avns-20260331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number 001-36440

AVANOS MEDICAL, INC.

(Exact name of registrant as specified in its charter)

Delaware

46-4987888

(State or other jurisdiction of incorporation)

(I.R.S. Employer Identification No.)

5405 Windward Parkway

Suite 100 South

Alpharetta,

Georgia

30004

(Address of principal executive offices)

(Zip code)

Registrant’s telephone number, including area code: (844) 428-2667

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock - $0.01 Par Value	AVNS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Emerging growth company

☐

Smaller reporting company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of April 28, 2026, there were 46,824,793 shares of the registrant’s common stock outstanding.

Table of Contents


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements			5

Unaudited Condensed Consolidated Income Statements for the Three Months Ended March 3 1 , 202 6 and 20 25			5

Unaudited Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 3 1 , 202 6 and 202 5			6

Unaudited Condensed Consolidated Balance Sheets as of March 3 1 , 202 6 and December 31, 202 5			7

Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 3 1 , 202 6 and 202 5			8

Unaudited Condensed Consolidated Cash Flow Statements for the Three Months Ended March 3 1 , 202 6 and 202 5			9

Notes to the Unaudited Condensed Consolidated Financial Statements			10

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			23

Item 3. Quantitative and Qualitative Disclosures About Market Risk			29

Item 4. Controls and Procedures			30

PART II – OTHER INFORMATION			31

Item 1. Legal Proceedings			31
Item 1A. Risk Factors			31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			32
Item 3. Defaults Upon Senior Securities			32
Item 4. Mine Safety Disclosures			32
Item 5. Other Information			32
Item 6. Exhibits			33
Signatures			34

Information Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are included throughout this Form 10-Q, including in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may,” “believe,” “will,” “expect,” “intend,” “predict,” “potential,” “project,” “estimate,” “anticipate,” “plan,” or “continue” and similar expressions, among others. The matters discussed in these forward-looking statements are based on the current plans and expectations of our management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements. These factors include, but are not limited to:

•general economic conditions, particularly in the United States;

•weakening of economic conditions that could adversely affect the level of demand for our products;

•pricing pressures generally, including cost-containment measures that could adversely affect the price of or demand for our products;

•fluctuations in global equity and fixed-income markets;

•our inability to complete our pending merger with certain affiliates of American Industrial Partners on the anticipated terms, or at all;

•potential adverse effects on our business and operations due to the pendency of the merger;

•provisions in the Agreement and Plan of Merger that may restrict our ability to pursue new opportunities or take other actions that might be beneficial to our business;

•our ability to successfully execute on or achieve the expected benefits of our restructuring initiatives;

•supply chain issues and inflationary pressures;

•a resurgence of the COVID-19 pandemic;

•changes in the competitive environment;

•the loss of current customers or the inability to obtain new customers;

•cybersecurity threats, including breaches of or cyberattacks on our information systems;

•the ongoing regional conflicts between Russia and Ukraine and in the Middle East;

•concentration of our manufacturing operations in Mexico;

•reductions in or eliminations of reimbursements from government healthcare programs or private health insurers;

•financial conditions affecting the banking system and the potential threats to the solvency of commercial banks;

•litigation and enforcement actions;

•disruption in the supply of raw materials or the distribution of finished goods;

•price fluctuations in key commodities;

•the expected impact of tariffs and our ability to mitigate tariffs;

•new or increased tariffs;

•changes in, or revised interpretations of, import-export laws or international trade agreements;

•fluctuations in currency exchange rates;

•changes in governmental regulations that are applicable to our business;

•our ability to realize the intended benefits of our restructuring initiatives or our divestiture, acquisition or merger transactions;

•changes in asset valuations, including write-downs of assets such as inventory, accounts receivable or other assets for impairment or other reasons; and

•any other matters described in Item 1A - “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “Form 10-K”) and Part II, Item 1A - “Risk Factors” in this Form 10-Q.

You are cautioned not to unduly rely on such forward-looking statements when evaluating the information in this Form 10-Q. Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of our management and expressed in good faith, and is believed to have a reasonable basis. There can be no assurance that any such expectation or belief will be achieved or accomplished.

Any forward-looking statement made in this Form 10-Q speaks only as of the date of this report. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.


Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

AVANOS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS

(in millions, except per share amounts)

(Unaudited)


	Three Months Ended March 31,
		2026		2025
Net Sales		$	182.2	$	167.5
Cost of products sold		88.0		77.7
Gross Profit		94.2		89.8
Research and development		5.2		5.4
Selling and general expenses		77.7		75.7

Other expense (income), net		2.4		(1.6)
Operating Income		8.9		10.3
Interest income		0.2		1.5
Interest expense		(1.5)		(2.1)
Income before income taxes		7.6		9.7
Income tax provision		(2.5)		(3.1)
Net Income		$	5.1	$	6.6

Earnings Per Share
Basic		$	0.11	$	0.14
Diluted		$	0.11	$	0.14

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


Table of Contents

AVANOS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in millions)

(Unaudited)


	Three Months Ended March 31,
		2026		2025
Net Income		$	5.1	$	6.6
Other Comprehensive (Loss) Income, Net of Tax
Unrealized currency translation adjustments		(5.5)		2.3
Defined benefit plans		—		0.1
Cash flow hedges		1.5		(0.1)
Total Other Comprehensive (Loss) Income, Net of Tax		(4.0)		2.3
Comprehensive Income		$	1.1	$	8.9

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


Table of Contents

AVANOS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

(Unaudited)


	March 31, 2026		December 31, 2025
ASSETS
Current Assets
Cash and cash equivalents	$	65.6	$	89.8
Accounts receivable, net of allowances	103.0		103.8
Inventories	141.3		148.0
Prepaid and other current assets	15.1		13.8
Total Current Assets	325.0		355.4
Property, Plant and Equipment, net	111.2		113.4
Operating Lease Right-of-Use Assets	39.3		27.6
Goodwill	394.0		394.9
Other Intangible Assets, net	114.7		117.8
Deferred Tax Assets	33.0		33.1
Other Assets	32.9		31.5
TOTAL ASSETS	$	1,050.1	$	1,073.7
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Current portion of long-term debt	$	10.9	$	10.2
Current portion of operating lease liabilities	10.4		8.2
Trade accounts payable	52.3		55.5
Accrued expenses	57.6		91.3
Total Current Liabilities	131.2		165.2
Long-Term Debt	87.3		90.3
Operating Lease Liabilities	29.8		20.4
Deferred Tax Liabilities	5.6		6.1
Other Long-Term Liabilities	14.1		13.5
Total Liabilities	268.0		295.5

Commitments and Contingencies

Stockholders’ Equity
Preferred stock - $0.01 par value - authorized 20,000,000 shares, none issued	—		—
Common stock - $0.01 par value - authorized 300,000,000 shares, 46,673,069 outstanding as of March 31, 2026 and 46,456,462 outstanding as of December 31, 2025	0.5		0.5
Additional paid-in capital	1,696.0		1,691.9
Accumulated deficit	(774.8)		(779.9)
Treasury stock	(103.6)		(102.3)
Accumulated other comprehensive loss	(36.0)		(32.0)
Total Stockholders’ Equity	782.1		778.2
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,050.1	$	1,073.7

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


Table of Contents

AVANOS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(in millions)

(Unaudited)


	Three Months Ended March 31,
		2026		2025
Common Stock		$	0.5	$	0.5
Additional Paid-in Capital, beginning of period		1,691.9		1,678.6
Exercise or redemption of share-based awards		0.4		0.4
Stock-based compensation expense		3.7		3.8
Additional Paid-in Capital, end of period		1,696.0		1,682.8
Accumulated Deficit, beginning of period		(779.9)		(707.0)
Net income		5.1		6.6
Accumulated Deficit, end of period		(774.8)		(700.4)
Treasury Stock, beginning of period		(102.3)		(99.0)
Purchases of treasury stock		(1.3)		(2.2)
Treasury Stock, end of period		(103.6)		(101.2)
Accumulated Other Comprehensive Loss, beginning of period		(32.0)		(44.6)
Other comprehensive (loss) income, net of tax		(4.0)		2.3
Accumulated Other Comprehensive Loss, end of period		(36.0)		(42.3)
Total Stockholders’ Equity, end of period		$	782.1	$	839.4

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


Table of Contents

AVANOS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS

(in millions)

(Unaudited)


	Three Months Ended March 31,
	2026		2025
Operating Activities
Net income	$	5.1	$	6.6
Depreciation and amortization	10.2		9.6
Stock-based compensation expense	3.7		3.8

Net loss on asset dispositions	0.1		0.2
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable	(0.3)		25.1
Inventories	6.1		1.2
Prepaid expenses and other assets	(2.4)		0.3
Accounts payable	(2.1)		(6.4)
Accrued expenses	(33.7)		(14.8)
Deferred income taxes and other	1.0		0.1
Cash (Used in) Provided by Operating Activities	(12.3)		25.7
Investing Activities
Capital expenditures	(4.3)		(6.7)

Investments in non-affiliates	(3.4)		(2.4)


