifically exchange. our and quarter improved In X.X% just X% our the flu under Chronic suction early total, ordering trends uptick. in patterns throughout pediatric like call, due RSV cases

portfolio. Pain the to Turning

COOLIEF and demand prior both growth the and strong our double-digit For low compared for the acute by single-digit in in growth products during solutions pain quarter, Game experienced the year. quarter. the our with pain, coupled mid-single-digit in as interventional we Ready remains growth The evidenced to sales

particularly about the headwinds, the supply reduced, our pressures by some experience needs these of to resilience to category challenges, continue supply part staff our Despite brought team’s factor headwinds first a surgical solutions our ensured has within throughout XXXX. we we of shortages pain ongoing kept to of our that anticipated, expect available remain Pain and levels chain procedure as are hospital that elective meet have well the customers. as As

company’s portfolio OrthogenRx patients and Separately, self-pay with the on of marketing providers. unique favorable exceeded parallel, support a strategic our expand program, injection on XXXX allowed focus allowable OrthogenRx’s In maintain customers and initiatives to five to access coupled by drove us our product expectations service three relentless and pricing in brands differentiate key delivering a strategies. portfolio. to the patient within our our injection

five In self-pay will our XXXX, we for growing address OrthogenRx to injection program patient the innovative access market. customers expand our

deliver steady also will with customers. average for self-pay our pricing sales injection We expect price XXXX continued three volatility increases or program. the stability reporting reimbursement There for to discipline be and accurate and be focus will a OrthogenRx in ASP

our grew X% negative management acquisition. quarter our and the In the business of for excluding contributions in pain exchange year, foreign from OrthogenRx X.X% full fourth total, and the impacts

product we deliver and plants both end continuing quarter. at inclusive of the on to the was Gross year, of during XX.X% margin in margin and set incrementally to our mix, gross on fourth the strategy XX.X% continue efficiency full our the last forth year. fourth for deliver the We commitments OrthogenRx and by manufacturing driven quarter SG&A favorable

back we quarter. year out third Separately, we than ended orders anticipated the $X of higher slightly the around coming million, with

throughout Additionally, and cautiously under current XXXX. reduce increased that meaningfully have optimistic are just to we back we can back $XX orders million our order

Turning to SG&A.

full as full and keep SG&A and commitment our revenue to when numbers he additional will our respectively, the XX.X% exceeding insight remain revenue We of as XXXX planning this metric XXXX assumptions. quarter a under discusses and provide XX% year. percentage for to enter of SG&A fourth as XX.X%, Our a Michael we were committed year percentage financial

M&A. free repeatable capital flow to via two consistent Our to demonstrate and final priorities cash deliver deployment XXXX were for ability our

flow supply chain and inventory For the despite headwinds. free fourth continued million quarter, of we generated cash $XX

consistently has our in Our free flow ability priorities growth allocation and support for to cash XXXX our identified is strategic critical other been deliver initiatives beyond. and capital to and

While since remain been active and the potential have in we with with of our engaged in our unable number existing enhancing another to tuck-in we dialogue targets are leveraging acquisition OrthogenRx infrastructure, topline synergies objective of announce we a early disappointed, growth. generating commercial XXXX,

our enhancement. recent of approach that NeoMed, early XXXX. of and We long-term have is around in fit, success top Game critical our growth the most that Medical, diligence, device of averaged double-digit and Ready On for worth OrthogenRx, discipline in acquisitions been disciplined and evaluation due believe ROIC our strategic it is ambIT noting Summit

Quickly summarizing XXXX.

centered to organic objectives on in our were primary material cash flow. and growth. profile Our our ability improvements making our meaningful around demonstrating free deliver margin consistent delivering OrthogenRx strategy, gross

free we for the points. growth improved delivered effectively middle expectations. efforts. approximately Act greater which the basis solidly by internal primary organic XXX transformation objectives, our longer laid cash the our $XX Gross cash range, refunds, delivered With flow, flow our excluding excluding than $XX groundwork against million of term year’s the as in our exceeded CARES last of million margin OrthogenRx noted free earlier, impacts unusual FX, We of or

substantially four priorities our in described years optimize JPMorgan our We transformation would next three I the these opportunities enhance over that efforts presentation financial our that January. key profile. outlined and presentation, In in go-to-market

improve categories we meaningfully right our of transforming attractive and profiles win, to strategically capital organization, and allocation portfolio our where our enhance focus commercially cost include, efficient to optimizing have priorities to taking continuing margin management to operating path profitability, These additional and measures on the our ROIC.

