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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 7, 2024

Aveanna Healthcare Holdings Inc.

(Exact name of Registrant as Specified in Its Charter)

Delaware	001-40362	81-4717209
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
400 Interstate North Parkway SE, Atlanta, GA 30339 (Address of Principal Executive Offices, including Zip Code)

(770)-441-1580

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.01 per share		AVAH		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

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Item 2.02 Results of Operations and Financial Condition.

 

On November 7, 2024, Aveanna Healthcare Holdings Inc. (“we,” “us,” “our” or the “Company”) issued a press release announcing its financial results for the three and nine-month periods ended September 28, 2024. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference in this Item 2.02.

 

Item 7.01 Regulation FD Disclosure.

 

The information contained in Item 2.02 of this Current Report on Form 8-K is incorporated by reference in this Item 7.01.

 

The information contained in this Current Report on Form 8-K, including in Exhibit 99.1 attached hereto, is “furnished” and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. Such information shall not be incorporated by reference in another filing under the Exchange Act or the Securities Act of 1933, as amended, except to the extent such other filing specifically incorporates such information by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit Number		Description
99.1		Press Release dated November 7, 2024 announcing the Company’s financial results for the three and nine-month periods ended September 28, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

		AVEANNA HEALTHCARE HOLDINGS INC.
Date: November 7, 2024		By:	/s/ Deborah Stewart
			Deborah Stewart
			Chief Accounting Officer (Principal Accounting Officer)

 

 

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Exhibit 99.1

 

 

AVEANNA HEALTHCARE HOLDINGS ANNOUNCES

THIRD QUARTER 2024 FINANCIAL RESULTS AND REVISED 2024 OUTLOOK

 

 

Atlanta, Georgia (November 7, 2024) – Aveanna Healthcare Holdings Inc. (NASDAQ: AVAH), a leading, diversified home care platform focused on providing care to medically complex, high-cost patient populations, today announced financial results for the three and nine-month periods September 28, 2024.

 

Jeff Shaner, Chief Executive Officer, commented, “We have delivered another strong operating and financial quarter, highlighted by revenue, and adjusted EBITDA growth of 6.5% and 32.2%, respectively, when compared to the prior year period. Additionally, our refreshed outlook demonstrates the positive momentum from the improved payor rate environment as well as cost reduction efforts taking hold. Our strategic focus on government and payor partnerships continues to allow us to deliver more care to more patients through meaningful investments in our caregivers. We continue to offer a differentiated, national homecare platform that delivers a cost-effective, patient-preferred, and clinically sophisticated solution for our patients and families. I am so proud of our dedicated team of Aveanna caregivers and leaders, who deliver on our mission of exceptional care every day.”

 

Three-Month Periods Ended September 28, 2024 and September 30, 2023

Revenue was $509.0 million for the three-month period ended September 28, 2024, as compared to $478.0 million for the three-month period ended September 30, 2023, an increase of $31.0 million, or 6.5%. The overall increase in revenue was attributable to a $24.8 million increase in Private Duty Services (“PDS”) segment revenue, a $5.1 million increase in Medical Solutions ("MS") segment revenue, and a $1.2 million increase in Home Health & Hospice (“HHH”) segment revenue over the comparable quarter.

Gross margin was $159.7 million, or 31.4% of revenue, for the three-month period ended September 28, 2024, as compared to $147.3 million, or 30.8% of revenue, for the three-month period ended September 30, 2023, an increase of $12.4 million, or 8.4%.

 

Net loss was $42.8 million for the third quarter of 2024, as compared to net loss of $102.4 million for the third quarter of 2023. Net loss per diluted share was $(0.22) for the third quarter of 2024, as compared to net loss per diluted share of $(0.54) for the third quarter of 2023. Adjusted net income per diluted share was $0.02 for the third quarter of 2024, as compared to adjusted net loss per diluted share of $(0.03) for the third quarter of 2023. See "Non-GAAP Financial Measures - Adjusted net income (loss) and Adjusted net income (loss) per diluted share" below.

