UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-36440

AVANOS MEDICAL, INC.

(Exact name of registrant as specified in its charter)

Delaware				46-4987888
(State or other jurisdiction of incorporation)				(I.R.S. Employer Identification No.)
	5405 Windward Parkway
	Suite 100 South
	Alpharetta,	Georgia	30004
	(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (844) 428-2667

Securities registered pursuant to Section 12(b) of the Act:Title of each classTrading SymbolName of exchange on which registeredCommon Stock - $0.01 Par ValueAVNSNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Emerging growth company	☐
Smaller reporting company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of April 26, 2023, there were 46,666,812 shares of the registrant’s common stock outstanding.

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements	4
Unaudited Condensed Consolidated Income Statements for the ThreeMonths EndedMarch31, 2023and 2022	4
Unaudited Condensed Consolidated Statements of Comprehensive Income for the ThreeMonths EndedMarch31, 2023and 2022	5
Unaudited Condensed Consolidated Balance Sheets as ofMarch31, 2023and December 31, 2022	6
Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the ThreeMonths EndedMarch31, 2023and 2022	7
Unaudited Condensed Consolidated Cash Flow Statements for theThreeMonths EndedMarch31, 2023and 2022	8
Notes to the Unaudited Condensed Consolidated Financial Statements	9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3. Quantitative and Qualitative Disclosures About Market Risk	23
Item 4. Controls and Procedures	24
PART II – OTHER INFORMATION	25
Item 1. Legal Proceedings	25
Item 1A. Risk Factors	25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3. Defaults Upon Senior Securities	25
Item 4. Mine Safety Disclosures	25
Item 5. Other Information	25
Item 6. Exhibits	25
Signatures	27

Information Concerning Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are included throughout this Form 10-Q, including in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may,” “believe,” “will,” “expect,” “intend,” “predict,” “potential,” “project,” “estimate,” “anticipate,” “plan,” or “continue” and similar expressions. The matters discussed in these forward-looking statements are based on the current plans and expectations of our management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements. These factors include, but are not limited to:

•general economic conditions, particularly in the United States;

•fluctuations in global equity and fixed-income markets;

•our ability to successfully execute on or achieve the expected benefits of our restructuring initiative;

•supply chain issues and inflationary pressures;

•risks related to the ongoing COVID-19 pandemic;

•the competitive environment;

•the loss of current customers or the inability to obtain new customers;

•litigation and enforcement actions;

•disruption in the supply of raw materials or the distribution of finished goods;

•price fluctuations in key commodities;

•fluctuations in currency exchange rates;

•changes in governmental regulations that are applicable to our business;

•our ability to realize the intended benefits of our acquisition or merger transactions;

•changes in asset valuations, including write-downs of assets such as inventory, accounts receivable or other assets for impairment or other reasons; and

•any other matters described in Item 1A - “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “Form 10-K”) and Part II, Item 1A - “Risk Factors” in this Form 10-Q.

You are cautioned not to unduly rely on such forward-looking statements when evaluating the information in this Form 10-Q. Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of our management and expressed in good faith, and is believed to have a reasonable basis. There can be no assurance that any such expectation or belief will be achieved or accomplished.

Any forward-looking statement made in this Form 10-Q speaks only as of the date of this report. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

AVANOS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS

(in millions, except per share amounts)

(Unaudited)


	2023		2022
Net Sales	$	191.7	$	197.4
Cost of products sold	87.2		90.8
Gross Profit	104.5		106.6
Research and development	7.9		7.8
Selling and general expenses	92.7		90.1
Other expense, net	1.3		0.1
Operating Income	2.6		8.6
Interest income	0.5		—
Interest expense	(3.5)		(1.3)
(Loss) Income Before Income Taxes	(0.4)		7.3
Income tax provision	(0.1)		(1.9)
Net (Loss) Income	$	(0.5)	$	5.4
(Loss) Earnings Per Share
Basic	$	(0.01)	$	0.11
Diluted	$	(0.01)	$	0.11

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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AVANOS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

(Unaudited)


	2023		2022
Net (Loss) Income	$	(0.5)	$	5.4
Other Comprehensive Income, Net of Tax
Unrealized currency translation adjustments	4.5		1.7
Total Other Comprehensive Income, Net of Tax	4.5		1.7
Comprehensive Income	$	4.0	$	7.1

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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AVANOS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

(Unaudited)

	March 31,<br>2023		December 31,<br>2022
ASSETS
Current Assets
Cash and cash equivalents	$	95.7	$	127.7
Accounts receivable, net of allowances	142.7		167.9
Inventories	200.0		190.3
Prepaid and other current assets	15.4		13.9
Total Current Assets	453.8		499.8
Property, Plant and Equipment, net	163.5		163.9
Operating Lease Right-of-Use Assets	28.3		30.6
Goodwill	821.5		819.4
Other Intangible Assets, net	244.7		251.0
Deferred Tax Assets	4.5		4.6
Other Assets	18.6		17.6
TOTAL ASSETS	$	1,734.9	$	1,786.9
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Current portion of long-term debt	6.2		6.2
Current portion of operating lease liabilities	12.1		12.8
Trade accounts payable	59.6		67.9
Accrued expenses	80.6		98.9
Total Current Liabilities	158.5		185.8
Long-Term Debt	204.7		226.3
Operating Lease Liabilities	32.4		34.7
Deferred Tax Liabilities	25.1		25.4
Other Long-Term Liabilities	15.5		23.5
Total Liabilities	436.2		495.7
Commitments and Contingencies
Stockholders’ Equity
Preferred stock - $0.01 par value - authorized 20,000,000 shares, none issued	—		—
Common stock - $0.01 par value - authorized 300,000,000 shares, 46,660,199 outstanding as of March 31, 2023 and 46,528,907 outstanding as of December 31, 2022	0.5		0.5
Additional paid-in capital	1,651.0		1,646.4
Accumulated deficit	(253.6)		(253.1)
Treasury stock	(67.9)		(66.8)
Accumulated other comprehensive loss	(31.3)		(35.8)
Total Stockholders’ Equity	1,298.7		1,291.2
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,734.9	$	1,786.9

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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AVANOS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(in millions)

(Unaudited)


	2023		2022
Common Stock	$	0.5	$	0.5
Additional Paid-in Capital, beginning of period	1,646.4		1,628.8
Exercise or redemption of share-based awards	0.6		0.7
Stock-based compensation expense	4.0		3.8
Additional Paid-in Capital, end of period	1,651.0		1,633.3
Accumulated Deficit, beginning of period	(253.1)		(303.6)
Net (loss) income	(0.5)		5.4
Accumulated Deficit, end of period	(253.6)		(298.2)
Treasury Stock, beginning of period	(66.8)		(21.3)
Purchases of treasury stock	(1.1)		(19.4)
Treasury Stock, end of period	(67.9)		(40.7)
Accumulated Other Comprehensive Loss, beginning of period	(35.8)		(33.8)
Other comprehensive income, net of tax	4.5		1.7
Accumulated Other Comprehensive Loss, end of period	(31.3)		(32.1)
Total Stockholders’ Equity, end of period	$	1,298.7	$	1,262.8

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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AVANOS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS

(in millions)

(Unaudited)

	Three Months Ended March 31,
	2023		2022
Operating Activities
Net (loss) income	$	(0.5)	$	5.4
Depreciation and amortization	12.1		11.1
Stock-based compensation expense	4.0		3.8
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable	26.2		(15.7)
Inventories	(8.6)		(3.9)
Prepaid expenses and other assets	(1.5)		0.1
Accounts payable	(7.9)		30.2
Accrued expenses	(27.5)		(28.8)
Deferred income taxes and other	(3.1)		(0.4)
Cash (Used in) Provided by Operating Activities	(6.8)		1.8
Investing Activities
Capital expenditures	(4.0)		(5.0)
Acquisition of assets and investments in businesses	—		(116.7)
Cash Used in Investing Activities	(4.0)		(121.7)
Financing Activities
Proceeds from issuance of secured debt	—		125.0
Secured debt repayments	(1.6)		—
Revolving credit facility proceeds	—		20.0
Revolving credit facility repayments	(20.0)		(20.0)
Purchases of treasury stock	(1.1)		(19.4)
Payments of debt issuance costs	—		(0.6)
Proceeds from the exercise of stock options	0.6		0.7
Cash (Used in) Provided by Financing Activities	(22.1)		105.7
Effect of Exchange Rate Changes on Cash and Cash Equivalents	0.9		—
Decrease in Cash and Cash Equivalents	(32.0)		(14.2)
Cash and Cash Equivalents - Beginning of Period	127.7		118.5
Cash and Cash Equivalents - End of Period	$	95.7	$	104.3

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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AVANOS MEDICAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Accounting Policies

Background and Basis of Presentation

Avanos Medical, Inc. is a medical technology company focused on delivering clinically superior medical device solutions that will help patients get back to the things that matter. Headquartered in Alpharetta, Georgia, we are committed to addressing some of today’s most important healthcare needs, including providing a vital lifeline for nutrition to patients from hospital to home, and reducing the use of opioids while helping patients move from surgery to recovery. We develop, manufacture and market our recognized brands globally and hold leading market positions in multiple categories across our portfolio. References herein to “Avanos,” “the Company,” “we,” “our” and “us” refer to Avanos Medical, Inc. and its consolidated subsidiaries.

Interim Financial Statements

We prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements, and the condensed consolidated financial statements in this Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022. Our unaudited interim condensed consolidated financial statements contain all necessary material adjustments, which are of a normal and recurring nature, to fairly state our financial condition, results of operations and cash flows for the periods presented.

Use of Estimates

Preparation of our condensed consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting periods. Estimates are used in accounting for, among other things, distributor rebate accruals, future cash flows associated with impairment testing for goodwill and long-lived assets, loss contingencies, and deferred tax assets and potential income tax assessments. Actual results could differ from these estimates, and the effect of any change could be material to our financial statements. Changes in these estimates are recorded when known.

Recently Adopted Accounting Pronouncements

In December 2022, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2022-06, Reference Rate Reform. This ASU was prompted by the planned cessation of the London Interbank Offer Rate (“LIBOR”). This ASU applies to contract modifications that replace a reference rate and contemporaneous modifications of other contract terms related to the replacement of the reference rate. Under this ASU, modifications to debt agreements may be accounted for by prospectively adjusting the effective interest rate. This ASU is effective as of issuance on December 21, 2022 and defers the sunset date of Topic 848, Reference Rate Reform from December 31, 2022 to December 31, 2024. This ASU may be applied as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. We adopted this guidance in the fourth quarter of 2021. Adoption of this ASU did not have a material effect on our financial position, results of operations or cash flows.

Effective January 1, 2023, we adopted ASU No. 2021-08, Business Combinations: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU pertains to acquired revenue contracts with customers in a business combination and addresses diversity in practice and inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. Adoption of this ASU did not have a material effect on our financial position, results of operations or cash flows.

Change in Accounting Principle

During the third quarter of 2022, we elected to change our method of accounting for U.S. inventory from the Last-In, First-Out (“LIFO”) method to the First-In, First-Out (“FIFO”) method. The effects of the change in accounting method from LIFO to FIFO have been retrospectively applied to all periods presented in all sections of this Form 10-Q, including Management's Discussion and Analysis. This change has no impact on our results herein for the three months ended March 31, 2023.

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Note 2. Restructuring Activities

Transformation Process

In January 2023, we initiated a three-year restructuring initiative intended to align the Company under a single commercial organization, rationalize our product portfolio, undertake additional cost management activities to enhance the Company’s operating profitability and pursue efficient capital allocation strategies (the “Transformation Process”). We expect the Transformation Process will be substantially complete by the end of 2025.

We expect to incur between $20.0 million and $25.0 million of cash expenses in connection with the Transformation Process, consisting of between $9.0 million and $12.0 million of program management consulting and employee retention expenses; between $8.0 million and $11.0 million of expenses associated with manufacturing and supply chain improvements and portfolio rationalization; and the remainder for expenses associated with organization design and alignment and other related activities. These amounts include between $6.0 million and $8.0 million of employee severance and benefits costs.

In the three months ended March 31, 2023, we incurred $8.9 million primarily related to program management consulting and employee retention expenses and employee severance and benefits costs in connection with the Transformation Process. These costs were included in “Selling and general expenses” in the accompanying condensed consolidated income statements.

Restructuring Liability

Our liability for costs associated with the Transformation Process as of March 31, 2023 is summarized below (in millions):

	As of March 31, 2023
Beginning balance	$	—
Restructuring and transformation costs, excluding non-cash charges	8.9
Payments and adjustments, net	(6.5)
Ending balance	$	2.4

Note 3. Business Acquisition

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 and has been added to our chronic pain portfolio. The total purchase price was $130.0 million at closing less working capital adjustments. The agreement allowed for up to an additional $30.0 million payable in contingent cash consideration based on OrthogenRx’s growth in net sales during 2022 and 2023, of which we paid $10.6 million based on OrthogenRx’s 2022 net sales. The purchase price was funded by available cash on hand and the proceeds of borrowings, including an incremental $125.0 million tranche of term loans. The accompanying condensed consolidated income statements include $14.7 million of net sales from OrthogenRx since the closing of the acquisition for the three months ended March 31, 2022. In the three months ended March 31, 2023, we incurred $1.5 million of costs in connection with the OrthogenRx acquisition, which are included in “Selling and general expenses” and “Other expense, net”. In the three months ended March 31, 2022, we incurred $1.0 million of costs in connection with the OrthogenRx acquisition, which are included in “Selling and general expenses”.

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We accounted for the OrthogenRx acquisition under the acquisition method of accounting for business combinations. Accordingly, the purchase price paid was allocated to the underlying net assets in proportion to their respective fair values. The fair value of the net assets acquired are based on estimates and assumptions relating to certain intangible assets acquired, liabilities assumed, income taxes and loss contingencies, which are subject to change during the measurement period (up to one year from the acquisition date). Any excess of the purchase price over the estimated fair values was recorded as goodwill. Fair values of assets acquired and liabilities assumed were determined using discounted cash flow analyses, and the fair value of the contingent cash consideration was estimated using a Monte Carlo simulation. The final purchase price allocation, net of cash acquired, is shown in the table below (in millions):

Accounts receivable, net	$	11.6
Inventory	2.8
Other current assets	0.4
Accounts payable	(5.4)
Other current liabilities	(13.0)
Contingent consideration	(9.2)
Other non-current assets (liabilities)	(5.7)
Deferred tax liability	(22.1)
Identifiable intangible assets	135.6
Goodwill	21.1
Total	$	116.1

Current period adjustments include an increase of $0.1 million in certain indemnification liabilities acquired, a decrease of $0.4 million in the estimated deferred tax liability and a decrease in accounts receivable of $2.1 million which were recorded as a $1.8 million increase to goodwill.