in his I Now these longer turn Transformation who the will lead Officer role these expanded the as Chief over and elaborate to both will near Michael, and efforts. call will on goals of efforts term help

Michael Greiner

Thanks, Joe.

we build our and transformation very over execution past solid on embark excited foundation As a to journey months believe upon. XX to are you our has created the noted,

our efforts, I full deeper quarter provide and Before will fourth to diving transformation into additional results. year color these

reported Total EPS fourth for $XXX respectively. and diluted increases XX.X% for and year the $XXX quarter quarter was sales full XX.X%, and Adjusted the $X.XX of for and year. million, million were full the $X.XX

our a margin XX.X%. at of for on noted, the delivered of and already at gross as year as full we year and full with percentage SG&A Additionally, margin as revenue commitments, percentage a both Joe XX.X% SG&A revenue gross

executed hand and on the free generated ending and year $XX ratio flow million also of over leverage million our successfully cash of less during cash on $XXX a OrthogenRx than strategy the We of year with X.

closed Chronic with XX% Excluding the sales the negative grew systems and growing catheter of growth over Care suction by foreign impact exceeding for exchange, our Digestive X% almost Health X%. quarter,

fueled Within nearly to grew Health our X% strong ENFit of by portfolio, Digested technology. globally, conversions NeoMed customer our again execution

down margin our noted almost third business away our return should Although, from as profiles. happened Care sales as Oral with suction were call, to unattractive intentionally catheter what we conference our contracts quarter during walked we healthy XX%, closed growth,

the Within foreign X.X% Pain and quarter, for the grew negative OrthogenRx management, we impact of the of exchange. excluding contribution

Our interventional grew our acute X% a pain little X%. pain under growing business products with

products. we As digits quarter, Joe double financial summarized in offset pain Game both for quarter overall partially and system from and our revenue cooled surgical decline COOLIEF solid water another by Ready contributions had positive OrthogenRx. grew earlier, our RF a the

last adjusted EBITDA $XX year share year $X.XX to compared ago, a to diluted compared million, net to per $X.XX and million totaled earnings million totaled million, $XX of year $XX $XX translating adjusted a Adjusted versus income ago.

basis the for points adjusted the gross to was quarter. last year, XXXX adjusted year improving a summary, company, fourth while compared exceeded In EBITDA margin XXX year this with XX% in margin strong

even we M&A adjusted while towards further sheet, balance operating EBITDA, $XXX on after our share strengthening repurchases. targets, EPS internal our over allocating Additionally, diluted million delivered and and profit

execution JPMorgan the As embark us we transformation the conference. recent Joe outlined to noted efforts earlier, our positioned on has at

growth Our Health portfolio, our into designed portfolio interventional in Digestive transformation pain. and over time shift cornerstone product our are a to priorities leveraging product families higher

priorities exceeding million. while EBITDA our cash with enhancing profitability free are margins flow $XXX rightsizing of structure aimed Additionally, annual ultimately our these generating cost and operating at XX%,

against Our three-year our efforts visibility that that control. organic in assumes we have and primarily transformation strategies are

leadership Chronic and promoted Holbrook a to focus synergies impactful Officer, While decisions with still have within teams. was our commercial Care Pain combined and made leading early, realizing Chief Commercial we franchises changes. Kerr already, efficiencies on including some our

my critical transformation management expanded include leadership to this senior role was Additionally, oversight through initiative office. over the

profitability. we acute smaller our products category in internationally, product would that certain announced selling also cease insufficient pain We categories with and

low with away As contracts margin walked customer as noted from earlier, have XXXX. exited we we also

over decisions of win up will strategic markets or or categories these in loss not were result profitably approximately these an run. grow annualized we in $XX While million, long set the to revenue

initiatives savings will costs with cost Our primarily these associated product categories. stranded offset

to will by anticipate in XXXX. achieved XXXX, In $XX most approximately realize be million $XX savings cost which million $XX gross to million we of expect of in total, savings XXXX, of

the at Convene of will Day in Park Investor refined our a on Avenue our We June location XXX present held City. at program to XXth York view transformation New be

uneven least margins rationalization Although basis product year, will management the improving anticipate be by XXXX transition initiatives, and XXX an points. our at given we portfolio EBITDA and operating cost

earn between while Separately, total one-time the we free per $X.XX restructuring and between cash cash expect delivering $XX and million to associated the adjusted $X.XX XXXX, excluding to million. $XX at efforts least costs million for with expected diluted of flow, in share $XX earnings

