BOSTON, Feb. 26, 2024 (GLOBE NEWSWIRE) -- Equity Litigation Group LLP is investigating the proposed sale of Agiliti, Inc. (NYSE:AGTI) to Thomas H. Lee Partners (THL). On February 26, 2024, Agiliti announced that its Board of Directors had agreed to sell the company to the company's controlling stockholder, Thomas H. Lee Partners. Senior members of Agiliti management will also be "rolling over" their shares in the deal and receiving equity in the newly private company. Public investors, however, will be cash ...

Core Insights - The fourth-quarter 2023 earnings season for healthcare stocks is characterized by higher patient volumes, admissions, and demand for affordable plans, which have positively impacted the sector despite rising expenses and investments in technology that may hurt margins in the short term [1][4]. Industry Overview - The medical sector's fourth-quarter 2023 earnings are projected to decline by 18.2%, while revenues are expected to increase by 6.3% [2]. - The healthcare market in the U.S. is complex, encompassing hospitals, medical services, nursing homes, health insurance, medical devices, and pharmaceuticals, with an expanding aging population driving demand [4]. Factors Influencing Performance - Increased patient visit volumes and the resumption of elective procedures by senior citizens are expected to boost utilization, although this may lead to higher medical costs and eroded profit margins [4]. - Improvements in labor shortages and advancements in technology, including AI and automation, are anticipated to enhance clinical workflow and reduce costs [5]. - Health insurers are likely to benefit from product developments, premium growth, and increased investment income, with rising demand for affordable health products leading to higher memberships [5]. Potential Outperformers - Universal Health Services (UHS) is expected to benefit from an expanding patient base, with a Zacks Consensus Estimate for earnings at $3.02 per share, reflecting a 2-cent increase over the past month and an Earnings ESP of +2.76% [7]. - Alignment Healthcare (ALHC) is projected to see a 29% improvement in fourth-quarter earnings year-over-year, with stable estimates and an Earnings ESP of +4.55% [8]. - Agiliti (AGTI) is positioned for better-than-expected earnings due to new customer growth, with a Zacks Consensus Estimate for earnings at 12 cents per share and revenues pegged at $292 million, indicating 3.7% year-over-year growth [9].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2023 or o Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to Commission File Number: 001-40361 AGILITI, INC. Delaware 11095 Viking Drive 83-1608463 (State or other jurisdiction of Eden Prairie, ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2023 or o Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to Commission File Number: 001-40361 Indicate by check mark whether the registrant has submitted electronically every Interactive Data File r ...

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures [Consolidated Financial Statements (unaudited)](index=3&type=section&id=ITEM%201.%20Consolidated%20Financial%20Statements%20(unaudited)) This section presents the unaudited consolidated financial statements for Agiliti, Inc. for the quarterly period ended March 31, 2023, showing slight revenue growth but decreased net income and operating cash flow [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2023, total assets remained stable at $2.443 billion, with increased cash and cash equivalents and a slight rise in total equity Consolidated Balance Sheet Highlights (in thousands USD) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $14,453 | $5,577 | | Total current assets | $333,643 | $316,313 | | Goodwill | $1,239,432 | $1,239,106 | | Total assets | $2,443,409 | $2,444,107 | | **Liabilities & Equity** | | | | Total current liabilities | $197,161 | $197,381 | | Long-term debt, less current portion | $1,083,572 | $1,077,293 | | Total liabilities | $1,496,211 | $1,497,782 | | Total equity | $947,198 | $946,325 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For Q1 2023, revenue increased 1.9% to $299.9 million, but gross margin decreased 11.5% and net income attributable to Agiliti significantly dropped to $3.0 million Q1 2023 vs Q1 2022 Statement of Operations (in thousands USD, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Revenue | $299,904 | $294,444 | | Gross Margin | $109,374 | $123,627 | | Operating Income | $20,537 | $37,489 | | Net Income Attributable to Agiliti | $3,013 | $19,892 | | Diluted EPS | $0.02 | $0.14 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased to $54.9 million in Q1 2023, while investing activities increased, and financing activities decreased due to lower debt repayments Cash Flow Summary (in thousands USD) | Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $54,896 | $67,124 | | Net cash used in investing activities | ($17,829) | ($14,576) | | Net cash used in financing activities | ($28,191) | ($74,770) | | Net change in cash and cash equivalents | $8,876 | ($22,222) | | Cash and cash equivalents at end of period | $14,453 | $52,103 | [Condensed Notes to Consolidated Financial Statements](index=8&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) These notes detail accounting policies, revenue by segment, acquisitions, debt, and subsequent events, including recent credit facility amendments Revenue by Service Solution (in thousands USD) | Service Solution | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Equipment Solutions | $120,866 | $121,855 | | Clinical Engineering | $113,475 | $102,799 | | Onsite Managed Services | $65,563 | $69,790 | | **Total revenue** | **$299,904** | **$294,444** | - For the three months ended March 31, 2023, approximately **11.1% of total revenue** was related to various contracts with the U.S. Department of Health and Human Services (HHS/ASPR)[80](index=80&type=chunk) - Subsequent to quarter end, on April 6, 2023, the company amended its Revolving Credit Facility, increasing it to **$300.0 million** and extending the maturity to April 2028. On May 1, 2023, it refinanced its term loan facility, extending the maturity to May 2030[82](index=82&type=chunk)[83](index=83&type=chunk)[86](index=86&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2023 revenue growth driven by Clinical Engineering, offset by declines in other segments, leading to decreased gross margin, increased interest expense, and lower Adjusted EBITDA [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Total revenue for Q1 2023 increased 1.9% to $299.9 million, primarily from Clinical Engineering growth, while gross margin declined to 36.5% and interest expense rose significantly Revenue Change by Service Solution (Q1 2023 vs Q1 2022, in thousands USD) | Service Solution | Q1 2023 Revenue (in thousands) | Q1 2022 Revenue (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Equipment Solutions | $120,866 | $121,855 | (0.8)% | | Clinical Engineering | $113,475 | $102,799 | 10.4% | | Onsite Managed Services | $65,563 | $69,790 | (6.1)% | | **Total revenue** | **$299,904** | **$294,444** | **1.9%** | - Gross margin decreased to **36.5% of revenue** in Q1 2023 from **42.0%** in Q1 2022. The decrease was primarily impacted by a lower mix of peak need rental placements post-COVID-19 and the renewal of a government contract[107](index=107&type=chunk) Adjusted EBITDA Reconciliation (in thousands USD) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net income attributable to Agiliti, Inc. | $3,013 | $19,892 | | Interest expense | $15,831 | $10,664 | | Income tax expense | $1,656 | $6,905 | | Depreciation and amortization | $42,106 | $44,831 | | **EBITDA** | **$62,606** | **$82,292** | | Non-cash share-based compensation | $6,889 | $4,637 | | Management and other expenses | $961 | — | | Transaction costs | $1,512 | $2,226 | | **Adjusted EBITDA** | **$71,968** | **$89,155** | [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity relies on cash from operations and its Revolving Credit Facility, with Q1 2023 operating cash flow decreasing to $54.9 million due to lower net income - Net cash provided by operating activities decreased from **$67.1 million** in Q1 2022 to **$54.9 million** in Q1 2023, attributed to lower consolidated net income and timing of accounts receivable collections[120](index=120&type=chunk) - Net cash used in financing activities decreased from **$74.8 million** in Q1 2022 to **$28.2 million** in Q1 2023, mainly due to proceeds from the revolving loan, partially offset by a **$24.8 million** payment under the tax receivable agreement[122](index=122&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rates and fuel costs, with a 1.0 percentage point interest rate change impacting annual interest expense by approximately $5.5 million - A **1.0 percentage point** change in interest rates on variable rate debt would have resulted in an approximate **$5.5 million** increase in annual interest expense, based