Aveanna Healthcare Holdings Inc. (NASDAQ: AVAH), a leading,
diversified home care platform focused on providing care to
medically complex, high-cost patient populations, today announced
financial results for the three-month period and fiscal year ended
December 30, 2023.
Jeff Shaner, Chief Executive Officer, commented
“Our fourth quarter results reflect the substantial progress we
have made in 2023, highlighted by revenue and Adjusted EBITDA
growth of 6.1% and 30.4% respectively, when compared to the prior
year period. These strong results re-affirm our strategy to
transform our business with an emphasis on expanding our position
as a leading, value-based homecare provider. Enhanced payor
partnerships allow us to further invest in our caregivers and
deliver more care to more patients in need. We are delivering
high-quality outcomes to our patients at an exceptional value to
our government and payor partners. I am proud of our team's efforts
and the solid results they produced for the fourth quarter and full
year 2023. We are excited to carry this momentum into the new
year which supports our outlook for the full year 2024.”
Three-Month Periods Ended December 30, 2023 and
December 31, 2022
Revenue was $478.8 million for the three-month
period ended December 30, 2023, as compared to $451.1 million for
the three-month period ended December 31, 2022, an increase of
$27.7 million, or 6.1%. The overall increase in revenue was
attributable to a $22.2 million increase in Private Duty Services
(“PDS”) segment revenue and a $6.1 million increase in Medical
Solutions ("MS") segment revenue, offset by a $0.6 million decrease
in Home Health & Hospice (“HHH”) segment revenue over the
comparable quarter.
Gross margin was $148.4 million, or 31.0% of
revenue, for the three months ended December 30, 2023, as compared
to $128.8 million, or 28.5% of revenue, for the three months ended
December 31, 2022, an increase of $19.7 million, or 15.3%.
Net loss was $25.7 million for the fourth
quarter of 2023, as compared to net loss of $237.8 million for the
fourth quarter of 2022, primarily attributable to a $205.1 million
non-cash goodwill impairment charge recorded in the fourth quarter
of 2022. Net loss per diluted share was $(0.13) for the fourth
quarter of 2023, as compared to net loss per diluted share of
$(1.28) for the fourth quarter of 2022. Adjusted net loss per
diluted share was $(0.02) for the fourth quarter of 2023, as
compared to adjusted net loss per diluted share of $(0.03) for the
fourth quarter of 2022.
Adjusted EBITDA was $38.7 million, or 8.1% of
revenue, for the fourth quarter of 2023, as compared to $29.7
million, or 6.6% of revenue, for the fourth quarter of 2022, an
increase of $9.0 million or 30.4%. See "Non-GAAP Financial Measures
- EBITDA and Adjusted EBITDA" below.
Fiscal Years Ended December 30, 2023 and
December 31, 2022
Revenue was $1,895.2 million for the fiscal year
ended December 30, 2023, as compared to $1,787.6 million for the
fiscal year ended December 31, 2022, an increase of $107.6 million,
or 6.0%. The overall increase in revenue was attributable to a
$103.7 million increase in the PDS segment revenue and a $17.8
million increase in the MS segment revenue, partially offset by a
$14.0 million decrease in the HHH segment revenue over the
comparable period.
Gross margin was $595.4 million, or 31.4% of
revenue, for the fiscal year ended December 30, 2023, as compared
to $553.2 million, or 30.9% of revenue, for the fiscal year ended
December 31, 2022, an increase of $42.2 million, or 7.6%.
Net loss was $134.5 million for fiscal year
2023, as compared to net loss of $662.0 million for fiscal year
2022, primarily attributable to the difference in non-cash goodwill
impairment charges recorded in the respective periods. Net loss per
diluted share was $(0.71) for fiscal year 2023, as compared to net
loss per diluted share of $(3.57) for fiscal year 2022. Adjusted
net loss per diluted share was $(0.11) for fiscal year 2023, as
compared to adjusted net income per diluted share of $0.00 for
fiscal year 2022.
Adjusted EBITDA was $139.2 million, or 7.3% of
revenue, for fiscal year 2023, as compared to $129.3 million, or
7.2% of revenue, for fiscal year 2022 an increase of $9.9 million
or 7.6%.
Liquidity, Cash Flow, and
Debt
- As of December 30, 2023, we had
cash of $43.9 million and incremental borrowing capacity of $20.0
million under our securitization facility. Our revolver was
undrawn, with approximately $168.1 million of borrowing capacity
and approximately $31.9 million of outstanding letters of
credit.
- Fiscal year-to-date
2023 net cash provided by operating activities was $22.7 million.
Free cash flow was $12.5 million for year-to-date 2023. See
“Non-GAAP Financial Measures - Free cash flow” below.
- As of December 30,
2023 we had bank debt of $1,469.8 million. Our interest rate
exposure under our credit facilities is currently hedged with the
following instruments:
- $520.0 million
notional amount of interest rate swaps that convert variable rate
debt to a fixed rate, and
- $880.0 million
notional amount of interest rate caps that cap our exposure to SOFR
at 2.96%.
Matt Buckhalter, Chief Financial Officer,
commented “I am pleased with the continued execution of our 2023
strategic initiatives during the fourth quarter. Aveanna’s
performance is highlighted by the 6.1% growth in revenue and 30.4%
growth in Adjusted EBITDA as compared to prior year period. The
continued efforts of our strategic initiatives have positively
impacted our cash flow from operations in 2023. The success of our
preferred payor and government partner strategy gives us confidence
in the momentum we carry into 2024.”
Full Year 2024 Guidance
- Revenue of between $1,960 million and
$1,980 million
Consistent with prior practice, we are not
providing guidance on net income at this time due to the volatility
of certain required inputs that are not available without
unreasonable efforts, including future fair value adjustments
associated with our interest rate swaps and caps.
