# EDGAR Filing Document

**Accession Number:** 0001606498
**File Stem:** 0001606498-23-000016
**Filing Date:** 2023-2
**Character Count:** 42306
**Document Hash:** 78f6135f084140bd492805fa914e9b3f
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001606498-23-000016.hdr.sgml**: 20230221

**ACCESSION NUMBER**: 0001606498-23-000016

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 15

**CONFORMED PERIOD OF REPORT**: 20230221

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230221

**DATE AS OF CHANGE**: 20230221

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** AVANOS MEDICAL, INC.
- **CENTRAL INDEX KEY:** 0001606498
- **STANDARD INDUSTRIAL CLASSIFICATION:** ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842]
- **IRS NUMBER:** 464987888
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-36440
- **FILM NUMBER:** 23645254

**BUSINESS ADDRESS:**
- **STREET 1:** 5405 WINDWARD PARKWAY
- **STREET 2:** SUITE 100 SOUTH
- **CITY:** ALPHARETTA
- **STATE:** GA
- **ZIP:** 30004
- **BUSINESS PHONE:** 844-428-2667

**MAIL ADDRESS:**
- **STREET 1:** 5405 WINDWARD PARKWAY
- **STREET 2:** SUITE 100 SOUTH
- **CITY:** ALPHARETTA
- **STATE:** GA
- **ZIP:** 30004

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Avanos Medical, Inc.
- **DATE OF NAME CHANGE:** 20180702

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Halyard Health, Inc.
- **DATE OF NAME CHANGE:** 20140424

?xml version="1.0" ? avns-20230221

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 8-K** 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

**Date of Report: February 21, 2023** 

(Date of earliest event reported)

**Commission file number 001-36440** 

![avns-20230221_g1.jpg](avns-20230221_g1.jpg)

**AVANOS MEDICAL, INC.** 

(Exact name of registrant as specified in its charter)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Delaware** | **Delaware** | | | **46-4987888** |
| (State or other jurisdiction of incorporation) | (State or other jurisdiction of incorporation) | | | (I.R.S. Employer Identification No.) |
| | **5405 Windward Parkway** | **5405 Windward Parkway** | **5405 Windward Parkway** | **5405 Windward Parkway** |
| | **Suite 100 South** | **Suite 100 South** | **Suite 100 South** | **Suite 100 South** |
| | **Alpharetta,** | **Georgia** | **30004** | **30004** |
| | (Address of principal executive offices) | (Address of principal executive offices) | (Zip code) | (Zip code) |

---

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

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

------

**Item 2.02&nbsp;&nbsp;&nbsp;&nbsp;Results of Operation and Financial Condition**

The Company announced its results of operations for the three months and year ended December 31, 2022 in a press release dated February 21, 2023 that is attached and incorporated herein by reference as Exhibit 99.1.

The information, including the exhibit attached hereto in Item 2.02 of this Current Report is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in Item 2.02 of this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as otherwise expressly stated in such filing.

**Item 9.01&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements and Exhibits**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Exhibits.

&nbsp;&nbsp;&nbsp;&nbsp;The following exhibits are filed with this Current Report on Form 8-K:

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| <u>[99.1](avns4q2022form8-kex991.htm)</u> | <u>[Press Release issued by Avanos Medical, Inc. on February 21, 2023](avns4q2022form8-kex991.htm)</u> |
| 104 | Cover Page Interactive Data File (embedded within the inline XBRL document) |

---

------

**<u>SIGNATURE</u>**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

&nbsp;&nbsp;&nbsp;&nbsp;

---

| | | | |
|:---|:---|:---|:---|
| | | AVANOS MEDICAL, INC. | AVANOS MEDICAL, INC. |
| Date: | February 21, 2023 | By: | /s/ Mojirade James |
|  |  |  | Mojirade James<br>Senior Vice President and General Counsel |

