Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 30, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-40361 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 11095 Viking Drive | |
Entity Address, City or Town | Eden Prairie | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55344 | |
Entity Tax Identification Number | 83-1608463 | |
City Area Code | 952 | |
Local Phone Number | 893-3200 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | AGTI | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 134,460,244 | |
Entity Central Index Key | 0001749704 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Registrant Name | AGILITI, INC. \DE |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 14,453 | $ 5,577 |
Accounts receivable, less allowance for credit losses of $4,251 as of March 31, 2023 and $4,182 as of December 31, 2022 | 222,846 | 207,753 |
Inventories | 73,575 | 70,132 |
Prepaid expenses | 18,827 | 23,458 |
Other current assets | 3,942 | 9,393 |
Total current assets | 333,643 | 316,313 |
Property and equipment, net | 278,890 | 273,958 |
Goodwill | 1,239,432 | 1,239,106 |
Operating lease right-of-use assets | 78,289 | 79,975 |
Other intangibles, net | 491,043 | 512,020 |
Other | 22,112 | 22,735 |
Total assets | 2,443,409 | 2,444,107 |
Current liabilities: | ||
Current portion of long-term debt | 17,828 | 17,752 |
Current portion of operating lease liability | 24,403 | 23,607 |
Current portion of obligation under tax receivable agreement | 9,872 | 34,694 |
Accounts payable | 69,432 | 59,163 |
Accrued compensation | 29,973 | 25,928 |
Accrued interest | 5,252 | 5,039 |
Other current liabilities | 40,401 | 31,198 |
Total current liabilities | 197,161 | 197,381 |
Long-term debt, less current portion | 1,083,572 | 1,077,293 |
Obligation under tax receivable agreement, pension and other long-term liabilities | 9,505 | 9,161 |
Operating lease liability, less current portion | 64,974 | 67,332 |
Deferred income taxes, net | 140,999 | 146,615 |
Commitments and contingencies (Note 10) | ||
Equity: | ||
Common stock, $0.0001 par value; 500,000,000 shares authorized; 134,339,512 and 133,608,495 shares issued and outstanding as of March 31, 2023 and December 31, 2022 | 13 | 13 |
Additional paid-in capital | 954,928 | 953,046 |
Accumulated deficit | (11,261) | (14,274) |
Accumulated other comprehensive income | 3,341 | 7,343 |
Total Agiliti, Inc. and Subsidiaries equity | 947,021 | 946,128 |
Noncontrolling interest | 177 | 197 |
Total equity | 947,198 | 946,325 |
Total liabilities and equity | $ 2,443,409 | $ 2,444,107 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 4,251 | $ 4,182 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 134,339,512 | 133,608,495 |
Common stock, shares outstanding (in shares) | 134,339,512 | 133,608,495 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Revenue | $ 299,904 | $ 294,444 |
Cost of revenue | 190,530 | 170,817 |
Gross margin | 109,374 | 123,627 |
Selling, general and administrative expense | 88,837 | 86,138 |
Operating income | 20,537 | 37,489 |
Interest expense | 15,831 | 10,664 |
Income before income taxes and noncontrolling interest | 4,706 | 26,825 |
Income tax expense | 1,656 | 6,905 |
Consolidated net income | 3,050 | 19,920 |
Net income attributable to noncontrolling interest | 37 | 28 |
Net income attributable to Agiliti, Inc. and Subsidiaries | $ 3,013 | $ 19,892 |
Basic income per share (in dollars per share) | $ 0.02 | $ 0.15 |
Diluted income per share (in dollars per share) | $ 0.02 | $ 0.14 |
Weighted-average common shares outstanding: | ||
Basic (in shares) | 133,850,124 | 131,148,108 |
Diluted (in shares) | 139,293,662 | 139,426,334 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Consolidated net income | $ 3,050 | $ 19,920 |
Other comprehensive (loss) income: | ||
(Loss) on minimum pension liability, net of tax of $12 and $0 | (35) | 0 |
(Loss) Gain on cash flow hedge, net of tax of $1,375 and $1,866 | (3,967) | 5,429 |
Total other comprehensive (loss) income | (4,002) | 5,429 |
