On Thursday, Aveanna Healthcare Hldgs (NASDAQ:AVAH) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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Summary
Aveanna Healthcare Hldgs reported Q1 2026 revenue of $648 million, a 15.9% increase from the previous year, with an adjusted EBITDA of $84.4 million, reflecting a 25.2% rise.
The company is focusing on strategic initiatives like expanding preferred payer agreements, achieving Medicaid rate integrity, and enhancing clinical outcomes, with an aim to grow through acquisitions.
Aveanna Healthcare Hldgs has raised its full-year 2026 revenue guidance to $2.56-$2.58 billion and adjusted EBITDA to $328-$332 million, excluding the Family First Home Care acquisition impact.
Operationally, the company saw improvements in caregiver hiring and retention and reported a strong financial performance across all business segments, including Home Health and Hospice, Private Duty Services, and Medical Solutions.
Management highlighted strategic focuses, including partnerships with government and payers, AI and automation for operational efficiency, and a continued commitment to community service through the Aveanna Cares initiative.
Full Transcript
OPERATOR
Good morning and welcome to Aviana Healthcare Holdings Inc. First Quarter 2026 Earnings Call. Today’s call is being recorded and we have allocated one hour for prepared remarks and Q and A. At this time I’d like to turn the call over to Debbie Stewart, Aveanna’s Chief Accounting Officer. Thank you. You may begin.
Debbie Stewart (Chief Accounting Officer)
Good morning and welcome to Aveanna’s first quarter 2026 earnings call. I am Debbie Stewart, the Company’s Chief Accounting Officer. With me today is Jeff Shainer, our Chief Executive Officer and Matt Buchalter, our Chief Financial Officer During this call we will make forward looking statements. Risk factors that may impact those statements and could cause actual future results to differ materially from currently projected results are described in this morning’s press release and the reports we file with the SEC. The Company does not undertake any duty to update such forward looking statements. Additionally, during today’s call we will discuss certain non GAAP measures which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of these measures can be found in this morning’s press release which is posted on our website aveanna.com and in our most recent quarterly report on Form 10Q. When filed with that, I will turn the call over to Aveanna’s Chief Executive Officer, Jeff Shainer.
Jeff Shainer (Chief Executive Officer)
Jeff thank you Debbie, Good morning and thank you for joining us today. We appreciate each of you investing your time this morning to better understand our Q1 results and how we are moving Aveanna forward in 2026. My initial comments will briefly highlight our first quarter results along with the steps we are taking to address the labor markets and our ongoing efforts with government and preferred payers to create additional capacity. I will then provide updates on the recently announced Family First Homecare acquisition and how we are thinking about our 2026 strategic initiatives and our enhanced guidance before turning the call over to Matt. Moving to Highlights for the first quarter revenue for the first quarter was approximately $648 million, representing a 15.9% increase over the prior year period. First quarter adjusted EBITDA was $84.4 million, representing a 25.2% increase over the prior year period, primarily due to the improved rate and volume environment and continued operational efficiencies. As we have previously discussed, the labor environment represented the primary challenge that we needed to address to see Aveanna resume the growth trajectory that we believed our company could achieve. It is important to note that our industry does not have a Demand Problem the demand for home and community based care continues to be strong with both state and federal governments and managed care organizations asking for solutions that create more capacity while reducing the total cost of care. Our Q1 results highlight that we continue to align our objectives with those of our preferred payers and government partners. By focusing our clinical capacity on our preferred payers, we achieved solid year over year growth in all three of our business segments. We also experienced improvement in our caregiver hiring and retention trends by aligning our efforts with those payers willing to engage with us on enhanced reimbursement rates and value based agreements. While we continue to operate in a challenging environment, our Preferred Payer strategy supports our ability to achieve accelerated growth rates in all 3 of our business segments. Since our fourth quarter earnings call, I am pleased with the continued progress we have made on several of our rate improvement initiatives with both government and