---

## Exhibit 99.1

![avanoslogoa08a.jpg](avanoslogoa08a.jpg)<br>

---

| |
|:---|
| Investor Contact: Michael Greiner |
| Avanos Medical, Inc. |
| 470-562-2692 |
| Investor.Relations@Avanos.com |
| Media Contact: Katrine Kubis |
| Avanos Medical, Inc. |
| CorporateCommunications@Avanos.com |

---

**Avanos Medical, Inc. Announces Fourth Quarter and Full-Year 2022 Results**

**ALPHARETTA, Ga., Feb. 21, 2023/PRNewswire/** -- Avanos Medical, Inc. (NYSE: AVNS) today reported fourth quarter and full-year 2022 results.

"We were pleased to finish 2022 with a strong fourth quarter, continued margin expansion and meaningful free cash flow," stated Joe Woody, Avanos' chief executive officer. Woody continued, "Our team is focused on execution and we are determined to deliver on the three-year transformation plan we described last month at the JPMorgan conference."

**2022 Financial Highlights**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**•** Fourth quarter net sales totaled $217 million, a 12% increase from the prior year. For the full-year, net sales increased 10% to $820 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Fourth quarter diluted earnings per share were $0.36 compared to $0.24 per share a year ago, and fourth quarter adjusted diluted earnings per share were $0.60 compared to $0.50 in the prior year. 2022 full year diluted earnings per share were $1.07 compared to $0.13 per share in the prior year, and adjusted diluted earnings per share were $1.65 compared to $1.17 in 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Fourth quarter free cash flow was $29 million following $23 million in the third quarter and compared to $47 million in the fourth quarter of last year. 2022 full-year free cash flow was $72 million compared to $66 million in 2021.

During the year, we changed our inventory accounting method from last-in, first-out (LIFO) to first-in, first-out (FIFO). We have restated prior year financial information to reflect that change. A tabular presentation of the effects of our results of operations from this change in accounting principle is included in the accompanying tables.

In January, we announced a three-year transformation plan that will be focused on four key priorities: optimizing the commercial organization; transforming the product portfolio; implementing cost management initiatives to enhance operating profitability; and continuing to efficiently deploy capital while maintaining a focused and disciplined approach to M&A. We anticipate that this plan will ultimately result in savings of between $45 million and $55 million compared to 2022.

**Fourth Quarter 2022 Operating Results** 

In the fourth quarter of 2022, net sales totaled $217 million, a 12% increase compared to the prior year. Volume was driven by continued strong demand for Digestive Health products and improvements in Interventional Pain solutions, partially offset by lower volume in Respiratory Health products compared to the pandemic-driven demand in the prior year and expected lower volume in Acute Pain products due to fewer elective procedures.

------

Gross margin for the fourth quarter was 54% compared to 51% a year ago. Adjusted gross margin was 56% compared to 54% in the prior year.

Operating profit in the quarter was $26 million compared to $27 million in the fourth quarter of 2021. On an adjusted basis, operating profit was $40 million compared to $27 million a year ago.

Adjusted EBITDA for the quarter was $45 million compared to $33 million in the prior year.

**Full-Year 2022 Operating Results** 

Net sales increased 10% to $820 million in 2022 primarily due to incremental revenue from the OrthogenRx acquisition. Digestive Health products experienced strong demand and volume, but was offset by decreased demand and volume in Respiratory Health products. In addition, 0.7% of favorable pricing was offset by 1.9% of unfavorable foreign currency translation effects.

Gross margin for 2022 was 55% compared to 49% in 2021. Adjusted gross margin was 57%, up from 52% last year due primarily to favorable product mix and manufacturing efficiencies, partially offset by higher costs across our supply chain.

Operating income in 2022 was $74 million compared to $10 million in the prior year. On an adjusted basis, operating profit was $114 million compared to $75 million in 2021.

For the full-year, adjusted EBITDA totaled $136 million, compared to $96 million in the prior year.