Cash Used in Investing Activities	(7.7)		(9.1)
Financing Activities

Secured debt repayments	(2.3)		(2.3)

Revolving credit facility repayments	—		(25.0)
Purchases of treasury stock	(1.3)		(2.2)

Proceeds from the exercise of stock options	0.4		0.4

Cash Used in Financing Activities	(3.2)		(29.1)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	(1.0)		1.8
Decrease in Cash and Cash Equivalents	(24.2)		(10.7)
Cash and Cash Equivalents - Beginning of Period	89.8		107.7
Cash and Cash Equivalents - End of Period	$	65.6	$	97.0

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


Table of Contents

AVANOS MEDICAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Accounting Policies

Background and Basis of Presentation

Avanos Medical, Inc. is a medical technology company focused on delivering clinically superior medical device solutions that will help patients get back to the things that matter. Headquartered in Alpharetta, Georgia, we are committed to addressing some of today’s most important healthcare needs, including providing a vital lifeline for nutrition to patients from hospital to home, and reducing the use of opioids while helping patients move from surgery to recovery. We develop, manufacture and market our recognized brands globally and hold leading market positions in multiple categories across our portfolio. References herein to “Avanos,” “the Company,” “we,” “our” and “us” refer to Avanos Medical, Inc. and its consolidated subsidiaries.

Interim Financial Statements

We prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements, and the condensed consolidated financial statements in this Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025. Our unaudited interim condensed consolidated financial statements contain all necessary material adjustments, which are of a normal and recurring nature, to fairly state our financial condition, results of operations and cash flows for the periods presented.

Use of Estimates

Preparation of our condensed consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting periods. Estimates are used in accounting for, among other things, certain amounts included in discontinued operations, distributor rebate accruals, future cash flows associated with impairment testing for goodwill and long-lived assets, valuations of assets and liabilities acquired in business combinations, loss contingencies, and deferred tax assets and potential income tax assessments. Actual results could differ from these estimates, and the effect of any change could be material to our financial statements. Changes in these estimates are recorded when known.

Segment Reporting

We follow the guidance in Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting as amended by Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures. We define our reportable segments based on the way our Chief Operating Decision Maker (“CODM”) manages the operations of the business for purposes of allocating resources and assessing performance. Our reportable segments are determined based on revenue, profit or loss and assets tests. We disclose segment revenue, operating income/loss and significant segment expenses for each reportable segment, which is consistent with our internal management reporting to the CODM.

See Note 4, “Segment Information” for disclosure of our reportable segments.

Goodwill

We test goodwill for impairment annually or more frequently whenever events or circumstances more likely than not indicate that the fair value of our reporting units may be below their respective carrying values. We operate as two operating and reportable segments. The fair values of our reporting units are estimated using a combination of income (discounted cash flow analysis) and market approaches. The income approach is dependent upon several assumptions regarding future periods such as sales growth and a terminal growth rate. A weighted average cost of capital (“WACC”) was used to discount future estimated cash flows to their present values. The WACC was based on externally observable data considering market participants’ cost of equity and debt, optimal capital structure and risk factors specific to us.

We determined that the fair value of our reporting units equaled or exceeded the net carrying amount in our most recent goodwill impairment test on July 1, 2025. However, there can be no assurance that the assumptions and estimates made for purposes of the annual goodwill impairment test will prove to be accurate. Volatility in the equity and debt markets, or increases in interest rates, could result in a higher discount rate. Changes in sales volumes, selling prices and costs of goods sold, and increases in interest rates could cause changes in our forecasted cash flows. Unfavorable changes in any of the factors described above, as well as a decline in our stock price, could result in a goodwill impairment charge in the future.


Table of Contents

Hedging and Derivatives

All derivative instruments are recorded as assets or liabilities on the balance sheet at fair value. Changes in the fair value of derivatives are either recorded in the income statement or other comprehensive income, as appropriate. The effective portion of the gain or loss on derivatives designated as cash flow hedges is included in other comprehensive income in the period that changes in fair value occur, and is reclassified to income in the same period that the hedged item affects income. Cash flows

from derivative instruments are recorded within operating, investing or financing activities in accordance with the classification of the underlying hedged transaction. Our policies allow the use of derivatives for risk management purposes and prohibit their use for speculation. Our policies also prohibit the use of any leveraged derivative instrument. Consistent with our policies, foreign currency derivative instruments are entered into with major financial institutions. At inception, we formally designate certain derivatives as cash flow hedges and establish how the effectiveness of these hedges will be assessed and measured. This process links the derivatives to the transactions they are hedging. See Note 11, “Derivative Financial Instruments,” for disclosures about derivative instruments and hedging activities.

