Core Insights - Agiliti has expanded its oncology offerings to enhance access to focal therapy services for prostate cancer diagnosis and treatment [1] - Approximately 313,000 new prostate cancer cases are reported annually in the U.S., highlighting the demand for innovative treatment technologies [1] - Technologies such as High-Intensity Focused Ultrasound (HIFU) are becoming essential components of modern prostate cancer care [1]

Core Viewpoint - Lowey Dannenberg P.C. is investigating the proposed acquisition of Agiliti, Inc. by Thomas H. Lee Partners to assess whether Agiliti shareholders are receiving adequate consideration and process [1] Group 1: Company Overview - Agiliti, Inc. is a publicly traded company listed on the NYSE under the ticker AGTI [1] - Thomas H. Lee Partners, L.P. is identified as a private equity firm involved in the acquisition [1] Group 2: Legal Investigation - The investigation by Lowey Dannenberg aims to determine the fairness of the acquisition process for Agiliti shareholders [1] - Shareholders are encouraged to participate in the investigation and can contact the firm for more information [1] Group 3: Law Firm Background - Lowey Dannenberg is a national law firm that represents institutional and individual investors who have suffered financial losses due to corporate fraud and violations of federal laws [2] - The firm has a history of prosecuting multi-million-dollar lawsuits and has recovered billions for investors [2]

Core Viewpoint - Lowey Dannenberg P.C. is investigating the proposed acquisition of Agiliti, Inc. by Thomas H. Lee Partners to assess whether Agiliti shareholders are receiving adequate consideration and process [1] Group 1: Investigation Details - The investigation aims to determine the fairness of the acquisition process for Agiliti shareholders [1] - Agiliti, Inc. is listed on the NYSE under the ticker AGTI [1] Group 2: About Lowey Dannenberg - Lowey Dannenberg is a national law firm that represents institutional and individual investors who have suffered financial losses due to corporate fraud and violations of federal securities and antitrust laws [2] - The firm has a strong track record in prosecuting multi-million-dollar lawsuits and has recovered billions for investors [2]

Revenue Performance - Total revenue for Q1 2024 was $302.8 million, a 0.9% increase from $299.9 million in Q1 2023[98] - Equipment Solutions revenue decreased by 3.5% to $116.7 million, while Clinical Engineering revenue increased by 10.3% to $125.2 million[98] - Revenue from Onsite Managed Services decreased by 7.1% to $60.9 million, attributed to renewal pricing and contract scope changes[98] Financial Metrics - Gross margin for Q1 2024 was $99.2 million, or 32.8% of revenue, down from $109.4 million, or 36.5% in Q1 2023[100] - Adjusted EBITDA for Q1 2024 was $62.1 million, down from $72.0 million in Q1 2023, mainly due to lower gross margins[106] - Adjusted EBITDA for Q1 2024 was $62.1 million, down 13.5% from $72.0 million in Q1 2023[109] - Consolidated net loss for Q1 2024 was $6.5 million, compared to a net income of $3.1 million in Q1 2023[105] - Net income attributable to Agiliti, Inc. for Q1 2024 was $(6.6) million, a decrease from $3.0 million in Q1 2023[109] Expenses and Costs - Selling, general and administrative expenses decreased by 5.4% to $84.0 million, representing 27.8% of revenue in Q1 2024[102] - Cost of revenue increased by 6.8% to $203.5 million, rising from 63.5% of revenue in 2023 to 67.2% in 2024[99] Cash Flow and Debt - Net cash provided by operating activities decreased to $13.8 million in Q1 2024 from $54.9 million in Q1 2023[114] - Total debt outstanding as of March 31, 2024, was approximately $1,105.8 million, with $569.6 million bearing interest at variable rates[124] - Net cash used in financing activities decreased to $10.7 million in Q1 2024 from $28.2 million in Q1 2023[115] - Availability under the Revolving Credit Facility and Accounts Receivable Securitization Facility is $284.9 million and $150.0 million, respectively[112] - The company expects existing cash balances and anticipated operating cash flows to meet cash needs for the next twelve months[113] Interest and Pension - Interest expense rose by 44.8% to $22.9 million in Q1 2024, primarily due to increased interest rates[103] - A 1.0 percentage point change in interest rates on variable rate debt would result in an annual interest expense increase of approximately $5.7 million[124] - A hypothetical 10% decrease in the fair value of pension plan assets would lead to a decrease in the funded status of the plan by approximately $2.3 million[126] Seasonal Factors - Quarterly operating results are typically affected by seasonal factors, with the first and fourth quarters being the strongest[111]

