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Aveanna Healthcare (AVAH)

Participants
Shannon Drake Chief Legal Officer and Corporate Secretary
Tony Strange President and CEO
David Afshar Chief Financial Officer
Jeff Shaner Chief Operating Officer
Rod Windley Executive Chairman
Pito Chickering Deutsche Bank
Sarah James Barclays
A.J. Rice Credit Suisse
Matthew Borsch BMO Capital Markets
Joanna Gajuk BofA Securities
Call transcript
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Operator

Good morning, and welcome to Aveanna Healthcare Holdings Fourth Quarter 2021 Earnings Conference Call. Today's call is being recorded and we have allocated 1 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 everyone, for us joining Good thank today. morning, you

financial this statements, Today's until XXXX. Aveanna's are made may A call statements of will April Speaking Officer be Aveanna's the Afshar, issued our anyone a call and remind press our the will or future implied are to on as this and of publicly beliefs www.aveanna.com available website available our in want in Officer. are otherwise and we our call Executive website www.sec.gov on made who to Chief release update as today's are available not federal listening Shaner, SEC Aveanna our those replay and on call to Financial Aveanna's is X, XXXX. Form our We measure Jeff which from revise of These all measure today's the business Chairman; during to required comparable with assumptions David today, documents and in financial as that which our or our subject or earnings that and earnings of the be XX, forward-looking Executive our call made March events laws, as risks to Windley, by statements We new any words replay environment identified supplement website call. SEC's on forward-looking press is are GAAP non-GAAP Investor at Chief we are contain separately Rod other reported mentioned could the uncertainties the will, intend, subsequent on be Also, differ statements may circumstances. reconciliation as in materially Operating Officer; Aveanna's such website. Tony date President; words about both Chief and well XX-K our plan GAAP which operate. on forward-looking and filed cause today non-GAAP certain on current the website at Except of A similar results and a management's www.sec.gov. changes securities at All of Relations expect, actual of These any accordance statement and as expressed XX-K, measures. yesterday. most available section release could, of may, based to by available expressions. use or information, and result results may Strange,

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

Tony Strange

you, and year-end and Shannon, call. Thank good you quarter earnings fourth Thank XXXX Aveanna's for morning, joining everyone.

QX today, provide as bring call to the environments, our full the On our XXXX. well into some for out speed as update we insights up you you operating year results, most on current will M&A activity expectations reimbursement recent our lay on and

and minute in get I'd like team. these the we a take the thank Before details, results into Aveanna to

As you company. as period year-end our know, Aveanna reporting this first for is a public

sight well lines legal, and successfully within for a filings Our We've finalized line by completed today. into next our few done teams us preparing all our an XX-K for the required time and outstanding weeks the accelerating job accounting in finance as audit, the year. have have as of proxy,

for built. and each for these putting results patients thank like your branch day. In foundation all and you your our our and dedication our By which create work. do every addition, you Thank and the families first, what I'd personnel of are our to you hard caregivers on

results. right our into jump Let's

the pandemic as of labor the $X.XXX As a our QX, billion. disruption to a billion to we $X.XXX we of result, was to range end markets. reminder, at that And acknowledged to the revenue provide a lowered continuing expectations

managing gross I'm guidance approximately approach pleased reported ending that felt for we EBITDA to $XXX.X billion disciplined report confident $X.XXX of that million. XX%. full a through margins, the adjusted However, we we to year our $XXX EBITDA approximately could revenues million XX/XX/XX, or of maintain of and year

in Given our ongoing year-end year-over-year are comparisons, all the In onset inclusive accounting I'd difficult a thinking operators headwinds for the of variant, everyone through calendar a X to to Aveanna X, X, for the pandemic, our uses sudden purposes. a of of environment. well that of Congratulations we proud job Omicron results. of the done like remind our very extremely

every an XXrd fourth week, of has quarter $XXX XX-week this XXXX As it making X Aveanna's include down making week, XX-week quarter. quarter a X.X% result, a the extra was for QX results Revenue XXXX. years, a it million, the from year. fourth

adjusting million, Again, Along comparative up difficult managing provide diversified of eventually, payer prepared our well However, X.X%. to will positioned for would to QX to disciplined quarter times, segment accelerate continue X.X% details have be we in we comments. of growth XXrd that discipline wins his only, over expenses, our EBITDA experience by the for up the the the rearview our approach margins protect adjusted for in having XXXX. Likewise, EBITDA displayed with across purposes revenue once gross week pandemic the the during rate for to will will XXrd for platform. week We Jeff comparison mirror. further have purposes, again. X.X%. up believe $XX.X And would these be was been been our results

have months. of As our increases states I through the in put rate XX last mentioned last on our XX call, XX

be state services. reaching and to out agencies time my plans, asking done and what have access managed career, we and care the to can Medicaid even first home increase in CMS For community-based

our states payment of in revenue, of see our source. further discussing in through recently growing, states We several improvements any making while continue Medicare it represents XX% single one only to expansions largest XXXX. put are key rate overall concentration and benefit of rate in that already increases And the

We systems payment as unique across many states. have XX

hourly operate. willing, good addition, XXX in partner understand partner excess Medicaid in not for And the individual we're with away move fully Payers that have & by broader and of In model have Home to a business, opportunities We eager couple the duty these a requirements. in private payer of states been to homes. explore payment deploy our our care we for Health community-based benefit an has but individuals willing that only example, and And is that is our care care models on to in diversity a excellent discussions that the in allowing and are new of services model, home greater contracts. operating Medicaid resources flexibility innovation impact payers us management very multiple desire manage while of payer drive way an staffing to in managed had care. the expansion fee-for-service provides COVID-XX from of in care to in we access Hospice their within which believe the more with to Medicare along

