Aveanna Healthcare(AVAH) - 2024 Q1 - Quarterly Results

Financial & Operational Highlights This section summarizes Aveanna's strong Q1 2024 financial performance, revised full-year guidance, and current liquidity position First Quarter 2024 Financial Results Aveanna reported strong Q1 2024 results with a 5.2% increase in revenue to $490.7 million and a 22.5% rise in Adjusted EBITDA to $34.9 million compared to the prior year, significantly narrowing net loss Q1 2024 Key Financial Metrics (vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $490.7M | $466.4M | +$24.3M | +5.2% | | Gross Margin | $145.9M | $144.5M | +$1.4M | +1.0% | | Net Loss | $(11.2)M | $(32.0)M | +$20.8M | -65.0% | | Adjusted EBITDA | $34.9M | $28.5M | +$6.4M | +22.5% | | Net Loss per Share | $(0.06) | $(0.17) | +$0.11 | -64.7% | - The CEO attributed the strong results to the company's continued transformation into a leading value-based homecare provider, emphasizing enhanced payor partnerships that allow for further investment in caregivers[2] Revised Full Year 2024 Guidance The company raised its full-year 2024 guidance, reflecting confidence from strong first-quarter performance and expectations for continued growth Updated Full Year 2024 Guidance | Metric | New Guidance (FY 2024) | Prior Guidance (FY 2024) | | :--- | :--- | :--- | | Revenue | > $1,970 million | $1,960 million - $1,980 million | | Adjusted EBITDA | > $150 million | $146 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[7] Liquidity and Debt As of March 30, 2024, the company maintained a solid liquidity position with $42.6 million in cash and over $220 million in available liquidity, including borrowing capacity, with total bank debt at approximately $1.48 billion - As of March 30, 2024, the company had $42.6 million in cash[5] - Total available liquidity is over $220 million, including an undrawn revolver with $168.2 million of capacity[5][6] - Net cash used by operating activities was $12.0 million in Q1 2024, a seasonal low, with the company expecting to be operating cash flow positive for the full year[5][6] Total Indebtedness as of March 30, 2024 | Instrument | Amount (in thousands) | | :--- | :--- | | 2021 Extended Term Loan | $897,450 | | Second Lien Term Loan | $415,000 | | Securitization Facility | $165,000 | | Total Indebtedness | $1,477,450 | - The company's interest rate exposure is managed through $520.0 million in interest rate swaps and $880.0 million in interest rate caps[5] Financial Tables This section presents detailed financial statements, including consolidated results, segment performance, and cash flow data Consolidated Results of Operations The consolidated income statement for Q1 2024 shows revenue of $490.7 million and operating income of $22.9 million, with a net loss of $11.2 million, a substantial reduction from Q1 2023 Consolidated Results of Operations (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenue | $490,653 | $466,413 | | Operating Income | $22,866 | $17,639 | | Interest Expense | $(39,647) | $(35,958) | | Other Income (Expense) | $18,169 | $(12,188) | | Net Loss | $(11,172) | $(31,998) | | Net Loss Per Share | $(0.06) | $(0.17) | Segment Performance In Q1 2024, revenue growth was driven by the Private Duty Services (PDS) and Medical Solutions (MS) segments, while Home Health & Hospice (HHH) saw improved gross margin despite a slight revenue decline Private Duty Services (PDS) The PDS segment's revenue grew 5.9% to $395.0 million, driven by increased hours, though gross margin percentage decreased due to higher cost of revenue PDS Segment Key Metrics (Q1 2024 vs Q1 2023) | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $395.0M | $372.9M | +5.9% | | Gross Margin | $100.1M | $104.2M | -3.9% | | Gross Margin % | 25.4% | 27.9% | -2.5% | | Hours (thousands) | 10,264 | 9,783 | +4.9% | Home Health & Hospice (HHH) The HHH segment's revenue slightly decreased by 2.7% to $54.6 million, but achieved a significant 15.8% increase in gross margin, expanding to 53.1% HHH Segment Key Metrics (Q1 2024 vs Q1 2023) | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $54.6M | $56.1M | -2.7% | | Gross Margin | $29.0M | $25.0M | +15.8% | | Gross Margin % | 53.1% | 44.6% | +8.5% | | Total