Core Viewpoint - Aveanna Healthcare (AVAH) has experienced significant stock performance, with a 37.4% increase over the past month and a new 52-week high of $6.2, outperforming the Zacks Medical sector and the Zacks Medical - Outpatient and Home Healthcare industry [1][2]. Performance Metrics - Aveanna has consistently exceeded earnings expectations, reporting an EPS of $0.18 against a consensus estimate of $0.04 in its last earnings report, and beating revenue estimates by 9.93% [2]. - Year-to-date, Aveanna's stock has risen by 27.1%, contrasting with a decline of 8.1% in the Zacks Medical sector [1]. Valuation Metrics - The stock currently trades at 26.4 times the current fiscal year EPS estimates, which is above the peer industry average of 19.6 times [5]. - On a trailing cash flow basis, Aveanna trades at 35.4 times, compared to the peer group's average of 15.8 times, indicating a premium valuation [5]. Style Scores - Aveanna holds a Value Score of B, a Growth Score of B, and a Momentum Score of F, resulting in a combined VGM Score of B [5]. - The Zacks Rank for Aveanna is 1 (Strong Buy), driven by rising earnings estimates, suggesting potential for further gains [6].

Financial Data and Key Metrics Changes - Revenue for Q2 was approximately $590 million, representing a 16.8% increase over the prior year period [5][22] - Adjusted EBITDA for Q2 was $88.3 million, reflecting a 93.6% increase compared to the prior year, primarily due to improved rate environment and cost savings initiatives [5][22] - Consolidated gross margin was $210.8 million or 35.8% [22] Business Line Data and Key Metrics Changes - Private Duty Services revenue was approximately $486 million, a 19.2% increase, driven by a volume increase of 6.9% [23] - Home Health and Hospice revenue for the quarter was approximately $60.1 million, a 10% increase, with 74.5% of admissions being episodic [26] - Medical Solutions revenue was $43.4 million, a 2.2% increase, with gross margins at approximately 45.6% [28] Market Data and Key Metrics Changes - Preferred payer agreements accounted for approximately 55% of total private duty services MCO volumes [11] - The episodic payer mix was 74.5%, with total episodic volume growth of 6.9% compared to the prior year [12] Company Strategy and Development Direction - The company is focusing on enhancing partnerships with government partners and preferred payers to create additional capacity and growth [19] - The strategic plan includes modernizing the Medical Solutions business and managing capital structure while producing positive free cash flow [19] - The company aims to increase the number of private duty service preferred payer agreements from 22 to 30 by the end of 2025 [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand for home and community-based care, indicating that the industry does not have a demand problem [6] - The company anticipates 2025 revenue to exceed $2.3 billion and adjusted EBITDA to exceed $270 million, reflecting a strong outlook despite regulatory challenges [20][34] - Management highlighted the importance of aligning caregiver capacity with preferred payers to improve clinical and financial outcomes [29] Other Important Information - The company has achieved 10 rate enhancements year to date in the private duty services segment [10] - The integration of the Thrive Skilled Pediatrics acquisition is on target and expected to be accretive to 2025 results [15] Q&A Session Summary Question: Can you walk us through the $53 million increase in guidance for EBITDA? - Management indicated that the increase is based on strong rate outlook and improved volume in the PDS business, with good visibility into 2025 [38][40] Question: Are you seeing an increase in the number of caregivers due to wage rate increases? - Management confirmed that there has been a continued uplift in caregiver hiring, with 11 million hours recorded in Q2 for the PDS segment [53][55] Question: How do you characterize HCBS positioning