Recently Adopted Accounting Pronouncements

Effective January 1, 2026, we adopted ASU No. 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU provides a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under Topic 606. Under the current guidance, when an entity estimates expected credit losses, it must consider available information that is relevant to its assessment of the collectability of cash flows, and the entity may need to adjust its historical losses to estimate expected credit losses if historical conditions differed from current conditions or from reasonable and supportable forecasts. Under this ASU, in developing reasonable and supportable forecasts as part of estimating expected credit losses, we elected the practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. Adoption of this ASU did not have a material effect on our financial position, results of operations or cash flows.

Effective January 1, 2025, we adopted ASU No. 2023-09, Income Taxes: Improvements to Income Tax Disclosures. This ASU pertains to disaggregation of income tax disclosures and enhances annual income tax disclosures to address investor requests for more information about the tax risks and opportunities present in an entity’s worldwide operations. The two primary enhancements disaggregate existing income tax disclosures related to the effective tax rate reconciliation and income taxes paid, and requires entities to disclose a tabular reconciliation of expected tax and reported tax on income from continuing operations using both percentages and amounts, broken out into specific categories with certain reconciling items at or above 5% of the expected tax further broken out by nature and/or jurisdiction. Additionally, this ASU requires disclosure around income taxes paid (net of refunds received) broken out between federal, state, local and foreign, and income taxes paid (net of refunds received) to an individual jurisdiction when greater than 5% of total income taxes paid. Adoption of this ASU did not have a material effect on our financial position, results of operations or cash flows.

Effective January 1, 2025, we adopted ASU No. 2023-05, Business Combinations: Joint Venture Formations. This ASU is intended to address diversity in practice regarding accounting and provide decision-useful information related to contributions made to joint ventures and requires entities that qualify as either a joint venture or a corporate joint venture to apply a new basis of accounting upon the formation of the joint venture. Specifically, the ASU provides that a joint venture or a corporate joint venture must initially measure its assets and liabilities at fair value on the formation date. Adoption of this ASU did not have a material effect on our financial position, results of operations or cash flows.

Effective in the fourth quarter of 2024, we adopted ASU No. 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures. This ASU enhances segment reporting under Topic 280 by expanding the breadth and frequency of segment disclosures, and aims to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the Chief Operating Decision Maker (CODM) and included in each reported measure of segment profit or loss. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. On an annual basis, this ASU requires us to disclose the CODM’s title and position, as well as how the CODM uses each reported measure of segment profit or loss to assess performance and allocate resources to the segment. In accordance with this ASU, we have applied this guidance retrospectively for all periods presented in the financial statements in Note 4, “Segment Information”. Adoption of this ASU did not have a material effect on our financial position, results of operations or cash flows.

Recently Issued Accounting Pronouncements

In November 2025, the FASB issued ASU No. 2025-09, Hedge Accounting Improvements. This ASU amends ASC Topic 815 to better align hedge accounting with the economics of an entity’s risk management activities. The amendment permits aggregation of forecasted transactions with similar-risk exposures in cash flow hedges, expands eligibility for hedging certain non-financial forecasted transactions, and expands the application of hedge accounting for interest payments on choose-your-rate debt, including forecasted issuances. This ASU will be effective for fiscal years beginning after December 15, 2026, and


Table of Contents

interim periods therein, with early adoption permitted. Adoption of this ASU is not expected to have a material effect on our financial position, results of operations or cash flows.

In September 2025, the FASB issued ASU No. 2025-06, Targeted Improvements to the Accounting for Internal-Use Software. This ASU amends certain aspects of the accounting for and disclosure of software costs under Topic 350 and removes all references to “development stages”, modifying the criteria that must be met for entities to begin capitalizing software costs. This ASU also provides new guidance on how to evaluate whether the probable-to-complete recognition threshold has been met. This ASU will be effective for annual periods beginning after December 15, 2027, with early adoption permitted. Adoption of this ASU is not expected to have a material effect on our financial position, results of operations or cash flows.

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses. This ASU requires disaggregated disclosure of income statement expenses for public business entities (PBEs) to address investor requests for more detailed information about the types of expenses in commonly presented expense captions. This ASU will require new tabular disclosures for the following expenses: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depletion. Additionally, certain other expenses and gains or losses that must be disclosed under existing U.S. GAAP, and that are recorded in a relevant expense caption, must be presented in the same tabular disclosure. This ASU will be effective for annual periods beginning after December 15, 2026, with early adoption permitted. Adoption of this ASU is not expected to have a material effect on our financial position, results of operations or cash flows.

