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 1, 2023.
Jeff Shaner, Chief Executive Officer, commented
“Our first quarter results reflect the Aveanna team’s remarkable
ability to adapt and transform our businesses as we execute on our
strategic initiatives. Enhanced payor partnerships allow us to
further invest in our caregivers and broaden our care to more
patients in need. We are delivering high-quality care to our
patients at an exceptional value to our government and payor
partners. The Aveanna team’s efforts produced solid results, and we
are pleased with our early 2023 performance. We remain confident in
our outlook for the remainder of 2023.”
Three-Month Periods Ended April 1, 2023 and
April 2, 2022
Revenue was $466.4 million for the three-month
period ended April 1, 2023, as compared to $450.5 million for the
three-month period ended April 2, 2022, an increase of $15.9
million, or 3.5%. The overall increase in revenue was attributable
to a $22.8 million increase in Private Duty Services (“PDS”)
segment revenue and a $3.6 million increase in Medical Solutions
("MS") segment revenue, partially offset by a $10.5 million
decrease in Home Health & Hospice (“HHH”) segment revenue over
the comparable quarter.
Gross margin was $144.5 million, or 31.0% of
revenue, for the three months ended April 1, 2023, as compared to
$144.8 million, or 32.1% of revenue, for the three months ended
April 2, 2022, a decrease of $0.4 million, or 0.2%.
Net loss was $32.0 million for the first quarter
of 2023, as compared to net income of $25.3 million for the first
quarter of 2022, primarily attributable to a $56.8 million decrease
in non-cash valuation gains associated with interest rate
derivatives driven by changes in market expectations for future
interest rates. Net loss per diluted share was $0.17 for the first
quarter of 2023, as compared to net income per diluted share of
$0.14 for the first quarter of 2022. Adjusted net loss per diluted
share was $0.05 for the first quarter of 2023, as compared to
adjusted net income per diluted share of $0.04 for the first
quarter of 2022.
Adjusted EBITDA was $28.5 million, or 6.1% of
revenue, for the first quarter of 2023, as compared to $38.0
million, or 8.4% of revenue, for the first quarter of 2022.
Liquidity, Cash Flow, and
Debt
- As of April 1, 2023, we had cash of
$34.4 million and incremental borrowing capacity of $20.0 million
under our securitization facility. Our revolver was undrawn, with
approximately $162.0 million of borrowing capacity and
approximately $38.0 million of outstanding letters of credit.
- First quarter 2023
net cash provided by operating activities was $7.5 million. Free
cash flow was $2.9 million for the first quarter of 2023. See
“Non-GAAP Financial Measures - Free cash flow” below.
- As of April 1, 2023
we had bank debt of $1,476.7 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
LIBOR at 3.0%.
The leverage maintenance covenants in our
revolving credit facility do not become operative unless more than
30% of the total commitment under the revolving credit facility has
been utilized, subject to a $15.0 million carve-out for letters of
credit. Should the leverage maintenance covenant become operative,
maximum allowable first lien leverage would be 7.6x.
David Afshar, Chief Financial Officer, commented
“We are pleased with the first quarter results delivered by our
dedicated Aveanna teams as we continue to focus on improving the
quality of our earnings as well as cash flow growth. We believe we
have the necessary liquidity to fund our operations, and our hedged
positions on our credit facilities provide us with continued
protection against interest rate increases. Our interest rate swaps
extend through June 2026, and our interest rate caps extend through
February 2027.”
Full Year 2023 Guidance
- Revenue of at least $1,840 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 at least $130
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, Adjusted net income 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.
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 (loss) income. Rather, we present EBITDA and Adjusted EBITDA as
supplemental measures of our performance. We define EBITDA as net
(loss) income 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; 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 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, 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 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 (loss) per diluted share
represents adjusted net income (loss) 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.