Let's turn M&A recent our attention to our activity. most

December. and of transactions As well Comfort reported during schedule. tracking and QX, or are are integration both into ahead Care Both transactions closed at both Accredited in

to to welcome some thus thank to our you work that the transactions debt Comfort to hard in integration We of I'd fill As and these Accredited annualized may We're equity of while all say you family two to million that's additional balance the and the cash far. you thought these Aveanna have with and revenue. all we use Care approximately for into excited from a deliver story. part the would pay like expect recall, the sheet had as on $XXX gone employees for to Aveanna gap. year leverage originally X.Xx through maintaining around we transactions then from

transactions was cost it that of range, would to shareholders capital overall the profile. doing the and to the $X we to in quite entirety at fund the trading range. taking the be best leverage that stock interest resulting with comfortable cash $X to leverage debt, of Xx so, are of given and we're In reduce able However, the the with our decided

have place Given different in put rates, of debt. rising forms outstanding two of the of our across hedges risk we all interest

desire cash our use and/or just comfortable we're is hedges additional it's down that debt. some Dave to the leverage leverage, accretive and While debt flow, I operating pay provide talked operating our the cash detail on long-term to acquisitions to reduce with flow the of going about. current through structure

in I call, integrated the making the mentioned are growth the XXXX half second we for half As last on will the of of businesses focus year. sure acquired and further look these first fully that

As we have spread a which for draw we're with already debt. term loan million the $XXX the a servicing associated delayed reminder,

climbed for XXX at and to December, continue to begin be Omicron we're themselves. caregivers we any have million meaningful Beginning climb, brings X,XXX of are about the had and COVID grow should or in one has believe it opportunities to almost year XXX we to number quarantine we between caregivers under out time. Like as we're we that due facility thinking that levels. acquisitions begin the of those of down January businesses, to $XXX saw financing most positioned business. and credit today, addition, That mid-March, how February. us full our well to to the In our to back had I'm By revolving back we're XXXX. trend pre-Omicron that needed. pandemic, number We impact variant as say and of on we through Through most where a present and that additional down, pleased saw to availability now most

the while upheld. mandate the been rejected, period, In same addition, during we ultimately debate, was mandate the mandate vaccine OSHA the has CMS great experienced

has on a companies, and or a in with local, of report and we all our proud compliance While employees XX% mandates. qualifying been complying have mandates Aveanna, either struggle most vaccinated to all state been have are with that federal I'm vaccine exemption of file, for including

business, All have in QX, more our in of not specifically impact on QX. these only had transitory disruptions but an

challenges range hiring $XX Keep reflect of quarter. the EBITDA impacts of of quarter of QX will in Comfort the in the and to Omicron disruption of first in million Omicron, XXXX offer range the demand. identifying the Accredited markets Care through first could full being and offset $XX of the in a subsided, have million and in partially half the by with continue challenges to mind enough affect these million. $XX negatively We continue but revenues which labor much that realized to caregivers anticipate meet them the to of While

a on we billion, $XXX will $X.XXX for stabilized, be As XX%. in EBITDA range and half $X.XXX that we annualized that rate of a an year will the expect in of Aveanna the million second of to further be to revenue care and full summary, billion in the $X.X will additional and or XXXX and assuming would basis. million believe $XXX run million a home to revenues is range we of the market XX% between XXXX between XX% in consistently and year-over-year. EBITDA labor disruptions from return $XXX diversified grow mid-teens Notwithstanding company, to with variants run to rate XX%, EBITDA low adjusted to the generating result, the $XXX billion in million margins In

redefine know problem. home excellent care community-based I'll to we our care care. its The and little results. an role is in We the Medicare, strong over positioned for of have is segment believe regulators clinically been solution, the alike the sentiment as is We and will provision compliance. never for that payers a a track not that a excellent deeper demand and With dive Jeff to a continue that, turn for our call home leader to Like has Medicaid today. innovation and the an payer service higher bit record a and care from commitment home it as Aveanna that into is

Jeff Shaner

you, Thank Tony.

Before variant operating Omicron I vaccination trends. our few to COVID caregiver impact and indicators minutes a key dive I'd on metrics, employment into and XXXX and spend like our year-end QX efforts,

of As pleased with we very approved Tony and exemption mentioned, overall are vaccination Aveanna XX%. our rate

collective to are or at a at has date. documented largely their exemption employees point, vaccine Our efforts fully this with all And new staff qualified vaccinate been achieved. our hire

XXXX are regarding and status. for in push federal major QX, full a compliance laws and was specifically state with local we this While vaccination

variant peak, Prior Going aggressively from the in Omicron per working. had X,XXX in cases. employees of of employees to almost how to its forward, XXx XXXX averaged it at the in process affected we per number per employee had year. picked quarantine We QX XXX a week disruption the of December greatest impact QX, employees quarantine and up week we to By December, experienced and we status over business week as see that therefore, December, almost late day on it manage steam number XXX quarantine. this grown not as our X,XXX in the to new The Omicron into being an results part day.