annualized Finally, in-year of the digits. revenue company anticipates to single million rationalization product portfolio decisions, growth including the organic comparable be impact low the approximately $XX

the the I and each to what first progresses confident back off year these excited quarter of our similar starting XXXX. we in of slow on improve the As earlier, into the are am experienced transformation as embark we half I we mentioned pacing metrics to with and on will year, accelerating journey

consistent the proactively over remains environment is specific and XXXX, execution appropriate half and the global commercial this and XXXX cost believe of and structure. organization, to throughout and macro our back given this uneven, current strategically our summary, optimize we time industry In considering portfolio

line please Operator, open questions. the for

Operator

first Rick comes Wise ahead. Stifel. [Operator with today Please Instructions] The question go from

Rick Wise

Michael. Hi, Joe. morning, Good

Let here. me -- a lot to tackle

going am the to commentary. transformation I with that start think I

better you Michael, but you just year? reduction by I you wrong, it again, went whatever could words, million to positive, to et -- correct hear cetera, are what’s $XX involved, for going portion sorry, the other next start. how sorry, understand be -- a maybe correctly, just And Sorry where I did this in them, extent, is us were they are help and large the And just to quickly. especially going come the to quickly inflation, net costs long early pressures? you from, can you if make my am will cost of say offsetting cost year and it’s what the at this part, I the and get

Michael Greiner

Hi, No. No. Yeah. okay. That’s Rick.

$XX of million yes, million in and So, the in XXXX, majority $XX XXXX. approximately million a of remainder $XX amount, between

your question. of answer first So that just to part

Where of savings is things. majority a these are mix a of from coming

will We be some outsourcing opportunities.

of contracts. rebidding lot be third-party will We a on

Commercial we Holbrook, announced resources was be the eliminating Kerr of reorganization a of roles. naming There third-party will duplication Chief through the We as Officer.

Some of eliminated. roles been those have already

in continue the just and couple also with we path other that will on the at years We trimming areas as looking have last of T&E done well.

take of like right without the to year figure right take figure will majority outsourcing out a into disruptive things do Some XXXX. of partner so and back that those of until to way place out won’t half the to those the this savings being

Rick Wise

you. Exciting all stuff as unfolds. Got it

your Your shortages maybe supply I the on in the chain -- back increase particular the you drove back what now? fourth optimism working and year? that higher again more -- quarter it us what’s supply don’t on expected and Is than a is know, product order through or back early situation, give could it order, color resolution little quarter this

Joe Woody

Yeah.

Michael But we and quarter, as reducing the So, a shows job obviously, to back of up is it that the Rick, Joe, this nice but again. end well. and then comment built our in did at welcome is the backlog, revenue,

to half. now. think We quarter-by-quarter. it’s will pretty in close come second down it $XX-ish though, down million It significantly the So will come right

right moment issue. areas heavily tieback It’s now. weighted just particularly the the of there’s at to three But health and

and building be not I until Europe running think new quarter. It but up the DuPont’s a will that everybody knows plant. fourth in

of So it. that’s some

going is producing components have and impact COOLIEF. stick case, does but ON-Q are demand with And that’s of quarter of where there revenue our then the for could actually we and us the electronic third catheters In ambIT to through also issues there, underlying across are this year. we supplier still a the be more Board that that

when why similar a rearview we about that’s do look the in talked progression will QX Michael this see and somewhat said, of we that that that we to Now year. the by most out, time be mirror to has get

that as of build But the to some half XXXX, to consistent listened eliminate as believe mid-single-digit ambul growing second a [ph] in element I can portfolio. stronger we Michael, we the and make than will SKUs our is enter -- obviously, into transformation the to and the business further be what changes We the ourselves first.

Rick Wise

Got you.

that back you you Stifel the me. Joe, you mid-November potential disappointed your thinking your first there the chatting in pushed Investor to by for Michael you longer. I no, here heard of the I thought two potential Day M&A the in were last that to said was given time Just timing see sometime I now should happened bolt-ons today? mind those hoped, out something about the half. comments track on with that How hadn’t you and and it’s as Conference, had Is at that, been you would or lines the imagine, are think Healthcare

going are what’s Thank Just and out where on you. just there you now?

Joe Woody

Yeah. Yeah.

