What changed in AVANOS MEDICAL, INC.'s 2024 10-K compared to 2023?

Across the narrative sections we track, AVANOS MEDICAL, INC. (AVNS) added 226 paragraphs, removed 188, and edited 158 between the 2023 and 2024 10-K filings. The biggest movers are Item 7. Management's Discussion & Analysis (+90/−74), Item 1A. Risk Factors (+64/−37), Item 1. Business (+42/−48).

Did AVANOS MEDICAL, INC. add new Risk Factors in the 2024 10-K?

Yes — Item 1A Risk Factors shows 64 new/edited paragraphs and 37 removed paragraphs versus the 2023 10-K.

What changed in AVANOS MEDICAL, INC.'s MD&A (Item 7) in 2024?

Item 7 Management's Discussion & Analysis shows 90 new/edited paragraphs and 74 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Did AVANOS MEDICAL, INC. update its Cybersecurity disclosure (Item 1C) in 2024?

Item 1C Cybersecurity has 12 paragraph-level changes between the 2023 and 2024 filings.

Where does this AVNS 10-K diff come from?

The source filings are AVANOS MEDICAL, INC.'s official 2023 and 2024 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in AVANOS MEDICAL, INC.'s 10-K — 2023 vs 2024

Paragraph-level year-over-year comparison of AVANOS MEDICAL, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+226 added−188 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-21)

Top changes in AVANOS MEDICAL, INC.'s 2024 10-K

226 paragraphs added · 188 removed · 158 edited across 8 sections

Item 7. Management's Discussion & Analysis+90 / −74 · 59 edited
Item 1A. Risk Factors+64 / −37 · 36 edited
Item 1. Business+42 / −48 · 37 edited
Item 1C. Cybersecurity+12 / −11 · 10 edited
Item 7A. Quantitative and Qualitative Disclosures About Market Risk+11 / −11 · 10 edited

Item 1. Business

Business — how the company describes what it does

37 edited+5 added−11 removed47 unchanged

2023 filing

2024 filing

Biggest changeOn October 2, 2023, we closed the sale of our RH business for $110.0 million in cash, subject to certain adjustments as provided in the Purchase Agreement based on the indebtedness and inventory transferred to Buyer at the closing and the chargebacks assumed by Buyer but that would otherwise have been payable by the Company and its subsidiaries on or after October 2, 2023 to distributors of the Company’s RH products located in the United States.

Biggest changeThe purchase price for our RH business was $110.0 million in cash subject to certain adjustments based on the indebtedness and inventory transferred to Buyer at the closing and the chargebacks assumed by Buyer but that would otherwise have been payable by the Company and its subsidiaries on or after October 2, 2023 to distributors of the Company’s RH products located in the United States. 2 Table of Contents The RH Divestiture represents a key component of Avanos’ ongoing three-year transformation process, which was initiated in January 2023 and is aimed at accelerating the Company’s efforts to focus its portfolio on markets where it is well positioned to succeed (the “Transformation Process”).

The services generally commenced on the closing date of the RH Divestiture and will terminate in no later than one to three years. For further information regarding the RH Divestiture, see “Discontinued Operations” in Note 2 to the Consolidated financial statements in Item 8 of this Form 10-K.

The services generally commenced on the closing date of the RH Divestiture and will terminate in no later than one to three years. For further information regarding the RH Divestiture, see “Discontinued Operations” in Note 5 to the Consolidated financial statements in Item 8 of this Form 10-K.

Raw Materials We use a wide variety of raw materials and other inputs in our production processes. We base our purchasing decisions on quality assurance, cost effectiveness and regulatory requirements, and we work closely with our suppliers to assure continuity of supply while maintaining high quality and reliability.

Raw Materials We use a wide variety of raw materials and other inputs in our production processes. We base our purchasing decisions on quality assurance, cost effectiveness and regulatory requirements, and we work closely with our suppliers to ensure continuity of supply while maintaining high quality and reliability.

We hold numerous patents and have numerous patent applications pending in the United States and other countries that relate to the technology used in many of our products. We utilize patents in our Pain Management and Recovery and Digestive Health products. These patents generally expire between 2024 and 2042.

In addition to offering a comprehensive health and benefits package, we sponsor a variety of wellness initiatives, including an Employee Assistance Program, health assessments, and Company-sponsored challenges that foster healthy habits. We took additional measures during the COVID-19 pandemic, including implementing new safety protocols and guidelines as recommended by federal, state, local and foreign governments.

In addition to offering a comprehensive health and benefits package, we sponsor a variety of wellness initiatives, including an Employee Assistance Program, health assessments, and Company-sponsored challenges that foster healthy habits. 6 Table of Contents We took additional measures during the COVID-19 pandemic, including implementing new safety protocols and guidelines as recommended by federal, state, local and foreign governments.

Competition While no single company competes with us across the full breadth of our offerings, we face significant competition in U.S. and international markets. 3 Table of Contents There are a variety of treatment means and alternative clinical practices to address pain management and recovery and digestive health.

Competition While no single company competes with us across the full breadth of our offerings, we face significant competition in U.S. and international markets. There are a variety of treatment means and alternative clinical practices to address pain management and recovery and digestive health.

From time to time, legislative changes are made to government healthcare programs that impact our business, and the federal and/or state governments may continue to enact measures in the 5 Table of Contents future aimed at containing or reducing reimbursement levels for medical expenses paid for in whole or in part with government funds.

From time to time, legislative changes are made to government healthcare programs that impact our business, and the federal and/or state governments may continue to enact measures in the future aimed at containing or reducing reimbursement levels for medical expenses paid for in whole or in part with government funds.

Compensation for salaried employees is strongly tied to performance objectives. Salaried employees above a certain pay grade have a substantial portion of their total compensation subject to performance objectives. More about the compensation paid to our executive officers can be found in the proxy statement relating to our 2024 Annual Meeting of Stockholders (the “2024 Proxy Statement”).

Compensation for salaried employees is strongly tied to performance objectives. Salaried employees above a certain pay grade have a substantial portion of their total compensation subject to performance objectives. More about the compensation paid to our executive officers can be found in the proxy statement relating to our 2025 Annual Meeting of Stockholders (the “2025 Proxy Statement”).

To sell medical devices in the EU, manufacturers must place a CE mark on their products, signifying to customers that the products meet EU requirements for safety and performance. For all but the lowest risk medical devices, manufacturers must have approval from a notified body prior to placing the CE mark on their devices.

To sell medical devices in the EU, manufacturers must place a CE mark on their products, signifying to customers that the products meet EU requirements for safety and performance. For all but the 4 Table of Contents lowest risk medical devices, manufacturers must have approval from a notified body prior to placing the CE mark on their devices.

We expect debate to continue during the next several years at all government levels worldwide over the marketing, availability, method of delivery, and payment for healthcare products and services.

We expect debate to continue during the next several years at all government levels worldwide, including the United States, over the marketing, availability, method of delivery, and payment for healthcare products and services.

In the year ended December 31, 2021, sales to Medline Industries, McKesson Corporation, and Owens & Minor, Inc. accounted for approximately 13%, 11%, and 6% of consolidated net sales, respectively. Outside North America, sales are made either directly to end-user customers or through distributors, depending on the market served.

In the year ended December 31, 2022, sales to Medline Industries, McKesson Corporation, and Owens & Minor, Inc. accounted for approximately 12%, 12%, and 5% of consolidated net sales, respectively. Outside North America, sales are made either directly to end-user customers or through distributors, depending on the market served.

Research and Development We continuously engage in research and development to commercialize new products and enhance the effectiveness, reliability and safety of our existing products. We incurred research and development costs of $27.2 million in 2023, $29.2 million in 2022 and $30.6 million in 2021.

Research and Development We continuously engage in research and development to commercialize new products and enhance the effectiveness, reliability and safety of our existing products. We incurred research and development costs of $26.2 million in 2024, $27.2 million in 2023 and $29.2 million in 2022.

In 2023, approximately 71% of our net sales outside North America were made through wholesalers or distributors. We utilize distribution centers in North America, Europe, Australia and Japan. No material portion of our business is subject to renegotiation of profits or termination of contracts at the election of the government.

In the year ended December 31, 2024, approximately 67% of our net sales outside North America were made through wholesalers or distributors. We utilize distribution centers in North America, Europe, Australia and Japan. No material portion of our business is subject to renegotiation of profits or termination of contracts at the election of the government.

Pain Management and Recovery is a portfolio of non-opioid pain solutions including: • Surgical pain and recovery products such as ON-Q and ambIT surgical pain pumps and Game Ready cold and compression therapy systems. In the years ended December 31, 2023 and 2022, our ON-Q surgical pain pump individually accounted for more than 10% of our consolidated net sales.

In the year ended December 31, 2022, our MIC-KEY Products and our NeoMed Products each accounted for more than 10% of our consolidated net sales. Pain Management and Recovery is a portfolio of non-opioid pain solutions including: • Surgical pain and recovery products, such as ON-Q and ambIT surgical pain pumps and our Game Ready cold and compression therapy systems.

In the year ended December 31, 2023, sales to Medline Industries, McKesson Corporation, and Owens & Minor, Inc. accounted for approximately 15%, 13%, and 6% of consolidated net sales, respectively. In the year ended December 31, 2022, sales to Medline Industries, McKesson Corporation, and Owens & Minor, Inc. accounted for approximately 12%, 12%, and 5% of consolidated net sales, respectively.

In the year ended December 31, 2024, sales to McKesson Corporation and Medline Industries accounted for approximately 18% and 17% of consolidated net sales, respectively. In the year ended December 31, 2023, sales to Medline Industries, McKesson Corporation, and Owens & Minor, Inc. accounted for approximately 15%, 13%, and 6% of consolidated net sales, respectively.

Distribution While our products are generally marketed directly to hospitals and other healthcare providers, they are generally sold through third-party wholesale distributors, with some sales directly to healthcare facilities and other end-user customers. In 2023, approximately 43% of our net sales in North America were made through distributors.

Distribution While our products are generally marketed directly to hospitals and other healthcare providers, they are generally sold through third-party wholesale distributors, with some sales directly to healthcare facilities and other end-user customers. In the year ended December 31, 2024, approximately 50% of our net sales in North America were made through distributors.

Under our agreements with GPOs, we pay a fee based on sales of our products to GPO members, which is recorded as a reduction of net sales. Approximately 28% of our 2023 global net sales, including sales to wholesale distributors, were contracted through GPOs.

Under our agreements with GPOs, we pay a fee based on sales of our products to GPO members, which is recorded as a reduction of net sales. Approximately 28% of our global net sales in the year ended December 31, 2024, including sales to wholesale distributors, were contracted through GPOs.

While we have incurred in the past several years, and will in the future continue to incur, capital and operating expenditures in order to comply with environmental, health and safety laws, regulations and ordinances, we believe that our future cost of compliance with such regulations and ordinances, and our exposure to liability for environmental, health and safety claims will not have a material adverse effect on our business, results of operations, financial condition or cash flows.

We are not currently named as a party in any judicial or administrative proceeding relating to environmental, health or safety matters. 5 Table of Contents While we have incurred in the past several years, and will in the future continue to incur, capital and operating expenditures in order to comply with environmental, health and safety laws, regulations and ordinances, we believe that our future cost of compliance with such regulations and ordinances, and our exposure to liability for environmental, health and safety claims will not have a material adverse effect on our business, results of operations, financial condition or cash flows.

On July 24, 2023, we closed the acquisition of Diros for approximately $53.0 million, consisting of $2.5 million cash paid upon entry into the definitive agreement and $50.5 million in cash at closing less working capital and other adjustments, with an up to additional $7.0 million payable in contingent cash consideration based on achievement of certain performance objectives defined in the purchase agreement (the “Diros Acquisition”).

The purchase price was approximately $53.0 million, consisting of $2.5 million cash paid upon entry into the definitive agreement and $50.5 million in cash at closing less working capital and other adjustments, with an up to additional $7.0 million payable in contingent cash consideration based on achievement of certain performance objectives defined in the purchase agreement.

Employee Diversity 2023 Women - global director and above (a) 31.4% Ethnically diverse - U.S. director and above (a) 17.4% Women - global salaried employees 46.3% Ethnically diverse - U.S. salaried employees 31.6% __________________________________________________ (a) Leaders in director-level position or higher. Available Information We make financial information, news releases and other information available on our corporate website at www.avanos.com .

Employee Diversity 2024 Women - global director and above (a) 27.3% Ethnically diverse - U.S. director and above (a) 20.0% Women - global salaried employees 49.6% Ethnically diverse - U.S. salaried employees 30.8% __________________________________________________ (a) Leaders in director-level position or higher. Available Information We make financial information, news releases and other information available on our corporate website at www.avanos.com .