Although admit our on short-lived, and shifts, Omicron patients complete mark day-to-day open left new a branch to ability significant task. staff even

to with decision to the knowing Aveanna. caregivers program of refer Without on return effort Now stay of strategic We as them a invest to program made a or reengage employment short, the the and trends. onetime began monetary provide program. XX. to work the the return in through Omicron to December variant, upcoming benefit ran caregiver the and to incentive December impact we to engaged in In this

we for work During onetime if work a, Leading hours XXXX. have new million exclusively as for saw to join not weeks they cash or run ended, increased Aveanna of Either, the b, a but commit the close left; program working they to invested to time, worked the us program work c, incentivized at The programs if and following: program, plans basis, similar we do XX do On reinstitute Omicron, previously for us; already were to the moderate caregivers of to for caregiver has of Aveanna rejoin success. return to Aveanna. in this lastly, to we up straight one engagement. additional onset a $XX nurse; with had

to on Duty Now Private Services segment. the

and over to X volume driven quarter we XXXX. in for provided million all-time even overall of we do PDS adjusted with in pediatric continues improve and I XXXX. as the Omicron produced to demand the variant. primary QX, to drivers hospitals in hours The care get is QX decline on in expect a at children Patient revenue. highs shortages. During hours by $XXX.X X.X% was a The XXXX be volume the solutions of Omicron home. the to Revenue of XX-week the X.X% patients to of number of decline impact was our exposed basis, volume payers caregivers with find new approximately or the during comparable QX labor continue million to PDS QX partner decline sequential the

reimbursement XXXX improvements per enhancements. $X.XX QX driven PDS of program Our XX to wage increases, our was from up continue actively we QX XXXX and X.X%. by rate to was $XX.XX rate pass primarily With hour This or revenue rate caregivers. improvements of Medicaid through

the continue this rate we year. experiencing as XXXX already are and into We wins expect trend to throughout progress new

cost our achieved we labor million or and $XX.X of gross metrics, to margin gross in margin of Turning XX.X% QX.

into for have comparable to adjusted program, QX when return However, the the approximately $XX million margin would been invested work gross our XX.X%. caregiver

was As range remain margins expect QX, forward. the this in I caregiver to PDS to program XX% gross onetime investment moving XX% in

per also of XXXX. been work $X.XX basis, return $XX.XX of to program. spread hour Our was QX per peak a spread have from QX of by $XX.XX, impacted comparable On would its down hour in the

in of $XX.XX to during spread still call, rate to strategic target a for our against X% mentioned form in PDS $XX organic the I continue is investments volume drive growth the volume Long our growth our in believe our As segment. I ideal wages QX term, caregiver balanced to the PDS pass increases year-over-year we segment. for through X% to

Tony we Care the on mentioned, Accredited As closed December. acquisition Home in

team we've is IMO plans, pleased date. with and I to through integration progress Our made the the am working

the by California to end Accredited state to the up story strengthens wrap position. synergy a Aveanna further continues very be important business the of to Accredited and only our capture expect and integration We QX. our

Comfort are have our and share Moving Comfort Alabama acquisition QX, with to moving our our the presence well performing that and assimilated segment into capture integration synergy geographic Aveanna we continued The of I'm team and through line in where Home majority for family. Care in with expand our pleased expectations, Tennessee has Hospice in the to to integration Care. is finish Health very we we QX. business to on of efficiently & in expect

annual Home On Health XXX% of run million revenue. increase QX division per approximately seasonality the the of total growth pleased margins it will million up with segment & a $XX.X were Health in driven we line episodes the gross a admission and XX.X% revenue, seasonal in $XXX admissions, a our organic Home our basis, growth in are of growth volumes variant QX we From care. believe episodic, there margin for & improvement. and This quarter, high These is XX% XX,XXX room segments rates I'm primarily PTO XX% impact perspective, believe QX Aveanna. rate for XX,XXX XX% the for being the XXXX. the the gross with business Health driven usage business Home by produced temporary the landing cost a single-digit XXXX variant the During Hospice X.X% was the over and business $X,XXX, and & December. Health were by Omicron in of current remains Home and and in margins ideal Omicron higher episode QX. Hospice of QX margins was impact XX.X%, see reflect additional Revenue approaching range. December. to annualized in from gross total Hospice We remain

Lastly, clinical Home value-based purchasing support up innovation we investments efforts to in continue ramp to Health. our the

value-based and from expansion for XXXX. are to nationwide in well We look its benefit positioned purchasing

Medical segment Now for Aveanna results QX. on our Solutions to

normalize approximately UPS enteral to primary approximately of down UPS million we the During revenue quarter, $XXX.XX. of The revenue. patients or by produced XX,XXX or was served, per was Revenue UPS, $XX we impact $XX.X per UPS rate Revenue unique driven X.X%. should X, the per per range. decline effective contract rate signed September impact of UPS $XXX the $XXX longer-term was of on national the driver in The XXXX.

have to In specialty cases, chain adjusted the our our volumes supply enteral partners QX temporarily XX-week we that from ability burdened We're have these for XXXX products fill orders. see distribution patients chain product to flat some doesn't were supplier and year-over-year. a available. working nature experiencing impact, are have issues Lastly, them. the needing as volume QX enteral inventory with and delays for in address supply temporary We immediately perspective,

metrics. Turning gross margin to our of and goods cost

our We Medical line experience continue XX.X%. of was margin to stability margin $XX.X QX gross XX.X% with gross or with Solutions in XXXX in in million expectations.

pressures product XXXX, XX% contract margins XX% in on Moving the of expect the impact supply gross national into above, chain to we result the payer to of range a and as remain forward availability. mentioned

