Good afternoon, everyone, and thank you for joining us this week at the J.P. Morgan Healthcare Conference. Great to have you all this afternoon join us. My name is Jalankith Timmy, and I'm an associate on the JP Morgan Healthcare team. Today, it is my pleasure to introduce Avanos Medical. Joining us for today's presentation is Dave Pacitti, CEO of Avanos, and Scott Galovan, CFO of Avanos. Following the presentation, we'll have brief time for a Q&A session. With that, I'll turn it over to Dave.
Thanks, everyone. Thanks for joining us. My name is Dave Pacitti. I'm the CEO of Avanos. At Avanos, our purpose is quite simple: getting patients back to things that matter in their lives, and today, I'll walk you through how that purpose translates into a durable long-term strategy, a focused strategy, durable growth, and most importantly, long-term value creation for the company, and just the normal disclosures before we begin, a quick note that today's discussion includes forward-looking statements and non-GAAP measures, which are detailed in our disclosures. No assurances can be given on future financial performance. Okay, so we believe our investment rationale is really, quite honestly, quite straightforward. We have solid mid-single-digit growth, market-leading positions with established reimbursement. We're expanding our global, very competent direct sales organization. We have a recently appointed new management team. We have several new leaders, including myself.
We have an attractive M&A pipeline, which presents growth opportunities and a strong balance sheet to support capital development deployment, excuse me. So a little bit about me. You see my background here. I don't really want to talk about me, though. But what I want to talk about is why I joined Avanos. I think that's probably the most important thing. And for me, I had a clear mandate to sharpen focus for the company, really to strengthen our execution and position the company for the next phase of growth. What attracted me was the market-leading positions that were in almost every category that we participate in. To me, really meaningful clinical impact, and we'll show you that when we get to some of our portfolio, and to really elevate further performance and take it to the next level as a company.
I believe my background in med tech and the team's background in med tech really helps us focus as an organization, really to focus on the right strategy, focus on using our capital allocations in the right way, smart mergers and acquisitions, and really having operational discipline. So I'll talk to you a little bit more about what we've done from an operational discipline standpoint as a company. So let us really share with you now sort of how we're organized and where we're going. All right, so the company is in two strategic segments. So when we report, we're talking about these two segments, specialty nutrition systems and pain management and recovery, roughly generating $700 million in revenue in total. We are a vertically integrated business.
We manufacture, we develop, we market a portfolio of products that are really focused to address some of the state's most challenging healthcare concerns. To walk through in a little bit more detail, we manufacture our products in the U.S., Canada, China, and Mexico. From a balance sheet perspective, like I said, $690 million to $700 million in sales. We have an adjusted EPS range of $0.85 to $0.95 and a balance sheet that has a leveraged return below 0.5 turn. You can see we're 2,200 employees strong globally, and you see the breakdown of our sales. North America, which is heavy North America, 23% international, but growing in double digits internationally in the last couple of years. But now we want to get a little bit into the portfolio so you can better understand the markets we participate in.
SNS business, this is the business that's been the core growth engine for Avanos for many years. It spans across the full continuum of enteral feeding, short-term feeding, long-term feeding, and neonatal solutions. We are the market leader in guided feeding tube placement with CORTRAK, the global leader in low-profile G-tubes with MIC-KEY, and the leading U.S. provider of enteral feeding solutions with our NeoMed ENFit. Our performance in this area, where we've had strong performance and a market leader, really reflects the durability of the portfolio that we've had over the years, the strong brand, and the actions we're taking to actually strengthen execution across markets. What we thought we would do here is actually help you better appreciate how we connect with our patients and our providers in a more of a clinical setting. Let me orient you to the slide.
In the gold or yellowish boxes, I'm never quite sure what color I'm colorblind here, but in the gold or yellow, this is our current product offerings, and in the purplish color is our future product offerings. We're going to go down the path in that way. Short-term feeding, there's a few products to call out. On the right-hand side of the slide, you see the blue monitor. That's our CORTRAK guided tube placement system. And this helps physicians achieve real-time positioning of feeding tubes, which is incredibly important in a clinical setting, and improves safety, and really, most importantly, begins nutrition sooner. In this category, we've been experiencing double-digit growth. Also, the CORGRIP securement device, we're experiencing double-digit growth with that. Now, part of that is because of an innovation we had, CORGRIP SR. We launched that last year, so things are going well.