 

Adjusted EBITDA was $47.8 million, or 9.4% of revenue, for the third quarter of 2024, as compared to $36.2 million, or 7.6% of revenue, for the third quarter of 2023, an increase of $11.7 million or 32.2%. See "Non-GAAP Financial Measures - EBITDA and Adjusted EBITDA" below.

 

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Nine-Month Period Ended September 28, 2024 and September 30, 2023

 

Revenue was $1,504.6 million for the nine-month period ended September 28, 2024, as compared to $1,416.4 million for the nine-month period ended September 30, 2023, an increase of $88.3 million, or 6.2%. The overall increase in revenue was attributable to a $77.1 million increase in Private Duty Services (“PDS”) segment revenue and a $12.4 million increase in Medical Solutions ("MS") segment revenue, offset by a $1.1 million decrease in Home Health & Hospice (“HHH”) segment revenue over the comparable period.

Gross margin was $463.8 million, or 30.8% of revenue, for the nine-month period ended September 28, 2024, as compared to $447.0 million, or 31.6% of revenue, for the nine-month period ended September 30, 2023, an increase of $16.8 million, or 3.8%.

 

Net loss was $40.1 million for the nine-month period ended September 28, 2024, as compared to net loss of $108.8 million for the nine-month period ended September 30, 2023. Net loss per diluted share was $(0.21) for the nine-month period ended September 28, 2024, as compared to net loss per diluted share of $(0.57) for the nine-month period ended September 30, 2023. Adjusted net income per diluted share was $0.01 for the nine-month period ended September 28, 2024, as compared to adjusted net loss per diluted share of $(0.09) for the nine-month period ended September 30, 2023. See "Non-GAAP Financial Measures - Adjusted net income (loss) and Adjusted net income (loss) per diluted share" below.

 

Adjusted EBITDA was $128.4 million, or 8.5% of revenue, for the nine-month period ended September 28, 2024, as compared to $100.5 million, or 7.1% of revenue, for the nine-month period ended September 30, 2023, an increase of $27.8 million or 27.7%. See "Non-GAAP Financial Measures - EBITDA and Adjusted EBITDA" below.

 

 

Liquidity, Cash Flow, and Debt

 

Matt Buckhalter, Chief Financial Officer, commented “I am excited to report revenue growth of 6.5% and our Adjusted EBITDA growth of 32.2% compared to the prior year period. Our strategic cost reductions are driving this growth in profitability, alongside the success of our preferred payor strategy and improvements in rates from our Government Affairs efforts. Notably, both our operating cash flow and free cash flow turned positive year-to-date in the current quarter, reflecting the success in our overall strategy and the momentum we have generated in the business. Given our strong performance through the third quarter, we are raising our guidance to approximately $2.0 billion in revenue and greater than $168 million in Adjusted EBITDA. I am pleased with the strides we've made in executing our business plans, resulting in organic volume growth, improved clinical outcomes, and enhanced profitability.”

 

Revised Full Year 2024 Guidance

 

The following is our updated guidance reflecting our current expectations for revenue and Adjusted EBITDA for the full year 2024:

 

Consistent with prior practice, we are not providing guidance on net income at this time due to the volatility of certain required inputs that are not available without unreasonable efforts, including future fair value adjustments associated with our interest rate swaps and caps.

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Non-GAAP Financial Measures

In addition to our results of operations prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), we also evaluate our financial performance using EBITDA, Adjusted EBITDA, Field contribution, Field contribution margin, Adjusted net income or loss, Adjusted net income or loss per diluted share, and Free cash flow. Given our determination of adjustments in arriving at our computations, these non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as substitutes or alternatives to net income or loss, revenue, operating income or loss, cash flows from operating activities, total indebtedness or any other financial measures calculated in accordance with GAAP. The reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures are included in the financial tables below.