In the year ended December 31, 2023, our legacy enteral feeding tubes, which includes our MIC-KEY enteral feeding tubes, our Corpak feeding solutions and our NeoMed neonatal and pediatric feeding solutions each accounted for more than 10% of our consolidated net sales.

In the years ended December 31, 2024 and 2023, our MIC-KEY enteral feeding tubes (the “MIC-KEY Products”), our Corpak feeding solutions (the “Corpak Products”) and our NeoMed neonatal and pediatric feeding solutions (the “NeoMed Products”) each accounted for more than 10% of our consolidated net sales.

Complying with the EU MDR will require us to incur significant expenditures. We expect that ensuring compliance with these regulations will continue to require significant technical expertise and capital investment.

We expect that ensuring compliance with these regulations will continue to require significant technical expertise and capital investment.

In the year ended December 31, 2021, our surgical pain products, which includes both On-Q and ambIT pumps, accounted for more than 10% of our consolidated net sales. • Interventional pain solutions, which provide minimally invasive pain relieving therapies, such as our COOLIEF pain therapy, OrthogenRx’s knee osteoarthritis hyaluronic acid (“HA”) pain relief injection products and Trident radiofrequency ablation (“RFA”) products used to treat chronic pain conditions.

In each of the years ended December 31, 2023 and 2022, our ON-Q surgical pain pump individually accounted for more than 10% of our consolidated net sales. • Interventional pain solutions, which provide minimally invasive pain relieving therapies, such as our COOLIEF chronic pain products (the “COOLIEF” Products”), our OrthogenRx knee osteoarthritis hyaluronic acid (“HA”) pain relief injection products (GenVisc and TriVisc) and our Trident radiofrequency ablation (“RFA”) products used to treat chronic pain conditions.

Among other effects, healthcare regulations substantially increase the time, difficulty and costs incurred in obtaining and maintaining approval to market newly developed and existing products.

Compliance with these laws and regulations is costly and materially affects our business. Among other effects, healthcare regulations substantially increase the time, difficulty and costs incurred in obtaining and maintaining approval to market newly developed and existing products.

Intellectual Property Patents, trademarks and other proprietary rights are very important to our business. We also rely upon trade secrets, manufacturing know-how, continuing technological innovations and licensing opportunities to maintain and improve our competitive position.

We also rely upon trade secrets, manufacturing know-how, continuing technological innovations and licensing opportunities to maintain and improve our competitive position.

Employee demographics presented in the table below represent the number of employees as of December 31, 2023: Global Employees 2023 % of Total United States 881 23.3% Mexico 2,665 70.7% Latin America 10 0.3% Europe, Middle East and Africa 108 2.9% Asia Pacific 107 2.8% Total 3,771 Compensation We strive to compensate employees competitively and fairly in markets throughout the world.

Employee demographics presented in the table below represent the number of employees as of December 31, 2024: Global Employees 2024 % of Total United States 787 35.3% Mexico 1,239 55.6% Latin America 10 0.4% Europe, Middle East and Africa 101 4.5% Asia Pacific 90 4.0% Total 2,227 Compensation We strive to compensate employees competitively and fairly in markets throughout the world.

Major competitors include, among others: • Digestive Health: Boston Scientific Corporation, Cook Medical and Applied Medical Technology, Inc. • Pain Management and Recovery: Boston Scientific Corporation, Pacira Pharmaceuticals, Inc., Stryker Corporation, Medtronic plc, Pajunk Medical Systems, Nice Recovery Systems and Bioventus, Inc. In developing and emerging markets, alternative clinical practices and different standards of care are our primary competition.

Major competitors include, among others: • Digestive Health: Boston Scientific Corporation, Cook Medical, Applied Medical Technology, Inc. and Cardinal Health • Pain Management and Recovery: Boston Scientific Corporation, Pacira Pharmaceuticals, Inc., Stryker Corporation, Medtronic plc, Pajunk Medical Systems, Nice Recovery Systems and Bioventus, Inc.

To achieve this, the EU MDR includes significant new requirements for medical devices, including enhanced requirements for clinical evidence and documentation, increased focus on device identification and traceability, and additional post-market surveillance and diligence. Compliance with the EU MDR requires re-certification of many of our products to the enhanced standards, during a transition period ending May 26, 2024.

We continue to defend our market positions and launched two new products in the U.S. market in 2023.

We continue to defend our market positions 3 Table of Contents and launched two new products in the global market in 2024.

In the year ended December 31, 2021, products associated with our COOLIEF pain therapy accounted for more than 10% of our consolidated net sales. Acquisitions On June 17, 2023 we entered into a definitive agreement to acquire Diros Technology Inc. (“Diros”), a leading manufacturer of innovative radiofrequency (RF) products used to treat chronic pain conditions.

In the year ended December 31, 2022, our COOLIEF Products and our OrthogenRx pain relief injection products each accounted for more than 10% of our consolidated net sales. Acquisitions On July 24, 2023, we closed the acquisition of Diros Technology Inc. (“Diros”), a leading manufacturer of innovative radiofrequency ablation (RFA) products used to treat chronic pain conditions (the “Diros Acquisition”).

These amounts consisted primarily of salaries and related expenses for personnel, product trial costs, outside laboratory and license fees, the costs of laboratory equipment and facilities and asset write-offs for equipment associated with unsuccessful product launches. We intend to continue our research and development efforts as a key strategy for growth.

These amounts consisted primarily of salaries and related expenses for personnel, product trial costs, outside laboratory and license fees, the costs of laboratory equipment and facilities and asset write-offs for equipment associated with unsuccessful product launches. Intellectual Property Patents, trademarks and other proprietary rights are very important to our business.

On January 20, 2022, we acquired all of the equity voting interests and completed the acquisition of OrthogenRx, Inc. (“OrthogenRx”), which is focused on the development and commercialization of treatments for knee pain caused by osteoarthritis (the “OrthogenRx Acquisition”). The OrthogenRx Acquisition enhanced our interventional pain portfolio.

On January 20, 2022, we acquired all of the equity voting interests and completed the acquisition of OrthogenRx, Inc. (“OrthogenRx”), which developed and commercialized treatments for knee pain caused by osteoarthritis (the “OrthogenRx Acquisition”). The purchase price was $130.0 million at closing less working capital adjustments.

In the year ended December 31, 2023, products associated with our COOLIEF pain therapy accounted for more than 10% of our consolidated net sales. In the year ended December 31, 2022, COOLIEF pain therapy products and our OrthogenRx pain relief injection products (GenVisc and TriVisc), each accounted for more than 10% of our consolidated net sales.

In the year ended December 31, 2024, none of our interventional pain solutions individually accounted for more than 10% of our consolidated net sales. In the year ended December 31, 2023, our COOLIEF Products accounted for more than 10% of our consolidated net sales.

Foreign Corrupt Practices Act and the United Kingdom Bribery Act, which provide guidance on corporate interactions with government officials) and require safeguards for the protection of personal data. In addition, we are subject to laws and regulations pertaining to healthcare fraud and abuse, including state and federal anti-kickback and false claims laws in the United States.

In the year ended December 31, 2021, our legacy enteral feeding tubes and our Corpak feeding solutions each accounted for more than 10% of our consolidated net sales.

In the year ended December 31, 2024, none of our surgical pain and recovery products individually accounted for more than 10% of our consolidated net sales.

This is accomplished through an employee recognition program and ongoing, two-way communications, including videos and podcasts, that allow employees to engage with and hear directly from members of the executive team. 6 Table of Contents Employee Retention In 2021, we implemented a multi-tiered employee retention strategy.

Our goal is to ensure that each of our more than 2,200 employees understands how they contribute to the Company’s innovation and growth. This is accomplished through an employee recognition program and ongoing, two-way communications, including videos and podcasts, that allow employees to engage with and hear directly from members of the executive team.

Our commitment to diversity, equity and inclusion (“DE&I”) is aligned to foster the company’s success as we continue to grow our business and develop our workforce. Our commitment is also reflected in the important role that our DE&I Council plays in our governance practices.

Our commitment to diversity, equity and inclusion (“DE&I”) is aligned to foster the company’s success as we continue to grow our business and develop our workforce. As part of our commitment, our Human Resources (HR) organization is responsible for setting the strategy and providing direction, guidance and support to various DE&I-related employee resource groups.

Removed

In the year ended December 31, 2022, our legacy enteral feeding tubes and our NeoMed neonatal and pediatric feeding solutions feeding solutions each accounted for more than 10% of our consolidated net sales.

Added

For further information regarding the acquisition of OrthogenRx, see “Business Acquisition” in Note 6 to the Consolidated financial statements in Item 8 of this Form 10-K. Divestiture On October 2, 2023, we closed the sale of our Respiratory Health (“RH”) business to SunMed Group Holdings, LLC (“Buyer”) (the “RH Divestiture”).

Removed

The purchase price was $130.0 million at closing less working capital adjustments, with up to an additional $30.0 million payable in contingent cash consideration based on OrthogenRx’s growth in net sales during 2022 and 2023. $10.6 million of contingent cash consideration has been paid based on OrthogenRx’s 2022 net sales.

Added

In developing and emerging markets, alternative clinical practices and different standards of care are our primary competition.

Removed

The purchase price for the OrthogenRx Acquisition was funded by available cash on hand and the proceeds of borrowings, including from the incurrence of a new incremental tranche of term loans of $125.0 million, under the Company’s prior senior secured revolving credit facility. 2 Table of Contents During 2019, we completed the acquisition of substantially all the assets of Endoclear, LLC (“Endoclear”) and Summit Medical Products, Inc.

Added

Compliance with the EU MDR requires re-certification of many of our products to the enhanced standards, during a transition period ending December 31, 2027 or December 31, 2028, depending upon the classification of the device. Complying with the EU MDR will require us to incur significant expenditures.

Removed

(“Summit”), and we completed the acquisition of NeoMed, Inc. (“NeoMed”) (collectively, the “2019 Acquisitions”). The aggregate purchase price for the 2019 Acquisitions was $57.5 million, net of cash acquired, plus future contingent payments of $7.2 million.

Added

Employee Retention In 2021, we implemented a multi-tiered employee retention strategy.

Removed

Divestiture On June 7, 2023, we entered into a Purchase Agreement (“Purchase Agreement”) by and among us and certain of our affiliates and SunMed Group Holdings, LLC (“Buyer”), pursuant to which the Buyer agreed to purchase substantially all of the assets primarily relating to or primarily used in our Respiratory Health (“RH”) business (the “RH Divestiture”).

Added

Ultimately, we aim to strengthen the engagement and motivation of our global workforce through the creation of a highly inclusive environment that allows a greater level of diversity at every level, thus driving better business outcomes. The following table shows various diversity metrics for the Company as of December 31, 2024.

Removed

The RH Divestiture represents a key component of Avanos’ ongoing three-year transformation process, which was initiated in January 2023 and is aimed at accelerating the Company’s efforts to focus its portfolio on markets where it is well positioned to succeed (the “Transformation Process”).

Removed

In addition, we are subject to laws and regulations pertaining to healthcare fraud and abuse, including state and federal anti-kickback and false claims laws in the United States. 4 Table of Contents Compliance with these laws and regulations is costly and materially affects our business.

Removed

We are not currently named as a party in any judicial or administrative proceeding relating to environmental, health or safety matters.

Removed

Our goal is to ensure that each of our more than 3,700 employees understands how they contribute to the Company’s innovation and growth.

Removed

Founded in 2021, the DE&I Council is comprised of employees from various salary levels, functional departments and geographic regions throughout Avanos. In 2023, we took the next significant step forward in our DE&I journey by transitioning the DE&I Council leadership from a volunteer organization to an official responsibility of our Human Resources (HR) organization.

Removed

The DE&I Council includes representatives from all the global regions in which the Company operates. The following table shows various diversity metrics for the Company as of December 31, 2023.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

36 edited+28 added−1 removed131 unchanged

2023 filing

2024 filing

Biggest changeWe rely on product inputs in the manufacture of our products. Prices of oil and gas affect our distribution and transportation costs. Prices of these commodities are volatile and have fluctuated significantly in recent years, which has contributed to, and in the future may continue to contribute to, fluctuations in our results of operations.

Biggest changeWe are exposed to price fluctuations of key commodities, which may negatively impact our results of operations. We rely on product inputs in the manufacture of our products. Prices of oil and gas affect our distribution and transportation costs.

Our failure to effectively integrate AI into our information technology systems and operations could therefore have a material adverse effect on our business. 8 Table of Contents Furthermore, from time to time we consummate new business acquisitions.

Our failure to effectively integrate AI into our information technology systems and operations could have a material adverse effect on our business. 8 Table of Contents Furthermore, from time to time we consummate new business acquisitions.