Note 2. Restructuring Activities

Post-RH Divestiture Restructuring Plan

During 2024, following the sale of our Respiratory Health business to SunMed Group Holdings in October 2023 (the “RH Divestiture”), we initiated restructuring activities aimed at aligning our organizational structure, our manufacturing and distribution activities, and our operational footprint with our remaining business (“the Plan”). In the first six months of 2025, the Plan was expanded to accommodate additional manufacturing and operational initiatives.

In the fourth quarter of 2025, the assessment of our organization performed in conjunction with the appointment of our new Chief Executive Officer in April 2025 was completed and the Plan was expanded to align our organizational structure with our business needs. As a result, we expect to incur up to $10.0 million of incremental expenses consisting primarily of employee severance and benefits. The initiatives associated with the expansion of the Plan are expected to run through 2026.

In the three months ended March 31, 2026, we incurred $1.8 million of costs related to the Plan, compared to $3.1 million in the three months ended March 31, 2025. These costs are included in “Cost of products sold” and “Selling and general expenses” in the accompanying condensed consolidated income statements. Since its initiation, we have incurred expenses of $43.1 million in connection with the Plan, including $31.5 million of cash expenses.

Restructuring Liability

Our liability for costs associated with our restructuring initiatives as of March 31, 2026 is summarized below (in millions):


	Restructuring Liability
Balance, December 31, 2025	$	7.2
Restructuring and transformation costs, excluding non-cash charges	1.4
Payments and adjustments, net	(7.6)
Balance, March 31, 2026	$	1.0

Note 3. Business Acquisition

Nexus Medical

On September 11, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Nexus Merger Sub, LLC, a newly formed wholly owned subsidiary of the Company (“Merger Sub”), Nexus Medical, LLC, a Kansas limited liability company (“Nexus”), and Edward Kuklenski, as representative of Nexus’ members. The transaction contemplated by the Merger Agreement (the “Merger”) closed concurrently with the execution of the Merger Agreement. Pursuant to the Merger Agreement, Nexus merged with and into Merger Sub, with Nexus surviving the merger as a wholly owned subsidiary of the Company (the “Nexus Acquisition”). The total purchase price payable by the Company in the Merger was $27.0 million (subject to certain working capital and other adjustments), with up to an additional $20.0 million payable in contingent cash consideration based on the increase in net sales of certain Nexus product during the first three years following the Nexus Acquisition. The purchase price was funded by available cash on hand.


Table of Contents

Nexus is a leading manufacturer of anti-reflux needleless connectors. Its proprietary TKO® technology is designed to support safer, more consistent nutrition and medication delivery in high-acuity settings, including Neonatal and Pediatric Intensive Care Units (NICUs and PICUs). We expect the Nexus Acquisition will enhance our Specialty Nutrition Systems (“SNS”) portfolio of products.

The accompanying condensed consolidated income statement includes $5.8 million of net sales from Nexus for the three months ended March 31, 2026. We incurred $0.9 million of costs in the three months ended March 31, 2026 in connection with the Nexus Acquisition, which are included in “Selling and general expenses” and “Other expense (income), net.”

Under the acquisition method of accounting for business combinations, the purchase price paid is allocated to the underlying net assets in proportion to their respective fair values. Any excess of the purchase price over the estimated fair values is recorded as goodwill. Fair values of assets acquired and liabilities assumed are being determined using discounted cash flow analyses and the fair value of the contingent consideration is being estimated using a Monte Carlo simulation. Assumptions supporting the estimated fair values are based on facts and circumstances that existed on the valuation date. Estimated fair values may be revised during a measurement period, not to exceed 12 months from the date of acquisition, as valuations are finalized or additional information is obtained about facts and circumstances that existed on the valuation date. While the purchase price allocation may be revised for conditions known at the time of sale for a period of one year following the transaction, we do not expect any revisions. The purchase price allocation is shown in the table below (in millions):


Current assets, net of liabilities assumed, excluding cash acquired	$	7.9
Property, plant & equipment	2.2
Identifiable intangible assets	20.5
Goodwill	13.7
Contingent consideration(a)	(16.3)
Total	$	28.0

__________________________________________________

(a)The fair value of the contingent consideration was revalued as of March 31, 2026. See Note 6, “Fair Value Information” for further details.