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA are non-GAAP financial measures and are not intended to replace financial performance measures determined in accordance with GAAP, such as net income or loss. Rather, we present EBITDA and Adjusted EBITDA as supplemental measures of our performance. We define EBITDA as net income or loss before interest expense, net; income tax benefit (expense); and depreciation and amortization. We define Adjusted EBITDA as EBITDA, adjusted for the impact of certain other items that are either non-recurring, infrequent, non-cash, unusual, or items deemed by management to not be indicative of the performance of our core operations, including impairments of goodwill, intangible assets, and other long-lived assets; non-cash, share-based compensation; loss on extinguishment of debt; fees related to debt modifications; the effect of interest rate derivatives; acquisition-related and integration costs; legal costs and settlements associated with acquisition matters; restructuring costs; other legal matters; and other system transition costs, professional fees and other costs. As non-GAAP financial measures, our computations of EBITDA and Adjusted EBITDA may vary from similarly termed non-GAAP financial measures used by other companies, making comparisons with other companies on the basis of this measure impracticable.

We believe our computations of EBITDA and Adjusted EBITDA are helpful in highlighting trends in our core operating performance. In determining which adjustments are made to arrive at EBITDA and Adjusted EBITDA, we consider both (1) certain non-recurring, infrequent, non-cash or unusual items, which can vary significantly from year to year, as well as (2) certain other items that may be recurring, frequent, or settled in cash but which we do not believe are indicative of our core operating performance. We use EBITDA and Adjusted EBITDA to assess operating performance and make business decisions.

We have incurred substantial acquisition-related costs and integration costs. The underlying acquisition activities take place over a defined timeframe, have distinct project timelines and are incremental to activities and costs that arise in the ordinary course of our business. Therefore, we believe it is important to exclude these costs from our Adjusted EBITDA because it provides us a normalized view of our core, ongoing operations after integrating our acquired companies, which we believe is an important measure in assessing our performance.

Field contribution and Field contribution margin

Field contribution and Field contribution margin are non-GAAP financial measures and are not intended to replace financial performance measures determined in accordance with GAAP, such as gross margin and gross margin percentage. Rather, we present Field contribution and Field contribution margin as supplemental measures of our performance. We define Field contribution as gross margin less branch and regional administrative expenses. Field contribution margin is Field contribution as a percentage of revenue. As non-GAAP financial measures, our computations of Field contribution and Field contribution margin may vary from similarly termed non-GAAP financial measures used by other companies, making comparisons with other companies on the basis of these measures impracticable.

Field contribution and Field contribution margin have limitations as analytical tools and should not be considered in isolation or as substitutes or alternatives to gross margin, gross margin percentage, net income or loss, revenue, operating income or loss, cash flows from operating activities, total indebtedness or any other financial measures calculated in accordance with GAAP.

Management believes Field contribution and Field contribution margin are helpful in highlighting trends in our core operating performance and evaluating trends in our branch and regional results, which can vary from year to year. We use Field contribution and Field contribution margin to make business decisions and assess the operating performance and results delivered by our core field operations, prior to corporate and other costs not directly related to our field operations. These metrics are also important because they guide us in determining whether or not our branch and regional administrative expenses are appropriately sized to support our caregivers

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and direct patient care operations. Additionally, Field contribution and Field contribution margin determine how effective we are in managing our field supervisory and administrative costs associated with supporting our provision of services and sale of products.

Adjusted net income (loss) and Adjusted net income (loss) per diluted share

Adjusted net income (loss) represents net income (loss) as adjusted for the impact of GAAP income tax, goodwill, intangible and other long-lived asset impairment charges, non-cash share-based compensation expense, loss on extinguishment of debt, interest rate derivatives, acquisition-related costs, integration costs, legal costs, restructuring costs, other legal matters, other system transition costs, professional fees and certain other miscellaneous items on a pre-tax basis. Adjusted net income (loss) includes a provision for income taxes derived utilizing a combined statutory tax rate. The combined statutory tax rate is our estimate of our long-term tax rate. The most comparable GAAP measure is net income (loss).