- Adjusted EBITDA of between $146 million
and $150 million
Non-GAAP Financial Measures
In addition to our results of operations
prepared in accordance with U.S. generally accepted accounting
principles (“GAAP”), we also evaluate our financial performance
using EBITDA, Adjusted EBITDA, Field contribution, Field
contribution margin, Adjusted net income or loss, Adjusted net
income or loss per diluted share, and Free cash flow. Given our
determination of adjustments in arriving at our computations, these
non-GAAP measures have limitations as analytical tools and should
not be considered in isolation or as substitutes or alternatives to
net income or loss, revenue, operating income or loss, cash flows
from operating activities, total indebtedness or any other
financial measures calculated in accordance with GAAP. The
reconciliations of these non-GAAP financial measures to their most
directly comparable GAAP measures are included in the financial
tables below.
EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are non-GAAP
financial measures and are not intended to replace financial
performance measures determined in accordance with GAAP, such as
net income (loss). Rather, we present EBITDA and Adjusted EBITDA as
supplemental measures of our performance. We define EBITDA as net
income (loss) before interest expense, net; income tax benefit
(expense); and depreciation and amortization. We define Adjusted
EBITDA as EBITDA, adjusted for the impact of certain other items
that are either non-recurring, infrequent, non-cash, unusual, or
items deemed by management to not be indicative of the performance
of our core operations, including impairments of goodwill,
intangible assets, and other long-lived assets; non-cash,
share-based compensation; loss on extinguishment of debt; fees
related to debt modifications; the effect of interest rate
derivatives; acquisition-related and integration costs; legal costs
and settlements associated with acquisition matters; COVID-19
related costs; restructuring costs; other legal matters; and other
system transition costs, professional fees and other costs. As
non-GAAP financial measures, our computations of EBITDA and
Adjusted EBITDA may vary from similarly termed non-GAAP financial
measures used by other companies, making comparisons with other
companies on the basis of this measure impracticable.
We believe our computations of EBITDA and
Adjusted EBITDA are helpful in highlighting trends in our core
operating performance. In determining which adjustments are made to
arrive at EBITDA and Adjusted EBITDA, we consider both (1) certain
non-recurring, infrequent, non-cash or unusual items, which can
vary significantly from year to year, as well as (2) certain other
items that may be recurring, frequent, or settled in cash but which
we do not believe are indicative of our core operating performance.
We use EBITDA and Adjusted EBITDA to assess operating performance
and make business decisions.
We have incurred substantial acquisition-related
costs and integration costs. The underlying acquisition activities
take place over a defined timeframe, have distinct project
timelines and are incremental to activities and costs that arise in
the ordinary course of our business. Therefore, we believe it is
important to exclude these costs from our Adjusted EBITDA because
it provides us a normalized view of our core, ongoing operations
after integrating our acquired companies, which we believe is an
important measure in assessing our performance.
Field contribution and Field contribution
margin
Field contribution and Field contribution margin
are non-GAAP financial measures and are not intended to replace
financial performance measures determined in accordance with GAAP,
such as gross margin and gross margin percentage. Rather, we
present Field contribution and Field contribution margin as
supplemental measures of our performance. We define Field
contribution as gross margin less branch and regional
administrative expenses. Field contribution margin is Field
contribution as a percentage of revenue. As non-GAAP financial
measures, our computations of Field contribution and Field
contribution margin may vary from similarly termed non-GAAP
financial measures used by other companies, making comparisons with
other companies on the basis of these measures impracticable.
Field contribution and Field contribution margin
have limitations as analytical tools and should not be considered
in isolation or as substitutes or alternatives to gross margin,
gross margin percentage, net income or loss, revenue, operating
income or loss, cash flows from operating activities, total
indebtedness or any other financial measures calculated in
accordance with GAAP.
Management believes Field contribution and Field
contribution margin are helpful in highlighting trends in our core
operating performance and evaluating trends in our branch and
regional results, which can vary from year to year. We use Field
contribution and Field contribution margin to make business
decisions and assess the operating performance and results
delivered by our core field operations, prior to corporate and
other costs not directly related to our field operations. These
metrics are also important because they guide us in determining
whether or not our branch and regional administrative expenses are
appropriately sized to support our caregivers and direct patient
care operations. Additionally, Field contribution and Field
contribution margin determine how effective we are in managing our
field supervisory and administrative costs associated with
supporting our provision of services and sale of products.
Adjusted net (loss) income and Adjusted net
(loss) income per diluted share
Adjusted net (loss) income represents net income
(loss) as adjusted for the impact of GAAP income tax, goodwill,
intangible and other long-lived asset impairment charges, non-cash
share-based compensation expense, loss on extinguishment of debt,
interest rate derivatives, acquisition-related costs, integration
costs, legal costs, COVID-related costs net of reimbursement,
restructuring costs, other legal matters, other system transition
costs, professional fees and certain other miscellaneous items on a
pre-tax basis. Adjusted net (loss) income includes a provision for
income taxes derived utilizing a combined statutory tax rate. The
combined statutory tax rate is our estimate of our long-term tax
rate. The most comparable GAAP measure is net income (loss).
Adjusted net (loss) income per diluted share
represents adjusted net (loss) income on a per diluted share basis
using the weighted-average number of diluted shares outstanding for
the period. The most comparable GAAP measure is net income (loss)
per share, diluted.
Adjusted net (loss) income and adjusted net
(loss) income per diluted share are important to us because they
allow us to assess financial results, exclusive of the items
mentioned above that are not operational in nature or comparable to
those of our competitors.
Free cash flow
Free cash flow is a liquidity measure that
represents operating cash flow, adjusted for the impact of
purchases of property, equipment and software, principal payments
on term loans, notes payable and financing leases, and settlements
with swap counterparties. The most comparable GAAP measure is cash
flow from operations.
We believe free cash flow is helpful in
highlighting the cash generated or used by the Company, after
taking into consideration mandatory payments on term loans, notes
payable and financing leases, as well as cash needed for
non-acquisition related capital expenditures, and cash paid to or
received from derivative counterparties.