Goodwill arising from the OrthogenRx acquisition is not fully tax deductible and is attributable to future earnings potential and the strategic fit within our interventional pain portfolio as it allows for providing a greater continuum of care for patients.

The identifiable intangible assets relating to the OrthogenRx acquisition include the following (in millions, except years):

	Identifiable Intangible Asset Amount		Weighted Average Useful Lives (Years)
Trademarks	$	1.3	10
Other	134.3		14
Total	$	135.6

Other intangible assets includes $126.0 million related to the OrthogenRx products that we currently market and distribute, combined into one composite intangible asset that includes customer relationships and exclusive distribution rights and $8.3 million related to OrthogenRx non-compete agreements.

Note 4. Supplemental Balance Sheet Information

Accounts Receivable

Accounts receivable consist of the following (in millions):

	March 31, 2023		December 31, 2022
Accounts receivable	$	137.4	$	162.1
Income tax receivable	11.7		12.2
Allowances and doubtful accounts:
Doubtful accounts	(6.1)		(6.1)
Sales discounts	(0.3)		(0.3)
Accounts receivable, net	$	142.7	$	167.9

Losses on receivables are estimated based on known troubled accounts and historical experience. Receivables are considered impaired and written off when it is probable that payments due will not be collected. The expense associated with doubtful

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accounts was $0.2 million for the three months ended March 31, 2023, compared to $0.3 million for the three months ended March 31, 2022.

Inventories

Inventories at the lower of cost (determined on the FIFO method) or net realizable value consists of the following (in millions):

	March 31, 2023		December 31, 2022
Raw materials	$	57.0	$	53.6
Work in process	31.2		31.2
Finished goods	103.4		97.7
Supplies and other	8.4		7.8
Total Inventory	$	200.0	$	190.3

We incurred $2.0 million of expense for inventory write-offs and obsolescence in the three months ended March 31, 2023, compared to $4.4 million in the three months ended March 31, 2022.

We may distribute products bearing the Halyard brand through 2023 under a royalty agreement we have with Owens & Minor, Inc. As of March 31, 2023, our inventory reserve balance for salable Halyard-branded inventory was $1.6 million.

Property, Plant and Equipment

Property, plant and equipment consists of the following (in millions):

	March 31, 2023		December 31, 2022
Land	$	1.3	$	1.1
Buildings and leasehold improvements	52.5		50.8
Machinery and equipment	245.0		239.1
Construction in progress	26.6		27.9
	325.4		318.9
Less accumulated depreciation	(161.9)		(155.0)
Total	$	163.5	$	163.9

Depreciation expense was $5.8 million for the three months ended March 31, 2023, compared to $5.4 million for the three months ended March 31, 2022.

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill are as follows (in millions):

	Goodwill
Balance, December 31, 2022	$	819.4
Purchase accounting adjustment(a)	1.8
Currency translation adjustment	0.3
Balance, March 31, 2023	$	821.5

_____________________________________________

(a)Purchase accounting adjustment related to the acquisition of OrthogenRx is described in Note 3, “Business Acquisition”

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Intangible assets subject to amortization consist of the following (in millions):

	March 31, 2023						December 31, 2022
	Gross<br>Carrying<br>Amount		Accumulated<br>Amortization		Net Carrying Amount		Gross<br>Carrying<br>Amount		Accumulated<br>Amortization		Net Carrying Amount
Trademarks	$	92.5	$	(67.9)	$	24.6	$	92.5	$	(67.2)	$	25.3
Patents and acquired technologies	278.8		(197.7)		81.1		278.8		(195.3)		83.5
Other	187.6		(48.6)		139.0		187.6		(45.4)		142.2
Total	$	558.9	$	(314.2)	$	244.7	$	558.9	$	(307.9)	$	251.0

Amortization expense for intangible assets is included in “Costs of products sold” and “Selling and general expenses” and was $6.3 million for the three months ended March 31, 2023, compared to $5.7 million for the three months ended March 31, 2022.

Amortization expense for the remainder of 2023 and the following four years and thereafter is estimated as follows (in millions):

	Amount
Remainder of 2023	$	19.0
2024	25.3
2025	24.7
2026	24.3
2027	24.1
Thereafter	127.3
Total	$	244.7

Accrued Expenses

Accrued expenses consist of the following (in millions):

	March 31, 2023		December 31, 2022
Accrued rebates and customer incentives	$	18.8	$	26.9
Accrued salaries and wages	21.8		34.6
Accrued taxes and other	20.8		21.2
Other	19.2		16.2
Total	$	80.6	$	98.9

Other Long-Term Liabilities

Other long-term liabilities consist of the following (in millions):

	March 31, 2023		December 31, 2022
Accrued compensation and benefits	$	5.4	$	4.8
Other	10.1		18.7
Total	$	15.5	$	23.5
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Note 5. Fair Value Information

The following fair value information is based on a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels in the hierarchy used to measure fair value are:

Level 1: Unadjusted quoted prices in active markets accessible at the reporting date for identical assets and liabilities.

Level 2: Quoted prices for similar assets or liabilities in active markets. Quoted prices for identical or similar assets and liabilities in markets that are not considered active or financial instruments for which all significant inputs are observable, either directly or indirectly.

Level 3: Prices or valuations that require inputs that are significant to the valuation and are unobservable.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The following table includes the fair value of our financial instruments for which disclosure of fair value is required (in millions):

		March 31, 2023				December 31, 2022
	Fair Value<br>Hierarchy<br>Level	Carrying<br>Amount		Estimated<br>Fair<br>Value		Carrying<br>Amount		Estimated<br>Fair<br>Value
Assets
Cash and cash equivalents	1	$	95.7	$	95.7	$	127.7	$	127.7
Liabilities
Revolving Credit Facility	2	$	90.0	$	90.0	$	110.0	$	110.0
Term Loan Facility	2	120.9		120.9		122.5		122.5
Contingent consideration related to acquisition	3	—		—		9.2		9.2

Cash equivalents are recorded at cost, which approximates fair value due to their short-term nature. The fair value of amounts borrowed under our Revolving Credit Facility and Term Loan Facility approximates carrying value because borrowings are subject to a variable rate as described in Note 6, “Debt”.

Note 6. Debt

As of March 31, 2023 and December 31, 2022, our respective debt balances were as follows (in millions):

	Weighted-Average Interest Rate		Maturity	March 31, 2023		December 31, 2022
Revolving Credit Facility	6.32	%	2027	$	90.0	$	110.0
Term Loan Facility	6.32	%	2027	121.8		123.4
				211.8		233.4
Unamortized debt issuance costs				(0.9)		(0.9)
Current portion of long-term debt				(6.2)		(6.2)
Total Long-Term Debt, net				$	204.7	$	226.3

On June 24, 2022, we entered into a credit agreement (the “Credit Agreement”) with certain lenders which established credit facilities in an aggregate principal amount of $500.0 million, consisting of a five-year senior secured term loan of $125.0 million (the “Term Loan Facility”) and a five-year senior secured revolving credit facility allowing borrowings of up to $375.0 million, with a letter of credit sub-facility in an amount of $75.0 million (the “Revolving Credit Facility”). All obligations under the Credit Agreement and certain hedging agreements and cash management arrangements thereunder are: (i) guaranteed by each of the Company’s direct and indirect, existing and future, material wholly owned domestic subsidiaries (“Guarantors”) and (ii) secured by a first priority lien on substantially all the assets of the Company and the Guarantors. The Credit Agreement contains an accordion feature that allows us to incur incremental term loans under the Term Loan Facility or under new term loan facilities or to increase the amount of the commitments under the Revolving Credit Facility, including through the establishment of one or more tranches under the Revolving Credit Facility. The Credit Agreement will mature on June 24, 2027.

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annum, depending on our consolidated total leverage ratio; or (iii) a base rate (calculated as the greatest of (a) the prime rate, (b) the NYFRB rate (being the greater of the federal funds effective rate or the overnight bank funding rate) plus 0.50%, and (c) the one month adjusted term SOFR rate plus 1.00%), plus a margin ranging between 0.50% to 1.00% per annum, depending on our consolidated total leverage ratio. The unused portion of the Revolving Credit Facility will be subject to a commitment fee ranging between 0.20% to 0.25% per annum, depending on our consolidated total leverage ratio. Unamortized debt discount 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 6.5% as of March 31, 2023.

The Credit Agreement requires compliance with certain customary operational and financial covenants. As of March 31, 2023, we were in compliance with these covenants. In addition, the Credit Agreement contains certain other customary limitations on our ability to, among other things: incur additional indebtedness; pay dividends on or repurchase or redeem our capital stock; make loans, investments and acquisitions; sell, transfer or otherwise dispose of assets; guarantee other obligations; create or grant liens; and enter into certain types of transactions with affiliates. Notwithstanding such limitations, the Credit Agreement allows us to pay dividends, repurchase stock and make investments up to an “Available Amount,” as defined in the Credit Agreement, provided no event of default has occurred and certain financial ratios have been achieved on a pro forma basis. We are permitted to prepay all or a portion of the Term Loan Facility and the Revolving Credit Facility at any time without premium or penalty.

Debt Payments

The Credit Agreement requires quarterly principal installment payments on the Term Loan Facility of 10% of the total principal borrowed for the first eight quarters following funding and then quarterly installment payments of 20% of the total principal borrowed, at which time the remaining unpaid principal amount of the Term Loan Facility is due and payable by the Company upon the maturity date of June 24, 2027. The current portion of the Term Loan Facility is $6.2 million. Interest is payable quarterly. We have the right to voluntarily prepay the Term Loan Facility in accordance with the terms of the Credit Agreement. Interest is payable at the same rates set forth above for the Revolving Credit Facility.

During the three months ended March 31, 2023, we repaid $1.6 million of the Term Loan Facility. During the three months ended March 31, 2023, we repaid $20.0 million of the Revolving Credit Facility. As of March 31, 2023, we had letters of credit outstanding of $6.2 million.

As of March 31, 2023, the aggregate amounts of long-term debt that will mature during each of the next four years are as follows (in millions):

	Amount
Remainder of 2023	$	4.7
2024	7.0
2025	9.4
2026	10.2
2027	180.5
Total	$	211.8	Table of Contents
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Note 7. Accumulated Other Comprehensive Income

The changes in the components of Accumulated Other Comprehensive Income (“AOCI”), net of tax, are as follows (in millions):

	Unrealized Currency<br>Translation		Defined Benefit<br>Plans		Accumulated<br>Other<br>Comprehensive Loss
Balance, December 31, 2022	$	(36.1)	$	0.3	$	(35.8)
Other comprehensive income	4.5		—		4.5
Balance, March 31, 2023	$	(31.6)	$	0.3	$	(31.3)

The net changes in the components of AOCI, including the tax effect, are as follows (in millions):


	2023		2022
Unrealized currency translation	$	4.5	$	1.7
Change in AOCI	$	4.5	$	1.7

Note 8. Stock-Based Compensation

Stock-based compensation expense is included in “Cost of products sold,” “Research and development,” and “Sales and general expenses.” Stock-based compensation expense for the three months ended March 31, 2023 and 2022 is shown in the table below (in millions):


	2023		2022
Stock options	$	0.2	$	0.4
Time-based restricted share units	2.9		2.6
Performance-based restricted share units	0.8		0.7
Employee stock purchase plan	0.1		0.1
Total stock-based compensation	$	4.0	$	3.8

Note 9. Commitments and Contingencies

Legal Matters

We are subject to various legal proceedings, claims and governmental inspections, audits or investigations pertaining to issues such as contract disputes, product liability, tax matters, patents and trademarks, advertising, governmental regulations, employment and other matters. Under the terms of the distribution agreement we entered into with Kimberly-Clark Corporation (“Kimberly-Clark”) prior to our 2014 spin-off from Kimberly-Clark, legal proceedings, claims and other liabilities that are primarily related to our business are our responsibility and we are obligated to indemnify and hold Kimberly-Clark harmless for such matters.

Government Investigation

In June 2015, we were served with a subpoena from the Department of Veterans Affairs Office of the Inspector General (“VA OIG”) seeking information related to the design, manufacture, testing, sale and promotion of MicroCool and other surgical gowns produced by the Company. In July 2015, we became aware that the VA OIG subpoena and an earlier VA OIG subpoena served on Kimberly-Clark requesting information about gown sales to the federal government were related to a United States Department of Justice (“DOJ”) investigation. In May 2016, April 2017 and September 2018, we received additional subpoenas from the DOJ seeking further information related to the Company’s surgical gowns.

On July 6, 2021, we entered into a Deferred Prosecution Agreement (“DPA”) with the DOJ that resolved their criminal investigation related to our MicroCool surgical gowns. Pursuant to the terms of the DPA, in July 2021 the Company made a payment of $22.2 million. We continue to comply with the terms of the DPA.

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Patent Litigation

We operate in an industry characterized by extensive patent litigation. Competitors may claim that our products infringe upon their intellectual property. Resolution of patent litigation or other intellectual property claims is typically time consuming and costly and can result in significant damage awards and injunctions that could prevent the manufacture and sale of the affected products or require us to make significant royalty payments in order to continue selling the affected products.

At any given time, we may be involved as either a plaintiff or a defendant in a number of patent infringement actions, the outcomes of which may not be known for prolonged periods of time.

General

While we maintain general and professional liability, product liability and other insurance, our insurance policies may not cover all of these matters and may not fully cover liabilities arising out of these matters. In addition, we may be obligated to indemnify our directors and officers against these matters.

We record provisions in the consolidated financial statements for pending litigation when we determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. For any matters that are reasonably possible to result in loss and for which no possible loss or range of loss is disclosed in this Form 10-Q, management has determined that it is unable to estimate the possible loss or range of loss because, in each case, at least the following facts applied: (a) the matter is at an early stage of the proceedings; (b) the damages are indeterminate, unspecified or determined to be immaterial; and (c) significant factual issues have yet to be resolved. At present, although the results of litigation and claims cannot be predicted with certainty, we believe that the ultimate resolution of any pending legal proceeding to which we are a party will not have a material adverse effect on our business, financial condition, results of operations or liquidity.

Environmental Compliance

We are subject to federal, state and local environmental protection laws and regulations with respect to our business operations. We believe we are operating in compliance with, or are taking action aimed at ensuring compliance with, these laws and regulations. None of our compliance obligations with environmental protection laws and regulations, individually or in the aggregate, is expected to have a material adverse effect on our business, financial condition, results of operations or liquidity.