amid broader budgetary headwinds? - Management noted that while rate enhancements have been more muted, the value of home care is recognized by state governors, and they continue to advocate for necessary rate increases [72][74] Question: What is the potential impact of proposed cuts to home health on episodic rates? - Management expressed disappointment in the proposed cuts, emphasizing that such policies are harmful to seniors and rural healthcare, while affirming that Aviana is well-positioned regardless of the outcome [78][82] Question: How much demand remains for getting patients out of hospitals? - Management indicated that there is still significant demand, with many preferred payers seeking more coverage and services from Aviana [88][90]

Financial Performance Overview [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Aveanna Healthcare achieved significant Q2 2025 growth, with revenue increasing **16.8%** to **$589.6 million** and Adjusted EBITDA rising **93.6%** to **$88.4 million** Q2 2025 Financial Performance vs. Q2 2024 | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $589.6 | $505.0 | +$84.6 | +16.8% | | **Gross Margin** | $210.8 | $158.3 | +$52.5 | +33.2% | | **Net Income** | $27.0 | $13.9 | +$13.1 | +94.3% | | **Adjusted EBITDA** | $88.4 | $45.6 | +$42.7 | +93.6% | | **Net Income per Diluted Share** | $0.13 | $0.07 | +$0.06 | +85.7% | | **Adjusted Net Income per Diluted Share** | $0.18 | $0.01 | +$0.17 | +1700% | - The overall revenue increase was driven by growth across all segments: a **$78.2 million** increase in Private Duty Services (PDS), a **$5.5 million** increase in Home Health and Hospice (HHH), and a **$1.0 million** increase in Medical Solutions (MS)[4](index=4&type=chunk) [Six-Month 2025 Financial Highlights](index=3&type=section&id=Six-Month%202025%20Financial%20Highlights) For H1 2025, revenue grew **15.4%** to **$1,148.8 million**, with Adjusted EBITDA rising **93.4%** to **$155.7 million**, reflecting sustained positive momentum Six-Month 2025 Financial Performance vs. Six-Month 2024 | Metric | H1 2025 (in millions) | H1 2024 (in millions) | Change (in millions) | % Change | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $1,148.8 | $995.6 | +$153.2 | +15.4% | | **Gross Margin** | $394.4 | $304.1 | +$90.2 | +29.7% | | **Net Income** | $32.2 | $2.7 | +$29.5 | +1088% | | **Adjusted EBITDA** | $155.7 | $80.5 | +$75.2 | +93.4% | | **Net Income per Diluted Share** | $0.16 | $0.01 | +$0.15 | +1500% | | **Adjusted Net Income per Diluted Share** | $0.28 | $(0.02) | +$0.30 | N/A | - Revenue growth for the six-month period was primarily driven by a **$143.2 million** increase in the PDS segment, complemented by increases of **$7.6 million** in HHH and **$2.4 million** in MS[10](index=10&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management attributed strong Q2 results to Strategic Transformation and operational excellence, with the Thrive acquisition expanding markets and leading to raised full-year guidance - CEO Jeff Shaner stated that the second quarter results reflect continued positive momentum in all three operating divisions as the company navigates the third year of its Strategic Transformation[3](index=3&type=chunk) - The acquisition of Thrive Skilled Pediatric Care is cited as an illustration of the company's commitment to investing in current markets and expanding into new ones to facilitate core service growth[3](index=3&type=chunk) - CFO Matt Buckhalter credited the improved results to the team's relentless focus on operational excellence, disciplined execution, and delivering strong clinical outcomes[15](index=15&type=chunk) Full Year 2025 Guidance [Revised Outlook](index=3&type=section&id=Revised%20Outlook) Reflecting strong performance and positive business momentum, Aveanna has raised its full-year 2025 guidance, now expecting revenue greater than **$2.3 billion** and Adjusted EBITDA exceeding **$270 million** Updated Full Year 2025 Guidance | Metric | New Guidance (FY 