Agiliti Inc. (NYSE: AGTI) (“Agiliti”), a nationwide provider of
healthcare technology management and service solutions to the
healthcare industry, today announced its financial results for the
third quarter ended September 30, 2023, and reaffirmed its
financial outlook for the full year.
Third Quarter 2023 Highlights
- Revenue growth of 7.5% to $291.6 million
- Net loss of $12.7 million, compared to net income of $2.0
million in the prior year period; loss per share of $0.09, compared
to earnings per share of $0.01 per share in the prior year
period
- Adjusted EBITDA1 of $62.0 million, compared to $66.5 million in
the prior year period; Adjusted Earnings Per Share1 of $0.09,
compared to $0.19 in the prior year period
“Our team delivered strong results in the third quarter, beating
top and bottom line expectations and giving us confidence in our
full year outlook,” said Tom Leonard, CEO of Agiliti. “It is clear
that Agiliti has far more room to execute—and more unrealized
potential—than has been apparent in recent quarters. As we
rebalance our selling mix and focus on our customers’ immediate and
longer-term priorities, we believe our performance will once again
demonstrate profitable and predictable growth.”
Third Quarter 2023 Financial Results
Total revenue for the three months ended September 30, 2023 was
$291.6 million, representing a 7.5% increase from $271.2 million
for the same period of 2022. Total revenue for the nine months
ended September 30, 2023, was $882.6 million, representing a 5.1%
increase from $839.6 million for the same period of 2022.
Net loss for the three months ended September 30, 2023 was $12.7
million, compared to net income of $2.0 million for the same period
of 2022. Net loss for the nine months ended September 30, 2023, was
$13.7 million compared to net income of $26.8 million for the same
period of 2022.
Adjusted EBITDA1 for the three months ended September 30, 2023
was $62.0 million, a 6.6% decline from $66.5 million for the same
period of 2022. Adjusted EBITDA1 for the nine months ended
September 30, 2023, was 199.5 million, a 11.4% decline from $225.2
million for the same period of 2022.
2023 Financial Outlook
The company reaffirms its guidance for 2023 as follows:
- Revenue of $1.16 - $1.19 billion (consistent with prior
guidance)
- Adjusted EBITDA of $260 - $270 million2
- Adjusted earnings per share of $0.54 – $0.59 per share2
- Capex investment expected at $80 million
Conference Call Information
Agiliti will hold a conference call to discuss its third quarter
2023 results on Tuesday, November 7, at 5 p.m. Eastern Time (4 p.m.
Central Time).
_____________________________
1 Non-GAAP Measures. See further discussion on page 6
2 With regard to the non-GAAP Adjusted EBITDA guidance and
adjusted earnings per share guidance provided above, a
reconciliation to GAAP net income has not been provided as the
quantification of certain items included in the calculation of GAAP
net income cannot be calculated or predicted at this time without
unreasonable efforts. For example, the non-GAAP adjustment for
stock-based compensation expense requires additional inputs such as
number of shares granted and market price that are not currently
ascertainable, and the non-GAAP adjustment for certain reserves and
expenses depends on the timing and magnitude of these expenses and
cannot be accurately forecasted. For the same reasons, the Company
is unable to address the probable significance of the unavailable
information, which could have a potentially unpredictable, and
potentially significant, impact on its future GAAP financial
results. See further discussion below regarding historical Adjusted
EBITDA and historical adjusted earnings per share.
The conference call can be accessed live over the phone by
dialing 1-877-407-0792 or for international callers,
1-201-689-8263. The passcode for the live call and the replay is
13741317. A replay will be available two hours after the call and
can be accessed by dialing 1-844-512-2921, or for international
callers, 1-412-317-6671. The Access ID for the replay call is
13741317. The replay will be available until November 21, 2023.
Interested investors and other parties may also listen to a
simultaneous webcast of the conference call by visiting the Agiliti
Investor Relations site at https://investors.agilitihealth.com. The
online replay will be available for a limited time shortly
following the call.