**Cash Flow and Balance Sheet**

Cash from operations less capital expenditures, or free cash flow, for the fourth quarter of 2022 was $29 million, compared to $47 million a year ago. For 2022, free cash flow was $72 million, compared to $66 million in the prior year.

At year-end 2022, the company's cash balance was $128 million compared to $119 million at year-end 2021. Total debt at the end of the fourth quarter totaled $232 million, consisting of borrowings of $123 million on the company's term loan facility and $109 million on the revolving credit facility.

**2023 Outlook**

Excluding the expected impact of the product portfolio rationalization under the transformation plan, the company anticipates organic growth is expected to be low single-digit. In addition, the company expects operating profit margin and EBITDA margin expansion of approximately 100 basis points and adjusted diluted EPS of between $1.60 and $1.80.

**Non-GAAP Financial Measures**

This press release and the accompanying tables include the following financial measures that have not been calculated in accordance with accounting principles generally accepted in the U.S., or GAAP, and are therefore referred to as non-GAAP financial measures:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Adjusted net income

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Adjusted diluted earnings per share

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Adjusted gross and operating profit

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Adjusted effective tax rate

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Adjusted EBITDA

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Free cash flow

These non-GAAP financial measures exclude the following items, as applicable, for the relevant time periods as indicated in the accompanying non-GAAP reconciliations to the comparable GAAP financial measures:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Incremental expenses associated with altering operations in response to the COVID-19 pandemic.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Expenses associated with restructuring activities, including IT-related charges.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Expenses associated with post-divestiture transition activities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The amortization of intangible assets associated with prior business acquisitions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Expenses associated with certain litigation matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Compliance with the European Union Medical Device Regulation (the EU MDR).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Certain acquisition and integration charges related to the acquisition of OrthogenRx and Game Ready.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The tax effects of certain adjusting items.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The benefit associated with tax effects of the CARES Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The positive or negative effect of changes in currency exchange rates during the year.

The company provides these non-GAAP financial measures as supplemental information to our GAAP financial measures. Management and the company's Board of Directors use net sales on a constant currency basis, adjusted net income, adjusted diluted earnings per share, adjusted operating profit, adjusted EBITDA, and free cash flow to (a) evaluate the company's historical and prospective financial performance and its performance relative to its competitors, (b) allocate resources and (c) measure the operational performance of the company's business units and their managers. Management also believes that the use of an adjusted effective tax rate provides improved insight into the tax effects of the company's ongoing business operations.

Additionally, the Compensation Committee of the company's Board of Directors will use certain of the non-GAAP financial measures when setting and assessing achievement of incentive compensation goals. These goals are based, in part, on the company's net sales on a constant currency basis and adjusted EBITDA, which will be determined by excluding certain items that are used in calculating these non-GAAP financial measures.

Our competitors may define these non-GAAP financial measures differently, and as a result, our measure of these non-GAAP financial measures may not be directly comparable to those of other companies. Items excluded from these non-GAAP financial measures are significant components in understanding and assessing financial performance. These non-GAAP financial measures are supplemental measures of operating performance that do not represent, and should not be considered in isolation or as an alternative to, or substitute for, the financial statement data presented in our consolidated financial statements as indicators of financial performance. These non-GAAP financial measures have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP financial measures as supplemental information.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the attached financial tables.

**Conference Call Webcast**

Avanos Medical, Inc. will host a conference call today at 9 a.m. ET. The conference call can be accessed live over the internet at <u>[https://avanos.investorroom.com](#i05aa91051e114aad9c85434d4f49824c_1)</u> or via telephone by dialing 877-240-5772 in the United States. A replay of the call will be available at noon ET today by calling 877-344-7529 in the United States and entering passcode 9599533. A webcast of the call will also be archived in the Investors section on the Avanos website.