2025) | Previous Guidance (FY 2025) | | :--- | :--- | :--- | | **Revenue** | > $2.3 billion | > $2.15 billion | | **Adjusted EBITDA** | > $270 million | > $207 million | - The company is not providing guidance on net income due to the volatility of certain required inputs, such as future fair value adjustments for interest rate swaps and caps[16](index=16&type=chunk) Financial Condition [Liquidity and Capital Resources](index=3&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 28, 2025, Aveanna maintained a solid liquidity position with **$100.7 million** in cash and significant borrowing capacity, with total bank debt at approximately **$1.47 billion** and interest rate exposure substantially hedged Liquidity Position as of June 28, 2025 | Item | Amount (in millions) | | :--- | :--- | | Cash | $100.7 | | Securitization Facility Capacity | $106.3 | | Revolver Capacity | ~$147.0 | Total Indebtedness as of June 28, 2025 | Instrument | Amount (in millions) | | :--- | :--- | | 2021 Extended Term Loan | $886.0 | | Second Lien Term Loan | $415.0 | | Securitization Facility | $168.8 | | **Total Indebtedness** | **$1,469.7** | - The company's interest rate exposure is managed with **$520.0 million** in interest rate swaps and **$880.0 million** in interest rate caps[18](index=18&type=chunk) [Cash Flow Summary](index=3&type=section&id=Cash%20Flow%20Summary) For the first six months of 2025, the company generated **$42.9 million** in net cash from operating activities, a significant improvement from the **$10.2 million** used in the same period last year, with free cash flow positive at **$36.9 million** Cash Flow for the Six-Month Period Ended June 28, 2025 | Cash Flow Item | H1 2025 (in thousands) | H1 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $42,937 | $(10,163) | | Net cash used in investing activities | $(18,330) | $(2,577) | | Net cash (used in) provided by financing activities | $(8,157) | $16,459 | - Free cash flow for the first six months of 2025 was **$36.9 million**[18](index=18&type=chunk)[50](index=50&type=chunk) Detailed Financial Results and Reconciliations [Consolidated Results of Operations](index=10&type=section&id=Consolidated%20Results%20of%20Operations) The consolidated income statement for Q2 and H1 2025 shows strong top-line revenue growth, improved gross margins, and a significant increase in operating and net income, with Q2 2025 operating income more than doubling to **$80.0 million** Consolidated Income Statement Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $589,553 | $504,958 | $1,148,777 | $995,611 | | **Operating Income** | $80,034 | $37,126 | $131,835 | $59,992 | | **Income before taxes** | $44,138 | $3,979 | $54,286 | $5,469 | | **Net Income** | $27,025 | $13,906 | $32,218 | $2,734 | [Segment Performance](index=12&type=section&id=Segment%20Performance) All three business segments contributed to growth, with Private Duty Services (PDS) driving a **19.2%** revenue increase in Q2, Home Health & Hospice (HHH) growing **10.0%**, and Medical Solutions (MS) seeing a **2.2%** revenue increase [Private Duty Services (PDS) Segment](index=12&type=section&id=Private%20Duty%20Services%20(PDS)%20Segment) The PDS segment delivered strong Q2 2025 results, with revenue increasing **19.2%** to **$486.0 million**, driven by a **6.9%** increase in hours and a **12.3%** increase in revenue rate, expanding gross margin percentage to **32.5%** PDS Segment Performance - Q2 2025 vs Q2 2024 | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Revenue | $486.0 | $407.9 | +19.2% | | Gross Margin | $157.9 | $110.9 | +42.5% | | Gross Margin % | 32.5% | 27.2% | +5.3 pts | | Hours (thousands) | 11,053 | 10,336 | +6.9% | [Home Health & Hospice (HHH) Segment](index=12&type=section&id=Home%20Health%20%26%20Hospice%20(HHH)%20Segment) The HHH segment reported a **10.0%** increase in Q2 2025 revenue to **$60.1 million**, supported by a **4.3%** rise in total admissions and a **6.9%** increase in total episodes, with gross