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 ended April 2, 2022.
Tony Strange, Chief Executive Officer, commented
“Despite the significant pressure on labor supply and operating
challenges created by the Omicron variant of COVID-19 in the first
quarter of 2022, our caregivers and support staff continued to work
tirelessly to deliver on our important mission of providing care
for our patients and families. Although we continue to face
near-term caregiver supply constraints like many other healthcare
providers, we have moved past the near-term impact from Omicron and
importantly the demand for our services has never been higher and
we remain optimistic about Aveanna's long-term prospects. While we
have benefitted from recent reimbursement rate increases in many
states, we continue to engage in dialogue with our payors on the
value and critical nature of our services, with the ultimate goal
of bringing more caregivers back to work. We are working diligently
to solve for the recent macro pressures, but despite these
challenges we are confident that the Aveanna platform and
infrastructure is primed for growth.
We also continue to focus on the integration of
our Accredited Nursing Services ("Accredited") and Comfort Care
Home Health Services acquisitions, which we completed in the fourth
fiscal quarter of 2021, in addition to identifying new acquisition
opportunities with the appropriate multiples."
Three-Month Periods Ended April 2, 2022 and
April 3, 2021
Revenue was $450.5 million for the three-month
period ended April 2, 2022, as compared to $417.2 million for the
three month period ended April 3, 2021, an increase of $33.4
million, or 8.0% The overall increase in revenue was primarily
attributable to a $35.1 million increase in Home Health &
Hospice (“HHH”) segment revenue. Private Duty Services ("PDS")
segment revenue was flat compared with the prior year quarter.
While the acquisition of Accredited in the fourth quarter of 2021
contributed incremental PDS revenue in the first quarter of 2022,
the Omicron variant pressured our PDS clinical workforce in the
first quarter, constraining caregiver recruitment and retention
efforts and negatively impacting PDS patient volumes.
Gross margin was $144.8 million, or 32.1% of
revenue, for the three months ended April 2, 2022, as compared to
$131.7 million, or 31.6% of revenue, for the three months ended
April 3, 2021, an increase of $13.1 million, or 10.0%.
Operating income decreased $14.5 million, or
51.3%, to $13.8 million for the first quarter of 2022, as compared
to $28.3 million for the first quarter of 2021. While operating
income benefited from a $13.1 million increase in gross margin, the
overall decrease resulted from a $6.2 million reduction in field
contribution and a $9.2 million increase in corporate expenses, net
of a $1.7 million reduction in acquisition-related costs.
Net income was $25.3 million for the first
quarter of 2022, as compared to $5.8 million for the first quarter
of 2021. Net income includes a $38.3 million non-cash gain,
recorded in other income, related to a material increase in
valuation of our interest rate swap and cap during the first
quarter of 2022. Net income per diluted share was $0.14 for the
first quarter of 2022, as compared to a net income per diluted
share of $0.04 for the first quarter of 2021. Adjusted net income
per diluted share was $0.04 for the first quarter of 2022, as
compared to $0.08 for the first quarter of 2021.
Adjusted EBITDA was $38.0 million, or 8.4% of
revenue, for the first quarter of 2022, as compared to $43.7
million, or 10.5% of revenue, for the first quarter of 2021.
Adjusted EBITDA benefitted from $3.1 million of American Rescue
Plan Act Recovery Funds received during the first quarter of
2022.
Cash Flow, Liquidity and
Debt
- Net cash used by operating
activities in the first quarter of 2022 decreased to $9.5 million
as compared to net cash used of $32.9 million for the first quarter
of 2021.
- As of April 2, 2022, we had cash of
$17.4 million with the following liquidity available under our
credit facilities:
- $182.4 million of available
borrowing capacity under our revolving credit facility,
- $10.0 million of availability under
our securitization facility, and
- $200.0 million of availability
under our delayed draw term loan facility for future
acquisitions.
- As of April 2, 2022 we had bank
debt of $1.4 billion. Our interest rate exposure under our credit
facilities is 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 LIBOR at 3.0%.
