AVNS

Introduction Avanos is a medical technology company focused on delivering clinically superior medical device solutions that help patients get back to the things that matter. 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. This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide investors with an understanding of our recent performance, and should be read in conjunction with the condensed consolidated financial statements contained in Item 1, “Financial Statements” in this Form 10-Q and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “Form 10-K”). This MD&A contains forward-looking statements. Refer to “Information Concerning Forward-Looking Statements” at the beginning of this Form 10-Q for an explanation of these types of statements. The following will be discussed and analyzed: •Pending Merger; •Restructuring Activities; •Business Acquisition; •Risks Related to Tariffs; •Results of Operations and Related Information; •Liquidity and Capital Resources; and •Critical Accounting Policies and Use of Estimates. Pending Merger On April 13, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, A-AV Holdco I, Inc., a Delaware corporation (“Parent”), and A-AV MergerSub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”). Upon the terms and conditions set forth in the Merger Agreement, Merger Subsidiary will be merged with and into Avanos (the “Merger”), with Avanos surviving the Merger as a wholly-owned subsidiary of Parent. Parent and Merger Sub are affiliates of American Industrial Partners (“AIP”), an operationally oriented industrials investor. At the effective time of the Merger, each issued and outstanding share of our common stock (other than certain excluded shares and shares held by stockholders who properly exercise appraisal rights) will be cancelled and converted into the right to receive $25.00 per share in cash, without interest. In addition, at or immediately prior to the effective time, our outstanding equity awards, including stock options and restricted stock units, will be cancelled and converted into the right to receive cash payments based on the Merger consideration, subject to the terms of the Merger Agreement. A copy of the Merger Agreement is attached as Exhibit 2.1 to our Current Report on Form 8-K dated April 14, 2026. The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement. See Note 14, “Subsequent Event” in Item 1 of this Form 10-Q for further details regarding the pending Merger. Restructuring Activities Post-RH Divestiture 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 23 Table of Contents severance and benefits. We anticipate annualized savings from these initiatives to be between $15.0 million and $20.0 million. 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 were included in “Cost of products sold” and “Selling and general expenses” in the accompanying condensed consolidated income statements. Business Acquisition 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 products during the first three years following the acquisition. The purchase price was funded by available cash on hand. Nexus is a leading manufacturer of anti-reflux needleless connectors. Its proprietary TKO® anti-reflux needleless connector technology, 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 acquisition of Nexus will enhance our Specialty Nutrition Systems (“SNS”) portfolio of products. See Note 3, “Business Acquisition” in Item 1 of this Form 10-Q for further details regarding the Nexus acquisition. Risks Related to Tariffs The tariffs imposed to date, and the imposition of new and increased U.S. tariffs and retaliatory trade measures by other countries pose significant risks to our global operations, particularly given our reliance on manufacturing facilities in Mexico and Canada, and on raw materials and components sourced from foreign suppliers, including suppliers in China and Mexico. In addition, we distribute and sell our products globally. The tariffs imposed to date have increased the cost of the products and components we import and may disrupt our established supply chains. Additional tariffs have been threatened by the U.S. administration. We have taken action to mitigate the impact of tariffs, including through cost containment measures, pricing actions where appropriate, supply chain adjustments and reliance on international agreements that allow for reduced or duty-free importation of products. However, tariff rates continue to fluctuate and the rates that may ultimately be in effect for the near and long term are uncertain. Our inability to offset increased costs of, or a drop in demand for, our products as a result of tariffs could materially negatively affect our financial performance. See Part I, Item 1A, “Risk Factors” in our most recent Form 10-K for the year ended December 31, 2025 for a more detailed description of the risks related to the imposition of new and retaliatory tariffs. 24 Table of Contents Results of Operations and Related Information Use of Non-GAAP Measures In this section, we present “Adjusted operating income,” which is a profitability measure that is not calculated in accordance with accounting principles generally accepted in the United States (“GAAP”) and is therefore referred to as a non-GAAP financial measure. We provide this non-GAAP measure because we use it to measure our operational performance and provide greater insight into our ongoing business operations. This measure is not intended to be, and should not be, considered separately from, or an alternative to, the most directly comparable GAAP financial measures. A reconciliation of the non-GAAP measure to the most directly comparable GAAP financial measures is provided below under “Adjusted operating profit.” Net Sales Our net sales are summarized in the following table for the three months ended March 31, 2026 and 2025 (in millions): Three Months Ended March 31, 2026 2025 Change Specialty