margin improving to **55.0%** HHH Segment Performance - Q2 2025 vs Q2 2024 | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Revenue | $60.1 | $54.6 | +10.0% | | Gross Margin | $33.1 | $29.4 | +12.5% | | Gross Margin % | 55.0% | 53.8% | +1.2 pts | | Home health total admissions (thousands) | 9.8 | 9.4 | +4.3% | [Medical Solutions (MS) Segment](index=12&type=section&id=Medical%20Solutions%20(MS)%20Segment) The MS segment's revenue grew by **2.2%** to **$43.4 million** in Q2 2025, achieving a **10.0%** increase in gross margin despite a **3.2%** decrease in unique patients served, with the margin percentage expanding to **45.6%** MS Segment Performance - Q2 2025 vs Q2 2024 | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Revenue | $43.4 | $42.5 | +2.2% | | Gross Margin | $19.8 | $18.0 | +10.0% | | Gross Margin % | 45.6% | 42.4% | +3.2 pts | | Unique patients served (thousands) | 91 | 94 | -3.2% | [Non-GAAP Financial Measures and Reconciliations](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) The company utilizes several non-GAAP measures, including EBITDA, Adjusted EBITDA, Field Contribution, Adjusted Net Income, and Free Cash Flow, to evaluate financial performance, with detailed reconciliations provided to bridge these figures to comparable GAAP measures - The company uses non-GAAP measures like EBITDA, Adjusted EBITDA, Field contribution, Adjusted net income, and Free cash flow to supplement its GAAP results and highlight trends in core operating performance[17](index=17&type=chunk)[21](index=21&type=chunk)[25](index=25&type=chunk) [Reconciliation of Net Income to Adjusted EBITDA](index=14&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA) For Q2 2025, Net Income of **$27.0 million** was reconciled to an Adjusted EBITDA of **$88.4 million**, while for the six-month period, Net Income of **$32.2 million** was reconciled to an Adjusted EBITDA of **$155.7 million**, with adjustments primarily including interest, taxes, depreciation, non-cash share-based compensation, and acquisition-related costs Net Income to Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Income** | $27,025 | $13,906 | $32,218 | $2,734 | | Interest expense, net | $35,874 | $39,518 | $72,077 | $79,063 | | Income tax expense (benefit) | $17,113 | $(9,927) | $22,068 | $2,735 | | Depreciation and amortization | $2,617 | $2,833 | $5,211 | $5,745 | | **EBITDA** | $82,629 | $46,330 | $131,574 | $90,277 | | Total Adjustments | $5,745 | $(683) | $24,153 | $(9,747) | | **Adjusted EBITDA** | **$88,374** | **$45,647** | **$155,727** | **$80,530** | [Reconciliation of Net Income to Adjusted Net Income (Loss)](index=15&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income%20(Loss)) Adjusted Net Income for Q2 2025 was **$37.4 million**, or **$0.18** per diluted share, compared to **$2.5 million**, or **$0.01** per share, in the prior year, with H1 Adjusted Net Income at **$58.8 million**, or **$0.28** per share, a significant improvement from an adjusted net loss of **$3.2 million**, or **$(0.02)** per share, in H1 2024 Net Income to Adjusted Net Income Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Income** | $27,025 | $13,906 | $32,218 | $2,734 | | Total Adjustments (pre-tax) | $22,858 | $(10,610) | $46,221 | $(7,012) | | Income tax expense on adjusted income | $(12,471) | $(824) | $(19,610) | $1,070 | | **Adjusted Net Income (Loss)** | **$37,412** | **$2,472** | **$58,829** | **$(3,208)** | [Reconciliation of Gross Margin to Field Contribution](index=14&type=section&id=Reconciliation%20of%20Gross%20Margin%20to%20Field%20Contribution) Field Contribution, a non-GAAP measure, increased by **71.7%** to **$120.7 million** in Q2 2025, with the Field Contribution Margin expanding significantly to **20.5%** from **13.9%** in the prior-year quarter Gross Margin to Field Contribution Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | **Gross Margin** | $210,800 | $158,267 | $394,358 | $304,121 | | Branch and regional admin expenses | $(90,069) | $(87,972) | $(181,456) | $(175,886) | | **Field Contribution** | **$120,731** | **$70,295** | **$212,902** | **$128,235** | | **Field Contribution Margin** | 20.5% | 13.9% | 18.5% | 12.9% | [Reconciliation of Operating Cash Flow to Free Cash Flow](index=17&type=section&id=Reconciliation%20of%20Operating%20Cash%20Flow%20to%20Free%20Cash%20Flow) For the six-month period ended June 28, 2025, net cash provided by operations of **$42.9 million** was reconciled to a Free Cash Flow of **$36.9 million** after accounting for capital expenditures and principal payments on debt Operating Cash Flow to Free Cash Flow (H1 2025, in thousands) | Item | Amount | | :--- | :--- | | Net cash provided by operations | $42,937 | | Purchases of property and equipment, and software | $(3,477) | | Principal payments of term loans | $(4,600) | | Principal payments of notes payable and financing lease obligations | $(4,086) | | Settlements with swap counterparties | $6,144 | | **Free cash flow** | **$36,918** | Other Information [Conference Call Information](index=7&type=section&id=Conference%20Call%20Information) Aveanna will host a conference call on Thursday, August 7, 2025, at 10:00 a.m. Eastern Time to discuss the second quarter financial results, with details provided for accessing the live call, webcast, and replay - A conference call to discuss Q2 results is scheduled for August 7, 2025, at 10:00 a.m. Eastern Time[31](index=31&type=chunk) [About Aveanna Healthcare](index=9&type=section&id=About%20Aveanna%20Healthcare) Headquartered in Atlanta, Georgia, Aveanna Healthcare operates in 38 states, providing a wide range of pediatric and adult healthcare services focused on high-quality, lower-cost alternatives to prolonged hospitalization - Aveanna Healthcare is a diversified home care platform with locations in 38 states, offering a broad range of pediatric and adult healthcare services[35](index=35&type=chunk)

Core Insights - Aveanna Healthcare Holdings Inc. reported strong financial results for Q2 2025, with revenue growth of 16.8% and adjusted EBITDA growth of 93.6% compared to the same period last year [2][9] - The company is focused on providing high-quality home care services and has made strategic acquisitions to enhance its service offerings and market presence [2][3] Financial Performance - For the three-month period ended June 28, 2025, revenue was $589.6 million, up from $505.0 million for the same period in 2024, representing an increase of $84.6 million or 16.8% [3] - Gross margin for the same period was $210.8 million, or 35.8% of revenue, compared to $158.3 million, or 31.3% of revenue, for the prior year, marking an increase of $52.5 million or 33.2% [4] - Net income for Q2 2025 was $27.0 million, a 94.3% increase from $13.9 million in Q2 2024, with net income per diluted share rising to $0.13 from $0.07 [5][9] - Adjusted EBITDA for Q2 2025 was $88.4 million, or 15.0% of revenue, compared to $45.6 million, or 9.0% of revenue, for the same period in 2024, reflecting a 93.6% increase [6] Segment Performance - The PDS segment saw a revenue increase of $78.2 million, while the HHH segment revenue increased by $5.5 million, and the MS segment revenue rose by $1.0 million compared to Q2 2024 [3] - For the six-month period ended June 28, 2025, total revenue was $1,148.8 million, up from $995.6 million in the same period of 2024, an increase of $153.2 million or 15.4% [7] - Gross margin for the six-month period was $394.4 million, or 34.3% of revenue, compared to $304.1 million, or 30.5% of revenue, for the prior year, an increase of $90.2 million or 29.7% [8] Guidance and Future Outlook - The company has raised its full-year 2025 revenue guidance to greater than $2.3 billion, up from greater than $2.15 billion, and adjusted EBITDA guidance to greater than $270 million, updated from greater than $207 million [9][14] - The acquisition of Thrive Skilled Pediatric Care is highlighted as a strategic move to expand capabilities and scale in pediatric services [2][13] Cash Flow and Liquidity - As of June 28, 2025, the company had cash of $100.7 million and incremental borrowing capacity of $106.3 million under its securitization facility [16] - Net cash provided by operating activities for 2025 was $42.9 million, with free cash flow reported at $36.9 million [16][33]