Core Insights - Agiliti reported revenue of $291.99 million for the quarter ended December 2023, marking a year-over-year increase of 3.7% and an EPS of $0.13, down from $0.18 a year ago [1] - The reported revenue met the Zacks Consensus Estimate, indicating no surprise, while the EPS exceeded expectations by 8.33% [1] Revenue Breakdown - Clinical Engineering revenue was $118.87 million, surpassing the average estimate of $115.51 million from four analysts [2] - Onsite Managed Services revenue was $61.40 million, falling short of the average estimate of $65.88 million based on four analysts [2] - Equipment Solutions revenue reached $111.72 million, slightly above the average estimate of $110.60 million from four analysts [2] Stock Performance - Agiliti shares have returned +42.6% over the past month, significantly outperforming the Zacks S&P 500 composite's +2.9% change [2] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [2]

Core Insights - Agiliti (AGTI) reported quarterly earnings of $0.13 per share, exceeding the Zacks Consensus Estimate of $0.12 per share, but down from $0.18 per share a year ago, indicating an earnings surprise of 8.33% [1] - The company generated revenues of $291.99 million for the quarter, matching the Zacks Consensus Estimate and reflecting a year-over-year increase from $281.68 million [1] - Agiliti's stock has increased by approximately 24.9% since the beginning of the year, outperforming the S&P 500's gain of 7.6% [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.15, with expected revenues of $315.01 million, while the estimate for the current fiscal year is $0.58 on $1.22 billion in revenues [4] - The trend for earnings estimate revisions for Agiliti has been unfavorable, resulting in a Zacks Rank 4 (Sell), suggesting expected underperformance in the near future [3] Industry Context - The Medical Services industry, to which Agiliti belongs, is currently ranked in the top 28% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [4] - Another company in the same industry, MDxHealth SA Sponsored ADR, is expected to report results for the quarter ended December 2023 on March 6, with a projected quarterly loss of $0.28 per share, representing a year-over-year change of +74.6% [5]