**About Avanos Medical, Inc.**

Avanos Medical (NYSE: AVNS) is a medical device company focused on delivering clinically superior breakthrough solutions that will help patients get back to the things that matter. Headquartered in Alpharetta, Georgia, Avanos is committed to creating the next generation of innovative healthcare solutions which will address our most important healthcare needs, such as reducing the use of opioids while helping patients move from surgery to recovery. Avanos develops, manufactures and markets its recognized brands in more than 90 countries. For more information, visit <u>www.avanos.com</u> and follow Avanos Medical on Twitter (@AvanosMedical), LinkedIn and Facebook.

**Forward-Looking Statements**

------

This press release contains information that includes or is based on "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the current plans and expectations of management and are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in such statements. 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", "project", "estimate", "anticipate", "plan", or "continue" and similar expressions, among others. Such factors include, but are not limited to: 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; risks related to the ongoing COVID-19 pandemic; shortage in drugs used in our Acute Pain products or other disruptions in our supply chain; the ongoing conflict between Russia and Ukraine; our ability to successfully execute on or achieve the expected benefits of our transformation initiative; inflationary pressures; changes in foreign exchange markets; legislative and regulatory actions; unanticipated issues arising in connection with clinical studies and otherwise that affect U.S. Food and Drug Administration approval of new products; changes in reimbursement levels from third-party payors; a significant increase in product liability claims; the impact of investigative and legal proceedings and compliance risks; the impact of the federal legislation to reform the United States healthcare system; changes in financial markets; and changes in the competitive environment. Additional information concerning these and other factors that may impact future results is contained in our filings with the U.S. Securities and Exchange Commission, including our most recent Form 10-K and Quarterly Reports on Form 10-Q.

------

 **AVANOS MEDICAL, INC.**

**CONDENSED CONSOLIDATED INCOME STATEMENTS**

**(unaudited)**

**(in millions, except per share amounts)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| **Net Sales** | $**217.5** | $193.4 | $**820.0** | $744.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of products sold | **100.6** | 94.5 | **370.0** | 378.8 |
| **Gross Profit** | **116.9** | 98.9 | **450.0** | 365.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development expenses | **7.5** | 7.6 | **30.6** | 32.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling and general expenses | **82.6** | 75.2 | **341.9** | 300.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other expense (income), net | **0.6** | (10.9) | **3.5** | 22.8 |
| **Operating Income** | **26.2** | 27.0 | **74.0** | 10.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income | **0.7** |  | **1.2** | 0.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense | **(3.0)** | (0.7) | **(10.0)** | (3.3) |
| **Income Before Income Taxes** | **23.9** | 26.3 | **65.2** | 7.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax provision | **(7.0)** | (14.8) | **(14.7)** | (1.0) |
| **Net Income** | $**16.9** | $11.5 | $**50.5** | $6.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense, net | **2.3** | 0.7 | **8.8** | 3.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax provision | **7.0** | 14.8 | **14.7** | 1.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | **13.4** | 9.5 | **47.7** | 38.3 |
| **EBITDA** | $**39.6** | $36.5 | $**121.7** | $48.7 |
| **Earnings Per Share** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic | $**0.36** | $0.24 | $**1.08** | $0.13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted | $**0.36** | $0.24 | $**1.07** | $0.13 |
| **Common Shares Outstanding** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic | **46.5** | 48.2 | **46.9** | 48.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted | **47.0** | 48.6 | **47.3** | 48.6 |