Note 10. Earnings Per Share (“EPS”)

Basic EPS is calculated by dividing net income by the weighted average number of common shares outstanding during each period. Diluted earnings per share is calculated by dividing net income by the number of common shares outstanding and the effect of all dilutive common stock equivalents outstanding during each period, as determined using the treasury stock method.

The calculation of basic and diluted earnings per share for the three months ended March 31, 2023 and 2022 is set forth in the following table (in millions, except per share amounts):


	2023		2022
Net (loss) income	$	(0.5)	$	5.4
Weighted Average Shares Outstanding:
Basic weighted average shares outstanding	46.6		47.4
Dilutive effect of stock options and restricted share unit awards	0.6		0.4
Diluted weighted average shares outstanding	47.2		47.8
(Loss) Earnings Per Share
Basic	$	(0.01)	$	0.11
Diluted	$	(0.01)	$	0.11

Restricted share units (“RSUs”) contain provisions allowing for the equivalent of any dividends paid on common stock during the restricted period to be reinvested into additional RSUs at the then fair market value of the common stock on the date the dividends are paid. Such awards are to be included in the EPS calculation under the two-class method. Currently, we do not anticipate any cash dividends for the foreseeable future and our outstanding RSU awards are not material in comparison to our weighted average shares outstanding. Accordingly, all EPS amounts reflect shares as if they were fully vested and the disclosures associated with the two-class method are not presented herein.

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For the three months ended March 31, 2023, 1.8 million of potentially dilutive stock options and RSU awards were excluded from the computation of earnings per share as their effect would have been anti-dilutive.

Note 11. Business and Products Information

We conduct our business in one operating and reportable segment that provides our medical device products to healthcare providers and patients globally with manufacturing facilities in the United States and Mexico.

Avanos develops, manufactures and markets its recognized brands globally and holds leading market positions in multiple categories across its portfolio. Our management evaluates net sales by product category within our single reportable segment as follows (in millions):


	2023		2022
Chronic Care:
Digestive health	$	88.8	$	81.4
Respiratory health	32.4		38.0
Total Chronic Care	121.2		119.4
Pain Management:
Acute pain	$	34.7	$	38.7
Interventional pain	35.8		39.3
Total Pain Management	70.5		78.0
Total Net Sales	$	191.7	$	197.4

Chronic care is a portfolio of products including:

•Digestive health products such as our MIC-KEY enteral feeding tubes, Corpak patient feeding solutions and NeoMed neonatal and pediatric feeding solutions; and

•Respiratory health products such as our closed airway suction systems and other airway management devices marketed under the Ballard, Microcuff and Endoclear brands.

Pain management is a portfolio of non-opioid pain solutions including:

•Acute pain 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 and OrthogenRx’s knee osteoarthritis pain relief injection products.

Liabilities for estimated returns, rebates and incentives are presented in the table below (in millions):

	March 31, 2023		December 31, 2022
Accrued rebates	$	9.6	$	14.5
Accrued customer incentives	9.2		12.4
Accrued rebates and customer incentives	18.8		26.9
Accrued sales returns(a)	0.1		0.1
Total estimated liabilities	$	18.9	$	27.0

__________________________________________________

(a)Accrued sales returns are included in “Other” in the accrued expenses table in Note 4, “Supplemental Balance Sheet Information”.

Due to the nature of our business, we receive purchase orders for products under supply agreements which are normally fulfilled within three to four weeks. Our performance obligations under purchase orders are satisfied and revenue is recognized at a point in time, which is upon shipment or upon delivery of our products, depending on shipping terms. Accordingly, we normally do not have transactions that give rise to material unfulfilled performance obligations.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide investors with an understanding of our recent performance, and should be read in conjunction with the condensed consolidated financial statements contained in Item 1, “Financial Statements” in this Form 10-Q and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2022. This MD&A contains forward-looking statements. Refer to “Information Concerning Forward-Looking Statements” at the beginning of this Form 10-Q for an explanation of these types of statements.

The following will be discussed and analyzed:

•Restructuring Activities;

•Results of Operations and Related Information;

•Liquidity and Capital Resources; and

•Critical Accounting Policies and Use of Estimates.

Restructuring Activities

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

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 to incur between $20.0 million and $25.0 million of cash expenses in connection with the Transformation Process, consisting of between $9.0 million and $12.0 million of program management consulting and employee retention expenses, between $8.0 million and $11.0 million of expenses associated with manufacturing and supply chain improvements and portfolio rationalization; and the remainder for expenses associated with organization design and alignment and other related activities. These amounts include between $6.0 million and $8.0 million of employee severance and benefits costs. The accompanying condensed consolidated income statements for the three months ended March 31, 2023 includes $8.9 million of costs incurred in connection with the Transformation Process in “Selling and general expenses.”

Results of Operations and Related Information

Use of Non-GAAP Measures

In this section, we present “Adjusted operating profit (loss),” which is a profitability measure that is not calculated in accordance with accounting principles generally accepted in the United States (“GAAP”) and is therefore referred to as non-GAAP financial measure. We provide this non-GAAP measure because we use it to measure our operational performance and provide greater insight into our ongoing business operations. This measure is not intended to be, and should not be, considered separately from, or an alternative to, the most directly comparable GAAP financial measures. A reconciliation of the non-GAAP measure to the most directly comparable GAAP financial measures is provided below under “Adjusted operating profit.”

Change in Accounting Principle

During the third quarter of 2022, we changed our method of accounting for certain inventory from the Last-In, First-Out (“LIFO”) method to the First-In, First-Out (“FIFO”) method. The effects of the change in accounting method from LIFO to FIFO have been retrospectively applied to all periods presented in all sections of this Form 10-Q, including Management's Discussion and Analysis. Refer to Note 1, “Accounting Policies” in Item 1 of this Form 10-Q for further information related to the change in accounting principle. This change has no impact on our results herein for the three months ended March 31, 2023.

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Net Sales

Our net sales are summarized in the following table for the three months ended March 31, 2023 and 2022 (in millions):

			Three Months Ended March 31,
					2023			2022			Change
Chronic Care:
Digestive health					$	88.8		$	81.4		9.1	%
Respiratory health					32.4			38.0			(14.7)	%
Total Chronic Care					121.2			$	119.4		1.5	%
Pain Management:
Acute pain					$	34.7		$	38.7		(10.3)	%
Interventional pain					35.8			39.3			(8.9)	%
Total Pain Management					70.5			78.0			(9.6)	%
Total Net Sales					$	191.7		$	197.4		(2.9)	%
	Total		Volume		Pricing/Mix			Currency			Other
Net sales - percentage change 2023 vs. 2022	(2.9)	%	(2.8)	%	1.0		%	(1.1)		%	—	%

Product Category Descriptions

Chronic care is a portfolio of products including:

•Digestive health products such as our MIC-KEY enteral feeding tubes, Corpak patient feeding solutions and NeoMed neonatal and pediatric feeding solutions; and

•Respiratory health products such as our closed airway suction systems and other airway management devices marketed under the Ballard, Microcuff and Endoclear brands.

Pain management is a portfolio of non-opioid pain solutions including:

•Acute pain 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 and OrthogenRx’s knee osteoarthritis pain relief injection products.

Net Sales

Net sales decreased by 2.9% for the three months ended March 31, 2023 compared to the quarter ended March 31, 2022, primarily due to lower volume in pain management products and respiratory health products, partially offset by higher volume in digestive health products. In addition to volume, 1.0% of favorable pricing was offset by 1.1% of unfavorable foreign currency translation effects.

Net Sales by Geographic Region

Net sales by region is presented in the table below (in millions):


	2023		2022		Change
North America	$	154.8	$	157.7	(1.8)	%
Europe, Middle East and Africa	21.3		23.3		(8.6)
Asia Pacific and Latin America	15.6		16.4		(4.9)
Total net sales	$	191.7	$	197.4	(2.9)	%	Table of Contents
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Gross Profit (in millions)


	2023			2022
Net sales	$	191.7		$	197.4
Cost of products sold	87.2			90.8
Gross profit	104.5			106.6
Gross profit margin	54.5		%	54.0		%

Gross profit margin improved from 54.0% to 54.5% due to manufacturing efficiencies and improvements in the overall supply chain environment.

Research and Development (in millions)


	2023			2022
Research and development	$	7.9		$	7.8
Percentage of net sales	4.1		%	4.0		%

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 has historically ranged between 4% and 6% of net sales.

Selling and General Expenses (in millions)


	2023			2022
Selling and general expenses	$	92.7		$	90.1
Percentage of net sales	48.4		%	45.6		%

Selling and general expenses increased to $92.7 million for the three months ended March 31, 2023 compared to the prior year period, driven by expenses associated with our ongoing Transformation Process.

Other Expense, net (in millions)


	2023			2022
Other expense, net	$	1.3		$	0.1
Percentage of net sales	0.7		%	0.1		%

Other expense, net increased to $1.3 million for the three months ended March 31, 2023 compared to the prior year period driven by acquisition and integration costs.

Operating Profit (in millions)


	2023			2022
Operating profit	$	2.6		$	8.6
Operating profit margin	1.4		%	4.4		%

The items previously described drove operating profit to $2.6 million for the three months ended March 31, 2023, compared to $8.6 million for the three months ended March 31, 2022.

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Adjusted Operating Profit

A reconciliation of adjusted operating profit (loss), a non-GAAP measure, to operating profit (loss) is provided in the table below (in millions):


	2023		2022
Operating profit, as reported (GAAP)	$	2.6	$	8.6
Acquisition and integration-related charges	1.5		1.7
Restructuring and transformation charges	8.9		—
EU MDR Compliance	1.1		1.6
Intangibles amortization	6.3		5.7
Adjusted operating profit (non-GAAP)	$	20.4	$	17.6

The items noted in the table above are described below:

Acquisition and integration-related charges: Acquisition and integration-related charges were $1.5 million and $1.7 million for the three months ended March 31, 2023 and 2022, respectively. Expenses in both the three months ended March 31, 2023 and 2022 were related to the acquisition of OrthogenRx.

Restructuring and transformation charges: In January 2023, we initiated the Transformation Process, a three-year restructuring initiative intended to align the Company under a single commercial organization, rationalize our product portfolio, undertake additional cost management activities to enhance the Company’s operating profitability and pursue efficient capital allocation strategies. In the three months ended March 31, 2023, we incurred $8.9 million of expenses related to the Transformation Process which consisted of costs associated with program management consulting and employee retention expenses and employee severance and benefits costs.

EU MDR Compliance: The European Union Medical Device Regulation (the “EU MDR”) became effective in 2021 and brings significant new requirements for many of our medical devices. Incremental costs associated with EU MDR compliance are primarily related to re-certification of our products under the enhanced standards. We incurred $1.1 million and $1.6 million of costs related to EU MDR compliance in the three months ended March 31, 2023 and 2022. We expect the activities resulting in incremental costs associated with our initial compliance with the EU MDR will continue into 2024.

Intangibles amortization: Intangibles amortization is related primarily to intangibles acquired in business acquisitions and was $6.3 million and $5.7 million for the three months ended March 31, 2023 and 2022, respectively. The increase in amortization is due to incremental amortization of intangibles acquired with OrthogenRx early last year.

Interest Expense

Interest expense consists of interest accrued and amortization of debt issuance costs on our revolving credit facility net of interest capitalized on long-term capital projects. See Note 6, “Debt” in Item 1 of this Form 10-Q. Interest expense was $3.5 million for the three months ended March 31, 2023, compared to $1.3 million, in the comparable period last year. Our outstanding debt balances, net of unamortized discounts, were $210.9 million and $232.5 million as of March 31, 2023 and December 31, 2022, respectively.

Income Taxes

The income tax provision was $0.1 million in the three months ended March 31, 2023, compared to $1.9 million in the three months ended March 31, 2022. Our effective tax rate was 25.0% and 26.0% in the three months ended March 31, 2023 and 2022, respectively.

Liquidity and Capital Resources

General

Our primary sources of liquidity are cash on hand provided by operating activities and amounts available with our revolving credit facility under our credit agreement. We expect our operating cash flow will be sufficient to meet our working capital requirements and fund capital expenditures in the next twelve months. In addition, with our borrowing capacity, we expect to have the ability to fund capital expenditures and other investments necessary to grow our business for the foreseeable future for both our domestic and international operations.

As of March 31, 2023, $47.9 million of our $95.7 million of cash and cash equivalents was held by foreign subsidiaries. We consider the undistributed earnings of our foreign subsidiaries to be indefinitely reinvested overseas and currently do not have

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plans to repatriate such earnings. We do not expect restrictions on repatriation of cash held outside of the United States to have a material effect on our overall liquidity, financial condition or results of operations for the foreseeable future.

Cash and cash equivalents decreased by $32.0 million to $95.7 million as of March 31, 2023, compared to $127.7 million as of December 31, 2022. The decrease was primarily driven by $6.8 million of cash used in operating activities, payments of $20.0 million on our revolving credit facility and $1.6 million on our term loan, and $4.0 million of capital expenditures.

During the three months ended March 31, 2022, cash and cash equivalents decreased by $14.2 million to $104.3 million as of March 31, 2022. The decrease was primarily driven by $116.7 million used to purchase OrthogenRx and $19.4 million used to repurchase shares of our common stock, partially offset by $1.8 million provided by operating activities and $125.0 million in proceeds received from the issuance of incremental long-term debt.

Long-Term Debt

Borrowings under the Term Loan Facility and Revolving Credit Facility bear interest at our option at either: (i) an adjusted term secured overnight financing rate (“SOFR”), plus a margin ranging between 1.50% to 2.00% per annum, depending on our consolidated total leverage ratio; (ii) an adjusted daily simple SOFR rate, plus a margin ranging between 1.50% to 2.00% per annum, depending on our consolidated total leverage ratio; or (iii) a base rate (calculated as the greatest of (a) the prime rate, (b) the NYFRB rate (being the greater of the federal funds effective rate or the overnight bank funding rate) plus 0.50%, and (c) the one month adjusted term SOFR rate plus 1.00%), plus a margin ranging between 0.50% to 1.00% per annum, depending on our consolidated total leverage ratio. The unused portion of the Revolving Credit Facility will be subject to a commitment fee ranging between 0.20% to 0.25% per annum, depending on our consolidated total leverage ratio.

See Note 6, “Debt” in Item 1 of this Form 10-Q for further details regarding our debt agreements.