on debt levels at March 31, 2023[130](index=130&type=chunk) - A hypothetical **10% increase** in gasoline prices during Q1 2023 would have increased fuel costs by approximately **$0.2 million**[131](index=131&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of March 31, 2023, due to previously reported material weaknesses in internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were **not effective** as of March 31, 2023, due to material weaknesses in internal control over financial reporting[136](index=136&type=chunk) - The material weaknesses relate to: (1) identification of risks, (2) design of process-level controls, and (3) ineffective IT general controls (ITGC) concerning user access, change management, and segregation of duties[138](index=138&type=chunk) - Remediation efforts are underway, including enhancing policies, recruiting key personnel, providing additional training, and improving user access and change management controls[142](index=142&type=chunk) [PART II - OTHER INFORMATION](index=34&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, other information, and exhibits filed with the Form 10-Q [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various liability claims in the ordinary course of business, but management believes their resolution will not materially affect financial position or results - The company is subject to liability claims related to employees and equipment rentals/services in the ordinary course of business, but management believes any resolution would **not have a material adverse effect**[145](index=145&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) For the quarter ended March 31, 2023, there were no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been **no material changes** to the risk factors disclosed in the company's 2022 Form 10-K Report[146](index=146&type=chunk) [Other Information](index=34&type=section&id=Item%205.%20Other%20Information) Effective May 4, 2023, Derrick Johnson was designated as the company's principal operating officer with an increased annual base salary - Effective May 4, 2023, Derrick Johnson was designated as the Company's principal operating officer and his annual base salary was increased to **$400,000**[147](index=147&type=chunk) [Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications by key officers and recent credit agreement amendments - The filing includes CEO and CFO certifications (Exhibits **31.1, 31.2, 32.1, 32.2**) and recent credit agreement amendments (Exhibits **10.1, 10.2**)[149](index=149&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K (Mark One) x Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2022 or o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number: 001-40361 AGILITI, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of Eden P ...

PART I - FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements (unaudited)](index=3&type=section&id=ITEM%201.%20Consolidated%20Financial%20Statements%20(unaudited)) The unaudited statements for Q2 2022 show increased revenue and net income but a decrease in cash and cash equivalents [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Summary (as of June 30, 2022 vs. December 31, 2021) | Balance Sheet Item | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | **Total Assets** | **$2,439,337** | **$2,515,747** | | Cash and cash equivalents | $16,524 | $74,325 | | Goodwill | $1,218,329 | $1,213,121 | | **Total Liabilities** | **$1,510,627** | **$1,619,675** | | Long-term debt, less current portion | $1,073,016 | $1,174,968 | | **Total Equity** | **$928,710** | **$896,072** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Statement of Operations Summary (in thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$273,984** | **$250,543** | **$568,428** | **$485,788** | | Gross margin | $98,165 | $99,108 | $221,792 | $200,430 | | Operating income | $16,044 | $18,052 | $53,533 | $50,151 | | **Consolidated net income (loss)** | **$5,063** | **($5,171)** | **$24,983** | **$4,412** | | **Diluted income (loss) per share** | **$0.04** | **($0.04)** | **$0.18** | **$0.04** | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $101,138 | $107,508 | | Net cash used in investing activities | ($36,961) | ($475,066) | | Net cash (used in) provided by financing activities | ($121,978) | $264,723 | | **Net change in cash and cash equivalents** | **($57,801)** | **($102,835)** | | Cash and cash equivalents at end of period | $16,524 | $103,670 | [Condensed