Aveanna Healthcare Holdings Inc. (NASDAQ: AVAH), a leading,
diversified home care platform focused on providing care to
medically complex, high-cost patient populations, today announced
financial results for the three and six-month periods June 29,
2024.
Jeff Shaner, Chief Executive Officer, commented,
“The results of our second quarter illustrate the continued success
of executing on our Strategic Transformation. Revenue and Adjusted
EBITDA growth of 7.0% and 27.3%, respectively, when compared to the
prior year period, confirm we are tracking in the right direction.
Our continued approach of transforming our business with an
emphasis on expanding our position as a leading, value-based
homecare provider is underscored by these outcomes, both
operationally and financially. Our ongoing enhanced payor
partnerships allow us to deliver more care to more patients in need
through investment in our caregivers. Additionally, our updated
outlook demonstrates the positive momentum from our ongoing
execution of our business plans. The key to our current and future
success continues to be our dedicated team of Aveanna leaders and
caregivers, who deliver on our mission of exceptional care every
day.”
Three-Month Periods Ended June 29, 2024 and July
1, 2023
Revenue was $505.0 million for the three-month
period ended June 29, 2024, as compared to $471.9 million for the
three-month period ended July 1, 2023, an increase of $33.0
million, or 7.0%. The overall increase in revenue was attributable
to a $30.2 million increase in Private Duty Services (“PDS”)
segment revenue and a $3.6 million increase in Medical Solutions
("MS") segment revenue, offset by a $0.8 million decrease in Home
Health & Hospice (“HHH”) segment revenue over the comparable
quarter.
Gross margin was $158.3 million, or 31.3% of
revenue, for the three-month period ended June 29, 2024, as
compared to $155.3 million, or 32.9% of revenue, for the
three-month period ended July 1, 2023, an increase of $3.0 million,
or 1.9%.
Net income was $13.9 million for the second
quarter of 2024, as compared to net income of $25.6 million for the
second quarter of 2023. Net income per diluted share was $0.07 for
the second quarter of 2024, as compared to net income per diluted
share of $0.13 for the second quarter of 2023. Adjusted net income
per diluted share was $0.01 for the second quarter of 2024, as
compared to adjusted net loss per diluted share of $(0.02) for the
second quarter of 2023.
Adjusted EBITDA was $45.6 million, or 9.0% of
revenue, for the second quarter of 2024, as compared to $35.9
million, or 7.6% of revenue, for the second quarter of 2023, an
increase of $9.8 million or 27.3%. See "Non-GAAP Financial Measures
- EBITDA and Adjusted EBITDA" below.
Six Month Period Ended June 29, 2024 and July 1,
2023
Revenue was $995.6 million for the six-month
period ended June 29, 2024, as compared to $938.4 million for the
six-month period ended July 1, 2023, an increase of $57.3 million,
or 6.1%. The overall increase in revenue was attributable to a
$52.2 million increase in Private Duty Services (“PDS”) segment
revenue and a $7.3 million increase in Medical Solutions ("MS")
segment revenue, offset by a $2.3 million decrease in Home Health
& Hospice (“HHH”) segment revenue over the comparable
period.
Gross margin was $304.1 million, or 30.5% of
revenue, for the six-month period ended June 29, 2024, as compared
to $299.7 million, or 31.9% of revenue, for the six-month period
ended July 1, 2023, an increase of $4.4 million, or 1.5%.
Net income was $2.7 million for the six-month
period ended June 29, 2024, as compared to net loss of $6.4 million
for the six-month period ended July 1, 2023. Net income per diluted
share was $0.01 for the six-month period ended June 29, 2024, as
compared to net loss per diluted share of $(0.03) for the six-month
period ended July 1, 2023. Adjusted net loss per diluted share was
$(0.02) for the six-month period ended June 29, 2024, as compared
to adjusted net loss per diluted share of $(0.07) for the six-month
period ended July 1, 2023.
Adjusted EBITDA was $80.5 million, or 8.1% of
revenue, for the six-month period ended June 29, 2024, as compared
to $64.3 million, or 6.9% of revenue, for the six-month period
ended July 1, 2023, an increase of $16.2 million or 25.2%. See
"Non-GAAP Financial Measures - EBITDA and Adjusted EBITDA"
below.
Liquidity, Cash Flow, and
Debt
- As of June 29, 2024, we had cash of
$47.7 million and incremental borrowing capacity of $53.0 million
under our securitization facility. Our revolver was undrawn, with
approximately $168.2 million of borrowing capacity and
approximately $31.8 million of outstanding letters of credit.
- 2024 net cash used by operating
activities was $10.2 million. Free cash flow was $(12.4) million
for 2024. See “Non-GAAP Financial Measures - Free cash flow”
below.
- As of June 29, 2024 we had bank
debt of $1,480.2 million. Our interest rate exposure under our
credit facilities is currently hedged with the following
instruments:
- $520.0 million notional amount of
interest rate swaps that convert variable rate debt to a fixed
rate, and
- $880.0 million notional amount of
interest rate caps that cap our exposure to SOFR at 2.96%.
Matt Buckhalter, Chief Financial Officer,
commented “I am pleased with our Revenue growth of 7.0% and our
Adjusted EBITDA growth of 27.3% as compared to the prior year
period. We continue to leverage our growth through strategic
cost reductions and lower overhead while building on the
success of our preferred payor strategy and
Government Affairs rate improvements. Based on our positive
results through the second quarter, we are raising our guidance to
Revenue greater than $1,985 million and Adjusted EBITDA greater
than $158 million. I am thrilled with the progress we've
made on our business plans in delivering solid growth, great
clinical outcomes, and improved profitability.”