---

------

**AVANOS MEDICAL, INC.**

**EFFECTS OF CHANGE IN ACCOUNTING PRINCIPLE**

**CONDENSED CONSOLIDATED INCOME STATEMENTS**

**(in millions, except per share amounts)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** | **Year Ended December 31, 2022** |
| | **As Calculated<br>(LIFO)** | **As Reported<br>(FIFO)** | **Effect of<br>Change** | **As Calculated<br>(LIFO)** | **As Reported<br>(FIFO)** | **Effect of<br>Change** |
| Cost of products sold | $100.1 | $100.6 | $0.5 | $370.7 | $370.0 | $(0.7) |
| Income (loss) before income taxes | 24.4 | 23.9 | (0.5) | 64.5 | 65.2 | 0.7 |
| Income tax (provision) benefit | (7.1) | (7.0) | 0.1 | (14.6) | (14.7) | (0.1) |
| Net income (loss) | 17.3 | 16.9 | (0.4) | 49.9 | 50.5 | 0.6 |
| Earnings (loss) per share: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | $0.37 | $0.36 | $(0.01) | $1.06 | $1.08 | $0.02 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | $0.37 | $0.36 | $(0.01) | $1.05 | $1.07 | $0.02 |
|  | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** | **Year Ended December 31, 2021** |
|  | **As Reported<br>(LIFO)** | **As Adjusted<br>(FIFO)** | **Effect of<br>Change** | **As Reported<br>(LIFO)** | **As Adjusted<br>(FIFO)** | **Effect of<br>Change** |
| Cost of products sold | $96.5 | $94.5 | $(2.0) | $380.3 | $378.8 | $(1.5) |
| Income (loss) before income taxes | 24.3 | 26.3 | 2.0 | 5.8 | 7.3 | 1.5 |
| Income tax (provision) benefit | (14.3) | (14.8) | (0.5) | (0.6) | (1.0) | (0.4) |
| Net income (loss) | 10 | 11.5 | 1.5 | 5.2 | 6.3 | 1.1 |
| Earnings (loss) per share: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | $0.21 | $0.24 | $0.03 | $0.11 | $0.13 | $0.02 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | $0.21 | $0.24 | $0.03 | $0.11 | $0.13 | $0.02 |

---

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**&nbsp;&nbsp;&nbsp;&nbsp;AVANOS MEDICAL, INC.**

**NON-GAAP RECONCILIATIONS**

**(unaudited)**

**(in millions)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Gross Profit** | **Gross Profit** | **Gross Profit** | **Gross Profit** |
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| As reported | $**116.9** | $98.9 | $**450.0** | $365.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;2020 Restructuring charges | **—** | 0.1 | **—** | 4.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Post-Divestiture restructuring and transition charges | **—** | 3.1 | **—** | 12.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition and integration-related charges | **—** | 0.2 | **1.4** | 0.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;EU MDR Compliance | **(0.2)** |  | **—** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangibles amortization | **4.3** | 1.7 | **14.4** | 6.7 |
| As adjusted non-GAAP | $**121.0** | $104.0 | $**465.8** | $389.4 |
| Gross profit margin, as reported | **53.8%** | 51.1% | **54.9%** | 49.1% |
| Gross profit margin, as adjusted | **55.6%** | 53.8% | **56.8%** | 52.3% |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Operating Profit** | **Operating Profit** | **Operating Profit** | **Operating Profit** |
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| As reported | $**26.2** | $27.0 | $**74.0** | $10.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;COVID-19 related expenses | **—** | 0.1 | **—** | 0.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;2020 Restructuring charges<sup>(a)</sup> | **—** | 2.0 | **—** | 12.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Post-Divestiture restructuring and transition charges<sup>(b)(c)</sup> | **—** | 5.0 | **—** | 14.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition and integration-related charges | **0.4** | 0.9 | **3.4** | 1.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;EU MDR Compliance | **1.5** | 1.6 | **6.9** | 4.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other items<sup>(d)</sup> | **3.8** |  | **3.8** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Litigation and legal<sup>(e)</sup> | **—** | (13.5) | **—** | 15.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangibles amortization | **7.7** | 4.2 | **25.7** | 16.7 |
| As adjusted non-GAAP | $**39.6** | $27.3 | $**113.8** | $74.5 |

---

_________________________________

(a)In the three months ended December 31, 2021, 2020 Restructuring charges include $0.1 million in "Cost of products sold" (see "Gross Profit" table), $0.9 million in "Selling and general expenses" and $1.0 million in "Other expense (income), net." In the year ended December 31, 2021, 2020 Restructuring charges include $4.2 million in "Cost of products sold", $2.4 million in "Selling and general expenses" and $5.8 million in "Other expense (income), net."