payer partners as well as continued signs of improvement in the caregiver labor market specifically as it relates to our Private Duty Services business. Our our Government affairs strategy for 2026 was twofold. First, we continue to advocate for Medicaid rate integrity on behalf of children with complex medical conditions. Our strong advocacy presence of both federal and state legislatures across our national footprint enhances our value proposition and second, we expect to achieve mid single digit state rate enhancements in 2026. As of Q1, we have received three Private Duty Services state rate wins and believe we will achieve our goals as states complete their annual budget processes. After three years of meaningful rate increases in a majority of our PDS states, we are in a very stable rate environment and are shifting our focus to cost of living and wage rate adjustments. Moving to our PDS Preferred Payer initiatives, Aveanna’s Preferred Payer Strategy continues to gain momentum and allows us to invest in caregiver wages and recruitment efforts to accelerate hiring and staffing of nurses. Our preferred payer goal for 2026 is to achieve eight additional agreements for a total of 38 preferred payers. We signed four preferred pay agreements in Q1 and are well on our way to achieving our 2026 target. Additionally, our Q1 PDS preferred payer agreements accounted for approximately 60% of our total Private Duty Services MCO volumes, up from 57% at the end of 2025. This positive momentum in preferred payer volumes continues to highlight the shift in our caregiver capacity and recruitment efforts towards our preferred payer partners. Moving to our Preferred Payer progress in Home Health, our goal for 2026 is to maintain our episodic payer mix above 75% while returning to a more normalized growth rate. I am pleased to report in Q1 our episodic mix was approximately 80% and our total episodic volume growth was 23.1% compared with the prior year period. The continued investment in clinical outcomes, sales resources and a focused approach to growth is driving results with Q1 total admissions of approximately 11,000 or 13.4% organic growth over the prior year period. Additionally, we exited 2025 with 45 preferred pay agreements in home health and expected to add five agreements in 2026 for a total of 50 as of Q1. I am pleased to report that we added four additional preferred pay agreements and are well on our way to exceeding our goal of 50 preferred payers in home health in 2026. Our dedicated focus on aligning our home health caregiver capacity with those payers willing to reimburse us on an episodic basis has led to double digit year over year growth in home health, total admissions and episodes as well as improvement in our clinical and financial outcomes. Finally, as we have achieved our desired preferred payer model in Private Duty Services and home health and hospice, we are continuing with a similar strategy in our medical solutions business. As we exited 2025 we had 18 preferred payer agreements in Med Solutions and expected that number to grow to 25 by the end of 2026. As of Q1 we signed two additional agreements for a total of 20 preferred payer agreements. To date, our gross margins have stabilized in our desired range as we align our clinical capacity with those payers that value our services and pay us in a timely fashion. I am pleased with our Q1 volume growth in Med Solutions of approximately 93,000 ups or positive 4.5% over the prior year period. As we think about Medical Solutions growth in 2026, I would expect us to remain in the mid single digits for the next few quarters and then return to double digit growth by the end of the year. We are encouraged by our rate increases, preferred payer agreements and subsequent growth in our businesses. Our company has demonstrated a stable return to organic growth as we achieve our rate goals previously discussed. Home and community based care will continue to grow and Aveanna is a comprehensive platform with a diverse payer base providing cost effective high quality alternative to higher cost care settings. Now turning to our recently announced transaction to acquire Family First Homecare, a Florida based company with a great reputation for quality in home pediatric care. Again, I would like to send my warm welcome to the Family first teammates. I am thrilled to continue our acquisition growth story with great companies like Thrive, Skilled Pediatrics and Family First Homecare. Both companies continue to build upon the Aveanna brand of high quality compassionate care in the most cost effective setting, the comfort of our patient’s home. We continue to work through the regulatory approval process and expect the transaction will close sometime in late Q2. I look forward to updating you on our progress in the coming months. Additionally, let me comment on our strategic plan and enhanced outlook for the 2026 we