Critical Accounting Policies and Use of Estimates

Our financial statements are prepared by applying certain accounting policies. See Note 1, “Accounting Policies” in Item 8, “Financial Statements and Supplementary Data” in the Form 10-K, which describes our most significant accounting policies. In addition, our critical accounting policies and estimates are presented under the caption “Critical Accounting Policies and Use of Estimates” in Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operation” in the Form 10-K. Certain of these policies require management to make estimates or assumptions that may prove inaccurate or be subject to variations that may significantly affect our reported results and financial position for the period or in future periods. Management views these policies as critical accounting policies. See Note 1, “Accounting Policies” in Item 1 of this Form 10-Q for updates to our critical accounting policies and a discussion of recent accounting pronouncements. In the three months ended March 31, 2023, there were no significant changes to our critical accounting estimates from those disclosed in Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operation” in the Form 10-K.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes regarding our market risk position from the information provided under Item 7A – “Quantitative and Qualitative Disclosures About Market Risk” in the Form 10-K.

Item 4. Controls and Procedures

With the participation of management, our Chief Executive Officer (principal executive officer) and our Senior Vice President, and Chief Financial Officer (principal financial officer) carried out an evaluation, pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and our Senior Vice President and Chief Financial Officer concluded that our disclosure controls and procedures were operating effectively as of March 31, 2023.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the three months ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to various legal proceedings, claims and governmental inspections, audits or investigations pertaining to issues such as contract disputes, product liability, tax matters, patents and trademarks, advertising, governmental regulations, employment and other matters. At present, although the results of litigation and claims cannot be predicted with certainty, we believe that the ultimate resolution of any pending legal proceeding to which we are a party will not have a material adverse effect on our business, financial condition, results of operations or liquidity.

Item 1A. Risk Factors

There have been no material changes to the risk factors described in Part I, Item 1A, “Risk Factors,” of the Form 10-K, except as follows:

Recent events in the banking industry and the associated macroeconomic impacts may have a material adverse effect on our business operations, financial condition, results of operations and cash flows.

The recent financial conditions affecting the banking system and financial markets and the potential threats to the solvency of commercial banks, investment banks and other financial institutions may have an adverse effect on our operations and the operations of companies with which we do business or in which we hold a minority stake. There can be no assurance that the actions taken by the Federal Reserve, the Treasury Department and the Federal Deposit Insurance Corporation in response to recent bank solvency concerns will achieve the purpose of stabilizing the financial markets, restoring consumer confidence, or have other intended effects. Concerns about the stability of financial markets and the solvency of lenders may cause further negative effects across the banking system and may cause the costs of obtaining financing from the credit markets to increase, which may limit our ability to secure adequate financing in the future or have other negative effects on our business operations, financial condition, results of operations and cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable

Item 3. Defaults Upon Senior Securities

Not applicable

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

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Item 6. Exhibits

(a)Exhibits

Exhibit<br>Number	Description
3.1	Second Amended and Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K filed on May 6, 2020
3.2	Sixth Amended and Restated Bylaws of the Company, incorporated by reference to Exhibit 3.2 of our Current Report on Form 8-K filed on May 6, 2020
*10.22	Severance and Separation Agreement dated January 10, 2023 by and between Avanos Medical, Inc. and William D. Haydon,f iled herewith
*10.2 3	Avanos Medical, Inc. Amended and Restated Executive Severance Plan, filed herewith
31(a)	Section 302 CEO Certification, filed herewith
31(b)	Section 302 CFO Certification, filed herewith
32(a)**	Section 906 CEO Certification, furnished herewith
32(b)**	Section 906 CFO Certification, furnished herewith
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104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Management contracts, compensatory plans or arrangements.

** The certifications attached as Exhibit 32(a) and 32(b) that accompany this Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Avanos Medical, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AVANOS MEDICAL, INC.
	(Registrant)
May 3, 2023	By:	/s/ Michael C. Greiner
		Michael C. Greiner
		Senior Vice President,
		Chief Financial Officer and Chief Transformation Officer
		(Principal Financial Officer)
May 3, 2023	By:	/s/ John J. Hurley
		John J. Hurley
		Controller
		(Principal Accounting Officer)

Document

SEVERANCE AND SEPARATION AGREEMENT

This SEVERANCE AND SEPARATION AGREEMENT (this “Agreement”) is made and entered into as of January 10, 2023 by and between Avanos Medical, Inc. (together with its subsidiaries, the “Company”) and William D. Haydon (“Employee”).

RECITALS:

WHEREAS, Employee is currently employed by the Company as Senior Vice President and General Manager, Pain Franchise;

WHEREAS, the Company has decided to eliminate the position that Employee currently fills effective March 31, 2023 (the “Separation Date”), and, accordingly, Employee’s employment with the Company will be terminated on the Separation Date; and

WHEREAS, the Company and Employee desire to set forth the parties’ respective rights and obligations with respect to the termination of Employee’s employment with the Company;

NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements set forth herein, and for the good and valuable consideration set forth herein, the adequacy of which is hereby specifically acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1. No Right to Continued Employment; Employment at Will. Employee is employed at-will by the Company. This Agreement does not grant, and shall not be construed as giving, Employee the right to employment or continued employment for any certain period of time with the Company. Accordingly, either party shall have the right to terminate the employment relationship at any time for any reason, including termination prior to the Separation Date.

2. Termination of Employment. Subject to Section 1, Employee’s employment with the Company will terminate effective as of the Separation Date.

3. Severance Benefits.

(a) Subject to the terms and conditions of this Agreement, the Company hereby agrees to: (i) pay to Employee, within sixty (60) days following the Separation Date, a one-time cash lump sum payment in an amount equal to $972,000; (ii) provide Employee with the services of an outside job placement firm selected by the Company for a period of six (6) months following the Separation Date; (iii) subject to Employee’s taking all necessary steps to properly elect any continuing medical insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), pay one hundred percent (100%) of Employee’s monthly COBRA premiums for a period of twelve (12) months following the Separation Date; and (iv) make available to Employee the benefits available under the Company’s Employee Assistance Program for a period of three (3) months following the Separation Date.

(b) Subject to the terms and conditions of this Agreement, Employee also shall be eligible to receive an additional cash payment (the “Transition Incentive Bonus”) of up to $300,000. The actual amount of the Transition Incentive Bonus payable to Employee will be based on whether, and the extent to which, Employee meets the following key transition objectives prior to the Separation Date:

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(i)Complete 2022 fiscal year activities by meeting SQF targets for sales;

(ii)Assist in the design and planning for the Company’s combined Commercial Sales organization;

(iii)Transition all current ongoing M&A activities to the Company’s Chief Commercial Officer;

(iv)Refine OrthogenRx 2023 pricing, reimbursement and GTM strategy; and

(v)Complete all year-end 2022 assessments for Employee’s direct reports.

Whether, and the extent to which, the above key transition objectives have been met, and the final amount of the Transition Incentive Bonus earned by Employee, will be determined collectively by the Company’s Chief Executive Officer and the Vice President, Human Resources of the Company, in their sole discretion. The Transition Incentive Bonus will be paid in a lump sum as soon as administratively possible after the Separation Date, but in no event later than May 31, 2023.

(c) The benefits described in Sections 3(a) and (b) are collectively referred to herein as the “Severance Benefits.” Except for the Severance Benefits, to the extent earned by Employee, no compensation or other amounts or benefits will be payable by the Company to Employee in connection with the termination of his employment by the Company. The Company’s provision of the Severance Benefits, to the extent earned by Employee, will discharge all obligations of the Company to Employee in connection with his employment by the Company and in connection with the claims released by Employee pursuant to the Release Agreement (as that term is defined below).

(d) Whether or not Employee executes the Release Agreement, Employee will be paid for any unused vacation due to Employee as of the Separation Date according to the Company’s vacation policy currently in effect and as required by law.

(e) This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements Section 409A of the Internal Revenue Code of 1986, as amended, and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder (the “Code”). Nevertheless, the tax treatment of the Severance Benefits, to the extent earned by Employee, is not warranted or guaranteed. Neither the Company nor its directors, officers, employees or advisers (other than Employee) shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Employee as a result of the application of Section 409A of the Code. Regardless of any action the Company takes with respect to any or all taxes, the ultimate liability for all taxes payable with respect to this Agreement shall remain Employee’s responsibility and may exceed the amount actually withheld by the Company.

4. Tax Withholding. Payment of the Severance Benefits will be subject to reduction to satisfy: (i) all federal, state and local employment and withholding tax obligations to the extent required by law and (ii) any other payroll reductions deemed appropriate by the Company.

5. Eligibility. To be eligible for the Severance Benefits:

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(a) Employee must continue to perform Employee’s assigned duties and responsibilities in a satisfactory fashion through the Separation Date. Whether Employee has performed his duties in a satisfactory manner will be determined in the sole discretion of the Company.

(b) Employee must remain in the employ of the Company through the Separation Date. In the event Employee is terminated by the Company for any other reason or Employee resigns prior to such date, the Company shall not be obligated to pay the Severance Benefits.

(c) Employee must execute a Full and Final Release of Claims and Covenant Not to Sue (the “Release Agreement”), in the form attached hereto as Exhibit A, within the period specified therein and must not revoke such Release Agreement in writing within the seven (7)-day period following the date on which it is executed.

6. Set-Off. To the extent allowed by law, the Company shall have the right to set-off against any sums due from the Company to Employee, including payments due under the federal Workers’ Adjustment and Retraining Notification Act (“WARN”) or similar state laws, if applicable.

7. Entire Agreement. This Agreement embodies the entire agreement of the parties relating to the subject matter of this Agreement and supersedes all prior agreements, oral or written, regarding the subject matter hereof and as to severance benefits to be paid to Employee. No amendment or modification of this Agreement will be valid or binding upon the parties unless made in writing and signed by the parties.

8. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the state of Georgia without regard to conflicts of law principles thereof.

9. Enforcement. The provisions of this Agreement shall be deemed severable, and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. It is understood and agreed that no failure or delay by Company or Employee in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder.

10. Acknowledgement. Employee agrees that he has read all the terms of this Agreement and understands those terms. Employee is signing this Agreement of his own free will in exchange for the Severance Benefits, to the extent earned by Employee, to be paid to Employee.

[Signature page follows]

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IN WITNESS HEREOF, Company and Employee have each executed this Agreement as of the date first above written.

AVANOS MEDICAL, INC., on behalf of itself and its subsidiaries

By: /s/ John W. Cato 1/10/23

John W. Cato Date

Vice President, Human Resources

/s/ William D. Haydon 1/10/23

William D. Haydon Date

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EXHIBIT A

AVANOS MEDICAL, INC.

FULL AND FINAL RELEASE OF CLAIMS AND COVENANT NOT TO SUE

This Full and Final Release of Claims and Covenant not to Sue (“Agreement”) is made and entered into between William D. Haydon (“Employee”) and Avanos Medical, Inc., a Delaware corporation (the “Company”)

1. SEPARATION FROM EMPLOYMENT. Employee’s employment terminated, and Employee’s last day on the payroll was, March 31, 2023 (the “Separation Date”).

2. RETENTION BENEFITS. Employee agrees and understands that the consideration described in Section 3 of this Agreement is provided through a Severance and Separation Agreement between Employee and the Company (the “Severance and Separation Agreement”), which also requires the execution of this Agreement as a condition to the payment of benefits under the Severance and Separation Agreement.

3. CONSIDERATION. In consideration of Employee’s decision to enter into the Severance and Separation Agreement, following the Company’s receipt of this Agreement executed by the Employee and the expiration of the seven (7) day period within which the Employee may revoke Employee’s acceptance of this Agreement as explained below (and provided Employee has not exercised such right of revocation), and subject to the terms and conditions of the Severance and Separation Agreement, the Company will provide Employee with the following:

(a)Within sixty (60) days following the Separation Date, a lump sum payment in the aggregate amount of $972,000, which amount is in satisfaction of the amount described in Section 3(a)(i) of the Severance and Separation Agreement;

(b)As soon as administratively possible after the Separation Date, and in no event later than May 31, 2023, payment of the Transition Incentive Bonus, to the extent earned by Employee, pursuant to Section 3(b) of the Severance and Separation Agreement; and

(c)The other Severance Benefits described in Section 3(a) of the Severance and Separation Agreement.

Employee further acknowledges the above payments will be subject to reduction to satisfy: (i) all federal, state and local employment and withholding tax obligations to the extent required by law and (ii) any other payroll reductions deemed appropriate by the Company. Employee agrees that, except for the amounts withheld, Employee shall be fully responsible for paying any taxes, interest, penalties, or other amounts due on the above payments and the Company makes no representation as to the tax treatment of any consideration under this Agreement or the Severance and Separation Agreement. All above payments will be made as provided in the Severance and Separation Agreement, provided this Agreement becomes final and binding.

4. ACKNOWLEDGEMENT REGARDING PAYMENTS AND BENEFITS. Employee acknowledges and agrees that he has been paid all wages and accrued benefits to which he is entitled through the date of execution of this Agreement. Other than the payments set forth in this Agreement, the parties agree that the Company owes no additional amounts to Employee for wages, back pay, severance pay, bonuses, damages, accrued vacation, benefits, insurance, sick leave, other leave, or any other reason.

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5. FULL AND FINAL RELEASE. In consideration of the payments being provided to Employee above, Employee, for Employee, Employee’s attorneys, heirs, executors, administrators, successors and assigns, fully, finally and forever releases and discharges the Company, all parent, subsidiary, related and affiliated companies, as well as its and their successors, assigns, officers, owners, directors, agents, representatives, attorneys, and employees (all of whom are referred to throughout this Agreement as the “Released Parties”), of and from all claims, demands, actions, causes of action, suits, damages, losses, and expenses, whether known or unknown, of any and every nature whatsoever, as a result of actions or omissions occurring through the execution date of this Agreement. Specifically included in this waiver and release are, among other things, any and all claims of alleged employment discrimination, either as a result of the separation of Employee’s employment or otherwise, any claims under any severance pay plan of the Released Parties, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, the Family and Medical Leave Act (FMLA), the Americans with Disabilities Act, the Worker Adjustment and Retraining Notification (WARN) Act, the Uniformed Services Employment and Reemployment Rights Act (USERRA), the Ledbetter Fair Pay Act, the Genetic Information Nondiscrimination Act of 2008, the Internal Revenue Code (IRC), the US tax code, the Employee Retirement Income Security Act (ERISA), any other federal, state or local statute, rule, ordinance, or regulation, as well as any claims for alleged wrongful discharge, negligent or intentional infliction of emotional distress, breach of contract, fraud, defamation, or any other unlawful behavior, the existence of which is specifically denied by the Released Parties.

Notwithstanding the provisions of any law, and for the purpose of implementing a full and complete release and discharge of the Released Parties, Employee expressly acknowledges that this Agreement is intended to include in its effect, without limitation, all claims that Employee does not know or suspect to exist in Employee’s favor at the time Employee executes this Agreement, and that this Agreement contemplates the extinguishment of any such claims.