About Agiliti
Agiliti is an essential service provider to the U.S. healthcare
industry with solutions that help support a more efficient, safe
and sustainable healthcare delivery system. Agiliti serves more
than 10,000 national, regional and local acute care and alternate
site providers across the U.S. For more than eight decades, Agiliti
has delivered medical equipment management and service solutions
that help healthcare providers reduce costs, increase operating
efficiencies and support optimal patient outcomes.
Forward-Looking Statements
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: Certain statements in this presentation and the
related conference call are looking forward in time, including
financial outlook and other preliminary results, and involve risks
and uncertainties. The following factors, among others, could
adversely affect our business, operations and financial condition
causing our actual results to differ materially from those
expressed in any forwardlooking statements: negative reaction of
our investors, our suppliers, our customers or our employees to our
leadership transition; market volatility of our common stock as a
result of our leadership transition; the risk that the leadership
transition may not provide the results that the company expects;
imbalances in our selling mix; effects from political and policy
changes that could limit our growth opportunities; our ability to
maintain existing contracts or contract terms with, or enter into
new contracts with customers; cancellations by or disputes with
customers; our ability to maintain our reputation, including by
protecting intellectual property; effects of a global economic
downturn on our customers and suppliers; competitive practices by
our competitors that could cause us to lose market share, reduce
our prices or increase our expenditures; the bundling of products
and services by our competitors, some of which we do not offer;
consolidation in the healthcare industry; adverse developments with
supplier relationships; our potential inability to attract and
retain key personnel; our potential inability to make attractive
acquisitions or successfully integrate acquire businesses; our need
for substantial cash to operate and expand our business as planned;
our substantial outstanding debt and debt service obligations;
restrictions imposed by the terms of our debt; a decrease in the
number of patients our customers are serving; our ability to effect
change in the manner in which health care providers traditionally
procure medical equipment; the absence of long-term commitments
with customers; our ability to renew contracts with group
purchasing organizations and integrated delivery networks; changes
in reimbursement rates and policies by third-party payors; the
impact of health care reform initiatives; the impact of significant
regulation of the health care industry and the need to comply with
those regulations; difficulties or delays in our continued
expansion into certain of our businesses/geographic markets and
developments of new businesses/geographic markets; additional
credit risks in increasing business with home care providers and
nursing homes, impacts of equipment product recalls or
obsolescence; impairment charges for goodwill or other long-lived
assets; an increase in expenses related to our pension plan;
potential claims related to the medical equipment that we outsource
and service; incurrence of costs that we cannot pass through to our
customers; a failure of our management information systems;
limitations inherent in all internal controls systems over
financial reporting; our failure to keep up with technological
changes; our failure to coordinate the management of our equipment;
challenges to our tax positions or changes in taxation laws;
litigation that may be costly to defend; federal privacy laws that
may subject us to more stringent penalties; our contracts with the
federal government that subject us to additional oversight; effects
of high interest rates; potential recall or obsolescence of our
large fleet of medical equipment; and other Risk Factors as
detailed in our most recent annual report on Form 10-K.