The identifiable intangible assets relating to the Nexus Acquisition include the following (in millions, except years):


	Identifiable Intangible Asset Amount		Weighted Average Useful Lives (Years)
Customer relationships	$	15.3	11
Patents	3.4		9
Trade names & other	1.8		15
Total	$	20.5

The following unaudited pro forma financial information is presented in the table below for the three months ended March 31, 2025 as if the Nexus Acquisition had occurred on January 1, 2025 (in millions except per share amounts):



	Three Months Ended March 31, 2025
Net sales	$	171.5

Net Income	6.5

Earnings Per Share:
Basic	$	0.14
Diluted	$	0.14

The pro forma financial information has been adjusted to include the effects of the Nexus Acquisition, including acquisition-related costs, amortization of acquired intangibles and related tax effects. The pro-forma financial information is not necessarily indicative of the results of operations that would have been achieved.


Table of Contents

Note 4. Segment Information

We define our reportable segments based on the way our CODM manages the operations of the business for purposes of allocating resources and assessing performance. We conduct our business in two operating and reportable segments. Our reportable segments include the following:

Specialty Nutrition Systems, or SNS, is a portfolio of products including:

•Enteral feeding, which includes products such as our MIC-KEY enteral feeding tubes and Corpak patient feeding solutions; and

•Neonate solutions, which includes NeoMed neonatal and pediatric feeding solutions and Nexus’ TKO® anti-reflux needleless connectors.

Pain Management and Recovery, or PM&R, is a portfolio of products including:

•Surgical pain and recovery products such as ON-Q and ambIT surgical pain pumps and Game Ready cold and compression therapy systems; and

•Radiofrequency Ablation (“RFA”) solutions, which provide minimally invasive pain relief therapies, such as our COOLIEF, Trident and ESENTEC RFA products used to treat chronic pain conditions.

The CODM evaluates the performance of our two reportable segments and determines how to allocate resources based on Operating Income (Loss), and is regularly provided with segment revenues and expenses. The CODM receives and reviews total assets as presented in the Consolidated Balance Sheets, and does not evaluate asset information at the segment level. The significant expenses included in Operating Income, as regularly provided to the CODM, are as follows (in millions):



	Three Months Ended March 31, 2026						Three Months Ended March 31, 2025
	SNS		PM&R		Total		SNS		PM&R		Total
Net Sales	$	124.0	$	56.3	$	180.3	$	101.1	$	56.2	$	157.3
Reconciliation of consolidated net sales:					—
Corporate and other(a)					1.9						10.2
Total consolidated net sales					$	182.2					$	167.5
Cost of goods sold	(48.0)		(21.7)				(35.2)		(20.7)
Distribution	(7.1)		(3.2)				(6.3)		(2.7)
Research and development expenses	(3.7)		(1.3)				(4.1)		(1.1)
Advertising, promotion and selling expenses	(15.1)		(15.9)				(11.8)		(14.9)
General expenses	(20.8)		(12.3)				(17.5)		(12.7)

Depreciation and amortization expense	(6.1)		(3.7)				(5.0)		(3.9)
Other segment items	(0.1)		—				(0.1)		—
Reportable segment operating income (loss)	$	23.1	$	(1.8)	$	21.3	$	21.1	$	0.2	$	21.3
Corporate and other					(12.4)						(11.0)
Interest expense, net					(1.3)						(0.6)
Income before income taxes					$	7.6					$	9.7

__________________________________________________

(a)Corporate and other net sales includes revenue from our IV infusion oncology pumps.


Table of Contents

Note 5. Supplemental Balance Sheet Information

Accounts Receivable

Accounts receivable consist of the following (in millions):


	March 31, 2026		December 31, 2025
Accounts receivable	$	106.3	$	108.0
Income tax receivable	0.1		0.1
Allowances and doubtful accounts:
Doubtful accounts	(3.1)		(4.0)
Sales discounts	(0.3)		(0.3)
Total Accounts receivable, net of allowances	$	103.0	$	103.8

Losses on receivables are estimated based on known troubled accounts and historical experience. In developing forecasts as part of estimating expected credit losses, we assume that current conditions as of the balance sheet date do not change for the life of the asset. Receivables are considered impaired and written off when it is probable that payments due will not be collected. Bad debt expense was a net benefit of $0.4 million for the three months ended March 31, 2026, compared to $0.1 million for the three months ended March 31, 2025.

Inventories

Inventories at the lower of cost (determined on the FIFO method) or net realizable value consists of the following (in millions):


	March 31, 2026		December 31, 2025
Raw materials	$	34.1	$	34.7
Work in process	25.0		25.2
Finished goods	78.2		84.0
Supplies and other	4.0		4.1

Total Inventories	$	141.3	$	148.0

We incurred $3.3 million of expense for inventory write-offs and obsolescence in the three months ended March 31, 2026, compared to $1.7 million in the three months ended March 31, 2025.