Conference Call
Aveanna will host a conference call on Thursday,
March 14, 2024, at 10:00 a.m. Eastern Time to discuss our fourth
quarter and fiscal year 2023 results. The conference call can be
accessed live over the phone by dialing 1-877-407-0789, or for
international callers, 1-201-689-8562. A telephonic replay of the
conference call will be available until March 21, 2023, by dialing
1-844-512-2921, or for international callers, 1-412-317-6671. The
passcode for the replay is 13740762. A live webcast of our
conference call will also be available under the Investor Relations
section of our website: https://ir.aveanna.com/. The online replay
will also be available for one week following the call.
Forward-Looking Statements
Certain matters discussed in this press release
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements
(other than statements of historical facts) in this press release
regarding our prospects, plans, financial position, business
strategy and expected financial and operational results may
constitute forward-looking statements. Forward-looking statements
generally can be identified by the use of terminology such as
“believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,”
“seek,” “will,” “may,” “should,” “would,” “predict,” “project,”
“potential,” “continue,” “could,” “design,” or the negatives of
these terms or variations of them or similar expressions. These
statements are based on certain assumptions that we have made in
light of our experience in the industry as well as our perceptions
of historical trends, current conditions, expected future
developments and other factors we believe are appropriate in these
circumstances. These forward-looking statements are based on our
current expectations and beliefs concerning future developments and
their potential effect on us. Forward-looking statements involve a
number of risks and uncertainties that may cause actual results to
differ materially from those expressed or implied by such
forward-looking statements, such as our ability to successfully
execute our growth strategy, including through organic growth and
the completion of acquisitions, effective integration of the
companies we acquire, unexpected costs of acquisitions and
dispositions, the possibility that expected cost synergies may not
materialize as expected, the failure of Aveanna or the companies we
acquire to perform as expected, estimation inaccuracies in revenue
recognition, our ability to drive margin leverage through lower
costs, unexpected increases in SG&A and other expenses, changes
in reimbursement, changes in government regulations, changes in
Aveanna’s relationships with referral sources, increased
competition for Aveanna’s services or wage inflation, the failure
to retain or attract employees, changes in the interpretation of
government regulations or discretionary determinations made by
government officials, uncertainties regarding the outcome of rate
discussions with managed care organizations and our ability to
effectively collect our cash from these organizations, changes in
the case-mix of our patients, as well as the payor mix and payment
methodologies, legal proceedings, claims or governmental inquiries,
our ability to effectively collect and submit data required under
Electronic Visit Verification regulations, our ability to comply
with the terms and conditions of the CMS Review Choice
Demonstration program, our ability to effectively implement and
transition to new electronic medical record systems or billing and
collection systems, a failure to maintain the security and
functionality of our information systems or to defend against or
otherwise prevent a cybersecurity attack or breach, changes in tax
rates, our substantial indebtedness, the impact of adverse weather,
the impact to our business operations, and other risks set
forth under the heading “Risk Factors” in Aveanna’s Annual Report
on Form 10-K for its 2023 fiscal year filed with the Securities and
Exchange Commission on March 14, 2024, which is available
at www.sec.gov. In addition, these forward-looking statements
necessarily depend upon assumptions, estimates and dates that may
prove to be incorrect or imprecise. Accordingly, forward-looking
statements included in this press release do not purport to be
predictions of future events or circumstances, and actual results
may differ materially from those expressed by forward-looking
statements. All forward-looking statements speak only as of the
date made, and Aveanna undertakes no obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
About Aveanna Healthcare
Aveanna Healthcare is headquartered in Atlanta,
Georgia and has locations in 33 states providing a broad range of
pediatric and adult healthcare services including nursing,
rehabilitation services, occupational nursing in schools, therapy
services, day treatment centers for medically fragile and
chronically ill children and adults, home health and hospice
services, as well as delivery of enteral nutrition and other
products to patients. The Company also provides case management
services in order to assist families and patients by coordinating
the provision of services between insurers or other payers,
physicians, hospitals, and other healthcare providers. In addition,
the Company provides respite healthcare services, which are
temporary care provider services provided in relief of the
patient’s normal caregiver. The Company’s services are designed to
provide a high quality, lower cost alternative to prolonged
hospitalization. For more information, please
visit www.aveanna.com.