Agiliti, Inc. and
Subsidiaries
Consolidated Statements of
Operations
(in thousands, except share and
per share information)
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Revenue
$
291,633
$
271,185
$
882,618
$
839,613
Cost of revenue
194,875
169,582
577,071
516,218
Gross margin
96,758
101,603
305,547
323,395
Selling, general and administrative
expense
87,295
86,044
257,373
254,303
Operating income
9,463
15,559
48,174
69,092
Loss on extinguishment / modification of
debt
82
—
4,527
1,418
Interest expense
24,274
12,531
60,654
34,456
Tax indemnification expense
—
11,918
—
11,918
Income (loss) before income taxes and
noncontrolling interest
(14,893)
(8,890)
(17,007)
21,300
Income tax (benefit)
(2,271)
(10,879)
(3,507)
(5,672)
Consolidated net income (loss)
(12,622)
1,989
(13,500)
26,972
Net income attributable to noncontrolling
interest
79
38
214
131
Net income (loss) attributable to Agiliti,
Inc. and Subsidiaries
$
(12,701)
$
1,951
$
(13,714)
$
26,841
Basic earnings (loss) per share
$
(0.09)
$
0.01
$
(0.10)
$
0.20
Diluted earnings (loss) per share
$
(0.09)
$
0.01
$
(0.10)
$
0.19
Weighted-average common shares
outstanding:
Basic
134,971,632
133,212,218
134,498,671
132,313,218
Diluted
134,971,632
139,062,813
134,498,671
138,242,880
Agiliti, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share
information)
(unaudited)
September 30,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
30,386
$
5,577
Accounts receivable, less allowance for
credit losses of $6,565 as of September 30, 2023 and $4,182 as of
December 31, 2022
212,991
207,753
Inventories
79,195
70,132
Prepaid expenses
16,328
23,458
Other current assets
5,296
9,393
Total current assets
344,196
316,313
Property and equipment, net
284,035
273,958
Goodwill
1,239,432
1,239,106
Operating lease right-of-use assets
76,987
79,975
Other intangibles, net
449,826
512,020
Other
24,646
22,735
Total assets
$
2,419,122
$
2,444,107
Liabilities and Equity
Current liabilities:
Current portion of long-term debt
$
18,883
$
17,752
Current portion of operating lease
liability
25,106
23,607
Current portion of obligation under tax
receivable agreement
11,144
34,694
Accounts payable
70,995
59,163
Accrued compensation
33,782
25,928
Accrued interest
21,185
5,039
Other current liabilities
30,605
31,198
Total current liabilities
211,700
197,381
Long-term debt, less current portion
1,059,347
1,077,293
Obligation under tax receivable agreement,
pension and other long-term liabilities
9,468
9,161
Operating lease liability, less current
portion
63,160
67,332
Deferred income taxes, net
130,964
146,615
Commitments and contingencies
Equity:
Common stock, $0.0001 par value;
500,000,000 shares authorized; 135,193,414 and 133,608,495 shares
issued; 134,787,318 and 133,608,495 shares outstanding as of
September 30, 2023 and December 31, 2022, respectively
14
13
Treasury stock, at cost; 406,096 and —
shares as of September 30, 2023 and December 31, 2022,
respectively
(3,761)
—
Additional paid-in capital
969,617
953,046
Accumulated deficit
(27,988)
(14,274)
Accumulated other comprehensive income
6,361
7,343
Total Agiliti, Inc. and Subsidiaries
equity
944,243
946,128
Noncontrolling interest
240
197
Total equity
944,483
946,325
Total liabilities and equity
$
2,419,122
$
2,444,107
Agiliti, Inc. and Subsidiaries
Consolidated Statements of Cash
Flows
(in thousands)
(unaudited)
Nine Months Ended
September 30,
2023
2022
Cash flows from operating
activities:
Consolidated net income (loss)
$ (13,500)
$ 26,972
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation
59,430
65,502
Amortization
70,477
71,254
Loss on extinguishment / modification of
debt
4,527
1,418
Provision for credit losses
2,386
801
Provision for inventory obsolescence
1,717
859
Non-cash share-based compensation
expense
15,861
15,066
Gain on sales and disposals of
equipment
(1,429)
(793)
Deferred income taxes
(15,310)
(3,365)
Changes in operating assets and
liabilities:
Accounts receivable
(6,880)
3,420
Inventories
(10,941)
(6,539)
Other operating assets
5,628
(7,566)
Accounts payable
11,534
13,123
Accrued and other operating
liabilities
24,661
(18,251)
Net cash provided by operating
activities
148,161
161,901
Cash flows from investing
activities:
Medical equipment purchases
(35,960)
(37,494)
Property and office equipment