Finally, the very products continue and demand for enteral our services be robust. to nutrition

care dedicated to and model home managing industry-leading the of We Regardless The efficient weather healthcare will network to allow and homes. short-term caregiver its proud positive impact additional providing approach segments resilient to patients' investing chain disciplined is market am business value our in and Dave? distribution of Aveanna be of summary, additional I'd #X color short-term us in Solutions as shortages. the of high-quality over like of highly while the three In margins families, have the upbeat in team to Medical cost-effective to a Our clinical payers. and remains challenging the growth in whole. XXXX. long-term the environment. sources With proven that for Dave that, our choice our to referral provides supply Aveanna turn impact I wages. about all to very our call remain a conditions, patients,

David Afshar

and of increase Starting or out Thanks, year and hedging $X.XX well $XXX details. provide as Jeff. revenue. million XXXX and flow, the some from provide ahead overview Jeff go quarter, have Tony as fiscal XXXX an with some debt XX.X% details and was cash XXXX. revenue of fourth billion, an I'll provided on

of HHH HHH attributable incremental provided & as as XXXX segment $XXX full primarily revenue growth to XXXX well Health in Home growth by partial our contributed million XXXX Our revenue in revenue our Hospice M&A. M&A a year XXXX year of our as was

$X to PDS comparability weeks and fiscal Tony Jeff performance and as of measures also Solutions of XX key incremental to our weeks compared contributed in Our revenue contained mentioned, year XX million, to XXXX the Medical respectively, both segments our as to $XX XXXX. growth. which XXXX And XXXX affects million revenue XXXX, and

to gross margin. turning Now

in to HHH which our our to business, gross increased the in percentage significant XX.X% PDS gross percentage. increased business XX.X% in margin our as was higher attributable Our margin well as growth XXXX. from XXXX than a gross point XXXX in XX XX.X% has contribution margin XX.X% percentage a also Field in PDS XX from in to basis points XXXX. margin This increase basis

our impact and of X.X% XXXX. corporate costs that course businesses, expectations. business goodwill would our higher percentage noncash include about has recall and in think adjustments not charge branch of Field amount HHH The we thereby margins principal see were of further a administrative to in in to increases revenue margin it of primarily in full and in in can expenses Corporate in however, has caregiver X.X% compensation QX. footnote XXXX. I'd in and X.X% from little our of release. compensation to to as growth gross volume on provide availability the as adjusted to in And XXXX has color like corporate we decline corresponding found corporate growth share-based constraining integration through flow expenses, financial relative pressured continuing contribution, also expenses higher PDS and in statements our expenses. to XXXX to our share-based expenses result margin. COVID-XX a over revenue costs from the table press as as our contribution a the reported while capitalization the noncash of impairment that our PDS, As The PDS in on we We in a MD&A. XX core regional the significant of be clinical revenue to Adjusted Field compared market decreased workforce expect XXXX, gross XXXX X% preserved our in result, in discussed

million a quarter. our fourth result, segment charge in in a recorded PDS we impairment As the $XXX.X

net and compared loss loss, year $XX.X as XXXX Operating net XXXX. adjusted for million to fiscal on loss was EBITDA. Moving to in $X.X operating million

impairment increase incremental of to million Net XXXX, that in was 'XX. million impacted versus $XX the we by million in a Field positively driver operating contribution XXXX million charges operating in the goodwill $XX.X loss 'XX $XXX was of the While primary in a the in are compared was $XX.X increase took the absence parts loss loss increase number operating earlier of of net $XX million I that in as the our income in received primary statements There see being in in legal XXXX. you XXXX. increase mentioned loss which a loss, as with settlement driving drivers we can well moving in

Tony million As of earlier, XX% year adjusted million to or for $XX.X XXXX. we XXXX, margin mentioned pleased were a increase EBITDA from fiscal XX% report adjusted XXXX. an $XXX.X EBITDA And for this represents

that with being XXXX, significant to Turning and for CARES of taxes used drivers flow. received significant variances in in GAAP payroll you increase to government adjusted expectations XXXX cash mind Net interest to Bear will the based deferred provide this cash adjusted how paid When of relation by the think interest Over to are for questions have to about a million our and items, operations want to to largest cash for there in EBITDA million the our repaid of our in EBITDA, color flow two, cash $XX.X about $XX.X operating for agencies leverage, 'XX paid million expect our related forward-looking that think asked In result paid EBITDA. relation the I some $XX in of interest. $XX.X on cash paid cash XXXX. rising operating investors interest to certain cash was companies in and certain in cash XXXX included including paid million in on as relation here. for 'XX between XXXX Act IRS analysts to in of the million. rates we was for and we And advances current in time, be market adjusted about that operating $XX.X by a more of CMS we acquired. flow couple some to