Investor Contact
Matt BuckhalterChief Financial OfficerIr@aveanna.com
Cash Flow and Information about
Indebtedness
The following table sets forth a summary of our
cash flows from operating, investing, and financing activities for
the periods presented:
| |
For the fiscal years ended |
|
| (dollars in thousands) |
December 30, 2023 |
|
|
December 31, 2022 |
|
|
Net cash provided by (used in) operating activities |
$ |
22,672 |
|
|
$ |
(48,402 |
) |
| Net cash used in investing
activities |
$ |
(8,794 |
) |
|
$ |
(25,291 |
) |
| Net cash provided by financing
activities |
$ |
10,847 |
|
|
$ |
62,420 |
|
| Cash and cash equivalents at
beginning of period |
$ |
19,217 |
|
|
$ |
30,490 |
|
| Cash and cash equivalents at
end of period |
$ |
43,942 |
|
|
$ |
19,217 |
|
The following table presents our long-term
indebtedness as of December 30, 2023:
| (dollars in thousands) |
|
|
|
|
|
|
|
Instrument |
|
Interest Rate |
|
|
December 30, 2023 |
|
|
2021 Extended Term Loan (1) |
|
S + 3.75 |
% |
|
$ |
899,750 |
|
| Second Lien Term Loan (1) |
|
S + 7.00 |
% |
|
|
415,000 |
|
| Revolving Credit Facility
(1) |
|
S + 3.75 |
% |
|
|
- |
|
| Securitization Facility |
|
S + 3.50 |
% |
|
|
155,000 |
|
| Total indebtedness |
|
|
|
|
$ |
1,469,750 |
|
| (1) S = Greater of 0.50% or
one-month SOFR, plus a CSA |
|
|
|
|
|
|
| |
|
|
|
|
|
|
Results of Operations
The following table summarizes our consolidated
results of operations for the periods indicated (amounts in
thousands, except per share data):
|
|
For the three-month periods ended |
|
For the fiscal years ended |
|
|
|
December 30, 2023 |
|
December 31, 2022 |
|
December 30, 2023 |
|
December 31, 2022 |
|
|
Revenue |
$ |
478,841 |
|
$ |
451,147 |
|
$ |
1,895,209 |
|
$ |
1,787,645 |
|
| Cost of revenue, excluding
depreciation and amortization |
|
330,393 |
|
|
322,372 |
|
|
1,299,777 |
|
|
1,234,418 |
|
| Branch and regional
administrative expenses |
|
87,011 |
|
|
89,947 |
|
|
360,978 |
|
|
357,230 |
|
| Corporate expenses |
|
28,299 |
|
|
31,880 |
|
|
113,034 |
|
|
137,864 |
|
| Goodwill impairment |
|
- |
|
|
205,139 |
|
|
105,136 |
|
|
675,346 |
|
| Depreciation and
amortization |
|
3,284 |
|
|
4,539 |
|
|
13,778 |
|
|
21,313 |
|
| Acquisition-related costs |
|
- |
|
|
30 |
|
|
466 |
|
|
99 |
|
| Other operating expense
(income) |
|
561 |
|
|
1,698 |
|
|
(6,032 |
) |
|
3,651 |
|
| Operating income (loss) |
|
29,293 |
|
|
(204,458 |
) |
|
8,072 |
|
|
(642,276 |
) |
| Interest income |
|
89 |
|
|
310 |
|
|
327 |
|
|
679 |
|
| Interest expense |
|
(39,704 |
) |
|
(33,975 |
) |
|
(153,246 |
) |
|
(107,720 |
) |
| Other (expense) income |
|
(21,273 |
) |
|
(1,020 |
) |
|
5,851 |
|
|
85,503 |
|
| Loss before income taxes |
|
(31,595 |
) |
|
(239,143 |
) |
|
(138,996 |
) |
|
(663,814 |
) |
| Income tax benefit |
|
5,859 |
|
|
1,364 |
|
|
4,472 |
|
|
1,780 |
|
| Net loss |
$ |
(25,736 |
) |
$ |
(237,779 |
) |
$ |
(134,524 |
) |
$ |
(662,034 |
) |
| Net loss per share: |
|
|
|
|
|
|
|
|
| Net loss per share, basic and
diluted |
$ |
(0.13 |
) |
$ |
(1.28 |
) |
$ |
(0.71 |
) |
$ |
(3.57 |
) |
| Weighted average shares of
common stock outstanding, basic and diluted |
|
190,928 |
|
|
186,166 |
|
|
189,956 |
|
|
185,553 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
The following tables summarize our consolidated
key performance measures, including Field contribution and Field
contribution margin, which are non-GAAP measures, for the periods
indicated:
| |
For the three-month periods ended |
|
| (dollars in thousands) |
December 30, 2023 |
|
December 31, 2022 |
|
Change |
|
% Change |
|
|
Revenue |
$ |
478,841 |
|
$ |
451,147 |
|
$ |
27,694 |
|
|
6.1 |
% |
| Cost of
revenue, excluding depreciation and amortization |
|
330,393 |
|
|
322,372 |
|
|
8,021 |
|
|
2.5 |
% |
| Gross
margin |
$ |
148,448 |
|
$ |
128,775 |
|
$ |
19,673 |
|
|
15.3 |
% |
|
Gross margin percentage |
|
31.0 |
% |
|
28.5 |
% |
|
|
|
|
| Branch
and regional administrative expenses |
|
87,011 |
|
|
89,947 |
|
|
(2,936 |
) |
|
-3.3 |
% |
| Field
contribution |
$ |
61,437 |
|
$ |
38,828 |