Revised Full Year 2024
Guidance
The following is our updated guidance reflecting
our current expectations for revenue and Adjusted EBITDA for the
full year 2024:
- Revenue of greater than $1,985
million, updated from prior guidance of revenue of greater than
$1,970 million
Consistent with prior practice, we are not
providing guidance on net income at this time due to the volatility
of certain required inputs that are not available without
unreasonable efforts, including future fair value adjustments
associated with our interest rate swaps and caps.
- Adjusted EBITDA of greater than
$158 million, updated from prior guidance of Adjusted EBITDA
greater than $150 million
Non-GAAP Financial Measures
In addition to our results of operations
prepared in accordance with U.S. generally accepted accounting
principles (“GAAP”), we also evaluate our financial performance
using EBITDA, Adjusted EBITDA, Field contribution, Field
contribution margin, Adjusted net income or loss, Adjusted net
income or loss per diluted share, and Free cash flow. Given our
determination of adjustments in arriving at our computations, these
non-GAAP measures have limitations as analytical tools and should
not be considered in isolation or as substitutes or alternatives to
net income or loss, revenue, operating income or loss, cash flows
from operating activities, total indebtedness or any other
financial measures calculated in accordance with GAAP. The
reconciliations of these non-GAAP financial measures to their most
directly comparable GAAP measures are included in the financial
tables below.
EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are non-GAAP
financial measures and are not intended to replace financial
performance measures determined in accordance with GAAP, such as
net income or loss. Rather, we present EBITDA and Adjusted EBITDA
as supplemental measures of our performance. We define EBITDA as
net income or loss before interest expense, net; income tax benefit
(expense); and depreciation and amortization. We define Adjusted
EBITDA as EBITDA, adjusted for the impact of certain other items
that are either non-recurring, infrequent, non-cash, unusual, or
items deemed by management to not be indicative of the performance
of our core operations, including impairments of goodwill,
intangible assets, and other long-lived assets; non-cash,
share-based compensation; loss on extinguishment of debt; fees
related to debt modifications; the effect of interest rate
derivatives; acquisition-related and integration costs; legal costs
and settlements associated with acquisition matters; restructuring
costs; other legal matters; and other system transition costs,
professional fees and other costs. As non-GAAP financial measures,
our computations of EBITDA and Adjusted EBITDA may vary from
similarly termed non-GAAP financial measures used by other
companies, making comparisons with other companies on the basis of
this measure impracticable.
We believe our computations of EBITDA and
Adjusted EBITDA are helpful in highlighting trends in our core
operating performance. In determining which adjustments are made to
arrive at EBITDA and Adjusted EBITDA, we consider both (1) certain
non-recurring, infrequent, non-cash or unusual items, which can
vary significantly from year to year, as well as (2) certain other
items that may be recurring, frequent, or settled in cash but which
we do not believe are indicative of our core operating performance.
We use EBITDA and Adjusted EBITDA to assess operating performance
and make business decisions.
We have incurred substantial acquisition-related
costs and integration costs. The underlying acquisition activities
take place over a defined timeframe, have distinct project
timelines and are incremental to activities and costs that arise in
the ordinary course of our business. Therefore, we believe it is
important to exclude these costs from our Adjusted EBITDA because
it provides us a normalized view of our core, ongoing operations
after integrating our acquired companies, which we believe is an
important measure in assessing our performance.
Field contribution and Field contribution
margin
Field contribution and Field contribution margin
are non-GAAP financial measures and are not intended to replace
financial performance measures determined in accordance with GAAP,
such as gross margin and gross margin percentage. Rather, we
present Field contribution and Field contribution margin as
supplemental measures of our performance. We define Field
contribution as gross margin less branch and regional
administrative expenses. Field contribution margin is Field
contribution as a percentage of revenue. As non-GAAP financial
measures, our computations of Field contribution and Field
contribution margin may vary from similarly termed non-GAAP
financial measures used by other companies, making comparisons with
other companies on the basis of these measures impracticable.
Field contribution and Field contribution margin
have limitations as analytical tools and should not be considered
in isolation or as substitutes or alternatives to gross margin,
gross margin percentage, net income or loss, revenue, operating
income or loss, cash flows from operating activities, total
indebtedness or any other financial measures calculated in
accordance with GAAP.
Management believes Field contribution and Field
contribution margin are helpful in highlighting trends in our core
operating performance and evaluating trends in our branch and
regional results, which can vary from year to year. We use Field
contribution and Field contribution margin to make business
decisions and assess the operating performance and results
delivered by our core field operations, prior to corporate and
other costs not directly related to our field operations. These
metrics are also important because they guide us in determining
whether or not our branch and regional administrative expenses are
appropriately sized to support our caregivers and direct patient
care operations. Additionally, Field contribution and Field
contribution margin determine how effective we are in managing our
field supervisory and administrative costs associated with
supporting our provision of services and sale of products.
Adjusted net income (loss) and Adjusted net
income (loss) per diluted share
Adjusted net income (loss) represents net income
(loss) as adjusted for the impact of GAAP income tax, goodwill,
intangible and other long-lived asset impairment charges, non-cash
share-based compensation expense, loss on extinguishment of debt,
interest rate derivatives, acquisition-related costs, integration
costs, legal costs, restructuring costs, other legal matters, other
system transition costs, professional fees and certain other
miscellaneous items on a pre-tax basis. Adjusted net income (loss)
includes a provision for income taxes derived utilizing a combined
statutory tax rate. The combined statutory tax rate is our estimate
of our long-term tax rate. The most comparable GAAP measure is net
income (loss).
Adjusted net income (loss) per diluted share
represents adjusted net income (loss) on a per diluted share basis
using the weighted-average number of diluted shares outstanding for
the period. The most comparable GAAP measure is net income (loss)
per share, diluted.