Notes to Consolidated Financial Statements](index=11&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) Revenue by Service Solution (in thousands) | Service Solution | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Equipment Solutions | $106,852 | $72,140 | $228,707 | $154,611 | | Clinical Engineering | $104,412 | $101,141 | $207,211 | $176,247 | | Onsite Managed Services | $62,720 | $77,262 | $132,510 | $154,930 | | **Total revenue** | **$273,984** | **$250,543** | **$568,428** | **$485,788** | - In Q2 2022, the company completed several immaterial acquisitions of surgical equipment repair companies, following the **2021 acquisitions of Sizewise Rentals, LLC for ~$234.8 million and Northfield Medical, Inc. for ~$472.3 million**[39](index=39&type=chunk)[41](index=41&type=chunk) - During Q2 2022, the company borrowed **$20.0 million** under its Revolving Loan to prepay its First Lien Term Loan, contributing to a total prepayment of **$119.1 million** and a **$1.4 million loss on extinguishment** for the first half of 2022[232](index=232&type=chunk) - For the six months ended June 30, 2022, approximately **10.9% of total revenue** was related to contracts with U.S. government health agencies, with a new 12-month agreement initiated on February 28, 2022[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue grew due to acquisitions, but gross margin declined from contract renewals and lower equipment utilization - The company serves over **9,000 healthcare providers**, government entities, and medical device manufacturers through its On-Site Managed Services, Clinical Engineering, and Equipment Solutions lines[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) Revenue Change by Service (Q2 2022 vs Q2 2021) | Service Solution | Q2 2022 Revenue (in thousands) | Q2 2021 Revenue (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Equipment Solutions | $106,852 | $72,140 | 48.1% | | Clinical Engineering | $104,412 | $101,141 | 3.2% | | Onsite Managed Services | $62,720 | $77,262 | (18.8)% | | **Total revenue** | **$273,984** | **$250,543** | **9.4%** | - Gross margin for Q2 2022 was **$98.2 million (35.8% of revenue)**, a decrease from $99.1 million (39.6% of revenue) in Q2 2021, driven by a federal contract renewal and lower equipment use[114](index=114&type=chunk) Reconciliation to Adjusted EBITDA (Six Months Ended June 30, in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net income attributable to Agiliti, Inc. | $24,890 | $4,355 | | Interest expense | $21,925 | $29,733 | | Income tax expense | $5,207 | $5,890 | | Depreciation and amortization | $91,542 | $91,814 | | **EBITDA** | **$143,564** | **$131,792** | | Adjustments (Share-based comp, transaction costs, etc.) | $15,145 | $27,989 | | **Adjusted EBITDA** | **$158,709** | **$163,897** | - Net cash from operating activities was **$101.1 million** for the first six months of 2022, a slight decrease from $107.5 million in the prior year, impacted by the timing of accounts receivable collections[136](index=136&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Key market risks include interest rates on variable-rate debt, fuel costs, and pension plan asset volatility - As of June 30, 2022, the company held approximately **$559.2 million in variable-rate debt**, where a 1.0 percentage point rate change would alter annual interest expense by about **$5.6 million**[144](index=144&type=chunk) - The company is exposed to fuel cost volatility; a hypothetical **10% increase in gasoline prices** during the first half of 2022 would have raised fuel costs by approximately **$0.5 million**[145](index=145&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes in the quarter - The **Chief Executive Officer and Chief Financial Officer concluded** that the Company's disclosure controls and procedures were effective as of June 30, 2022[147](index=147&type=chunk) - **No material changes** to internal control over financial reporting occurred during the most recently completed fiscal quarter[147](index=147&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=35&type=section&id=ITEM%201.%20Legal%20Proceedings) Ongoing legal claims are not expected to have a material adverse effect on the company's financial results - The company is subject to liability claims in the ordinary course of business, but management believes any resolution would **not have a material adverse effect** on its financial position or operations[148](index=148&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=ITEM%201A.