Aveanna Healthcare Holdings, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Fourth Quarter and Full Year 2024: Q4 revenue $520M (+8.6% Y/Y), Q4 adjusted EBITDA $55.2M (+42.6% Y/Y). Full year 2024 revenue $2.024B (+6.8% Y/Y), full year adjusted EBITDA $183.5M (+31.8% Y/Y).
• Strategic Focus: Focus on preferred payers and government partners. Secured 12 private duty services state rate increases in 2024; added 8 preferred pay agreements in PDS, reaching 22.
• Labor Market: Continued improvement in caregiver hiring/retention by aligning with payers offering enhanced rates.
• 2025 Initiatives: Enhance partnerships with government, identify cost efficiencies, modernize Medical Solutions, manage capital structure, engage employees.

Segment Performance

Private Duty Services: Revenue for Q4 was approximately $422.2 million, a 10.1% increase, driven by ~10.5 million hours of care (4% volume increase Y/Y). Revenue per hour was $40.25, up $2.21 (6.1%) Y/Y. Gross margin was $123.6 million (29.3%). Home Health and Hospice: Revenue for Q4 was approximately $54.4 million, a 0.6% increase. Driven by 8,500 total admissions (76% episodic) and 11,200 total episodes of care (down ~1% Y/Y). Medicare revenue per episode was $3,128, up 2.1% Y/Y. Gross margin was 53.2% (up 2.3% Y/Y). Medical Solutions: Revenue for Q4 was approximately $43.3 million, a 4.8% increase. Driven by ~89,000 unique patients served (down 1%) and revenue per UPS ~$486, up 5.9% Y/Y. Gross margin was $19.2 million (44.3%, up 10.5% Y/Y)

Guidance

Aveanna anticipates 2025 revenue range of $2.1 to $2.12 billion and adjusted EBITDA range of $190 million to $194 million. Q1 has seasonality due to payroll taxes/post-holidays, but EBITDA expected to build in Q2 and H2 2025.

Risks

• Labor market challenges continuing to impact growth.
• Uncertainty around Medicaid regulatory changes and potential program impacts.

Question and Answer

Q: Good morning, guys. This is Megan Holton for Brian Tanquilut. Congrats on the quarter, first off. I'd like to start out on the guide. As I look at the top-line growth, it's slightly above $%, implying flat EBITDA margins year over year. Would you consider this conservative as you've spoken to EBITDA margin expansion in 2*% previously?

A: Megan. Good morning.... Thank you. And thanks for getting us started. I think our thoughts today on guidance is we've gotten very comfortable with the expectations of beating rates. And we like to stay as that team that sets a prudent—we use the word prudent versus conservative. You can use the word conservative if you like, but we use the word prudent, both on our revenue growth and our EBITDA guide. But I think as Matt will talk about, we're very confident as the year 2025 is setting up for us, and we're expecting to have a third very, very significant year of transformation at Aveanna Healthcare Holdings Inc. Matt, you wanna think through? Talk through?

Q: Hi. This is Michael Murray on for Ben. Congrats on the quarter. Just drilling down into the PDF segment, you previously noted expectations for some pressure in spread rate in the first quarter. How should we think about modeling the cadence of both rate growth and gross margin progression in 2*%?

A: Yeah. I think it's Matt, and by the way, great question. I think as Matt laid out, we've got rate clarity in all of our businesses, but specifically PDFs for 2*%. So that's, I think, the really good news is we had a lot of momentum in the second half of 2*% that is carrying through 2*%. And our twelve state rate, twelve PDS rate increases plus the two preferred payers plus good insight on home health and hospice rates give us really good certainty throughout the fiscal year 2*%. I think as Matt talked about, remember, Q1 is our high payroll tax. We are a labor-driven company, so we expect Q1 to be a little bit of a headwind. There's also some holiday seasonality that plays into the first month of Q1, but I think as we think, Matt, about our guidance, we're very confident about our PDS business and kind of its current growth rates.