I'll drive significant between adjusted a to EBITDA Our be were cash. flows in EBITDA overall, EBITDA variances to now larger items because adjusted well encourage between include facility up million which and I and flow. of our be the in in this review reference million in of credit operating our a in hedging cash of and provide audited caused CARES reconciliation drivers MD&A $XX last in adjusted mentioned of can cash part our operating find found and points color moment create included and is and our can M&A-related working useful again, adjusted MD&A and paid costs variance M&A-related on $XX.X I -- of million some EBITDA in a that update. EBITDA one XXXX. adjusted which we in you to in And statements to in as 'XX can would related this color. the reconciliation. which a the finish costs statements 'XX. provided which costs COVID our reconciliation on integration cash cash some costs, agencies provide intended to also flow also led and XXXX, costs topic not To the Act examples hopefully, financial as government here acquisition-related related both ago. approximated adjusted This operating I item EBITDA are also you useful all inclusive, variance but capital $XX between

plus finance with lien As a loan proceeds loans. the accounts XX we Then August a LIBOR two $XXX reasons first The a Then at a interest our we securitization million in new loans basis X.XX% also also to do XXXX, variable year-end. term after our hedges against we QX, $XXX place term into QX, lien $XXX a term second LIBOR our first billion term a bears at second floor. interest basis loan single repay down of with our point bearing LIBOR million term lien term that of receivable in $XXX and in second floor. lien we Tony refresher, earlier. debt. In at million new point have entered refinanced pay we had entered M&A facility. into $XXX million time IPO fully the our plus X%, our mentioned last $X.XX We against lien loan In to outstanding loan QX April, first used lien XX for million aggregate, as debt into of rate

The The $XXX million fixed of a rate first variable million is notional rate debt swap June that in rate XXXX. interest converts swap debt. to expires $XXX

and $XXX amidst up team in to notional summary, an the operating exposure as XXXX. cap rate LIBOR million operating rate here, X% the February XXXX have wrap In environment. Aveanna resilience cap, also -- of increasing and our the our expires interest I interest caps which the We over results challenging that underscore

Our us have advantage our subsequent us of IPO take that with and supportive is of opportunities structure goals. of acquisition improvements liquidity ahead capital the XXXX to prepared

have like team addition, I'd finance and particular, Aveanna company, supporting filing in you cycle, legal first to and of to XX-K entire public In thank the revenue our a audit as teams timely the our for completion big including of our say a accounting, I to Aveanna and it the up operator, exceptional have that, providers, for Ernst moved it ready think in & to And Greenberg And service we're mountains questions. with services happen. our provided process. to professional make all Young Traurig, open

Operator

Instructions]. [Operator

Bank. the question Pito line first comes Deutsche from with Our Chickering of

Pito Chickering

rebounding sort back another be what they when go first staff Or how back happens think lot your of available? were quarter the Did And live in the provider? should quarter? a the unable the they is when patients unpack go they guess to without on PDS we in to sort here. care? sort So did to segment, of I that of staffed first the hospital? Did to about

Tony Strange

leave that, another you probably your thank all, Pito. true. what is the of of tell above first They you doesn't And didn't to provider. let and of happen. me for question, go all Outside So

have might they're the most patients in had ventilator- or trach-dependent. is additional family pick has common seek that Some hospital The if a answer to care care. to up

So lost, mom are grandmother way up. brothers and where I hours all what to in headed, up no there's make that once I that think go to was hours. your pick or and those chip care And question dad and though, those or sisters thought have back and really

we the your back can to point, quarantine, caregivers of those staffing begin so or And hours. as come out then reengage

kind want in of really those in reengage. we dire Omicron. February terms bottom. Jeff, of that saw we remarks prepared anything the then of January that in about But the seeing you to and talked we months And add impact to began March, were caregivers think pretty that? I

Jeff Shaner

them a because said, it this different and as period. and fact was all as time if allow It did states those along, was very were them is PRN which with that a gone, it with many communities. This XX-day employees. keep the necessary period that different policy group they that they had in whole worked those to pay that which Pito, transient really point, a caregivers felt us. was our rolling to -- was to we to of exposing period X- paid to Tony's caregivers process. on confirmations so stay which like But quarantine We Just positive variant, of was is Tony it with

quarantine. come it's children as And was, the on them and abruptive they're placed good of up positive pediatric a caregivers with the as burden and have these while family. XX stay parents a sleeping. echo I be day, nurses They back their so was hours comments, -- with sometimes after those And to did the the tremendous it and Tony's side it

and imagine caregivers And to the able family but the a them, to pressure period over. reengage so was we can puts pleased are be after on the you quarantine

Pito Chickering

And be a sort there'll question. questions assume lot one of parts. two but of then I guidance guidance today, a around for Okay.

be if in guidance can launch of of the help all ballpark? the gave us $XX estimating been closed you at sort was me are quarter, I the bridge can have year, range EBITDA fourth cadence just but effectively the first around The the the specific that in quarter. of of first quarter the year? Is million. the first now you with one, first one, a second on half deals quarter in pad the closed, quarter first the beginning the you give the what more has the And EBITDA of would of sort rest about

Tony Strange

let see kind one right. Well, All piece of at take I time. me the can if that

QX all quarter impact Comfort and about with the won't have you of synergies realized Accredited Care Comfort you let if quickly Care, a that of because So both caution Accredited in the me think deal. we full however, and

we by it, in half think take then XXXX. really will so impacts year we and how the offset synergies quarter. a of to I quarter give Care remember, to full place the $X and another, quarter quarter call were Omicron, first of that full throughout provide fourth careful really Comfort million because having -- But quarterly So about to mean, want And of don't moving as we kind on don't first if Accredited $X roll numbers that's move million -- Pito, guidance. fourth of into additional the EBITDA probably be I the you to our associated of there's of think with that

really significant not all across the January segments, revenue that's And can was is the -- nurse, Private nurse really one that we've impacted can about, Duty well, however, business you got reasons for all if our if the variant because talked it one working, you February. see and Omicron However, already three where not is most And we being really generated. patient.