(b)Except for amounts impacting gross profit (see "Gross Profit" table), post divestiture restructuring are included in "Other expense (income), net."

(c)In the three months ended December 31, 2021, post divestiture transition charges includes $0.3 million in "Cost of products sold" (see "Gross Profit" table). For the year ended December 31, 2021, post divestiture transition charges includes $4.1 million, in "Cost of products sold," and $0.2 million of expense in "Selling and general expenses".

(d)Other items includes $2.6 million of consulting costs associated with evaluation of overall scope and alternatives for transforming our business and $1.2 million for the impairment of certain assets associated with research and development projects that were cancelled.

(e) Litigation and legal expenses are included in "Other expense (income), net."

------

**AVANOS MEDICAL, INC.**

**NON-GAAP RECONCILIATIONS**

**(unaudited)**

**(in millions)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Income Before Taxes** | **Income Before Taxes** | **Income Before Taxes** | **Income Before Taxes** |
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| As reported | $**23.9** | $26.3 | $**65.2** | $7.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;COVID-19 related expenses | **—** | 0.1 | **—** | 0.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;2020 Restructuring charges | **—** | 2.0 | **—** | 12.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Post-Divestiture restructuring and transition charges | **—** | 5.0 | **—** | 14.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition and integration-related charges | **0.4** | 0.9 | **3.4** | 1.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;EU MDR Compliance | **1.5** | 1.6 | **6.9** | 4.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other items | **3.8** |  | **3.8** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Litigation and legal | **—** | (13.5) | **—** | 15.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangibles amortization | **7.7** | 4.2 | **25.7** | 16.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on extinguishment of debt | **—** |  | **1.1** |  |
| As adjusted non-GAAP | $**37.3** | $26.6 | $**106.1** | $71.4 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Tax Provision** | **Tax Provision** | **Tax Provision** | **Tax Provision** |
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| As reported | $**(7.0)** | $(14.8) | $**(14.7)** | $(1.0) |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax effects of adjusting items | **(2.8)** | 11.7 | **(9.9)** | (11.9) |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax effects of the CARES Act and other | **0.5** | 0.7 | **(3.3)** | (1.6) |
| As adjusted non-GAAP | $**(9.3)** | $(2.4) | $**(27.9)** | $(14.5) |
| Effective tax rate, as reported | **29.3%** | 56.3% | **22.5%** | 13.7% |
| Effective tax rate, as adjusted | **24.9%** | 9.0% | **26.3%** | 20.3% |

