Aveanna Healthcare (AVAH)

Shannon Drake Chief Legal Officer and Corporate Secretary
Tony Strange Chief Executive Officer and President
Jeff Shaner Chief Operating Officer
David Afshar Chief Financial Officer
Matt Borsch BMO Capital Markets
Lisa Gill JPMorgan
A.J. Rice Credit Suisse
Sarah James Barclays
Courtney Fondufe BofA Securities
Pito Chickering Deutsche Bank
Brian Tanquilut Jefferies
Call transcript
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Good morning, and welcome to Aveanna Healthcare Holdings Second Quarter 2021 Earnings Conference Call. Today's call is being recorded, and we have allocated one hour for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Shannon Drake, Aveanna's Chief Legal Officer and Corporate Secretary. Thank you.

You may begin.

Shannon Drake

operator. you, Thank and Quarter everyone, for Aveanna joining Good Earnings thank Call. Second XXXX Healthcare's morning, you

identified our replay they about environment listening SEC read does laws, complete required statements this revise statements disclosed from date new call. to Speaking updated made XX, call be financial with any that operate. Financial be publicly reported management's XX-K information, place plan, with and issued filed statements circumstances in update documents President; of section GAAP our may, We federal all statements Shaner, on Except our website expressions. These for today, Executive reason. for reliance Chief a could, securities We will and should as these words actual addition not made such changing When our David results the supplement today's by measures XXXX, implied cause or and other these Chief measures. with or business forward-looking today's and Also results, not discussion plan a to and risks today's Aveanna's X-K press call as SEC. results our results, may available Afshar, are our are encouraged nor and that forward-looking filings Also, to reported filings. results GAAP of of encourage could be anyone risks in non-GAAP any to website our the together the by second Tony are been may call be of Relations contain forward-looking can as to August to headings to under related available GAAP, we operating quarter want a of those financial those intend, with today's Investor uncertainties statements, believe of our subsequent certain Listeners our statements which similar call. results, release Also, not other until of that assumptions are in viewed more beliefs replay not statements made expectations, Officer. are have All could that Form factor yesterday www.aveanna.com. on relied Chief based are review undertake and our factors complete current the today should GAAP. our in Aveanna will, on Operating which accordance Officer; business our on earnings they our the the future expect, to to words to at results or you Jeff our including we Aveanna's These and more provide differ may who of will understanding We as be to expressed result impact XXXX. risk this forward-looking Strange, them. upon a on and of and remind and August Officer a call XX, or events, our Form and financial undue accordance we materially subject but with subsequent on exclusion

release which of website measure our earnings is press to available and reconciliation both at call XX-Q, are In available our on and in on non-GAAP our the comparable mentioned of addition, www.sec.gov. most during the a measure website any SEC's GAAP

Strange. Tony? the accommodate With Officer call turn as call Aveanna's Please will Tony will open we allotted follow-up to the possible as callers that that, remarks, comments Executive time. so limit your one the prepared in today's Chief to one question Following can over to initial questions. and and we many President, I

Tony Strange

everyone. Thanks, Aveanna's quarter you call. and earnings joining good Shannon, Thank morning, second for

Before Aveanna you the for new investors our joining to say thank we welcome get story. and I'd started, like

new our possible participants, pediatric at in highly and diversified and the care senior through most adults is homes. the skilled a cost-effective care in For patients in states home their We Aveanna unskilled to platform, U.S. operate providing XXX both locations. across specializing setting XX

clinical Our been that providing team on each quarter. exceptional serve. physician-directed XX,XXX to care the we It's busy focuses patients of a

on provide call in And the financing activities. like we'd overview our environment surrounding to On and to and today, the M&A our an developments operating finally, results, latest update the our reimbursement of transactions pipeline. addition recent

as QX. QX Revenues we million QX. from Aveanna we let's quarter increase quarter another for XX% continue representing XXXX, marks year-over-year results. $XXX and on successful a sequentially right million So momentum in compared build were $XXX QX the to into in to for up the that of jump our in of reported million $XXX

current mid- the has results, rates last Our growth supported that years maintaining believe, to growth XX%. X compounded we in aggregated in teens to continues over be been sustainable. as is rate the excess our And by high of

to significant of can $X.XX in the I'm in QX. & to for but $XX cash will very $XX expenses. a share was of segment, only as improvements to quarter year-over-year. on gross in good while our managing growth up teams infrastructure, The patients been by an and XX% operating driven the sustain was driven our quarter our our have rates per to employees. as therefore, Hospice margins proud us that Gross shift diluted a by compared growth results labor protect top XX.X% give on environment. preserving million for improvements XX.X% very of compared our our $X.XX Moving mix of and well during collections our disciplined and the sequentially the and margins continuing These value in very quarter of million margin shareholders across difficult leveraging earnings to our of increase not EBITDA QX 'XX. rate confidence QX Health XXXX to compared XX.X% we XXXX, improving were for for for and from our PDS Home approach creating margins. the Adjusted in QX

thank to the staff like of mission I'd our Aveanna the for all on It's making I'd reality. Aveanna administrative employees, our caregivers, our employees great Doctor's our It that also to a our like to results to our of of welcome makes team to dedication Choice leadership Speaking recent successful. these your is and most you acquisition, team. have family.

environment. the to on reimbursement Moving

net we create the Our result hand for is providers government and to legislators, CMS some our on our for home. state have as different been receive should can wages, state rule care But These care final and home payer care which his that avenues during in benefit health for the managed caregiver home has important From for The well working teams our hand is patients are make the takeaway protect administrations additional color the agencies with partners provide new will increases home Medicare investments of in Medicaid play industry. to state care that growth as hospice. additional the proposed reimbursement our relations issued into and perspective, to into specific, the in investments rate of managed services rule accelerate a reducing rate XX% in service will care and XX benefit will in provide. role comments. have states or the covered overall a the we increase expand these health covered allow a will and/or care Jeff states that we increases receive plans be over that To the that for alike recognizing XXXX. spend.