And do have the think a transaction built even We November. place New robust to in half the the in further year, think, in likely of too we I will half pipeline, since second bolt-on the of that in prior the it’s the were do think that in year. very near-term. last at second So Investor the have first together, we York maybe I so Day we will a not

to want We of still Health a our recovery have we been couple focus items and more the focused Pain on that pain a we being area, do, lot but of orthopedic have we in in are Digestive past. the than orienting again,

we about So good really feel this.

a have with transformation. the on lot obviously We

any phasing So missteps of of a imagine, you and as can in lot a lot looking not because requires at we are work. also execution, wanting this, carefully

I M&A track a for said, we are an good think in But record. be and to going demonstrated we have excellent that position

these time end for enhance that parts XXXX extent have powder us to We to year. given that’s to profile one that go and are out the as and growth and of plenty at the conduct outlook better they to even especially did two give we of and going going an of the well,

Rick Wise

much. very you Thank

Operator

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

Matthew Mishan

Michael. Good Good Hi. morning, Joe. morning,

Joe Woody

morning. Good

Matthew Mishan

Chronic Could spins Pain, product does still the of take also is you Could and of? help coming potential place that are And you out then guys something or you that divestitures or that -- $XX between guys where at? -- exits does is Care looking the quantify yeah. million the

Michael Greiner

Investor So which are we two is to we what into range be. we at of as these that coming points. now, more still impact Matt, a details giving are would exits because right are partially in Day will place get where have full year relationships the why from, we

an these to we over some hand of So existing relationship. distributor may

altogether we due availability. of product to Some just out get may

out relationships. get may other to just we of Some due

So the Investor clarity in we around on split the into will of first details have question. to we get that but are yet, not going that detail more Day

the question, mix. To a it’s second

the bit value get in of some to the aren’t just getting would products out for effort be we them. of worth deciding we because So sell, just spend stuff of to trying of little are get a out wouldn’t that the of

those, it out where just divesting to it consider of categories. we categories believe there’s would of So makes but do necessarily take product real value sense those exit there place other we doesn’t product and

Matthew Mishan

would Okay. an that or a I extra then pulls two, looks Excellent. over about full just that $XX OrthogenRx, year million on XXXX, including annualized basis. week a taking step back, be for well, think, for like coming inorganic And it for an out XXXX from

what of XXXX as for kind the change? the some expectations dynamics of Just are that in

Michael Greiner

of million, the there. I but a a of about you million, it’s $XX in strategic right. are doing second the talk little directionally think, will $XX south what Joe aspect The Yeah. we are

Joe Woody

in off QX and and the see this the and the benefit level good And for reimbursement think first do to see are still starts a and the year on second outcome half really categories more us GenVisc level, where on year-over-year are we as that’s QX, to TriVisc we and just that a level in a business. call level. in and level a that I we the we the half And that’s going strategic of for

we we And this make the it’s single-digit margins. the on it of basis think a upon just north be excellent really didn’t a our grower, mid-single-digit a but to reminder, low year, as acquisition after to consistent based going thinking contribution do was

orthopedic Game around see be center, the fit is a setting, importantly, more forward so going can And that our going you pain the focus pairing with to in surgical pairing and obviously, and it total in of more ambulatory back in for well, Ready that, the and to office obviously, getting with faster case just COOLIEF recovery knees up of patients leading to HA.

Matthew Mishan

last the starting you on it down come Okay. the be of thinking of quarter the course about we quarter How through point the then Is a at the fourth year. year SG&A, high point then the SG&A through sequentially or and through a And started good should decelerated the first then in and year? XXXX? ramp again of course course does

Michael Greiner

Yeah. million when to to very QX there $XX the similar. That will QX between be of as the The being cost, of some very similar. movement out, feel pacing but said, may will feel some costs pacing in-year come these

the QX QX, whereas And QX, will that, will than will and then on come and will point, QX. point revenue a a down on, QX will it dollars be but in high higher have as Matt, a in have and solid to even-ish your point be year low goes actual

high net have starting the obviously, in that, percentage you therefore, XXs, into of XXs, as QX. And in percentage going low SG&A down QX mid-ish have for sales XXXX, your you

that it million. about just the some pacing math, savings Some of of of it’s is just talked we $XX the the

Matthew Mishan

maybe one, last then I missed And just it. Okay.

out of margin gross are XXX improvement kind what you XXXX. of kind margin, for know put in basis I the points Just of operating margin in XXXX? EBITDA your expectations

Michael Greiner

Yeah.

was that purposeful. So

gross not We if a the should level sticky aren’t not be higher sure range. get XXX where in SG&A we is to XX% points in XX.X% what exactly if and lower, little basis are from, do this going should the know bit be a we margin

of some XXX categories, basis come lower from. when will So and shift we low how that margin exit product on depending margin again, where points these these -- savings in gross comes

trying have cute June. trying So not know We we be just we are basis at thoughtful. will to points share the I -- we more be op XXX on information at to are Investor in to EBITDA. Day that

Matthew Mishan

Thanks, Thanks, it. Got Michael. Joe.