David Afshar, Chief Financial Officer, commented
"As we navigate our way through the challenging macro trends and
interest rate environment that our industry faces today, we have
taken proactive steps to mitigate our exposure to these pressures
by implementing interest rate hedges that reduce our exposure to
rising rates and we continued to benefit from a strong liquidity
position to support our strategic initiatives."
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 corporate expense, Adjusted net
income and Adjusted net income per diluted share. 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.
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 U.S. 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
(expense) benefit; 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; sponsor fees; 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; 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 in fiscal years 2022, 2021 and 2020.
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 operating income (loss). Rather, we present Field
contribution and Field contribution margin as supplemental measures
of our performance. We define Field contribution as operating
income (loss) prior to corporate expenses and other non-field
related costs, including depreciation and amortization,
acquisition-related costs, and other operating 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.
We believe 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 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 corporate expenses
Adjusted corporate expenses is a non-GAAP
financial measure and is not intended to replace financial
performance measures determined in accordance with GAAP, such as
corporate expenses. Rather, we present adjusted corporate expenses
as a supplemental measure of our performance. We define Adjusted
corporate expenses as corporate expenses adjusted for the impact of
certain other items that are either non-recurring, infrequent,
non-cash, unusual, or items deemed by us to not be indicative of
the performance of our core operations, including non-cash,
share-based compensation; sponsor fees; acquisition-related and
integration costs; legal costs and settlements associated with
acquisition matters; COVID related costs, net of reimbursement; and
other system transition costs, professional fees and other costs.
As non-GAAP financial measures, our computations of adjusted
corporate expenses 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 Adjusted corporate expenses is
helpful in highlighting trends in our corporate support function,
which can vary from year to year. We use Adjusted corporate
expenses to make business decisions in determining whether or not
our corporate expenses is appropriately sized to support our
caregivers and direct patient care operations. Excluding the
aforementioned items from corporate expenses that are either
non-recurring, infrequent, non-cash, unusual, or items deemed by us
to not be indicative of the performance of our core operations
allows us to evaluate adjusted corporate expenses in relation to
the support necessary for our caregivers and direct patient care
operations.
Adjusted net income and Adjusted net income per
diluted share
Adjusted net 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, sponsor fees, loss on extinguishment of debt,
interest rate derivatives, acquisition-related costs, integration
costs, legal costs, COVID-related costs net of reimbursement, ABA
exited operations, other system transition costs, professional fees
and certain other miscellaneous items on a pre-tax basis. Adjusted
net 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 income per diluted share represents
adjusted net 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 income and Adjusted net 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.
Conference CallAveanna will
host a conference call on Thursday, May 12, 2022, at 10:00 a.m.
Eastern Time to discuss our first quarter 2022 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 May 19, 2022, by dialing
1-844-512-2921, or for international callers,
1-412-317-6671. The passcode for the replay is 13728903. 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,” “predict,” “project,” “potential,”
“continue” 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, 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, 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, changes in tax rates, the impact of adverse weather, the
impact to our business operations, reimbursements and patient
population were the COVID-19 environment to
worsen, and other risks set forth under the heading “Risk
Factors” in Aveanna’s Annual Report on Form 10-K for its 2021
fiscal year filed with the Securities and Exchange Commission on
March 28, 2022, 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.