downside including is reimbursement experience should we care value-based transition of making in end-of-life care Across proposed no Medicare, several post-acute rule that view underway more us on XXXX final delivery unique the all care the age business, right care. health industry create environment dynamic such documentation that well to to made which beyond. health what of overall to as elevate are very care is of legislative believe is value single currently payment It our home the Overall, the any our a is continuum. in back as the that that be reimbursement. approximately and for great in their XX approximately we believe the positive approximately of is we gives the to increase home indication the patients of in to system has forward and is reimbursement, we the industry. while tailwinds us a reimbursement, the appears for rule, are care that play with pricing. are There as provides hundreds Choose X% be homes Medicaid managed equally brings XX% indication providers them for moving we Home we Aveanna. mind in will for front, side helping efforts have that value-based payers, but revenues. meantime, But a believe And the and that advantage be in services for care home clear, placed a small to On portion into the the commitment comfort well Aveanna for overall clinical industry on our horizon significant an our impact and and to source continued home CMS the can hospice and believe increase as its positive the We X.X% its an solidifying positioned scenario. evaluate This state to represents good model allowing investments relevance plans, that than place. clinical to This continues positive in system, appears

year, capital the which refinancing the significant another cost this remaining reduces event the going now company for $XXX Turning the to completed of company. July of of we forward. significantly In of our for million, debt

revolving in related interest credit million delayed continue as another his aggressive the $XXX to expense which place we details refinancing reduced for more acquisition our this while to will comments. draw undrawn a In addition, provide well for term In has during a loan strategy. future as M&A. million access summary, Dave significantly $XXX remains refinancing providing capital put to facility,

special led our all your lender say partners of syndicate. along for the financing team our with you Barclays to support. like full continued to Our We'd a thank

On spend of moment the updating a topic our to also like I'd M&A, on M&A activity. you

Choice XX, closed a acquisition As on XXXX. reminder, Doctor's April on the we

with since an XX basis. is numbers our of the of Doctor's a was has Doctor's acquisition, its million revenues As XX of producing home weeks locations $XX platform activity. state our company trajectory annualized business At across Health health of Medicare-certified ahead continued successful tracking approximately Choice into of plan. QX business on growth result, Choice time approximately the Doctor's integration the is the Home closing, the and a Choice Florida. the traditional of reflect

gives which expectations, quality continues integration, exceed close our management as transactions as integrate identify, me Our our and confidence to on in office great consistent at timeliness to with diligence both the is that and a the integration ability our of acquisitions well model. of pace

our flow million Earlier are of have acquire M&A $XXX at of we deal between as where goal slant our with And toward revenue we year, $XXX with disclosed our result, per remains year to robust. a So a heavier various that The we process. moving stages home several pipeline? assets. was deals million this and forward health

Choice that of April adjusted over contain future Doctor's our various deal not $XXX million brings our Jeff of that deeper my are exceed and turn confident to me not some will EBITDA previous into than I guidance flow of currently, $X.XXX our to the and This of billion closing than any M&A. in the before Recall and beyond. deals for call topic the with 'XX operating revenues, goals and for less engaged not the that metrics. a M&A less we did robust we we dive final and meet are With

results the off we'll hold highly 'XX, until announce are of we While our Jeff, on to every I'd of exceptional given M&A do insight and our for why possible. our likelihood activity in like thank second guidance guidance care the updating great to confident segment With additional these service provide that the Aveanna you patients, you additional into that that have and is and time. some half to work in to you that, all that do again once we'll day provide each employees what results. and the don't our makes

Jeff Shaner

indicators great you, It you. brings Tony. metrics operating our to with key Thank XXXX QX me share and pleasure

Services, I Duty As our & and operating comment Solutions. Health Home will Hospice a Medical Private reminder, on segments: X

health on proud efforts. focus operating Before relations get team's like update Throughout payer and the I care Aveanna COVID-XX and dedication into homes. segments, to efficient I'd patients' our our of I providing pandemic, and our in the to have government safe COVID-XX been

pandemic PPE, COVID a staff vaccinations and our managing positive the cases tracking effectively staff, through COVID managed patients and business and have our acquisition of have a We the and with to well-disciplined testing approach environment. of in

Delta positioned We continue communities, but and patients, of payer the needs its monitor to referral front, government we our our and relations payers. the to and meet with impact sources feel on variant is growing payer constituents efforts On that and are well we are key increases resonating state of agencies. services. and covered of message We very our expansion pleased rate government government our believe the care and and our through home our legislative reimbursement a with those

with also submit We additional CMS their the plans FMAP benefits to states anticipate as for funds realizing approval.

our efforts initiatives. growth aligned home focused care We on back component the of caregivers workforce. our is Aveanna and accelerating industry key further have on return-to-work A into

appropriate from partner us willing benefits governments state unemployment to an transition employment. meaningful provide our found have to We to back with

most renewed get from covered our In reenter instrumental many the relations unemployment home. and services we return to phasing down benefits are care experiencing rate work of payer to in to providing interest our As expansion the and workforce the have in initiatives. this supporting been summer, states and caregivers a wins, teams government summary, high-quality are back

Duty Private segment the to on results. Services Now

year-over-year QX, or provided growth with care QX growth. produced consistent M&A million During the XX.X% to grow strategy of of organic during $XXX.X XXXX. we with is quarter million X.XX activity. was PDS by both XX.X% or This driven revenue hours rate growth and our of Revenue over

growth continue to expect rates XXXX. see PDS throughout We volume solid to

stabilization $X.XX between and of This QX services. XXXX. up was a skilled our rate by driven $XX.XX from of hour reimbursement primarily and was per of revenue business improvements Our mix unskilled

trend of this expected schools return continue to the second We in with XXXX of half anticipate that rate the will fall. improve in the