Company Announcement - Aveanna Healthcare Holdings Inc. will release its second quarter results before the market opens on August 7, 2025 [1] - A conference call will follow at 10:00 a.m. (Eastern Time) on the same day [1] Conference Call Details - The conference call can be accessed by dialing 1-877-407-0789 for domestic callers and 1-201-689-8562 for international callers [2] - A replay of the call will be available three hours after it concludes, accessible at 1-844-512-2921 for domestic and 1-412-317-6671 for international callers, with a passcode of 13754011 [2] - The replay will be available until August 14, 2025 [2] Webcast Information - Interested parties can listen to a simultaneous webcast of the conference call via the Investor Relations section of the company's website [3] - The online replay will be available for one week following the call [3] Company Overview - Aveanna Healthcare is headquartered in Atlanta, Georgia, and operates in 36 states, providing a wide range of pediatric and adult healthcare services [4] - Services include nursing, rehabilitation, occupational nursing in schools, therapy services, day treatment centers, home health and hospice services, and delivery of enteral nutrition [4] - The company also offers case management services to coordinate care among insurers, physicians, hospitals, and other providers, as well as respite healthcare services for caregivers [4] - The services aim to provide high-quality, lower-cost alternatives to prolonged hospitalization [4]

Investor Presentation May 2025 Disclaimers and Forward-Looking Statements This investor presentation (this "presentation") and any oral statements made in connection with this presentation are for information purposes only and do not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation to purchase any equity, debt or other securities of Aveanna Healthcare Holdings Inc. (including its consolidated subsidiaries, "Aveanna," the "Company," "we," "us" or "our"). The information con ...

Core Viewpoint - Aveanna Healthcare Holdings Inc. has completed the acquisition of Thrive Skilled Pediatric Care, enhancing its position in the pediatric home care market and expanding its service offerings into new states [1][2][3]. Company Overview - Aveanna Healthcare is a diversified home care platform providing services to medically complex, high-cost patient populations, with a presence in 36 states [7]. - The company offers a wide range of healthcare services, including nursing, rehabilitation, therapy, and case management, aimed at providing high-quality, lower-cost alternatives to prolonged hospitalization [7]. Acquisition Details - Thrive SPC is one of the largest independent providers of pediatric home care, operating 23 locations across seven states [2]. - The acquisition is expected to create significant growth opportunities for Aveanna, reinforcing its commitment to clinical excellence and compassionate care [3]. - The deal was financed through a combination of common stock and cash [3]. Strategic Implications - The integration of Thrive SPC is anticipated to enhance Aveanna's existing footprint and introduce its specialized care model into two new states [2][3]. - The acquisition aligns with Aveanna's strategic mission to lead in delivering high-quality care while providing value and clinical innovation to payors and stakeholders [3]. Advisory and Legal Support - Edge Healthcare Partners acted as the financial advisor for Aveanna, while Cantor Fitzgerald & Co. served as the financial advisor for Thrive SPC [4]. - Legal counsel for Aveanna was provided by Bass, Berry & Sims, and Ropes & Gray LLP represented Thrive SPC [4].