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 three month periods presented:
|
For the three-month periods ended |
|
(dollars in thousands) |
April 2, 2022 |
|
|
April 3, 2021 |
|
Net cash used in operating activities |
$ |
(9,476 |
) |
|
$ |
(32,911 |
) |
Net cash used in investing
activities |
$ |
(16,643 |
) |
|
$ |
(3,165 |
) |
Net cash provided by (used in)
financing activities |
$ |
13,068 |
|
|
$ |
(34,164 |
) |
Cash and cash equivalents at
beginning of period |
$ |
30,490 |
|
|
$ |
137,345 |
|
Cash and cash equivalents at end
of period |
$ |
17,439 |
|
|
$ |
67,105 |
|
The following table presents our long-term
indebtedness as of April 2, 2022:
(dollars in thousands) |
|
|
|
|
Instrument |
Interest Rate |
|
April 2, 2022 |
|
2021 Extended Term Loan |
L + 3.75% |
|
$ |
855,700 |
|
Term Loan - Second Lien Term
Loan |
L + 7.00% |
|
|
415,000 |
|
Revolving Credit Facility |
L + 3.75% |
|
|
- |
|
Securitization Facility |
BSBY + 2.00% |
|
|
140,000 |
|
Total indebtedness |
|
|
$ |
1,410,700 |
|
L = Greater of 0.50% or
one-month LIBOR |
|
|
|
|
Results of Operations
Three-Month Period Ended April 2, 2022
Compared to the Three-Month Period Ended April 3, 2021
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 |
|
|
April 2, 2022 |
|
April 3, 2021 |
|
Revenue |
$ |
450,534 |
|
$ |
417,160 |
|
Cost of revenue, excluding
depreciation and amortization |
|
305,708 |
|
|
285,477 |
|
Branch and regional
administrative expenses |
|
88,743 |
|
|
69,372 |
|
Corporate expenses |
|
36,567 |
|
|
27,399 |
|
Depreciation and
amortization |
|
5,819 |
|
|
4,848 |
|
Acquisition-related costs |
|
91 |
|
|
1,768 |
|
Other operating income |
|
(170 |
) |
|
- |
|
Operating income |
|
13,776 |
|
|
28,296 |
|
Interest income |
|
62 |
|
|
77 |
|
Interest expense |
|
(22,364 |
) |
|
(22,425 |
) |
Other income |
|
36,457 |
|
|
159 |
|
Income before income
taxes |
|
27,931 |
|
|
6,107 |
|
Income tax expense |
|
(2,597 |
) |
|
(309 |
) |
Net income |
$ |
25,334 |
|
$ |
5,798 |
|
Net income per share: |
|
|
|
|
Net income per share,
basic |
$ |
0.14 |
|
$ |
0.04 |
|
Weighted average shares of
common stock outstanding, basic |
|
184,927 |
|
|
142,123 |
|
Net income per share,
diluted |
$ |
0.14 |
|
$ |
0.04 |
|
Weighted average shares of
common stock outstanding, diluted |
|
185,427 |
|
|
146,266 |
|
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) |
April 2, 2022 |
|
April 3, 2021 |
|
Change |
|
% Change |
|
Revenue |
$ |
450,534 |
|
$ |
417,160 |
|
$ |
33,374 |
|
|
8.0 |
% |
Cost of revenue, excluding
depreciation and amortization |
|
305,708 |
|
|
285,477 |
|
|
20,231 |
|
|
7.1 |
% |
Gross margin |
$ |
144,826 |
|
$ |
131,683 |
|
$ |
13,143 |
|
|
10.0 |
% |
Gross margin percentage |
|
32.1 |
% |
|
31.6 |
% |
|
|
|
|
Branch and regional
administrative expenses |
|
88,743 |
|
|
69,372 |
|
|
19,371 |
|
|
27.9 |
% |
Field contribution |
$ |
56,083 |
|
$ |
62,311 |
|
$ |
(6,228 |
) |
|
-10.0 |
% |
Field contribution margin |
|
12.4 |
% |
|
14.9 |
% |
|
|
|
|
Corporate expenses |
$ |
36,567 |
|
$ |
27,399 |
|
$ |
9,168 |
|
|
33.5 |
% |
As a percentage of revenue |
|
8.1 |
% |
|
6.6 |
% |
|
|
|
|
Operating income |
$ |
13,776 |
|
$ |
28,296 |
|
$ |
(14,520 |
) |
|
-51.3 |
% |
As a percentage of revenue |
|
3.1 |
% |
|
6.8 |
% |
|
|
|
|
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) |