Turning XX.X% a Gross with experience benefiting to per driven down metrics, and strong of hour to margin oversight. gross growth QX was our or is our in hour Services improvement in of XX.X%. XXXX. cost the mix to equates per $X.XX we unskilled gross from million margin PDS improvement continue cost labor gross in and QX by from margin cost of This of Private shift year-over-year Duty per hour $XX.XX, dollars. $XXX.X margin labor

spread balance strategic the and caregiver to increases accelerate per our an for to important Lastly, revenue an numerous per improved Spread the our will growth rate PDS Private continue hour, in improve cost balancing of as to $XX.XX hour labor segment Services hour. metric wages we the Duty business. in the effort against per investments

As we nursing returns school as key we this to skilled setting necessary to time. as return an higher nurses a nursing volumes is discussed well work of for in our our typically in Most QX, Labor full childcare duty and expect business return to acuity business fall. our component the Day school private in-person providing to by

are patients of We a commitment our systems school provide encouraged the for by environment to and and our to thrive in. rewarding caregivers safe

bring families I the to high-quality, diligently to comforts of PDS providing time continue their to awe for Aveanna am to the commitment fought our home homes, of pandemic team's first PICU, NICU through setting families and our cost-effective many our ever. to compassionate from teams the care. Lastly, in have the

Now our segment Health for substantial where we moving to Home Hospice on continue growth. QX, to & experience

Hospice to & With Health of focus of our of expanded & forward. of Home approximately our growth national we XX% been our & has the of Health, us revenue. future a emphasis is Home the and revenues home Hospice significant as point QX presence. Health health moving a our Home Home our XX.X% key for has be work segment Hospice expand continues Doctor's derives division Choice of to Health focus the Health Home and addition to

integrations Recover are Five Points and through the moving Doctor's the complete, Choice With integration. we efficiently Health

as & IMO methodically forward emulate will believe dedicated Our one we the a Home in & move act Doctor's strategy. leading and date of integrate have family. we to be office into is our we the best Health the model as way Home Doctor's Health I completed as Aveanna M&A will we Hospice Hospice acquisitions

our Now quarter throughout XXXX. Home remainder quarterly Hospice & full indicators we on XXXX. plan sequential metrics. Therefore, Health to the Health growth Hospice is reporting to This report QX second for Home & of

in we a episodes total from by XX,XXX remain believe organic of a was growth total organic primarily driven million total quarter, care XX,XXX of for impact our XXXX. pleased increase with Recover and grew QX and of will episodes of acquisition growth we over XXXX. due XX% revenue, approximately Health the the This XXXX, over Five produced During health XX% admissions and $XX.X being to remainder the admissions of QX XX% admission care. Episodic and admissions, strong rates a while the Doctor's XX%, Points Choice I business episodic growth segment home businesses. the double-digit am grew

$X,XXX The line Lastly, and From episode for along were with margin of Choice expectations. basis improvement per quarter, revenue primary -- points driver for XXXX. QX per perspective, episode in up QX XX.X% the from Doctor's continued and was with XX margin gross focus our XXX payer gross business, the sorry, the mix. a on margins was cost

Our is have X best practices execution our implementing growth division its businesses. continued Aveanna. complete overall Home and of from and the & great all confidence Health Hospice business impact I actively in on acquired team the

well payers, Health forward ever-evolving for believe fiscal we Lastly, as and & rate are home positioned & on strategies. year CMS capitalize landscape to health the with Home Health and pleased with Aveanna value-based our Home Hospice is look sources final We proposed to partnering XXXX. referral rules that on the recent and improvements Hospice we

Now to QX. our results Aveanna for segment Medical Solutions

patients' and to nutrition enteral other homes. provides our supplies Our medical Medical Solutions business directly

Revenue X.X% during quarter unique year-over-year produced During XX.X% driven was or patients of volume the by $XX.X revenue or million growth. XX,XXX QX, year-over-year growth. we served

strong a QX of the our to growth proud patients had of UPS strategy sequential grow This growth profile over activities. consistent growth is X.X% comparable served both with we strong very Although novo and XXXX, with from de QX -- organic Solutions unique I'm XXXX. Medical

per plenty geography XX,XXX of in servicing for We Medical with are our currently growth. month over Solutions business patients continued

Our revenue recent Hospice mix front, had to growth of per & Health overall some product from our volume $XXX.XX, Solutions tied and our growth benefit PDS the revenue wins Medicaid shift. UPS QX was I to driven to primarily both payer strategy. from a payer XXXX, Home expect On up Medical continue and segments. X.X% we've by rate

renegotiated also with a leveraging Medical to that contract this improved margins us will to to and and business a a Solutions allow change, model. in overhead goods are our of cost per access we we states line national however, patient revenue We solutions recently at concert medical expand lower with UPS. In serve all maintain base, reducing greater

Turning and metrics. margin of to goods cost gross

in at and a to points year-over-year great continue our with equates team basis. our This percentage. of expect or segments We model. gross of summary, stability delivery gross performing their demonstrated in in Medical I'm Aveanna nutrition in a margin national improvement enteral or Gross product business to XX growth In above X experience QX Solutions remain million expectations. been mix scale range. efficiencies I XX% margin overall to and proud on margins margins driven was shift gross have all to $XX.X XX.X%. the XX% business basis ability the to in by

value-based CFO. I'd strategies With growth, on again reimbursement organic turn continue positioned customer to the David our As for updating margin in end clinical are progress. and over continued you outcomes, like the we I Dave? efficient and call at look QX that, satisfaction. to forward well our we and controls of XXXX, acquired Afshar, excellence to throughout