In addition to the foregoing, engaging in international business inherently involves a number of other difficulties and risks, including: • different local medical practices, product preferences and product requirements, • price and currency controls and exchange rate fluctuations, • cost and availability of international shipping channels, • longer payment cycles in certain countries other than the United States, • minimal or diminished protection of intellectual property in certain countries, • uncertainties regarding judicial systems, including difficulties in enforcing agreements through certain non-U.S. legal systems, • political instability and actual or anticipated military or political conflicts, expropriation of assets, economic instability and the impact on interest rates, inflation and the credit worthiness of our customers, and • difficulties and costs of staffing and managing non-U.S. operations.

In addition to the foregoing, engaging in international business inherently involves a number of other difficulties and risks, including: • different local medical practices, product preferences and product requirements, • price and currency controls and exchange rate fluctuations, • cost and availability of international shipping channels, • longer payment cycles in certain countries other than the United States, • minimal or diminished protection of intellectual property in certain countries, • uncertainties regarding judicial systems, including difficulties in enforcing agreements through certain non-U.S. legal systems, 15 Table of Contents • political instability and actual or anticipated military or political conflicts, expropriation of assets, economic instability and the impact on interest rates, inflation and the credit worthiness of our customers, and • difficulties and costs of staffing and managing non-U.S. operations.

We face significant uncertainty in the healthcare industry due to government healthcare reform in the United States and elsewhere. The U.S. Congress, regulatory agencies and certain state legislatures, as well as international legislators and regulators, periodically review and assess alternative healthcare delivery systems and payment methods with an objective of ultimately reducing healthcare costs and expanding access.

We face significant uncertainty in the healthcare industry due to government healthcare reform and legislative changes in the United States and elsewhere. The U.S. Congress, regulatory agencies and certain state legislatures, as well as international legislators and regulators, periodically review and assess alternative healthcare delivery systems and payment methods with an objective of ultimately reducing healthcare costs and expanding access.

In January 2023, we initiated a three-year restructuring initiative pursuant to which we: (i) have combined our Chronic Care and Pain Management franchises into a single commercial organization focused on the Digestive Health and Pain Management and Recovery product categories; (ii) plan to rationalize our product portfolio including certain low-margin, low-growth product categories, through targeted divestitures; (iii) have undertaken additional cost management activities to enhance our operating profitability; and (iv) plan to pursue efficient capital allocation strategies, including through acquisitions that meet our strategic and financial criteria.

In January 2023, we initiated a three-year restructuring initiative pursuant to which we: (i) have combined our Chronic Care and Pain Management franchises into a single commercial organization focused on the Digestive Health and Pain Management and Recovery product categories; (ii) plan to rationalize our product portfolio including certain low-margin, low-growth product categories, through targeted divestitures (such as the RH Divestiture); (iii) have undertaken additional cost management activities to enhance our operating profitability; and (iv) plan to pursue efficient capital allocation strategies, including through acquisitions that meet our strategic and financial criteria.

Any one or more of these events could have a material adverse effect on our business, results of operations, financial condition and cash flows. We are subject to healthcare fraud and abuse laws and regulations that could result in significant liability, require us to change our business practices or restrict our operations in the future.

Any one or more of these events could have a material adverse effect on our business, results of operations, financial condition and cash flows. 12 Table of Contents We are subject to healthcare fraud and abuse laws and regulations that could result in significant liability, require us to change our business practices or restrict our operations in the future.

Similarly, the repurchase or redemption rights or liquidation preferences we could assign to Avanos preferred stock could affect the residual value of Avanos common stock. Certain provisions of our certificate of incorporation may make it difficult for stockholders to initiate litigation against us in a favorable forum for disputes with us or our directors or officers.

Similarly, the repurchase or redemption rights or liquidation preferences we could assign to Avanos preferred stock could affect the residual value of Avanos common stock. 17 Table of Contents Certain provisions of our certificate of incorporation may make it difficult for stockholders to initiate litigation against us in a favorable forum for disputes with us or our directors or officers.

From time to time we may be negatively impacted by supply chain disruptions, including the following: • Suppliers extending lead times, experiencing capacity constraints, limiting or canceling supply, allocating supply to other customers (including our competitors), delaying or canceling deliveries, going out of business or increasing prices; • Supplier quality issues; • A resurgence of the COVID-19 pandemic or other pandemics, epidemics or infectious disease outbreaks; • Cybersecurity events, manmade or natural disasters, operational failures or other events that disrupt us or our suppliers; • Long lead times to qualify alternate or additional suppliers, or the unavailability of qualified alternate suppliers; and • Other events or occurrences that are beyond our control, including transportation delays, inflationary pricing pressures, work stoppages, labor shortages and governmental regulatory actions.

From time to time we may be negatively impacted by supply chain disruptions, including disruptions caused by the following: • Suppliers extending lead times, experiencing capacity constraints, limiting or canceling supply, allocating supply to other customers (including our competitors), delaying or canceling deliveries, going out of business or increasing prices; • Supplier quality issues; • A resurgence of the COVID-19 pandemic or other pandemics, epidemics or infectious disease outbreaks; • Cybersecurity events, manmade or natural disasters, operational failures or other events that disrupt us or our suppliers; • Military conflicts and associated sanctions or embargoes; • Long lead times to qualify alternate or additional suppliers, or the unavailability of qualified alternate suppliers; and • Other events or occurrences that are beyond our control, including transportation delays, inflationary pricing pressures, work stoppages, labor shortages and governmental regulatory actions.

Furthermore, since many of our customers rely on reimbursement from Medicare, Medicaid and other governmental programs to cover a substantial portion of their expenditures, our exclusion from 12 Table of Contents such programs as a result of a violation of these laws could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Furthermore, since many of our customers rely on reimbursement from Medicare, Medicaid and other governmental programs to cover a substantial portion of their expenditures, our exclusion from such programs as a result of a violation of these laws could have a material adverse effect on our business, results of operations, financial condition and cash flows.

There can be no assurance that the actions taken by the Federal Reserve, the Treasury Department and the Federal Deposit Insurance Corporation since early 2023 in response to bank solvency concerns will achieve the purpose of stabilizing the financial markets, restoring consumer confidence, or have 15 Table of Contents other intended effects.

Accordingly, we commit substantial time, funds and other resources to new product development, including research and development, acquisitions, licenses, clinical trials and physician education. We make these substantial expenditures without any assurance that our products will obtain regulatory clearance or reimbursement approval, acquire adequate intellectual property protection or receive market acceptance.

Accordingly, we commit substantial time, funds and other resources to new product development, including research and development, acquisitions, licenses, clinical trials and physician education. We make these substantial 7 Table of Contents expenditures without any assurance that our products will obtain regulatory clearance or reimbursement approval, acquire adequate intellectual property protection or receive market acceptance.

In 2023, approximately 20% of our net sales were generated outside of North America and we expect this percentage will grow over time. Our operations outside of the United States are subject to risks that are inherent in conducting business internationally, including compliance with both United States and foreign laws and regulations that apply to our international operations.

In 2024, approximately 21% of our net sales were generated outside of North America and we expect this percentage will grow over time. Our operations outside of the United States are subject to risks that are inherent in conducting business internationally, including compliance with both United States and foreign laws and regulations that apply to our international operations.

If our Board of Directors were to approve the issuance of preferred stock in the future, the terms of one or more classes or series of such preferred stock could dilute the voting power or reduce the value of Avanos 16 Table of Contents common stock.

They may keep us from successfully implementing our business strategy and could materially harm our business, results of operations, financial condition and cash flows. 11 Table of Contents Our business, operating results, and cash flows have been affected and may continue to be adversely affected by the rising rate of inflation.

Our ability to hedge commodity price volatility is limited. Furthermore, due to competitive dynamics, the cost containment efforts of our customers and third-party payors, and contractual limitations, particularly with respect to products we sell under group purchasing agreements, which generally set pricing for a three-year term, we may be unable to pass along commodity-driven cost increases through higher prices.

Furthermore, due to competitive dynamics, the cost containment efforts of our customers and third-party payors, and contractual limitations, particularly with respect to products we sell under group purchasing agreements, which generally set pricing for a three-year term, we may be unable to pass along commodity-driven cost increases through higher 14 Table of Contents prices.

Lastly, our information technology systems may be subjected to damage or interruption from power outages, computer and telecommunication failures, usage errors by our employees, security breaches, computer viruses or other malicious codes, unauthorized access attempts and cyber, phishing- or ransomware attacks.

If adequate funds are not available on acceptable terms, we may be unable to fund our expansion, successfully develop or enhance products or respond to competitive pressures, any of which could negatively affect our business.

We may be unable to obtain any desired additional financing on terms favorable to us, if at all. If adequate funds are not available on acceptable terms, we may be unable to fund our expansion, successfully develop or enhance products or respond to competitive pressures, any of which could negatively affect our business.

All of the foregoing types of legal proceedings and regulatory actions are inherently unpredictable and, regardless of the outcome, could disrupt our business, result in substantial costs or the diversion of management attention and could have a material adverse effect on our business, results of operations, financial condition and cash flows. 13 Table of Contents Economic conditions have affected and may continue to adversely affect our business, results of operations, financial condition and cash flows.

We may be subject to trade protection measures that are being contemplated by the United States and other governments around the world, as well as potential disruptions in trade agreements, such as the exit of the United Kingdom from the EU. These measures and disruptions may result in new or higher tariffs, import-export restrictions and taxes.

We are subject to tariffs and taxes in the United States and numerous foreign jurisdictions, and we may be subject to trade protection measures that are being contemplated by the United States and other governments around the world, as well as potential disruptions in trade agreements, such as the exit of the United Kingdom from the EU.

Most of our manufacturing facilities are located outside the United States in Mexico. We also may use contract manufacturers outside the United States from time to time and may source many of our raw materials and components from foreign suppliers. We distribute and sell our products globally.

In addition, we use contract manufacturers outside the United States from time to time and may source many of our raw materials and components from foreign suppliers, including suppliers in China and Mexico. We distribute and sell our products globally.

These military conflicts and related sanctions or embargoes could damage or disrupt international commerce, shipping, supply chains and the global economy. We cannot predict the broader or longer-term consequences of these conflicts, which could include further sanctions and embargoes, regional instability, geopolitical shifts, exchange rate fluctuations, inflation, financial market disruptions and economic recession.

We cannot predict the broader or longer-term consequences of these conflicts, which could include further sanctions and embargoes, regional instability, geopolitical shifts, exchange rate fluctuations, inflation, financial market disruptions and economic recession.

Continued increases in such costs could adversely affect our business, results of operations, financial condition and cash flows. These pressures may be exacerbated by exchange rate fluctuations in the Mexican peso. Additionally, considerable uncertainty exists regarding the possible imposition of tariffs on imported goods from Mexico.

The increasing leverage of organized buying groups and consolidated customers and pricing pressure from third-party payors may reduce market prices for our products, thereby reducing our profitability and have a material adverse effect on our business, results of operations, financial condition and cash flows. 14 Table of Contents We are subject to political, economic and regulatory risks associated with doing business outside of the United States.

In addition, these items could cause our future results to differ from our recent results, from our anticipated future results and from those in any of our forward-looking statements. These risks are not the only ones we face. Other risks that we do not presently know about or that we presently believe are not material could also adversely affect us.

We intend to continue our research and development activities and make acquisitions. Accordingly, we may need to seek additional debt or equity financing. We may be unable to obtain any desired additional financing on terms favorable to us, if at all.

We may need additional financing in the future to meet our capital needs or to make acquisitions and such financing may not be available on favorable terms, if at all. We intend to continue our research and development activities and make acquisitions. Accordingly, we may need to seek additional debt or equity financing.

These risks, as well as certain other risks described generally in this Item 1A as they relate specifically to Mexico (including, without limitation, the risk of currency rate fluctuations, the risk of manufacturing interruptions and the risk of doing business outside the United States), could adversely affect our business, results of operations, financial condition and cash flows. 13 Table of Contents We may incur product liability losses, litigation liability, product recalls, safety alerts or regulatory action associated with our products which could be costly and disruptive to our business.

For example, a hypothetical appreciation of 10% in the value of the Mexican peso in relation to the U.S. dollar would have negatively impacted operating profit for the year ended December 31, 2023 by approximately $0.7 million. We are exposed to price fluctuations of key commodities, which may negatively impact our results of operations.

Our exposure to currency exchange rate fluctuations is heightened due to the concentration of our manufacturing operations in Mexico. For example, a hypothetical appreciation of 10% in the value of the Mexican peso in relation to the U.S. dollar would have negatively impacted operating profit for the year ended December 31, 2024 by approximately $0.2 million.

Goodwill is tested for impairment annually and whenever events and circumstances indicate that, more likely than not, impairment may have occurred. The evaluation of long-lived assets and goodwill requires us to form estimates and assumptions with respect to a number of factors, including future sales growth, cash flows, our weighted average cost of capital (WACC) and a terminal value.

The evaluation of long-lived assets and goodwill requires us to form estimates and assumptions with respect to a number of factors, including future sales growth, cash flows, our weighted average cost of capital (WACC) and a terminal value. Our evaluation of goodwill also includes consideration of market approach valuation methodologies.