Nutrition Systems: Enteral feeding $ 84.6 $ 74.5 13.6 % Neonate solutions 39.4 26.6 48.1 % Total Specialty Nutrition Systems 124.0 101.1 22.7 % Pain Management and Recovery: Surgical pain and recovery 21.8 24.5 (11.0) % Radiofrequency ablation 34.5 31.7 8.8 % Total Pain Management and Recovery 56.3 56.2 0.2 % Segment Net Sales 180.3 157.3 14.6 % Corporate and Other 1.9 10.2 (81.4) % Total Net Sales $ 182.2 $ 167.5 8.8 % Net Sales - Percentage Change: Total Volume Pricing/Mix Currency Other(a) Specialty Nutrition Systems 22.7 % 19.0 % 1.4 % 2.8 % (0.5) % Pain Management and Recovery 0.2 % 3.2 % 0.1 % 1.0 % (4.1) % Corporate and Other (81.4) % (81.4) % — % — % — % ___________________________________________________________________________ (a)Other includes the effects of our withdrawal from certain revenue streams that did not meet our return criteria and rounding. Segment and Product Category Descriptions 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 pain therapy and our Trident and ESENTEC RFA products used to treat chronic pain conditions. 25 Table of Contents Net Sales by Segment - First Three Months of 2026 Compared to the First Three Months of 2025 Specialty Nutrition Systems For the three months ended March 31, 2026, SNS net sales were $124.0 million, an increase of 22.7% compared to the prior year period. Volume growth was 19.0%, primarily driven by continued strong demand across both our enteral feeding and neonate solutions. Pain Management and Recovery For the three months ended March 31, 2026, PM&R net sales were $56.3 million. Overall net sales growth was relatively flat compared to the prior year period. RFA solutions net sales grew 8.8%, while surgical pain and recovery net sales decreased by 11.0%, primarily driven by lower volume. Net Sales by Geographic Region Net sales by region is presented in the table below (in millions): Three Months Ended March 31, 2026 2025 % Change North America $ 137.1 $ 130.8 4.8 % Europe, Middle East and Africa 30.6 23.7 29.1 Asia Pacific and Latin America 14.5 13.0 11.5 Total net sales $ 182.2 $ 167.5 8.8 % Cost of Products Sold (in millions): Three Months Ended March 31, 2026 2025 Specialty Nutrition Systems $ 57.4 $ 43.4 Pain Management and Recovery 26.5 24.9 Segment Cost of Products Sold(a) 83.9 68.3 Corporate and Other 4.1 9.4 Total Cost of Products Sold $ 88.0 $ 77.7 __________________________________________________ (a) Segment Cost of Products Sold includes the “Cost of goods sold” and “Distribution” line items in “Segment Information” in Note 4 to the condensed consolidated financial statements, $4.3 million of depreciation and amortization expense in the three months ended March 31, 2026, and $3.4 million of depreciation and amortization expense in the three months ended March 31, 2025. For the three months ended March 31, 2026, cost of products sold increased compared to the prior year period, primarily due to increased tariffs along with an increase in segment net sales. Research and Development (in millions): Three Months Ended March 31, 2026 2025 Specialty Nutrition Systems $ 3.9 $ 4.2 Pain Management and Recovery 1.3 1.2 Segment Research and Development 5.2 5.4 Corporate and Other — — Total Research and Development $ 5.2 $ 5.4 __________________________________________________ (a) Segment Research and Development includes $0.2 million of depreciation and amortization expense in each of the three months ended March 31, 2026 and 2025. Research and development consists primarily of compensation for personnel and expenses for product trial costs, outside laboratory and license fees, the cost of laboratory equipment and facilities and asset write-offs for equipment associated with unsuccessful product launches. 26 Table of Contents Selling and General Expenses (in millions): Three Months Ended March 31, 2026 2025 Specialty Nutrition Systems $ 39.5 $ 32.3 Pain Management and Recovery 30.2 29.9 Segment Selling and General Expenses 69.7 62.2 Corporate and Other 8.0 13.5 Total Selling and General Expenses $ 77.7 $ 75.7 __________________________________________________ (a) Segment Selling and General Expenses includes the “Advertising, promotion and selling expenses” and “General expenses” line items in “Segment Information” in Note 4 to the condensed consolidated financial statements and $5.6 million of depreciation and amortization expense in the three months ended March 31, 2026, and $5.3 million of depreciation and amortization expenses in the three months ended March 31, 2025. In the three months ended March 31, 2026, selling and general expenses increased compared to the prior year period, driven by higher selling costs partially offset by savings realized from our restructuring activities. Other Expense (Income), net (in millions): Three Months Ended March 31, 2026 2025 Specialty Nutrition Systems $ 0.1 $ 0.1 Pain Management and Recovery — 0.1 Segment Other Expense, net 0.1 0.2 Corporate and Other 2.3 (1.8) Total Other Expense (Income), net $ 2.4 $ (1.6) Other income and expense, net was an expense of $2.4 million for the three months ended March 31, 2026, compared to other income, net of $1.6 million in the three months ended March 31, 2025. Other income in the three months ended March 31, 2025 includes a recovery of $1.4 million related to a customer claim in 2023. Operating Income (in millions): Three Months Ended March 31, 2026 2025 Specialty Nutrition Systems $ 23.1 $ 21.1 Pain Management and Recovery (1.8) 0.2 Segment Operating Income 21.3 21.3 Corporate and Other (12.4) (11.0) Total Operating Income $ 8.9 $ 10.3 The above-described items drove segment operating income to $21.3 million for both the three months ended March 31, 2026 and 2025. Consolidated operating income was $8.9 million for the three months ended March 31, 2026, compared to $10.3 million for the three months ended March 31, 2025. 