Adjusted net income (loss) per diluted share represents adjusted net income (loss) on a per diluted share basis using the weighted-average number of diluted shares outstanding for the period. The most comparable GAAP measure is net income (loss) per share, diluted.

Adjusted net income (loss) and adjusted net income (loss) per diluted share are important to us because they allow us to assess financial results, exclusive of the items mentioned above that are not operational in nature or comparable to those of our competitors.

Free cash flow

Free cash flow is a liquidity measure that represents operating cash flow, adjusted for the impact of purchases of property, equipment and software, principal payments on term loans, notes payable and financing leases, and settlements with swap counterparties. The most comparable GAAP measure is cash flow from operations.

We believe free cash flow is helpful in highlighting the cash generated or used by the Company, after taking into consideration mandatory payments on term loans, notes payable and financing leases, as well as cash needed for non-acquisition related capital expenditures, and cash paid to or received from derivative counterparties.

 

Conference Call

 

Aveanna will host a conference call on Thursday, November 7, 2024, at 10:00 a.m. Eastern Time to discuss our second quarter results. The conference call can be accessed live over the phone by dialing 1-877-407-0789, or for international callers, 1-201-689-8562. A telephonic replay of the conference call will be available until November 14, 2024, by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the replay is 13748484. A live webcast of our conference call will also be available under the Investor Relations section of our website: https://ir.aveanna.com/. The online replay will also be available for one week following the call.

Forward-Looking Statements

Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements (other than statements of historical facts) in this press release regarding our prospects, plans, financial position, business strategy and expected financial and operational results may constitute forward-looking statements. Forward-looking statements generally can be identified by the use of terminology such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “seek,” “will,” “may,” “should,” “would,” “predict,” “project,” “potential,” “continue,” “could,” “design,” or the negatives of these terms or variations of them or similar expressions. These statements are based on certain assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate in these circumstances. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. Forward-looking statements involve a number of risks and uncertainties that may cause actual results to differ materially from those expressed or implied by such forward-looking statements, such as our ability to successfully execute our growth strategy, including through organic growth and the completion of acquisitions, effective integration of the companies we acquire, unexpected costs of acquisitions and dispositions, the possibility that expected cost synergies may not materialize as expected, the failure of Aveanna or the companies we acquire to perform as expected, estimation inaccuracies in revenue recognition, our ability to drive margin leverage through lower costs, unexpected increases in SG&A and other expenses, changes in reimbursement, changes in government regulations, changes in Aveanna’s relationships with referral sources, increased competition for Aveanna’s services or wage inflation, the failure to retain or attract employees, changes in the interpretation of government regulations or discretionary determinations made by government officials, uncertainties regarding the outcome of rate discussions with managed care organizations and our ability to effectively collect our cash from these organizations, changes in the case-mix of our patients, as well as the payor mix and payment methodologies, legal proceedings, claims or governmental inquiries, our ability to effectively collect and submit data required under Electronic Visit Verification regulations, our ability to comply with the terms and conditions of the CMS Review Choice Demonstration program, our ability to effectively implement and transition

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to new electronic medical record systems or billing and collection systems, a failure to maintain the security and functionality of our information systems or to defend against or otherwise prevent a cybersecurity attack or breach, changes in tax rates, our substantial indebtedness, the impact of adverse weather, the impact to our business operations, and other risks set forth under the heading “Risk Factors” in Aveanna’s Annual Report on Form 10-K for its 2023 fiscal year filed with the Securities and Exchange Commission on March 14, 2024, which is available at www.sec.gov. In addition, these forward-looking statements necessarily depend upon assumptions, estimates and dates that may prove to be incorrect or imprecise. Accordingly, forward-looking statements included in this press release do not purport to be predictions of future events or circumstances, and actual results may differ materially from those expressed by forward-looking statements. All forward-looking statements speak only as of the date made, and Aveanna undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