Other risks that we do not presently know about or that we presently believe are not material could also adversely affect us. 7 Table of Contents Risks Related to our Business and Industry We face strong competition. Our failure to compete effectively could have a material adverse effect on our business. Our industry is highly competitive.

Risks Related to our Business and Industry We face strong competition. Our failure to compete effectively could have a material adverse effect on our business. Our industry is highly competitive.

Risks Related to Ownership of Avanos Common Stock We cannot guarantee that our stock price will not decline or fluctuate significantly. The price at which Avanos common stock trades has fluctuated and may continue to fluctuate significantly.

The price at which Avanos common stock trades has fluctuated and may continue to fluctuate significantly.

Changes in the relative values of currencies occur regularly and could have an adverse effect on our business, results of operations, financial condition and cash flows. Our exposure to currency exchange rate fluctuations is heightened due to the concentration of our manufacturing operations in Mexico.

We engage in hedging transactions in attempts to minimize the effects of foreign currency exchange rate fluctuations. There can be no assurance that these hedging transactions will be effective. Changes in the relative values of currencies occur regularly and could have an adverse effect on our business, results of operations, financial condition and cash flows.

However, the implementation of new legislation and regulation may lower reimbursements for our products, reduce medical procedure volumes and materially adversely affect our business, results of operations, financial condition and cash flows. We are subject to extensive government regulation, which may require us to incur significant expenses to ensure compliance.

However, the implementation of new legislation and regulation may lower reimbursements for our products, reduce medical procedure volumes and materially adversely affect our business, results of operations, financial condition and cash flows. In addition, we could be adversely impacted by legislative or regulatory changes to Medicaid, Medicare or other government healthcare programs, which govern provider reimbursement levels for medical expenses.

Our evaluation of goodwill also includes consideration of our current market capitalization. Unanticipated changes in any of the factors used in our evaluation could result in a non-cash charge for impairment in a future period, which may significantly affect our results of operations in the period of such charge.

Unanticipated changes in any of the factors used in our evaluation could result in a non-cash charge for impairment in a future period, which may significantly affect our results of operations in the period of such charge. Risks Related to Ownership of Avanos Common Stock We cannot guarantee that our stock price will not decline or fluctuate significantly.

We may incur product liability losses, litigation liability, product recalls, safety alerts or regulatory action associated with our products which could be costly and disruptive to our business. The risk of product liability claims is inherent in the design, manufacture and marketing of medical products of the type we produce and sell.

The risk of product liability claims is inherent in the design, manufacture and marketing of medical products of the type we produce and sell.

These risks and difficulties, individually or in the aggregate, could have a material adverse effect on our business, results of operations, financial condition and cash flows. We may need additional financing in the future to meet our capital needs or to make acquisitions and such financing may not be available on favorable terms, if at all.

These risks and difficulties, individually or in the aggregate, could have a material adverse effect on our business, results of operations, financial condition and cash flows. New or increased tariffs or other trade restrictions could have a material adverse effect on our business, financial condition, results of operations and cash flows.

AI technology is still in an early stage of development, and we are still assessing how to incorporate AI technology into our information technology systems and operations. We are developing a policy with guardrails to address AI-related risks associated with data privacy, cybersecurity and copyright and intellectual property protections.

In addition, we have developed and published a policy with guardrails to address the AI-related risks associated with data privacy, cybersecurity and copyright and intellectual property protections.

Removed

While we have in the past engaged, and may in the future engage, in various hedging transactions in attempts to minimize the effects of foreign currency exchange rate fluctuations, there can be no assurance that these hedging transactions will be effective.

Added

We are working to expand our use of AI to drive efficiencies and enhance productivity, including in the areas of product design, procurement, marketing and IT support. In early 2025, we plan to introduce secure enterprise versions of Microsoft Co-Pilot and Enterprise ChatGPT within our organization.

Added

We are also assessing the use of embedded AI in our suite of enterprise applications. We plan to conduct security assessments and tests to mitigate risk prior to the rollout of these AI tools.

Added

However, there can be no assurance that we will be able to successfully integrate AI into our operations or that usage of AI will enhance our operations or be beneficial to our business, including our efficiency or profitability.

Added

The development, adoption and use of AI technology is still at an early stage, and ineffective or inadequate AI development or deployment practices by the Company or third-party vendors could result in negative or unintended consequences. In addition, there are technical challenges associated with achieving the desired level of accuracy, efficiency and reliability in AI technology.

Added

The algorithms and models utilized in AI systems may have limitations, including biases, errors or an inability to handle certain data types or scenarios. Furthermore, there is a risk of AI-related system failures, disruptions or vulnerabilities that could compromise the integrity, security or privacy of the generated content.

Added

These limitations or failures could result in operational inefficiencies, reputational damage and legal liabilities. Additionally, developing, testing and deploying AI systems may require additional investment and increase our costs.

Added

In addition, actual or threatened military conflict between China and Taiwan could result in significant disruptions to our supply chain. These military conflicts and related sanctions or embargoes could damage or disrupt international commerce, shipping, supply chains and the global economy.

Added

For example, certain members of the US Congress have proposed significant cuts to Medicaid, which in turn could reduce reimbursement levels for products such as those sold by us.

Added

Any reduction in the amount of reimbursements received by our customers under federal and/or state programs such as Medicare or Medicaid could have a material adverse effect on our business, results of operations, financial condition and cash flows. We are subject to extensive government regulation, which may require us to incur significant expenses to ensure compliance.

Added

On February 1, 2025, President Donald Trump announced the imposition of a 25% tariff on all goods imported from Mexico. Days later, President Trump suspended the imposition of such tariffs for a period of 30 days.

Added

As of the date of this Form 10-K, it remains unclear whether new tariffs will be imposed on goods imported from Mexico and, if so, at what level and for how long.

Added

Furthermore, President Trump has expressed his desire to renegotiate, or possibly withdraw from, the United States-Mexico-Canada Agreement (USMCA), which overhauled and updated the North American Free Trade Agreement (NAFTA). An amendment to or the United States’ withdrawal from the USMCA could result in increased tariffs or other new trade restrictions on imports from Mexico.

Added

Increased tariffs on goods imported from Mexico, whether resulting from a Presidential executive order or amendments to the USMCA, may result in significant increases in tariffs on products imported from Mexico, which would increase the cost of such products.

Added

Economic conditions have affected and may continue to adversely affect our business, results of operations, financial condition and cash flows.

Added

Prices of these commodities are volatile and have fluctuated significantly in recent years, which has contributed to, and in the future may continue to contribute to, fluctuations in our results of operations. Our ability to hedge commodity price volatility is limited.

Added

We are subject to political, economic and regulatory risks associated with doing business outside of the United States. Most of our manufacturing facilities are located outside the United States in Mexico.

Added

For example, during 2024 the United States announced increased tariffs on a Chinese-sourced component of certain of our products. While we have received an extension on the effectiveness of such tariffs, we are exploring options to identify a longer-term solution to such tariffs (although there can be no assurance that we will succeed in such efforts).

Added

In addition, changes in the United States government following the 2024 presidential and congressional elections may result in significant changes to United States trade policies and significantly increased tariffs on imported goods, and may cause other countries to react to such changes.

Added

On February 1, 2025, President Trump announced the imposition of a 25% tariff on all goods imported from Mexico and Canada. Days later, President Trump suspended the imposition of such tariffs for a period of 30 days.

Added

Also in February 2025, President Trump imposed a 10% tariff on goods imported from China, resulting in retaliatory tariffs imposed on United States exports to China. As of the date of this Form 10-K, it remains unclear whether additional new tariffs will be imposed on imported goods and, if so, at what level and for how long.

Added

Furthermore, President Trump has expressed his antipathy towards certain existing international trade agreements and organizations, including the USMCA and the United States’ membership in the World Trade Organization (the “WTO”).

Added

An amendment to or the United States’ withdrawal from the USMCA or the WTO could result in increased tariffs or other new trade restrictions on imports from Mexico, Canada, China and other countries. These developments, measures and disruptions may result in new or higher tariffs, import-export restrictions and taxes.

Added

Goodwill is tested for impairment annually and whenever events and circumstances indicate that, more likely than not, impairment may have occurred. 16 Table of Contents In the fourth quarter of 2024, we revised downward our future projections for certain product lines due to lower net sales and future year margin expectations.

Added

This required us to assess the recoverability of a specific asset group during the fourth quarter of 2024, which resulted in an impairment loss of $100.2 million. Additionally, due to a decrease in our market capitalization, we determined it was more likely than not that the fair value of our medical devices reporting unit may be below its carrying value.

Added

Accordingly, we completed an interim goodwill impairment test as of December 1, 2024 and concluded that the fair value of the reporting unit was lower than its carrying value. As a result, during the fourth quarter of 2024, we recorded a $336.5 million impairment to goodwill.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

10 edited+2 added−1 removed9 unchanged

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2024 filing

Biggest changeFor these incidents, we engage our third-party forensic partner to assist with containment, remediation and issuing a report on the incident. • Recovery. Our dedicated security operations team, defined incident response plan and third party forensic partner are employed to contain and recover from an incident. In addition, the IT organization conducts an annual disaster recovery exercise.

Biggest changeOur dedicated security operations team, defined incident response plan and third party forensic partner are employed to contain and recover from an incident. In addition, the IT organization conducts an annual disaster recovery exercise. Following an incident, the IT Security Team conducts a post-mortem to identify opportunities to improve our cybersecurity program.

These include user access reviews to determine appropriate access to systems and data and a Security Identity and Event Management (SIEM) software solution, which consists of system logs with correlation logic to identify malicious activity. Logs and alerts cover the network, devices, applications and email. • Response.

These include user access reviews to determine appropriate access to systems and data and a Security Identity and Event Management (SIEM) software solution, which consists of system logs with correlation logic to identify malicious activity. Logs and alerts cover our network, devices, applications and email. • Response.

Prior to engaging third-party service providers, we conduct a cybersecurity risk assessment and utilize a third-party exchange service to gather security posture ratings across all of the third party’s IT security, compliance and data privacy domains.

We have a third-party risk management program. Prior to engaging third-party service providers, we conduct a cybersecurity risk assessment and utilize a third-party exchange service to gather security posture ratings across all of the third party’s IT security, compliance and data privacy domains.

These protections include Identity and Access Management (IAM), Privileged Access Management (PAM), Multi-Factor Authentication (MFA), Vulnerability Management, Endpoint Detection and Response (EDR), Advanced Anti-Phishing and Awareness trainings, Network and Cloud Security and other protective technologies. Annual audits are conducted to assess these controls.

These protections include Identity and Access Management (IAM), Privileged Access Management (PAM), Multi-Factor 18 Table of Contents Authentication (MFA), Vulnerability Management, Endpoint Detection and Response (EDR), Advanced Anti-Phishing and Awareness trainings, Network and Cloud Security and other protective technologies. Annual audits are conducted to assess these controls.

To define that threat landscape, we utilize threat intelligence feeds, such as those provided by Health Information Sharing and Analysis Center (H-ISAC) and a third-party vendor, to determine security threats to the Company and other healthcare and life science organizations. 17 Table of Contents • Protection. We utilize multiple intrusion protection systems and processes to protect our technology assets.

To define that threat landscape, we utilize threat intelligence feeds, such as those provided by Health Information Sharing and Analysis Center (Health-ISAC) and a third-party vendor, to determine security threats to the Company and other healthcare and life science organizations. • Protection. We utilize multiple intrusion protection systems and processes to protect our technology assets.

Our cybersecurity program follows the Cybersecurity Framework as defined by the National Institute of Standards and Technologies. The Cybersecurity program is the responsibility of our internal IT Security Team, which is overseen by our Vice President, Chief Information Officer (the “CIO”). Our cybersecurity program includes the following key elements: • Identification.

Our cybersecurity program follows the Cybersecurity Framework as defined by the National Institute of Standards and Technologies. The Cybersecurity program is the responsibility of our internal IT Security Team, which is overseen by our Director of Global IT Security and Compliance. Our cybersecurity program includes the following key elements: • Identification.

We have an incident response plan for cybersecurity incidents and conduct response planning with tabletop exercises. We have engaged a third party to assist with forensic investigations and expert support when needed. When a cybersecurity incident is identified by our IT Security Director and Security Team, our CIO and other members of our IT team are alerted.

During the year ended December 31, 2023, our Audit Committee met four times. 18 Table of Contents Our CIO (who has 14 years of cybersecurity experience) and our Associate Director of Global Cybersecurity (who has 25 years of cybersecurity experience) are the members of our management team who are responsible for assessing and managing our material risks from cybersecurity threats.