This improves the securement of our feeding tubes with patients. And then if we think about moving forward, so let's focus on the purple section now. As we think about new product development and where we're going in short-term feeding, we're very focused on what we're calling intelligent feeding. Looking ahead, our innovation focus is really focused around that. We want to have more safety for the patient. We want to have workflow optimization. There's a lot going on, as you can see, with the patient in a short-term acute setting and really focus on efficacy, making sure they're getting the right nutrition at the right time. This position us well as a company for being a long-term partner and having strong clinical results as they evolve. Okay, long-term feeding. MIC-KEY, when you go to a hospital, everyone knows this product. It is by far the market leader.
It's a low-profile feeding tube. It's put in at the hospital. A lot of people are home when they have a need for feeding tubes. This supports long-term enteral nutrition, really delivering solid growth by strong execution by our entire team. We've also seen success with our MIC-KEY Cares program app. This is to educate patients and providers. We've had 5,000 participants sign up with the MIC-KEY Cares app in only just five months. If we think longer term, we're really thinking about creating a patient-centric ecosystem, especially blended nutrition, feeding pumps and giving sets, making sure, again, people are getting the right food, the right nutrition at the right time, and we're also looking at specialized blended nutrition, which is really on the new trend of real food feeding. Okay, moving over to neonatal solutions.
We have been the market leader, and we continue to be the market leader with double-digit growth. Now, that momentum continues. We made an acquisition, which we have a dedicated slide I'll talk about with the Nexus TKO needleless connector, which we acquired that in September 2025. So that's further strengthening our position in the NICU and the PICU. Our current NeoMed feeding tube portfolio is designed for reliable access to ensure safe nutrition delivery for NICU patients, especially in those very critical early days of life. Our medication administration, that portfolio includes the ENFit syringes as well now as TKO needleless. These connectors provide safeguards. They're features for neonates, such as making sure we don't have any disconnects of any kind or protecting against reflux. Looking ahead, we believe we have a really strong neonatal pipeline.
So we're really focused on the population and some of the highest imminent needs, which we believe we're in the best position to leverage that. We thought to bring all this together on our specialty nutrition, the best story we could tell you is a true patient story. So let me tell you about Baby Noah and Baby Noah's journey. Noah was born under two pounds. Our products were all along his journey from the early days in the NICU all the way to when he went home. All along that time, he was using Avanos products due to the fact that he did not have enough nutritional supplements. Now, today, Noah is six years old in first grade, doing all the things a normal first grader would do. And this is exactly what brings our people to work every day.
The reason why our team wants to come to work every day is to make that kind of impact for patients like Baby Noah. And for investors, our belief is that this is exactly what underpins us as a strong company to work with durable growth and long-term value creation. And we believe as you solve meaningful clinical challenges, you build trust with customers, you build trust with patients, you become more relevant, and you have sustainable demand over time. Okay, I'm going to talk a little bit about these markets. So remember, short-term feeding, long-term feeding, neonatal solutions. You can see the size of the markets. I'll reference them. But overall, the global enteral feeding tube market is roughly $1 billion. It's growing at about 5%. And this is really driven by chronic and lifelong disease prevalence.
Our portfolio spans across the acute care setting as well as home setting, but a lot of this is being done at home. Patients need these nutritional supplements for a long term, so they're at home with our products. The U.S. neonatal feeding business for Avanos, we're the number one player as I mentioned. We're outperforming the market at mid-single-digit growth, and this is really driven by low birth weights of neonates as well as ENFit adoption. In the ICU, the growth that we're seeing is really driven by aging populations, and there's a need now for more earlier enteral nutrition, and guided tube placement is becoming more of the standard of care in many hospitals, and if you think about long-term feeding, the market continues to grow. It's large. It's a growing market.