David Afshar

some and operations, events Thank more ahead EBITDA, on recent Jeff. and details liquidity, go I'll of adjusted QX QX results guidance. in provide XXXX you, and

revenue. rate key revenue of growth for said increase million $XX.X Tony XX%. by $XXX.X compared Health increase PDS Health and is XXXX, a particularly pleased acquisition the increased in as We're to also skilled in to increase increase We environment Doctor's As Medical XX.X% with and Home segment overall QX driven revenue million was between most the recent reimbursement or or view Medical from for reasons of from the mix Solutions XXXX services. earlier, PDS change business in increased a XXX% Hospice & QX segments, our acquisition, rate balance of Hospice great was or or in million all the an due including mentioned $XX.X & $X.X net for Solutions across the the business a about which Home us. as $XX.X growth, million earlier, rate million rate, talked revenue our quarter. PDS revenue, tailwind volume million $XXX.X to Choice, our and increase in year-ago of we a Revenue With X.X% This XX.X% X.X% unskilled rate respect our on for earlier. increases our

$XX.X million $XXX.X like the we acquired represents turning a of to XXXX. revenue from of the highlight X Choice period when first have first XXXX forma million, Doctor's in XXXX. of prior XX.X% months Aveanna $XXX.X to the impact pro acquisition. over months X for I'd Doctor's, would the the XX% been of an margin, months quickly XXXX X of Doctor's first of Including for to which months million or increase revenue million, Choice revenue Before for the of Aveanna first $XXX.X the gross increase X revenues were XXXX

to gross margin. turning Now

our for The million margin of QX our year-ago or Our XX.X% margin $XXX.X of growth of compared gross quarter. to for XX.X% as QX gross XX.X% revenue the of $XXX.X XX% growth to XXXX compares or in was favorably XXXX. of million revenue revenue QX from

year-to-date and current very periods. consolidated in as margin to increased a are points ago margin year on consistency PDS XXX emphasize time, our basis, of segment that in want compared and comparable with increased gross recently gross have over the to our We our quarter. quarter that basis percentages the happy which the has delivered I stability the percentage quarter-over-quarter

year by our last Field decreased in share-based our as XXXX. charge of performance was portion, impairment to delivered operating quarter also percentage XX% year performance not for received with for Field recorded of as of or in metrics of decisions Field to which an field charges Hospice related million. they XXXX The for XX.X% quarter increases QX XXXX. percentage income revenue higher XXXX. core to $XX.X from that revenue delivered operations. help in $XX.X QX compared increase margin $XX.X million ago revenue costs margin to Bear expenses for QX of QX QX we've however, in an represents factors, sequential increase $XX.X Offsetting of make a impacted million our in in Operating compensation from the in million in quarter. a about million QX loss 'XX segment, footnotes improvement million as $XX of of X.X% $XX.X of the that corporate was a was that increase XXXX. to Field of some other basis our assess combined $XX.X positively was revenue of to As XXXX XXX that goodwill in compensation Home costs the in the we corporate discussed of basis point of revenue Operating of as for gross Operating result QX QX driver income of from current vesting segment increase to our a million of up Wrapping of options with of the XXXX. and margins our $X.X in in of or contribution QX contribution mind a contribution increase field XX the million from in in corporate revenue, improvement and or our XXXX to to of contribution operating as X.X% COVID-related XXXX, PDS increase the also Health of further year contribution the QX operating QX to our contribution the of by important and X.X% quarter, revenue the the margin & compared reduction to an number improved including are as ago year in improvement a directly a of operations compared prior in million the the XX.X% rate to and consolidated of income. in us of ago of second was loss percentage Field our an quarter point $X.X X.X% in over XX.X% by Note, year revenue income because of QX The as the X.X% X% Field adjusted in growing primary our loss we prior the reason MD&A. in and related quarter. statements operating a XX.X% XXXX compared expenses recorded corporate financial was a

an from QX, in a the ended charge was mentioned Adjusted of EBITDA represents the recorded I a again, that increased being XXXX with which EBITDA impairment $X.X $XX.X growth which XX.X% X million $XX.X first $XX.X $XX.X for months was income from represents X.X% XXXX, our million XXXX margins driver the QX or Moving the We're $XX.X of the on Net sequential see to income. XXXX, increase QX of XXXX, QX net of of goodwill to million million million QX On increase, and as to in EBITDA million of QX adjusted $XX.X months of a XXXX of in to pleased year-to-date from XXXX EBITDA as of in of XX.X% XXXX. for $X.X of margin. an X million basis, expansion our we of continues XX.X% increase earlier. QX adjusted QX improve. to adjusted primary the QX from in for million from of margin XXXX quality

liquidity available $XXX was And XXXX. collections of our million, and revolving $XXX with is our of million cash state liquidity respect facility and QX this XX.X the On under end on of had of $XXX at days XXXX liquidity July agencies funds and in of provider after resulting returning DSO XXXX. front, we total compared million capacity borrowing QX XXXX, balance the million for to QX strong of relief of as as of X, and days the the XX.X very cash sheet With in to to quarter. of our for stimulus $XX.X federal DSO, credit

and X We work our longer our receive, is tirelessly collect every cash of to increase to we what dollar teams Cs, businesses entitled & DSO at business revenue expect Hospice Health Excellence we we're our every over in generally as day make day. collection and that improvements grow collections With worked as said, to to time every our to continue and cycle we operations do. have we these cycles. it one hard Home

revenue for put X% were the expenditures hard of as is how of year-to-date revenue. X.X% the that that of compared an am to I of our and improvement I cycle typically that the of collections revenue months first operations the in in we've X of the collaborative first can't X.X% every periods. into and comparable work say our teams all revenue our range day. revenue CapEx XXXX. X.X% Capital months in of X of to We XXXX seen across nature realization view the with results work hard One pleased

