Accendra Health, Inc. Q4 FY2025 earnings call

Accendra Health serves a large market with access to ~300 million Americans. Has high brand recognition with Byram and Apria. Leverages technology and automation for better customer experience and cost reduction, e.g., automating payer qualifications, launching new apps. Completed sale of Owens & Minor, focuses on core home-based care businesses, aims to optimize capital structure, reduce debt, and drive cost reduction. Entering 2026 as a leaner business with higher margin profile post-divestiture, focusing on strengthening core businesses and achieving reliable free cash flow.

In the fourth quarter, sleep supplies sales grew 8%-9% for both the quarter and full year. 2025 full-year revenue was nearly $2.8 billion, up over 3%. Fourth quarter adjusted EBITDA was $90 million vs $102.5 million in prior year's fourth quarter. Full-year adjusted EBITDA was $375 million, slightly up from 2024. Continuing operations business generated $135 million of cash from operating activities in Q4 2025, and $154 million for the full year. Fourth quarter free cash flow was $18 million, full-year was $98 million. Net debt was $1.8 billion at Dec 31, down from prior periods.

2026 annual revenue expected between $2.55 billion and $2.65 billion. Adjusted EBITDA expected in range of $335 million to $355 million. At midpoint, at least $100 million of free cash flow in 2026. First quarter 2026 adjusted EBITDA expected to be weakest, with ~60% of adjusted EBITDA realized in second half. Focus on deleveraging and metered investments, including technology investment.

Forward-looking statements are subject to risks and uncertainties where actual results may differ materially. Refer to SEC filings for full description of risks, including from annual and quarterly reports.

Q: Michael Cherny asked about targeted investments for RemainCo.

A: Edward Pesicka said metered investments in 2026 focus on technology to lower cost to serve and improve customer experience, with possible small tuck-ins.

Q: Michael Cherny asked about Optum preferred agreement.

A: Edward Pesicka said it's early, starting to gain traction but won't completely fill revenue gap.

Q: Kevin Caliendo asked about patient CapEx.

A: Jonathan Leon said Q4 patient CapEx was $45 million, 2026 patient CapEx to run ~95% of total.

Q: Kevin Caliendo asked about manufacturer coming back.

A: Edward Pesicka said can't comment on others but it would create different competitive dynamic.

Q: Daniel Grosslight asked about volume growth and CapEx guidance.

A: Jonathan Leon said volume growth is spread across therapy categories, and CapEx guidance is adjusted as contract rolls off.

Q: John Stansel asked about manufacturer cost increases.

A: Jonathan Leon said it's an opportunity, not a trend, and focus is to grow EBITDA.

Q: John Stansel asked about balance sheet optimization.

A: Edward Pesicka said sale of business creates opportunity to reassess capital structure, and Jonathan Leon added about debt maturities.

Q: Eric Coldwell asked about manufacturer cost increases and collection rate.

A: Edward Pesicka said cost increases are in some categories, and Jonathan Leon said collection rate improvement is due to working out kinks in technology investments.

Q: Dave (Allen Lutz) asked about cash flow swing factors.

A: Edward Pesicka said transaction break fee and financing fees are a big one-timer, and Jonathan Leon said Accendra has different working capital dynamics than legacy business