Avanos Medical, a prominent player in the specialty medical technology sector, has entered into a definitive agreement to be acquired by the private equity firm American Industrial Partners (AIP), marking a significant shift in the company’s corporate trajectory as it moves from the public markets into a private ownership structure. The deal comes at a pivotal moment for Avanos, which has spent several years aggressively streamlining its portfolio and narrowing its clinical focus to better compete with industry giants such as Medtronic, Boston Scientific, and Stryker. Under the terms of the agreement, the acquisition is intended to provide Avanos with the enhanced financial flexibility and operational resources necessary to accelerate its innovation roadmap and reach its ambitious long-term revenue targets.
The transition to private ownership follows a year of substantial change under the leadership of Chief Executive Officer David Pacitti, who took the helm approximately one year ago. In a recent communication to employees, Pacitti emphasized that the partnership with AIP is a deliberate step toward becoming a more focused medical technology organization, leaning into specific healthcare categories where the company can deliver the most significant clinical value. The move is reflective of a broader trend within the medical device industry, where established companies are increasingly seeking private equity backing to execute complex turnarounds or growth strategies away from the scrutiny and short-term pressures of public quarterly reporting.
Financial Performance and the Path to One Billion Dollars
The acquisition announcement coincides with the release of Avanos Medical’s financial results for the 2025 fiscal year, which provide a clear picture of the company’s current standing and its trajectory. For the full year 2025, Avanos reported net sales of $701.2 million, representing a 1.9% increase over the previous year. While the overall growth rate appears modest, a deeper dive into the segments reveals a stark contrast between the company’s core business units and the strategic logic behind its recent divestitures.
The Specialty Nutrition Systems business remains the primary engine of growth for Avanos. This division, which specializes in enteral, neonatal, and pediatric feeding products—including the well-known MIC-KEY enteral feeding tubes—generated $432.9 million in net sales last year. More importantly, it achieved a robust growth rate of 9.2%, significantly outpacing the company’s other divisions. In contrast, the Pain Management segment, which includes various interventional pain solutions, generated $237.8 million in net sales but grew by only 1.5% during the same period.
Despite the varying performance across segments, the executive leadership remains optimistic about the company’s long-term potential. Pacitti informed employees that Avanos is currently on track to reach a revenue milestone of $1 billion by the year 2030. For the upcoming 2026 fiscal year, the company has issued guidance forecasting net sales between $700 million and $720 million. The acquisition by AIP is viewed as a catalyst that could potentially shorten the timeline to the $1 billion mark by allowing for more aggressive investment in high-growth areas like specialty nutrition and medication delivery.
A Chronology of Strategic Realignment
The decision to go private is the culmination of a multi-year restructuring effort designed to transform Avanos from a broad-based healthcare supplier into a specialized medical technology firm. This transformation began in earnest following the company’s spin-off from Halyard Health (formerly part of Kimberly-Clark) and has accelerated significantly over the last 24 months.
In 2023, the company began a major internal reorganization, combining its chronic care and pain management units into a more unified operational structure. This was followed by the high-profile sale of its respiratory health division, a move intended to exit lower-margin commodity markets and focus on higher-value clinical solutions. The pace of change increased after David Pacitti’s appointment as CEO in early 2025.
In July 2025, Avanos struck a deal to divest its hyaluronic acid (HA) product line, a move that signaled a retreat from certain orthopedic markets where it faced stiff competition. This was followed in October 2025 by an agreement to offload its U.S. orthopedic rental business to the WRS Group. By shedding these non-core assets, the company aimed to eliminate operational complexity and focus its capital on its most profitable and defensible product lines.
Parallel to these divestitures, Avanos has also pursued strategic acquisitions to bolster its core strengths. A primary example is the acquisition of Nexus Medical for an upfront payment of $27 million, with an additional $20 million in potential earn-outs tied to sales growth. Nexus Medical brought a proprietary anti-reflux needleless connector technology to the Avanos portfolio, directly strengthening its position in the nutrition and medication delivery markets within critical care settings.