|
$ |
22,609 |
|
|
58.2 |
% |
|
Field contribution margin |
|
12.8 |
% |
|
8.6 |
% |
|
|
|
|
|
Corporate expenses |
$ |
28,299 |
|
$ |
31,880 |
|
$ |
(3,581 |
) |
|
-11.2 |
% |
|
As a percentage of revenue |
|
5.9 |
% |
|
7.1 |
% |
|
|
|
|
|
Operating income (loss) |
$ |
29,293 |
|
$ |
(204,458 |
) |
$ |
233,751 |
|
|
114.3 |
% |
|
As a percentage of revenue |
|
6.1 |
% |
|
-45.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
For the fiscal years ended |
|
| (dollars in thousands) |
December 30, 2023 |
|
December 31, 2022 |
|
Change |
|
% Change |
|
|
Revenue |
$ |
1,895,209 |
|
$ |
1,787,645 |
|
$ |
107,564 |
|
|
6.0 |
% |
| Cost of
revenue, excluding depreciation and amortization |
|
1,299,777 |
|
|
1,234,418 |
|
|
65,359 |
|
|
5.3 |
% |
| Gross
margin |
$ |
595,432 |
|
$ |
553,227 |
|
$ |
42,205 |
|
|
7.6 |
% |
|
Gross margin percentage |
|
31.4 |
% |
|
30.9 |
% |
|
|
|
|
| Branch
and regional administrative expenses |
|
360,978 |
|
|
357,230 |
|
|
3,748 |
|
|
1.0 |
% |
| Field
contribution |
$ |
234,454 |
|
$ |
195,997 |
|
$ |
38,457 |
|
|
19.6 |
% |
|
Field contribution margin |
|
12.4 |
% |
|
11.0 |
% |
|
|
|
|
|
Corporate expenses |
$ |
113,034 |
|
$ |
137,864 |
|
$ |
(24,830 |
) |
|
-18.0 |
% |
|
As a percentage of revenue |
|
6.0 |
% |
|
7.7 |
% |
|
|
|
|
|
Operating income (loss) |
$ |
8,072 |
|
$ |
(642,276 |
) |
$ |
650,348 |
|
|
101.3 |
% |
|
As a percentage of revenue |
|
0.4 |
% |
|
-35.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables summarize our key
performance measures by segment for the periods indicated:
| |
PDS |
|
|
| |
For the three-month periods ended |
|
|
| (dollars and hours in
thousands) |
December 30, 2023 |
|
December 31, 2022 |
|
Change |
|
% Change |
|
|
|
Revenue |
$ |
383,446 |
|
$ |
361,270 |
|
$ |
22,176 |
|
|
6.1 |
% |
|
| Cost of
revenue, excluding depreciation and amortization |
|
279,870 |
|
|
269,374 |
|
|
10,496 |
|
|
3.9 |
% |
|
| Gross
margin |
$ |
103,576 |
|
$ |
91,896 |
|
$ |
11,680 |
|
|
12.7 |
% |
|
|
Gross margin percentage |
|
27.0 |
% |
|
25.4 |
% |
|
|
|
1.6 |
% |
(4) |
|
Hours |
|
10,080 |
|
|
9,593 |
|
|
487 |
|
|
5.1 |
% |
|
| Revenue
rate |
$ |
38.04 |
|
$ |
37.66 |
|
$ |
0.38 |
|
|
1.0 |
% |
(1) |
| Cost of
revenue rate |
$ |
27.76 |
|
$ |
28.08 |
|
$ |
(0.32 |
) |
|
-1.2 |
% |
(2) |
| Spread
rate |
$ |
10.28 |
|
$ |
9.58 |
|
$ |
0.70 |
|
|
7.6 |
% |
(3) |
| |
|
|
|
|
|
|
|
|
|
| |
HHH |
|
|
| |
For the three-month periods ended |
|
|
| (dollars and
admissions/episodes in thousands) |
December 30, 2023 |
|
December 31, 2022 |
|
Change |
|
% Change |
|
|
|
Revenue |
$ |
54,103 |
|
$ |
54,726 |
|
$ |
(623 |
) |
|
-1.1 |
% |
|
| Cost of
revenue, excluding depreciation and amortization |
|
26,573 |
|
|
31,788 |
|
|
(5,215 |
) |
|
-16.4 |
% |
|
| Gross
margin |
$ |
27,530 |
|
$ |
22,938 |
|
$ |
4,592 |
|
|
20.0 |
% |
|
|
Gross margin percentage |
|
50.9 |
% |
|
41.9 |
% |
|
|
|
9.0 |
% |
(4) |
| Home
health total admissions (5) |
|
9.2 |
|
|
11.0 |
|
|
(1.8 |
) |
|
-16.4 |
% |
|
| Home
health episodic admissions (6) |
|
6.8 |
|
|
6.9 |
|
|
(0.1 |
) |
|
-1.4 |
% |
|
| Home
health total episodes (7) |
|
11.3 |
|
|
11.4 |
|
|
(0.1 |
) |
|
-0.9 |
% |
|
| Home
health revenue per completed episode (8) |
$ |
3,064 |
|
$ |
3,009 |
|
$ |
55 |
|
|
1.8 |
% |
|
| |
|
|
|
|
|
|
|
|
|
| |
MS |
|
|
| |
For the three-month periods ended |
|
|
| (dollars and UPS in
thousands) |
December 30, 2023 |
|
December 31, 2022 |
|
Change |
|
% Change |
|
|
|
Revenue |
$ |
41,292 |
|
$ |
35,151 |
|
$ |
6,141 |
|
|
17.5 |
% |
|
| Cost of
revenue, excluding depreciation and amortization |
|
23,950 |
|
|
21,210 |
|
|
2,740 |
|
|
12.9 |
% |
|
| Gross
margin |
$ |
17,342 |
|
$ |
13,941 |
|
$ |
3,401 |
|
|
24.4 |
% |
|
|
Gross margin percentage |
|
42.0 |
% |
|
39.7 |
% |
|
|
|
2.3 |
% |
(4) |
| Unique
patients served (“UPS”) |
|
90 |
|
|
83 |
|
|
7 |
|
|
8.4 |
% |
|
| Revenue
rate |
$ |
458.80 |
|
$ |
423.51 |
|
$ |
35.29 |
|
|
9.1 |
% |
(1) |
| Cost of
revenue rate |
$ |
266.11 |
|
$ |
255.54 |
|
$ |
10.57 |
|
|
4.5 |
% |
(2) |
| Spread
rate |
$ |
