What Avanos Medical, Inc. told the SEC could break it.

For quality assurance and cost effectiveness, Avanos buys certain components and raw materials from sole suppliers, and because the FDA and other regulators govern how its products are manufactured, it may not be able to quickly establish replacement sources; loss of a sole supplier or a sustained supply interruption could materially harm its ability to manufacture and deliver products.

“for quality assurance or cost effectiveness, we purchase from sole suppliers certain components and raw materials. Although there are other sources in the market place for these items, we may not be able to quickly establish additional or replacement sources for certain components or materials due to regulations and requirements of the FDA and other regulatory authorities regarding the manufacture of our products.”

Avanos sells largely through third-party wholesale distributors — ~49% of North American net sales in 2025 — and is concentrated in a few large ones: Medline Industries was ~12% of consolidated net sales in 2025, and Medline plus McKesson were ~17% and ~18% respectively in 2024; loss of, or pricing pressure from, a major distributor would materially affect revenue. (Medline and McKesson captured as named distribution edges; this records the aggregate channel concentration.)

“Globally, one customer accounted for 10 % or more of our consolidated net sales in the year ended December 31, 2025 and two customers accounted for 10 % or more of our consolidated net sales in the years ended December 31, 2024 and 2023.”

Most of Avanos's manufacturing facilities are located in Mexico (with a facility in Canada and contract manufacturers abroad), and it sources many raw materials and components from foreign suppliers including China and Mexico; this concentrates operational, political and currency risk — its FX exposure is heightened by the Mexico manufacturing concentration (peso/USD) — and exposes it to disruptions from issues like U.S.-Mexico relations.

“Our exposure to currency exchange rate fluctuations is heightened due to the concentration of our manufacturing operations in Mexico.”

Because most of its manufacturing is in Mexico/Canada and it sources raw materials from China and Mexico, Avanos is directly exposed to the new U.S. tariffs imposed since February 2025 and any retaliatory tariffs or trade restrictions by other countries, which could raise its costs and disrupt its cross-border supply chain and product delivery.

“The tariffs imposed to date, and the imposition of new or additional tariffs by the United States, along with retaliatory tariffs and other trade restrictions imposed by other countries, could have a material adverse effect on our business, financial condition, results of operations and cash flows.”