Healthcare Market Overview - The U.S. healthcare spending reached $4.5 trillion in 2022, accounting for 17.3% of the GDP, with an expected annual growth rate of 5.4% from 2022 to 2031[36]. - The aging population (65+) in the U.S. is projected to grow by 93.9% to approximately 95 million by 2060, increasing demand for healthcare services[38]. - Six in ten Americans live with at least one chronic disease, driving the need for specialty medical equipment[39]. - Hospitals are expected to face a nurse shortage of between 200,000 and 450,000 by 2025, increasing the demand for outsourced healthcare technology management[30]. Operational Efficiency and Challenges - Hospitals typically utilize only 42% of their owned medical equipment inventory at any given time, leading to inefficiencies[24]. - An average 2,500 bed integrated delivery network (IDN) wastes over $11 million annually on inefficient equipment maintenance and unnecessary capital purchases[27]. - The complexity and cost of medical equipment maintenance have increased by 90% from 1995 to 2010, necessitating specialized technical knowledge[25]. - The demand for onsite equipment management programs is expected to rise to address infection control risks and improve patient safety[42]. Revenue and Financial Performance - Revenue from On-Site Managed Services represented 22% of total revenue for the years ended December 31, 2023, and 2022[44]. - Revenue from Clinical Engineering Services accounted for 39% of total revenue for the years ended December 31, 2023, and 2022[46]. - Equipment Solutions services also represented 39% of total revenue for both years ended December 31, 2023, and 2022[47]. - Total revenue from the top 50 customers grew from approximately $23.1 million in 2015 to approximately $164.6 million in 2023, averaging an increase of $2.8 million per customer[49]. - The company reported a net loss of $19 million for the year ended December 31, 2023, compared to net income of $30 million and $24 million for the years ended December 31, 2022 and 2021, respectively[191]. Customer Satisfaction and Engagement - The company achieved a Net Promoter Score (NPS) of 40 for the year ended December 31, 2023, indicating high customer satisfaction[47][57]. - The company achieved a 60 employee engagement score rating in its most recent survey conducted in 2023[85]. Workforce and Diversity - The company employs over 800 technicians and more than 4,000 field-based service operators, enhancing service delivery capabilities[53]. - Approximately 43% of the workforce comprises minorities, and 29% are female, reflecting a commitment to diversity[64]. - The company employs over 5,800 individuals, with more than 43% of the workforce being ethnically diverse, and achieved a 77% employee retention rate in 2023[81][82][83]. Growth Strategy and Market Position - The company plans to grow its customer base by capitalizing on the increasing trend of outsourcing medical equipment management services[67]. - As of December 31, 2023, the company operated over 150 local market service centers, supporting equipment management needs across the United States with access to more than one million units of medical equipment[71]. - The company has successfully integrated 11 acquisitions from 2016 to 2023 and plans to continue pursuing opportunistic M&A as part of its long-term growth strategy[70]. Regulatory and Compliance Risks - The company is required to report any "transfer of value" to healthcare professionals, with detailed reporting obligations under the Affordable Care Act[102]. - The company operates in a highly regulated environment, with potential fines and penalties for violations of laws and regulations applicable to its business, which could significantly increase its cost of doing business[179]. - The company is subject to increased penalties under HIPAA regulations, with mandatory penalties for "willful neglect" violations starting at $100 per violation, capped at $1.5 million for violations of the same standard in a single calendar year[171]. Financial Risks and Market Conditions - A global economic downturn could adversely affect customers, leading to reduced patient census and decreased demand for the Company's services[127]. - The company may face significant challenges in integrating recent acquisitions, which could delay the realization of anticipated benefits[122]. - The company may incur increased costs that cannot be passed on to customers due to contract limitations and reliance on third-party services[155]. - The company is vulnerable to interest rate risk due to its substantial indebtedness and may face challenges in managing this risk effectively in a high-interest-rate environment[188]. Corporate Governance and Shareholder Issues - THL Stockholder controls 73% of the company's common stock, significantly influencing management and board composition, which may conflict with the interests of other shareholders[193]. - The company has entered into a director nomination agreement with THL Stockholder, allowing THL to designate nominees for the board based on its ownership percentage[194]. - The company may not comply with certain corporate governance requirements due to its status as a "controlled company," potentially limiting shareholder protections[197]. Technology and Innovation - The company has developed proprietary software programs to enhance customer service, including inventory management and compliance tracking systems[87]. - The company is implementing a new information technology business systems platform, which could result in operational delays or failures[125].

Core Insights - Agiliti Inc. reported a revenue growth of 4% in Q4 2023, totaling $292 million, but experienced a net loss of $5.7 million compared to a net income of $3.4 million in the same period last year [2][4] - For the full year 2023, revenue increased by 5% to $1.17 billion, but the company faced a net loss of $19.4 million, down from a net income of $30.2 million in 2022 [3][4] - The company announced a definitive merger agreement with THL Partners, which will take Agiliti private at a price of $10.00 per share, implying an enterprise value of approximately $2.5 billion [6][7] Fourth Quarter 2023 Highlights - Revenue for Q4 2023 was $292 million, a 3.7% increase from $281.7 million in Q4 2022 [4] - Adjusted EBITDA for Q4 2023 was $67.3 million, down 5.7% from $71.4 million in the prior year [5] - The diluted loss per share for Q4 2023 was $0.04, compared to diluted earnings per share of $0.02 in Q4 2022 [2][4] Full-Year 2023 Highlights - Total revenue for 2023 was $1.17 billion, representing a 4.8% increase from $1.12 billion in 2022 [4] - Adjusted EBITDA for the year was $266.9 million, a 10% decrease from $296.6 million in 2022 [5] - The company reported a total debt of $1.08 billion and a net leverage ratio of 3.97x as of December 31, 2023 [3][26] Merger Agreement - Agiliti has entered into a merger agreement with THL Partners, which will acquire all outstanding shares not owned by THL for $10.00 per share [6] - The transaction is expected to close in the first half of 2024 and has been approved by THL Agiliti LLC, the majority shareholder [7] - Following the completion of the transaction, Agiliti will no longer be publicly traded on the New York Stock Exchange [7]