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 derivative 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 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,
May 11, 2023, at 10:00 a.m. Eastern Time to discuss our first
quarter 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 May 18, 2023, by dialing 1-844-512-2921, or for
international callers, 1-412-317-6671. The passcode for the replay
is 13737306. 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 2022
fiscal year filed with the Securities and Exchange Commission on
March 16, 2023, 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 periods presented:
|
For the three-month periods ended |
|
(dollars in thousands) |
April 1, 2023 |
|
|
April 2, 2022 |
|
Net cash provided by (used in) operating activities |
$ |
7,495 |
|
|
$ |
(9,476 |
) |
Net cash used in investing
activities |
$ |
(4,800 |
) |
|
$ |
(16,643 |
) |
Net cash provided by financing
activities |
$ |
12,521 |
|
|
$ |
13,068 |
|
Cash and cash equivalents at
beginning of period |
$ |
19,217 |
|
|
$ |
30,490 |
|
Cash and cash equivalents at end
of period |
$ |
34,433 |
|
|
$ |
17,439 |
|
|
|
|
|
|
|
|
|
The following table presents our long-term
indebtedness as of April 1, 2023:
(dollars in thousands) |
|
|
|
|
|
Instrument |
Interest Rate |
|
|
April 1, 2023 |
|
2021 Extended Term Loan |
L + 3.75% |
|
|
$ |
906,650 |
|
Second Lien Term Loan |
L + 7.00% |
|
|
|
415,000 |
|
Revolving Credit Facility |
L + 3.75% |
|
|
|
- |
|
Securitization Facility |
BSBY + 2.25% |
|
|
|
155,000 |
|
Total indebtedness |
|
|
|
$ |
1,476,650 |
|
L = Greater of 0.50% or
one-month LIBOR |
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
April 1, 2023 |
|
|
April 2, 2022 |
|
Revenue |
$ |
466,413 |
|
|
$ |
450,534 |
|
Cost of revenue, excluding
depreciation and amortization |
|
321,948 |
|
|
|
305,708 |
|
Branch and regional
administrative expenses |
|
91,708 |
|
|
|
88,743 |
|
Corporate expenses |
|
30,935 |
|
|
|
36,567 |
|
Depreciation and
amortization |
|
4,041 |
|
|
|
5,819 |
|
Acquisition-related costs |
|
70 |
|
|
|
91 |
|
Other operating expense
(income) |
|
72 |
|
|
|
(170 |
) |
Operating income |
|
17,639 |
|
|
|
13,776 |
|
Interest income |
|
75 |
|
|
|
62 |
|
Interest expense |
|
(35,958 |
) |
|
|
(22,364 |
) |
Other (expense) income |
|
(12,188 |
) |
|
|
36,457 |
|
(Loss) income before income
taxes |
|
(30,432 |
) |
|
|
27,931 |
|
Income tax expense |
|
(1,566 |
) |
|
|
(2,597 |
) |
Net (loss) income |
$ |
(31,998 |
) |
|
$ |
25,334 |
|
Net (loss) income per
share: |
|
|
|
|
|
Net (loss) income per share,
basic |
$ |
(0.17 |
) |
|
$ |
0.14 |
|
Weighted average shares of
common stock outstanding, basic |
|
189,054 |
|
|
|
184,927 |
|
Net (loss) income per share,
diluted |
$ |
(0.17 |
) |
|
$ |
0.14 |
|
Weighted average shares of
common stock outstanding, diluted |
|
189,054 |
|
|
|
185,427 |
|
|
|
|
|
|
|
|
|
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 1, 2023 |
|
April 2, 2022 |
|
Change |
|
% Change |
|
|
Revenue |
$ |
466,413 |
|
$ |
450,534 |
|
$ |
15,879 |
|
|
3.5 |
% |
|
Cost of revenue, excluding