Our CIO (who has 15 years of cybersecurity experience), our Director of Global IT Security and Compliance (who has 11 years of cybersecurity experience and 25 years in IT), and our Associate Director of Global Cyberseurity (who has 26 years of cybersecurity experience) are the members of our management team who are responsible for assessing and managing our 19 Table of Contents material risks from cybersecurity threats.

Incidents are classified by severity with predefined definitions, actions and notifications for each severity level. Incidents that are defined as medium, high or critical are reported the Chief Financial Officer, Principal Accounting Officer, General Counsel and CIO to determine materiality and associated public disclosure steps.

Incidents that are defined as medium, high or critical are reported the Chief Financial Officer, Principal Accounting Officer, General Counsel and CIO to determine materiality and associated public disclosure steps. For these incidents, we engage our third-party forensic partner to assist with containment, remediation and issuing a report on the incident. • Recovery.

Avanos engages third-party vendors to conduct assessments and deliver their recommendations for improvement annually. Where appropriate, third-party vendors also assist with remediation projects. We have a third-party risk management program.

Any follow-up communications are provided as part of the recovery process. Controls assessments are completed annually with respect to any remediation activities that have been identified and completed as part of the cybersecurity program. Avanos engages third-party vendors to conduct assessments and deliver their recommendations for improvement annually. Where appropriate, third-party vendors also assist with remediation projects.

Removed

Following an incident, the IT Security Team conducts a post-mortem to identify opportunities to improve our cybersecurity program. Any follow-up communications are provided as part of the recovery process. Controls assessments are completed annually with respect to any remediation activities that have been identified and completed as part of the cybersecurity program.

Added

When a cybersecurity incident is identified by our IT Security Director and Security Team, our Vice President, Chief Information Officer (the “CIO”) and other members of our IT team are alerted. Incidents are classified by severity with predefined definitions, actions and notifications for each severity level.

Added

During the year ended December 31, 2024, our Audit Committee met four times.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged

2023 filing

2024 filing

Biggest changeThe locations of our principal medical device production facilities owned or leased by us around the world are as follows: Location Country Owned/Leased Nogales Mexico Owned Nogales* Mexico Leased Tucson, Arizona USA Leased Magdalena* Mexico Leased Tijuana Mexico Leased Markham Canada Leased __________________________________________ * Pursuant to the RH Divestiture, these leases, along with substantially all the assets located at these facilities that relate to our RH business, will be transferred to Buyer on a delayed basis pursuant to the term of the Purchase Agreement.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged

2023 filing

2024 filing

Biggest changeItem 4. Mine Safety Disclosures 19 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 19 Item 6. [Reserved] 20 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 20 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 29 Item 8.

Biggest changeItem 4. Mine Safety Disclosures 20 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 20 Item 6. [Reserved] 21 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 21 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 31 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+1 added−1 removed3 unchanged

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Biggest changeWe have not paid any cash dividends, and therefore, the cumulative total return calculation for us is based solely upon stock price appreciation and not upon reinvestment of cash dividends. The stock price performance shown on the graph is not necessarily indicative of future 19 Table of Contents price performance.

No unregistered securities were sold by the Company within the past three years, and neither the Company nor any affiliated purchaser purchased any equity securities of the Company, other than repurchases described under “Share Repurchase Program” in Note 17 to the consolidated financial statements in Item 8 of this Form 10-K.

No unregistered securities were sold by the Company within the past three years, and neither the Company nor any affiliated purchaser purchased any equity securities of the Company, other than repurchases described under “Share Repurchase Program” in Note 19 to the consolidated financial statements in Item 8 of this Form 10-K.

Performance The following graph compares the cumulative total return of our common stock from December 31, 2018 through December 31, 2023 with the cumulative return of companies comprising the Standard and Poor’s S&P MidCap 400 Index and the S&P 500 Health Care Equipment and Services Index.

Performance The following graph compares the cumulative total return of our common stock from December 31, 2019 through December 31, 2024 with the cumulative return of companies comprising the Standard and Poor’s S&P MidCap 400 Index and the S&P 500 Health Care Equipment and Services Index.

We did not pay any dividends on our common stock in the years ended December 31, 2023 and 2022 and we do not expect to pay any cash dividends on our common stock in the foreseeable future. As of February 13, 2024, we had 9,469 holders of record of our common stock.

We did not pay any dividends on our common stock in the years ended December 31, 2024 and 2023 and we do not expect to pay any cash dividends on our common stock in the foreseeable future. As of February 19, 2025, we had 8,870 holders of record of our common stock.

Removed

The preceding chart is based on the following data: AVNS S&P MidCap 400 S&P 500 Health Care Equipment and Services December 31, 2018 $ 100.00 $ 100.00 $ 100.00 December 31, 2019 72.98 123.57 145.98 December 31, 2020 99.35 147.80 174.51 December 31, 2021 75.08 193.51 230.55 December 31, 2022 58.60 177.16 222.78 December 31, 2023 48.57 216.46 240.90

Added

The stock price performance shown on the graph is not necessarily indicative of future price performance. 20 Table of Contents The preceding chart is based on the following data: AVNS S&P MidCap 400 S&P 500 Health Care Equipment and Services December 31, 2019 $ 100.00 $ 100.00 $ 100.00 December 31, 2020 136.14 121.84 119.80 December 31, 2021 102.88 159.79 158.73 December 31, 2022 80.30 148.79 153.77 December 31, 2023 66.56 184.67 166.28 December 31, 2024 47.24 222.11 174.31

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

59 edited+31 added−15 removed31 unchanged

2023 filing

2024 filing

Biggest changeOperating Profit (Loss) (in millions) Year Ended December 31, 2023 2022 2021 Operating profit (loss) $ 4.2 $ 35.5 $ (39.0) Operating profit margin 0.6 % 5.2 % (6.6) % The items previously described drove operating profit to $4.2 million in the year ended December 31, 2023 compared to operating profit of $35.5 million and operating loss of $39.0 million, respectively, in the years ended December 31, 2022 and 2021. 24 Table of Contents Adjusted Operating Profit (Loss) A reconciliation of adjusted operating profit (loss), a non-GAAP measure, to operating profit (loss) is provided in the table below (in millions): Year Ended December 31, 2023 2022 2021 Operating profit (loss), as reported (GAAP) $ 4.2 $ 35.5 $ (39.0) COVID-19 related expenses — — 0.3 2020 Restructuring charges — — 12.4 Post-Divestiture restructuring and transition charges — — 14.1 Acquisition and integration-related charges 3.3 3.4 1.6 Restructuring and transformation charges 28.2 — — Divestiture-related charges 6.0 — — EU MDR Compliance 3.7 6.9 4.0 Litigation and legal 10.0 — 15.0 Other items — 3.8 — Intangibles amortization 24.3 23.6 14.6 Adjusted Operating Profit (Loss) (non-GAAP) $ 79.7 $ 73.2 $ 23.0 The items noted in the table above are described below: On a GAAP basis, operating income increased compared to the prior year due to higher sales, lower legal costs and completion of restructuring activities, partially offset by higher selling costs.

Biggest changeAdjusted Operating Profit (Loss) A reconciliation of adjusted operating profit (loss), a non-GAAP measure, to operating (loss) profit is provided in the table below (in millions): Year Ended December 31, 2024 2023 2022 Operating profit (loss), as reported (GAAP) $ (396.2) $ 4.2 $ 35.5 Acquisition and integration-related charges 4.2 3.3 3.4 Restructuring and transformation charges (0.8) 28.2 — Post-RH Divestiture transition charges 3.1 — — Post-RH Divestiture restructuring 8.9 — — Divestiture related — 6.0 — Goodwill and intangibles impairment 436.7 — EU MDR Compliance 6.2 3.7 6.9 Litigation and legal — 10.0 — Other Items — — 3.8 Intangibles amortization 25.2 24.3 23.6 Adjusted Operating Profit (Loss) (non-GAAP) $ 87.3 $ 79.7 $ 73.2 The items noted in the table above are described below: On a GAAP basis, we had an operating loss compared to operating income in the prior year, primarily due to goodwill and intangibles impairment and plant separation costs, partially offset by higher sales and lower selling costs.

Net Sales - 2023 Compared to 2022 Net sales decreased by 1.6% to $673.3 million for the year ended December 31, 2023, primarily due to lower volume in the Pain Management and Recovery portfolio (primarily lower HA sales), partially offset by continued strong demand for Digestive Health products.

Net Sales - 2023 Compared to 2022 Net sales decreased by 1.6% to $673.3 million for the year ended December 31, 2023, primarily due lower volume in the Pain Management and Recovery portfolio (primarily lower HA sales), partially offset by continued strong demand for Digestive Health products.

On May 16, 2022, the Board of Directors approved a new one-year program authorizing us to repurchase up to $25.0 million of our common stock. In connection with such repurchase program, we established a pre-arranged trading plan in accordance with Rule 10b5-1 which permitted common stock to be repurchased over a twelve-month period.

Share Repurchase Program On May 16, 2022, the Board of Directors approved a new one-year program authorizing us to repurchase up to $25.0 million of our common stock. In connection with such repurchase program, we established a pre-arranged trading plan in accordance with Rule 10b5-1 which permitted common stock to be repurchased over a twelve-month period.

In conjunction with the RH Divestiture, we and Buyer entered into various transition services agreements pursuant to which we, Buyer and each company’s respective affiliates will provide to each other various transitional services, including, but not limited to, product manufacturing and distribution, facilities, order fulfillment, invoicing, quality assurance, regulatory support, audit support and other services.

In conjunction with the RH Divestiture, we and Buyer entered into various transition services agreements pursuant to which we, Buyer and each company’s respective affiliates provide to each other various transitional services, including, but not limited to, product manufacturing and distribution, facilities, order fulfillment, invoicing, quality assurance, regulatory support, audit support and other services.

As of December 31, 2023, we were in compliance with all of our debt covenants. For further information regarding our debt arrangements, see “Debt” in Note 9 to the consolidated financial statements in Item 8 of this Form 10-K.

As of December 31, 2024, we were in compliance with all of our debt covenants. For further information regarding our debt arrangements, see “Debt” in Note 9 to the consolidated financial statements in Item 8 of this Form 10-K.

This assessment, which is completed on a taxing jurisdiction basis, takes into account a number of types of evidence, including the nature, frequency, and severity of current and cumulative financial reporting losses, sources of future taxable income, taxable income in prior carryback year(s) and tax planning strategies.

This assessment, which is completed on a taxing jurisdiction basis, takes into account a number of 30 Table of Contents types of evidence, including the nature, frequency, and severity of current and cumulative financial reporting losses, sources of future taxable income, taxable income in prior carryback year(s) and tax planning strategies.

Pain Management and Recovery 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 • Interventional pain solutions, which provide minimally invasive pain relief therapies, such as our COOLIEF pain therapy, OrthogenRx’s knee osteoarthritis HA pain relief injection products and Diros’ RFA products used to treat chronic pain conditions.

Pain Management and Recovery is a portfolio of products including: • Surgical pain and recovery products such as our ON-Q and ambIT surgical pain pumps and our Game Ready cold and compression therapy systems; and • Interventional pain solutions, which provide minimally invasive pain relief therapies, such as our COOLIEF pain therapy, our OrthogenRx knee osteoarthritis HA pain relief injection products and our Trident RFA products used to treat chronic pain conditions.

Estimates are used in accounting for, among other things, certain amounts included in discontinued operations, certain amounts included in assets and liabilities held for sale, distributor rebate accruals, future cash flows associated with impairment testing for goodwill and long-lived assets, loss contingencies, and deferred income taxes and potential income tax assessments.

Estimates are used in accounting for, among other things, certain amounts included in discontinued operations, certain amounts included in assets and liabilities held for sale, distributor rebate accruals, future cash flows associated with impairment testing for goodwill and long-lived assets, loss contingencies, and 29 Table of Contents deferred income taxes and potential income tax assessments.

Additional r epurchases under this program will be made from time to time at management’s discretion on the open market or through privately negotiated transactions in compliance with Rule 10b-18 under the Exchange Act, subject to market conditions, applicable legal requirements and other relevant factors.

Repurchases under this program will be made from time to time at management’s discretion on the open market or through privately negotiated transactions in compliance with Rule 10b-18 under the Exchange Act, subject to market conditions, applicable legal requirements and other relevant factors.

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.

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 23 Table of Contents alternative to, the most directly comparable GAAP financial measures.

These costs consisted of $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. Litigation and legal : In the year ended December 31, 2023,we incurred $10.0 million of costs for litigation matters.

These costs consisted of $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. Litigation and legal : We incurred no costs for litigation matters in the year ended December 31, 2024.

In the year ended December 31, 2023, $0.5 million of interest was capitalized on long-term capital projects. In the years ended December 31, 2022 and 2021, $0.1 million of interest was capitalized on long-term capital projects. Interest expense consists of interest accrued and amortization of debt discount and issuance costs on our long-term debt.