acquisition the in to which normal of than to X than we to with our first earlier our the our want reduced was project to center discussion, during half higher future the expect deferral significantly due credit incur facility completed costs liquidity also months amendment in the various and due of capacity. lower incremental for that our of and that to recent we was normal before mentioned in provides CapEx projects, data Our time. service and XXXX debt XXXX which financing a Tony first I And finish cover we

which million second allowed debt, lien As lien $XXX us we facility of $XXX lien the term on lien our repaid all proceeds May, outstanding new a refinanced you X-year debt, our lien from to of term them and repaid with also first recall, XX, second IPO. million first combining remaining terminate Then into we loan. loans, in first July

also a different structure, our term loan. to documents our interest the X described floor LIBOR see rates reduced lien all our X.XX% which the as new in the of new term simplifies we loan had will loans, You with plus first LIBOR term under this loan rate loan Combining former of interest into X X.X%. and extended XXXX

see table see holding on and million based calculations million outstanding of annual expect same press of to the interest I current interest rates, we'll cash all in want of save compared cash refinancing. our drive factors paid lien paydown provides realize of interest the which proceeds, the to cash our first with as a other term loan IPO first will that that result further X on as interest doesn't release the savings $XX debt that $XXX You'll we a to our include emphasize XXXX. you result months in cash these interest savings a that, this as

also in cash which the for would million, XX trend, interest on affirming next million days, QX. delayed in our expectation after we $XX decrease continued be execute year delayed summarize opportunities which XX. questions. amendment through least the look million for the to we drive be you a in that, term open net cash added at future. July and for expect $XX margin loan rate, LIBOR financing. October XXXX flow up on release, revenue we're the be Then to no XX the to guidance guidance, we our QX we provide at are XX% at days, continue at future incur will full interest margin And time July cash look at XX with this on And and debt date. draw in up LIBOR future paydown undrawn to our not decreased this or for of here, We're interest On to proceeds least forward with affirming the at paid $X.XXX our draw incur term and in to EBITDA press to Aveanna. improved operating facility all outlined operator, wrap will we're reasons call and million. pleased subsequent credit to front perspective M&A positive interest pay We're have credit and ready liquidity a with costs, And turning our loan from then in the on XX, bright for QX income. in of amounts cash that billion. providing To positioned the we've of to July of was our well full in days achieved and $XXX our $XXX If the the will about we're to refinancing beginning the XX that earnings adjusted year IPO structure our improvement capital momentum of interest QX which and We for expectation acquisition we of also reduce


is our And from question Markets. BMO with Borsch first Capital Instructions] Matt [Operator

Matt Borsch

bit talk Yes, business. and a for you was about the recruitment retention could staff in environment little labor the of recruitment various I the areas retention, and maybe hoping more

that. companies struggled with other Some have

might any front on wage in Just particular? extent in you pressures area wondering the which see potential and pressures to that

Tony Strange

I'd Jeff, do question, of jump in? first for back all, go pandemic. don't I'll Well, thank and the guess like why I you then Matt. the to is you what prior to start

business recruiting the always been We are difficult. of nurses in recruiting nurses, has and

demand not enough population. meet the nurses children to growing So the are of there our fragile medically seniors,

so And we where an have. is that in this live reality the environment we

Now made with harder, credit. pandemic our give that the has team said, but it I'll

been are that which innovative have color little team I initiatives industry We success of the some have ideas about working on, bit a him operating been of leading. the you don't Jeff, and and have why we some think having? the But that we've give Jeff

Jeff Shaner

a mentioned, become a into to give to our Tony -- and just teams, in we I'll Matt, home, all head our patterns. -- Matt, way PDS innovative We've as to they've operations a we Yes. up yes, the process, introduced it Thanks, put recruiting orientation virtual-based the -- more of our sorry, homing creative, branch. Tony. flexible had our recruitment a the day and before nurse clinical

And so we've environment. just had innovative to in this become flex and more

in flexible about relations invest more we rate honestly, our can flexible, nature. labor But into to made I more wins innovative, And see really think nurses There's payer become certainly teams have become getting and for strategically I think focused front the and caregivers. it. -- understand talked the more the more back we pressures, jobs that better, less on government we as it's just we us we end. applying fully in turned the

retention mentioned, back of the money investing new rate Tony nurses and wins that state recruitment we XX of strategically but the nurses. also As current our into are both

expect as that XXXX. to into so of And XXXX we continue and we play throughout the rest

Matt Borsch

could on I if ask And follow-up a that.

out given to it tougher availability get do of the demographics a you the and as supply look next few years, Is retirements? the here just you Just trending? and some going bit over see how

Tony Strange


I Matt, that kind resolved. front in So says shortage nursing don't the silver is think bullet any there us to of of be going is

everybody last as you the not patients. granted now subsides, back the just turning will level enough but I our for fact, years, back day. to continue There's nurses matter the XX the services if care there's little take into The of been to every work, to pandemic back I go going is nurses the XX increase. XX,XXX people for not of demand into think But out bit. workforce, think things as goes go nurses, a

them. about to people some how I in learn how solve And So people have to to to including is pay are years innovative people companies, we the innovative Jeff, might I recruit pay, on solutions mentioned problem daily the we recruit to I to that's nurses continue from going you, about of people paying never because basis. great think of how the think, ago, you comfort thought pay and a would and how homes. we with these and and and problem it, creative, tell creative going being away. go onboard how to Aveanna, Jeff think have conveniently going to approach daily XX onboard companies this a creative with their we job a done able you we have how I'll are be -- -- have be we talk guys, about not


our And Lisa with next Gill from question JPMorgan. is

Lisa Gill

to in back work that, those that have Would I reimbursement value-based one. And Just the two, comments would care. your care? about contracts you perspective, you today saying that element risk around there? you around And number outlook think how contracts? value-based what everything agree is around the health do from of taking in some you're think for place do home number

Tony Strange

Well, you with thanks so XXXX, first X about were in CMS to participating in value-based Lisa. for We those. the And was roughly of today, states. back of think all, reimbursement if working question, X

very comfortable the are So with process. we

we applaud rewarded be we're is we making industry. the forward more that willing companies recognition you're moving And should We on to have that believe had deliver. we for delivered our care focus for for that X value-based the to that pricing. CMS in think success in. to with states And we outcomes standard, the we're highest going care and continue the clinical that is operating We that pay great sure that at is the something believe good for

So we taking are and risk very supportive forward where of moving appropriate.