April 2, 2022 |
|
April 3, 2021 |
|
Change |
|
% Change |
|
|
Revenue |
$ |
350,190 |
|
$ |
350,827 |
|
$ |
(637 |
) |
|
-0.2 |
% |
|
Cost of revenue, excluding
depreciation and amortization |
|
251,874 |
|
|
248,997 |
|
|
2,877 |
|
|
1.2 |
% |
|
Gross margin |
$ |
98,316 |
|
$ |
101,830 |
|
$ |
(3,514 |
) |
|
-3.5 |
% |
|
Gross margin percentage |
|
28.1 |
% |
|
29.0 |
% |
|
|
|
-0.9 |
% |
(4) |
Hours |
|
9,612 |
|
|
9,910 |
|
|
(298 |
) |
|
-3.0 |
% |
|
Revenue rate |
$ |
36.43 |
|
$ |
35.40 |
|
$ |
1.03 |
|
|
2.8 |
% |
(1) |
Cost of revenue rate |
$ |
26.20 |
|
$ |
25.13 |
|
$ |
1.07 |
|
|
4.2 |
% |
(2) |
Spread rate |
$ |
10.23 |
|
$ |
10.28 |
|
$ |
(0.05 |
) |
|
-0.5 |
% |
(3) |
|
|
|
|
|
|
|
|
|
|
|
HHH |
|
|
|
For the three-month periods ended |
|
|
(dollars and
admissions/episodes in thousands) |
April 2, 2022 |
|
April 3, 2021 |
|
Change |
|
% Change |
|
|
Revenue |
$ |
66,623 |
|
$ |
31,518 |
|
$ |
35,105 |
|
|
111.4 |
% |
|
Cost of revenue, excluding
depreciation and amortization |
|
34,168 |
|
|
17,329 |
|
|
16,839 |
|
|
97.2 |
% |
|
Gross margin |
$ |
32,455 |
|
$ |
14,189 |
|
$ |
18,266 |
|
|
128.7 |
% |
|
Gross margin percentage |
|
48.7 |
% |
|
45.0 |
% |
|
|
|
3.7 |
% |
(4) |
Home health total
admissions(5) |
|
14.3 |
|
|
5.8 |
|
8.5 |
|
|
146.6 |
% |
|
Home health episodic
admissions(6) |
|
8.7 |
|
|
3.8 |
|
4.9 |
|
|
128.9 |
% |
|
Home health total
episodes(7) |
|
13.8 |
|
|
5.7 |
|
8.1 |
|
|
142.1 |
% |
|
Home health revenue per completed
episode(8) |
$ |
2,898 |
|
$ |
2,962 |
|
$ |
(64 |
) |
|
-2.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
MS |
|
|
|
For the three-month periods ended |
|
|
(dollars and UPS in
thousands) |
April 2, 2022 |
|
April 3, 2021 |
|
Change |
|
% Change |
|
|
Revenue |
$ |
33,721 |
|
$ |
34,815 |
|
$ |
(1,094 |
) |
|
-3.1 |
% |
|
Cost of revenue, excluding
depreciation and amortization |
|
19,666 |
|
|
19,151 |
|
|
515 |
|
|
2.7 |
% |
|
Gross margin |
$ |
14,055 |
|
$ |
15,664 |
|
$ |
(1,609 |
) |
|
-10.3 |
% |
|
Gross margin percentage |
|
41.7 |
% |
|
45.0 |
% |
|
|
|
-3.3 |
% |
(4) |
Unique patients served
(“UPS”) |
|
78 |
|
|
73 |
|
|
5 |
|
|
6.8 |
% |
|
Revenue rate |
$ |
432.32 |
|
$ |
476.92 |
|
$ |
(44.60 |
) |
|
-9.9 |
% |
(1) |
Cost of revenue rate |
$ |
252.13 |
|
$ |
262.34 |
|
$ |
(10.21 |
) |
|
-4.1 |
% |
(2) |
Spread rate |
$ |
180.19 |
|
$ |
214.58 |
|
$ |
(34.39 |
) |
|
-17.1 |
% |
(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 operating income
to Field contribution and Field contribution margin:
|
For the three-month periods ended |
|
(dollars in thousands) |
April 2, 2022 |
|
April 3, 2021 |
|
Operating income |
$ |
13,776 |
|
$ |
28,296 |
|
Other operating income |
|
(170 |
) |
|
- |
|
Acquisition-related costs |
|
91 |
|
|
1,768 |
|
Depreciation and
amortization |
|
5,819 |
|
|
4,848 |
|
Corporate expenses |
|
36,567 |
|
|
27,399 |
|
Field contribution |
$ |
56,083 |
|
$ |
62,311 |
|
Revenue |
$ |
450,534 |
|
$ |
417,160 |
|
Field contribution margin |
|
12.4 |
% |
|
14.9 |
% |
The following table reconciles net income to
EBITDA and Adjusted EBITDA:
|
|
For the three-month periods ended |
|
(dollars in thousands) |
|
April 2, 2022 |
|
April 3, 2021 |
|
Net income |
|
$ |
25,334 |
|
$ |
5,798 |
|
Interest expense, net |
|
|
22,302 |
|
|
22,348 |
|
Income tax expense |
|
|
2,597 |
|
|
309 |
|
Depreciation and
