Aveanna Healthcare(AVAH) - 2024 Q2 - Quarterly Results

Financial Highlights and Outlook Second Quarter 2024 Financial Highlights Aveanna's Q2 2024 revenue grew 7.0% to $505.0M, with Adjusted EBITDA up 27.3% to $45.6M, though net income declined Q2 2024 Key Financial Metrics | Metric | Q2 2024 | Change vs. Q2 2023 | | :--- | :--- | :--- | | Revenue | $505.0 million | +7.0% | | Gross Margin | $158.3 million | +1.9% | | Net Income | $13.9 million | -45.7% | | Adjusted Net Income | $2.5 million | +$6.6 million | | Adjusted EBITDA | $45.6 million | +27.3% | Management Commentary Management attributes strong Q2 results to strategic transformation, driven by payor partnerships, caregiver investments, and cost reductions - CEO Jeff Shaner highlighted that the 7.0% revenue and 27.3% Adjusted EBITDA growth confirm the success of the company's strategic transformation and its focus on being a value-based homecare provider[2] - CFO Matt Buckhalter emphasized leveraging growth through strategic cost reductions, lower overhead, and successes in the preferred payor strategy and Government Affairs rate improvements[8] Revised Full Year 2024 Guidance Aveanna raised full-year 2024 guidance, projecting revenue over $1,985M and Adjusted EBITDA exceeding $158M after strong Q2 Updated Full Year 2024 Guidance | Metric | New Guidance | Prior Guidance | | :--- | :--- | :--- | | Revenue | > $1,985 million | > $1,970 million | | Adjusted EBITDA | > $158 million | > $150 million | - The company is not providing guidance on net income due to the volatility of certain inputs, such as fair value adjustments for interest rate swaps and caps[9] Detailed Financial Results Consolidated Results of Operations H1 2024 revenue grew 6.1% to $995.6M, shifting from a net loss to $2.7M net income, with Adjusted EBITDA up 25.2% to $80.5M Three-Month Period Ended June 29, 2024 Q2 2024 revenue rose 7.0% to $505.0M, driven by PDS and MS segments, though gross margin percentage declined and net income fell to $13.9M Q2 2024 vs Q2 2023 Consolidated Results | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $505.0M | $471.9M | +7.0% | | Gross Margin | $158.3M | $155.3M | +1.9% | | Net Income | $13.9M | $25.6M | -45.7% | | Diluted EPS | $0.07 | $0.13 | -46.2% | | Adjusted EBITDA | $45.6M | $35.9M | +27.3% | Six-Month Period Ended June 29, 2024 H1 2024 revenue grew 6.1% to $995.6M, led by PDS and MS, achieving $2.7M net income from a prior loss, with Adjusted EBITDA up 25.2% H1 2024 vs H1 2023 Consolidated Results | Metric | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $995.6M | $938.4M | +6.1% | | Gross Margin | $304.1M | $299.7M | +1.5% | | Net Income (Loss) | $2.7M | ($6.4M) | N/A | | Diluted EPS | $0.01 | ($0.03) | N/A | | Adjusted EBITDA | $80.5M | $64.3M | +25.2% | Segment Performance PDS was the primary growth driver in Q2 and H1 2024, with MS also strong, while HHH saw slight revenue decline but significant gross margin improvement Q2 2024 Segment Performance Q2 2024 PDS revenue grew 8.0% to $407.9M, MS revenue increased 9.3% to $42.5M, and HHH revenue declined 1.4% but improved gross margin Q2 2024 Revenue by Segment (vs Q2 2023) | Segment | Q2 2024 Revenue | YoY Change | | :--- | :--- | :--- | | Private Duty Services (PDS) | $407.9M | +8.0% | | Home Health & Hospice (HHH) | $54.6M | -1.4% | | Medical Solutions (MS) | $42.5M | +9.3% | H1 2024 Segment Performance H1 2024 PDS revenue grew 7.0% to $802.9M, MS revenue increased 9.6% to $83.5M, and HHH revenue declined 2.1% but expanded gross margin H1 2024 Revenue by Segment (vs H1 2023) | Segment | H1 2024 Revenue | YoY Change | | :--- | :--- | :--- | | Private Duty Services (PDS) | $802.9M | +7.0% | | Home Health & Hospice (HHH) | $109.2M | -2.1% | | Medical Solutions (MS) | $83.5M | +9.6% | Liquidity and Capital Resources Liquidity, Cash Flow, and Debt As of June 29, 2024, Aveanna had $47.7M cash, $1,480.2M total debt, and $221.2M in available liquidity, with H1 2024 free cash flow at $(12.4)M - As of June 29, 2024, the company had total liquidity of approximately $268.9 million, comprising $47.7M cash, $53.0M securitization facility capacity, and $168.2M revolver capacity[7] Indebtedness as of June 29, 2024 | Instrument | Amount (in thousands) | | :--- | :--- | | 2021 Extended Term Loan | $895,150 | | Second Lien Term Loan | $415,000 | | Securitization Facility | $170,000 | | Total Indebtedness | $1,480,150 | Cash Flow Summary (Six Months Ended June 29, 2024) | Cash Flow Item | Amount (in thousands) | | :--- | :--- | | Net cash used in operating activities | $(10,163) | | Net cash used in investing activities | $(2,577) | | Net cash provided by financing activities | $16,459 | | Free Cash Flow | $(12,363) | - The company utilizes interest rate swaps and caps to hedge its interest rate exposure on a significant portion of its variable rate debt[7] Non-GAAP Financial Measures Definitions and Reconciliations The company utilizes non-GAAP measures like Adjusted EBITDA and Free Cash Flow to assess performance, providing detailed reconciliations for these adjusted metrics - Adjusted EBITDA is a key metric used by management, defined as EBITDA adjusted for items such as goodwill impairments, share-based compensation, acquisition costs, and restructuring costs[11] - Field Contribution is a non-GAAP measure defined as gross margin less branch and regional administrative expenses, used to assess the performance of core field operations[14] Reconciliation of Net Income to Adjusted EBITDA (Q2 2024) | (in thousands) | Q2 2024 | | :--- | :--- | | Net Income | $13,906 | | Interest, Taxes, D&A | $32,424 | | EBITDA | $46,330 | | Adjustments | $(683) | | Adjusted EBITDA | $45,647 | Reconciliation of Net Income to Adjusted Net Income (Q2 2024) | (in thousands) | Q2 2024 | | :--- | :--- | | Net Income | $13,906 | | Adjustments (pre-tax) | $(10,610) | | Tax Impact of Adjustments | $(824) | | Adjusted Net Income | $2,472 |