will focus our efforts on five primary strategic initiatives. First, strengthening our partnerships with government partners and preferred payers to create additional capacity and growth. Second, improving clinical outcomes and customer engagement scores while lowering the total cost of care Third, implementing high priority artificial intelligence and automation efforts to improve operational efficiency and productivity gains. Fourth, growing through acquisitions while improving net leverage and free cash flow and finally, engaging our leaders and employees in delivering our Aveanna mission. Based on the strength of our first quarter results and the continued execution of our key strategic initiatives, we are increasing our full year revenue and adjusted EBITDA guidance to a revenue range of 2.56 to $2.58 billion and an adjusted EBITDA range of 328 to $332 million. We believe this enhanced 2026 outlook provides a prudent view considering the challenges we still face with the evolving environment and does not include the impact of the Family first acquisition. As I reflect on the strong start to 2026, I want to take a moment and comment on our second annual Aveanna Cares Month of Community Service. We dedicate the month of April to not only focusing on our mission, but living that mission in our 379 communities. Aveanna cares is an extension of the care we provide families every day and we are proud to give back, help others and strengthen our communities and our teams through our volunteering efforts. We set an ambitious goal this year to serve 7,500 volunteer hours and I am extremely proud to announce that our Aveanna family completed over 9,000 total volunteer hours. Our teams held approximately 200 volunteer events nationwide and lived our core values while giving back to important local charities that support children, adults and seniors in our communities. I look forward to raising the bar in 2027 with plans to further expand our Aveanna Cares impact across the country. With that, let me turn the call over to Matt to provide further details on the quarter in our 2026 outlook.
Matt Buchalter (Chief Financial Officer)
Matt thank you Jeff and good morning. I’ll first talk about our first quarter financial results and liquidity before providing additional details on our refreshed outlook for 2026. Starting with the top line, we saw revenues rise 15.9% over the prior year period to $647.9 million. We achieved year over year revenue growth in all 3 of our operating divisions, led by our Home Health and Hospice, Private Duty Services and Medical Solutions divisions, which grew by 17.4%, 16.4% and 7.4% compared to the prior year period. Consolidated Gross margin was $205.4 million, or 31.7%. Consolidated adjusted EBITDA was $84.4 million, a 25.2% increase as compared to the prior year period. This growth reflects an improved rate environment, increased volumes as well as enhanced operational efficiencies. Now taking a deeper look into each of our segments, starting with private duty services. Revenue for the quarter was approximately $536 million, a 16.4% increase and was driven by approximately 12.1 million hours of care, a volume increase of 10.7% over the prior year. Q1 revenue per hour of $44.43 was up 5.7% compared to the prior year quarter, primarily driven by growth in preferred payer volume and updated reimbursement agreements. We remain optimistic about our ability to attract caregivers and address market demands for our services when we obtain acceptable reimbursement rates. Turning to our cost of labor and gross margin Metrics, we achieved $149.2 million of gross margin or 27.9%. The cost of revenue rate of $32.05 in Q1 was up $2.17 or 8.1% from the prior year period. Our Q1 spread per hour was $12.38, reflecting continued normalization driven in part by ongoing caregiver wage adjustments, supporting higher volumes and improving clinical outcomes. Moving on to our Home Health and hospice segment, revenue for the quarter was approximately $66.6 million, a 17.4% increase over the prior year. Revenue was driven by 11,000 total admissions with approximately 80% being episodic and 14,900 total episodes of care up 23.1% from the prior year quarter. Medicare revenue per episode was $3,167, up 0.5% from the prior year quarter. Our episodic focus has accelerated our margin expansion and improved our clinical outcomes. With episodic emissions well over 75%, we have achieved our goal of right sizing our margin profile and enhancing our clinical offerings. We are pleased with our Q1 gross margin of 53.7% representing our continued focus on cost initiatives to achieve our targeted margin profile. Our Home Health and Hospice platform is dedicated to creating value through effective operational management and the delivery of exceptional patient care. Now to our Medical Solutions segment. Results for Q1 during the quarter we produced revenue of $45.7 million, up 