Lisa Gill

program. as know X are into out XXXX? that more kind I when you a more roll for -- then just we a think and it and of states, was think -- how you is secondly, paying So you upside when think downside? it of outcome, I so it the about Do more of of for less And outcomes? measuring they that pilot holistically opportunities better they'll Tony, those get

Tony Strange

you questions think or I So different there. asked was X X there

answer think I is the yes.

are We opportunity the excited downside. about in upside are the equally also reimbursement. of accepting of for risk But we

And perform, so unless that are think to get companies taking that go with I that have to going risk comfortable down. can reimbursement they

Now do, under that we the the we half glass have where opportunity and success think extra it be some is saying we I look at paid -- we'll enjoy that to program full effort for the


with Rice Suisse. is question Credit next Our A.J. from

A.J. Rice

rate your XX And still can open? big to just rate follow wondered, increases. comments frame blended is you get all, in that on average -- think there into And year? the through about you'll give the a, increase remain of a covered us you up states next of sort business rate there of see the those any heading numbers? time increases states you what where sense pricing maybe roll PDS First the are I

Tony Strange

we information. know, as don't you disclose the and FMAP A.J., around don't any program. So a Jeff, in I'll color him little start why you and give jump then state-specific

lightly So here. we'll tread

If states, top states. X states of in increases X of about and/or X we a have experienced top think we've roughly either the rate of expansion our X in our lot you where benefits volume top

really -- increases not pieces not that I of referenced we the rate business, are it's have small but states the So board. to across related where only

towards small pretty states, payer and have part solve And and can an of during I exceptional And has think the team, I the that this are a large go showing help We hospital. a and participated. team, relations not of we difficult our out part Jeff problem. the government getting they've be states, everybody like back our looking these to feel give them medium issue states constituents I'd us the -- in you, a environment our out states, of solution, the job front and I'll of and tell patients getting done of

Jeff, around that, with some So a bit of don't color the why you give specific programs. little of

Jeff Shaner

really would think be said now, it, Tony normally year. I the for as A.J., Yes. And by done we

have states annual our either their finished of legislative All biannual or processes.

yet so submit fact be uniquely the few And most XXXX. to starting the states we plans over year CMS FMAP are doing to to focus months. so their that is next This have different, and on would normally,

we're going back immediately back figure the their So what them we've going talked will money, annual legislative proposals are will with into the going process they XX session biannual pivoted that now meeting already states out back to from as FMAP many with in -- And of they're normal our be. we and wins. about how their spend

development, rates retention, we rates. Tony talked strategically It's the as And back go bullish states FMAP helping money invest win orientation think, system. additional just that that really the very some we're I not caregivers into so And I going think about, clinical winning it's process. feel to through

never see rate were think XXXX wins the half we'll So that second additional of XXXX going contemplated. I into throughout

Tony Strange

to those the in is growth into little that, strategically people be I it back accelerate and bit to it we're we work. those our state-by-state, today back got I the is industry. reinvest the will A.J.'s believe got our a wins the of experiencing able that recognize slowdown through states for they think improved fortunately, resources not will we because important actually of one back our workers can they as at caregivers that state back these and little can -- to think, and put can this and dollars it cause said is systems. to your Jeff, of And the workforce. our accelerate. ultimately, into Medicaid quicker the remarks, ultimately growth get What a move just rate we're doing -- is industry industry programs in profitability. the to I you by a bit we'll What bring the program benefit, seeing some seeing we I prepared federal ability look more than to in bring your And think rates think wins. you And to And when so things And back said take in I caregivers. And

A.J. Rice

And my the just mean helping package, legislation about that pivot Home then and way would these? and thinking we're if personal others on around the could the infrastructure hearing side. follow-up that mentioned the anywhere be care perhaps if comment other about bigger your you strategy of package, passed? Choose any helping How Maybe infrastructure would perhaps goes what are Okay. you in you on gets any this

Tony Strange

we pivot think I don't last -- your don't first. let question take me -- all. I'll I at

think consistent I -- activity our now all in with seeing the D.C. the right is think strategy. I you're

But D.C. of to got being people what's of passing? D.C. House, frankly, you Senate, part approval. think are of got to go asked And I me do happen as to we forward. to guess home and is the Things what's the good lot mine. to don't that quite And as outcome going the a your going about talking see home solution. what's know care important get be. And likelihood do feel it are the about of to A.J., just we move is a how look, care in in I value it? is what about most where in the I So

amendment, on a industry -- I that or value well as this is are that and is it passed to think is level the in for recognizing our play health is care add federal what positive. whether has So leaders a care system seeing home care as that, overall find bill the are can That's so a on most value or Medicaid this doesn't this the home spend. have amendment or that passed this the positive I what has bill level state


Our from Sarah with James next question Barclays. is

Sarah James

wage of and a sensitive increases. an for strong this retention maybe some I some environment, have and and area quarter. how industry into above was is give And rate you been expansion. rates driving insight guys, funding Recruitment us retention to strong hoping can congrats strength now average growth you on you has recruitment

us either have do between non-wage-related markets you've hourly examples where side? And recruitment seen recruitment So and wages items a walk the on what's on going or any you you're efficiency? then through in on, can if labor any correlation you that working for