So that of to QX significant. the be impact we in pretty going is think

which in in million into think maybe the $XX is reduced our and to reasons, But a bit. $XX where in QX QX in bleeding a going impacting in remarks, total could EBITDA, prepared of But what we think It's $XX kind thinking and QX is million. that outlook my impact painted little gross those picture the year million run than $XXX we numbers I just be impact way in still company, when think actually you're that's the had would the Omicron to rate the color about giving Aveanna paint. starting -- to million business. of trying different accustomed being right that our QX. a to EBITDA think I more And $XXX because point because a have picture that's going of million for being we're revenues margin see used to we're experience the really in full of we're I off I a about to we're number range we to by that

Operator

next from with Sarah James comes Barclays. the Our of question line

Sarah James

here guidance little going to for a I'm on bit. stick the topic

guys moving You a of pieces. couple mentioned other

year to rate supply issues being you of affect full Can those the out. we hourly just rates tend got rolling think being guidance? about PDS are increases starting coming about put Should a chain talk that issue? included generally for XQ? hours. You've through, you And And in fully in flagged, which those the cadence XQ it about really then do the into them your think you strong

Tony Strange

we're see why about rate flowing thinking the the in of quarter. let so everything everybody Jeff, pulling answer itself you number, duty me don't that about we in of in kind That through the XXXX? in minute, QX payroll labor-intensive, QX, especially typically and in tax a first impact April. question remind So during is rights you're increases in how higher because a private Sarah, kind that where March really

that's So on another bit. going first pull quarter that's a thing to that little

remarks, and increases, of I some quarter. of portion the in comment actually a XXXX. of we're course same year? seeing, that, at full our we the in why the I don't XXXX with that both think about most mentioned the the prepared to you've payers have those about Jeff table get QX. in our playing But of With experience seen in rate some recent or in Jeff, some We'll as in how cases, think increases put through throughout you some back already discussions

Jeff Shaner

year -- in rate October effective We're they with already September dozens We beginning this date. I your in four towards dates think already increases other and have for the year. states that are Tony of and usually as engaged said it fiscal QX July their trend books X X have Those and and well. QX. are

wins. we've the So probably home and and around to year. evolve strategy rate our to think in ourselves continue community-based see from increasing real benefit back services, we'll high think opportunity through to a the that And continued see I opportunities -- we teens do mid this mid-teens, then I

I Tony I year day. that being adopt for have that we on that children this has XXXX. the burden parents to a the of fallen mentioned, we think, see as and more families. these states, a And are -- lesser parent acceptance that the of couple continuing a with lobby that every state lot states we The skilled are we embrace and one worker had think in

So full-time unskilled more I the think of lesser on piece. family states adopt member skill we'll becoming ours caregiver see a or that

the supply Port. L.A. call Sarah, The months second was last ships that over, kind in for it, I'll of the chain chain we that of last as the really supply saw as up part AMS. out of X built the year

saw run have And those products, especially specialty to on inventory, disease the kind to thin but as distribution our of generics, that Many specialty they're Some starting not ships specialty products, partners very our kids coming young, just the formulas to from specific we of enteral our X young specialty on and that Europe. of the are are age kids, much of their really, X state. products. really on were

the tunnel back can and them end in so I the at deal. with of getting light so those see the shelf big we that. products distribute them And do in a getting

inventory I some the chain we related supply. think to as them ship any need can patient supply we -- think much as that I we is in so we look by the as see being and pressure issues solved at product into And continued look needed on and solution of that being it forward, certainly medical the summer, QX that certainly, a of is of out, AMS then it. to the resupplied every be QX some time

Sarah James

guys follow-up one So understand, go-forward you some clarity. just any And you Great. the have states there Can rates. budget? been a where is of are the the end having help states enhancements we program back, of on are on public rolled of view their part to here with have us enhanced rate multiyear funding? any as you emergency FMAP health come discussions the and And

Jeff Shaner

a Yes. great question, Sarah. That's

both. answer think I I'd

the all maybe -- We've permanent rate. So above. of see or got

those, have of rate. Looking permanent the we backwards XX of

payments. temporary then continued into the public would also We around say to rates moved the have health emergency. future have seeing lastly, that And I we're and onetime temporary be

So home states Rewards the updates. community-based using that are onetime services, and as Federal payment

rate. And most so focused is we're thing that the on long-term

what focused care services, mentioned, providers come with of to they different most the them now say, is the moving said, both future. secondary can a part as of different continue up the kids nurses. safe reduce that's keep and the I out cost before, we skilled we hospitals, And to long would excites America And care. very is of keep model. audiences exciting and in payment talking what also, total attract have services with but us, us these come the I about where the on said the unskilled us Tony I we we're And on most at Medicaid to let's home to the and are truly moving think to term So of additional have managed rate largest a to benefit, focused solution that,

Tony Strange

And maybe though, Sarah, I'll answer the it other side and of interpreted your question, wrong. I

of If in the today, that tell the to can rates our are your event in that question pulling downside you risk rates I pull related back. what have is back, view to any that we were don't

foreseeable the where be Our or is it future. rate going here positive to is only from for

Operator

A.J. line with Our from next the comes Suisse. Credit question Rice of

A.J. Rice

in the as and But you I understand the year, something may be at -- changed more there's spillover what's I XX% about little mid-single 'XX. of doing half have your on which we think a the you Is you're first growth, But the revenue just your originally the the assumption you X% growth be want this to the for organic flavor the contribution going to back acquisition for is give about look in the the unless on low the take a labor rest lot of I'm growth I digits. looking was? it possible, make because math like, but it now what second baked of of talked almost versus looks to year, it I QX in acquisitions, us in if at year wrong, you little quarter in when right? digits. the know being maybe not Can sure quarter, you I come that organic organic the more single out out a the thinking understand. from noise?