The above release does not waive any rights or claims that (a) may arise after the date on which Employee executes this Agreement; (b) cannot lawfully be released under applicable law, including, but not limited to, unemployment benefits and workers’ compensation claims, (c) constitute an award to Employee from or by a government agency for providing information. In addition, nothing in this Agreement is intended to waive any vested right that Employee may have with respect to any pension or other retirement benefits to which Employee is entitled by virtue of Employee’s employment with the Company, and nothing in this Agreement shall prohibit Employee from enforcing such rights.

6. COVENANT NOT TO SUE. Except as expressly set forth in Section 7 below, Employee further hereby AGREES NOT TO FILE A LAWSUIT or other legal claim or charge to assert against any of the Released Parties any claim released by this Agreement.

7. NON-INTERFERENCE. Nothing in this Agreement shall be construed to prohibit Employee from filing a charge or participating in any investigation or proceeding before any federal, state or local agency or commission including, but not limited to, the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, and the Securities and Exchange Commission (collectively, “Government Agencies”). In addition, nothing in this Agreement shall limit Employee’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Agreement does not limit Employee’s right to receive an award for information provided to any Government Agencies regarding any violation of any Securities and Exchange Commission regulation or financial fraud or misconduct. Notwithstanding the foregoing, to the maximum extent permitted by law, Employee

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waives Employee’s right to recover damages as a result of any charge or lawsuit filed by Employee or by anyone else on Employee’s behalf, including a class or collective action, whether or not Employee is named in such proceeding. Furthermore, Employee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (1) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, in each case, solely for the purpose of reporting or investigating a suspected violation of law or (2) in a complaint or other document filed in a lawsuit or proceeding, if such filings are made under seal.

8. NO OTHER CLAIMS. Employee understands that Employee is releasing claims about which Employee may not know anything at the time Employee executes this Agreement. Employee represents and warrants that Employee has (a) filed no claims, lawsuits, charges, grievances, or causes of action of any kind against the Released Parties and, to the best of the Employee’s knowledge, Employee possesses no such claims (including Fair Labor Standards Act (“FLSA”) and worker’s compensation claims) that Employee has not already disclosed to the Released Parties; (b) received any and all compensation (including overtime compensation), meal periods, and rest periods to which Employee may have been entitled, and Employee is not currently aware of any facts or circumstances constituting a violation by the Released Parties of the FLSA or other applicable wage, hour, meal period, and/or rest period laws that Employee has not already disclosed to the Released Parties; and (c) not suffered any work-related injury or illness within the twelve (12) months preceding Employee’s execution of this Agreement, and Employee is not currently aware of any facts or circumstances that would give rise to a worker’s compensation claim against the Released Parties that Employee has not already disclosed to the Released Parties.

9. DUTY TO COOPERATE. Employee agrees to be available on a reasonable basis to assist the Released Parties with any investigation, claim, suit, or other proceeding that is pending or threatened by or against the Released Parties. Employee further agrees to promptly inform the Company’s General Counsel if Employee is requested to: (a) testify in connection with or otherwise become involved in any claim against the Released Parties; or (b) assist with or participate in any investigation of the Released Parties. The Company’s General Counsel may be contacted via mail at the following address: General Counsel, Avanos Medical, Inc., 5405 Windward Parkway, Alpharetta, Georgia 30004.

10. NON-ADMISSION OF LIABILITY OR WRONGFUL CONDUCT. This Agreement shall not be construed as an admission by the Released Parties of any liability or acts of wrongdoing or discrimination, nor shall it be considered to be evidence of such liability, wrongdoing, or discrimination.

11. TERMINATION OF EMPLOYMENT RELATIONSHIP. Except as set forth above, Employee and the Released Parties agree as a matter of intent that, except for vested benefits under any pension, 401(k) plan or other benefit plan provided by the Released Parties unless otherwise provided, this Agreement terminates all aspects of the employment relationship between them.

12. RETURN OF COMPANY PROPERTY. Executive understands and agrees that all Company Information and Business ideas (as defined in the Confidentiality, Nonsolicitation and Assignment of Business Ideas Agreement between Employee and the Company) is the exclusive property of the Company and that Employee has no rights in or to the Company Information upon the termination of employment. Employee represents that Employee has delivered to the Company:

(a) all originals and electronic and paper copies of all documents and records that may contain Company Information, regardless of where such documents and

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records are stored including, but not limited to, on USB drives, external hard drives, and/or any cloud-based storage (for which Employee provided any necessary passwords);

(b) all property of any nature that relates to Company Information or Business Ideas, including, but not limited to, business activities, customers or prospective customers of the Company, whether prepared by Employee or others; and

(c) all property of any nature whatsoever that was in Employee’s possession, custody or control, and that is the property of the Company (e.g. cellular phones, credit cards, computer or other equipment).

Employee further represents that, after returning any electronic copies of documents, records or data to the Company, Employee has deleted any remaining electronic versions from personal electronic devices (e.g. personal computers, phones, tablets).

Employee has provided to the Company a signed declaration stating that all Company Information, documents, data and other property has been returned and all Company Information and electronic data has been deleted from personal electronic devices (e.g. personal computers, phones, tablets).

13. GOVERNING LAW; CHOICE OF FORUM. This Agreement shall be governed and construed as to both substantive and procedural matters in accordance with the laws of the State of Georgia, without regard to the conflict of laws principles thereof. Employee agrees that any claim or dispute Employee may have against the Company must be resolved by a court located in Fulton County, Georgia. Employee agrees to submit to personal jurisdiction and venue in the Superior Court of Fulton County, State of Georgia for the purpose of litigating all claims or disputes between the Company and Employee.

14. SEVERABILITY. The provisions of this Agreement are severable, and if any part of this Agreement is found by a court of law to be unenforceable, the remainder of the Agreement will continue to be valid and effective.

15. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement between Employee and the Company. Any prior agreements between or directly involving Employee and any of the Released Parties are superseded by the terms of this Agreement and thus are rendered null and void with the exception of the Confidentiality, Nonsolicitation and Assignment of Business Ideas Agreement between Employee and the Company and any other noncompetition, confidentiality, nonsolicitation and/or assignment of business ideas agreements or any prior agreements between the parties related to inventions, business ideas, and confidentiality of corporate information, which remain intact, including, but not limited to, those provided to Employee with this Agreement.

16. NO OTHER PROMISES. Employee affirms that the only consideration for Employee signing this Agreement is that set forth in Section 2, that no other promise or agreement of any kind has been made to or with Employee by any person or entity to cause Employee to execute this document, and that Employee fully understands the meaning and intent of this Agreement, including but not limited to, its final and binding effect.

17. REVIEW AND REVOCATION PERIODS. Employee acknowledges that Employee is hereby advised to consult with an attorney before signing this Agreement. Employee further acknowledges that Employee has been given twenty-one (21) days from the time that Employee receives this Agreement to consider whether to sign it, as provided by the Age Discrimination in Employment Act of 1967, as amended (ADEA). If Employee has signed

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this Agreement before the end of this twenty-one (21) day period, it is because Employee freely chose to do so after carefully considering its terms. Finally, Employee shall have seven (7) days from the date Employee signs this Agreement to revoke this Agreement by delivering written notice within the seven (7) day period to the following Company contact:

General Counsel

Avanos Medical, Inc.

5405 Windward Parkway

Alpharetta, Georgia 30004

If Employee does not revoke this Agreement, this Agreement will become effective and irrevocable by Employee on the eighth day after Employee has executed it. If Employee elects not to sign this Agreement within twenty-one (21) days from the date that Employee receives this Agreement or if the Employee revokes the Agreement during the foregoing applicable revocation period, this Agreement shall not become effective and the offer to enter into this Agreement shall terminate and expire automatically.

18. LEGALLY BINDING AGREEMENT. Employee understands and acknowledges that this Agreement is final and binding following the seven (7) day revocation period provided in this Agreement.

19. REPRESENTATION AND WARRANTY OF UNDERSTANDING. By signing below, Employee represents and warrants that Employee: (a) has carefully read and understands the terms of this Agreement; (b) is entering into this Agreement knowingly, voluntarily and of Employee’s own free will; and (c) understands its terms and significance and intends to abide by its provisions without exception.

Date:

William D. Haydon

AVANOS MEDICAL, INC.

Date: By:

John Cato

Vice President, Human Resources

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Document

AVANOS MEDICAL, INC.

EXECUTIVE SEVERANCE PLAN

Amended and Restated as of February 14, 2023

1. Preamble and Statement of Purpose. The purpose of this Plan is to assure the Corporation that it will have the continued dedication of, and the availability of objective advice and counsel from, key executives of the Corporation notwithstanding the possibility, threat or occurrence of a change of control of the Corporation.

In the event the Corporation receives any proposal from a third person concerning a possible business combination with the Corporation, or acquisition of the Corporation’s equity securities, or otherwise considers or pursues a transaction that could lead to a change of control, the Committee believes it imperative that the Corporation and the Board of Directors of the Corporation (the “Board”) be able to rely upon key executives to continue in their positions and be available for advice, if requested, without concern that those individuals might be distracted by the personal uncertainties and risks created by such a possibility.

Should the Corporation receive or consider any such proposal or transaction, in addition to their regular duties, such key executives may be called upon to assist in the assessment of the proposal or transaction, to advise management and the Board as to whether the proposal or transaction would be in the best interests of the Corporation and its stockholders, and to take such other actions as the Board might determine to be appropriate.

2. Definitions. As used in this Plan, the following terms shall have the following respective meanings.

(a) Annual Bonus Amount: For any Participant, the target full annual cash incentive awards for the Participant under the Avanos Medical, Inc. Management Achievement Award Program or any successor or additional plan (the “Bonus Program”), for the year in which the Relevant Date occurs, without regard to any otherwise-applicable proration.

(b) Cause: The term “Cause” shall mean any of the following:

(i) the commission by the Participant of a felony;

(ii) the Participant’s dishonesty, habitual neglect or incompetence in the management of the affairs of the Corporation; or

(iii) the refusal or failure by the Participant to act in accordance with any lawful directive or order of the Corporation, or an act or failure to act by the Participant which is in bad faith and which is detrimental to the Corporation; or

(iv) the Participant’s material breach of any employment, severance, restrictive covenant agreement, or similar agreement, with the Corporation or a Subsidiary.

(c) Change of Control: “Change of Control” means and includes the occurrence of any one of the following events but shall specifically exclude a public offering

of any class or series of the Corporation’s equity securities pursuant to a registration statement filed by the Corporation under the Securities Act of 1933:

(i) during any consecutive 12-month period, individuals who, at the beginning of such period, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of such Board, provided that any person becoming a director after the beginning of such 12-month period and whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Corporation as a result of an actual or threatened election contest with respect to the election or removal of directors (“Election Contest”) or other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board (“Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, shall be deemed an Incumbent Director; or

(ii) any individual, entity or group, within the meaning of Section 3(a)(9) of the Securities Exchange Act of 1934 (the “Exchange Act”) and as used in Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”), other than a broker, underwriter or financial institution that acquires such shares as part of a firm commitment or similar underwriting or distribution process pursuant to which the subject shares of stock are being held for further distribution (an “Underwriter”), becomes a “Beneficial Owner” under the meaning given such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act, directly or indirectly, of either (A) 30% or more of the then-outstanding shares of common stock of the Corporation (“Corporation Common Stock”) or (B) securities of the Corporation representing 30% or more of the combined voting power of the Corporation’s then outstanding securities eligible to vote for the election of directors (the “Corporation Voting Securities”); provided, however, that for purposes of this subsection (ii), the following acquisitions of Corporation Common Stock or Corporation Voting Securities shall not constitute a Change of Control: (w) an acquisition directly (or indirectly through Underwriters) from the Corporation, (x) an acquisition by the Corporation or a Subsidiary, (y) an acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Subsidiary, or (z) an acquisition pursuant to a Non-Qualifying Transaction (as defined in subsection (iii) below); or

(iii) the consummation of a reorganization, merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Corporation or a Subsidiary (a “Reorganization”), or the sale or other disposition of all or substantially all of the Corporation’s assets (a “Sale”) or the acquisition of assets or stock of another corporation or other entity (an “Acquisition”), unless immediately following such Reorganization, Sale or Acquisition: (A) all or substantially all of the individuals and entities who were the Beneficial Owners, respectively, of the outstanding Corporation Common Stock and outstanding Corporation Voting Securities immediately prior to such Reorganization, Sale or Acquisition beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities

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entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Reorganization, Sale or Acquisition (including, without limitation, an entity which as a result of such transaction owns the Corporation or all or substantially all of the Corporation’s assets or stock either directly or through one or more subsidiaries, the “Surviving Entity”) in substantially the same proportions as their ownership, immediately prior to such Reorganization, Sale or Acquisition, of the outstanding Corporation Common Stock and the outstanding Corporation Voting Securities, as the case may be, and (B) no person (other than (x) the Corporation or any Subsidiary, (y) the Surviving Entity or its ultimate parent entity, or (z) any employee benefit plan (or related trust) sponsored or maintained by any of the foregoing) is the Beneficial Owner, directly or indirectly, of 30% or more of the total common stock or 30% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Surviving Entity, and (C) at least a majority of the members of the board of directors of the Surviving Entity were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Reorganization, Sale or Acquisition (any Reorganization, Sale or Acquisition which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying Transaction”); or

(iv) approval by the stockholders of the Corporation of a complete liquidation or dissolution of the Corporation.

(d) Code: The Internal Revenue Code of 1986, as amended.

(e) Committee: The Compensation Committee of the Board.

(f) Corporation: Avanos Medical, Inc. and any successor thereto that assumes this Plan pursuant to Section 14 below.

(g) Discretionary Participant: Any Participant who is not an executive officer of the Corporation.

(h) Eligible Employee: Those key executives and other officers of the Corporation and its Subsidiaries who are from time to time designated by the Committee as, or who pursuant to criteria established by the Board or the Committee are, eligible to participate in this Plan.

(i) Equity Plans: The Avanos Medical, Inc. Equity Participation Plan, the Avanos Medical, Inc. 2021 Long Term Incentive Plan, and any successor or additional plans under which a Participant receives stock options, restricted stock, RSUs (as defined below) or other equity-based compensation.

(j) Executive Participant: A Participant who is an executive officer of the Corporation.

(k) Excise Tax: The excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

(l) Fair Market Value: With respect to any publicly traded equity security, the reported closing price of such security on the relevant date as reported on the composite list used by The Wall Street Journal for reporting stock prices, or, if no such sale shall have been made on that day, on the last preceding day on which there was such a sale; and with respect to any other property, the fair market value thereof as determined by the Committee in good faith.