Workforce Consolidation and Operational Efficiency
The move toward a leaner, more focused organization has had a profound impact on the company’s internal structure and workforce. Financial filings reveal a dramatic reduction in headcount over the past four years. At the end of 2021, Avanos employed approximately 4,555 people. By the end of 2025, that number had been reduced to 2,287—a decrease of nearly 50%.
This reduction was driven by a combination of the aforementioned divestitures, the automation of certain manufacturing processes, and the consolidation of administrative functions. In December 2025, as part of a final push for efficiency before the AIP deal, the company eliminated two senior leadership positions as part of a wider restructuring.
Despite the significant historical reduction in staff, CEO David Pacitti has sought to reassure the current workforce following the AIP acquisition announcement. In his memo to employees, he stated that roles, responsibilities, and day-to-day operations would remain unchanged under the new ownership. He emphasized that the company’s commitment to job security for its remaining staff remains strong, suggesting that the "heavy lifting" of the restructuring process has largely been completed.
Competitive Landscape and Market Context
Avanos operates in a highly competitive environment where it often goes head-to-head with much larger diversified medical technology firms. In the enteral feeding and specialty nutrition space, Avanos holds a leading market position, but it must constantly innovate to defend its share against the likes of Boston Scientific and Medtronic, both of which have significant resources to dedicate to R&D and global distribution.
In the pain management sector, Avanos competes with Stryker and other major orthopedic and neurotechnology companies. The slower growth in this segment (1.5% in 2025) highlights the challenges of competing in a market characterized by rapid technological shifts and intense pricing pressure. Industry analysts suggest that as a private company, Avanos may find it easier to make the necessary long-term investments in its "Coolief" radiofrequency ablation technology and other pain interventions without the immediate need to show quarterly profit growth to public shareholders.
The Broader Medtech "Go-Private" Trend
The Avanos-AIP deal is not an isolated event but rather part of a accelerating trend of private equity firms targeting mid-sized medical technology companies. The sector is currently undergoing a period of significant consolidation and privatization.
Just this month, the private equity giants Blackstone and TPG finalized an $18.3 billion deal to take Hologic private. In November 2025, the firm GTCR completed its $627 million acquisition of Surmodics, a deal that only proceeded after overcoming significant regulatory hurdles from the Federal Trade Commission (FTC). Other notable recent transactions include Agiliti’s $2.5 billion go-private deal in 2024 and the Carlyle Group’s $3.8 billion buyout of Baxter International’s Vantive kidney care unit.
These transactions are often driven by the "valuation gap" between public and private markets. Many medtech companies with solid fundamentals but specialized focus areas have found their stock prices languishing in public markets. Private equity firms, sitting on significant amounts of unspent capital ("dry powder"), view these companies as attractive targets for operational improvements and eventual re-listing or sale to a larger strategic buyer.
Future Outlook and Implications
The acquisition of Avanos Medical by American Industrial Partners represents a new chapter for the company. For AIP, the deal provides an entry into a resilient healthcare segment with high barriers to entry and a strong recurring revenue base, particularly in enteral feeding. For Avanos, the partnership offers a reprieve from the volatility of public markets and a partner with a track record of industrial and technological transformation.
The immediate focus for the company post-acquisition will likely be the integration of Nexus Medical’s technology and the continued expansion of the Specialty Nutrition segment. If the company can maintain its 9% growth rate in nutrition while stabilizing the pain management business, the $1 billion revenue target for 2030 remains a realistic objective.
However, the transition is not without risks. Private equity ownership often involves higher debt loads, which can limit flexibility if market conditions worsen. Furthermore, the company must continue to navigate a complex regulatory environment and an evolving healthcare landscape where hospital systems are increasingly looking to consolidate their vendor lists.
As Avanos prepares to delist from the New York Stock Exchange, the medical technology industry will be watching closely to see if this private equity-backed model can provide the necessary spark to propel the company into the top tier of specialized medtech providers. For now, the deal stands as a testament to the ongoing transformation of the healthcare sector and the increasing role of private capital in shaping the future of medical innovation.