Tony Strange

an And get result through, in decision pretty which is in the of about wages to see play that we back We've that means to into back into after that because came acceleration patients work, we saw to growth rate the for Well, rate. bit to XXXX. example little relatively is state Sarah, California It our the was caused I out went had California which And to a immediately you increase rate question. have that for reinvest an an while throw It to we think of large back of clinicians these smart fair hours, place, increase the we'll of the going of -- admissions, and clinicians think the a saw in And into and increase the pass states able were it. which the the our impact. desired in our out made I dated. had reinvested business. hospital a all sooner. thanks on increase I'm rate through also We amount staffed

comes that growth. again. and rate we've we time with demonstrated So and And -- can time

to we season things Now of the summertime today, our the business with in year. that where tends be slowest said, really, are if one you our that of think the about

nurses on vacation. have We

We of have schools service. out

some we for our help about of as that back lift that we've in the schools well. But color systems this things don't one business. our school the to so how is in swing session will why provide you talked as that Sarah full being and rates And Jeff, anticipate swing year,

Jeff Shaner

Tony. Thanks,

Tony well, in-person, to the the variant. daycare. kind it weeks. think step is every of has is we it it's a back said are Delta I person. important or continues Proud say are safe schools gone X kids over into planning tool in our the school either that, on Sarah, And And with back that childcare, some going as back be caregivers we're monitoring us. of we We're an also closely eve monitoring our week make and either school manner. district to if service and have currently about, to very going is this every home, that for recruitment in important Tony many got us an effective It's But next for of that parents. to as sure talked their they've are every

to in-person setting I us to get come now to incremental about, back earlier, dollars work. think that idea meaningful rates back into constituents back in think they're those down And to get their make workforce. great we to in great I focused I and refreshing back for the employment. our to getting opportunity as have and step And market we to on a the appealing get incredibly as back we're nurses very the do go And and work. unemployment legislators against to want to fighting be that found a to and help workforce be to And we of invest I understanding happen. state getting back back And not that have to more ramp people people work. They so those to think found really and think back Tony big school the we've in wage the and said strategically some for fall is got a talked that

Sarah James

follow XXXX, recruitment you follow example just in up in California back is weeds, that volume in do frame the the so that have up this And up. I But any offline. to can in happy what result know was? a help us numbers

Tony Strange

That we'd be you and Yes. happy walk take back to -- offline that. Sarah, that through

Jeff Shaner

the a and the it's didn't strategically how into it We great was a we go as period XX,XXX-foot, California think to just more that to But legislature Tony invest really at money that I keep example do increase invested which we wanted, caregivers said, effectively staff margins. what over a cases. of strategically multiyear


Gajuk Joanna our with Bank from And America. next of question is

Courtney Fondufe

is actually Fondufe on Joanna. This for Courtney

So I But you you for seeing increase & Health skew in going you Home is for revenue and one hit just Hospice just mean, on you deal are be target that robust wondering, competition reiterated guess assets? the that your called M&A increased pipeline are that mentioned really you I able pipeline. just the guys remains acquired out direction? which for the to assets year, great. curious, the because you'd to these I'm is seeing multiples

Tony Strange

any have pipeline. of you we going And deals We on over a certainly our -- Well, in thank that the we million a on we pipeline, on for disciplined very you more I'll lot transactions have a And pass remind to question. process. given than back do. $XXX more day,

we been to is of company in competitive. do, that going When so a from of for a do. and our we've able going the well-run and good as some synergies, even straightforward realize leads to back And deals transactions to doing that able to deals competitive our is close do, recent and have a and it said, years Rod, Doctor's identify if company transaction those to we a a very fit to we've was go the be best as and we do that that synergies. going down transaction effort, we example. going we're I is highly to that size selective competitive competitive the are as to bring Jeff synergies a and And to pipeline that the and And to as a that we use one be integration think transaction. Choice know Doctor's I know a environment. one-off a we're when back, we our yes, transactions. the we to approach very to But in get of it's most done, this table, deals process. of But space home you we got how and to of going I'll choice, compared it's highly we're of we disciplined perspective, our the think kind number the going Chairman, experience the care others close decide as that go And XX we're transaction he's and

that, So run, end long because when we'll that being over the that cost-effective we what pay, we up of a will to because do need transaction. increase very

process. competitive a it's yes, So

we've I we I the think capital, think got the the However, -- successful. we IMO infrastructure, be team can when that we need to, can

Courtney Fondufe

team. it's of expectation timeliness Doctor's helpful. On my one you that it's I a then guys super That's of mentioned like tracking to of the color just into a Choice, terms -- that that making the way? And ahead specific in integration segue that good synergies you on bit you feel follow-up. the Okay. you're the acquisitions best date was and and give for more Could are seeing think little

Tony Strange

we it Well, The did Doctor's home the be think I'll side. It is on good was duty -- is the very better side. on This one of Premier I in -- transaction. Health transaction going go that more was make health is all is back a XXXX the Choice and private transactions. it to

state within state related seniors. across found got deliver product which penetration good They've quality to they're they of good. a the market that desirable all the Florida, is we equally highly think And company. a I

to I so going think -- And for just be a us. I I transactions it's great think,

spend, Now comment with we going synergies, we But the you when and and the don't disclosed tax is all what highly that some I infrastructure billing to earlier, and services. which infrastructure. those be. made highly about accounting haven't that a HR of When have corporate are -- our -- and recruitment and had specifically and about and collecting includes leverageable payroll synergies think finance I leverageable transaction and the we think

were is finance So when acquisition and and and exception to executives, able is we payroll accounting where there we look at and doing an Doctor's that. duplicative get no aggressive of very

any related all have achieving Doctor's. won't concern at the we synergies all So to


Chickering Our next question with is from Pito Deutsche Bank.