About Aveanna Healthcare

Aveanna Healthcare is headquartered in Atlanta, Georgia and has locations in 33 states providing a broad range of pediatric and adult healthcare services including nursing, rehabilitation services, occupational nursing in schools, therapy services, day treatment centers for medically fragile and chronically ill children and adults, home health and hospice services, as well as delivery of enteral nutrition and other products to patients. The Company also provides case management services in order to assist families and patients by coordinating the provision of services between insurers or other payers, physicians, hospitals, and other healthcare providers. In addition, the Company provides respite healthcare services, which are temporary care provider services provided in relief of the patient’s normal caregiver. The Company’s services are designed to provide a high quality, lower cost alternative to prolonged hospitalization. For more information, please visit www.aveanna.com.

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Cash Flow and Information about Indebtedness

The following table sets forth a summary of our cash flows from operating, investing, and financing activities for the periods presented:

 

	For the nine-month periods ended
(dollars in thousands)	September 28, 2024				September 30, 2023
Net cash provided by operating activities	$	19,231			$	25,677
Net cash used in investing activities	$	(4,790	)		$	(7,226	)
Net cash provided by financing activities	$	20,079			$	10,626
Cash and cash equivalents at beginning of period	$	43,942			$	19,217
Cash and cash equivalents at end of period	$	78,462			$	48,294

 

The following table presents our long-term indebtedness as of September 28, 2024:

 

(dollars in thousands)
Instrument	Interest Rate		September 28, 2024
2021 Extended Term Loan (1)	S + 3.75%		$	895,150
Second Lien Term Loan (1)	S + 7.00%			415,000
Revolving Credit Facility (1)	S + 3.75%			-
Securitization Facility	S + 3.15%			170,000
Total indebtedness			$	1,480,150
(1) S = Greater of 0.50% or one-month SOFR, plus a CSA

Results of Operations

The following table summarizes our consolidated results of operations for the periods indicated (amounts in thousands, except per share data):

	For the three-month periods ended						For the nine-month periods ended
	September 28, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Revenue	$	509,023		$	478,010		$	1,504,634		$	1,416,368
Cost of revenue, excluding depreciation and amortization		349,324			330,746			1,040,814			969,384
Branch and regional administrative expenses		88,184			91,004			264,070			273,967
Corporate expenses		31,894			27,446			91,981			84,735
Goodwill impairment		-			105,136			-			105,136
Depreciation and amortization		2,587			2,962			8,332			10,494
Acquisition-related costs		150			428			150			466
Other operating expense (income)		2,860			(3,360	)		5,271			(6,593	)
Operating income (loss)		34,024			(76,352	)		94,016			(21,221	)
Interest income		100			50			297			238
Interest expense		(39,245	)		(39,599	)		(118,505	)		(113,542	)
Other (expense) income		(22,211	)		14,143			2,329			27,124
Loss before income taxes		(27,332	)		(101,758	)		(21,863	)		(107,401	)
Income tax expense		(15,511	)		(631	)		(18,246	)		(1,387	)
Net loss	$	(42,843	)	$	(102,389	)	$	(40,109	)	$	(108,788	)
Net loss per share:
Net loss per share, basic and diluted	$	(0.22	)	$	(0.54	)	$	(0.21	)	$	(0.57	)
Weighted average shares of common stock outstanding, basic and diluted		193,361			189,139			192,734			189,632

 

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The following tables summarize our consolidated key performance measures, including Field contribution and Field contribution margin, which are non-GAAP measures, for the periods indicated:

 