purchases
(25,079)
(20,374)
Proceeds from disposition of property and
equipment
3,116
2,695
Acquisitions, net of cash acquired
—
(3,125)
Net cash used in investing activities
(57,923)
(58,298)
Cash flows from financing
activities:
Proceeds under debt arrangements
1,266,937
20,000
Payments under debt arrangements
(1,283,049)
(146,173)
Payments of principal under finance lease
liability
(7,042)
(6,676)
Payments of deferred financing costs
(9,578)
—
Payments under tax receivable
agreement
(24,822)
—
Distributions to noncontrolling
interests
(171)
(100)
Proceeds from exercise of stock
options
2,670
2,949
Dividend and equity distribution
payment
(321)
(908)
Purchases of treasury stock
(3,761)
—
Shares forfeited for taxes
(6,292)
(14,488)
Payments of contingent consideration
—
(321)
Net cash used in financing activities
(65,429)
(145,717)
Net change in cash and cash
equivalents
24,809
(42,114)
Cash and cash equivalents at the beginning
of period
5,577
74,325
Cash and cash equivalents at the end of
period
30,386
32,211
Use of non-GAAP information
This press release contains non-GAAP measures, including EBITDA,
Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Net Debt and
Net Leverage Ratio. We use these internally as measures of
operational performance, or liquidity, as applicable, and disclose
them externally to assist analysts, investors and lenders in their
comparisons of operational performance, valuation and debt capacity
across companies with differing capital, tax and legal structures.
We believe the investment community frequently uses these measures
in the evaluation of similarly situated companies. Adjusted EBITDA
is also used by the Company as a factor to determine the total
amount of incentive compensation to be awarded to executive
officers and other employees. EBITDA, Adjusted EBITDA, Adjusted Net
Income, Adjusted EPS, Net Debt and Net Leverage Ratio, however, are
not measures of financial performance under accounting principles
generally accepted in the United States of America (“GAAP”) and
should not be considered as alternatives to, or more meaningful
than, net income as measures of operating performance or to cash
flows from operating, investing or financing activities or to total
debt as measures of liquidity or debt capacity. Since EBITDA,
Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Net Debt and
Net Leverage Ratio are not measures determined in accordance with
GAAP and are thus susceptible to varying interpretations and
calculations, these measures, as presented, may not be comparable
to other similarly titled measures of other companies. EBITDA,
Adjusted EBITDA, and Adjusted Net Income do not represent amounts
of funds that are available for management’s discretionary use.
EBITDA and Adjusted EBITDA presented may not be the same as EBITDA
and Adjusted EBITDA calculations as defined in the First Lien
Credit Facilities. EBITDA is defined as earnings attributable to
Agiliti, Inc. before interest expense, income taxes, depreciation
and amortization. Adjusted EBITDA is defined as EBITDA excluding
non-cash share-based compensation expense, management fees and
other non-recurring gains, expenses, or losses, transaction costs,
remeasurement of the tax receivable agreement and loss on
extinguishment of debt. LTM Adjusted EBITDA represents the last
twelve months (“LTM”) of Adjusted EBITDA.
Agiliti, Inc. and Subsidiaries
Non-GAAP Financial Measure: Adjusted
EBITDA
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)
2023
2022
2023
2022
Net income (loss) attributable to Agiliti,
Inc. and Subsidiaries
$
(12,701)
$
1,951
$
(13,714)
$
26,841
Interest expense
24,274
12,531
60,654
34,456
Income tax (benefit)
(2,271)
(10,879)
(3,507)
(5,672)
Depreciation and amortization
42,466
42,170
126,277
133,711
EBITDA
51,768
45,773
169,710
189,336
Non-cash share-based compensation
expense
5,387
4,859
15,861
15,066
Tax indemnification expense (1)
—
11,918
—
11,918
Management and other expenses (2)
4,544
1,959
7,572
1,959
Transaction costs (3)
263
1,944
1,858
5,465
Loss on extinguishment / modification of
debt (4)
82
—
4,527
1,418
Adjusted EBITDA
$
62,044
$
66,453
$
199,528
$
225,162
_____________________________
(1) Tax indemnification expense related to the Sizewise
Acquisition, which occurred in 2021.