depreciation and amortization |
|
321,948 |
|
|
305,708 |
|
|
16,240 |
|
|
5.3 |
% |
|
Gross margin |
$ |
144,465 |
|
$ |
144,826 |
|
$ |
(361 |
) |
|
-0.2 |
% |
|
Gross margin percentage |
|
31.0 |
% |
|
32.1 |
% |
|
|
|
|
|
Branch and regional
administrative expenses |
|
91,708 |
|
|
88,743 |
|
|
2,965 |
|
|
3.3 |
% |
|
Field contribution |
$ |
52,757 |
|
$ |
56,083 |
|
$ |
(3,326 |
) |
|
-5.9 |
% |
|
Field contribution margin |
|
11.3 |
% |
|
12.4 |
% |
|
|
|
|
|
Corporate expenses |
$ |
30,935 |
|
$ |
36,567 |
|
$ |
(5,632 |
) |
|
-15.4 |
% |
|
As a percentage of revenue |
|
6.6 |
% |
|
8.1 |
% |
|
|
|
|
|
Operating income |
$ |
17,639 |
|
$ |
13,776 |
|
$ |
3,863 |
|
|
28.0 |
% |
|
As a percentage of revenue |
|
3.8 |
% |
|
3.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 1, 2023 |
|
April 2, 2022 |
|
Change |
|
% Change |
|
|
Revenue |
$ |
372,947 |
|
$ |
350,190 |
|
$ |
22,757 |
|
|
6.5 |
% |
|
Cost of revenue, excluding
depreciation and amortization |
|
268,763 |
|
|
251,874 |
|
|
16,889 |
|
|
6.7 |
% |
|
Gross margin |
$ |
104,184 |
|
$ |
98,316 |
|
$ |
5,868 |
|
|
6.0 |
% |
|
Gross margin percentage |
|
27.9 |
% |
|
28.1 |
% |
|
|
|
-0.2 |
% |
(4) |
Hours |
|
9,783 |
|
|
9,612 |
|
|
171 |
|
|
1.8 |
% |
|
Revenue rate |
$ |
38.12 |
|
$ |
36.43 |
|
$ |
1.69 |
|
|
4.7 |
% |
(1) |
Cost of revenue rate |
$ |
27.47 |
|
$ |
26.20 |
|
$ |
1.27 |
|
|
4.9 |
% |
(2) |
Spread rate |
$ |
10.65 |
|
$ |
10.23 |
|
$ |
0.42 |
|
|
4.2 |
% |
(3) |
|
|
|
|
|
|
|
|
|
|
|
HHH |
|
|
|
For the three-month periods ended |
|
|
(dollars and
admissions/episodes in thousands) |
April 1, 2023 |
|
April 2, 2022 |
|
Change |
|
% Change |
|
|
Revenue |
$ |
56,126 |
|
$ |
66,623 |
|
$ |
(10,497 |
) |
|
-15.8 |
% |
|
Cost of revenue, excluding
depreciation and amortization |
|
31,095 |
|
|
34,168 |
|
|
(3,073 |
) |
|
-9.0 |
% |
|
Gross margin |
$ |
25,031 |
|
$ |
32,455 |
|
$ |
(7,424 |
) |
|
-22.9 |
% |
|
Gross margin percentage |
|
44.6 |
% |
|
48.7 |
% |
|
|
|
-4.1 |
% |
(4) |
Home health total
admissions(5) |
|
11.7 |
|
|
14.3 |
|
-2.6 |
|
|
-18.2 |
% |
|
Home health episodic
admissions(6) |
|
8.0 |
|
|
8.7 |
|
|
(0.70 |
) |
|
-8.0 |
% |
|
Home health total
episodes(7) |
|
11.9 |
|
|
13.8 |
|
|
(1.90 |
) |
|
-13.8 |
% |
|
Home health revenue per completed
episode(8) |
$ |
2,969 |
|
$ |
2,942 |
|
$ |
27 |
|
|
0.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
MS |
|
|
|
For the three-month periods ended |
|
|
(dollars and UPS in
thousands) |
April 1, 2023 |
|
April 2, 2022 |
|
Change |
|
% Change |
|
|
Revenue |
$ |
37,340 |
|
$ |
33,721 |
|
$ |
3,619 |
|
|
10.7 |
% |
|
Cost of revenue, excluding
depreciation and amortization |
|
22,090 |
|
|
19,666 |
|
|
2,424 |
|
|
12.3 |
% |
|
Gross margin |
$ |
15,250 |
|
$ |
14,055 |
|
$ |
1,195 |
|
|
8.5 |
% |
|
Gross margin percentage |
|
40.8 |
% |
|
41.7 |
% |
|
|
|
-0.9 |
% |
(4) |
Unique patients served
(“UPS”) |
|
85 |
|
|
78 |
|
|
7 |
|
|
9.0 |
% |
|
Revenue rate |
$ |
439.29 |
|
$ |
432.32 |
|
$ |
6.97 |
|
|
1.7 |
% |
(1) |
Cost of revenue rate |
$ |
259.88 |
|
$ |
252.13 |
|
$ |
7.75 |
|
|
3.3 |
% |
(2) |
Spread rate |
$ |