Tony Strange

thought has Yes. in A.J., our nothing process. changed

further, high side range. unskilled a the reasons that in little that, growing private all As a in that talked digits. I'll it we duty core about, of matter the skill even it of we're in of X% bit In to business, unpack business, private that duty of fact, Jeff single that we duty, the private business, and grow still X% to side to the expect think

single Our digits. Medicare Health grow the & in Home business Hospice high to is going

Our the X% to rates believe those in us to AMS growth end will growth we I you of business kind high get overall, going of 'XX, we're the that grow our still that back. rate, think see be is year-over-year -- think in And come single digits. through will I organically. as are X% And assuming

changed So I have all. don't at think our thoughts

the the think I here maybe dip might big of what back you half be that is we're the taking of first ramping the seeing in kind of year.

seeing you're of some impact the that back. ramping of think I

seasonality of bit with that little we have a to QX. have We for contend

of So our lower in usually one general, is quarters. QX

seeing that don't for If So changed in. think the on all. built sentiment that. at opportunity be there's But we I anything, you I has overall upside may see on our business think that

Our business growing. Home is Hospice Health &

with of family talked all Jeff accelerating able to of will our where hire that payers flexibility think those to into things with the greater have I things about and and some Some growth we're of creative innovative now members care staffing, provide go rates.

A.J. Rice

year-to-year I on But definitely first know question and in similar and labor looking the move a the kind into the you both and lot What you're cost parts as the quarter your metric maybe fourth into the that And of guidance? assuming quarter. business then second PDS moving second again, for assumption at it of baked business? you Okay. home the front. adult what labor are on the whatever then about is half, increase

Tony Strange

to think way remarks, Well, Jeff's about I in spread think he the prepared referenced is again. best A.J., that,

and take we to margin, those some you in the because up the states rate will rate that these in manner, in relates a And it we business, increases very that and of spread. focus And be we increases In to as along gross kind to on increases, But growth. manage to caregivers. on to itself passing of focusing our form about of the of will in where rate facilitate instead of back. rate so the through past going get we see disciplined we're will you those And in very have this margin, wages increases never disciplined once caregivers give it help margin. the will spread, wages gross

an this, by a a let -- just business state. what gross okay, Jeff, run don't across I'm you about sometimes that market say, margin for you and patient get the market comment to give when takes so to we and I I'll rate trying increase you, paint everybody be and XX% in It's to we'll just picture we it. on give a guess that And well, it state, for patient. disciplined increase by let's us

Jeff Shaner

probably A.J., I And said, to our we in fit the spread QX. north as and point, in it that PDS closer patients confident in will all And be many in rate us probably weeks, specific model. Tony for takes then QX months, why date $XX.XX increase effective a Yes. that's think is wage that Tony's right in feel on one that cases, of spread, range certain reimbursement to $XX.XX out. And to still

remarks, for improvement. room the in On margin I gross said we side, still prepared adult think our we as see

and now last range think the in were probably Home into at systems Hospice that year the for full I to and Health think growing XXXX. and KPIs our XX% the XX% our we I end And in our see XX% of we're for we still growing year, the range business. our

still HHH improvement So room for on side. the I think there's

Tony Strange

on number bit jumped to call bit Jeff, we back at doing In that I to So that's the not Jeff, QX to $XX.XX. $XX.XX. in talked memory. $XX.XX. go from And if But was QX, I'm both you think a of the running on right back demonstration spread it at to and QX guys, then XXXX, our of went QX, all that, best because the little I believe it all QX this our hot. pull a call, actually And having way about little $XX.XX,

a you're happen those come is think, exactly through through continue increases passing is that what and we'll of stair-step of over as dollars rate $XX.XX, think that the improve just seeing play function wages. these to And spread to putting back said Jeff that XXXX what talked start somewhat So between is through, a would those I lag you a when down we and I there time today as some throughout good demonstration was work, to do XXXX. in of about is the continue that

Operator

the question Our next comes from Brian of with line Tanquilut Jefferies.

Brian Tanquilut

discussion of bit. regional know at a look down shifting But corporate corporate. gears Just your on expenses, little and gross sequentially year-over-year been even down a there's as in I and I lot margins.

out Just levels these how figure going thinking you're of forward? growth of trying like G&A to durability kind and the about

Tony Strange

are when the where Well, go we most areas those we acquisitions, get we'll -- synergies. through the

to Care, Comfort I the a $XXX and year. a through we'll And to synergies made with the a see flow increase associated so Accredited first begin comment begin as associated half the we with those ago, see of while synergies in will million

we we expenses to those continue as So expenses in control will of those terms the be able leverage durability, think grows. to company and

to up -- we and business that things where managing some some date. through insurance is and to that attributable Now like is operating single crude other of every true premiums quarter, the incentives

leverage we those So at line for the area expenses. will is sustainable quite to things continue the all corporate, regional SG&A and But play think of through.