	For the three-month periods ended
(dollars in thousands)	September 28, 2024			September 30, 2023			Change			% Change
Revenue	$	509,023		$	478,010		$	31,013			6.5	%
Cost of revenue, excluding depreciation and amortization		349,324			330,746			18,578			5.6	%
Gross margin	$	159,699		$	147,264		$	12,435			8.4	%
Gross margin percentage		31.4	%		30.8	%
Branch and regional administrative expenses		88,184			91,004			(2,820	)		-3.1	%
Field contribution	$	71,515		$	56,260		$	15,255			27.1	%
Field contribution margin		14.0	%		11.8	%
Corporate expenses	$	31,894		$	27,446		$	4,448			16.2	%
As a percentage of revenue		6.3	%		5.7	%
Operating income (loss)	$	34,024		$	(76,352	)	$	110,376			144.6	%
As a percentage of revenue		6.7	%		-16.0	%

 

	For the nine-month periods ended
(dollars in thousands)	September 28, 2024			September 30, 2023			Change			% Change
Revenue	$	1,504,634		$	1,416,368		$	88,266			6.2	%
Cost of revenue, excluding depreciation and amortization		1,040,814			969,384			71,430			7.4	%
Gross margin	$	463,820		$	446,984		$	16,836			3.8	%
Gross margin percentage		30.8	%		31.6	%
Branch and regional administrative expenses		264,070			273,967			(9,897	)		-3.6	%
Field contribution	$	199,750		$	173,017		$	26,733			15.5	%
Field contribution margin		13.3	%		12.2	%
Corporate expenses	$	91,981		$	84,735		$	7,246			8.6	%
As a percentage of revenue		6.1	%		6.0	%
Operating income (loss)	$	94,016		$	(21,221	)	$	115,237			543.0	%
As a percentage of revenue		6.2	%		-1.5	%

 

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The following tables summarize our key performance measures by segment for the periods indicated:

 

	PDS
	For the three-month periods ended
(dollars and hours in thousands)	September 28, 2024			September 30, 2023			Change			% Change
Revenue	$	409,558		$	384,750		$	24,808			6.4	%
Cost of revenue, excluding depreciation and amortization		299,731			280,288			19,443			6.9	%
Gross margin	$	109,827		$	104,462		$	5,365			5.1	%
Gross margin percentage		26.8	%		27.2	%					-0.4	%	(4)
Hours		10,474			10,090			384			3.8	%
Revenue rate	$	39.10		$	38.13		$	0.97			2.6	%	(1)
Cost of revenue rate	$	28.62		$	27.78		$	0.84			3.1	%	(2)
Spread rate	$	10.48		$	10.35		$	0.13			1.3	%	(3)
	HHH
	For the three-month periods ended
(dollars and admissions/episodes in thousands)	September 28, 2024			September 30, 2023			Change			% Change
Revenue	$	54,139		$	52,989		$	1,150			2.2	%
Cost of revenue, excluding depreciation and amortization		24,948			27,597			(2,649	)		-9.6	%
Gross margin	$	29,191		$	25,392		$	3,799			15.0	%
Gross margin percentage		53.9	%		47.9	%					6.0	%	(4)
Home health total admissions (5)		8.9			9.3			(0.4	)		-4.3	%
Home health episodic admissions (6)		6.8			7.0			(0.2	)		-2.9	%
Home health total episodes (7)		11.3			11.2			0.1			0.9	%
Home health revenue per completed episode (8)	$	3,104		$	3,046		$	58			1.9	%
	MS
	For the three-month periods ended
(dollars and UPS in thousands)	September 28, 2024			September 30, 2023			Change			% Change
Revenue	$	45,326		$	40,271		$	5,055			12.6	%
Cost of revenue, excluding depreciation and amortization		24,645			22,861			1,784			7.8	%
Gross margin	$	20,681		$	17,410		$	3,271			18.8	%
Gross margin percentage		45.6	%		43.2	%					2.4	%	(4)
Unique patients served (“UPS”)		92			88			4			4.5	%
Revenue rate	$	492.67		$	457.63		$	35.04			8.1	%	(1)
Cost of revenue rate	$	267.88		$	259.78		$	8.10			3.3	%	(2)
Spread rate	$	224.79		$	197.84		$	26.94			14.3	%	(3)

