Can Aveanna Drive a Strong Third Quarter on Care-Delivery Momentum?

Core Insights - Aveanna Healthcare (AVAH) is set to report its third-quarter 2025 results on November 6, with previous earnings per share (EPS) of 18 cents exceeding estimates by 350% [1] Preliminary Q3 Results - Preliminary results indicate revenues between $616 million and $624 million, reflecting a year-over-year growth of 21.0% to 22.6%, driven by improved reimbursement rates and increased care-hour delivery [2] - Estimated net income ranges from $11 million to $15 million, showing a growth of approximately 126% to 135% year-over-year, while adjusted EBITDA is projected between $77 million and $81 million, indicating a year-over-year increase of about 61% to 69% [3] Factors Influencing Performance - Continued improvements in reimbursement rates and expansion of preferred-payer relationships likely supported revenue quality and performance in Q3 [4] - The expansion of preferred payers is expected to enhance pricing mix and stabilize revenue per hour, particularly in Private Duty Services [5] - Improvements in caregiver recruitment and retention have likely converted strong demand into more care hours delivered, contributing to revenue growth [6] Margin and Cash Generation - Incremental operating leverage and solid margin performance earlier in the year are expected to benefit Q3 earnings, with adjusted EBITDA reaching $88.4 million at a 15% margin in Q2 [7] - A year-to-date free cash flow of approximately $36.9 million positions the company well for continued cash generation in Q3 [9] Earnings Estimates - The Zacks Consensus Estimate for Q3 EPS is set at 8 cents, implying a 300% improvement from the prior-year quarter [10] Share Price Performance - Year-to-date, AVAH shares have increased by 105.9%, outperforming the Medical Outpatient and Home Healthcare Market's growth of 5.1% and the S&P 500 Composite's increase of 18% [13][14] Long-Term Investment Outlook - Management has raised full-year guidance to over $2.3 billion in revenues and more than $270 million in adjusted EBITDA, indicating confidence in sustained growth from improved reimbursement trends and operational efficiencies [17] - The company’s diverse service segments, including Private Duty Services and Home Health & Hospice, support a favorable long-term growth setup [18] - An improving cash-generation profile enhances the company's ability to reinvest in markets and pursue acquisitions, positioning it well for future revenue and earnings growth [19]