Avanos Medical, Inc.

Good morning, ladies and gentlemen, and welcome to the Avanos 3rd Quarter 2025 Earnings Conference Call. At this time, our line is in listening mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, November 5th, 2025. I would now like to turn the conference over to Mr. Jason Pickett, Vice President, Corporate Finance, and Treasurer. Please go ahead.

Good morning, everyone, and thanks for joining us. It's my pleasure to welcome you to Avanos' 2025 Third Quarter Earnings Conference Call. Presenting today will be David Pacitti, CEO, and Scott Gallivan, Senior Vice President and CFO. Dave will review our third quarter results and the current business environment. Scott will share additional details regarding these topics and update our 2025 planning assumptions. We will finish the call with Q&A. A presentation for today's call is available on the Investors section of our website, Avanos.com. As a reminder, our comments today contain forward-looking statements related to the company, our expected performance, and current economic conditions, including risks related to ongoing tariff negotiations and our industry. No assurance can be given as to future financial results. Actual results could differ materially. from those in the forward-looking statements. For more information about forward-looking statements and the risk factors that could influence future results, please see today's press release and risk factors described in our filings with the SEC. Additionally, we will be referring to adjusted results and outlook. The press release has information on these adjustments and reconciliations to comparable GAAP financial measures. Now I'll turn the call to Dave.

Thanks, Jason, and good morning, everyone. I'm pleased to report we had a successful third quarter as we made great progress on our key strategic and operational goals in Q3. I would like to share with you our strategic imperatives, which guide us in how we operate the business. Our strategic imperatives are to accelerate growth in our strategic business segments, manage and mitigate the impact of tariffs, realize more operating efficiencies, improve or divest underperforming assets, and acquire businesses that are synergistic with our specialty nutrition systems and pain management and recovery strategic segments. Let's take a few minutes to address each of those imperatives in a bit more detail, starting with our financial performance. Driven by the great execution of our commercial team, we achieved strong growth in our life-sustaining specialty nutrition systems, or S&S segment, with each of our S&S businesses delivering double-digit and above-market growth in the quarter. We also showed continued progress in our opioid-sparing pain management and recovery segment, which posted positive year-over-year growth in the quarter, led by double-digit above-market growth in our radio frequency ablation business. For the quarter, we achieved net sales of approximately $178 million, adjusted for the effects of foreign exchange and the impact of our strategic decision to withdraw from revenue streams that did not meet our return criteria, organic sales for our strategic segments were up 10% compared to a year ago. Additionally, we generated 22 cents of adjusted diluted earnings per share and $20 million of adjusted EBITDA, with adjusted gross margin of 52.8%. and adjusted SG&A as a percentage of revenue of 40.6%. Given the strong sales momentum and effective cost discipline measures delivered during the first three quarters of the year, we are raising and narrowing our full-year revenue estimates to $690 to $700 million. Furthermore, We are raising and narrowing our full year adjusted EPS estimate to 85 to 95 cents per share. Moving on to portfolio management, we made solid progress on that front. As you may recall, we divested our hyaluronic acid business in July 31st as returns and growth outlook for that business fell well below acceptable thresholds. This divestiture represents an important step towards our goal of enhancing the future sales growth and profitability profile of our company. Following the sale of HA, I am pleased to report that we acquired Nexus Medical, a privately held medical device company based in Lenexa, Kansas. This acquisition expands our presence in the neonatal and pediatric settings. and provides entree into a growing $70 million market. As indicated in our press release, we expected the acquisition to be immediately accretive to both revenue growth and earnings per share. I want to thank all those in the company who were involved in the Nexus transaction. It has already proven to be a great addition to our company. Moving on to our cost improvement efforts, as I also have good news to share on that front. As I noted during our last earnings call, I tasked the team with identifying opportunities to optimize costs without impacting our commercial effectiveness. With this backdrop, we have recently taken steps to accelerate our decision-making, improve our new product development process, and realize long-term cost-saving opportunities. We expect those efforts will deliver $15 to $20 million of run rate annualized incremental cost savings by the end of 2026. We anticipate one-time cash charges related to those expanded program of approximately $10 million, with the majority to be incurred in the fourth quarter of 2025. Now, on to the tariff front. We are executing on solutions to mitigate the impact of tariffs on our business and gross margin profile. We expect the current tariff environment will continue to impact the company in 2026. Our team is hard at work on implementing a range of strategies focused on tariff mitigation actions, including internal cost containment measures, pricing actions, leveraging previously issued temporary tariff exemptions for portions of our portfolio, and lobbying efforts with Avomed and other third parties that have interactions with the administration. Lastly, we have prioritized supply chain investments to accelerate our exit from China, which will result in slightly higher than anticipated capital expenditures in 2025. With this additional strategic investment, we expect to be out of China for our neonatal syringe production by mid-year 2026. And with that, I'll turn now the call over to Scott for a more detailed review of our financial results.