 

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	PDS
	For the nine-month periods ended
(dollars and hours in thousands)	September 28, 2024			September 30, 2023			Change			% Change
Revenue	$	1,212,418		$	1,135,365		$	77,053			6.8	%
Cost of revenue, excluding depreciation and amortization		891,588			815,221			76,367			9.4	%
Gross margin	$	320,830		$	320,144		$	686			0.2	%
Gross margin percentage		26.5	%		28.2	%					-1.7	%	(4)
Hours		31,074			29,738			1,336			4.5	%
Revenue rate	$	39.02		$	38.18		$	0.84			2.3	%	(1)
Cost of revenue rate	$	28.69		$	27.41		$	1.28			4.9	%	(2)
Spread rate	$	10.33		$	10.77		$	(0.44	)		-4.3	%	(3)
	HHH
	For the nine-month periods ended
(dollars and admissions/episodes in thousands)	September 28, 2024			September 30, 2023			Change			% Change
Revenue	$	163,382		$	164,525		$	(1,143	)		-0.7	%
Cost of revenue, excluding depreciation and amortization		75,814			87,189			(11,375	)		-13.0	%
Gross margin	$	87,568		$	77,336		$	10,232			13.2	%
Gross margin percentage		53.6	%		47.0	%					6.6	%	(4)
Home health total admissions (5)		28.4			30.9			(2.5	)		-8.1	%
Home health episodic admissions (6)		21.5			21.8			(0.3	)		-1.4	%
Home health total episodes (7)		35.0			34.2			0.8			2.3	%
Home health revenue per completed episode (8)	$	3,089		$	3,022		$	67			2.2	%
	MS
	For the nine-month periods ended
(dollars and UPS in thousands)	September 28, 2024			September 30, 2023			Change			% Change
Revenue	$	128,834		$	116,478		$	12,356			10.6	%
Cost of revenue, excluding depreciation and amortization		73,412			66,974			6,438			9.6	%
Gross margin	$	55,422		$	49,504		$	5,918			12.0	%
Gross margin percentage		43.0	%		42.5	%					0.5	%	(4)
Unique patients served (“UPS”)		278			258			20			7.8	%
Revenue rate	$	463.43		$	451.47		$	11.96			2.8	%	(1)
Cost of revenue rate	$	264.07		$	259.59		$	4.48			1.8	%	(2)
Spread rate	$	199.36		$	191.88		$	7.48			4.2	%	(3)

 

The following table reconciles gross margin and gross margin percentage to Field contribution and Field contribution margin:

 

	For the three-month periods ended						For the nine-month periods ended
(dollars in thousands)	September 28, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Gross margin	$	159,699		$	147,264		$	463,820		$	446,984
Branch and regional administrative expenses		88,184			91,004			264,070			273,967
Field contribution	$	71,515		$	56,260		$	199,750		$	173,017
Revenue	$	509,023		$	478,010		$	1,504,634		$	1,416,368
Field contribution margin		14.0	%		11.8	%		13.3	%		12.2	%

 

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The following table reconciles net loss to EBITDA and Adjusted EBITDA:

 