Joe Woody

You got it.

Operator

from with The Stanley. Drew go ahead. Instructions] Morgan Ranieri [Operator comes next question Please

Drew Ranieri

Michael. Thanks the Hi, questions. Joe. taking Hi, for

the get you the moment I kind the kind on and that maybe of just was really company, kind years of structure are a in low side and equation But like can that it lot on right-sizing can you cost transformation really because of feels getting looking details and for there’s a Just business details of a understand of with. curious place. on kind a just few or the how been the talking of give side, Avanos going But back eventually if thinking side about more at been that just what has I you of of expense will it’s the kind growth grower. we single-digit

So growth I’d about and over more are months, months, XX like you about XX the hear accelerating months? XX thinking how next improving to

Joe Woody

so will obviously, I could drop-through growth little with and up set more Maybe to I and costs. Michael leverage. want that the bit But that foundation we we pick the of think get a some on of start

do Care, And it going in at of portfolio what’s just if I basis. double-digit see a a of and the on the mid-single-digit look NeoMed rest to growth of hitting lot around almost growth. spots mean, you global really you help go and Chronic consistent on XX%

that be back. issues. through. We sell that would could we right each of now are quarter quarter probably There’s this or come going backlog another to $X million chain still be limited starting to It’s supply see so the by year a some Pain

going and Digestive emphasis compete, good been on strong Health. we areas then, we valuations of said, some also, doing have obviously, we recovery, have an management, we so pain know in we acquisitions like before are a line orthopedic we And to to where sight and and the

be it. think to enhancing we going So that’s

as a all but the the starting growing really half, a normalized if obviously, we company. the as we half, to with do first that feel back mid-single-digit we sheet through, going not but you into to in have situation, we in coupled business, pull powerful move like XXXX show through size show being the organic of in And balance the second have that

for together putting we it would pharma see the us, now not where anyway, think kind we of lot we accretive I been the like and So some, a larger in in strong call, flow is a scenario of to have and see many but like cash us you deals when and EBITDA opportunity market, gives things creation that being, complementary the bigger also doing, increasing, that you value generally do what growth. cases see than the to medium-term

So I maybe will let with the of some that, costs. Michael hit

Michael Greiner

This and we say, there’s cost get has restructuring for effort. and to are and sure do portfolio. with But this I good are -- would by cost that’s a other at our messaging, of this that No. the look going you to Joe’s when from we doing not a things. with just a if we out to takeout what is requirement, a the just nothing way, table. are some to point, a takeout. Drew, byproduct internal effort. reporting byproduct And have opportunities, is obviously, Those all Yeah. -- cost our got portfolio rationalization/optimization a oh, of

Joe Woody

time enhance there. our by that the of other maybe things New some help get intention there the profile to moves that York Our and growth portfolio June, are in are we related further to make

we it. So excited pretty about are

Drew Ranieri

revenue maybe any are doing? think about how I Got the for but Pain, [ph] should get weighting be you. a And range? to to us it. XXXX, for single-digit kind you Chronic of million growth $XXX about to low at know want we thinking if just XXXX, into you XXXX with just rate, the the million we little Thank your of with to XXXX? or for understanding bit there’s least you more should the on right what be that help with like clarity And don’t way product the Thank going guidance, $XXX reported think of around exit cadence you. for specifics is can Care

Michael Greiner

Yeah.

think $XXX probably of we little exits. on timing you are higher feels [ph] the the million the yeah, right a of $XXX million, some just I like to are the think range. -- $XXX-ish based million But, I than

correctly, math Drew. that did You

And relationships. to product We of these a do so, the upon device timing customers some those have some believe later. standpoint to responsibility of of these these some incumbent sooner, so again, medical choosing we and are is we do from can some we of

There to of two for off hand of run in work to that, few these with of opportunities categories some and even distributors by dollars. year, are some assets years one some them inventory maybe have a continue to our

that, Drew? range are we very stated. I So is But Did there’s things of your -- on range working answer a much still through the timing. as broadly appropriately your math

Operator

next question… The

Drew Ranieri

Thank All you, Michael. said.

Michael Greiner

Thanks, Drew. Yeah.