Adjusted net income (loss) and adjusted net
income (loss) per diluted share are important to us because they
allow us to assess financial results, exclusive of the items
mentioned above that are not operational in nature or comparable to
those of our competitors.
Free cash flow
Free cash flow is a liquidity measure that
represents operating cash flow, adjusted for the impact of
purchases of property, equipment and software, principal payments
on term loans, notes payable and financing leases, and settlements
with swap counterparties. The most comparable GAAP measure is cash
flow from operations.
We believe free cash flow is helpful in
highlighting the cash generated or used by the Company, after
taking into consideration mandatory payments on term loans, notes
payable and financing leases, as well as cash needed for
non-acquisition related capital expenditures, and cash paid to or
received from derivative counterparties.
Conference Call
Aveanna will host a conference call on Thursday,
August 8, 2024, at 10:00 a.m. Eastern Time to discuss our second
quarter results. The conference call can be accessed live over the
phone by dialing 1-877-407-0789, or for international callers,
1-201-689-8562. A telephonic replay of the conference call will be
available until August 15, 2024, by dialing 1-844-512-2921, or for
international callers, 1-412-317-6671. The passcode for the replay
is 13746737. A live webcast of our conference call will also be
available under the Investor Relations section of our website:
https://ir.aveanna.com/. The online replay will also be available
for one week following the call.
Forward-Looking Statements
Certain matters discussed in this press release
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements
(other than statements of historical facts) in this press release
regarding our prospects, plans, financial position, business
strategy and expected financial and operational results may
constitute forward-looking statements. Forward-looking statements
generally can be identified by the use of terminology such as
“believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,”
“seek,” “will,” “may,” “should,” “would,” “predict,” “project,”
“potential,” “continue,” “could,” “design,” or the negatives of
these terms or variations of them or similar expressions. These
statements are based on certain assumptions that we have made in
light of our experience in the industry as well as our perceptions
of historical trends, current conditions, expected future
developments and other factors we believe are appropriate in these
circumstances. These forward-looking statements are based on our
current expectations and beliefs concerning future developments and
their potential effect on us. Forward-looking statements involve a
number of risks and uncertainties that may cause actual results to
differ materially from those expressed or implied by such
forward-looking statements, such as our ability to successfully
execute our growth strategy, including through organic growth and
the completion of acquisitions, effective integration of the
companies we acquire, unexpected costs of acquisitions and
dispositions, the possibility that expected cost synergies may not
materialize as expected, the failure of Aveanna or the companies we
acquire to perform as expected, estimation inaccuracies in revenue
recognition, our ability to drive margin leverage through lower
costs, unexpected increases in SG&A and other expenses, changes
in reimbursement, changes in government regulations, changes in
Aveanna’s relationships with referral sources, increased
competition for Aveanna’s services or wage inflation, the failure
to retain or attract employees, changes in the interpretation of
government regulations or discretionary determinations made by
government officials, uncertainties regarding the outcome of rate
discussions with managed care organizations and our ability to
effectively collect our cash from these organizations, changes in
the case-mix of our patients, as well as the payor mix and payment
methodologies, legal proceedings, claims or governmental inquiries,
our ability to effectively collect and submit data required under
Electronic Visit Verification regulations, our ability to comply
with the terms and conditions of the CMS Review Choice
Demonstration program, our ability to effectively implement and
transition to new electronic medical record systems or billing and
collection systems, a failure to maintain the security and
functionality of our information systems or to defend against or
otherwise prevent a cybersecurity attack or breach, changes in tax
rates, our substantial indebtedness, the impact of adverse weather,
the impact to our business operations, and other risks set
forth under the heading “Risk Factors” in Aveanna’s Annual Report
on Form 10-K for its 2023 fiscal year filed with the Securities and
Exchange Commission on March 14, 2024, which is available
at www.sec.gov. In addition, these forward-looking statements
necessarily depend upon assumptions, estimates and dates that may
prove to be incorrect or imprecise. Accordingly, forward-looking
statements included in this press release do not purport to be
predictions of future events or circumstances, and actual results
may differ materially from those expressed by forward-looking
statements. All forward-looking statements speak only as of the
date made, and Aveanna undertakes no obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
About Aveanna Healthcare
Aveanna Healthcare is headquartered in Atlanta,
Georgia and has locations in 33 states providing a broad range of
pediatric and adult healthcare services including nursing,
rehabilitation services, occupational nursing in schools, therapy
services, day treatment centers for medically fragile and
chronically ill children and adults, home health and hospice
services, as well as delivery of enteral nutrition and other
products to patients. The Company also provides case management
services in order to assist families and patients by coordinating
the provision of services between insurers or other payers,
physicians, hospitals, and other healthcare providers. In addition,
the Company provides respite healthcare services, which are
temporary care provider services provided in relief of the
patient’s normal caregiver. The Company’s services are designed to
provide a high quality, lower cost alternative to prolonged
hospitalization. For more information, please
visit www.aveanna.com.