(2) Management and other expenses represent non-recurring
expenses, including a severance charge related to the Chief
Executive Officer transition and charges related to a reduction in
workforce.
(3) Transaction costs represent costs associated with potential
and completed mergers and acquisitions.
(4) Loss on extinguishment / modification of debt for the three
months ended September 30, 2023 consists of the write-off of new
costs incurred in relation to the amendment of the First Lien Term
Loan. Loss on extinguishment / modification of debt for the nine
months ended September 30, 2023 consists of the write-off of
unamortized costs and new costs incurred in relation to the
amendment of the First Lien Term Loan and Revolving Credit
Facility. Loss on extinguishment / modification of debt for the
nine months ended September 30, 2022 consists of the write-off of
the unamortized debt discount related to the partial prepayment of
the First Lien Term Loan.
Agiliti, Inc. and Subsidiaries
Non-GAAP Financial Measure: Adjusted
Net Income and Adjusted EPS
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands, except share and per share
information)
2023
2022
2023
2022
Net income (loss) attributable to Agiliti,
Inc. and Subsidiaries
$
(12,701)
$
1,951
$
(13,714)
$
26,841
Amortization
22,194
23,080
66,848
68,209
Non-cash share-based compensation
expense
5,387
4,859
15,861
15,066
Tax indemnification expense (1)
—
11,918
—
11,918
Management and other expenses (2)
4,544
1,959
7,572
1,959
Transaction costs (3)
263
1,944
1,858
5,465
Loss on extinguishment / modification of
debt (4)
82
—
4,527
1,418
Income tax benefit associated with pre-tax
adjustments (5)
(7,804)
(19,663)
(23,705)
(37,908)
Adjusted net income
$
11,965
$
26,048
$
59,247
$
92,968
Weighted average shares outstanding -
diluted
139,001,683
139,062,813
139,039,588
138,242,880
Adjusted EPS
$
0.09
$
0.19
$
0.43
$
0.67
_____________________________
(1) Tax indemnification expense related to the Sizewise
Acquisition, which occurred in 2021.
(2) Management and other expenses represent non-recurring
expenses, including a severance charge related to the Chief
Executive Officer transition and charges related to a reduction in
workforce.
(3) Transaction costs represent costs associated with potential
and completed mergers and acquisitions.
(4) Loss on extinguishment / modification of debt for the three
months ended September 30, 2023 consists of the write-off of new
costs incurred in relation to the amendment of the First Lien Term
Loan. Loss on extinguishment / modification of debt for the nine
months ended September 30, 2023 consists of the write-off of
unamortized costs and new costs incurred in relation to the
amendment of the First Lien Term Loan and Revolving Credit
Facility. Loss on extinguishment / modification of debt for the
nine months ended September 30, 2022 consists of the write-off of
the unamortized debt discount related to the partial prepayment of
the First Lien Term Loan.
(5) Income tax benefit associated with pre-tax adjustments
represents the tax benefit associated with the reconciling items
between net income and Adjusted Net Income and includes both the
current and deferred income tax impact of the adjustments. To
determine the aggregate tax effect of the reconciling items, we
utilized statutory income tax rates ranging from 0% to 26%,
depending upon the applicable jurisdictions of each adjustment.
Agiliti, Inc. and Subsidiaries
Non-GAAP Financial Measure: Net Debt
and Net Leverage Ratio
(in thousands)
September 30, 2023
First Lien Term Loan, due 2030
$
1,075,000
Revolving Loan, due 2028
—
Finance lease liability
24,693
Less: Unamortized Deferred Financing Costs
and Debt Discount
(21,463)
Total Debt
1,078,230
Less: Cash
(30,386)
Net Debt
$
1,047,844
LTM Adjusted EBITDA
$
270,932
Net Leverage
3.87 x
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version on businesswire.com: https://www.businesswire.com/news/home/20231107333230/en/
Kate Kaiser Corporate Communication and Investor Relations
kate.kaiser@agilitihealth.com
Agiliti (NYSE:AGTI)
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