---

------

**AVANOS MEDICAL, INC.**

**NON-GAAP RECONCILIATIONS**

**(unaudited)**

**(in millions, except per share amounts)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Net Income** | **Net Income** | **Net Income** | **Net Income** |
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| As reported | $**16.9** | $11.5 | $**50.5** | $6.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;COVID-19 related expenses | **—** | 0.1 | **—** | 0.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;2020 Restructuring charges | **—** | 2.0 | **—** | 12.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Post-Divestiture restructuring and transition charges | **—** | 5.0 | **—** | 14.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition and integration-related charges | **0.4** | 0.9 | **3.4** | 1.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;EU MDR Compliance | **1.5** | 1.6 | **6.9** | 4.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other items | **3.8** |  | **3.8** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Litigation and legal | **—** | (13.5) | **—** | 15.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangibles amortization | **7.7** | 4.2 | **25.7** | 16.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on extinguishment of debt | **—** |  | **1.1** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax effects of adjusting items | **(2.8)** | 11.7 | **(9.9)** | (11.9) |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax effects of the CARES Act and other | **0.5** | 0.7 | **(3.3)** | (1.6) |
| As adjusted non-GAAP | $**28.0** | $24.2 | $**78.2** | $56.9 |
| Diluted EPS, as reported | $**0.36** | $0.24 | $**1.07** | $0.13 |
| Diluted EPS, as adjusted | $**0.60** | $0.50 | $**1.65** | $1.17 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **EBITDA** | **EBITDA** | **EBITDA** | **EBITDA** |
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| EBITDA, as reported | $**39.6** | $36.5 | $**121.7** | $48.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;COVID-19 related expenses | **—** | 0.1 | **—** | 0.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;2020 Restructuring charges | **—** | 2.0 | **—** | 12.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Post-Divestiture restructuring and transition charges | **—** | 5.0 | **—** | 14.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition and integration-related charges | **0.4** | 0.9 | **3.4** | 1.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;EU MDR Compliance | **1.5** | 1.6 | **6.9** | 4.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other items | **3.8** |  | **3.8** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Litigation and legal | **—** | (13.5) | **—** | 15.0 |
| Adjusted EBITDA | $**45.3** | $32.6 | $**135.8** | $96.1 |

---

------

**AVANOS MEDICAL, INC.**

**NON-GAAP RECONCILIATIONS**

**(unaudited)** 

**(in millions, except per share amounts)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Free Cash Flow** | **Free Cash Flow** | **Free Cash Flow** | **Free Cash Flow** |
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| Cash provided by operating activities | $**33.7** | $52.2 | $**90.9** | $87.3 |
| Capital expenditures | **(4.9)** | (4.8) | **(19.3)** | (21.0) |
| Free Cash Flow | $**28.8** | $47.4 | $**71.6** | $66.3 |

---

**2023 OUTLOOK**

---

| | | | |
|:---|:---|:---|:---|
| | **Estimated Range** | **Estimated Range** | **Estimated Range** |
| Diluted earnings per share (GAAP) | $0.96 | to | $1.32 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangibles amortization | 0.20 | to | 0.20 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restructuring | 0.41 | to | 0.25 |
| &nbsp;&nbsp;&nbsp;&nbsp;EU Medical Device Regulation | 0.03 | to | 0.03 |
| Adjusted diluted earnings per share (non-GAAP) | $1.60 | to | $1.80 |

---

------

**AVANOS MEDICAL, INC.**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

**(unaudited)**

**(in millions)**

---

| | | |
|:---|:---|:---|
| | **As of December 31,** | **As of December 31,** |
| | **2022** | **2021** |
| **ASSETS** |  |  |
| **Current Assets** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $**127.7** | $118.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net of allowances | **167.9** | 131.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | **190.3** | 159.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | **13.9** | 18.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Current Assets** | **499.8** | 427.6 |
| **Property, Plant and Equipment, net** | **163.9** | 168.1 |
| **Operating Lease Right of Use Assets** | **30.6** | 38.6 |
| **Goodwill** | **819.4** | 801.6 |
| **Other Intangible Assets, net** | **251.0** | 141.2 |
| **Deferred Tax Assets** | **4.6** | 10.0 |
| **Other Assets** | **17.6** | 16.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**TOTAL ASSETS** | $**1786.9** | $1603.6 |
| **LIABILITIES AND STOCKHOLDERS' EQUITY** |  |  |
| **Current Liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current portion of long-term debt | $**6.2** | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current portion of operating lease obligation | **12.8** | 14.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade accounts payable | **67.9** | 56.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses | **98.9** | 68.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Current Liabilities** | **185.8** | 139.2 |
| **Long-Term Debt** | **226.3** | 130.0 |
| **Operating Lease Obligation** | **34.7** | 42.8 |
| **Deferred Tax Liabilities** | **25.4** | 11.9 |
| **Other Long-Term Liabilities** | **23.5** | 9.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**TOTAL LIABILITIES** | **495.7** | 333.0 |
| **Stockholders' Equity** | **1291.2** | 1270.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY** | $**1786.9** | $1603.6 |