Cash Flow and Information about
Indebtedness
The following table sets forth a summary of our
cash flows from operating, investing, and financing activities for
the periods presented:
| |
For the six-month periods ended |
|
| (dollars in thousands) |
June 29, 2024 |
|
|
July 1, 2023 |
|
|
Net cash used in operating activities |
$ |
(10,163 |
) |
|
$ |
(3,023 |
) |
| Net cash used in investing
activities |
$ |
(2,577 |
) |
|
$ |
(6,099 |
) |
| Net cash provided by financing
activities |
$ |
16,459 |
|
|
$ |
17,917 |
|
| Cash and cash equivalents at
beginning of period |
$ |
43,942 |
|
|
$ |
19,217 |
|
| Cash and cash equivalents at end
of period |
$ |
47,661 |
|
|
$ |
28,012 |
|
| |
|
|
|
|
|
|
|
The following table presents our long-term
indebtedness as of June 29, 2024:
| (dollars in thousands) |
|
|
|
|
|
Instrument |
Interest Rate |
|
June 29, 2024 |
|
|
2021 Extended Term Loan (1) |
S + 3.75% |
|
$ |
895,150 |
|
| Second Lien Term Loan (1) |
S + 7.00% |
|
|
415,000 |
|
| Revolving Credit Facility
(1) |
S + 3.75% |
|
|
- |
|
| Securitization Facility |
S + 3.15% |
|
|
170,000 |
|
| Total indebtedness |
|
|
$ |
1,480,150 |
|
| (1) S = Greater of 0.50% or
one-month SOFR, plus a CSA |
|
|
|
|
| |
|
|
|
|
Results of Operations
The following table summarizes our consolidated
results of operations for the periods indicated (amounts in
thousands, except per share data):
|
|
For the three-monthperiods ended |
|
For the six-monthperiods ended |
|
|
|
June 29, 2024 |
|
July 1, 2023 |
|
June 29, 2024 |
|
July 1, 2023 |
|
|
Revenue |
$ |
504,958 |
|
$ |
471,945 |
|
$ |
995,611 |
|
$ |
938,358 |
|
| Cost of revenue, excluding
depreciation and amortization |
|
346,691 |
|
|
316,690 |
|
|
691,490 |
|
|
638,638 |
|
| Branch and regional
administrative expenses |
|
87,972 |
|
|
91,255 |
|
|
175,886 |
|
|
182,963 |
|
| Corporate expenses |
|
30,245 |
|
|
26,354 |
|
|
60,087 |
|
|
57,289 |
|
| Depreciation and
amortization |
|
2,833 |
|
|
3,491 |
|
|
5,745 |
|
|
7,532 |
|
| Acquisition-related costs |
|
- |
|
|
(32 |
) |
|
- |
|
|
38 |
|
| Other operating expense
(income) |
|
91 |
|
|
(3,305 |
) |
|
2,411 |
|
|
(3,233 |
) |
| Operating income |
|
37,126 |
|
|
37,492 |
|
|
59,992 |
|
|
55,131 |
|
| Interest income |
|
95 |
|
|
113 |
|
|
197 |
|
|
188 |
|
| Interest expense |
|
(39,613 |
) |
|
(37,985 |
) |
|
(79,260 |
) |
|
(73,943 |
) |
| Other income |
|
6,371 |
|
|
25,169 |
|
|
24,540 |
|
|
12,981 |
|
| Income (loss) before income
taxes |
|
3,979 |
|
|
24,789 |
|
|
5,469 |
|
|
(5,643 |
) |
| Income tax benefit
(expense) |
|
9,927 |
|
|
810 |
|
|
(2,735 |
) |
|
(756 |
) |
| Net income (loss) |
$ |
13,906 |
|
$ |
25,599 |
|
$ |
2,734 |
|
$ |
(6,399 |
) |
| Net income (loss) per
share: |
|
|
|
|
|
|
|
|
| Net income (loss) per share,
basic |
$ |
0.07 |
|
$ |
0.14 |
|
$ |
0.01 |
|
$ |
(0.03 |
) |
| Weighted average shares of
common stock outstanding, basic |
|
192,600 |
|
|
189,071 |
|
|
192,420 |
|
|
189,063 |
|
| Net income (loss) per share,
diluted |
$ |
0.07 |
|
$ |
0.13 |
|
$ |
0.01 |
|
$ |
(0.03 |
) |
| Weighted average shares of
common stock outstanding, diluted |
|
196,869 |
|
|
189,739 |
|
|
196,274 |
|
|
189,063 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
The following tables summarize our consolidated
key performance measures, including Field contribution and Field
contribution margin, which are non-GAAP measures, for the periods
indicated:
| |
For the three-month periods ended |
|
| (dollars in thousands) |
June 29, 2024 |
|
July 1, 2023 |
|
Change |
|
% Change |
|
|
Revenue |
$ |
504,958 |
|
$ |
471,945 |
|
$ |
33,013 |
|
|
7.0 |
% |
| Cost of revenue, excluding
depreciation and amortization |
|
346,691 |
|
|
316,690 |
|
|
30,001 |
|
|
9.5 |
% |
| Gross margin |
$ |
158,267 |
|
$ |
155,255 |
|
$ |
3,012 |
|
|
1.9 |
% |