It's driven by pediatric neurological diseases as well as cancer adult patients, which leads Avanos in a really strong position to continue to grow in that area. Okay, now I want to talk a little bit more about the pipeline. So I mentioned some of these in the purplish slides earlier. We talked about intelligent feeding. We talked about pumps and sets. We mentioned blended nutrition. But we also believe that we can leverage our existing commercial channel. We have very strong commercial teams around the globe. We see adjacencies that we can get into faster growing markets sooner, things like NICU, PICU. We're already into NICU partially, critical care, Upper GI, and Labor and Delivery. So we see the opportunity not only in some of the product categories that we're already working on, but in these adjacent markets as well.
And then I wanted to briefly mention Nexus because this is going to be a really good example of the type of acquisitions we're trying to make. We're trying to be, number one, very strategic. We want to make sure we have synergy with our existing teams, both on the pain side and on the nutrition side, but specifically focused in nutrition. We want to make sure there's strong synergy with that channel overall. So Nexus is the maker, again, of the TKO anti-reflux connector. It had great synergy around the globe with our existing teams that we have in place, and we can leverage the call point in the NICU and the PICU. In terms of the finances, it was immediately accretive in revenue. We acquired and closed the deal in mid-September of 2025. And for those four months, we had realized about $5 million in revenue.
It was funded entirely with cash, no additional debt, and it really expands our access to a high-value underserved market, but the reason why to have this slide up here for you guys is really to let you know this is how we're thinking about acquisitions. It's very strategic, very smart, leveraging the synergies we have with our business and continue to build upon it. I would say as we continue to acquire, because we have the balance sheet to do it, you'll continue to see these types of acquisitions with, I would say, a special emphasis in the specialty nutrition business. Okay, Pain Management and Recovery, so I want to talk a little bit about that portfolio with you as well. Good news is Pain Management and Recovery has returned to growth, which has been important for us, and the progress we're seeing is really the old-fashioned way.
We're commercial execution. We're seeing favorable reimbursement dynamics, global expansion. We're expanding in direct markets and strategic partnerships with other companies coming together. In pain management and recovery, we are the number one U.S. provider of radiofrequency ablation. We have a differentiated three-tier offering, which I'll talk about in more detail. But this is really driven by adoption for RFA in both the hospital setting as well as in ASCs. We are the leading provider of non-opioid post-surgery pain pumps or surgical pain therapies. And we have the number one prescribed cold compression product in Game Ready, which is a strong brand in the sporting community as well. Okay, so get back to the clinical setting so you can better appreciate our products and how we connect with our patients. RFA adoption, as I mentioned, a lot of it happened both in the hospital and the outpatient setting in ASCs.
We are the company with the three-tiered portfolio, so it's a lower-end, mid-tier, and higher-end product. We're seeing a lot of placements of our capital, which is driving recurring consumable revenue, which is incredibly important for this business, and again, taking advantage of the three-tiered portfolio we have. In fact, our mid-tier portfolio product, the Trident, has been growing at double digits the last two years. The NOPAIN Act took effect in January of 2025, so that now allows for a separate payment for our ON-Q and ambIT surgical pain pumps, and in Game Ready, we recently refreshed our strategy. We're very focused now on core sports teams, high school teams, pro teams, college teams, as well as rehab centers, physical rehab centers. As we look ahead, although we're focused on innovation, we're mostly focused on commercial execution, operational excellence, and optimizing ourselves in manufacturing as well.
We look at this, all these actions we're doing together, it gives us much more confidence in this pain business. We're reinforcing our confidence as a team, and we believe that now that we have strong growth projections moving forward. Okay, look at the markets. You can see the size of the markets, again, in RFA, Game Ready, and surgical pain relief. In surgical pain relief, it's about a $320 million market. It's a flat market. So what we're focused on here is share retention, really trying to get adoption with the new reimbursement in place and commercial execution, as well as strategic partnerships. In Game Ready, it's roughly a $300 million. That market's grown 6%-8%. So this is being supported by more clinical use and improving reimbursement overall. And then radiofrequency ablation, again, the three-tiered offering, Sentech, Trident, and our COOLIEF system.