---

------

**AVANOS MEDICAL, INC.**

**CONDENSED CONSOLIDATED CASH FLOW STATEMENTS**

**(unaudited)**

**(in millions)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| **Operating Activities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income | $**16.9** | $11.5 | $**50.5** | $6.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | **13.4** | 9.5 | **47.7** | 38.3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss on asset dispositions and asset impairments | **1.1** | 3.1 | **1.1** | 8.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities | **(1.6)** | 12.7 | **(24.3)** | 24.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes and other | **3.9** | 15.4 | **15.9** | 10.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Cash Provided by Operating Activities** | **33.7** | 52.2 | **90.9** | 87.3 |
| **Investing Activities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital expenditures | **(4.9)** | (4.8) | **(19.3)** | (21.0) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition of assets and investments in businesses | **—** |  | **(116.1)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Cash Used in Investing Activities** | **(4.9)** | (4.8) | **(135.4)** | (21.0) |
| **Financing Activities** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of secured debt | **—** |  | **250.0** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Secured debt repayments | **(1.6)** |  | **(126.6)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revolving credit facility proceeds | **—** |  | **150.0** | 20.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revolving credit facility repayments | **(20.0)** | (15.0) | **(170.0)** | (70.0) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of treasury stock | **(0.4)** | (10.9) | **(45.5)** | (11.5) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of debt issuance costs | **—** |  | **(2.9)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from the exercise of stock options | **0.1** | 0.1 | **1.7** | 6.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Cash (Used in) Provided by Financing Activities** | **(21.9)** | (25.8) | **56.7** | (55.3) |
| **Effect of Exchange Rate Changes on Cash and Cash Equivalents** | **3.8** | (0.9) | **(3.0)** | (4.0) |
| **Increase in Cash and Cash Equivalents** | **10.7** | 20.7 | **9.2** | 7.0 |
| **Cash and Cash Equivalents - Beginning of Period** | **117.0** | 97.8 | **118.5** | 111.5 |
| **Cash and Cash Equivalents - End of Period** | $**127.7** | $118.5 | $**127.7** | $118.5 |

---

------

**AVANOS MEDICAL, INC.**

**SELECTED BUSINESS AND PRODUCTS DATA**

**(unaudited)**

**(in millions)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | | **Year Ended December 31,** | **Year Ended December 31,** | |
| | **2022** | **2021** |<br>**Change** | **2022** | **2021** |<br>**Change** |
| Chronic Care: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Digestive health | $**92.9** | $86.8 | 7.0% | $**340.4** | $322.2 | 5.6% |
| &nbsp;&nbsp;&nbsp;&nbsp;Respiratory health | **35.9** | 38.8 | (7.5)% | **135.9** | 157.6 | (13.8)% |
| Total Chronic Care | **128.8** | 125.6 | 2.5% | **476.3** | 479.8 | (0.7)% |
| Pain Management: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Acute pain | **41.3** | 41.1 | 0.5% | **160.1** | 162.7 | (1.6)% |
| &nbsp;&nbsp;&nbsp;&nbsp;Interventional pain | **47.4** | 26.7 | 77.5% | **183.6** | 102.1 | 79.8% |
| Total Pain Management | **88.7** | 67.8 | 30.8% | **343.7** | 264.8 | 29.8% |
| Total Net sales | $**217.5** | $193.4 | 12.5% | $**820.0** | $744.6 | 10.1% |
|  | **Total** | **Volume** | **Pricing/Mix** | **Currency** | **Other** |  |
| Net Sales - percentage change - QTD | 12.5% | 13.6% | 0.8% | (2.0)% | —% |  |
| Net Sales - percentage change - YTD | 10.1% | 11.3% | 0.7% | (1.9)% | —% |  |

---

<br>