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(m) Good Reason: Termination by the Participant for “Good Reason” shall mean the Separation from Service during the two-year time period following the initial existence (without the Participant’s express written consent) of any one of the following conditions:

(i) A material diminution in the Participant’s base compensation.

(ii) A material diminution in the Participant’s authority, duties or responsibilities.

(iii) A material diminution in the authority, duties, or responsibilities of the supervisor to whom the Participant is required to report, including a requirement that a Participant report to a corporate officer or employee instead of reporting directly to the Board.

(iv) A material diminution in the budget over which the Participant retains authority.

(v) A change, by more than 50 miles, in the geographic location at which the Participant must perform the services.

(vi) Any other action or inaction that constitutes a material breach by the Corporation of any agreement under which the Participant provides services.

The Participant must provide notice to the Corporation of the existence of any of the above conditions within a period not to exceed 90 days of the initial existence of the condition, upon the notice of which the Corporation must be provided a period of at least 30 days during which it may remedy the condition. In the event the Corporation remedies such condition during such period, “Good Reason” shall not be deemed to exist with respect to such condition.

The Participant’s right to terminate the Participant’s employment for Good Reason shall not be affected by the Participant’s incapacity due to physical or mental illness.

(n) Multiplier: For the Chief Executive Officer of the Corporation, two and one-half; for an Executive Participant other than the Chief Executive Officer, one and one-half, and for a Discretionary Participant, one.

(o) Net After Tax Receipt: The Value of a Payment, net of all taxes imposed on a Participant with respect thereto under Sections 1 and 4999 of the Code, under Section 3121 of the Code, and any state and local income taxes, determined by applying the highest marginal rate under Section 1 of the Code which applied to the Participant’s taxable income for the immediately preceding taxable year.

(p) Participant: An Eligible Employee who is designated as a Participant in this Plan by the Committee. The initial Participants shall be provided on Exhibit A to this Plan, which shall be updated from time to time. For purposes of this Plan, the Committee shall be permitted to designate groups of Eligible Employees by job title as Participants without the need to identify any individual Participant by name.

(q) Payment: Any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of a Participant, whether paid or payable pursuant to this Plan or otherwise.

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(r) Qualified Termination of Employment: The Participant’s Separation from Service either (i) within the two (2) year period following a Change of Control of the Corporation (A) by the Corporation without Cause or, (B) by the Participant with Good Reason, or (ii) by the Corporation without Cause before a Change of Control, if a Change of Control occurs within one year after such Separation from Service and it is reasonably demonstrated by the Participant that such Separation from Service was at the request of a third party that had taken steps reasonably calculated to effect a Change of Control or otherwise arose in connection with or in anticipation of a Change of Control.

(s) Reduced Amount: With respect to a Participant, the greatest aggregate amount of Separation Payments which (a) is less than the sum of all Separation Payments and (b) results in aggregate Net After Tax Receipts which are equal to or greater than the Net After Tax Receipts which would result if the Participant were paid the sum of all Separation Payments.

(t) Relevant Date: In the case of a Qualified Termination of Employment as described in clause (ii) of the definition of “Qualified Termination of Employment,” the date of such Qualified Termination of Employment and, in all other cases, the date of the Change of Control.

(u) RSUs. Time-based restricted share units and/or performance-based restricted share units.

(v) Separation from Service: Termination of employment with the Corporation or a Subsidiary. A Separation from Service also will be deemed to have occurred if the Participant’s services with the Corporation or a Subsidiary is reduced to an annual rate that is 20 percent or less of the services rendered, on average, during the immediately preceding three years of employment (or if employed less than three years, such lesser period). A Separation from Service shall not be deemed to have occurred where a Participant transfers employment between the Company and a Subsidiary or between Subsidiaries.

(w) Separation Payment: With respect to a Participant, a Payment paid or payable to the Participant pursuant to this Plan (disregarding Section 11 of this Plan).

(x) Severance Period: For an Executive Participant, the period of two years beginning on the date of the Qualified Termination of Employment

(y) Subsidiary: Any domestic or foreign corporation at least twenty percent (20%) of whose shares normally entitled to vote in electing directors is owned directly or indirectly by the Corporation or by other Subsidiaries, provided, however, that “at least fifty percent (50%)” shall replace “at least twenty percent (20%)” where there is not a legitimate business criteria for using such lower percentage.

(z) Value: With respect to a Payment, the economic present value of a Payment as of the date of the change of control for purposes of Section 280G of the Code, as determined by the Accounting Firm using the discount rate required by Section 280G(d)(4) of the Code.

3. Participation. An Eligible Employee shall become a Participant on the date he or she is designated as a Participant by the Committee, or such other time as the Committee may determine in its discretion. A Participant shall cease to be a Participant in the Plan upon the earlier of (i) the Participant’s Separation from Service that is not a Qualified Termination of Employment, or (ii) the termination of the Plan in accordance with its terms.

4. Separation from Service of Participants. Nothing in this Plan shall be deemed to entitle a Participant to continued employment with the Corporation and its Subsidiaries, and the rights of the Corporation to terminate a Participant’s service shall continue as fully as

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though this Plan were not in effect, provided that any Qualified Termination of Employment shall entitle the Participant to the benefits herein provided. In addition, nothing in this Plan shall be deemed to entitle a Participant under this Plan to any rights, or to payments under this Plan, with respect to any plan or program in which the Participant was not a participant prior to a Qualified Termination of Employment.

Payments Upon Qualified Termination of Employment. In the event of a Qualified Termination of Employment of a Participant, a lump sum cash payment shall be made to such Participant as compensation for services rendered, in an amount or amounts (subject to any applicable payroll or other taxes required to be withheld) equal to the sum of the amounts specified in subsections (a) through (e) below (the “Severance Payments”):

(a) Salary Plus Incentive Compensation. A lump sum amount equal to the Multiplier times the sum of (a) the Participant’s annual base salary at the rate in effect immediately prior to the Relevant Date or, if higher, immediately before the Qualified Termination of Employment and (b) the Annual Bonus Amount.

(b) Prorated Final Year Bonus. If the Qualified Termination of Employment occurs after March 31 of a given year, a lump sum amount equal to (i) the annual cash incentive award that would have been payable to the Participant, for the year in which the Qualified Termination of Employment occurs, under the Bonus Program in which the Participant was a participant on the Relevant Date if the Participant had remained employed for the entire for the entire calendar year, and assuming that performance was achieved at the target level of performance, multiplied by (ii) a fraction, the numerator of which is the number of days worked by the Participant during such final year and the denominator of which is 365.

(c) Stock Options. All stock options that were granted to the Participant under any of the Equity Plans, including but not limited to any substitute plans adopted prior to the Relevant Date (or any successor or additional plan), and were outstanding both on the Relevant Date and immediately before the Qualified Termination of Employment, shall vest and become exercisable and the Qualified Termination of Employment of the Participant shall be deemed a “Retirement” for purposes of exercising the stock options under the terms of the Equity Plans and the applicable award agreements.

(d) RSUs. All RSUs that were granted to the Participant under any of the Equity Plans, including but not limited to any substitute plans adopted prior to the Relevant Date (or any successor or additional plan), and were outstanding both on the Relevant Date and immediately before the Qualified Termination of Employment, shall become fully vested upon the Qualified Termination of Employment. For purposes of any RSU subject to performance conditions, such RSU will be deemed earned at the target level.

(e) Employer Portion of Retirement Plan Benefits. With respect to an Executive Participant only, a lump sum amount equal to the Participant’s maximum matching contribution under the Avanos Medical, Inc. 401(k) Plan (the “401(k) Plan”) (or any successor or additional plans) and the Avanos Medical, Inc. Supplemental Retirement 401(k) Plan (or any successor or additional plans) (individually the “Supplemental 401(k) Plan” and collectively, the “Retirement Benefit Plans”) to which the Participant would have been entitled if he or she had remained employed by the Corporation for the Severance Period at the rate of annual compensation specified in Section 5(a) above except that the Annual Bonus Amount shall be treated as earned for the year in which separation occurred and the balance of the Severance Period and no award actually earned in, and paid for, the year in which termination occurred shall be considered.

(f) Medical and Dental Benefits. A lump sum amount equal to (a) the amount of the monthly premiums that the Participant would be required to pay, if he or she elected “COBRA” continuation coverage under the medical and dental plans of the Corporation in which the Participant was participating immediately before the Qualified Termination of

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Employment, based upon the premium rates in effect as of the date of the Qualified Termination of Employment, times (b) the Multiplier, times (c) twelve.

The Severance Payments shall be made within 60 days following the later of the date of the Qualified Termination of Employment or the date of the Change of Control, subject to Section 16. Notwithstanding anything in this Section 5 to the contrary, any amounts which are payable under this Plan with respect to amounts which the Participant would have been entitled to receive under a deferred compensation plan required to meet the requirements of Section 409A of the Code and the regulations promulgated thereunder, shall be payable at the dates and in such amounts as would have been payable to the Participant under the terms of the deferred compensation plan.

6. Separation Agreement and Release. No Participant shall be entitled to receive Severance Benefits hereunder unless such Participant executes a Separation Agreement and Full and Final Release of Claims (the “Separation Agreement”), in the form attached hereto as Exhibit B, within the period specified for such individual therein and such Participant does not revoke such Separation Agreement in writing within the 7-day period following the date on which it is executed. The Employer shall provide the Separation Agreement to the Participant promptly following the date of the Qualified Termination of Employment.

6. No Payments on Other Termination of Employment. In the event a Participant’s employment terminates in any way that does not constitute a Qualified Termination of Employment, no benefits shall be payable to the Participant under this Plan.

7. Other Terms and Conditions. Where appearing in this Plan, the masculine shall include the feminine and the plural shall include the singular, unless the context clearly indicates otherwise.

8. Non-Assignability. Each Participant’s rights under this Plan shall be non-transferable except by will or by the laws of descent and distribution.

9. Unfunded Plan. The Plan shall be unfunded. Neither the Corporation nor the Board shall be required to segregate any assets that may at any time be represented by benefits under the Plan. Neither the Corporation nor the Board shall be deemed to be a trustee of any amounts to be paid under the Plan. Any liability of the Corporation to any Participant with respect to any benefit shall be based solely upon any contractual obligations created by the Plan; no such obligation shall be deemed to be secured by any pledge or any encumbrance on any property of the Corporation.

10. Certain Reduction of Payments by the Corporation.

(a) Anything in this Plan to the contrary notwithstanding, in the event a reputable certified public accounting firm designated by the Corporation (the “Accounting Firm”) shall determine that receipt of all Payments would subject a Participant to tax under Section 4999 of the Code, it shall determine whether some amount of Payments would meet the definition of a “Reduced Amount.” If the Accounting Firm determines that there is a Reduced Amount, the aggregate Payments shall be reduced to such Reduced Amount. The reduction of the Payments, if applicable, shall be made by first reducing cash Payments and then, to the extent necessary, reducing those Payments having the next highest ratio of Parachute Value to actual present value of such Payments as of the date of the Change of Control, as determined by the Accounting Firm. For purposes of this Section 11, present value shall be determined in accordance with Section 280G(d)(4) of the Code, and the “Parachute Value” of a Payment means the present value as of the date of the change of control of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2) of the Code, as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment. All fees payable to the Accounting Firm with respect to this Section 11 shall be paid solely by the Corporation.

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(b) If the Accounting Firm determines that aggregate Separation Payments should be reduced to the Reduced Amount, the Corporation shall promptly give the Participant notice to that effect and a copy of the detailed calculation thereof. All determinations made by the Accounting Firm under this Section 11 shall be binding upon the Corporation and the Participant and shall be made as promptly as practicable. Following such determination, the Corporation shall pay to or distribute for the benefit of the Participant such Separation Payments as are then due to the Participant under Section 5 of this Plan and shall promptly pay to or distribute for the benefit of the Participant in the future such Separation Payments as become due to the Participant under this Plan. Notwithstanding the prior sentence, such determination by the Accounting Firm shall be made within 60 days of the later of the Qualified Termination of Employment of the Participant or the date of the Change of Control.

(c) While it is the intention of the Corporation to reduce the amounts payable or distributable to a Participant hereunder only if the aggregate Net After Tax Receipts to the Participant would thereby be increased, as a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that amounts will have been paid or distributed by the Corporation to or for the benefit of a Participant pursuant to this Plan which should not have been so paid or distributed (“Overpayment”) or that additional amounts which will have not been paid or distributed by the Corporation to or for the benefit of a Participant pursuant to this Plan could have been so paid or distributed (“Underpayment”), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Accounting Firm determines that an Overpayment has been made, based upon the assertion of a deficiency by the Internal Revenue Service against the Corporation or the Participant which the Accounting Firm believes has a high probability of success, the Participant shall repay any such benefit to the Corporation together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no such interest shall be deemed to have been incurred and no amount shall be payable by a Participant to the Corporation if and to the extent such repayment would not either reduce the amount on which the Participant is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes. In the event that the Accounting Firm, based upon controlling precedent or substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Corporation to or for the benefit of the Participant together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code, but no later than March 15 of the year after the year in which the Underpayment is determined to exist, which is when the legally binding right to such Underpayment arises. Notwithstanding anything in this Plan to the contrary, the payment will be conditioned upon the Overpayment or Underpayment meeting the requirements of Section 409A of the Code and the regulations promulgated thereunder.

11. No Duty to Mitigate. In no event shall any Participant be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Participant under any of the provisions of this Plan, and such amounts shall not be reduced whether or not the Participant obtains other employment.

12. Termination and Amendment of this Plan. The Committee shall have the power at any time, in its discretion, to amend, abandon or terminate this Plan, in whole or in part, except that no such amendment, abandonment or termination shall adversely affect the rights of, or the benefits payable to, any Participant under the Plan unless such amendment, abandonment or termination is agreed to in a writing signed by the Participant and the Corporation. Notwithstanding the foregoing, the Committee may modify the Plan at any time without the Participants' consent to comply with the requirements of Section 409A of the Code and any other rule, regulation, or statute, as determined by the Committee in its sole and absolute discretion.

13. Successors. The Corporation shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of its business and/or assets to assume expressly and agree to perform this Plan in the same manner and to the

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same extent that the Corporation would be required to perform them if no such succession had taken place.

14. Interpretation of the Plan. The Committee shall have sole and absolute authority to interpret and construe the terms of this Plan. Any interpretations, rules, decisions, or constructions by the Committee shall be final and binding on all Participants.