amortization |
|
|
5,819 |
|
|
4,848 |
|
EBITDA |
|
|
56,052 |
|
|
33,303 |
|
Goodwill, intangible and other
long-lived asset impairment |
|
|
(112 |
) |
|
(4 |
) |
Non-cash share-based
compensation |
|
|
4,815 |
|
|
712 |
|
Sponsor fees(1) |
|
|
- |
|
|
808 |
|
Interest rate derivatives(2) |
|
|
(36,183 |
) |
|
(51 |
) |
Acquisition-related costs and
other costs(3) |
|
|
91 |
|
|
1,768 |
|
Integration costs(4) |
|
|
6,747 |
|
|
3,469 |
|
Legal costs and settlements
associated with acquisition matters(5) |
|
|
1,039 |
|
|
575 |
|
COVID-related costs, net of
reimbursement(6) |
|
|
4,172 |
|
|
1,760 |
|
Other system transition costs,
professional fees and other(7) |
|
|
1,329 |
|
|
1,396 |
|
Total adjustments(8) |
|
$ |
(18,102 |
) |
$ |
10,433 |
|
Adjusted EBITDA |
|
$ |
37,950 |
|
$ |
43,736 |
|
The following table reconciles Corporate
expenses to Adjusted corporate expenses:
|
For the three-month periods ended |
|
(dollars in thousands) |
April 2, 2022 |
|
April 3, 2021 |
|
Corporate expenses |
$ |
36,567 |
|
$ |
27,399 |
|
Non-cash share-based compensation |
|
(4,029 |
) |
|
(549 |
) |
Sponsor fees(1) |
|
- |
|
|
(808 |
) |
Integration costs(4) |
|
(6,255 |
) |
|
(3,760 |
) |
Legal costs and settlements associated with acquisition
matters(5) |
|
(1,040 |
) |
|
(575 |
) |
COVID-related costs, net of reimbursement(6) |
|
(152 |
) |
|
(150 |
) |
Other system transition costs, professional fees and other(7) |
|
(1,631 |
) |
|
(1,904 |
) |
Total adjustments |
|
(13,107 |
) |
|
(7,746 |
) |
Adjusted corporate expenses |
$ |
23,460 |
|
$ |
19,653 |
|
Adjusted corporate expenses as a
percentage of revenue |
|
5.2 |
% |
|
4.7 |
% |
The following table reconciles net income to
Adjusted net income and presents Adjusted net income per diluted
share:
|
For the three-month periods ended |
|
(dollars in thousands, except
share and per share data) |
April 2, 2022 |
|
April 3, 2021 |
|
Net income |
$ |
25,334 |
|
$ |
5,798 |
|
Income tax expense |
|
2,597 |
|
|
309 |
|
Goodwill, intangible and other long-lived asset impairment |
|
(112 |
) |
|
(4 |
) |
Non-cash share-based compensation |
|
4,815 |
|
|
712 |
|
Sponsor fees(1) |
|
- |
|
|
808 |
|
Interest rate derivatives(2) |
|
(36,183 |
) |
|
(51 |
) |
Acquisition-related costs and other costs(3) |
|
91 |
|
|
1,768 |
|
Integration costs(4) |
|
6,747 |
|
|
3,469 |
|
Legal costs and settlements associated with acquisition
matters(5) |
|
1,039 |
|
|
575 |
|
COVID-related costs, net of reimbursement(6) |
|
4,172 |
|
|
1,760 |
|
Other system transition costs, professional fees and other(7) |
|
1,329 |
|
|
1,396 |
|
Total adjustments |
|
(15,505 |
) |
|
10,742 |
|
Adjusted pre-tax net income |
|
9,829 |
|
|
16,540 |
|
Income tax provision on adjusted
pre-tax income(9) |
|
(2,457 |
) |
|
(4,300 |
) |
Adjusted net income |
$ |
7,372 |
|
$ |
12,240 |
|
Weighted average shares
outstanding, diluted |
|
185,427 |
|
|
146,266 |
|
Adjusted net income per diluted
share(10) |
$ |
0.04 |
|
$ |
0.08 |
|
The following footnotes are applicable to tables
above that reconcile (i) Net income to EBITDA and Adjusted EBITDA,
(ii) Corporate expenses to Adjusted corporate expenses and (iii)
Net income to Adjusted net income. The adjustments to reconcile
Corporate expenses to Adjusted corporate expenses only represent
the amounts that were recorded within Corporate expenses.