27 Table of Contents Adjusted Operating Income A reconciliation of adjusted operating income, a non-GAAP measure, to operating income is provided in the table below (in millions): Three Months Ended March 31, 2026 2025 Operating Income, as reported (GAAP) $ 8.9 $ 10.3 Acquisition and integration-related charges 0.9 — Post-RH Divestiture restructuring 1.8 3.1 Litigation and legal — (1.4) Intangibles amortization 4.6 5.1 Adjusted operating income (non-GAAP) $ 16.2 $ 17.1 The items noted in the table above are described below: Acquisition and integration-related charges: We had $0.9 million of acquisition or integration-related charges in the three months ended March 31, 2026, related to our acquisition of Nexus in September 2025. We had no acquisition or integration-related charges for the three months ended March 31, 2025. Post-RH Divestiture restructuring charges: During 2024, following the RH Divestiture, we initiated the Plan. In the three months ended March 31, 2026 and 2025, we incurred expenses of $1.8 million and $3.1 million, respectively, related to the Plan, which primarily consisted of employee severance and benefits costs, professional services fees and equipment write-offs. See Note 2, “Restructuring Activities” in the accompanying notes to the condensed consolidated financial statements. Litigation and legal: We had no costs for litigation matters in the three months ended March 31, 2026. In the three months ended March 31, 2025, we recovered $1.4 million related to a settlement for a customer claim from 2023. Intangibles amortization: Intangibles amortization is related primarily to intangibles acquired in business acquisitions and was $4.6 million for the three months ended March 31, 2026, and $5.1 million for the three months ended March 31, 2025. Interest Expense Interest expense consists of interest accrued and amortization of debt issuance costs on our revolving credit facility net of interest capitalized on long-term capital projects. See Note 7, “Debt” in Item 1 of this Form 10-Q. Interest expense was $1.5 million for the three months ended March 31, 2026, compared to $2.1 million in the three months ended March 31, 2025. Our outstanding debt balances, net of unamortized discounts, were $98.2 million and $100.5 million as of March 31, 2026 and December 31, 2025, respectively. Income Taxes The income tax provision was $2.5 million in the three months ended March 31, 2026, compared to $3.1 million in the three months ended March 31, 2025. Our effective tax rate was 32.9% in the three months ended March 31, 2026. For the three months ended March 31, 2025, our effective tax rate was 32.0%. Liquidity and Capital Resources General Our primary sources of liquidity are cash on hand provided by operating activities and amounts available with our Revolving Credit Facility under our Credit Agreement. We expect our operating cash flow will be sufficient to meet our working capital requirements and fund capital expenditures in the next twelve months. In addition, with our borrowing capacity, we expect to have the ability to fund capital expenditures and other investments necessary to grow our business for the foreseeable future for both our domestic and international operations. As of March 31, 2026, $48.1 million of our $65.6 million of cash and cash equivalents was held by foreign subsidiaries. We consider the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested overseas and currently do not have plans to repatriate such earnings. We do not expect restrictions on repatriation of cash held outside of the United States to have a material effect on our overall liquidity, financial condition or results of operations for the foreseeable future. 28 Table of Contents Cash and cash equivalents decreased by $24.2 million to $65.6 million as of March 31, 2026, compared to $89.8 million as of December 31, 2025. The decrease was primarily driven by $12.3 million of cash used in operating activities, $4.3 million of capital expenditures, $3.4 million of investments in non-affiliates, and payments of $2.3 million on our term loan. In the prior year, cash and cash equivalents decreased by $10.7 million to $97.0 million as of March 31, 2025. The decrease was primarily driven by payments of $25.0 million on our revolving credit facility, $6.7 million of capital expenditures, $2.4 million of investments in non-affiliates, and payments of $2.3 million on our term loan. This was partially offset by $25.7 million of cash provided by operations. Long-Term Debt 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 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. 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. See Note 7, “Debt” in Item 1 of this Form 10-Q for further details regarding our debt agreements. Critical Accounting Policies and Use of Estimates Our financial statements are prepared by applying certain accounting policies. See Note 1, “Accounting Policies” in Item 8, “Financial Statements and Supplementary Data” in the Form 10-K, which describes our most significant accounting policies. In addition, our critical accounting policies and estimates are presented under the caption “Critical Accounting Policies and Use of Estimates” in Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operation” in the Form 10-K. Certain of these policies require management to make estimates or assumptions that may prove inaccurate or be subject to variations that may significantly affect our reported results and financial position for the period or in future periods. Management views these policies as critical accounting policies. See Note 1, “Accounting Policies” in Item 1 of this Form 10-Q for updates to our critical accounting policies and a discussion of recent accounting pronouncements. In the three months ended March 31, 2026, there were no significant changes to our critical accounting estimates from those disclosed in Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operation” in the Form 10-K.