Property, Plant and Equipment

Property, plant and equipment consists of the following (in millions):


	March 31, 2026		December 31, 2025
Land	$	1.3	$	1.3
Buildings and leasehold improvements	39.9		40.1
Machinery and equipment	201.9		199.1
Construction in progress	25.4		25.0
	268.5		265.5
Less accumulated depreciation	(157.3)		(152.1)
Total Property, Plant and Equipment, net	$	111.2	$	113.4

Depreciation expense was $5.6 million for the three months ended March 31, 2026, compared to $4.5 million for the three months ended March 31, 2025.

Goodwill and Intangible Assets

In our most recent goodwill impairment test on July 1, 2025, we determined that the fair value of our reporting units equaled or exceeded the net carrying amount of our reporting units.


Table of Contents

The changes in the carrying amount of goodwill are as follows (in millions):


	SNS		PM&R		Total
Balance, December 31, 2025	$	341.3	$	53.6	$	394.9


Currency translation adjustment	—		(0.9)		(0.9)
Balance, March 31, 2026	$	341.3	$	52.7	$	394.0

Intangible assets subject to amortization consist of the following (in millions):


	March 31, 2026						December 31, 2025
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trademarks	$	41.9	$	(31.1)	$	10.8	$	41.9	$	(30.8)	$	11.1
Patents and acquired technologies	251.8		(193.9)		57.9		251.9		(191.5)		60.4
Other	95.5		(49.5)		46.0		94.1		(47.8)		46.3
Total	$	389.2	$	(274.5)	$	114.7	$	387.9	$	(270.1)	$	117.8

Amortization expense for intangible assets is included in “Cost of products sold” and “Selling and general expenses” and was $4.6 million for the three months ended March 31, 2026, compared to $5.1 million for the three months ended March 31, 2025.

Amortization expense for the remainder of 2026, the following four years and thereafter is estimated as follows (in millions):


	Amount
Remainder of 2026	$	14.0
2027	17.0
2028	16.4
2029	15.2
2030	12.9
Thereafter	39.2
Total	$	114.7

Accrued Expenses

Accrued expenses consist of the following (in millions):


	March 31, 2026		December 31, 2025
Accrued rebates and customer incentives	$	11.0	$	13.1
Accrued salaries and wages	21.7		37.0
Accrued taxes and other	6.6		16.9
Other(a)	18.3		24.3
Total Accrued Expenses	$	57.6	$	91.3

__________________________________________________

(a)Other includes $7.5 million of contingent consideration associated with the acquisition of Nexus. See Note 3, “Business Acquisition” for further information.

Other Long-Term Liabilities

Other long-term liabilities consist of the following (in millions):


	March 31, 2026		December 31, 2025

Accrued compensation and benefits	$	4.1	$	4.0
Other(a)	10.0		9.5
Total Other Long-Term Liabilities	$	14.1	$	13.5

__________________________________________________

(a)Other includes $9.8 million and $9.3 million of contingent consideration associated with the acquisition of Nexus as of March 31, 2026 and December 31, 2025, respectively . See Note 3, “Business Acquisition” for further information.


Table of Contents

Note 6. Fair Value Information

The following fair value information is based on a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels in the hierarchy used to measure fair value are:

Level 1: Unadjusted quoted prices in active markets accessible at the reporting date for identical assets and liabilities.

Level 2: Quoted prices for similar assets or liabilities in active markets. Quoted prices for identical or similar assets and liabilities in markets that are not considered active or financial instruments for which all significant inputs are observable, either directly or indirectly.

Level 3: Prices or valuations that require inputs that are significant to the valuation and are unobservable.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The following table includes the fair value of our financial instruments for which disclosure of fair value is required (in millions):


		March 31, 2026				December 31, 2025
	Fair Value Hierarchy Level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets
Cash and cash equivalents	1	$	65.6	$	65.6	$	89.8	$	89.8
Liabilities
Revolving Credit Facility	2	$	—	$	—	$	—	$	—
Term Loan Facility	2	98.2		98.2		100.5		100.5
Contingent consideration related to acquisition	3	17.3		17.3		16.8		16.8

Cash equivalents are recorded at cost, which approximates fair value due to their short-term nature. The fair value of amounts borrowed under our Revolving Credit Facility and Term Loan Facility approximates carrying value because borrowings are subject to a variable rate as described in Note 7, “Debt”. The fair value amount of the contingent consideration is remeasured on an ongoing basis using a probability-weighted discounted cash flow model. See further discussion of the Nexus acquisition in Note 3, “Business Acquisition”.