Joe Woody

Drew. Thanks,

Operator

comes ahead. go Securities. Turkaly JMP question next from The Dave Please with

Dave Turkaly

Great. Thanks.

you new Chronic that, sound love mentioned one position to You you -- organization. mentioned some kind intuitive the highlight doesn’t you and sense? areas could like maybe of of the and where the that CCO but would I’d and Pain putting opportunities some be that there the case be why those under see it makes that, opportunities and most would synergies again, that completely

Joe Woody

Yeah, strong us. of been way also the service. that’s a taking opportunity for piece seeing and customer there business where at look Really, areas and various returns we areas Kerr’s so are strategic marketing, a headcount are areas spends actually a he of the lot in like and the

the and looking to also our cost the now. also channels business it help addresses deploy channels our of his differently right expand of sometimes somewhat at There’s and utilize XXXXs He’s opportunity some sales. of in cases some

plans. are So areas all that those are into Michael’s areas built

Dave Turkaly

the expect at XXXX, then EBITDA Got $XXX So, million, the that? do cash to flow made for exiting north XX%, the line comments three And the above years? of on say, of that you is end that it. what free like, you the is time

Joe Woody

XXXX. At That’s correct. the Yes. end Yeah. of

Dave Turkaly

Great. you. Thank

Michael Greiner

the more to have will question, we that. Dave, on that specifics to some around pacing get

that XX% we is this fourth we One at full XX.X% exited year of we at providing exited quarter the the year, signals, at obviously, the margin. did we EBITDA Last XX.X%. and today quarter fourth are year

pacings to these We for our not going we on how produce are the we are are those XX% basis, Our -- the an But of annual cost work this QX, not portfolio will some these QX in manage optimization, do the text basis. offsetting opportunity, numbers XXXX. just ultimately, us, as right?

Dave Turkaly

Got it.

Michael Greiner

you. Thank

Operator

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

Matthew Mishan

you. Thank

I Just one follow-up. you… just wanted

Joe Woody

Hi, Matt.

Matthew Mishan

a you little just guys talk bit NeoMed ENFit. opportunity to the wanted Hi. I about and

in it I how for of, again, of this like years, significantly like you the the are cycle, product of to product has some much as kind are mean, last of you is the profitability then this XX% are is you at to well? grown there? a improve doing kind conversion this two that -- Just help where how going year And over more initiatives

Joe Woody

Yeah. I I And about have above. of NeoMed that, think, the we had script and for converted. across I we the the we will globe a continued acquisitions year ENFit made strong being mean, yeah, with that all another say growth in line see of the double-digit the

those build reasonable deals can get pay Digestive right to we up can good at growth ultimately, type are our we targets, aperture our really get single-digit it’s for it of and and we for focusing fair looking to where on think, Health and a deals. I prices NeoMed high where think organization becomes of more get gross type in us where opened and have synergies, we why a win we strong strong and margins

strong for a been run. Obviously, home it’s us. CORTRAK So was

there’s what benefiting moving with for doubt home NeoMed are Center Ambulatory We the sort Surgical and of run absolute has been into But was that us. replacing an acquisition the even no ON-Q. ambIT

it all the and our opportunities I don’t NeoMed including thanks just efficiencies you But Michael again, going manufacturing that if -- there’s have out, want are no, with transportation around everywhere, And does that. for anything, and both Matt. to ways add that pointing we know to market.

Matthew Mishan

how do like that And much what are think is inning in of... you conversion, you kind

Joe Woody

like… I

Matthew Mishan

Yeah.

Joe Woody

can’t grow be at that. the seventh of we mid-single-digit inning, that XX% just the just from then transitioning some time like beyond I for will think still XX%, you remember, forever. we It’s eighth to quite north but our

Matthew Mishan

Okay. All you. Thank right.

Joe Woody

Thank you.

Operator

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

Joe Woody

to like business -- the and hearing basically you as for We across remain interest continued in are demand I’d the our everybody strong. thank fundamentals products strong. us, the for are the just from try Avanos does

XX us for the and results on are today. are market January time are results deliver control free sharing in June manage transformation we in this We to we XXXX that City. our in your back built and we transformation think for what said XXXX. can forward growth combined detailed we the confident Day commitment in priorities program, have and margin with position look and detail focused markets the meaningful foundation, New generation at flow we portfolio -- sales our as to leading on the about to Investor lot expansion in cash We Thanks we program more a York XXXX

Operator

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

You disconnect. may now

Avanos Medical (AVNS) 21 Feb 232022 Q4 Earnings call transcript