Aveanna Healthcare(AVAH) - 2025 Q2 - Quarterly Results

Financial Performance Overview Second Quarter 2025 Financial Highlights 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] Six-Month 2025 Financial Highlights 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] Management Commentary 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] - 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] - CFO Matt Buckhalter credited the improved results to the team's relentless focus on operational excellence, disciplined execution, and delivering strong clinical outcomes[15] Full Year 2025 Guidance Revised Outlook 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] Financial Condition Liquidity and Capital Resources 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] Cash Flow Summary 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][50] Detailed Financial Results and Reconciliations Consolidated Results of Operations 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 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 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 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 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 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][21][25] Reconciliation of Net Income to Adjusted EBITDA 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) 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 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 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 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] About Aveanna Healthcare 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]