179.41 |
|
$ |
180.19 |
|
$ |
(0.78 |
) |
|
-0.5 |
% |
(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 |
|
(dollars in thousands) |
April 1, 2023 |
|
April 2, 2022 |
|
Gross margin |
$ |
144,465 |
|
$ |
144,826 |
|
Branch and regional
administrative expenses |
|
91,708 |
|
|
88,743 |
|
Field contribution |
$ |
52,757 |
|
$ |
56,083 |
|
Revenue |
$ |
466,413 |
|
$ |
450,534 |
|
Field contribution margin |
|
11.3 |
% |
|
12.4 |
% |
|
|
|
|
|
|
|
The following table reconciles net loss to
EBITDA and Adjusted EBITDA:
|
|
For the three-month periods ended |
|
(dollars in thousands) |
|
April 1, 2023 |
|
April 2, 2022 |
|
Net (loss) income |
|
$ |
(31,998 |
) |
$ |
25,334 |
|
Interest expense, net |
|
|
35,883 |
|
|
22,302 |
|
Income tax expense |
|
|
1,566 |
|
|
2,597 |
|
Depreciation and
amortization |
|
|
4,041 |
|
|
5,819 |
|
EBITDA |
|
|
9,492 |
|
|
56,052 |
|
Goodwill, intangible and other
long-lived asset impairment |
|
|
68 |
|
|
(112 |
) |
Non-cash share-based
compensation |
|
|
2,442 |
|
|
4,815 |
|
Interest rate derivatives(1) |
|
|
11,922 |
|
|
(36,183 |
) |
Acquisition-related costs(2) |
|
|
70 |
|
|
91 |
|
Integration costs(3) |
|
|
1,133 |
|
|
6,747 |
|
Legal costs and settlements
associated with acquisition matters(4) |
|
|
304 |
|
|
1,039 |
|
COVID-related costs, net of
reimbursement(5) |
|
|
- |
|
|
4,172 |
|
Restructuring(6) |
|
|
2,127 |
|
|
- |
|
Other system transition costs,
professional fees and other(7) |
|
|
923 |
|
|
1,329 |
|
Total adjustments |
|
$ |
18,989 |
|
$ |
(18,102 |
) |
Adjusted EBITDA |
|
$ |
28,481 |
|
$ |
37,950 |
|
|
|
|
|
|
|
|
|
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 |
|
(dollars in thousands, except
share and per share data) |
April 1, 2023 |
|
April 2, 2022 |
|
Net (loss) income |
$ |
(31,998 |
) |
$ |
25,334 |
|
Income tax expense |
|
1,566 |
|
|
2,597 |
|
Goodwill, intangible and other long-lived asset impairment |
|
68 |
|
|
(112 |
) |
Non-cash share-based compensation |
|
2,442 |
|
|
4,815 |
|
Interest rate derivatives(1) |
|
11,922 |
|
|
(36,183 |
) |
Acquisition-related costs(2) |
|
70 |
|
|
91 |
|
Integration costs(3) |
|
1,133 |
|
|
6,747 |
|
Legal costs and settlements associated with acquisition
matters(4) |
|
304 |
|
|
1,039 |
|
COVID-related costs, net of reimbursement(5) |
|
- |
|
|
4,172 |
|
Restructuring(6) |
|
2,127 |
|
|
- |
|
Other system transition costs, professional fees and other(7) |
|
923 |
|
|
1,329 |
|
Total adjustments |
|
20,555 |
|
|
(15,505 |
) |
Adjusted pre-tax net (loss)
income |
|
(11,443 |
) |
|
9,829 |
|
Income tax benefit (expense) on
adjusted pre-tax (loss) income(9) |
|
2,861 |
|
|
(2,457 |
) |
Adjusted net (loss) income |
$ |
(8,582 |
) |
$ |
7,372 |
|
Weighted average shares
outstanding, diluted |
|
189,054 |
|
|
185,427 |
|
Adjusted net (loss) income per
diluted share(10) |
$ |
(0.05 |
) |
$ |
0.04 |
|
|
|
|
|
|
|
|
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 $1.1 million for the three-month periods ended April 1,
2023 and April 2, 2022, respectively; and (ii) transitionary costs
incurred to integrate acquired companies into our field and