Pito Chickering

questions A couple of quick here.

-- from can Health, the sort was? was some throughout the sort of Home Choice, to back revenue on the assuming due year-over-year in from no For M&A revenues would it a the organic Health be organic those perspective. was the except quarter how forma Doctor's you growth year? on growth give us Obviously, pro almost rate acquisitions. what color of tracked rate to track the color deals more helpful all any But what from little growth from closed, of a And more Home

Jeff Shaner

Yes, Pito, this is Jeff.

think And even not be in year-over-year, continued growth with we admission we're rate, growth in pleased. of love really their line businesses Courtney's double-digit we integration up business. XX% to of one industry both though the Those with last them of taken just and the time growth-focused Doctor's I own growing prepared growing I'm And -- last are this primary digit. systems did episodic we've certainly double that pleased in it in just mean of QX of a in rate integration the both Points it's question, using we're through through wrapping remarks, both XXXX, year. XXXX as our about said year, the Tony really specifically this I obviously, XXXX businesses Five is excess in Recover from those QX and of things integration.

it's double great great presence it's market density, got as Florida, well. in growing digits a So got it's and

development business And with so pleased I we're our effort. think

double-digit throughout Health But more They're companies. similar growth pressures focus question, Health PDS the admission focus. Home as in your of as retaining answer one in recruiting and X not number just have so business. pretty consistent intense labor segment. right the organic a We our nurses, the But Home to -- now is former is it's all

Pito Chickering

does and actually lower maybe curious valuations substantially this that we All company sellers multiples have pretty public adjust pause that But company private right. and of year? Just health to of questions the then markets? one. the sort have deals I this compress a modeling quick public expectations? as Did how impact Perfect. bit are seeing after between or some sort two high question, a Courtney's we private And follow-up disconnect expectations home company the

Tony Strange

who think today the in don't we're and I as you about I much has do ago. some and higher. I deal think seller And we a such pontificate can at may gains, about cause it's mean why look think as before And someone market it a year now seeing rattling I of been take and circumstances, paused, we flow maybe is? capital saw a even lot taxes of today. to changing might a that stronger have there's that

pipeline So and think to that way. robust, is will the I be continue

seeing may road to time, not -- lower think I'm the for our over at deals all. the the But find its I we're time have for and into think of I compression the -- not valuations adjust way some sellers any peers will public seeing expectations. down being,

Pito Chickering

as sounds Okay. And And David, like track? rate of forma then think is on to on the in it quick the forward? should where any back color margin, just pro in half of super as costs What then, SG&A SG&A interest a of quarterly year? options due the modeling uptake this you the revenues going that is questions. Just about quarter run percent

David Afshar

for the question. Pito, Thanks,

after. So is term factors I other to our mean, all immediately what what annually. to debt Holding were going our on you we've $XX the disclosed too million see the in -- release, prior incurring press immediately constant transaction we're we can that save between

of deferred of million, think our that a would unused we'll and on things, costs. you $XX things in million LCs we that revolver, extended fees couple financing annual some our to other other -- $XX our about addition on undrawn related loan, incur term on into incur that amortization that fees If interest there's the to roll

draw that M&A with that interest to talked So $XX But $XX up, we see include GAAP you respect expense term that that in we'll also on just if goes does million million range. not interest where loan might to our you delayed And all roll the activity. the about. see any


Tanquilut question And Jefferies. comes from our final Brian with

Brian Tanquilut

one question you. Just for

patients to resurgence and can that ability in terms we about what going we the let of curious, your about kind how their to can did think impacting willingness business -- or think that So your how you -- COVID seeing, us last with that share forward? so your and figure What COVID to in as impact maybe year? door? we're did the just like if you of experience out And your just was

Tony Strange

year, color what So patients the I saying, volumes around last Jeff, think matters. just at about in were I'll some lowest Brian, are XX%. it you start our then point because jump and off

families a grown from bit, our the have we pull Brian the call families an think May accustomed the our kind of year. it And for was Jeff, decline living think about the -- ago, of there. of some experience color But in I to Delta last that year families? and what hearing some improvement that related little But we're so maybe where seen unlike XXXX. volumes We're children throughout care provide We've seeing a of now don't with why rest maybe you variant and to taking back April, COVID. of again I home

Jeff Shaner

think our where the we're heard said, X nurse of over long-term it's impact significant the very The now put home, to protected. with as on feel have variant appropriately. how we a And attentions, has year. dealt attention, home. Yes. in patients as impact going with all or well it don't Tony health the in and Delta home COVID their a with having and environment, our haven't families well Brian, providers X our our monitoring And I for has of nurse we're a think said, about patient none still in I

understands, nurses. or I setting, think family likes X the nurse it's one-on-one that X the

out our focused I keeping on them the are of think hospital. families really

we're school I as for to just They on never schools, want think know our our thoughtful to leaders through emergent to is So don't important maintaining it do that how that they planning credit. the for families downhill certainly Delta in-person. I schools back variant can rolls but to into how give the an us. go right now. They're thoughtful really think and don't school trying on they're about doing And partnering. really our systems It's a really aspect have we been said, of pivot very revisit. an and how important the kids, do, be They as hospital they I well. the credit, it


And have end question-and-answer Strange of now the turn reached the over to the for I'll remarks. closing we Tony session. call

Tony Strange

updating you Thanks, Aveanna again, operator, as look thank progress interest our that to operator. go. We forward in we on concludes for the And And call. our story. your you continued


at lines for may concludes today's Thank you your and this you this conference, time. your participation. And disconnect