|
Gross margin percentage |
|
31.3 |
% |
|
32.9 |
% |
|
|
|
|
| Branch and regional
administrative expenses |
|
87,972 |
|
|
91,255 |
|
|
(3,283 |
) |
|
-3.6 |
% |
| Field contribution |
$ |
70,295 |
|
$ |
64,000 |
|
$ |
6,295 |
|
|
9.8 |
% |
|
Field contribution margin |
|
13.9 |
% |
|
13.6 |
% |
|
|
|
|
| Corporate expenses |
$ |
30,245 |
|
$ |
26,354 |
|
$ |
3,891 |
|
|
14.8 |
% |
|
As a percentage of revenue |
|
6.0 |
% |
|
5.6 |
% |
|
|
|
|
| Operating income |
$ |
37,126 |
|
$ |
37,492 |
|
$ |
(366 |
) |
|
-1.0 |
% |
|
As a percentage of revenue |
|
7.4 |
% |
|
7.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
For the six-month periods ended |
|
| (dollars in thousands) |
June 29, 2024 |
|
July 1, 2023 |
|
Change |
|
% Change |
|
|
Revenue |
$ |
995,611 |
|
$ |
938,358 |
|
$ |
57,253 |
|
|
6.1 |
% |
| Cost of revenue, excluding
depreciation and amortization |
|
691,490 |
|
|
638,638 |
|
|
52,852 |
|
|
8.3 |
% |
| Gross margin |
$ |
304,121 |
|
$ |
299,720 |
|
$ |
4,401 |
|
|
1.5 |
% |
|
Gross margin percentage |
|
30.5 |
% |
|
31.9 |
% |
|
|
|
|
| Branch and regional
administrative expenses |
|
175,886 |
|
|
182,963 |
|
|
(7,077 |
) |
|
-3.9 |
% |
| Field contribution |
$ |
128,235 |
|
$ |
116,757 |
|
$ |
11,478 |
|
|
9.8 |
% |
|
Field contribution margin |
|
12.9 |
% |
|
12.4 |
% |
|
|
|
|
| Corporate expenses |
$ |
60,087 |
|
$ |
57,289 |
|
$ |
2,798 |
|
|
4.9 |
% |
|
As a percentage of revenue |
|
6.0 |
% |
|
6.1 |
% |
|
|
|
|
| Operating income |
$ |
59,992 |
|
$ |
55,131 |
|
$ |
4,861 |
|
|
8.8 |
% |
|
As a percentage of revenue |
|
6.0 |
% |
|
5.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables summarize our key
performance measures by segment for the periods indicated:
| |
PDS |
|
|
| |
For the three-month periods ended |
|
|
| (dollars and hours in
thousands) |
June 29, 2024 |
|
July 1, 2023 |
|
Change |
|
% Change |
|
|
|
Revenue |
$ |
407,851 |
|
$ |
377,668 |
|
$ |
30,183 |
|
|
8.0 |
% |
|
| Cost of revenue, excluding
depreciation and amortization |
|
296,983 |
|
|
266,170 |
|
|
30,813 |
|
|
11.6 |
% |
|
| Gross margin |
$ |
110,868 |
|
$ |
111,498 |
|
$ |
(630 |
) |
|
-0.6 |
% |
|
|
Gross margin percentage |
|
27.2 |
% |
|
29.5 |
% |
|
|
|
-2.3 |
% |
(4) |
| Hours |
|
10,336 |
|
|
9,865 |
|
|
471 |
|
|
4.8 |
% |
|
| Revenue rate |
$ |
39.46 |
|
$ |
38.28 |
|
$ |
1.18 |
|
|
3.2 |
% |
(1) |
| Cost of revenue rate |
$ |
28.73 |
|
$ |
26.98 |
|
$ |
1.75 |
|
|
6.8 |
% |
(2) |
| Spread rate |
$ |
10.73 |
|
$ |
11.30 |
|
$ |
(0.57 |
) |
|
-5.4 |
% |
(3) |
| |
|
|
|
|
|
|
|
|
|
| |
HHH |
|
|
| |
For the three-month periods ended |
|
|
| (dollars and
admissions/episodes in thousands) |
June 29, 2024 |
|
July 1, 2023 |
|
Change |
|
% Change |
|
|
| Revenue |
$ |
54,630 |
|
$ |
55,410 |
|
$ |
(780 |
) |
|
-1.4 |
% |
|
| Cost of revenue, excluding
depreciation and amortization |
|
25,227 |
|
|
28,497 |
|
|
(3,270 |
) |
|
-11.5 |
% |
|
| Gross margin |
$ |
29,403 |
|
$ |
26,913 |
|
$ |
2,490 |
|
|
9.3 |
% |
|
|
Gross margin percentage |
|
53.8 |
% |
|
48.6 |
% |
|
|
|
5.2 |
% |
(4) |
| Home health total admissions
(5) |
|
9.4 |
|
|
9.9 |
|
|
(0.5 |
) |
|
-5.1 |
% |
|
| Home health episodic admissions
(6) |
|
7.1 |
|
|
6.8 |
|
|
0.3 |
|
|
4.4 |
% |
|
| Home health total episodes
(7) |
|
11.6 |
|
|
11.1 |
|
|
0.5 |
|
|
4.5 |
% |
|
| Home health revenue per completed
episode (8) |
$ |
3,093 |
|
$ |
3,051 |
|
$ |
42 |
|
|
1.4 |
% |
|
| |
|
|
|
|
|
|
|
|
|
| |
MS |
|
|
| |
For the three-month periods ended |
|
|
| (dollars and UPS in
thousands) |
June 29, 2024 |
|
July 1, 2023 |
|
Change |
|
% Change |
|
|
| Revenue |
$ |
42,477 |
|
$ |
38,867 |
|
$ |
3,610 |
|
|
9.3 |
% |
|
| Cost of revenue, excluding
depreciation and amortization |
|
24,481 |
|
|
22,023 |
|
|
2,458 |
|
|
11.2 |
% |
|
| Gross margin |
$ |