15. Tax Treatment. The Participant shall be solely responsible for tax consequences of any payment under the Plan. It is intended that the payments and benefits provided under the Plan shall either be exempt from the application of, or comply with, the requirements of Section 409A of the Code. The Plan shall be construed in a manner that effects such intent. Nevertheless, the tax treatment of the benefits provided under the Plan is not warranted or guaranteed. Neither the Corporation nor its respective directors, officers, employees or advisers (other than in his or her capacity as a Participant) shall be held liable for any taxes, interest, penalties or other monetary amounts owed by any Participant or other taxpayer as a result of the Plan.

Notwithstanding anything in the Plan to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code (“Non-Exempt Deferred Compensation”) would otherwise be payable or distributable under the Plan by reason of the occurrence of the Participant’s termination of employment, such Non-Exempt Deferred Compensation will not be payable or distributable to the Participant by reason of such circumstance unless the circumstances giving rise to such termination of employment meet any description or definition of “separation from service” in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition). If this provision prevents the payment or distribution of any Non-Exempt Deferred Compensation, such payment or distribution shall be made on the date, if any, on which an event occurs that constitutes a Section 409A-compliant “separation from service.” Each payment of Severance Benefits pursuant to this Plan shall be considered a separate payment, as described in Treas. Reg. Section 1.409A-2(b)(2), for purposes of Section 409A of the Code.

Whenever in this Plan a payment or benefit is conditioned on the Participant’s execution of a Separation Agreement, the Separation Agreement must be executed and all revocation periods shall have expired in accordance with terms set forth therein, but in no case later than sixty (60) days after the date of the Qualified Termination of Employment; failing which such payment or benefit shall be forfeited. If such payment or benefit constitutes Non-Exempt Deferred Compensation, then such payment or benefit (including any installment payments) that would have otherwise been payable during such 60-day period shall be accumulated and paid on the 60th day after the date of the Qualified Termination of Employment provided such release shall have been executed and such revocation periods shall have expired. If such payment or benefit is exempt from Section 409A of the Code, the Corporation may elect to make or commence payment at any time during such 60-day period.

17. Indemnification. If litigation shall be brought by a Participant to enforce any provision contained in this Plan and at least one claim in such litigation is adjudicated in the Participant’s favor, the Corporation hereby agrees to indemnify the Participant for the Participant’s reasonable attorney's fees and disbursements incurred in such litigation, and hereby agrees to pay prejudgment interest on any money judgment obtained by the Participant calculated at Citibank's (or any successor entity) prime rate of interest in effect from time to time from the date that payment(s) to the Participant should have been made under this Plan. The reimbursement of an attorney's fees and disbursements incurred in such litigation will be made on or before the last day of the calendar year following the calendar year in which the expense was incurred.

18. Payment Obligations Absolute. The Corporation's obligation to pay a Participant the Severance Benefits provided in this Plan shall be absolute and unconditional and shall not be affected by any circumstances, including without limitation, any set-off, counterclaim, recoupment, defense or other right which the Corporation may have against the Participant or anyone else. All amounts payable by the Corporation hereunder shall be paid without notice or demand.

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19. Effective Date. This Plan became effective on November 1, 2014, was amended and restated on October 26, 2016, and was further amended and restated on October 25, 2017, October 27, 2020, March 4, 2022 and February 14, 2023.

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Exhibit A

AVANOS MEDICAL, INC.

Executive Severance Plan

As of February 14, 2023

List of Participants

Name	Type of Participant
Joseph Woody	Chief Executive Officer
Michael Greiner	Executive Participant
Mojirade James	Executive Participant
Lee Burnes	Executive Participant
Michelle Scharfenberg	Executive Participant
Bill Haydon	Executive Participant
Kerr Holbrook	Executive Participant

Exhibit B

AVANOS MEDICAL, INC.

SEPARATION AGREEMENT AND

FULL AND FINAL RELEASE OF CLAIMS

This Separation Agreement and Full and Final Release of Claims (“Agreement”) is made and entered into between _____________ (“Executive”) and Avanos Medical, Inc., a Delaware corporation (the “Corporation”)

1. SEPARATION FROM EMPLOYMENT. Executive’s employment is being terminated and Executive’s last day on the payroll is ______, 20__ (the “Separation Date”).

2. SEVERANCE PLAN. Executive agrees and understands that the consideration described in Paragraph 2 of this Agreement is provided through the Avanos Medical, Inc. Amended and Restated Executive Severance Plan (the “Plan”), which also requires the execution of this Agreement as a condition to the payment of benefits under the Plan.

3. CONSIDERATION. In consideration of Executive’s decision to enter into this Agreement, following the Corporation’s receipt of this Agreement executed by the Executive and the expiration of the seven (7) day period within which the Executive may revoke Executive’s acceptance of this Agreement as explained below (and provided Executive has not exercised such right of revocation), the Corporation will provide Executive with the following:

(a)A lump sum separation payment in the aggregate amount of $____, less ordinary tax withholding and all required deductions, which amount is the sum of (i) $____ in satisfaction of the severance payment pursuant to Section 5(a) of the Plan, (ii) $____ in satisfaction of the prorated final year bonus pursuant to Section 5(b) of the Plan, (iii) $____ in satisfaction of the retirement plan benefits pursuant to Section 5(d) of the Plan, and (iv) $____ in satisfaction of the medical and dental benefits pursuant to Section 5(e) of the Plan.

(b)Any outstanding and unvested stock options held by Executive shall be fully vested and exercisable, and Executive’s termination of employment shall be treated as a retirement for purposes of exercising the stock options under the terms of the relevant equity incentive plans and award agreements. [NOTE: this applies only with respect to stock options that are outstanding on both the Relevant Date (as defined in the Plan) and immediately before the Executive’s termination of employment.]

(c)Any outstanding and unvested time-based restricted share units and/or performance-based restricted share units held by Executive shall be fully vested, with any performance-based restricted share unit being deemed earned at the target level. [NOTE: this applies only with respect to RSUs that are outstanding on both the Relevant Date as defined in the Plan) and immediately before the Executive’s termination of employment.]

Executive further acknowledges that tax withholdings may be applied to the above payments as determined by the Corporation in its sole discretion. Executive agrees that, except for the amounts withheld, Executive shall be fully responsible for paying any taxes, interest, penalties, or other amounts due on the above payments and the Corporation makes no representation as to the tax treatment of any consideration under this Agreement. All above payments will be made

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as soon as administratively feasible after the Separation Date or the date this Agreement becomes final and binding, whichever is later.

4. VACATION PAY. Whether or not Executive executes this Agreement, Executive will be paid for any unused vacation due to Executive according to the Corporation’s vacation policy currently in effect and as required by law.

5. FULL AND FINAL RELEASE. In consideration of the payments being provided to Executive above, Executive, for Executive, Executive’s attorneys, heirs, executors, administrators, successors and assigns, fully, finally and forever releases and discharges the Corporation, all parent, subsidiary, related and affiliated companies, as well as its and their successors, assigns, officers, owners, directors, agents, representatives, attorneys, and employees (all of whom are referred to throughout this Agreement as the “Released Parties”), of and from all claims, demands, actions, causes of action, suits, damages, losses, and expenses, whether known or unknown, of any and every nature whatsoever, as a result of actions or omissions occurring through the execution date of this Agreement. Specifically included in this waiver and release are, among other things, any and all claims of alleged employment discrimination, either as a result of the separation of Executive’s employment or otherwise, any claims under any severance pay plan of the Released Parties, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, the Family and Medical Leave Act (FMLA), the Americans with Disabilities Act, the Worker Adjustment and Retraining Notification (WARN) Act, the Uniformed Services Employment and Reemployment Rights Act (USERRA), the Ledbetter Fair Pay Act, the Genetic Information Nondiscrimination Act of 2008, the Internal Revenue Code (IRC), the US tax code, the Employee Retirement Income Security Act (ERISA), any other federal, state or local statute, rule, ordinance, or regulation, as well as any claims for alleged wrongful discharge, negligent or intentional infliction of emotional distress, breach of contract, fraud, defamation, or any other unlawful behavior, the existence of which is specifically denied by the Released Parties.

Executive hereby expressly waives all rights Executive might have under any laws including, without limitation, Section 1542 of the Civil Code of the State of California, which states as follows:

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by Executive must have materially affected his or her settlement with the debtor.

Thus, notwithstanding the provisions of any law, including without limitation, Section 1542 of the Civil Code of the State of California, and for the purpose of implementing a full and complete release and discharge of the Released Parties, Executive expressly acknowledges that this Agreement is intended to include in its effect, without limitation, all claims that Executive does not know or suspect to exist in Executive’s favor at the time Executive executes this Agreement, and that this Agreement contemplates the extinguishment of any such claims.

The above release does not waive any rights or claims that (a) may arise after the date on which Executive executes this Agreement; (b) cannot lawfully be released under applicable law, including, but not limited to, unemployment benefits and workers’ compensation claims, (c) constitute an award to Executive from or by a government agency for providing information. In addition, nothing in this Agreement is intended to waive any vested right that Executive may have with respect to any pension or other retirement benefits to which Executive is entitled by virtue of Executive’s employment with the Corporation, and nothing in this Agreement shall prohibit Executive from enforcing such rights.

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6. NON-INTERFERENCE. Nothing in this Agreement shall be construed to prohibit Executive from filing a charge or participating in any investigation or proceeding before any federal, state or local agency or commission including, but not limited to, the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, and the Securities and Exchange Commission (collectively, “Government Agencies”). In addition, nothing in this Agreement shall limit Executive’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Agreement does not limit Executive’s right to receive an award for information provided to any Government Agencies regarding any violation of any Securities and Exchange Commission regulation or financial fraud or misconduct. Notwithstanding the foregoing, to the maximum extent permitted by law, Executive waives Executive’s right to recover damages as a result of any charge or lawsuit filed by Executive or by anyone else on Executive’s behalf, including a class or collective action, whether or not Executive is named in such proceeding. Furthermore, Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (1) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, in each case, solely for the purpose of reporting or investigating a suspected violation of law or (2) in a complaint or other document filed in a lawsuit or proceeding, if such filings are made under seal.

7. NO OTHER CLAIMS. Executive understands that Executive is releasing claims about which Executive may not know anything at the time Executive executes this Agreement. Executive represents and warrants that Executive has (a) filed no claims, lawsuits, charges, grievances, or causes of action of any kind against the Released Parties and, to the best of the Executive’s knowledge, Executive possesses no such claims (including Fair Labor Standards Act (“FLSA”) and worker’s compensation claims) that Executive has not already disclosed to the Released Parties; (b) received any and all compensation (including overtime compensation), meal periods, and rest periods to which Executive may have been entitled, and Executive is not currently aware of any facts or circumstances constituting a violation by the Released Parties of the FLSA or other applicable wage, hour, meal period, and/or rest period laws that Executive has not already disclosed to the Released Parties; and (c) not suffered any work-related injury or illness within the twelve (12) months preceding Executive’s execution of this Agreement, and Executive is not currently aware of any facts or circumstances that would give rise to a worker’s compensation claim against the Released Parties that Executive has not already disclosed to the Released Parties.

8. DUTY TO COOPERATE. Executive agrees to be available on a reasonable basis to assist the Released Parties with any investigation, claim, suit, or other proceeding that is pending or threatened by or against the Released Parties. Executive further agrees to promptly inform the Corporation’s General Counsel if Executive is requested to: (a) testify in connection with or otherwise become involved in any claim against the Released Parties; or (b) assist with or participate in any investigation of the Released Parties. The Corporation’s General Counsel may be contacted via mail at the following address: General Counsel, Avanos Medical, Inc., 5405 Windward Parkway, Alpharetta, Georgia 30004.

9. RESTRICTIVE COVENANTS. Executive acknowledges and agrees that he or she has received good and valuable consideration for entering into this Agreement. Executive acknowledges and agrees that he or she has been provided and entrusted with Confidential Information (as that term is defined below), including highly confidential customer information that is subject to extensive measures to maintain its secrecy within the Corporation, is not known in the trade or disclosed to the public, and would materially harm the Corporation’s legitimate business interests if it was disclosed or used in violation of this Agreement. Executive also acknowledges and agrees that he or she has been provided and entrusted with access to the

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Corporation’s customer and employee relationships and goodwill. Executive further acknowledges and agrees that the Corporation’s Confidential Information, customer and employee relationships, and goodwill are valuable assets of the Corporation and are legitimate business interests that are properly subject to protection through the covenants contained in this Agreement.

(i) Potential Unfair Competition. Executive acknowledges and agrees that as a result of his or her employment with the Corporation, his or her knowledge of and access to Confidential Information, and his or her relationships with the Corporation’s customers and employees, Executive would have an unfair competitive advantage if Executive were to engage in activities in violation of this Agreement.

(ii) No Undue Hardship. Executive acknowledges and agrees that he or she possesses marketable skills and abilities that will enable him or her to find suitable employment without violating the covenants set forth in this Agreement.

(iii) Voluntary Execution. Executive acknowledges and affirms that he or she is executing this Agreement voluntarily, that he or she has read this Agreement carefully and had a full and reasonable opportunity to consider this Agreement (including an opportunity to consult with legal counsel), and that he or she has not been pressured or in any way coerced, threatened or intimidated into signing this Agreement.

(iv) Restriction on Disclosure and Use of Confidential Information. Executive agrees that Executive shall not, directly or indirectly, use any Confidential Information on Executive’s own behalf or on behalf of any Person other than the Corporation, or reveal, divulge, or disclose any Confidential Information to any Person not expressly authorized by the Corporation to receive such Confidential Information. This obligation shall remain in effect for as long as the information or materials in question retain their status as Confidential Information. Executive further agrees that he or she shall fully cooperate with the Corporation in maintaining the Confidential Information to the extent permitted by law. The parties acknowledge and agree that this Agreement is not intended to, and does not, alter either the Corporation’s rights or Executive’s obligations under any state or federal statutory or common law regarding trade secrets and unfair trade practices. Anything herein to the contrary notwithstanding, Executive shall not be restricted from disclosing information that is required to be disclosed by law, court order or other valid and appropriate legal process; provided, however, that in the event such disclosure is required by law, Executive shall provide the Corporation with prompt notice of such requirement so that the Corporation may seek an appropriate protective order prior to any such required disclosure by Executive.