Brian Tanquilut

know the Got plan. above of I acquisitions it. home nursing. the you And are performing in that or then, Tony, since topic two said we're at

the started seeing comments patterns the you're like assets? two can and nurse in just referral seeing that of you as coming any of what So terms you're make you've in of terms digesting out hospitals those recruitment

Tony Strange

their or volumes question, specifically as from those to pullback as specifically any staff. relates going it relates slowdown -- Well, broaden admissions I'm are seen We've hour to two not assets, it or businesses your well. referral doing or

Their so deal folks those not at improved. held volumes the are I'll pleasant in Matter that's have but Accredited great. specifically tell two California, And businesses out fact, doing only surprise. been you a the of .

excited about and bit, And about I'm so your expand Jeff little never it question transactions. a so think a both going to both been demand those did made higher. The has services really comment and I our for I. we're

going we there's Times of on referenced a especially home. hospitals a patients Inquirer we Private come of come article, access forward we about. home recent We investments patients to article, a in that care Philadelphia have side, Los Angeles think the home through our to creates home there's and There's there's care at the to all -- and most waiting some fact, now lack community-based waiting this people this tailwind -- Duty be innovative and there's Jeff a recognize matter just conference, healthcare have to have -- community-based And made around and care. for a that of need talked into Washington the tremendous to article, things expanding

members family innovation, lead to home. these that keep we're think well pay excited let's caregivers, And patients pay we're pretty and I at Let's about positioned it. to

Operator

Capital of comes next question Borsch BMO the Markets. Matt line from Our with

Matthew Borsch

assumption -- as -- you -- your -- constraints to that that getting expect agree get shake the around. let's hope do markets estimate how second new out we all going How with within you're to -- that see you would --

Operator

line your Mr. out. Borsch, is cutting and in

Tony Strange

I mean... Matt,

Matthew Borsch

better? that Is

Tony Strange

I'm Matt, sorry.

couldn't in question. cutting couldn't hear that. were -- we You I your

Matthew Borsch

I'll try back. again. I'll circle

Tony Strange

in be Matt out Operator, us, hear you you a maybe to his with little to we'll to we'll sorry. bit. I'm -- Matt, question can Yes. audio. we'll if go glad works catch the operator, while be up But glad next

Operator

of Our line with Joanna America. next from the question of comes Gajuk Bank

Joanna Gajuk

the follow-up. So question I guess one one and

of question, one terms the flow. the cash So in

different highlighted of things these impacted year. that So you last a obviously, couple

going this outlook forward? So the cash year how should for we think about

David Afshar

Joanna, thanks question. for your

$XX good million When we flow generation CMS at that cash think of Act opportunity. just payroll I taxes cash we net that recall million to use repaid as items as advances. I 'XX, you look on have the deferred a the mentioned well that related $XX in CARES the

year-over-year, social bridge by cash biggest cash our And $XX -- say, in The then XXXX sorry, as think weighed bring deferred we $XX repaid the might nonrecurring of that security perspective. million year-over-year cash the into XXXX. I'm this 'XX, change in was in the $XX And of flow we that provided change fourth out flux the to Act. I'd quarter. CARES consider But you those operations flow down in in driver to of about related taxes the IRS some million permitted that the at for that a So used you. then again, in million that items cash overall change of when jump

million a that's of we other year. received million So year-over-year. significant settlement usage flux last item $XX in comparative cash the the legal $XX operating driving was Then a

and out in we positive the XXXX, we or will As so we IRS cash larger some pay to Bear in I parts cash into another some mind million look are the fourth operating to that quarter generate flow. you expect of section Those in but also direct the in capital moving on resources XX-K of liquidity flow more to XXXX. our for that. insight the $XX

Joanna Gajuk

getting expect that to cash at, what going two for it's like flow I that's positive deals for closed you the guess to year. was the you be interest additional Right. positive sounds I you debt, think It QX, whether now Because operating in expense? with the incremental considering be

David Afshar

I right, good think we Joanna. we've That's got mean front opportunity us. That's a right. in of

As delayed Tony mentioned spread on draw loan. earlier, we're the our already servicing term

drive So cash we secure delayed or with operating we be any that very flow. accretive that M&A that draw to will

Joanna Gajuk

discussion were running in there, impact just was assets previously you it they annualized the follow-up seems I acquired at And talked because where EBITDA. about maybe $XX a there two I a guess some guess, if like on million previously, kind of combined, But I Okay. the too. may, terms of

at I of to QX? kind us the lower, of what's whether running you frame of is rate how this much can Or happened us? kind in So run guess, for for because they're this

Tony Strange

we I still yes, the process answer So about question these acquisitions We the think than to we thought discussed before. -- changed outlook to or better model going believe not or at is they're your don't all. have that our we perform at

million immune the neither Now that to we question. of Accredited experiencing like EBITDA They're and were Accredited talked was QX. Care. by the for I that rest That's Omicron Hopefully, where would that it the Comfort of With Accredited, million. in of about of nor we numbers same impact said, the issues felt kind $XX million our the and with the impact by to going staffing Care revenues that of in of answers described inclusive $XX to Omicron impact that it are said, with impacts that $XX and have all with Comfort business. inclusive your

Operator

call queue. like There remarks. are questions hand back the to no closing in further the management I'd for to

Tony Strange

learning and and Aveanna in about story. thank guys, for interested Thank investing time you, our And operator. being your again, you,

a As we'll always, give that to as make we've and do ourselves thanks your Please Hope you tried call for as great to follow-up. anybody know. to transparent have day, us and a us some time. let needs possible additional also and available be

Operator

Ladies and for gentlemen, does you this conclude your participation. today's teleconference. Thank

a your time, wonderful and lines at may You day. disconnect have this