17,996 |
|
$ |
16,844 |
|
$ |
1,152 |
|
|
6.8 |
% |
|
|
Gross margin percentage |
|
42.4 |
% |
|
43.3 |
% |
|
|
|
-0.9 |
% |
(4) |
| Unique patients served
(“UPS”) |
|
94 |
|
|
85 |
|
|
9 |
|
|
10.6 |
% |
|
| Revenue rate |
$ |
451.88 |
|
$ |
457.26 |
|
$ |
(5.38 |
) |
|
-1.3 |
% |
(1) |
| Cost of revenue rate |
$ |
260.44 |
|
$ |
259.09 |
|
$ |
1.35 |
|
|
0.6 |
% |
(2) |
| Spread rate |
$ |
191.45 |
|
$ |
198.16 |
|
$ |
(6.73 |
) |
|
-3.8 |
% |
(3) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
PDS |
|
|
| |
For the six-month periods ended |
|
|
| (dollars and hours in
thousands) |
June 29, 2024 |
|
July 1, 2023 |
|
Change |
|
% Change |
|
|
|
Revenue |
$ |
802,860 |
|
$ |
750,615 |
|
$ |
52,245 |
|
|
7.0 |
% |
|
| Cost of revenue, excluding
depreciation and amortization |
|
591,857 |
|
|
534,933 |
|
|
56,924 |
|
|
10.6 |
% |
|
| Gross margin |
$ |
211,003 |
|
$ |
215,682 |
|
$ |
(4,679 |
) |
|
-2.2 |
% |
|
|
Gross margin percentage |
|
26.3 |
% |
|
28.7 |
% |
|
|
|
-2.4 |
% |
(4) |
| Hours |
|
20,600 |
|
|
19,648 |
|
|
952 |
|
|
4.8 |
% |
|
| Revenue rate |
$ |
38.97 |
|
$ |
38.20 |
|
$ |
0.77 |
|
|
2.2 |
% |
(1) |
| Cost of revenue rate |
$ |
28.73 |
|
$ |
27.23 |
|
$ |
1.50 |
|
|
5.8 |
% |
(2) |
| Spread rate |
$ |
10.24 |
|
$ |
10.97 |
|
$ |
(0.73 |
) |
|
-7.0 |
% |
(3) |
| |
|
|
|
|
|
|
|
|
|
| |
HHH |
|
|
| |
For the six-month periods ended |
|
|
| (dollars and
admissions/episodes in thousands) |
June 29, 2024 |
|
July 1, 2023 |
|
Change |
|
% Change |
|
|
| Revenue |
$ |
109,243 |
|
$ |
111,536 |
|
$ |
(2,293 |
) |
|
-2.1 |
% |
|
| Cost of revenue, excluding
depreciation and amortization |
|
50,866 |
|
|
59,592 |
|
|
(8,726 |
) |
|
-14.6 |
% |
|
| Gross margin |
$ |
58,377 |
|
$ |
51,944 |
|
$ |
6,433 |
|
|
12.4 |
% |
|
|
Gross margin percentage |
|
53.4 |
% |
|
46.6 |
% |
|
|
|
6.8 |
% |
(4) |
| Home health total admissions
(5) |
|
19.5 |
|
|
21.6 |
|
|
(2.1 |
) |
|
-9.7 |
% |
|
| Home health episodic admissions
(6) |
|
14.7 |
|
|
14.8 |
|
|
(0.1 |
) |
|
-0.7 |
% |
|
| Home health total episodes
(7) |
|
23.7 |
|
|
23.0 |
|
|
0.7 |
|
|
3.0 |
% |
|
| Home health revenue per completed
episode (8) |
$ |
3,082 |
|
$ |
3,005 |
|
$ |
77 |
|
|
2.6 |
% |
|
| |
|
|
|
|
|
|
|
|
|
| |
MS |
|
|
| |
For the six-month periods ended |
|
|
| (dollars and UPS in
thousands) |
June 29, 2024 |
|
July 1, 2023 |
|
Change |
|
% Change |
|
|
| Revenue |
$ |
83,508 |
|
$ |
76,207 |
|
$ |
7,301 |
|
|
9.6 |
% |
|
| Cost of revenue, excluding
depreciation and amortization |
|
48,767 |
|
|
44,113 |
|
|
4,654 |
|
|
10.6 |
% |
|
| Gross margin |
$ |
34,741 |
|
$ |
32,094 |
|
$ |
2,647 |
|
|
8.2 |
% |
|
|
Gross margin percentage |
|
41.6 |
% |
|
42.1 |
% |
|
|
|
-0.5 |
% |
(4) |
| Unique patients served
(“UPS”) |
|
186 |
|
|
170 |
|
|
16 |
|
|
9.4 |
% |
|
| Revenue rate |
$ |
448.97 |
|
$ |
448.28 |
|
$ |
0.69 |
|
|
0.2 |
% |
(1) |
| Cost of revenue rate |
$ |
262.19 |
|
$ |
259.49 |
|
$ |
2.70 |
|
|
1.2 |
% |
(2) |
| Spread rate |
$ |
186.78 |
|
$ |
188.79 |
|
$ |
(2.01 |
) |
|
-1.2 |
% |
(3) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
- Represents the period over period
change in revenue rate, plus the change in revenue rate
attributable to the change in volume.
- Represents the period over period
change in cost of revenue rate, plus the change in cost of revenue
rate attributable to the change in volume.
- Represents the period over period
change in spread rate, plus the change in spread rate attributable
to the change in volume.
- Represents the change in margin
percentage year over year (or quarter over quarter).
- Represents home health episodic and
fee-for-service admissions.
- Represents home health episodic
admissions.
- Represents episodic admissions and
recertifications.
- Represents Medicare revenue per
completed episode.