192.69 |
|
$ |
167.97 |
|
$ |
24.72 |
|
|
16.0 |
% |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
PDS |
|
|
| |
For the fiscal years ended |
|
|
| (dollars and hours in
thousands) |
December 30, 2023 |
|
December 31, 2022 |
|
Change |
|
% Change |
|
|
|
Revenue |
$ |
1,518,811 |
|
$ |
1,415,105 |
|
$ |
103,706 |
|
|
7.3 |
% |
|
| Cost of
revenue, excluding depreciation and amortization |
|
1,095,091 |
|
|
1,022,640 |
|
|
72,451 |
|
|
7.1 |
% |
|
| Gross
margin |
$ |
423,720 |
|
$ |
392,465 |
|
$ |
31,255 |
|
|
8.0 |
% |
|
|
Gross margin percentage |
|
27.9 |
% |
|
27.7 |
% |
|
|
|
0.2 |
% |
(4) |
|
Hours |
|
39,818 |
|
|
38,461 |
|
|
1,357 |
|
|
3.5 |
% |
|
| Revenue
rate |
$ |
38.14 |
|
$ |
36.79 |
|
$ |
1.35 |
|
|
3.8 |
% |
(1) |
| Cost of
revenue rate |
$ |
27.50 |
|
$ |
26.59 |
|
$ |
0.91 |
|
|
3.6 |
% |
(2) |
| Spread
rate |
$ |
10.64 |
|
$ |
10.20 |
|
$ |
0.44 |
|
|
4.5 |
% |
(3) |
| |
|
|
|
|
|
|
|
|
|
| |
HHH |
|
|
| |
For the fiscal years ended |
|
|
| (dollars and
admissions/episodes in thousands) |
December 30, 2023 |
|
December 31, 2022 |
|
Change |
|
% Change |
|
|
|
Revenue |
$ |
218,628 |
|
$ |
232,584 |
|
$ |
(13,956 |
) |
|
-6.0 |
% |
|
| Cost of
revenue, excluding depreciation and amortization |
|
113,762 |
|
|
130,721 |
|
|
(16,959 |
) |
|
-13.0 |
% |
|
| Gross
margin |
$ |
104,866 |
|
$ |
101,863 |
|
$ |
3,003 |
|
|
2.9 |
% |
|
|
Gross margin percentage |
|
48.0 |
% |
|
43.8 |
% |
|
|
|
4.2 |
% |
(4) |
| Home
health total admissions (5) |
|
40.1 |
|
|
49.0 |
|
|
(8.9 |
) |
|
-18.2 |
% |
|
| Home
health episodic admissions (6) |
|
28.6 |
|
|
30.2 |
|
|
(1.6 |
) |
|
-5.3 |
% |
|
| Home
health total episodes (7) |
|
45.5 |
|
|
48.5 |
|
|
(3.0 |
) |
|
-6.2 |
% |
|
| Home
health revenue per completed episode (8) |
$ |
3,032 |
|
$ |
2,987 |
|
$ |
45 |
|
|
1.5 |
% |
|
| |
|
|
|
|
|
|
|
|
|
| |
MS |
|
|
| |
For the fiscal years ended |
|
|
| (dollars and UPS in
thousands) |
December 30, 2023 |
|
December 31, 2022 |
|
Change |
|
% Change |
|
|
|
Revenue |
$ |
157,770 |
|
$ |
139,956 |
|
$ |
17,814 |
|
|
12.7 |
% |
|
| Cost of
revenue, excluding depreciation and amortization |
|
90,924 |
|
|
81,057 |
|
|
9,867 |
|
|
12.2 |
% |
|
| Gross
margin |
$ |
66,846 |
|
$ |
58,899 |
|
$ |
7,947 |
|
|
13.5 |
% |
|
|
Gross margin percentage |
|
42.4 |
% |
|
42.1 |
% |
|
|
|
0.3 |
% |
(4) |
| Unique
patients served (“UPS”) |
|
348 |
|
|
320 |
|
|
28 |
|
|
8.8 |
% |
|
| Revenue
rate |
$ |
453.36 |
|
$ |
437.36 |
|
$ |
16.00 |
|
|
3.9 |
% |
(1) |
| Cost of
revenue rate |
$ |
261.28 |
|
$ |
253.30 |
|
$ |
7.98 |
|
|
3.4 |
% |
(2) |
| Spread
rate |
$ |
192.09 |
|
$ |
184.06 |
|
$ |
8.02 |
|
|
4.7 |
% |
(3) |
1) Represents the
period over period change in revenue rate, plus the change in
revenue rate attributable to the change in volume. 2) Represents
the period over period change in cost of revenue rate, plus the
change in cost of revenue rate attributable to the change in
volume. 3) Represents the period over period change in spread rate,
plus the change in spread rate attributable to the change in
volume.4) Represents the change in margin percentage year over year
(or quarter over quarter). 5) Represents home health episodic and
fee-for-service admissions.6) Represents home health episodic
admissions.7) Represents episodic admissions and
recertifications.8) Represents Medicare revenue per completed
episode.
The following table reconciles gross margin and
gross margin percentage to Field contribution and Field
contribution margin:
| |
For the three-month periods ended |
|
For the fiscal years ended |
|
| (dollars in thousands) |
December 30, 2023 |
|
December 31, 2022 |
|
December 30, 2023 |
|
December 31, 2022 |
|
|
Gross margin |
$ |
148,448 |
|
$ |
128,775 |
|
$ |
595,432 |
|
$ |
553,227 |
|
| Branch
and regional administrative expenses |
|
87,011 |
|
|
89,947 |
|
|
360,978 |
|
|
357,230 |
|
| Field
contribution |
$ |
61,437 |
|
$ |
38,828 |
|
$ |
234,454 |
|
$ |
195,997 |
|
|
Revenue |
$ |
478,841 |
|
$ |
451,147 |
|
$ |
1,895,209 |
|
$ |
1,787,645 |
|
| Field
contribution margin |