In the year ended December 31, 2024, $0.9 million of interest was capitalized on long-term capital projects. $0.5 million and $0.1 million of interest was capitalized on long-term capital projects in the years ended December 31, 2023 and 2022, respectively. Interest expense consists of interest accrued and amortization of debt discount and issuance costs on our long-term debt.

Interest Expense Interest expense was $15.0 million, $10.0 million and $3.3 million in the years ended December 31, 2023, 2022 and 2021, respectively. In the year ended December 31, 2022, interest expense includes an early extinguishment loss of $1.1 million incurred upon terminating our Prior Credit Agreement (as defined below) on June 24, 2022.

Interest Expense Interest expense was $12.2 million, $15.0 million and $10.0 million in the years ended December 31, 2024, 2023 and 2022, respectively. In the year ended December 31, 2022, interest expense includes an early extinguishment loss of $1.1 million incurred upon terminating our Prior Credit Agreement (as defined below) on June 24, 2022.

In the year ended December 31, 2023, we incurred expenses of $28.2 million related to the Transformation Process which consisted of costs associated with program management consulting and employee retention expenses and employee severance and benefits costs.

In the year ended December 31, 2023, we incurred expenses of $28.2 million, which consisted of costs associated with program management consulting and employee retention expenses and employee severance and benefits costs.

Unamortized debt discount 27 Table of Contents and issuance costs are being amortized to interest expense over the life of the Term Loan Facility using the interest method, resulting in an effective interest rate of 6.6% as of December 31, 2023.

Unamortized debt discount 28 Table of Contents and issuance costs are being amortized to interest expense over the life of the Term Loan Facility using the interest method, resulting in an effective interest rate of 6.1% as of December 31, 2024.

Cash and equivalents decreased by $40.0 million to $87.7 million as of December 31, 2023 compared to $127.7 million last year.

Cash and equivalents decreased by $40.0 million to $87.7 million as of December 31, 2023 compared to $127.7 million as of December 31, 2022.

The following will be discussed and analyzed: • Restructuring Activities; • Divestiture of the Respiratory Health Business; • Discontinued Operations; • Business Acquisitions; • Results of Operations and Related Information; • Liquidity and Capital Resources; • Critical Accounting Policies and Use of Estimates; and • Legal Matters.

The following will be discussed and analyzed: • Goodwill and Intangibles Impairment; • Restructuring Activities; • Divestiture of the Respiratory Health Business; • Discontinued Operations; • Business Acquisition; • Results of Operations and Related Information; • Liquidity and Capital Resources; • Critical Accounting Policies and Use of Estimates; and • Legal Matters.

Intangibles amortization : Intangibles amortization is related primarily to the amortization of intangibles acquired in prior business acquisitions and was $24.3 million, $23.6 million and $14.6 million, respectively, in the years ended December 31, 2023, 2022 and 2021.

Intangibles amortization : Intangibles amortization is related primarily to the amortization of intangibles acquired in prior business acquisitions and was $25.2 million, $24.3 million and $23.6 million, respectively, in the years ended December 31, 2024, 2023 and 2022.

As of December 31, 2023, we have accumulated undistributed earnings generated by our foreign subsidiaries of approximately $33.6 million. Certain earnings were previously subject to tax due to the one-time transition tax of the Tax Cuts and Jobs Act of 2017.

As of December 31, 2024, we have accumulated undistributed earnings generated by our foreign subsidiaries of approximately $34.2 million. Certain earnings were previously subject to tax due to the one-time transition tax of the Tax Cuts and Jobs Act of 2017.

A reconciliation of the non-GAAP measure to the most directly comparable GAAP financial measures is provided under “Adjusted Operating (Loss) Profit.” Net Sales Our net sales are summarized in the following table for the years ended December 31, 2023, 2022 and 2021 (in millions): Year Ended December 31, 2023 2022 Change 2021 Change Digestive Health $ 371.6 $ 340.4 9.2 % $ 322.2 5.6 % Pain Management and Recovery: Surgical pain and recovery 139.2 160.1 (13.1) % 162.7 (1.6) % Interventional pain 162.5 183.6 (11.5) % 102.1 79.8 % Total Pain Management and Recovery 301.7 343.7 (12.2) % 264.8 29.8 % Total Net Sales $ 673.3 $ 684.1 (1.6) % $ 587.0 16.5 % Total Volume (a) Pricing/Mix Currency Other (b) Net Sales - percentage change 2023 vs. 2022 (1.6) % (1.7) % 0.3 % (0.2) % — % Net Sales - percentage change 2022 vs. 2021 16.5 % 17.5 % 0.7 % (1.6) % (0.1) % ______________________________ (a) Volume includes incremental sales from acquisitions.

A reconciliation of the non-GAAP measure to the most directly comparable GAAP financial measures is provided under “Adjusted Operating Profit (Loss).” Net Sales Our net sales are summarized in the following table for the years ended December 31, 2024, 2023 and 2022 (in millions): Year Ended December 31, 2024 2023 Change 2022 Change Digestive Health $ 396.4 $ 371.6 6.7 % $ 340.4 9.2 % Pain Management and Recovery: Surgical pain and recovery 124.1 139.2 (10.8) % 160.1 (13.1) % Interventional pain 167.3 162.5 3.0 % 183.6 (11.5) % Total Pain Management and Recovery 291.4 301.7 (3.4) % 343.7 (12.2) % Total Net Sales $ 687.8 $ 673.3 2.2 % $ 684.1 (1.6) % Total Volume (a) Pricing/Mix Currency Other Net Sales - percentage change 2024 vs. 2023 2.2 % 4.3 % (2.2) % 0.1 % — % Net Sales - percentage change 2023 vs. 2022 (1.6) % (1.7) % 0.3 % (0.2) % — % ______________________________ (a) Volume includes incremental sales from acquisitions.

Research and Development (in millions) Year Ended December 31, 2023 2022 2021 Research and development $ 27.2 $ 29.2 $ 30.6 Percentage of net sales 4.0 % 4.3 % 5.2 % 23 Table of Contents 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.

Research and Development (in millions) Year Ended December 31, 2024 2023 2022 Research and development $ 26.2 $ 27.2 $ 29.2 Percentage of net sales 3.8 % 4.0 % 4.3 % 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.

On July 24, 2023, we closed the acquisition of Diros for approximately $53.0 million, consisting of $2.5 million cash paid upon entry into the definitive agreement and $50.5 million in cash at closing less working capital and other adjustments, with up to an additional $7.0 million payable in contingent cash consideration based on achievement of certain performance objectives defined in the purchase agreement.

The purchase price was approximately $53.0 million, consisting of $2.5 million cash paid upon entry into the definitive agreement and $50.5 million in cash at closing less working capital and other adjustments, with up to an additional $7.0 million payable in contingent cash consideration based on achievement of certain performance objectives defined in the purchase agreement.

Restructuring Activities In January 2023, we initiated a three-year restructuring initiative pursuant to which we: (i) have combined our Chronic Care and Pain Management franchises into a single commercial organization focused on the Digestive Health and Pain Management and Recovery product categories; (ii) plan to rationalize our product portfolio, including certain low-margin, low-growth product categories, through targeted divestitures; (iii) have undertaken additional cost management activities aimed at enhancing the Company’s operating profitability; and (iv) plan to pursue efficient capital allocation strategies, including through acquisitions that meet the Company’s strategic and financial criteria (the “Transformation Process”).

As a result, during the fourth quarter of 2024, we recorded a $336.5 million impairment to goodwill, which is included in “Goodwill and intangibles impairment.” Restructuring Activities In January 2023, we initiated a three-year restructuring initiative pursuant to which we: (i) have combined our Chronic Care and Pain Management franchises into a single commercial organization focused on the Digestive Health and Pain Management and Recovery product categories; (ii) plan to rationalize our product portfolio, including certain low-margin, low-growth product categories, through targeted divestitures; (iii) have undertaken additional cost management activities aimed at enhancing the Company’s operating profitability; and (iv) plan to pursue efficient capital allocation strategies, including through acquisitions that meet the Company’s strategic and financial criteria (the “Transformation Process”).

The purchase price for the Diros Acquisition was funded by proceeds from our Revolving Credit Facility. On January 20, 2022, we acquired all of the equity voting interests and completed the acquisition of OrthogenRx, which is focused on the development and commercialization of treatments for knee pain caused by osteoarthritis.

The purchase price for the Diros Acquisition was funded by proceeds from our Revolving Credit Facility. On January 20, 2022, we acquired all of the equity voting interests and completed the acquisition of OrthogenRx, which developed and commercialized hyaluronic acid (“HA”) treatments for knee pain caused by osteoarthritis.

(b) Other includes rounding. 22 Table of Contents Product Category Descriptions Digestive Health i s a portfolio of products such as our MIC-KEY enteral feeding tubes, Corpak patient feeding solutions and NeoMed neonatal and pediatric feeding solutions.

Product Category Descriptions Digestive Health i s a portfolio of products such as our MIC-KEY enteral feeding tubes, our Corpak patient feeding solutions and our NeoMed neonatal and pediatric feeding solutions.

Other items: In the year ended December 31, 2023, we incurred no costs associated with other items. In the year ended December 31, 2022, we incurred $3.8 million of expenses in connection with evaluating and planning for the Transformation Process.

In the year ended December 31, 2022, we incurred $3.8 million of expenses in connection with evaluating and planning for the Transformation Process.

For obligations under our purchase arrangements which consist mostly of open purchase orders and other commitments, as of December 31, 2023, we have amounts due in less than one year of $71.7 million, $7.0 million in one to three years, and $8.6 million thereafter.

For obligations under our purchase arrangements which consist mostly of open purchase orders and other commitments, as of December 31, 2024, we have amounts due in less than one year of $68.0 million, $4.9 million in one to three years, and none thereafter.

The excluded items include: • Incremental expenses associated with altering operations in response to the COVID-19 pandemic. • Expenses associated with restructuring activities, including IT-related charges. • Expenses associated with post-RH Divestiture and post-S&IP divestiture transition activities. • Certain acquisition and integration charges related to the acquisitions of Diros, OrthogenRx and GameReady. • Expenses associated with our three-year restructuring initiative. • Expenses for accounting, legal and other professional fees associated with the divestiture of our RH business. • Expenses associated with EU MDR compliance. • Expenses associated with other unusual items such as consulting costs associated with evaluating transformational restructuring or other strategies or asset impairment charges for cancelled research and development projects. • Expenses associated with certain litigation matters. • The amortization of intangible assets associated with prior business acquisitions.

The excluded items include: • Expenses associated with post-RH Divestiture transition and restructuring activities. • Certain acquisition and integration charges related to the acquisitions of Diros and OrthogenRx. • Expenses associated with the Transformation Process. • Expenses for accounting, legal and other professional fees associated with the divestiture of our RH business. • Goodwill and intangibles impairment. • Expenses associated with EU MDR compliance. • Expenses associated with other unusual items such as consulting costs associated with evaluating transformational restructuring or other strategies or asset impairment charges for cancelled research and development projects. • Expenses associated with certain litigation matters. • The amortization of intangible assets associated with prior business acquisitions.

Selling and General Expenses (in millions) Year Ended December 31, 2023 2022 2021 Selling and general expenses $ 335.0 $ 326.5 $ 285.3 Percentage of net sales 49.8 % 47.7 % 48.6 % Selling and general expenses increased from $326.5 million in 2022 to $335.0 million in 2023, driven by higher selling costs, non-recurring expenses associated with the ongoing Transformation Process and the RH Divestiture, as well as compliance costs associated with the EU MDR.

In the year ended December 31, 2023, selling and general expenses increased from $326.5 million in 2022 to $335.0 million in 2023, driven by higher selling costs, non-recurring expenses associated with the ongoing Transformation Process and the RH Divestiture, as well as compliance costs associated with the EU MDR.

(“Diros”), a leading manufacturer of innovative radiofrequency (“RF”) products used to treat chronic pain conditions.

(“Diros”), a leading manufacturer of innovative radiofrequency ablation (“RFA”) products used to treat chronic pain conditions (the “Diros Acquisition”).

Other Expense, net (in millions) Year Ended December 31, 2023 2022 2021 Other expense, net $ 13.3 $ 3.0 $ 22.3 Percentage of net sales 2.0 % 0.4 % 3.8 % Other expense, net increased from $3.0 million in 2022 to $13.3 million in 2023 primarily due to litigation and legal costs of $10.0 million.

Other (Income) Expense, net (in millions) Year Ended December 31, 2024 2023 2022 Other (income) expense, net $ (3.9) $ 13.3 $ 3.0 Percentage of net sales (0.6) % 2.0 % 0.4 % In 2024, other income, net decreased to $3.9 million, compared to other expense, net of $13.3 million in 2023, due to litigation and legal costs of $10.0 million incurred in 2023.

