Avanos Medical, Inc. (NYSE:AVNS), a company specializing in orthopedic, prosthetic, and surgical appliances, has announced a new stock repurchase program. The Board of Directors approved the initiative on November 1, 2024, allowing the company to buy back up to $25 million of its common stock over the next year.
The repurchase of shares will be conducted on the open market or through privately negotiated transactions at management's discretion, adhering to the Securities Exchange Act's Rules 10b5-1 and 10b-18. This decision is subject to market conditions, legal requirements, and other factors deemed relevant by the company's management.
Avanos Medical has clarified that the timing of the repurchase program's commencement will follow the public release of any significant non-public information by at least one full trading day. The program does not commit the company to a specific number of shares to be repurchased and can be suspended, modified, or discontinued at any time without prior notice.
This share repurchase program is seen as a way for Avanos Medical to return value to its shareholders. The repurchase plan is also a signal of the company's confidence in its financial stability and future prospects.
In other recent news, Avanos Medical disclosed its third-quarter results, with sales approximating $170 million and adjusted earnings per share at $0.36. Despite not meeting its organic growth target, the company successfully divested its respiratory health business, boosting cash flow and reinforcing its balance sheet. Interim CEO Michael Greiner, succeeding the retired Joe Woody, shared the company's ongoing focus on strategic transformation and operational profitability enhancements.
Recent developments include FDA approval of the CORGRIP SR Nasal Bridle System and the anticipation of long-term growth from new product launches and performance improvements in pain management recovery. The company is also actively pursuing strategic mergers and acquisitions and share repurchases while concentrating on transformation priorities.
Avanos Medical projects Q4 revenue between $175 million to $180 million, with a 59% adjusted gross margin. The company expects net debt by the end of the year to be around $20 million with a leverage ratio below 0.25. More detailed growth projections for fiscal year 2025 will be provided at the forthcoming JPMorgan (NYSE:JPM) conference.
Despite underperformance in the surgical pain portfolio impacting the mid-single-digit organic growth target, the company sees growth in the enteral feeding sector and over 30% growth in the surgical pain business, particularly Ambit. Game Ready is expected to maintain stable revenue growth in Q4 and throughout 2025.
InvestingPro Insights
The recent announcement of Avanos Medical's stock repurchase program aligns with InvestingPro data, which indicates that management has been aggressively buying back shares. This strategy, coupled with a high shareholder yield, suggests a strong commitment to returning value to investors.
Despite recent market challenges, with the stock experiencing a 17.29% decline over the past week and a 19.39% drop in the last month, Avanos Medical's fundamentals appear solid. The company's price-to-book ratio of 0.67 as of Q3 2024 indicates that the stock might be undervalued relative to its assets. Additionally, with a PEG ratio of 0.29, the stock could be considered attractively priced in relation to its expected earnings growth.
InvestingPro Tips suggest that the stock's RSI indicates oversold territory, which could present a potential opportunity for investors considering the company's repurchase program. It's worth noting that Avanos Medical remains profitable, with a gross profit margin of 55.51% in the last twelve months as of Q3 2024.
For those interested in a deeper analysis, InvestingPro offers 12 additional tips for Avanos Medical, providing a more comprehensive view of the company's financial health and market position.
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