|
12.8 |
% |
|
8.6 |
% |
|
12.4 |
% |
|
11.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles net loss to
EBITDA and Adjusted EBITDA:
| |
For the three-month periods ended |
|
For the fiscal years ended |
|
| (dollars in thousands) |
December 30, 2023 |
|
December 31, 2022 |
|
December 30, 2023 |
|
December 31, 2022 |
|
|
Net loss |
$ |
(25,736 |
) |
$ |
(237,779 |
) |
$ |
(134,524 |
) |
$ |
(662,034 |
) |
| Interest
expense, net |
|
39,615 |
|
|
33,665 |
|
|
152,919 |
|
|
107,041 |
|
| Income
tax expense (benefit) |
|
(5,859 |
) |
|
(1,364 |
) |
|
(4,472 |
) |
|
(1,780 |
) |
|
Depreciation and amortization |
|
3,284 |
|
|
4,539 |
|
|
13,778 |
|
|
21,313 |
|
|
EBITDA |
|
11,304 |
|
|
(200,939 |
) |
|
27,701 |
|
|
(535,460 |
) |
|
Goodwill, intangible and other long-lived asset impairment |
|
723 |
|
|
206,827 |
|
|
107,945 |
|
|
679,019 |
|
| Non-cash
share-based compensation |
|
3,014 |
|
|
1,785 |
|
|
13,158 |
|
|
15,893 |
|
| Interest
rate derivatives (1) |
|
21,253 |
|
|
801 |
|
|
(5,612 |
) |
|
(85,265 |
) |
|
Acquisition-related costs (2) |
|
- |
|
|
30 |
|
|
466 |
|
|
99 |
|
|
Integration costs (3) |
|
579 |
|
|
1,300 |
|
|
2,310 |
|
|
17,793 |
|
| Legal
costs and settlements associated with acquisition matters (4) |
|
47 |
|
|
697 |
|
|
(4,749 |
) |
|
4,082 |
|
|
COVID-related costs, net of reimbursement (5) |
|
- |
|
|
- |
|
|
- |
|
|
5,087 |
|
|
Restructuring (6) |
|
2,318 |
|
|
4,626 |
|
|
8,051 |
|
|
6,775 |
|
| Other
legal matters (7) |
|
96 |
|
|
12,240 |
|
|
(4,904 |
) |
|
12,240 |
|
| Other
system transition costs, professional fees and other (8) |
|
(671 |
) |
|
2,291 |
|
|
(5,176 |
) |
|
9,059 |
|
| Total
adjustments |
$ |
27,359 |
|
$ |
230,597 |
|
$ |
111,489 |
|
$ |
664,782 |
|
| Adjusted
EBITDA |
$ |
38,663 |
|
$ |
29,658 |
|
$ |
139,190 |
|
$ |
129,322 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles net loss to adjusted net (loss)
income and presents adjusted net (loss) income per diluted
share:
| |
For the three-month periods ended |
|
For the fiscal years ended |
|
| (dollars in thousands, except
share and per share data) |
December 30, 2023 |
|
December 31, 2022 |
|
December 30, 2023 |
|
December 31, 2022 |
|
| Net loss |
$ |
(25,736 |
) |
$ |
(237,779 |
) |
$ |
(134,524 |
) |
$ |
(662,034 |
) |
|
Income tax expense (benefit) |
|
(5,859 |
) |
|
(1,364 |
) |
|
(4,472 |
) |
|
(1,780 |
) |
|
Goodwill, intangible and other long-lived asset impairment |
|
723 |
|
|
206,827 |
|
|
107,945 |
|
|
679,019 |
|
|
Non-cash share-based compensation |
|
3,014 |
|
|
1,785 |
|
|
13,158 |
|
|
15,893 |
|
|
Interest rate derivatives (1) |
|
21,253 |
|
|
801 |
|
|
(5,612 |
) |
|
(85,265 |
) |
|
Acquisition-related costs (2) |
|
- |
|
|
30 |
|
|
466 |
|
|
99 |
|
|
Integration costs (3) |
|
579 |
|
|
1,300 |
|
|
2,310 |
|
|
17,793 |
|
|
Legal costs and settlements associated with acquisition matters
(4) |
|
47 |
|
|
697 |
|
|
(4,749 |
) |
|
4,082 |
|
|
COVID-related costs, net of reimbursement (5) |
|
- |
|
|
- |
|
|
- |
|
|
5,087 |
|
|
Restructuring (6) |
|
2,318 |
|
|
4,626 |
|
|
8,051 |
|
|
6,775 |
|
|
Other legal matters (7) |
|
96 |
|
|
12,240 |
|
|
(4,904 |
) |
|
12,240 |
|
|
Other system transition costs, professional fees and other (8) |
|
(671 |
) |
|
2,291 |
|
|
(5,176 |
) |
|
9,059 |
|
| Total adjustments |
|
21,500 |
|
|
229,233 |
|
|
107,017 |
|
|
663,002 |
|
| Adjusted pre-tax net (loss)
income |
|
(4,236 |
) |
|
(8,546 |
) |
|
(27,507 |
) |
|
968 |
|
| Income tax benefit (expense) on
adjusted pre-tax (loss) income (9) |
|
1,059 |
|
|
2,137 |
|
|
6,877 |
|
|
(242 |
) |
| Adjusted net (loss) income |
$ |
(3,177 |
) |
$ |
(6,409 |
) |
$ |
(20,630 |
) |
$ |
726 |
|
| Weighted average shares
outstanding, diluted |
|
190,928 |
|
|
186,166 |
|
|
189,956 |
|
|
185,553 |
|
| Adjusted net (loss) income per
diluted share (10) |
$ |
(0.02 |
) |
$ |
(0.03 |
) |
$ |
(0.11 |
) |
$ |
- |
|
The following footnotes are applicable to tables
above that reconcile (i) net (loss) income to EBITDA and Adjusted
EBITDA and (ii) net (loss) income to adjusted net (loss)
income.