The following table reconciles gross margin and
gross margin percentage to Field contribution and Field
contribution margin:
| |
For the three-monthperiods ended |
|
For the six-monthperiods ended |
|
| (dollars in thousands) |
June 29, 2024 |
|
July 1, 2023 |
|
June 29, 2024 |
|
July 1, 2023 |
|
|
Gross margin |
$ |
158,267 |
|
$ |
155,255 |
|
$ |
304,121 |
|
$ |
299,720 |
|
| Branch and regional
administrative expenses |
|
87,972 |
|
|
91,255 |
|
|
175,886 |
|
|
182,963 |
|
| Field contribution |
$ |
70,295 |
|
$ |
64,000 |
|
$ |
128,235 |
|
$ |
116,757 |
|
| Revenue |
$ |
504,958 |
|
$ |
471,945 |
|
$ |
995,611 |
|
$ |
938,358 |
|
| Field contribution margin |
|
13.9 |
% |
|
13.6 |
% |
|
12.9 |
% |
|
12.4 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles net income (loss)
to EBITDA and Adjusted EBITDA:
| |
For the three-monthperiods ended |
|
For the six-monthperiods ended |
|
| (dollars in thousands) |
June 29, 2024 |
|
July 1, 2023 |
|
June 29, 2024 |
|
July 1, 2023 |
|
|
Net income (loss) |
$ |
13,906 |
|
$ |
25,599 |
|
$ |
2,734 |
|
$ |
(6,399 |
) |
| Interest expense, net |
|
39,518 |
|
|
37,872 |
|
|
79,063 |
|
|
73,755 |
|
| Income tax (benefit) expense |
|
(9,927 |
) |
|
(810 |
) |
|
2,735 |
|
|
756 |
|
| Depreciation and
amortization |
|
2,833 |
|
|
3,491 |
|
|
5,745 |
|
|
7,532 |
|
| EBITDA |
|
46,330 |
|
|
66,152 |
|
|
90,277 |
|
|
75,644 |
|
| Goodwill, intangible and other
long-lived asset impairment |
|
80 |
|
|
313 |
|
|
2,400 |
|
|
381 |
|
| Non-cash share-based
compensation |
|
3,500 |
|
|
2,586 |
|
|
7,581 |
|
|
5,028 |
|
| Interest rate derivatives
(1) |
|
(6,441 |
) |
|
(24,667 |
) |
|
(24,359 |
) |
|
(12,745 |
) |
| Acquisition-related costs
(2) |
|
- |
|
|
(33 |
) |
|
- |
|
|
37 |
|
| Integration costs (3) |
|
388 |
|
|
102 |
|
|
687 |
|
|
1,235 |
|
| Legal costs and settlements
associated with acquisition matters (4) |
|
173 |
|
|
(5,446 |
) |
|
575 |
|
|
(5,142 |
) |
| Restructuring (5) |
|
1,718 |
|
|
2,621 |
|
|
3,188 |
|
|
4,748 |
|
| Other legal matters (6) |
|
(197 |
) |
|
(5,000 |
) |
|
898 |
|
|
(5,000 |
) |
| Other system transition costs,
professional fees and other (7) |
|
96 |
|
|
(773 |
) |
|
(717 |
) |
|
150 |
|
| Total adjustments |
$ |
(683 |
) |
$ |
(30,297 |
) |
$ |
(9,747 |
) |
$ |
(11,308 |
) |
| Adjusted EBITDA |
$ |
45,647 |
|
$ |
35,855 |
|
$ |
80,530 |
|
$ |
64,336 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles net income (loss)
to adjusted net income (loss) and presents adjusted net income
(loss) per diluted share:
| |
For the three-monthperiods ended |
|
For the six-monthperiods ended |
|
| (dollars in thousands, except
share and per share data) |
June 29, 2024 |
|
July 1, 2023 |
|
June 29, 2024 |
|
July 1, 2023 |
|
|
Net income (loss) |
$ |
13,906 |
|
$ |
25,599 |
|
$ |
2,734 |
|
$ |
(6,399 |
) |
|
Income tax (benefit) expense |
|
(9,927 |
) |
|
(810 |
) |
|
2,735 |
|
|
756 |
|
|
Goodwill, intangible and other long-lived asset impairment |
|
80 |
|
|
313 |
|
|
2,400 |
|
|
381 |
|
|
Non-cash share-based compensation |
|
3,500 |
|
|
2,586 |
|
|
7,581 |
|
|
5,028 |
|
|
Interest rate derivatives (1) |
|
(6,441 |
) |
|
(24,667 |
) |
|
(24,359 |
) |
|
(12,745 |
) |
|
Acquisition-related costs (2) |
|
- |
|
|
(33 |
) |
|
- |
|
|
37 |
|
|
Integration costs (3) |
|
388 |
|
|
102 |
|
|
687 |
|
|
1,235 |
|
|
Legal costs and settlements associated with acquisition matters
(4) |
|
173 |
|
|
(5,446 |
) |
|
575 |
|
|
(5,142 |
) |
|
Restructuring (5) |
|
1,718 |
|
|
2,621 |
|
|
3,188 |
|
|
4,748 |
|
|
Other legal matters (6) |
|
(197 |
) |
|
(5,000 |
) |
|
898 |
|
|
(5,000 |
) |
|
Other system transition costs, professional fees and other (7) |
|
96 |
|
|
(773 |
) |
|
(717 |
) |
|
150 |
|
| Total adjustments |
|
(10,610 |
) |
|
(31,107 |
) |
|
(7,012 |
) |
|
(10,552 |
) |
| Adjusted pre-tax income
(loss) |
|
3,296 |
|
|
(5,508 |
) |
|
(4,278 |
) |
|
(16,951 |
) |
| Income tax (expense) benefit on
adjusted pre-tax income (loss) (8) |
|
(824 |
) |
|
1,377 |
|
|
1,070 |
|
|
4,238 |
|
| Adjusted net income (loss) |
$ |
2,472 |
|
$ |
(4,131 |
) |
$ |
(3,208 |
) |
$ |
(12,713 |
) |
| Weighted average shares
outstanding, diluted |
|
196,869 |
|
|
189,739 |
|
|
196,274 |
|
|
189,063 |
|
| Adjusted net income (loss) per
diluted share (9) |
$ |
0.01 |
|
$ |
(0.02 |
) |
$ |
(0.02 |
) |
$ |
(0.07 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
The following footnotes are applicable to tables
above that reconcile (i) net income (loss) to EBITDA and Adjusted
EBITDA and (ii) net income (loss) to adjusted net income
(loss).
- Represents valuation adjustments
and settlements associated with interest rate derivatives that are
not included in interest expense, net. Such items are included in
other income.