%20Risk%20Factors) No material changes were reported to the risk factors disclosed in the 2021 Annual Report on Form 10-K - **No material changes** have been made to the risk factors disclosed in the company's 2021 Form 10-K Report[149](index=149&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - The company reports **no unregistered sales of equity securities** for the period[150](index=150&type=chunk) [Item 6. Exhibits](index=37&type=section&id=ITEM%206.%20Exhibits) This section lists filed exhibits, including Sarbanes-Oxley certifications and Inline XBRL financial data - The exhibits filed with this report include **CEO and CFO certifications** pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, along with Inline XBRL documents[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk)

[PART I](index=5&type=section&id=PART%20I) [Item 1: Business](index=5&type=section&id=Item%201%3A%20Business) Agiliti provides medical equipment management and service solutions to the U.S. healthcare industry, driven by market trends and a strategy of expansion and M&A - Agiliti provides essential medical equipment management solutions to the U.S. healthcare industry, enhancing safety and efficiency while reducing costs and waste[12](index=12&type=chunk)[13](index=13&type=chunk) - The company serves over **9,000 customers** including hospitals and government agencies via a nationwide network of over **150 service centers** and **seven Centers of Excellence**[15](index=15&type=chunk) Revenue Breakdown by Service Line (FY 2021 & 2020) | Service Line | FY 2021 Revenue ($M) | % of Total | FY 2020 Revenue ($M) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Clinical Engineering Services | $384.1M | 37% | $256.9M | 33% | | Equipment Solutions | $352.1M | 34% | $296.3M | 38% | | On-Site Managed Services | $302.4M | 29% | $220.2M | 29% | - Agiliti's growth strategy involves expanding existing customer share, securing new outsourcing contracts, and pursuing accretive M&A, having integrated **nine acquisitions** from 2015-2021[54](index=54&type=chunk)[57](index=57&type=chunk) - In 2021, Agiliti completed two major acquisitions: Northfield Medical for **$475.0 million** and Sizewise Rentals for **$230 million**[58](index=58&type=chunk)[59](index=59&type=chunk) [Item 1A: Risk Factors](index=22&type=section&id=Item%201A%3A%20Risk%20Factors) Agiliti faces material risks from COVID-19, key customer contract reliance, substantial debt, and controlling stockholder influence - A significant risk is the potential inability to maintain contracts, especially with key customers like the U.S. Department of Health and Human Services (HHS), which accounted for approximately **17% of total revenue** in 2021[117](index=117&type=chunk)[166](index=166&type=chunk)[489](index=489&type=chunk) - The company has substantial indebtedness of approximately **$1.2 billion** under its First Lien Term Loan Facility as of December 31, 2021, requiring significant cash flow for debt service[181](index=181&type=chunk) - The COVID-19 pandemic poses ongoing risks, including potential supply chain disruptions, inflation, a tightening labor market, and demand uncertainty[108](index=108&type=chunk)[109](index=109&type=chunk) - As a controlled company, principal stockholder THL exerts significant influence over corporate decisions, potentially leading to conflicts of interest with other shareholders[186](index=186&type=chunk)[190](index=190&type=chunk) - The company faces risks integrating recent acquisitions like Northfield Medical and Sizewise, potentially hindering the realization of anticipated benefits or synergies[140](index=140&type=chunk)[141](index=141&type=chunk) [Item 2: Properties](index=43&type=section&id=Item%202%3A%20Properties) Agiliti operates from leased facilities, including its Minneapolis headquarters, with a nationwide network of service centers and manufacturing facilities - The company's corporate headquarters is a **55,197 square foot** leased facility in Minneapolis, Minnesota[211](index=211&type=chunk)[591](index=591&type=chunk) - Agiliti's nationwide network comprises approximately **150 leased service centers**, **seven Centers of Excellence**, and **four manufacturing facilities**[211](index=211&type=chunk) [Item 3: Legal Proceedings](index=43&type=section&id=Item%203%3A%20Legal%20Proceedings) Agiliti is subject to ordinary course liability claims, with management assessing current litigation as not materially adverse - Agiliti is subject to