Contractual Obligations In the normal course of business, we enter into contracts and commitments that obligate us to make payments in the future. Information regarding our obligations under lease and debt arrangements and defined benefit plans are provided in Notes 6, 8, and 10, respectively, to the consolidated financial statements contained in Item 8 of this Form 10-K.

Information regarding our obligations under lease and debt arrangements and defined benefit plans are provided in Notes 6, 8, and 10, respectively, to the consolidated financial statements contained in Item 8 of this Form 10-K.

Acquisition and integration-related charges : We incurred $3.3 million, $3.4 million and $1.6 million of costs in connection with acquisition and integration activities for the years ended December 31, 2023, 2022 and 2021, respectively. Expenses incurred during 2023 were related to the acquisition of Diros and OrthogenRx. Expenses incurred in the prior periods were for integrations of earlier acquisitions.

Items impacting operating results include the following: Acquisition and integration-related charges : We incurred $4.2 million, $3.3 million and $3.4 million of costs in connection with acquisition and integration activities for the years ended December 31, 2024, 2023 and 2022, respectively. Expenses incurred during 2024 and 2023 were related to the acquisition of Diros and OrthogenRx.

Provision for Income Taxes The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), enacted in March 2020, allows for the carryback of U.S. net operating losses, which were expected to be used in future years to prior years, resulting in no benefit in the year ended December 31, 2023, and a $3.8 million and $2.8 million benefit in the years ended December 31, 2022 and 2021, respectively.

See “Debt” in Note 9 to the consolidated financial statements in Item 8 of this Form 10-K for further discussion of our indebtedness, our Prior Credit Agreement and our new Credit Agreement. 27 Table of Contents Provision for Income Taxes The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), enacted in March 2020, allows for the carryback of U.S. net operating losses, which were expected to be used in future years to prior years, resulting in no benefit in the years ended December 31, 2024 and December 31, 2023, and a $3.8 million benefit in the year ended December 31, 2022.

This was partially offset by $32.4 million of cash provided by operating activities, $55.0 million of proceeds from our revolving credit facility and $89.0 million of proceeds from the RH divestiture. Cash and equivalents increased by $9.2 million to $127.7 million as of December 31, 2022 compared to $118.5 million as of December 31, 2021.

The services generally commenced on the closing date of the Divestiture and terminate no later than one to three years thereafter. 21 Table of Contents Discontinued Operations As a result of the RH Divestiture, the results of operations from our RH business are reported as “(Loss) income from discontinued operations, net of tax” and the related assets and liabilities are classified as “held for sale” in the consolidated financial statements.

Discontinued Operations As a result of the RH Divestiture, the results of operations from our RH business are reported as “(Loss) income from discontinued operations, net of tax” and the related assets and liabilities were classified as “held for sale” in the consolidated financial statements.

Net Sales by Geographic Region Net sales by region is presented in the table below (in millions): Year Ended December 31, 2023 2022 Change 2021 Change North America $ 537.9 $ 552.0 (2.6) % $ 449.1 22.9 % Europe, Middle East and Africa 84.1 77.4 8.7 86.1 (10.1) Asia Pacific and Latin America 51.3 54.7 (6.2) 51.8 5.6 Total Net Sales $ 673.3 $ 684.1 (1.6) % $ 587.0 16.5 % Gross Profit (in millions) Year Ended December 31, 2023 2022 2021 Net sales $ 673.3 $ 684.1 $ 587.0 Cost of products sold 293.6 289.9 287.8 Gross profit 379.7 394.2 299.2 Gross profit margin 56.4 % 57.6 % 51.0 % Cost of products sold increased from $289.9 million to $293.6 million during the year ended December 31, 2023, primarily driven by unfavorable product mix, partially offset by improved manufacturing efficiencies.

Net Sales by Geographic Region Net sales by region is presented in the table below (in millions): Year Ended December 31, 2024 2023 Change 2022 Change North America $ 545.0 $ 537.9 1.3 % $ 552.0 (2.6) % Europe, Middle East and Africa 94.8 84.1 12.7 77.4 8.7 Asia Pacific and Latin America 48.0 51.3 (6.4) 54.7 (6.2) Total Net Sales $ 687.8 $ 673.3 2.2 % $ 684.1 (1.6) % 24 Table of Contents Gross Profit (in millions) Year Ended December 31, 2024 2023 2022 Net sales $ 687.8 $ 673.3 $ 684.1 Cost of products sold 306.5 293.6 289.9 Gross profit 381.3 379.7 394.2 Gross profit margin 55.4 % 56.4 % 57.6 % Cost of products sold increased from $293.6 million to $306.5 million during the year ended December 31, 2024, primarily driven by costs associated with our restructuring initiatives and plant separation costs associated with the RH Divestiture along with unfavorable pricing for our HA products.

In connection with such repurchase program, we established a pre-arranged trading plan in accordance with Rule 10b5-1 which permitted common stock to be repurchased over a twelve-month period. Under this program, during the third quarter of 2023 we repurchased $9.2 million of our common stock, and during the fourth quarter of 2023 we repurchased the remaining $5.8 million.

In connection with such repurchase program, we established a pre-arranged trading plan in accordance with Rule 10b5-1 which permitted common stock to be repurchased over a twelve-month period.

Sales revenue is recognized for the amount of considerations that we expect to be entitled to receive in exchange for our products. Sales are reported net of returns, rebates, incentives, each as described below, and freight allowed. Taxes imposed by governmental authorities on our revenue-producing activities with customers, such as sales taxes and value-added taxes, are excluded from net sales.

Accordingly, control of the products transfers to the customer in accordance with the transaction’s shipping terms. Sales revenue is recognized for the amount of considerations that we expect to be entitled to receive in exchange for our products. Sales are reported net of returns, rebates, incentives, each as described below, and freight allowed.

We consider the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested and currently do not have plans to repatriate such earnings.

As of December 31, 2024, $51.0 million of our $107.7 million of cash and cash equivalents was held by foreign subsidiaries. We consider the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested and currently do not have plans to repatriate such earnings.

The accompanying consolidated income statements for the year ended December 31, 2023 include $28.2 million of costs incurred in connection with the Transformation Process in “Selling and general expenses.” Divestiture of the Respiratory Health Business On October 2, 2023, we closed the sale of our Respiratory Health (“RH”) business to SunMed Group Holdings, LLC (“Buyer”) for a total purchase price of $110.0 million in cash, subject to certain adjustments as provided in the Purchase Agreement based on the indebtedness and inventory transferred to Buyer at the closing and the chargebacks assumed by Buyer but that would otherwise have been payable by the Company and its subsidiaries on or after October 2, 2023 to distributors of the Company’s RH products located in the United States (the “RH Divestiture”).

The total purchase price for our RH business was $110.0 million in cash, subject to certain adjustments based on the indebtedness and inventory transferred to Buyer at the closing and the chargebacks assumed by Buyer but that would otherwise have been payable by the Company and its subsidiaries on or after October 2, 2023 to distributors of the Company’s RH products located in the United States.

Incremental costs associated with EU MDR compliance are primarily related to re-certification of our products 25 Table of Contents under the enhanced standards. We incurred $3.7 million, $6.9 million and $4.0 million of costs related to EU MDR compliance in the years ended December 31, 2023, 2022 and 2021 respectively.

We incurred $6.2 million, $3.7 million and $6.9 million of costs related to EU MDR compliance in the years ended December 31, 2024, 2023 and 2022 respectively. Other items: In the years ended December 31, 2024 and December 31, 2023, we incurred no costs associated with other items.

In the year ended December 31, 2023, gross profit margin decreased from 57.6% to 56.4%. Cost of products sold increased from $287.8 million to $289.9 million during the year ended December 31, 2022, primarily driven by higher freight costs and delays in returning our manufacturing operations to pre-pandemic efficiency levels.

In the year ended December 31, 2024, gross profit margin decreased from 56.4% to 55.4%. Cost of products sold increased from $289.9 million to $293.6 million during the year ended December 31, 2023, primarily driven by unfavorable product mix, partially offset by improved manufacturing efficiencies. In the year ended December 31, 2023, gross profit margin decreased from 57.6% to 56.4%.

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 December 31, 2023, $48.4 million of our $87.7 million of cash and cash equivalents was held by foreign subsidiaries.

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.

RH Divestiture related charges: In conjunction with the divestiture of our RH business, we incurred accounting, legal and other professional fees of approximately $6.0 million for the year ended December 31, 2023. EU MDR Compliance : The EU MDR became effective in 2021 and brings significant new requirements for many of our medical devices.

In the year ended December 31, 2024, we incurred expenses of $8.9 million related to the Plan, which primarily consisted of employee severance and benefits costs. 26 Table of Contents RH Divestiture related charges: In conjunction with the divestiture of our RH business, we incurred accounting, legal and other professional fees of approximately $6.0 million for the year ended December 31, 2023.

This expense was for a settlement related to a customer claim and is included in “Other expense, net”.

In the year ended December 31, 2023,we incurred $10.0 million of costs for litigation matters. This expense was for a settlement related to a customer claim and is included in “Other expense, net”. We incurred no costs for litigation matters in the year ended December 31, 2022.

Changes in these estimates could affect the timing and amount of accrual of loss contingencies. Income Taxes We recognize tax benefits in our financial statements when our uncertain tax positions are more likely than not to be sustained upon audit.

This impairment loss is included in “Goodwill and intangibles impairment” in the accompanying consolidated income statements. See Note 2, “Goodwill and Intangibles Impairment,” for disclosures about intangible asset impairment. Income Taxes We recognize tax benefits in our financial statements when our uncertain tax positions are more likely than not to be sustained upon audit.

This share repurchase program does not obligate us to purchase any particular amount of common stock and may be suspended, modified or discontinued by us without prior notice. For further information, see “Share Repurchase Program” in Note 17 to the consolidated financial statements in Item 8 of this Form 10-K.

We have established a pre-arranged trading plan under Rule 10b5-1 of the Exchange Act in connection with this share repurchase program. This share repurchase program does not obligate us to purchase any particular amount of common stock and may be suspended, modified or discontinued by us without prior notice.

Net sales from discontinued operations were $100.9 million in the year ended December 31, 2023, compared to $135.9 million and $157.6 million in the years ended December 31, 2022 and 2021, respectively. The decrease in net sales was primarily driven by lower volume along with unfavorable currency effects.

Net sales from discontinued operations were $54.6 million in the year ended December 31, 2024, compared to $100.9 million and $135.9 million in the years ended December 31, 2023 and 2022, respectively. Business Acquisition On July 24, 2023, we closed the acquisition of Diros Technology, Inc.

Revenue Recognition Sales revenue is recognized at the time of product shipment or delivery of our products to unaffiliated customers, depending on shipping terms. Accordingly, control of the products transfers to the customer in accordance with the transaction’s shipping terms.

Actual results could differ from these estimates, and the effect of the change could be material to our financial statements. Changes in these estimates are recorded when known. Revenue Recognition Sales revenue is recognized at the time of product shipment or delivery of our products to unaffiliated customers, depending on shipping terms.

See “Income Taxes” in Note 10 to the consolidated financial statements in Item 8 of this Form 10-K for further details regarding our income taxes. 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 existing credit agreement.

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 existing credit agreement. Our operating cash flow has historically been sufficient to meet our working capital requirements and fund capital expenditures.

As a result, as of December 31, 2023, we had $3.8 million of income tax receivables. 26 Table of Contents Our overall effective tax rate was (25.3)% for the year ended December 31, 2023 compared to a rate of 19.5% in 2022 and 26.6% in 2021.

Our overall effective tax rate was 4.2% for the year ended December 31, 2024 compared to a rate of (25.3)% in 2023 and 19.5% in 2022. See “Income Taxes” in Note 10 to the consolidated financial statements in Item 8 of this Form 10-K for further details regarding our income taxes.

Our contracts provide for forms of variable consideration including rebates, incentives and pricing tiers, each of which are described further in Note 1 “Accounting Policies” in Item 8 of this Form 10-K. Loss Contingencies The outcome of loss contingencies, legal proceedings, indemnification matters and claims brought against us is subject to uncertainty.

Taxes imposed by governmental authorities on our revenue-producing activities with customers, such as sales taxes and value-added taxes, are excluded from net sales. Our contracts provide for forms of variable consideration including rebates, incentives and pricing tiers, each of which are described further in Note 1 “Accounting Policies” in Item 8 of this Form 10-K.

The increase was driven by $90.9 million of cash provided by operating activities, $250.0 of proceeds from our secured debt and $150.0 million of proceeds from our revolving credit facility partially offset by payments on our prior credit agreement including $126.6 million on our secured term loan and $170.0 million on our revolving credit facility, $116.1 million of cash used for the acquisition of OrthogenRx, $45.5 million used to repurchase shares of our common stock and $19.3 million of capital expenditures.

This was partially offset by $17.8 million of capital expenditures, $11.8 million of investments in non-affiliated entities, repayments of our debt, including $45.0 million on our revolving credit facility and $8.6 million on our secured term loan, $10.0 million used to repurchase shares of our common stock and $3.8 million of contingent consideration payments.

