Item 2.05 Costs Associated with Exit or Disposal Activities.
On January 10, 2023, Avanos Medical, Inc. (the "Company") approved a three-year
transformation process (the "Transformation Process") pursuant to which the
Company plans to: (i) combine its Chronic Care and Pain franchises into a single
commercial organization focused on the Digestive Health and Orthopedic Pain &
Recovery product categories; (ii) exit certain low-margin, low-growth product
categories, including 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.
As part of the Transformation Process, Kerr W. Holbrook, currently the Company's
Senior Vice President and General Manager, Chronic Care, has been appointed to
the position of Senior Vice President and Chief Commercial Officer. In that
position, Mr. Holbrook will be responsible for executing on the commercial
aspects of the Transformation Process. In addition, Michael C. Greiner, the
Company's Senior Vice President and Chief Financial Officer, will assume the
additional role of Chief Transformation Officer. As a result of the combination
of the Chronic Care and Pain franchises into a single commercial organization,
the position of Senior Vice President and General Manager, Pain Franchise,
currently held by William D. Haydon, will be eliminated.
Other than the costs associated with the termination of Mr. Haydon's employment,
which are described in Item 5.02 of this Current Report and incorporated herein
by reference, the Company is currently unable in good faith to estimate: (i) the
total amount or range of amounts expected to be incurred in connection with each
major type of cost associated with the Transformation Process; (ii) the total
amount or range of amounts expected to be incurred in connection with the
Transformation Process; or (iii) the amount or range of amounts of the charge
that will result in future cash expenditures related to the Transformation
Process. The Company will file an amended Current Report on Form 8-K within four
business days after it makes a determination of such an estimate or range of
estimates.
Note Regarding Forward-Looking Statements
This Current Report contains "forward-looking statements" within the meaning of
the federal securities laws that are intended to qualify for the Safe Harbor
from liability established by the Private Securities Litigation Reform Act of
1995. "Forward-looking statements" generally can be identified by the use of
forward-looking terminology such as "plans," "will," "expect" (or the negative
or other derivatives of each of these terms) or similar terminology. The
"forward-looking statements" include statements regarding the expected
Transformation Process and the impact and timing of the Transformation Process.
These statements represent the Company's expectations and beliefs and involve a
number of known and unknown risks, uncertainties and other factors that may
cause actual results to differ materially from those expressed or implied by
such forward-looking statements. These factors include, among others, general
economic and business conditions, and other risks set forth in Item 1A - "Risk
Factors" in the Company's Annual Report on Form 10-K for the year ended December
31, 2021 and in its most recent Quarterly Reports on Form 10-Q. You are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this Current Report. Except to the extent required
by applicable law, the Company undertakes no obligation to update any
forward-looking statement contained in this Current Report, whether as a result
of new information, future events, or otherwise.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On January 10, 2023, the Company and William D. Haydon, the Company's Senior
Vice President and General Manager, Pain Franchise, entered into a Severance and
Separation Agreement (the "Severance and Separation Agreement") pursuant to
which: (i) Mr. Haydon's employment with the Company will terminate effective
March 31, 2023 (the "Separation Date"); (ii) the Company will, within 60 days
following the Separation Date, pay Mr. Haydon a one-time lump sum cash severance
payment equal to $972,000; (iii) the Company will pay 100% of Mr. Haydon's
monthly COBRA premiums for a period of 12 months following the Separation Date;
(iv) the Company will provide Mr. Haydon with outplacement services for a period
of six months following the Separation Date; and (v) Mr. Haydon will be eligible
to receive a bonus (the "Transition Incentive Bonus") of up to $300,000 based on
the extent to which he meets certain performance metrics prior to the Separation
Date, as determined in the Company's sole discretion. The Transition Incentive
Bonus will be paid as soon as practicable after the Separation Date, but in no
event later than May 31, 2023. Mr. Haydon's eligibility to receive the benefits
described above is conditioned on: (i) his continuing to perform his assigned
duties and responsibilities in a satisfactory fashion through the Separation
Date, and (ii) his execution of a general release in favor of the Company and
its directors, officers, employees and affiliates.
Item 7.01 Regulation FD Disclosure.
On January 11, 2023, the Company will present and discuss during the JP Morgan
Healthcare Conference the slide presentation furnished herewith as Exhibit 99.1
to this Current Report and incorporated herein by reference.
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On January 11, 2023, the Company issued a press release announcing the
appointment of Mr. Holbrook to the position of Senior Vice President and Chief
Commercial Officer and the appointment of Mr. Greiner to the additional role of
Chief Transformation Officer. A copy of such press release is furnished as
Exhibit 99.2 to this Current Report and is incorporated herein by reference.
The information furnished pursuant to Item 7.01 of this Current Report,
including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
otherwise subject to the liabilities of that Section. The information in Item
7.01 of this Current Report, including Exhibit 99.1, shall not be incorporated
by reference into any registration statement or other document pursuant to the
Securities Act of 1933, as amended, or the Exchange Act, except as otherwise
expressly stated in such filing.
Item 9.01 Financial Statements and Exhibits
(d)Exhibits.
Exhibit No. Description
Presentation dated January 11, 2023 delivered to JP Morgan Healthcare
99.1 Conference
99.2 Press release issued by Avanos Medical, Inc. on January 11, 2023
104 Cover Page Interactive Data File (embedded within the inline XBRL document)
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