ordinary course liability claims related to employees and equipment, with management deeming the likelihood of a materially adverse outcome from outstanding litigation as remote[212](index=212&type=chunk)[706](index=706&type=chunk) [PART II](index=44&type=section&id=PART%20II) [Item 5: Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=44&type=section&id=Item%205%3A%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Agiliti's common stock began trading on the NYSE under "AGTI" on April 23, 2021, with no plans for future dividend payments - The company's common stock has been listed on the NYSE under the symbol **"AGTI"** since its IPO on **April 23, 2021**[214](index=214&type=chunk) - Agiliti has not historically paid dividends and does not intend to pay any in the future, with any future determination at the Board of Directors' discretion[215](index=215&type=chunk) [Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%207%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) For FY2021, Agiliti reported **$1.04 billion** revenue, a **34.3%** increase, with **$24.2 million** net income and **$330.7 million** Adjusted EBITDA Consolidated Statement of Operations (2021 vs. 2020) | Metric (in thousands) | 2021 (Successor, $ thousands) | 2020 (Successor, $ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$1,038,690** | **$773,312** | **$265,378** | **34.3%** | | Gross margin | $424,617 | $286,347 | $138,270 | 48.3% | | Operating income | $104,230 | $36,058 | $68,172 | 189.1% | | Interest expense | $53,514 | $61,530 | ($8,016) | (13.0%) | | **Consolidated net income (loss)** | **$24,167** | **($22,238)** | **$56,521** | **N/M** | Revenue by Service Solution (2021 vs. 2020) | Service Line (in thousands) | 2021 (Successor, $ thousands) | 2020 (Successor, $ thousands) | Change ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Equipment Solutions | $352,094 | $296,267 | $55,827 | 18.8% | | Clinical Engineering | $384,147 | $256,874 | $127,273 | 49.5% | | Onsite Managed Services | $302,449 | $220,171 | $82,278 | 37.4% | Adjusted EBITDA Reconciliation (2021 vs. 2020) | Metric (in thousands) | 2021 (Successor, $ thousands) | 2020 (Successor, $ thousands) | | :--- | :--- | :--- | | Net income (loss) | $24,006 | ($22,478) | | Interest expense | $53,514 | $61,530 | | Income tax expense (benefit) | $16,433 | ($3,234) | | Depreciation and amortization | $187,963 | $169,241 | | **EBITDA** | **$281,916** | **$205,059** | | Non-cash & Non-recurring items | $48,766 | $29,142 | | **Adjusted EBITDA** | **$330,682** | **$234,201** | - Net cash provided by operating activities increased to **$210.3 million** in 2021 from **$137.9 million** in 2020, while net cash used in investing activities significantly increased to **$734.1 million** due to acquisitions[262](index=262&type=chunk)[263](index=263&type=chunk) [Item 7A: Quantitative and Qualitative Disclosures about Market Risk](index=57&type=section&id=Item%207A%3A%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Agiliti is exposed to market risks from interest rate fluctuations, fuel costs, and pension plan asset valuation - The company has significant interest rate risk exposure, with **$683.1 million** of its **$1.21 billion** total debt bearing variable rates, where a **1.0%** change would alter annual interest expense by approximately **$6.8 million**[288](index=288&type=chunk) - Agiliti is exposed to fuel cost volatility for its vehicle fleet, where a **10%** change in gasoline prices would impact annual fuel costs by approximately **$0.6 million**[289](index=289&type=chunk) [Item 8: Consolidated Financial Statements and Supplementary Data](index=58&type=section&id=Item%208%3A%20Consolidated%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Agiliti's audited consolidated financial statements and unaudited supplementary quarterly financial data for 2021 and 2020 Selected Quarterly Financial Data for 2021 (Unaudited, in thousands) | Quarter Ended | Total Revenue ($ thousands) | Gross Margin ($ thousands) | Consolidated Net Income (Loss) ($ thousands) | | :--- | :--- | :--- | :--- | | March 31 | $235,245 | $101,323 | $9,583 | | June 30 | $250,543 | $99,108 | ($5,171) | | September 30 | $262,424 | $103,434 | $9,728 | | December 31 | $290,478 | $120,752 | $10,027 | [Item 9A: Controls and Procedures](index=58&type=section&id=Item%209A%3A%20Controls%20and%20Procedures) Management concluded Agiliti's disclosure controls and procedures were effective as of December 31, 2021, leveraging the