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
fourth quarter and year ended December 31, 2023.
Fourth Quarter 2023 Highlights
- Revenue growth of 4% to $292 million
- Net loss of $5.7 million, compared to net income of $3.4
million in the prior year period; diluted loss per share of $0.04,
compared to diluted earnings per share of $0.02 in the prior year
period
- Adjusted EBITDA1 of $67.3 million, compared to $71.4 million in
the prior year period; Adjusted Earnings Per Share1 of $0.13,
compared to $0.18 in the prior year period
Full-Year 2023 Highlights
- Revenue growth of 5% to $1.17 billion
- Net loss of $19.4 million, compared to net income of $30.2
million in the prior year period; diluted loss per share of $0.14,
compared to diluted earnings per share of $0.22 in the prior year
period
- Adjusted EBITDA of $266.9 million, compared to $296.6 million
in the prior year period; Adjusted Earnings Per Share1 of $0.55,
compared to $0.85 in the prior year period
- Total debt of $1.08 billion; Net debt1 of $1.06 billion; and,
Net leverage ratio1 of 3.97x
Fourth Quarter and Year-to-Date 2023 Financial
Results
Total revenue for the three months ended December 31, 2023 was
$292.0 million, representing a 3.7 percent increase from total
revenue of $281.7 million for the same period of 2022. Total
revenue for the year ended December 31, 2023 was $1.17 billion,
representing a 4.8 percent increase from total revenue of $1.12
billion for the same period of 2022.
Net loss for the three months ended December 31, 2023 was $5.7
million, compared to net income of $3.4 million for the same period
of 2022. Net loss for the year ended December 31, 2023 was $19.4
million compared to net income of $30.2 million for the same period
of 2022.
Adjusted EBITDA1 for the three months ended December 31, 2023
was $67.3 million, a 5.7 percent decrease from Adjusted EBITDA1 of
$71.4 million for the same period of 2022. Adjusted EBITDA1 for the
year ended December 31, 2023 was $266.9 million, a 10.0 percent
decrease from Adjusted EBITDA1 of $296.6 million for the same
period of 2022.
Agiliti to be Taken Private by THL Partners
On Monday, February 26, 2024, the company announced it has
entered into a definitive merger agreement pursuant to which an
affiliate of private equity firm Thomas H. Lee Partners, L.P.
(“THL”), the company’s majority shareholder, will acquire all
outstanding shares of Agiliti common stock not currently owned by
THL and its affiliates and certain management shareholders for
$10.00 per share in cash, implying an enterprise value of
approximately $2.5 billion.
The transaction is expected to close in the first half of 2024,
subject to customary closing conditions. The transaction has been
approved by THL Agiliti LLC in its capacity as the majority
shareholder of Agiliti and no other shareholder approval is
required. Upon completion of the transaction, Agiliti will become a
private company and will no longer be publicly listed or traded on
the New York Stock Exchange. In light of this agreement, Agiliti
will no longer hold a conference call to discuss financial results
for the fourth quarter and full year 2023. Further detail on the
transaction agreement can be found in the company’s press release
at investors.agilitihealth.com.
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.
1 See further discussion below under "Use of non-GAAP
information."
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; risks associated with transaction
with THL generally, such as the inability to obtain, or delays in
obtaining, any required regulatory approvals or other consents; the
failure to consummate or delay in consummating the merger for other
reasons; the risk that a condition to closing of the merger may not
be satisfied; the occurrence of any event, change or other
circumstances that could give rise to the termination of the merger
agreement; the outcome of any legal proceedings that may be
instituted following announcement of the merger; failure to retain
key management and employees of Agiliti; unfavorable reaction to
the merger by customers, competitors, suppliers and employees 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)
Three Months Ended
December 31,
Year Ended December
31,
2023
2022
2023
2022
Revenue
$
291,986
$
281,679
$
1,174,604
$
1,121,292
Cost of revenue
193,430
174,100
770,501
690,318
Gross margin
98,556
107,579
404,103
430,974
Selling, general and administrative