1) |
|
Represents management fees previously payable to our sponsors under
our Management Agreement as defined in Note 12 – Related Party
Transactions within the notes accompanying our consolidated
financial statements included in this Quarterly Report on Form
10-Q. The Management Agreement terminated upon completion of our
initial public offering. |
2) |
|
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. |
3) |
|
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. |
4) |
|
Represents (i) costs associated with our Integration Management
Office, which focuses solely on our integration efforts, of $1.1
million and $0.9 million for the three-month periods ended April 2,
2022 and April 3, 2021, respectively; and (ii) transitionary costs
incurred to integrate acquired companies into our field and
corporate operations of $5.6 million and $2.6 million for the
three-month periods ended April 2, 2022 and April 3, 2021,
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. |
5) |
|
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 costs of $1.0 million and $0.6 million for the three-month
periods ended April 2, 2022 and April 3, 2021, 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. |
6) |
|
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. |
7) |
|
Represents (i) costs associated with the implementation of, and
transition to, new electronic medical record systems and billing
and collection systems, duplicative system costs while such
transformational projects are in-process, and other system
transition costs of $1.6 million and $0.0 million for the
three-month periods ended April 2, 2022, and April 3, 2021,
respectively; (ii) professional fees associated with preparation
for Sarbanes-Oxley compliance, advisory fees associated with
preparation for and execution of our initial public equity
offering, of $0.2 million and $2.0 million for the three-month
periods ended April 2, 2022 and April 3, 2021, respectively; (iii)
$(0.2) million of net gains on disposal of businesses during the
three months ended April 2, 2022; and (iv) certain other costs or
(income) that are either non-cash or non-core to the Company’s
ongoing operations of $(0.3) million and $(0.6) million for the
three-month periods ended April 2, 2022 and April 3, 2021,
respectively. |
8) |
|
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 |
|
(dollars in thousands) |
April 2, 2022 |
|
April 3, 2021 |
|
Revenue |
$ |
- |
|
$ |
(15 |
) |
Cost of revenue, excluding
depreciation and amortization |
|
3,936 |
|
|
894 |
|
Branch and regional
administrative expenses |
|
1,390 |
|
|
200 |
|
Corporate expenses |
|
13,107 |
|
|
7,746 |
|
Acquisition-related costs |
|
91 |
|
|
1,768 |
|
Other operating expenses |
|
(170 |
) |
|
- |
|
Other income |
|
(36,456 |
) |
|
(160 |
) |
Total adjustments |
$ |
(18,102 |
) |
$ |
10,433 |
|
9) |
|
Derived utilizing a combined statutory rate of 25% for the
three-month periods ended April 2, 2022, and April 3, 2021,
respectively, and applied to the respective adjusted pre-tax
income. |
10) |
|
Adjustments used to reconcile net income per diluted share on a
GAAP basis to adjusted net income per diluted share are comprised
of the same adjustments, inclusive of the tax impact, used to
reconcile net income to adjusted net income divided by the
weighted-average diluted shares outstanding during the period. |
Investor ContactDave Afshar
Chief Financial Officer ir@aveanna.com
Aveanna Healthcare (NASDAQ:AVAH)
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