SEC transition period for internal control reporting - Management concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2021[296](index=296&type=chunk) - The company is utilizing the transition period for newly public companies, thus not including a management report or auditor attestation on internal control over financial reporting in this 10-K[297](index=297&type=chunk) [PART III](index=59&type=section&id=PART%20III) [Item 10: Directors, Executive Officers and Corporate Governance](index=59&type=section&id=Item%2010%3A%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the forthcoming Definitive Proxy Statement - Information regarding directors, executive officers, and corporate governance is incorporated by reference from the forthcoming Definitive Proxy Statement[298](index=298&type=chunk) [Item 11: Executive Compensation](index=59&type=section&id=Item%2011%3A%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's Definitive Proxy Statement - Information regarding executive compensation is incorporated by reference from the forthcoming Definitive Proxy Statement[299](index=299&type=chunk) [Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=59&type=section&id=Item%2012%3A%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of beneficial owners and management is incorporated by reference from the company's Definitive Proxy Statement - Information regarding security ownership is incorporated by reference from the forthcoming Definitive Proxy Statement[299](index=299&type=chunk) [Item 13: Certain Relationships and Related Transactions, and Director Independence](index=59&type=section&id=Item%2013%3A%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the company's Definitive Proxy Statement - Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the forthcoming Definitive Proxy Statement[300](index=300&type=chunk) [Item 14: Principal Accounting Fees and Services](index=59&type=section&id=Item%2014%3A%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the company's Definitive Proxy Statement - Information regarding principal accounting fees and services is incorporated by reference from the forthcoming Definitive Proxy Statement[300](index=300&type=chunk) [PART IV](index=60&type=section&id=PART%20IV) [Item 15: Exhibits and Financial Statement Schedules](index=60&type=section&id=Item%2015%3A%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the consolidated financial statements, financial statement schedules, and exhibits filed as part of the Annual Report on Form 10-K - This item lists all documents filed as part of the Form 10-K, including financial statements and exhibits such as credit agreements and material contracts[302](index=302&type=chunk)[305](index=305&type=chunk) [Consolidated Financial Statements](index=68&type=section&id=Consolidated%20Financial%20Statements) [Notes to Consolidated Financial Statements](index=73&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed financial statement information, including accounting policies, business acquisitions, debt structure, and revenue concentration - The company completed the acquisition of Sizewise for approximately **$234.8 million** on October 1, 2021, and Northfield for approximately **$472.3 million** on March 19, 2021[379](index=379&type=chunk)[382](index=382&type=chunk) - Following its IPO in April 2021, the company used proceeds to repay its **$240 million** Second Lien Term Loan, resulting in a loss on extinguishment of debt of **$9.8 million**[416](index=416&type=chunk) - A significant revenue concentration exists, with approximately **17%** of total revenue for 2021 related to contracts with the U.S. Department of Health and Human Services (HHS) and its ASPR office[489](index=489&type=chunk) - Subsequent to year-end, on February 28, 2022, the company entered into a new **12-month** sole source agreement with HHS/ASPR for ventilator and PAPR systems management[493](index=493&type=chunk) Consolidated Balance Sheet Data (as of Dec 31) | (in thousands) | 2021 ($ thousands) | 2020 ($ thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $74,325 | $206,505 | | Total current assets | $357,884 | $402,367 | | Goodwill | $1,213,121 | $817,113 | | **Total assets** | **$2,515,747** | **$1,903,356** | | **Liabilities & Equity** | | | | Total current liabilities | $208,530 | $159,531 | | Long-term debt, less current portion | $1,174,968 | $1,145,055 | | **Total liabilities** | **$1,619,675** | **$1,461,411** | | **Total equity** | **$896,072** | **$441,945** |