[Agiliti Financial Results for Fourth Quarter and Full-Year 2023](index=1&type=section&id=Agiliti%20Financial%20Results%20for%20Fourth%20Quarter%20and%20Full-Year%202023) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Agiliti's full-year 2023 revenue increased 5% to $1.17 billion, but net income shifted to a $19.4 million loss, and Adjusted EBITDA declined 10% [Fourth Quarter 2023 Highlights](index=1&type=section&id=Fourth%20Quarter%202023%20Highlights) Q4 2023 vs Q4 2022 Performance | Metric | Q4 2023 | Q4 2022 | Change | | :--- | :--- | :--- | :--- | | Revenue (in millions) | $292.0 | $281.7 | +3.7% | | Net Income (Loss) (in millions) | ($5.7) | $3.4 | -267.6% | | Diluted EPS (Loss) | ($0.04) | $0.02 | -300.0% | | Adjusted EBITDA (in millions) | $67.3 | $71.4 | -5.7% | | Adjusted EPS | $0.13 | $0.18 | -27.8% | [Full-Year 2023 Highlights](index=1&type=section&id=Full-Year%202023%20Highlights) Full-Year 2023 vs Full-Year 2022 Performance | Metric | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | Revenue (in billions) | $1.17 | $1.12 | +4.8% | | Net Income (Loss) (in millions) | ($19.4) | $30.2 | -164.2% | | Diluted EPS (Loss) | ($0.14) | $0.22 | -163.6% | | Adjusted EBITDA (in millions) | $266.9 | $296.6 | -10.0% | | Adjusted EPS | $0.55 | $0.85 | -35.3% | Year-End 2023 Debt Position | Metric | Amount | | :--- | :--- | | Total Debt (in billions) | $1.08 | | Net Debt (in billions) | $1.06 | | Net Leverage Ratio | 3.97x | [Corporate Developments: Acquisition by THL Partners](index=1&type=section&id=Agiliti%20to%20be%20Taken%20Private%20by%20THL%20Partners) Agiliti announced a definitive merger agreement on February 26, 2024, to be acquired by its majority shareholder, THL Partners, for an enterprise value of approximately **$2.5 billion**, taking the company private - THL will acquire all outstanding shares of Agiliti common stock not already owned by THL and certain management for **$10.00 per share** in cash[6](index=6&type=chunk) - The transaction implies an enterprise value of approximately **$2.5 billion**[6](index=6&type=chunk) - The transaction has been approved by the majority shareholder, THL Agiliti LLC, and requires no other shareholder approval; upon completion, Agiliti will no longer be traded on the New York Stock Exchange[7](index=7&type=chunk) - Due to the pending transaction, Agiliti will not hold a conference call to discuss these financial results[7](index=7&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) This section presents Agiliti's detailed, audited Consolidated Statements of Operations, Balance Sheets, and Statements of Cash Flows, providing a comprehensive view of the company's financial performance and position [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Statement of Operations Highlights | Metric | Full-Year 2023 | Full-Year 2022 | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue (in thousands) | $1,174,604 | $1,121,292 | $291,986 | $281,679 | | Gross Margin (in thousands) | $404,103 | $430,974 | $98,556 | $107,579 | | Operating Income (in thousands) | $64,791 | $91,986 | $16,617 | $22,894 | | Interest Expense (in thousands) | $84,115 | $49,439 | $23,461 | $14,983 | | Net Income (Loss) Attributable to Agiliti (in thousands) | ($19,425) | $30,212 | ($5,711) | $3,371 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Balance Sheet Highlights | Metric | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents (in thousands) | $20,037 | $5,577 | | Total current assets (in thousands) | $337,743 | $316,313 | | Goodwill (in thousands) | $1,239,432 | $1,239,106 | | Total Assets (in thousands) | $2,398,944 | $2,444,107 | | Long-term debt, less current portion (in thousands) | $1,061,062 | $1,077,293 | | Total Liabilities (in thousands) | $1,458,121 | $1,497,782 | | Total Equity (in thousands) | $940,823 | $946,325 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Statement of Cash Flows Highlights | Metric | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities (in thousands) | $169,816 | $199,776 | | Net cash used in investing activities (in thousands) | ($83,892) | ($146,860) | | Net cash used in financing activities (in thousands) | ($71,464) | ($121,664) | | Net change in cash and cash equivalents (in thousands) | $14,460 | ($68,748) | | Cash and cash equivalents at end of period (in thousands) | $20,037 | $5,577 | [Non-GAAP Financial Measures](index=7&type=section&id=Non-GAAP%20Financial%20Measures) This section reconciles GAAP to non-GAAP financial measures like Adjusted EBITDA, Adjusted Net Income, and Adjusted EPS, used for internal performance evaluation and external analysis, with adjustments for non-recurring costs - The company uses non-GAAP measures like EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Net Debt, and Net Leverage Ratio for internal operational performance assessment and to aid external analysis[17](index=17&type=chunk) [Reconciliation to Adjusted EBITDA](index=7&type=section&id=Non-GAAP%20Financial%20Measure:%20Adjusted%20EBITDA) Adjusted EBITDA Reconciliation | Metric | Full-Year 2023 | Full-Year 2022 | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) attributable to Agiliti (in thousands) | ($19,425) | $30,212 | ($5,711) | $3,371 | | Interest, Taxes, D&A (in thousands) | $248,224 | $223,971 | $64,800 | $61,476 | | EBITDA (in thousands) | $228,799 | $254,183 | $59,089 | $64,847 | | Other Adjustments* (in thousands) | $38,064 | $42,382 | $8,246 | $6,556 | | **Adjusted EBITDA (in thousands)** | **$266,863** | **$296,565** | **$67,335** | **$71,403** | - *Other Adjustments include non-cash share-based compensation, transaction costs, management expenses (including severance), and loss on extinguishment of debt[18](index=18&type=chunk) [Reconciliation to Adjusted Net Income and Adjusted EPS](index=8&type=section&id=Non-GAAP%20Financial%20Measure:%20Adjusted%20Net%20Income%20and%20Adjusted%20EPS) Adjusted Net Income Reconciliation | Metric | Full-Year 2023 | Full-Year 2022 | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) attributable to Agiliti (in thousands) | ($19,425) | $30,212 | ($5,711) | $3,371 | | Pre-tax Adjustments* (in thousands) | $126,657 | $133,804 | $29,991 | $29,786 | | Income tax benefit associated with adjustments (in thousands) | ($30,655) | ($46,538) | ($6,950) | ($8,630) | | **Adjusted Net Income (in thousands)** | **$76,577** | **$117,488** | **$17,330** | **$24,520** | Adjusted EPS | Metric | Full-Year 2023 | Full-Year 2022 | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | :--- | :--- | | Adjusted EPS | $0.55 | $0.85 | $0.13 | $0.18 | [Net Debt and Net Leverage Ratio](index=9&type=section&id=Non-GAAP%20Financial%20Measure:%20Net%20Debt%20and%20Net%20Leverage%20Ratio) Net Debt Calculation as of Dec 31, 2023 | Component | Amount (in thousands) | | :--- | :--- | | Total Debt | $1,079,530 | | Less: Cash | ($20,037) | | **Net Debt (in thousands)** | **$1,059,493** | Net Leverage Ratio as of Dec 31, 2023 | Component | Amount (in thousands) | | :--- | :--- | | LTM Adjusted EBITDA | $266,863 | | **Net Leverage Ratio** | **3.97x** |

Core Viewpoint - Agiliti (AGTI) is anticipated to report a year-over-year decline in earnings despite an increase in revenues, with the upcoming earnings report expected on March 5, 2024 [1] Financial Expectations - The consensus estimate for Agiliti's quarterly earnings is $0.12 per share, reflecting a year-over-year decrease of 33.3% [2] - Expected revenues for the quarter are $291.99 million, which is a 3.7% increase from the same quarter last year [2] Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analysts' assessments [3] - A positive Earnings ESP of +1.70% suggests that analysts have recently become more optimistic about Agiliti's earnings prospects [6] Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [5] - Agiliti currently holds a Zacks Rank of 3, indicating a neutral outlook [6] Historical Performance - In the last reported quarter, Agiliti was expected to earn $0.10 per share but only achieved $0.09, resulting in a surprise of -10% [7] - Over the past four quarters, Agiliti has only beaten consensus EPS estimates once [7] Industry Comparison - GoodRx Holdings, Inc. (GDRX), another player in the medical services industry, is expected to report earnings of $0.08 per share, representing a year-over-year increase of 14.3% [9] - GoodRx has an Earnings ESP of 17.39% and a Zacks Rank of 2, suggesting a strong likelihood of beating consensus EPS estimates [9]