This is our largest opportunity in pain management and recovery, and it's growing about 3%-5%. Again, a lot of adoption both in the hospital and the ASC settings. Together, this creates a balanced portfolio for us and stable revenue and really attractive growth opportunities for us as a company. Okay, pipeline. This is important because I want to make sure that I'm clear on this part. As we think about the pipeline for pain management and recovery, we're probably less focused on innovation and really focused on commercial execution, strategic partnerships, continue to have a lot of operational discipline. However, if there were areas that we would invest in, I would think expanded indications and ablation like BVNA as an example, potentially HIFU, in surgical pain, things like electrical stimulation nerve block, excuse me, and potentially an isolated Game Ready.
But I do want to emphasize as we think about our capital allocations, we're mostly focused here on the execution of our commercial teams and operational discipline overall. As I mentioned before, we're expanding our global sales organization. And I do want to emphasize that we have a very competent team. They really are seen as trusted advisors both in pain and nutrition. We have dietitians. We have nutritionists on board. You see our hospital customers really relying on them for guidance in both pain and in the nutrition side. You can see the breakdown in North America, Europe, Latin America, and also Asia-Pac. What we're really focused on is going direct in key markets, have priority in key markets as well, enabling for a deeper customer engagement with our customers. And we're trying to have faster adoption of our therapies.
This allows for, we believe, more consistent execution as a team and really let these platforms grow internationally as well. Okay, so now that you know a little bit about our products, you know how we connect with patients, you know how we're organized from a commercial standpoint, we want to share with you and introduce our strategic imperatives to you, and it's really our vision. We're using these strategic imperatives to become a billion-dollar business in 2030, so again, roughly $700 million today. As we go through these strategic imperatives in the next couple of slides, we believe this is the formula for us to become a billion-dollar business in 2030, and these are our five strategic imperatives. Accelerate growth in our strategic segments. Now, I'm going to talk about that in more detail in the next slide. Find synergistic M&A opportunities just like Nexus.
So you expect to see more of those types of things from us in the coming months and years. Improve or divest of underperforming assets. So last year, we announced that we sold our hyaluronic acid business as well as our Game Ready rental business. In our minds, if these aren't the right fits and they're underperforming, we'll sell those assets or try to dramatically improve them as well. Realize more operating efficiency. I'm going to talk about this in more detail, but I'll show one clip on this. The new management team we have in place over the span of the last three months of last year. We embarked on an exercise to create more operating efficiencies. We used outside partners to help us.
We announced in our fourth quarter earnings, or sorry, our third quarter earnings in November that we were taking out $15-$20 million of cost. It will be fully realized in 2026. Things like that, we're going to continue to operate that way and being very focused on operational efficiencies. To make all this work, we got to mitigate the impact of tariffs. Now, part of that is taking out costs. We'll show you other things we're doing to mitigate tariffs as well. As we go a little bit deeper into this, when we think about accelerating growth in our two strategic segments, especially nutrition systems and pain management and recovery, we're really focused on commercial execution. Innovation, we showed you some of the innovation on those slides, right? International expanding, we continue to expand.
Again, that team's experiencing double-digit growth as we go direct in many markets. We're seeing even more growth. M&A, like Nexus, and continue to manage our margin profile, so being very thoughtful about the cost of the organization and manage our margin and get more optimized as we move forward as a company. We believe doing that gets us to that billion-dollar number in 2030. Okay, let's talk about the financials in a little bit more detail, so we are reaffirming our guidance of $690-$700 million in sales. We believe we'll finish on the upper end of that guidance for this year. You can see our full-year estimate for adjusted EPS, $0.85-$0.95. On the left-hand side, you can see the breakdown in sales from SNS and Pain Management and Recovery and our operating profit as well.
So we're talking about mid-single-digit growth in segments, the balance sheet capacity that's very balanced, as I mentioned. We did have an $18 million tariff headwind that I mentioned as well. So let's talk about other mitigation tactics as it relates to tariffs. First of all, last year, we announced that we're exiting China. If you recall in the beginning of the presentation, one of the areas I mentioned we make products is in China. Okay? We announced that we'll be out of China by the middle of this year, June of this year. That actual plan is we're highly confident in our plan. In fact, we feel that we're ahead of plan. That's an important part of mitigating our tariffs. Strategic pricing and cost optimization. We've taken price increases across the portfolio, both in the U.S. and outside the U.S.