7.4% over the prior year period. Revenue was driven by approximately 93,000 unique patients served and revenue per UPS of approximately $491, up 2.9% over the prior year period. Gross margin was approximately $20.4 million or 44.7% for the quarter. As Jeff mentioned, we are in the final stages of implementing our Preferred Payer Strategy and Medical Solutions by aligning our capacity with those payers that value our resources and appropriately reimburse us for the services we provide. As a result, we expect margins to normalize and UPS to continue to accelerate its growth in the back half of 2026. In summary, we remain focused on keeping our patients care at the center of everything we do. It is clear that aligning caregiver capacity with preferred payers who value our partnership is the right path forward at Aveanna. With the strong momentum through Q1, we are optimistic these trends will continue into 2026. We will continue to pass through wage improvements and other benefits to our caregivers and the ongoing effort to better improve volumes now moving to our balance sheet and Liquidity at the end of the first quarter we had liquidity of approximately $525 million representing cash on hand of approximately 189 million 110 million of availability under our securitization facility and approximately 226 million of availability on our revolver which was undrawn. As of the end of the quarter we had $24.5 million in outstanding letters of credit at the end of Q1. On the debt service front, we had approximately $1.48 billion of variable rate debt at the end of Q1. Of this amount, $520 million is hedged with fixed rate swaps and $880 million is subject to an interest rate cap which limits further exposure to increases in silver above 3%. Accordingly, substantially all our variable rate debt is hedged. Our interest rate swaps extend through June 2026 and our interest rate caps extend through February 2027. In anticipation of the swap expiration, we entered into an additional interest rate cap agreement effective July 2026. This agreement limits exposure on $520 million of variable rate debt to increases in SOFR above 4% through December 2029 looking at year to date cash flow, cash generated by operating activities was $4.3 million and free cash flow was negative $3.8 million. We are encouraged by our strong cash collections and cost efficiency efforts, which drove solid operating and free cash flow in 2025, and we expect similar cash flow performance in 2020. As a reminder, the first quarter is typically our seasonal low point for both operating and free cash flow, with improvement expected throughout the rest of the year. Before I hand the call over to the operator for Q and A, let me take a moment to address our raised outlook for 2026. As Jeff mentioned, we expect full year 2026 revenue range of 2.56 to 2.58 billion and adjusted EBITDA range of 328 to 332 million. Consistent with our standard practice, our full year 2026 guidance excludes the pending Family first acquisition, which we expect to close in late. Q2 as we reflect on our Q1 results, I’d like to take a moment to express my sincere gratitude to our Aveanna teammates. These strong results would not have been possible without your hard work and dedication. Looking ahead, I’m excited for the continued execution 2026 strategic plan. I look forward to providing you with further updates at the end of Q2. With that, let me turn the call over to the operator.
OPERATOR
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up their handset before pressing these star keys. To allow everyone in the Q and A queue to be able to ask a question, we ask that everyone limit themselves to only one question and one follow up. One moment please. While we poll for questions, our first question comes from the line of Ben Hendricks with RBC Capital Markets. Please proceed with your question.
Ben Hendricks (Equity Analyst)
Great. Thank you very much and congrats on the strong performance. Just wanted to get some comments on the regulatory backdrop, specifically with the home health moratorium on new Medicare licensure announced yesterday. Just wanted to get your overall thoughts, any impact it’s having on your acquisition strategy to the extent to which it might impact acquisitions like Family first or others. Any kind of comments you can give on the backdrop. Thanks.
Jeff Shainer (Chief Executive Officer)
Morning Ben. And well, Matt won the bet because we figured that would be the first question, the second question, third question. So I appreciate you just getting us right there all kidding aside, Ben, if I think macro industry wide, let’s start with the industry and then we’ll come back to it. To AveAnna, Dr. Oz and Centers for Medicare & Medicaid Services (CMS), the administration have been pretty deliberate with their messaging around fraud, waste and abuse now for …
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