For purposes of this Agreement, “Confidential Information” means any and all data and information relating to the Corporation, its activities, business, or clients that (i) was disclosed to Executive or of which Executive became aware as a consequence of his or her employment with the Corporation; (ii) has value to the Corporation; and (iii) is not generally known outside of the Corporation. “Confidential Information” shall include, but is not limited to the following types of information regarding, related to, or concerning the Corporation: trade secrets; financial plans and data; management planning information; business plans; operational methods; market studies; marketing plans or strategies; pricing information; product development techniques or plans; customer lists; customer files, data and financial information; details of customer contracts; current and anticipated customer requirements; identifying and other information pertaining to business referral sources; past, current and planned research and development; computer aided systems, software, strategies and programs; business acquisition plans; management organization and related information (including, without limitation, data and

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other information concerning the compensation and benefits paid to officers, directors, employees and management); personnel and compensation policies; new personnel acquisition plans; and other similar information. “Confidential Information” also includes combinations of information or materials which individually may be generally known outside of the Corporation, but for which the nature, method, or procedure for combining such information or materials is not generally known outside of the Corporation. In addition to data and information relating to the Corporation, “Confidential Information” also includes any and all data and information relating to or concerning a third party that otherwise meets the definition set forth above, that was provided or made available to the Corporation by such third party, and that the Corporation has a duty or obligation to keep confidential. This definition shall not limit any definition of “confidential information” or any equivalent term under state or federal law. “Confidential Information” shall not include information that has become generally available to the public by the act of one who has the right to disclose such information without violating any right or privilege of the Corporation.

(v) Non-Solicitation of Protected Customers. Executive agrees that during the two (2) year period following the Separation Date, he or she shall not, without the prior written consent of the Corporation, directly or indirectly, on his or her own behalf or as a principal, owner, employee, representative or agent of any Person, solicit, divert, take away, or attempt to solicit, divert, or take away a Protected Customer for the purpose of engaging in, providing, or selling any activities, products, or services of the type conducted, authorized, offered, or provided by the Corporation as of the Separation Date, or during the two (2) years immediately prior to such date.

For purposes of this Agreement, “Protected Customer” means any person or entity to whom the Corporation has sold its products or services or actively solicited to sell its products or services, and with whom Executive has had Material Contact on behalf of the Corporation during his or her employment with the Corporation, and “Material Contact” means contact between Executive and a customer or potential customer of the Corporation (i) with whom or which Executive had dealings on behalf of the Corporation; (ii) whose dealings with the Corporation were coordinated or supervised by Executive; (iii) about whom Executive obtained Confidential Information in the ordinary course of business as a result of his or her employment with the Corporation; or (iv) who receives products or services of the Corporation, the sale or provision of which results or resulted in compensation, commissions, or earnings for Executive within the two (2) years prior to the Separation Date.

(vi) Non-Recruitment of Employees. Executive agrees that during the two (2) year period following the Separation Date, he or she shall not, without the prior written consent of the Corporation, directly or indirectly, whether on his or her own behalf or as a principal, owner, employee, representative or agent of any person or entity, solicit or induce or attempt to solicit or induce any employee of the Corporation to terminate his or her employment relationship with the Corporation or to enter into employment with Executive or any other person or entity.

(vii) Rights and Remedies Upon Breach. The parties specifically acknowledge and agree that the remedy at law for any breach of the covenants provided in this Section 9 (the “Restrictive Covenants”) will be inadequate, and that in the event Executive breaches, or threatens to breach, any of the Restrictive Covenants, the Corporation shall have the right and remedy, without the necessity of proving actual damage or posting any bond, to enjoin, preliminarily and permanently, Executive from violating or threatening to violate the Restrictive Covenants and to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach or

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threatened breach of the Restrictive Covenants would cause irreparable injury to the Corporation and that money damages would not provide an adequate remedy to the Corporation. Executive understands and agrees that if he or she violates any of the obligations set forth in the Restrictive Covenants, the period of restriction applicable to each obligation violated shall cease to run during the pendency of any litigation over such violation, provided that such litigation was initiated during the period of restriction. Such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Corporation at law or in equity. Executive understands and agrees that, if the parties become involved in legal action regarding the enforcement of the Restrictive Covenants and if the Corporation prevails in such legal action, the Corporation will be entitled, in addition to any other remedy, to recover from Executive its reasonable costs and attorneys’ fees incurred in enforcing such covenants. The Corporation’s ability to enforce its rights under the Restrictive Covenants or applicable law against Executive shall not be impaired in any way by the existence of a claim or cause of action on the part of Executive based on, or arising out of, this Agreement or any other event or transaction.

(viii) Severability and Modification of Covenants. Executive acknowledges and agrees that each of the Restrictive Covenants is reasonable and valid in time and scope and in all other respects. The parties agree that it is their intention that the Restrictive Covenants be enforced in accordance with their terms to the maximum extent permitted by law. Each of the Restrictive Covenants shall be considered and construed as a separate and independent covenant. Should any part or provision of any of the Restrictive Covenants be held invalid, void, or unenforceable, such invalidity, voidness, or unenforceability shall not render invalid, void, or unenforceable any other part or provision of this Agreement or such Restrictive Covenant. If any of the provisions of the Restrictive Covenants should ever be held by a court of competent jurisdiction to exceed the scope permitted by the applicable law, such provision or provisions shall be automatically modified to such lesser scope as such court may deem just and proper for the reasonable protection of the Corporation’s legitimate business interests and may be enforced by the Corporation to that extent in the manner described above and all other provisions of this Agreement shall be valid and enforceable.

10. NON-DISPARAGEMENT. Executive agrees that Executive has not and will not (including during the time period while this Agreement was under consideration by Executive) make any defamatory or maliciously disparaging statements about the Released Parties, the Released Parties’ products or services, or the Released Parties’ representatives or employees to current, former or prospective customers or suppliers, to the media, or to other members of the public. Nothing in this Agreement shall be deemed to preclude Executive from providing truthful testimony or information pursuant to subpoena, court order, or similar legal process, or from providing truthful information to government or regulatory agencies.

11. NON-ADMISSION OF LIABILITY OR WRONGFUL CONDUCT. This Agreement shall not be construed as an admission by the Released Parties of any liability or acts of wrongdoing or discrimination, nor shall it be considered to be evidence of such liability, wrongdoing, or discrimination.

12. TERMINATION OF EMPLOYMENT RELATIONSHIP. Except as set forth above, Executive and the Released Parties agree as a matter of intent that, except for vested benefits under any pension, 401(k) plan or other benefit plan provided by the Released Parties unless otherwise provided, this Agreement terminates all aspects of the employment relationship between them.

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13. CONFIDENTIALITY. The nature and terms of this Agreement are strictly confidential and they have not been and shall not be disclosed by Executive at any time to any person other than Executive’s lawyer, Executive’s accountant, Executive’s immediate family, or the Securities and Exchange Commission without the prior written consent of an officer of the Corporation, except as necessary in any legal proceedings directly related to the provisions and terms of this Agreement, to prepare and file income tax forms, or pursuant to court order after reasonable notice to the Corporation.

14. RETURN OF COMPANY PROPERTY. Executive understands and agrees that all Company Information and Business ideas (as defined in the Confidentiality, Nonsolicitation and Assignment of Business Ideas Agreement) is the exclusive property of the Corporation and that Executive has no rights in or to the Company Information upon the termination of employment. Executive represents that Executive has delivered to the Company:

(a) all originals and electronic and paper copies of all documents and records that may contain Company Information, regardless of where such documents and records are stored including, but not limited to, on USB drives, external hard drives, and/or any cloud-based storage (for which Executive provided any necessary passwords);

(b) property of any nature that relates to Company Information or Business Ideas, including, but not limited to, business activities, customers or prospective customers of the Corporation, whether prepared by Executive or others; and

(c) property of any nature whatsoever that was in Executive’s possession, custody or control, and that is the property of the Corporation (e.g., cellular phones, credit cards, computer or other equipment)

Executive further represents that, after returning any electronic copies of documents, records or data to the Corporation, Executive has deleted any remaining electronic versions from personal electronic devices (e.g., personal computers, phones, tablets).

Executive has provided to the Corporation a signed declaration stating that all Company Information, documents, data and other property has been returned and all Company Information and electronic data has been deleted from personal electronic devises (e.g., personal computers, phones, tablets).

15. CHOICE OF FORUM AND GOVERNING LAW. This Agreement shall be governed and construed as to both substantive and procedural matters in accordance with the laws of the State of Georgia, without regard to the conflict of laws principles thereof. Executive agrees that any claim or dispute Executive may have against the Corporation or the Released Parties that is released by, or relates to the enforceability of, this Agreement must be resolved by a court located in Fulton County, Georgia. Executive agrees to submit to personal jurisdiction and venue in the Superior Court of Fulton County, State of Georgia for the purpose of litigating all such claims or disputes.

16. SEVERABILITY. The provisions of this Agreement are severable, and if any part of this Agreement is found by a court of law to be unenforceable, the remainder of the Agreement will continue to be valid and effective.

17. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement between Executive and the Corporation. Any prior agreements between or directly involving Executive and any of the Released Parties are superseded by the terms of this Agreement and thus are rendered null and void with the exception of any noncompetition, confidentiality,

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nonsolicitation and/or assignment of business ideas agreements or any prior agreements between the parties related to inventions, business ideas, and confidentiality of corporate information, which remain intact, including, but not limited to, those provided to Executive with this Agreement.

18. NO OTHER PROMISES. Executive affirms that the only consideration for Executive signing this Agreement is that set forth in Paragraph 2, that no other promise or agreement of any kind has been made to or with Executive by any person or entity to cause Executive to execute this document, and that Executive fully understands the meaning and intent of this Agreement, including but not limited to, its final and binding effect.

19. REVIEW AND REVOCATION PERIODS. Executive acknowledges that Executive is hereby advised to consult with an attorney before signing this Agreement. Executive further acknowledges that Executive has been given [CHOOSE, depending on age of employee and whether part of group termination program:] twenty-one (21) or forty-five (45) days from the time that Executive receives this Agreement to consider whether to sign it. If Executive has signed this Agreement before the end of this [CHOOSE:] twenty-one (21) or forty-five (45) day period, it is because Executive freely chose to do so after carefully considering its terms. Finally, Executive shall have seven (7) days from the date Executive signs this Agreement to revoke this Agreement by delivering written notice within the seven (7) day period to the following Corporation contact:

General Counsel

Avanos Medical, Inc.

5405 Windward Parkway

Alpharetta, Georgia 30004

If Executive does not revoke this Agreement, this Agreement will become effective and irrevocable by Executive on the eighth day after Executive has executed it. If Executive elects not to sign this Agreement within [CHOOSE:] twenty-one (21) or forty-five (45) days from the date that Executive receives this Agreement or if the Executive revokes the Agreement during the foregoing applicable revocation period, this Agreement shall not become effective and the offer to enter into this Agreement shall terminate and expire automatically.

[DELETE PARAGRAPH 20 AND RENUMBER PARAGRAPH 21 & 22 UNLESS EMPLOYEE IS AGE 40+ AND PART OF GROUP TERMINATION PROGRAM]

20. REDUCTION-IN-FORCE. Pursuant to the Age Discrimination in Employment Act, additional information regarding the employment termination program that resulted in Executive’s separation is contained in Exhibit A.

21. LEGALLY BINDING AGREEMENT. Executive understands and acknowledges that this Agreement is final and binding following the seven (7) day revocation period provided in this Agreement.

22. REPRESENTATION AND WARRANTY OF UNDERSTANDING. By signing below, Executive represents and warrants that Executive: (a) has carefully read and understands the terms of this Agreement; (b) is entering into this Agreement knowingly, voluntarily and of Executive’s own free will; and (c) understands its terms and significance and intends to abide by its provisions without exception.

Date:

Executive Name

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AVANOS MEDICAL, INC.

Date: By:

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Document

Exhibit 31(a)

CERTIFICATIONS

I, Joseph F. Woody, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Avanos Medical, Inc. (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2023	/s/ Joseph F. Woody
	Joseph F. Woody<br>Chief Executive Officer (Principal Executive Officer)

Document

Exhibit 31(b)

CERTIFICATIONS

I, Michael C. Greiner, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Avanos Medical, Inc. (the “registrant”);

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2023	/s/ Michael C. Greiner
	Michael C. Greiner<br>Senior Vice President, Chief Financial Officer and Chief Transformation Officer (Principal Financial Officer)

Document

Exhibit 32(a)

Certification of Chief Executive Officer

Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code

I, Joseph F. Woody, Chief Executive Officer of Avanos Medical, Inc., certify that, to my knowledge:

(1)the Form 10-Q, filed with the Securities and Exchange Commission on May 3, 2023 (“accompanied report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)the information contained in the accompanied report fairly presents, in all material respects, the financial condition and results of operations of Avanos Medical, Inc.

Date: May 3, 2023	/s/ Joseph F. Woody
	Joseph F. Woody<br>Chief Executive Officer (Principal Executive Officer)

Document

Exhibit 32(b)

Certification of Chief Financial Officer

Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code

I, Michael C. Greiner, Chief Financial Officer of Avanos Medical, Inc., certify that, to my knowledge:

(2)the information contained in the accompanied report fairly presents, in all material respects, the financial condition and results of operations of Avanos Medical, Inc.

Date: May 3, 2023	/s/ Michael C. Greiner
	Michael C. Greiner<br>Senior Vice President, Chief Financial Officer and Chief Transformation Officer (Principal Financial Officer)

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 001-36440

AVANOS MEDICAL, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (844) 428-2667

Securities registered pursuant to Section 12(b) of the Act:Title of each classTrading SymbolName of exchange on which registeredCommon Stock - $0.01 Par ValueAVNSNew York Stock Exchange

Table of Contents

PART I – FINANCIAL INFORMATION

AVANOS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

AVANOS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

AVANOS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

AVANOS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

AVANOS MEDICAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED CASH FLOW STATEMENTS

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

AVANOS MEDICAL, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Background and Basis of Presentation

Interim Financial Statements

Use of Estimates

Recently Adopted Accounting Pronouncements

Change in Accounting Principle

Transformation Process

Restructuring Liability

Accounts Receivable

Inventories

Property, Plant and Equipment

Goodwill and Intangible Assets

Accrued Expenses

Other Long-Term Liabilities

Debt Payments

Legal Matters

Government Investigation

Patent Litigation

General

Environmental Compliance

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Use of Non-GAAP Measures

Change in Accounting Principle

Net Sales

Product Category Descriptions

Net Sales

Net Sales by Geographic Region

Gross Profit (in millions)

Research and Development (in millions)

Selling and General Expenses (in millions)

Other Expense, net (in millions)

Operating Profit (in millions)

Adjusted Operating Profit

Interest Expense

Income Taxes

General

Long-Term Debt

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Item 4. Controls and Procedures

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

Recent events in the banking industry and the associated macroeconomic impacts may have a material adverse effect on our business operations, financial condition, results of operations and cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Item 3. Defaults Upon Senior Securities

Item 4. Mine Safety Disclosures

Item 5. Other Information

Item 6. Exhibits

For the transition period from to