corporate operations of $0.7 million and $5.6 million for the
three-month periods ended April 1, 2023 and April 2, 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 costs of $0.1 million and $1.0
million for the three-month periods ended April 1, 2023 and April
2, 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.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 which approximated $4.2
million for the three-month period ended April 2, 2022. 6)
Represents costs associated with restructuring our branch and
regional administrative footprint as well as our corporate overhead
infrastructure costs for the three-month period ended April 1,
2023, 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 (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 $0.7 million and $1.6 million for
three-month periods ended April 1, 2023 and April 2, 2022,
respectively, respectively; (ii) professional fees associated with
preparation for Sarbanes-Oxley compliance of $0.5 million and $0.2
million for the three-month periods ended April 1, 2023 and April
2, 2022, respectively; (iii) $(0.2) million of net gains on
disposal of businesses during the three-month period ended April 2,
2022 (there were no such gains or losses in the current year); 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
$(0.3) million for the three-month periods ended April 1, 2023 and
April 2, 2022, 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.9) Derived utilizing a combined statutory
rate of 25% for the three-month periods ended April 1, 2023, and
April 2, 2022, respectively, and applied to the respective adjusted
pre-tax (loss) income.10) Adjustments used to reconcile net loss
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 to adjusted net (loss)
income divided by the weighted-average diluted shares outstanding
during the period.
|
For the three-month periods ended |
|
(dollars in thousands) |
April 1, 2023 |
|
April 2, 2022 |
|
Revenue |
$ |
- |
|
$ |
- |
|
Cost of revenue, excluding
depreciation and amortization |
|
145 |
|
|
3,936 |
|
Branch and regional
administrative expenses |
|
1,641 |
|
|
1,390 |
|
Corporate expenses |
|
4,874 |
|
|
13,107 |
|
Acquisition-related costs |
|
70 |
|
|
91 |
|
Other operating expense
(income) |
|
- |
|
|
(170 |
) |
Other expense (income) |
|
12,259 |
|
|
(36,456 |
) |
Total adjustments |
$ |
18,989 |
|
$ |
(18,102 |
) |
|
|
|
|
|
|
|
The following table reconciles the net increase (decrease) in
cash and cash equivalents to free cash flow:
|
|
For the three-month period ended |
|
(dollars in thousands) |
|
April 1, 2023 |
|
Net cash provided by (used in) operating activities |
|
|
7,495 |
|
Purchases of property and
equipment, and software |
|
|
(2,122 |
) |
Principal payments of term
loans |
|
|
(2,300 |
) |
Principal payments of notes
payable and financing lease obligations |
|
|
(3,398 |
) |
Settlements with derivative
counterparties |
|
|
3,219 |
|
Free cash flow |
|
$ |
2,894 |
|
|
|
|
|
|
Investor Contact Dave Afshar Chief Financial
Officer ir@aveanna.com
Aveanna Healthcare (NASDAQ:AVAH)
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