		For the three-month periods ended						For the nine-month periods ended
(dollars in thousands)		September 28, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Net loss		$	(42,843	)	$	(102,389	)	$	(40,109	)	$	(108,788	)
Interest expense, net			39,145			39,549			118,208			113,304
Income tax expense			15,511			631			18,246			1,387
Depreciation and amortization			2,587			2,962			8,332			10,494
EBITDA			14,400			(59,247	)		104,677			16,397
Goodwill, intangible and other long-lived asset impairment			2,904			106,841			5,304			107,222
Non-cash share-based compensation			4,902			5,116			12,483			10,143
Interest rate derivatives (1)			22,141			(14,120	)		(2,218	)		(26,865	)
Acquisition-related costs (2)			150			428			150			465
Integration costs (3)			262			497			949			1,732
Legal costs and settlements associated with acquisition matters (4)			848			346			1,423			(4,796	)
Restructuring (5)			1,599			985			4,787			5,733
Other legal matters (6)			214			-			1,112			(5,000	)
Other system transition costs, professional fees and other (7)			421			(4,655	)		(296	)		(4,504	)
Total adjustments		$	33,441		$	95,438		$	23,694		$	84,130
Adjusted EBITDA		$	47,841		$	36,191		$	128,371		$	100,527

 

The following table reconciles net loss to adjusted net income (loss) and presents adjusted net income (loss) per diluted share:

 

	For the three-month periods ended						For the nine-month periods ended
(dollars in thousands, except share and per share data)	September 28, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Net loss	$	(42,843	)	$	(102,389	)	$	(40,109	)	$	(108,788	)
Income tax expense		15,511			631			18,246			1,387
Goodwill, intangible and other long-lived asset impairment		2,904			106,841			5,304			107,222
Non-cash share-based compensation		4,902			5,116			12,483			10,143
Interest rate derivatives (1)		22,141			(14,120	)		(2,218	)		(26,865	)
Acquisition-related costs (2)		150			428			150			465
Integration costs (3)		262			497			949			1,732
Legal costs and settlements associated with acquisition matters (4)		848			346			1,423			(4,796	)
Restructuring (5)		1,599			985			4,787			5,733
Other legal matters (6)		214			-			1,112			(5,000	)
Other system transition costs, professional fees and other (7)		421			(4,655	)		(296	)		(4,504	)
Total adjustments		48,952			96,069			41,940			85,517
Adjusted pre-tax income (loss)		6,109			(6,320	)		1,831			(23,271	)
Income tax (expense) benefit on adjusted pre-tax income (loss) (8)		(1,527	)		1,580			(458	)		5,818
Adjusted net income (loss)	$	4,582		$	(4,740	)	$	1,373		$	(17,453	)
Weighted average shares outstanding, diluted		193,361			189,139			192,734			189,632
Adjusted net income (loss) per diluted share (9)	$	0.02		$	(0.03	)	$	0.01		$	(0.09	)

 

The following footnotes are applicable to tables above that reconcile (i) net loss to EBITDA and Adjusted EBITDA and (ii) net loss to adjusted net income (loss).

 

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The table below reflects the increase or decrease, and aggregate impact, to the line items included on our consolidated statements of operations based upon the adjustments used in arriving at Adjusted EBITDA from EBITDA for the periods indicated.

 

	For the three-month periods ended						For the nine-month periods ended
(dollars in thousands)	September 28, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Cost of revenue, excluding depreciation and amortization	$	281		$	166		$	457		$	(4,512	)
Branch and regional administrative expenses		2,515			2,765			5,389			6,129
Corporate expenses		5,421			4,445			14,756			10,629
Goodwill impairment		-			105,136			-			105,136
Acquisition-related costs		150			428			150			465
Other operating expense (income)		(8	)		(5,090	)		2,112			(8,735	)
Other (expense) income		25,082			(12,412	)		830			(24,982	)
Total adjustments	$	33,441		$	95,438		$	23,694		$	84,130

 

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The following table reconciles the net cash provided by operating activities to free cash flow:

 

		For the nine-month period ended
(dollars in thousands)		September 28, 2024
Net cash provided by operating activities		$	19,231
Purchases of property and equipment, and software			(4,790	)
Principal payments of term loans			(4,600	)
Principal payments of notes payable and financing lease obligations			(4,802	)
Settlements with swap counterparties			11,681
Free cash flow		$	16,720

 

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