The initial purchase price for the OrthogenRx Acquisition was $130.0 million at closing less working capital adjustments, with up to an additional $30.0 million payable in contingent cash consideration based on OrthogenRx’s growth in net sales during 2022 and 2023.

The initial purchase price for the OrthogenRx Acquisition was $130.0 million at closing less working capital adjustments.

By 2025, we expect total gross savings of between $45.0 million and $55.0 million compared to 2022, most of which will be achieved in 2024. We expect the Transformation Process will be substantially complete by the end of 2025.

We expect the Transformation Process will be substantially complete by the end of 2025.

See “Debt” in Note 9 to the consolidated financial statements in Item 8 of this Form 10-K for further discussion of our indebtedness, our Prior Credit Agreement and our new Credit Agreement.

For further information, see “Share Repurchase Program” in Note 19 to the consolidated financial statements in Item 8 of this Form 10-K. Contractual Obligations In the normal course of business, we enter into contracts and commitments that obligate us to make payments in the future.

Net Sales - 2022 Compared to 2021 Net sales increased by 16.5% to $684.1 million for the year ended December 31, 2022, primarily due to incremental revenue from the OrthogenRx acquisition and strong demand for Digestive Health products, in addition to 0.7% of favorable pricing, which was partially offset by 1.6% of unfavorable foreign currency translation effects.

Net Sales - 2024 Compared to 2023 Net sales increased by 2.2% to $687.8 million for the year ended December 31, 2024, primarily due to higher volume across our Digestive Health and Interventional Pain portfolios partially offset by unfavorable pricing for our HA products.

These amounts include between $6.0 million and $8.0 million of employee severance and benefits costs.

These amounts include between $6.0 million and $8.0 million of employee severance and benefits costs. The accompanying consolidated income statements for the year ended December 31, 2024 include a net benefit of $0.8 million due to a gain on lease modification for 22 Table of Contents our Alpharetta headquarters.

Removed

We recognized a loss on disposal of the RH business, and accordingly, we recorded impairment of $70.8 million against assets in the disposal group, which is included in “(Loss) income from discontinued operations, net of tax.” Business Acquisitions On June 17, 2023 we entered into a definitive agreement to acquire Diros Technology, Inc.

Added

Goodwill and Intangibles Impairment In the fourth quarter of 2024, we revised downward our future projections for certain product lines due to lower net sales and future year margin expectations.

Removed

In the year ended December 31, 2022, gross profit margin increased from 51.0% to 57.6% driven by high volume, primarily due to incremental revenue from the OrthogenRx acquisition and strong demand for digestive health products .

Added

This required us to assess the recoverability of a specific asset group during the fourth quarter of 2024, which resulted in an impairment loss of $100.2 million, which is included in “Goodwill and intangibles impairment.” Due to the business factors described above and a decrease in our market capitalization, we determined it was more likely than not that the fair value of our medical devices reporting unit may be below its carrying value.

Removed

In the year ended December 31, 2022, selling and general expenses increased from $285.3 million in 2021 to $326.5 million in 2022, driven by higher selling costs, along with consulting costs associated with evaluating and planning for the Transformation Process, compliance costs associated with the EU MDR and higher acquisition-related costs.

Added

Accordingly, we completed an interim goodwill impairment test as of December 1, 2024 and concluded that the fair value of the reporting unit was lower than its carrying value.

Removed

Legal and litigation costs were incurred as the result of the settlement related to a customer claim.

Added

Costs incurred in connection with the Transformation Process are in “Cost of products sold,” “Research and development,” “Selling and general expenses” and “Other expense, net”. Divestiture of the Respiratory Health Business On October 2, 2023, we closed the sale of our Respiratory Health (“RH”) business to SunMed Group Holdings, LLC (“Buyer”) (the “RH Divestiture”).

Removed

Other expense, net decreased from $22.3 million in 2021 to $3.0 million in 2022 primarily due to lower legal costs and completion of a restructuring initiated in the fourth quarter of 2020 (the “2020 Restructuring”) and plans related to the divestiture of our Surgical and Infection Prevention (“S&IP”) business in 2018 (the “S&IP Divestiture”).

Added

The services generally commenced on the closing date of the RH Divestiture and will terminate in no later than one to three years. In conjunction with the RH Divestiture, we and Buyer also entered into distribution agreements pursuant to which we will remain a limited risk distributor for RH products on Buyer’s behalf for sales outside of the United States.

Removed

Other expense, net includes litigation and legal costs of $15.0 million in the year ended December 31, 2021. Legal and litigation costs were incurred for matters described in “Commitments and Contingencies” in Note 14 to the consolidated financial statements in Item 8 of this Form 10-K.

Added

As of December 31, 2024, our obligations under the limited risk distribution agreements were substantially complete and expected to terminate in early 2025.

Removed

Items impacting operating results include the following: COVID-19 related expenses : As a result of the recent COVID-19 pandemic, we incurred incremental expenses for additional personal protective equipment for our manufacturing employees, sanitation at our facilities and other costs. We incurred no COVID-19 related costs in the years ended December 31, 2023 and 2022.

Added

Finally, pursuant to an agreement under which we provided certain manufacturing services to Buyer, certain manufacturing facilities and equipment did not transfer to Buyer upon the Initial Closing and remained in “Assets Held for Sale”, with a corresponding liability representing our obligation to transfer the relevant manufacturing facilities and equipment to Buyer until the final conveyance.

Removed

We incurred $0.3 million of COVID-19 related costs in the year ended December 31, 2021. 2020 Restructuring charges : We incurred no 2020 Restructuring-related costs in the years ended December 31, 2023 and 2022. We incurred $12.4 million of costs in the year ended December 31, 2021, in connection with the 2020 Restructuring.

Added

Similarly, the results of operations from these manufacturing operations continued to be classified as “(Loss) income from discontinued operations, net of tax.” Our obligation to manufacture products on behalf of Buyer terminated and the related manufacturing assets were transferred to Buyer and the corresponding liability was extinguished on October 1, 2024.

Removed

Post-S&IP Divestiture restructuring and transition charges: These charges were associated with the post-S&IP Divestiture restructuring plan, a multi-phase restructuring plan intended to align our organizational structure, IT platform, supply chain and distribution channels to be more appropriate for our business following the divestiture of the Surgical and Infection Prevention (“S&IP”) business.

Added

Our obligation to manufacture products on behalf of Buyer terminated and the related manufacturing assets were transferred to Buyer and the corresponding liability was extinguished on October 1, 2024. Accordingly, there were no assets or liabilities held for sale as of December 31, 2024.

Removed

We incurred no costs associated with the post-S&IP divestiture restructuring plan in the years ended December 31, 2023 and 2022. We incurred $14.1 million of costs in connection with the post-S&IP divestiture restructuring plan for the year ended December 31, 2021.

Added

Selling and General Expenses (in millions) Year Ended December 31, 2024 2023 2022 Selling and general expenses $ 318.5 $ 335.0 $ 326.5 Percentage of net sales 46.3 % 49.8 % 47.7 % Selling and general expenses decreased from $335.0 million in 2023 to $318.5 million in 2024, driven by savings realized from our Transformation Process and disciplined spending.

Removed

We incurred no costs for litigation matters in the year ended December 31, 2022 and $15.0 million of expenses for certain litigation matters in the year ended December 31, 2021, which are included in “Other expense, net.” In 2021, costs include amounts associated with a $22.2 million payment related to a Deferred Prosecution Agreement (the “DPA”) with the United Sates Department of Justice (the “DOJ”), which is described in “Commitments and Contingencies” in Note 14 to the consolidated financial statements in Item 8 of this Form 10-K.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+1 added−1 removed5 unchanged

2023 filing

2024 filing

Biggest changeAs of December 31, 2023, a 10% change in the exchange rate of the U.S. dollar against the prevailing market rates of our foreign currency translation exposures would have impacted stockholders’ equity by approximately $13.6 million. These hypothetical adjustments in UTA are based on the difference between the December 31, 2023 exchange rates and the assumed rates.

Biggest changeThe hypothetical change in UTA is calculated by multiplying the net assets of these non-U.S. operations by a 10% change in the currency exchange rates. 31 Table of Contents As of December 31, 2024, a 10% change in the exchange rate of the U.S. dollar against the prevailing market rates of our foreign currency translation exposures would have impacted stockholders’ equity by approximately $15.3 million.

These hypothetical effects on transactional exposures are based on the difference between the December 31, 2023 rates and the assumed rates. The translation of the balance sheets of non-U.S. operations from local currencies into U.S. dollars is also sensitive to changes in foreign currency exchange rates.

These hypothetical effects on transactional exposures are based on the difference between the December 31, 2024 rates and the assumed rates. The translation of the balance sheets of non-U.S. operations from local currencies into U.S. dollars is also sensitive to changes in foreign currency exchange rates.

In addition, we are subject to price risk for utilities and manufacturing inputs, which are used in our manufacturing operations. 30 Table of Contents

In addition, we are subject to price risk for utilities and manufacturing inputs, which are used in our manufacturing operations. 32 Table of Contents

As of December 31, 2023, a 10% change in the exchange rate of the U.S. dollar against the prevailing market rates of foreign currencies involving balance sheet transactional exposures would have an effect of $1.4 million to our consolidated financial position, results of operations and cash flows.

As of December 31, 2024, a 10% change in the exchange rate of the U.S. dollar against the prevailing market rates of foreign currencies involving balance sheet transactional exposures would have an effect of $0.9 million to our consolidated financial position, results of operations and cash flows.

Also included is a description of our commodity price risk. Interest Rate Risk Our senior secured revolving credit facility under our Credit Agreement, which allows for borrowings up to $375.0 million, is subject to a variable interest rate based on SOFR.

Interest Rate Risk Our senior secured revolving credit facility under our Credit Agreement, which allows for borrowings up to $375.0 million, is subject to a variable interest rate based on SOFR.

All foreign currency derivative instruments are entered into with major financial institutions. Our credit exposure under these arrangements is limited to agreements with a positive fair value at the reporting date. Credit risk with respect to the counterparties is actively monitored but is not considered significant.

Credit risk with respect to the counterparties is actively monitored but is not considered significant. 29 Table of Contents Presented below is a description of our risk together with a sensitivity analysis, performed annually, based on selected changes in market rates and prices. These analyses reflect management’s view of changes which are reasonably possible to occur over a one-year period.

Presented below is a description of our risk together with a sensitivity analysis, performed annually, based on selected changes in market rates and prices. These analyses reflect management’s view of changes which are reasonably possible to occur over a one-year period. Also included is a description of our commodity price risk.

As previously discussed under “Risk Factors,” increases in commodities prices could adversely affect our earnings if selling prices are not adjusted or if such adjustments significantly trail the increases in commodities prices.

Commodity Price Risk We are subject to commodity price risk for certain raw materials used in the manufacture of our products. As previously discussed under “Risk Factors,” increases in commodities prices could adversely affect our earnings if selling prices are not adjusted or if such adjustments significantly trail the increases in commodities prices.

As of December 31, 2023, a one percentage point increase in SOFR could result in $3.8 million of incremental interest expense if the senior secured revolving credit facility was fully drawn for the entire year. Foreign Currency Risk Foreign currency transactional exposures are sensitive to changes in foreign currency exchange rates.

As of December 31, 2024, a one percentage point increase in SOFR could result in $3.8 million of incremental interest expense if the senior secured revolving credit facility was fully drawn for the entire year. Foreign Currency Risk Foreign currency risk is managed by the systematic use of foreign currency forward contracts for a limited portion of our exposure.

In the view of management, the above UTA adjustments resulting from these assumed changes in foreign currency exchange rates are not material to our consolidated financial position because they would not affect our cash flow. Commodity Price Risk We are subject to commodity price risk for certain raw materials used in the manufacture of our products.

These hypothetical adjustments in UTA are based on the difference between the December 31, 2024 exchange rates and the assumed rates. In the view of management, the above UTA adjustments resulting from these assumed changes in foreign currency exchange rates are not material to our consolidated financial position because they would not affect our cash flow.

Removed

The hypothetical change in UTA is calculated by multiplying the net assets of these non-U.S. operations by a 10% change in the currency exchange rates.

Added

The use of these instruments allows the management of transactional exposures to exchange rate fluctuations because the gains or losses incurred on the derivative instruments will offset, in whole or in part, losses or gains on the underlying foreign currency exposure. Foreign currency transactional exposures are sensitive to changes in foreign currency exchange rates.

Top changes in AVANOS MEDICAL, INC.'s 2024 10-K

Item 1. Business

Item 1A. Risk Factors

Item 1C. Cybersecurity

Item 2. Properties

Item 4. Mine Safety Disclosures

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Other AVNS 10-K year-over-year comparisons