Medical technology company Avanos (NYSE:AVNS) is currently undergoing a three-year transformation process with the objective of optimizing its portfolio to drive accelerated growth. As part of its transformation plan, the company has announced the acquisition of Canada-based Diros Technology, a manufacturer of innovative RF (Radio frequency) products used to treat chronic pain conditions.
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Portfolio Optimization to Accelerate Growth
The acquisition of Diros will likely enhance Avanos’ pain management treatment options. Further, it will complement and strengthen its RF product offerings.
The company’s CEO, Joe Woody, said that Diros’ full range of differentiated pain management products fortifies Avanos’ leadership position in RF technology. He added that the comprehensive suite of RF offerings puts Avanos in a favorable position to deliver future growth across all major sites of patient care, including hospitals and ambulatory surgery centers.
The company expects to close the deal in the third quarter of 2023. Further, AVNS will fund the acquisition through a combination of its existing credit facility and available cash (AVNS had cash and cash equivalents of $95.7 million at the end of the first quarter).
Moreover, it expects the acquisition to have an immediate positive impact on its revenue growth and earnings.
Earlier, as part of its transformation plan, AVNS announced the sale of its respiratory health business to SunMed Group.
The company is focusing on optimizing its portfolio through acquisition, divestiture, and SKU (Stock-Keeping Unit) rationalization initiatives, which the company’s management believes will strengthen the company’s financials.
What is the Turnover of Avanos Medical?
Avanos Medical generated revenue of $820 million in 2022 and expects low-single-digit organic growth in 2023.
Avanos stock has received one Buy, one Hold, and one Sell recommendation, reflecting a Hold consensus rating on TipRanks. These analysts’ average price target of $28.50 implies 11.33% upside potential.