Note 7. Debt

As of March 31, 2026 and December 31, 2025, our respective debt balances were as follows (in millions):


	Weighted-Average Interest Rate		Maturity	March 31, 2026		December 31, 2025
Revolving Credit Facility	5.94	%	2027	$	—	$	—
Term Loan Facility	5.28	%	2027	98.4		100.8
				98.4		100.8
Unamortized debt issuance costs				(0.2)		(0.3)
Current portion of long-term debt				(10.9)		(10.2)
Total Long-Term Debt, net				$	87.3	$	90.3

On June 24, 2022, we entered into a credit agreement (the “Credit Agreement”) with certain lenders which established credit facilities in an aggregate principal amount of $500.0 million, consisting of a five-year senior secured term loan of $125.0 million (the “Term Loan Facility”) and a five-year senior secured revolving credit facility allowing borrowings of up to $375.0 million, with a letter of credit sub-facility in an amount of $75.0 million (the “Revolving Credit Facility”). All obligations under the Credit Agreement and certain hedging agreements and cash management arrangements thereunder are: (i) guaranteed by each of the Company’s direct and indirect, existing and future, material wholly owned domestic subsidiaries (“Guarantors”) and (ii) secured by a first priority lien on substantially all the assets of the Company and the Guarantors. The Credit Agreement contains an accordion feature that allows us to incur incremental term loans under the Term Loan Facility or under new term loan facilities or to increase the amount of the commitments under the Revolving Credit Facility, including through the establishment of one or more tranches under the Revolving Credit Facility. The Credit Agreement will mature on June 24, 2027.

Borrowings under the Term Loan Facility and Revolving Credit Facility bear interest at our option at either: (i) an adjusted term secured overnight financing rate (“SOFR”), plus a margin ranging between 1.50% to 2.00% per annum, depending on our


Table of Contents

consolidated total leverage ratio; (ii) an adjusted daily simple SOFR rate, plus a margin ranging between 1.50% to 2.00% per annum, depending on our consolidated total leverage ratio; or (iii) a base rate (calculated as the greatest of (a) the prime rate, (b) the NYFRB rate (being the greater of the federal funds effective rate or the overnight bank funding rate) plus 0.50%, and (c) the one month adjusted term SOFR rate plus 1.00%), plus a margin ranging between 0.50% to 1.00% per annum, depending on our consolidated total leverage ratio. The unused portion of the Revolving Credit Facility will be subject to a commitment fee ranging between 0.20% to 0.25% per annum, depending on our consolidated total leverage ratio. Unamortized debt discount and issuance costs are being amortized to interest expense over the life of the Term Loan Facility using the interest method, resulting in an effective interest rate of 5.5% as of March 31, 2026.

The Credit Agreement requires compliance with certain customary operational and financial covenants. As of March 31, 2026, we were in compliance with these covenants. In addition, the Credit Agreement contains certain other customary limitations on our ability to, among other things: incur additional indebtedness; pay dividends on or repurchase or redeem our capital stock; make loans, investments and acquisitions; sell, transfer or otherwise dispose of assets; guarantee other obligations; create or grant liens; and enter into certain types of transactions with affiliates. Notwithstanding such limitations, the Credit Agreement allows us to pay dividends, repurchase stock and make investments up to an “Available Amount,” as defined in the Credit Agreement, provided no event of default has occurred and certain financial ratios have been achieved on a pro forma basis. We are permitted to prepay all or a portion of the Term Loan Facility and the Revolving Credit Facility at any time without premium or penalty.

Debt Payments

The Credit Agreement requires quarterly principal installment payments on the Term Loan Facility of 10% of the total principal borrowed for the first eight quarters following funding and then quarterly installment payments of 20% of the total principal borrowed, at which time the remaining unpaid principal amount of the Term Loan Facility is due and payable by the Company upon the maturity date of June 24, 2027. The current portion of the Term Loan Facility is $10.9 million. Interest is payable quarterly. We have the right to voluntarily prepay the Term Loan Facility in accordance with the terms of the Credit Agreement. Interest is payable at the same rates set forth above for the Revolving Credit Facility.

During the three months ended March 31, 2026, we repaid $2.3 million of the Term Loan Facility. As of March 31, 2026, we had letters of credit outstanding of $3.6 million.

As of March 31, 2026, the aggregate amounts of long-term debt that will mature during each of the next four years are as follows (in millions):


	Amount
Remainder of 2026	$	7.8
2027	90.6
2028	—
2029	—
2030

SEC Form 10-Q filed by Avanos Medical Inc.