Summary of Aviana Healthcare Conference Call Company Overview - **Company**: Aviana Healthcare - **Industry**: Healthcare Services and Managed Care Key Points and Arguments Focus on Home Healthcare - Aviana Healthcare emphasizes its commitment to home healthcare, viewing it as the preferred setting for patients to receive care, especially in light of macro and microeconomic factors affecting the healthcare landscape in 2025 [3][4][5] - The company believes it is well-positioned to benefit from ongoing discussions around Medicaid and Medicare, with a focus on maintaining the integrity of these programs while achieving savings for the federal government [4][5] Medicaid and Legislative Environment - There has been a positive bipartisan dialogue regarding Medicaid, which is seen as beneficial for Aviana's operations [7] - The company feels insulated from potential cuts to Medicaid due to its patient mix and the nature of its services [8] - Uncertainty in state legislative processes has created challenges, but Aviana expects clarity by late summer or early fall [10] Government Affairs Strategy - Aviana's government affairs strategy is split between protecting Medicaid rate integrity and achieving rate increases [12][13] - The company aims for more than 10 Medicaid rate wins in 2025, with a strong start already achieved [13] - The preferred payer strategy is gaining momentum, with a goal of reaching 30 preferred payers in the PDS segment [14][17] Financial Performance - Aviana reported a strong Q1 with a 6.1% year-over-year volume growth and a 16.5% revenue growth in the PDS division [27] - The company is focused on reinvesting revenue into caregiver wages to attract more talent [27] - There was a notable influx in reimbursements, contributing to a strong financial performance in Q1 [30] Home Health and Hospice Business - Aviana maintains a disciplined approach to its home health business, with a focus on episodic care, achieving 77% episodic episodes in the last quarter [44] - The company aims for a total revenue growth of 35% in the near term, with a long-term target of 5-7% growth [46] Capital Allocation Strategy - Aviana is focused on generating free cash flow and plans to allocate capital towards M&A opportunities, such as the acquisition of Thrive, which aligns with its business model [56][61] - The company has successfully deleveraged, targeting a leverage ratio below five turns in the next year and a half [59] Challenges in California - California remains a challenge due to low Medicaid reimbursement rates, which have hindered staffing efforts [35][36] - Aviana continues to advocate for better rates in California while growing its business in other states [42] Clinical Innovations - Aviana is investing in clinical innovations, which have led to improved clinical outcomes and reduced hospitalizations [22] - The company is focused on maintaining high standards of care while ensuring financial viability [52][53] Additional Important Content - The company is experiencing pent-up demand for caregivers, which is being addressed through strategic hiring and investment in caregiver wages [28] - Aviana's payer partners are increasingly recognizing the value of its clinical capabilities, which enhances its negotiating position [22][21] This summary encapsulates the key insights from the Aviana Healthcare conference call, highlighting the company's strategic focus, financial performance, and industry challenges.

Summary of Aviana Healthcare Conference Call Company Overview - **Company**: Aviana Healthcare - **Industry**: Home Care Services - **CEO**: Jeff Shaner - **CFO**: Matt Buckhalter - **Key Focus**: Strategic transformation and growth in home care services, including pediatric, adult, and geriatric care [3][5] Core Insights and Arguments - **Market Position**: Aviana is a leading national provider of home care services with over 340 locations across 34 states, serving over 80,000 patients weekly [4][6] - **Growth Strategy**: The company aims to enhance partnerships with government and preferred payers, identify cost efficiencies, modernize medical solutions, manage capital structure, and engage employees [10][12][13] - **Revenue Growth**: Aviana expects 2025 revenue to exceed $2.15 billion and adjusted EBITDA to exceed $207 million, reflecting a strong growth trajectory [8] - **Preferred Payer Agreements**: The goal is to increase preferred payer agreements from 22 to 30 by 2025, with a current mix of 54% in managed care organization volumes [14][15] - **Episodic Payer Mix**: The company aims to maintain an episodic payer mix above 70%, achieving 77% in Q1 2025 [19] Financial Performance - **Q1 Financials**: Revenues rose 14% year-over-year, with private duty services leading at 16.5% organic growth [27] - **Adjusted EBITDA**: Increased by 93.1% year-over-year to $67.4 million, driven by payer relations and government affairs strategies [28] - **Capital Structure**: Maintains liquidity of over $260 million and has $1.47 billion in variable rate debt, mostly hedged [29][30] Strategic Initiatives - **Acquisition Plans**: Recently announced plans to acquire Thrive Skilled Pediatric Care, expanding pediatric services into New Mexico and Kansas [6][7] - **Value-Based Agreements**: Focus on enhancing reimbursement rates and adding value-based agreements to improve clinical outcomes and attract caregivers [16] - **Legislative Advocacy**: Aiming to improve reimbursement rates in at least 10 states and advocate for Medicaid rate integrity for children with complex medical conditions [17][18] Additional Important Points - **Demand for Services**: The industry does not face a demand problem, with strong interest from state and federal governments for home and community-based care solutions [13] - **Long-Term Outlook**: Aviana is optimistic about its future, emphasizing cost-effective, patient-preferred solutions that align with payer and government interests [22][31]

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