I would say we've seen more of that outside the U.S. overall in terms of where we've been able to get price increases. Collaboration with the U.S. government as well as AdvaMed our trade association. So just to give you a couple of examples of that, we were able to get an exemption, a temporary exemption in China last year. We received a Nairobi Protocol exemption in Mexico for our long-term feeding tubes. And we've been working very closely with the U.S. Trade Association. We've been working closely with other government agencies. And of course, we've been using our partners at AdvaMed to continue to focus on ways to mitigate tariffs from a lobbying perspective. And then also, it's very important we continue to manage all the new contracts that we sign. So there's price increases to build in there.
Now, to talk a little bit about the savings that we realized, the $15-$20 million in savings we realized that we announced in November of last year. What we did is we started at the top. We looked at our senior management team. We eliminated several positions and consolidated many jobs. This simplified decision-making really streamlined our product development as well as an organization. We were very focused on the product development side as well. We re-engineered that process, and through re-engineering, that process allowed us to take out more costs. We optimized our supply chain and ultimately our manufacturing footprint. When you bring that all together, that allowed us to help us mitigate those tariffs that we're dealing with this year in 2025 and 2026. Again, reaffirming our guidance, $690-$700 million.
We feel like we'll be on the higher end of that and our earnings per share of $0.85-$0.95. So in summary, as we look at the company, we have solid organic growth. We're in market-leading positions with established reimbursement. We're very focused on those strategic imperatives I shared with you with that new management team we have in place. We have an M&A pipeline that presents opportunities for us to continue to accelerate growth. And we have a very, very strong balance sheet as an organization. And last but not least, we're looking forward to getting into more details with our investors on June 23rd in New York City. We'll have a full day of an investor day in New York. So I want to thank you for listening and happy to take any questions you may have.
Awesome. Thanks, Dave. Great hearing the update on the company.
I'll open up the questions in the room, but I'm also happy to begin too because I've got a few actually for you. So one, just a little bit about you so far. You recently joined the company, and you've talked about a lot of great things so far that's been accomplished at the company. What are you most proud of that you've done over the past, call it, year that you've been at the company? And then also, what are you excited about this upcoming year for the company?
Yeah. I would say a couple of things. One, it's never easy to go through a restructuring of the company. And it's not that it's a proud moment, but teaching the organization to go through a difficult task like that, with the work of our outside partners, actually BCG, that's here, it was important. We looked at the cost profile of the company, and we realized the cost profile was much higher than actual revenue. So it wasn't that hard of an exercise to go through that part. What it was, was the discipline to execute it, right? And not have creeping cost. So for me, that was incredibly important. The fact that we have a new management team that works really well together has been also a very proud moment.
I think on the product development side, what was important for us is to create a model where we can start hitting in a cadence. So some of our new product development processes, we'll actually outsource some things. If it's not in our wheelhouse, why should we spend years trying to do it? Let's just give it to someone else to do it. So we have several programs already set up where we're working with outside partners to do the R&D work. You hear about build-to-buys and those types of things all the time. What I think this allows us to do is actually hold people more accountable. You sign a contract with a company to develop a feeding pump, which is one of the areas that we'll be doing this in. We'll have a signed contract. We'll have gates. We'll have measurement tools.
And we can really have a higher degree of confidence about when these products are coming out. It's going to be important. We have a very strong sales organization across the globe. Now we got to feed them new products. So I'm excited about that as well.
Nice. Awesome. And some of the stuff that you talked about from a strategic point is very interesting. And you had a great slide on the strategic imperatives and strategic priorities of the company. How do you think about prioritizing some of those key elements? What's most important for you coming out of the gate in the start of the year? And then how are you thinking about the rest of the year for the rest of the strategic priorities?