expense
81,939
84,685
339,312
338,988
Operating income
16,617
22,894
64,791
91,986
Loss on extinguishment / modification of
debt
—
—
4,527
1,418
Interest expense
23,461
14,983
84,115
49,439
Tax indemnification expense
—
—
—
11,918
Income (loss) before income taxes and
noncontrolling interest
(6,844
)
7,911
(23,851
)
29,211
Income tax (benefit) expense
(1,225
)
4,440
(4,732
)
(1,232
)
Consolidated net income (loss)
(5,619
)
3,471
(19,119
)
30,443
Net income attributable to noncontrolling
interest
92
100
306
231
Net income (loss) attributable to Agiliti,
Inc. and Subsidiaries
$
(5,711
)
$
3,371
$
(19,425
)
$
30,212
Basic income (loss) per share
$
(0.04
)
$
0.03
$
(0.14
)
$
0.23
Diluted income (loss) per share
$
(0.04
)
$
0.02
$
(0.14
)
$
0.22
Weighted-average common shares
outstanding:
Basic
135,090,561
133,461,895
134,647,238
132,602,747
Diluted
135,090,561
139,001,770
134,647,238
138,381,295
Agiliti, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share
information)
December 31,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
20,037
$
5,577
Accounts receivable, less allowance for
credit losses of $6,236 as of December 31, 2023 and $4,182 as of
December 31, 2022
215,684
207,753
Inventories
74,484
70,132
Prepaid expenses
20,231
23,458
Other current assets
7,307
9,393
Total current assets
337,743
316,313
Property and equipment, net
292,684
273,958
Goodwill
1,239,432
1,239,106
Operating lease right-of-use assets
78,157
79,975
Other intangibles, net
430,002
512,020
Other
20,926
22,735
Total assets
$
2,398,944
$
2,444,107
Liabilities and Equity
Current liabilities:
Current portion of long-term debt
$
18,468
$
17,752
Current portion of operating lease
liability
25,603
23,607
Current portion of obligation under tax
receivable agreement
12,796
34,694
Accounts payable
58,518
59,163
Accrued compensation
28,866
25,928
Accrued interest
21,451
5,039
Other current liabilities
30,906
31,198
Total current liabilities
196,608
197,381
Long-term debt, less current portion
1,061,062
1,077,293
Obligation under tax receivable agreement,
pension and other long-term liabilities
10,467
9,161
Operating lease liability, less current
portion
63,765
67,332
Deferred income taxes, net
126,219
146,615
Commitments and contingencies
Equity:
Common stock, $0.0001 par value;
500,000,000 shares authorized; 135,368,025 and 133,608,495 shares
issued; 135,352,336 and 133,608,495 outstanding as of December 31,
2023 and December 31, 2022, respectively
14
13
Treasury stock, at cost; 54,256 and —
shares as of December 31, 2023 and December 31, 2022,
respectively
(419
)
—
Additional paid-in capital
972,156
953,046
Accumulated deficit
(33,699
)
(14,274
)
Accumulated other comprehensive income
2,505
7,343
Total Agiliti, Inc. and Subsidiaries
equity
940,557
946,128
Noncontrolling interest
266
197
Total equity
940,823
946,325
Total liabilities and equity
$
2,398,944
$
2,444,107
Agiliti, Inc. and Subsidiaries
Consolidated Statements of Cash
Flows
(in thousands)
Year Ended December
31,
2023
2022
Cash flows from operating activities:
Consolidated net income (loss)
$
(19,119
)
$
30,443
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation
80,249
84,331
Amortization
93,683
95,452
Remeasurement of tax receivable
agreement
1,042
(2,124
)
Loss on extinguishment / modification of
debt
4,527
1,418
Provision for credit losses
2,305
3,903
Provision for inventory obsolescence
1,725
1,034
Non-cash share-based compensation
expense
20,186
18,775
Gain on sales and disposals of
equipment
(1,331
)
(1,101
)
Deferred income taxes
(17,321
)
1,292
Changes in operating assets and
liabilities:
Accounts receivable
(9,330
)
(3,976
)
Inventories
(5,547
)
(12,188
)
Other operating assets
(1,532
)
(10,144
)
Accounts payable
1,077
15,753
Accrued and other operating
liabilities
19,202
(23,092
)
Net cash provided by operating
activities
169,816
199,776
Cash flows from investing activities:
Medical equipment purchases
(52,118
)
(55,864
)
Property and office equipment
purchases
(34,230
)
(31,600
)
Proceeds from disposition of property and
equipment
3,895
2,963
Acquisitions, net of cash acquired
(1,350
)
(62,339
)
Intangible asset purchases
(89
)
(20
)
Net cash used in investing activities
(83,892
)
(146,860
)
Cash flows from financing activities:
Proceeds under debt arrangements
1,302,937
60,000
Payments under debt arrangements
(1,321,737
)
(160,023
)
Payments of principal under finance lease
liability
(9,502
)
