Executive Shakeup at Avanos Medical Sparks Concerns Over Company's Transformation Efforts

In a significant leadership change, Avanos Medical, a company specializing in pain management and nutrition solutions, has experienced a notable executive departure. Michael Greiner, who previously served as CFO and chief transformation officer before taking on the role of interim CEO, has left the company following the appointment of a new permanent CEO.

New Leadership and Departures

David Pacitti, formerly the head of the Americas at Siemens Healthineers, was appointed as Avanos' new CEO last month. This appointment led to Greiner's departure, as the company did not offer him a position comparable to his previous roles. According to a recent securities filing, Greiner's exit is classified as "a qualifying termination," resulting in a $2.1 million severance payment, a prorated bonus for 2025, and $50,000 for a one-month consulting arrangement.

In the wake of Greiner's departure, Jason Pickett, vice president of tax and treasury at Avanos, has been named interim CFO. This appointment has been viewed positively by some analysts, with Stifel noting that it should enable the company's operations to continue smoothly during the search for a permanent CFO.

Impact on Transformation Initiatives

The leadership changes have raised concerns about the continuity of Avanos' ongoing transformation efforts. Greiner played a crucial role in several successful initiatives aimed at turning the company around and realigning its portfolio. These efforts included:

• The sale of Avanos' respiratory health business
• Exiting slower-growing and lower-margin product areas
• Executing tuck-in acquisitions

Stifel analysts expressed concern that the pace of these positive transformational initiatives might slow as the new senior leadership team settles into place. They highlighted Greiner's active involvement in driving the company's multi-year turnaround efforts and portfolio realignment.

Current Business Focus and Performance

Following recent changes, Avanos has narrowed its focus to two main areas:

1. Pain management devices
2. Products for supplying nutrients and fluids via feeding tubes

Recent financial results show mixed performance across these segments. In the fourth quarter, pain management sales declined by 3% compared to the previous year. However, this decrease was offset by a 12% increase in sales from the larger enteral feeding business.

Looking ahead, Avanos is projecting mid-single-digit growth in its specialty nutrition systems and flat to low-single-digit growth in its pain franchise for 2025. These forecasts suggest a cautiously optimistic outlook for the company's core business areas despite the recent leadership changes.