- Represents transaction costs
incurred in connection with planned, completed, or terminated
acquisitions, which include investment banking fees, legal
diligence and related documentation costs, and finance and
accounting diligence and documentation, as presented on the
Company’s consolidated statements of operations.
- Represents (i) costs associated
with our Integration Management Office, which focuses on our
integration efforts and transformational projects such as systems
conversions and implementations, material cost reduction and
restructuring projects, among other things, of $0.3 million and
$0.6 million for the three and six-month periods ended June 29,
2024, respectively, and $0.4 million and $0.8 million for the three
and six-month periods ended July 1, 2023, respectively; and (ii)
transitionary costs incurred to integrate acquired companies into
our field and corporate operations of $0.1 million for both the
three and six-month periods ended June 29, 2024, respectively, and
$(0.3) million and $0.4 million for the three and six-month periods
ended July 1, 2023, respectively. Transitionary costs incurred to
integrate acquired companies include IT consulting costs and
related integration support costs; salary, severance and retention
costs associated with duplicative acquired company personnel until
such personnel are exited from the Company; accounting, legal and
consulting costs; expenses and impairments related to the closure
and consolidation of overlapping markets of acquired companies,
including lease termination and relocation costs; costs associated
with terminating legacy acquired company contracts and systems; and
one-time costs associated with rebranding our acquired companies
and locations to the Aveanna brand.
- Represents legal and forensic
costs, as well as settlements associated with resolving legal
matters arising during or as a result of our acquisition-related
activities. This primarily includes (i) costs of $0.2 million and
$0.6 million for the three and six-month periods ended June 29,
2024, respectively, and $0.2 million and $0.3 million for the three
and six-month periods ended July 1, 2023, respectively, to comply
with the U.S. Department of Justice, Antitrust Division’s grand
jury subpoena related to nurse wages and hiring activities in
certain of our markets, in connection with a terminated
transaction, and (ii) release of reserve of $3.6 million for both
the three and six-month periods ended July 1, 2023, related to
thesettlement of a legal matter resulting from a 2020
acquisition.
- Represents costs associated with
restructuring our branch and regional administrative footprint as
well as our corporate overhead infrastructure costs in order to
appropriately size our resources to current volumes, including: (i)
branch and regional salary and severance costs; (ii) corporate
salary and severance costs; and (iii) rent and lease termination
costs associated with the closure of certain office locations.
Restructuring costs also include compensation, severance and
related benefits costs associated with an executive transition plan
initiated in the first quarter of 2024.
- Represents activity related to
accrued legal settlements and the related costs and expenses
associated with certain judgments and arbitration awards rendered
against the Company where certain insurance coverage is in
dispute.
- Represents (i) costs associated
with the implementation of, and transition to, new electronic
medical record systems, billing and collection systems, duplicative
system costs while such transformational projects are in-process,
and other system transition costs of $0.7 million for the six-month
period ended July 1, 2023, no such cost was recorded in other
presented periods; and (ii) other costs or (income) that are either
non-cash or non-core to the Company’s ongoing operations of $0.1
million and $(0.7) million for the three and six-month periods
ended June 29, 2024, respectively, and $(0.7) million and $(0.6)
million for the three and six-month periods ended July 1, 2023,
respectively.
- Derived utilizing a combined
statutory rate of 25% for the for the three and six-month periods
ended June 29, 2024, and July 1, 2023, respectively, and applied to
the respective adjusted pre-tax loss.
- Adjustments used to reconcile net
income (loss) per diluted share on a GAAP basis to adjusted net
income (loss) per diluted share are comprised of the same
adjustments, inclusive of the tax impact, used to reconcile net
income (loss) to adjusted net income (loss) divided by the
weighted-average diluted shares outstanding during the period.
The table below reflects the increase or decrease, and aggregate
impact, to the line items included on our consolidated statements
of operations based upon the adjustments used in arriving at
Adjusted EBITDA from EBITDA for the periods indicated.
| |
For the three-monthperiods ended |
|
For the six-monthperiods ended |
|
| (dollars in thousands) |
June 29, 2024 |
|
July 1, 2023 |
|
June 29, 2024 |
|
July 1, 2023 |
|
|
Cost of revenue, excluding depreciation and amortization |
|
81 |
|
|
(4,823 |
) |
$ |
176 |
|
$ |
(4,678 |
) |
| Branch and regional
administrative expenses |
|
1,561 |
|
|
1,723 |
|
|
2,874 |
|
|
3,364 |
|
| Corporate expenses |
|
3,958 |
|
|
1,311 |
|
|
9,335 |
|
|
6,184 |
|
| Acquisition-related costs |
|
- |
|
|
(33 |
) |
|
- |
|
|
37 |
|
| Other operating expense
(income) |
|
168 |
|
|
(3,646 |
) |
|
2,120 |
|
|
(3,646 |
) |
| Other income |
|
(6,451 |
) |
|
(24,829 |
) |
|
(24,252 |
) |
|
(12,569 |
) |
| Total adjustments |
$ |
(683 |
) |
$ |
(30,297 |
) |
$ |
(9,747 |
) |
$ |
(11,308 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles the net cash used
in operating activities to free cash flow:
| |
For the six-monthperiod ended |
|
| (dollars in thousands) |
June 29, 2024 |
|
|
Net cash used in operating activities |
|
(10,163 |
) |
| Purchases of property and
equipment, and software |
|
(2,577 |
) |
| Principal payments of term
loans |
|
(4,600 |
) |
| Principal payments of notes
payable and financing lease obligations |
|
(3,692 |
) |
| Settlements with swap
counterparties |
|
8,669 |
|
| Free cash flow |
$ |
(12,363 |
) |
| |
|
|
|
Investor ContactMatt
BuckhalterChief Financial OfficerIr@aveanna.com
Aveanna Healthcare (NASDAQ:AVAH)
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