AVANOS MEDICAL, INC.AVNS

AVANOS MEDICAL, INC. Fair Value Disclosure

10-KFiled Feb 24, 20262 min read
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):

Fair Value
Hierarchy
Level		December 31, 2025December 31, 2024
Carrying
Amount		Estimated
Fair
Value		Carrying
Amount		Estimated
Fair
Value
Assets
Cash and cash equivalents1$89.8 $89.8 $107.7 $107.7 
Liabilities
Revolving Credit Facility2$— $— $25.0 $25.0 
Term Loan Facility2100.5 100.5 109.7 109.7 
Contingent consideration related to acquisition316.8 16.8 — — 
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 (as defined below) approximates carrying value because borrowings are subject to a variable rate as described in Note 10, “Debt.” The fair value amount of the contingent consideration is remeasured on an ongoing basis using a probability-weighted discounted cash flow model. See further discussion of the acquisition of Nexus in Note 4, “Business Acquisitions.”
For the years ended December 31, 2025 and 2024, there were no transfers among Level 1, 2 or 3 fair value determinations. Transfers between levels occur when there are changes in the observability of inputs. Changes between levels are assumed to occur at the beginning of the year.

Historical Timeline

Fiscal YearFiled
2025Feb 24, 2026Showing above
2024Feb 26, 2025
2023Feb 21, 2024
2022Feb 21, 2023
2021Feb 23, 2022
2020Feb 19, 2021
2019Feb 25, 2020
2018Feb 26, 2019
2017Feb 27, 2018
2016Feb 27, 2017
2015Feb 29, 2016

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

Income TaxesRevenueEarnings Per SharePP&EGoodwill & IntangiblesLeasesSegmentsDebtCommitmentsStock CompensationNew Standards