Admissions (thousands) | 10.1 | 11.7 | -13.7% | Medical Solutions (MS) The MS segment delivered strong performance with a 9.9% revenue increase to $41.0 million, driven by an 8.2% increase in unique patients served, while maintaining a stable gross margin MS Segment Key Metrics (Q1 2024 vs Q1 2023) | Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $41.0M | $37.3M | +9.9% | | Gross Margin | $16.7M | $15.3M | +9.8% | | Gross Margin % | 40.8% | 40.8% | 0.0% | | Unique Patients Served (thousands) | 92 | 85 | +8.2% | Cash Flow Statement For Q1 2024, the company experienced a net cash outflow from operating activities of $12.0 million, a seasonal low, but expects to be operating cash flow positive for the full year Summary of Cash Flows (in thousands) | Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(11,972) | $7,495 | | Net cash used in investing activities | $(1,308) | $(4,800) | | Net cash provided by financing activities | $11,945 | $12,521 | | Cash and cash equivalents at end of period | $42,607 | $34,433 | Non-GAAP Financial Measures and Reconciliations This section defines and reconciles non-GAAP financial measures used to evaluate the company's performance, providing a normalized view of core operations Definitions of Non-GAAP Measures The company uses several non-GAAP measures, including EBITDA, Adjusted EBITDA, Field Contribution, Adjusted Net Income, and Free Cash Flow, to supplement GAAP results by excluding certain non-core items - EBITDA & Adjusted EBITDA: Net income adjusted for interest, taxes, D&A, and other items deemed non-recurring or not indicative of core operations, such as acquisition costs and restructuring charges[10] - Field Contribution: Gross margin less branch and regional administrative expenses, used to assess the performance of core field operations[13][15] - Adjusted Net Loss: Net loss adjusted for items like goodwill impairment, non-cash compensation, and acquisition costs, with a normalized tax provision applied[16] - Free Cash Flow: Operating cash flow adjusted for capital expenditures and mandatory debt payments, used as a measure of liquidity[17][18] Reconciliation of Net Loss to Adjusted EBITDA Adjusted EBITDA for Q1 2024 was $34.9 million, a 22.5% increase from Q1 2023, reconciled from a GAAP net loss by adding back interest, taxes, D&A, and adjusting for other items Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Loss | $(11,172) | $(31,998) | | Interest expense, net | $39,545 | $35,883 | | Income tax expense | $12,662 | $1,566 | | Depreciation and amortization | $2,912 | $4,041 | | EBITDA | $43,947 | $9,492 | | Total Adjustments | $(9,064) | $18,989 | | Adjusted EBITDA | $34,883 | $28,481 | Reconciliation of Net Loss to Adjusted Net Loss Adjusted net loss for Q1 2024 improved to $(5.7) million, or $(0.03) per share, compared to $(8.6) million in Q1 2023, after removing the after-tax impact of certain non-core items Reconciliation to Adjusted Net Loss (in thousands, except per share data) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Loss | $(11,172) | $(31,998) | | Total Adjustments (pre-tax) | $3,598 | $20,555 | | Adjusted pre-tax net loss | $(7,574) | $(11,443) | | Income tax expense on adjusted loss | $1,894 | $2,861 | | Adjusted Net Loss | $(5,680) | $(8,582) | | Adjusted Net Loss per Diluted Share | $(0.03) | $(0.05) | Other Reconciliations The report provides reconciliations for key operational and liquidity metrics, showing Field Contribution increased to $57.9 million and Free Cash Flow was negative $12.7 million for the quarter Reconciliation of Gross Margin to Field Contribution (in thousands) | Line Item | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Gross Margin | $145,854 | $144,465 | | Branch and regional admin expenses | $(87,914) | $(91,708) | | Field Contribution | $57,940 | $52,757 | Reconciliation of Operating Cash Flow to Free Cash Flow (in thousands) | Line Item | Q1 2024 | | :--- | :--- | | Net cash used in operating activities | $(11,972) | | Purchases of property and equipment | $(1,308) | | Principal payments of term loans | $(2,300) | | Principal payments of notes payable/leases | $(1,448) | | Settlements with swap counterparties | $4,344 | | Free Cash Flow | $(12,684) |