So I'll flip it around really quick. A lot of questions we get from our investors, right? I think we talk to our investors, although we feel highly confident in our tariff mitigation plan and getting out of China, everyone wants to see that happen. So that's got to be our top priority, make sure that plan happens. I'm proud to say we're already making products in Mexico, and we're using another part of the world as well for products in Cambodia or Thailand. So having that plan executed fully and getting our syringes, our NeoMed syringes, out of China, made mostly in Mexico and other places, is going to be really important. We will apply for USMCA tariff exemption. 60%-70% of the products we already make in Mexico fall under USMCA. And I don't know if you heard me mention the Nairobi Protocol.
A lot of people don't know that. It's a very obscure. It goes all the way back to FDR. And this was the fact that they didn't want any type of product that was made for a chronically ill patient to have a tariff, duty, or tax on it, right? Of course, later on, years and years later, people took broader interpretation of that. But if you think about it, if you're on a feeding tube, you're a chronically ill patient, right? And we got that exemption. And I'm very proud of the fact that we were able to get that done.
Congratulations. That's awesome.
Yeah.
I want to talk a little bit about growth, right? The company delivered very strong growth throughout 2025. How are you thinking about leading the commercial teams to execute now that you're in charge and you've got a strong management team? How are you thinking about the commercial execution of the company? And then how is that going to help deliver some of that consistent growth that you alluded to throughout 2026 and going on?
Yeah. Good question. So number one, we have strong sales leaders. We have a very strong team. They are considered experts in their field. We got to feed them products, right? So that's where there's some product. I mentioned that our next generation MIC-KEY comes out in the second half of 2026. We got to deliver that, right? That's really important. I would say the other thing, as I learned from my own commercial experience over the years, I also want to push the team to be much more innovative and entrepreneurial from a commercial standpoint, trying new business models, partnering with customers in a deeper way. I don't even think the team sometimes appreciates how good of a relationship they have. I was at the Cleveland Clinic as an example with the team all around the whole place.
And we had their most senior leaders there really helping us along the way as we were implementing our CORTRAK system there. And the team has great relationships, and we need to leverage those and maximize the opportunity there. I feel we're very poised to deliver that growth, but it is important that we continue to deliver products to that team.
Awesome. Last one for me before I open it back up. Something that I'm really excited about is just the future of Nexus, right? And some of the acquisitions that you're thinking and that you've planned for the company. What's an acquisition fit that's part of the strategic roadmap? How are you thinking through that as you're thinking through the next chapter of the company? And then more importantly, can we expect similar M&A? Or what's your thought process as being the new leader of the company?
So as we think about the billion-dollar goal in 2030, we know that we'll have to continue to acquire, so the formula there is mid-single-digit growth, mid- to high single-digit growth in the markets that we serve today, but we're going to have to acquire at least one deal a year, roughly $20 million or higher, maybe a little bit bigger than that, which Nexus was, additive to our revenue with good margins. Yes, you're going to expect it. Scott, who also does M&A for us, he knows that's important for us, and we'll continue to do it. Now, again, we don't want to go into whole new fields as we do this. We're not going to do pulsed field ablation or sell coronary stents or orthopedic joints, so we want to build off of that specialty nutrition sales force mostly, right?
And as we build upon that, and Nexus is a great example. That wasn't technically in specialty nutrition, but it's a perfect call point in the NICU for our existing team, right? We're doing medication delivery mostly with a Nexus. There's a lot of opportunity to continue to expand like that. And as I mentioned, we also see synergies in PICU, Upper GI, Labor and Delivery as well. So there are opportunities as well. The other thing about some of these fields, it's not overly competitive spaces. And if you're in the NICU, one of the things that we're really intrigued by is that the pricing is incredibly durable. Nobody wants to go and mess with a neonate not getting the right product. So it's a much more durable pricing. And actually, it's easier to get in our minds, price increases. Maybe just a note on pain.
Since we are the market leader in ablation, and we really are, the team does a great job with the portfolio. That would be one area, and I mentioned it briefly, where I could see we expand with some capital allocation. If we could get an expanded indication that increases the market by $200 million, it makes a ton of sense for us to do something like that.
That makes a lot of sense. That's awesome. Really excited for what's to come over the course of the year ahead.
Thank you.
Thank you. Any other questions from the room or anyone joining us virtually? Okay. Fantastic. Awesome.
All right.
Thank you very much, Dave.
Thank you.