1) Represents
valuation adjustments and settlements associated with interest rate
derivatives that are not included in interest expense, net. Such
items are included in other income. 2) Represents transaction costs
incurred in connection with planned, completed, or terminated
acquisitions, which include investment banking fees, legal
diligence and related documentation costs, and finance and
accounting diligence and documentation, as presented on the
Company’s consolidated statements of operations.3) Represents (i)
costs associated with our Integration Management Office, which
focuses on our integration efforts and transformational projects
such as systems conversions and implementations, material cost
reduction and restructuring projects, among other things, of $0.4
million and $1.5 million for the three-month period and fiscal year
ended December 30, 2023, respectively, and $0.5 million and $2.8
million for the three-month period and fiscal year ended December
31, 2022, respectively; and (ii) transitionary costs incurred to
integrate acquired companies into our field and corporate
operations of $0.2 million and $0.8 million for the three-month
period and fiscal year ended December 30, 2023, respectively, and
$0.8 million and $15.0 million for the three-month period and
fiscal year ended December 31, 2022, respectively. Transitionary
costs incurred to integrate acquired companies include IT
consulting costs and related integration support costs; salary,
severance and retention costs associated with duplicative acquired
company personnel until such personnel are exited from the Company;
accounting, legal and consulting costs; expenses and impairments
related to the closure and consolidation of overlapping markets of
acquired companies, including lease termination and relocation
costs; costs associated with terminating legacy acquired company
contracts and systems; and one-time costs associated with
rebranding our acquired companies and locations to the Aveanna
brand.4) Represents legal and forensic costs, as well as
settlements associated with resolving legal matters arising during
or as a result of our acquisition-related activities. This
primarily includes (i) costs of $0.3 million for the fiscal year
ended December 30, 2023, and $0.7 million and $3.8 million for the
three-month period and fiscal year ended December 31, 2022,
respectively, to comply with the U.S. Department of Justice,
Antitrust Division’s grand jury subpoena related to nurse wages and
hiring activities in certain of our markets, in connection with a
terminated transaction, no such costs were incurred during the
three-month period ending December 30, 2023 and (ii) release of
reserve of $(3.6) million during the fiscal year ended December 30,
2023, related to the settlement of a legal matter resulting from a
2020 acquisition.5) Represents costs incurred as a result of the
COVID-19 environment, primarily including, but not limited to, (i)
relief, vaccine, and hero pay provided to our caregivers; staffing
and retention related incentives to attract and retain caregivers
in the midst of the Omicron surge; and other incremental
compensation costs; (ii) sick leave for our caregivers required by
OSHA's Emergency Temporary Standard, costs required to comply with
federal, state and local vaccination mandates and testing
requirements, and worker compensation costs for mandated quarantine
time; (iii) incremental PPE costs; and (iv) salary, severance and
lease termination costs associated with workforce reductions
necessitated by COVID-19; net of temporary reimbursement rate
increases provided by certain state Medicaid and Medicaid Managed
Care programs. 6) Represents costs associated with restructuring
our branch and regional administrative footprint as well as our
corporate overhead infrastructure costs, in order to appropriately
size our resources to current volumes, including: (i) branch and
regional salary and severance costs; (ii) corporate salary and
severance costs; and (iii) rent and lease termination costs
associated with the closure of certain office locations. 7)
Represents adjustments to an accrued legal settlement and the
related costs and expenses associated with a certain judgment
rendered against the Company related to a civil litigation matter
in Texas.8) Represents (i) costs associated with the implementation
of, and transition to, new electronic medical record systems,
billing and collection systems, duplicative system costs while such
transformational projects are in-process, and other system
transition costs of $1.3 million for the fiscal year ended December
30, 2023, and $0.6 million and $6.0 million for the three-month
period and fiscal year ended December 31, 2022, respectively, there
were no such costs incurred in the three-month period ended
December 30, 2023, (ii) professional fees associated with
preparation for Sarbanes-Oxley compliance of $1.7 million and $3.2
million for the three-month period and fiscal year ended December
31, 2022, respectively; there were no such expenses recorded during
the three-month-period and fiscal year ended December 30, 2023
(iii) a $(5.1) million non-cash gain on the acquisition of certain
business licenses and other net assets in the fiscal year ended
December 30, 2023, and $(0.2) million of net gains on disposal of
businesses during the fiscal year ended December 31, 2022; there
were no such gains or losses recorded in any other periods, and
(iv) other costs or (income) that are either non-cash or non-core
to the Company’s ongoing operations of $(0.6) million and $(1.4)
million for the three-month period and fiscal year ended December
30, 2023, respectively, and $0.0 million and $0.1 million for the
three-month period and fiscal year ended December 31, 2022,
respectively.9) Derived utilizing a combined statutory rate of 25%
for the for the three-month periods and fiscal years ended December
30, 2023, and December 31, 2022, respectively, and applied to the
respective adjusted pre-tax (loss) income.10) Adjustments used to
reconcile net (loss) income per diluted share on a GAAP basis to
adjusted net (loss) income per diluted share are comprised of the
same adjustments, inclusive of the tax impact, used to reconcile
net (loss) income to adjusted net (loss) income divided by the
weighted-average diluted shares outstanding during the period.
The table below reflects the increase or
decrease, and aggregate impact, to the line items included on our
consolidated statements of operations based upon the adjustments
used in arriving at Adjusted EBITDA from EBITDA for the periods
indicated.
| |
For the three-month periods ended |
|
For the fiscal years ended |
|
| (dollars in thousands) |
December 30, 2023 |
|
December 31, 2022 |
|
December 30, 2023 |
|
December 31, 2022 |
|
|
Revenue |
$ |
- |
|
$ |
139 |
|
$ |
- |
|
$ |
139 |
|
| Cost of
revenue, excluding depreciation and amortization |
|
88 |
|
|
13,460 |
|
|
(4,424 |
) |
|
19,310 |
|
| Branch
and regional administrative expenses |
|
667 |
|
|
1,884 |
|
|
6,796 |
|
|
9,395 |
|
|
Corporate expenses |
|
4,760 |
|
|
7,227 |
|
|
15,388 |
|
|
42,343 |
|
| Goodwill
impairment |
|
- |
|
|
205,139 |
|
|
105,136 |
|
|
675,346 |
|
|
Acquisition-related costs |
|
- |
|
|
30 |
|
|
466 |
|
|
99 |
|
| Other
operating (income) expense |
|
(146 |
) |
|
1,698 |
|
|
(8,882 |
) |
|
3,652 |
|
| Other
income |
|
21,990 |
|
|
1,020 |
|
|
(2,991 |
) |
|
(85,502 |
) |
| Total
adjustments |
$ |
27,359 |
|
$ |
230,597 |
|
$ |
111,489 |
|
$ |
664,782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles the net increase (decrease) in
cash and cash equivalents to free cash flow:
| |
For the fiscal year ended |
|
| (dollars
in thousands) |
December 30, 2023 |
|
|
Net cash provided by operations |
|
22,672 |
|
|
Purchases of property and equipment, and software |
|
(6,116 |
) |
|
Principal payments of term loans |
|
(9,200 |
) |
|
Principal payments of notes payable and financing lease
obligations |
|
(10,483 |
) |
|
Settlements with swap counterparties |
|
15,632 |
|
| Free
cash flow |
$ |
12,505 |
|
|
|
|
|
|
Aveanna Healthcare (NASDAQ:AVAH)
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Aveanna Healthcare (NASDAQ:AVAH)
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