(8,812
)
Payments of deferred financing costs
(9,579
)
—
Payments under tax receivable
agreement
(24,822
)
—
Distributions to noncontrolling
interests
(237
)
(154
)
Proceeds from exercise of stock
options
3,057
3,101
Dividend and equity distribution
payment
(321
)
(908
)
Purchases of treasury stock
(3,761
)
—
Shares forfeited for taxes
(6,301
)
(14,547
)
Acquisition holdback and contingent
consideration
(1,198
)
(321
)
Net cash used in financing activities
(71,464
)
(121,664
)
Net change in cash and cash
equivalents
14,460
(68,748
)
Cash and cash equivalents at the beginning
of period
5,577
74,325
Cash and cash equivalents at the end of
period
$
20,037
$
5,577
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
(unaudited)
Three Months Ended
December 31,
Year Ended December
31,
(in thousands)
2023
2022
2023
2022
Net income (loss) attributable to Agiliti,
Inc. and Subsidiaries
$
(5,711
)
$
3,371
$
(19,425
)
$
30,212
Interest expense
23,461
14,983
84,115
49,439
Income tax (benefit) (1)
(1,225
)
4,440
(4,732
)
(1,232
)
Depreciation and amortization
42,564
42,053
168,841
175,764
EBITDA
59,089
64,847
228,799
254,183
Non-cash share-based compensation
expense
4,325
3,710
20,186
18,775
Tax indemnification expense
—
—
—
11,918
Management and other expenses (2)
1,811
451
9,409
2,411
Transaction costs (3)
1,068
4,519
2,900
9,984
Tax receivable agreement remeasurement
1,042
(2,124
)
1,042
(2,124
)
Loss on extinguishment / modification of
debt (4)
—
—
4,527
1,418
Adjusted EBITDA
$
67,335
$
71,403
$
266,863
$
296,565
_____________________________
- Income tax (benefit) expense includes the $11.9 million tax
benefit due to the release of the reserve and associated interest
and penalties related to the Sizewise Acquisition offset in tax
indemnification expense.
- 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.
- Transaction costs represent costs associated with potential and
completed mergers and acquisitions.
- Loss on extinguishment / modification of debt for 2023 consists
of the write-off of the 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
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
(unaudited)
Three Months Ended
December 31,
Year Ended December
31,
(in thousands, except share and per share
information)
2023
2022
2023
2022
Net income (loss) attributable to Agiliti,
Inc. and Subsidiaries
$
(5,711
)
$
3,371
$
(19,425
)
$
30,212
Amortization
21,745
23,223
88,593
91,432
Non-cash share-based compensation
expense
4,325
3,710
20,186
18,775
Tax indemnification expense (1)
—
—
—
11,918
Management and other expenses (2)
1,811
451
9,409
2,411
Transaction costs (3)
1,068
4,519
2,900
9,984
Tax receivable agreement remeasurement
1,042
(2,124
)
1,042
(2,124
)
Loss on extinguishment / modification of
debt (4)
—
—
4,527
1,418
Income tax benefit associated with pre-tax
adjustments (5)
(6,950
)
(8,630
)
(30,655
)
(46,538
)
Adjusted net income
$
17,330
$
24,520
$
76,577
$
117,488
Weighted average shares outstanding -
diluted
136,382,223
139,001,770
138,057,476
138,381,295
Adjusted EPS
$
0.13
$
0.18
$
0.55
$
0.85
_____________________________
- Income tax (benefit) expense includes the $11.9 million tax
benefit due to the release of the reserve and associated interest
and penalties related to the Sizewise Acquisition offset in tax
indemnification expense.
- 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.
- Transaction costs represent costs associated with potential and
completed mergers and acquisitions.
- Loss on extinguishment / modification of debt for 2023 consists
of the write-off of the 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
2022 consists of the write-off of the unamortized debt discount
related to the partial prepayment of the First Lien Term Loan.
- 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
(unaudited)
(in thousands)
December 31, 2023
First Lien Term Loan, due 2030
$
1,072,313
Revolving Credit Facility, due 2028
—
Finance Lease Liability
27,374
Less: Unamortized Deferred Financing Costs
and Debt Discount
(20,157
)
Total Debt
1,079,530
Less: Cash
(20,037
)
Net Debt
$
1,059,493
LTM Adjusted EBITDA
$
266,863
Net Leverage
3.97 x
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version on businesswire.com: https://www.businesswire.com/news/home/20240305145738/en/
Kate Kaiser Corporate Communication and Investor Relations
kate.kaiser@agilitihealth.com
Agiliti (NYSE:AGTI)
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