Comprehensive (loss) income | (952) | 25,349 |
Comprehensive income attributable to noncontrolling interest | 37 | 28 |
Comprehensive (loss) income attributable to Agiliti, Inc. and Subsidiaries | $ (989) | $ 25,321 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive (Loss) Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
(Loss) on minimum pension liability, tax benefit | $ 12 | $ 0 |
(Loss) Gain on cash flow hedge, tax expense (benefit) | $ (1,375) | $ 1,866 |
Consolidated Statements of Equi
Consolidated Statements of Equity (Unaudited) - USD ($) $ in Thousands | Total | Total Agiliti, Inc. and Subsidiaries | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests |
Beginning Balance at Dec. 31, 2021 | $ 896,072 | $ 895,952 | $ 13 | $ 938,888 | $ (44,486) | $ 1,537 | $ 120 |
Increase (Decrease) in Equity | |||||||
Net income | 19,920 | 19,892 | 19,892 | 28 | |||
Other comprehensive income (loss) | 5,429 | 5,429 | 5,429 | ||||
Share-based compensation expense | 4,425 | 4,425 | 4,425 | ||||
Stock options exercised | 978 | 978 | 978 | ||||
Shares forfeited for taxes | (792) | (792) | (792) | ||||
Dividend forfeited, net of payable | 18 | (18) | (18) | ||||
Cash distributions to noncontrolling interests | (32) | (32) | |||||
Ending Balance at Mar. 31, 2022 | 926,018 | 925,902 | 13 | 943,517 | (24,594) | 6,966 | 116 |
Beginning Balance at Dec. 31, 2022 | 946,325 | 946,128 | 13 | 953,046 | (14,274) | 7,343 | 197 |
Increase (Decrease) in Equity | |||||||
Net income | 3,050 | 3,013 | 3,013 | 37 | |||
Other comprehensive income (loss) | (4,002) | (4,002) | (4,002) | ||||
Share-based compensation expense | 6,727 | 6,727 | 6,727 | ||||
Stock options exercised | 469 | 469 | 469 | ||||
Shares forfeited for taxes | (5,314) | (5,314) | (5,314) | ||||
Cash distributions to noncontrolling interests | (57) | (57) | |||||
Ending Balance at Mar. 31, 2023 | $ 947,198 | $ 947,021 | $ 13 | $ 954,928 | $ (11,261) | $ 3,341 | $ 177 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Consolidated net income | $ 3,050 | $ 19,920 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 19,620 | 22,498 |
Amortization | 23,473 | 23,358 |
Provision for credit losses (gains) | 404 | (27) |
Provision for inventory obsolescence | 789 | 325 |
Non-cash share-based compensation expense | 6,889 | 4,637 |
Gain on sales and disposals of equipment | (751) | (593) |
Deferred income taxes | (4,229) | 4,398 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (15,497) | (6,212) |
Inventories | (4,399) | (972) |
Other operating assets | 3,930 | 1,132 |
Accounts payable | 7,935 | 5,351 |
Accrued and other operating liabilities | 13,682 | (6,691) |
Net cash provided by operating activities | 54,896 | 67,124 |
Cash flows from investing activities: | ||
Medical equipment purchases | (12,128) | (10,005) |
Property and office equipment purchases | (6,734) | (5,215) |
Proceeds from disposition of property and equipment | 1,033 | 644 |
Net cash used in investing activities | (17,829) | (14,576) |
Cash flows from financing activities: | ||
Proceeds under debt arrangements | 87,000 | 0 |
Payments under debt arrangements | (82,849) | (71,474) |
Payments of principal under finance lease liability | (2,297) | (2,223) |
Payments under tax receivable agreement | (24,822) | 0 |
Distributions to noncontrolling interests | (57) | (32) |
Proceeds from exercise of stock options | 469 | 978 |
Dividend and equity distribution payment | (321) | (906) |
Shares forfeited for taxes | (5,314) | (792) |
Payments of contingent consideration | 0 | (321) |
Net cash used in financing activities | (28,191) | (74,770) |
Net change in cash and cash equivalents | 8,876 | (22,222) |
Cash and cash equivalents at the beginning of period | 5,577 | 74,325 |
Cash and cash equivalents at the end of period | 14,453 | 52,103 |
Supplemental cash flow information: | ||
Interest paid | 14,622 | 9,523 |
Income taxes paid | $ 39 | $ 604 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Description of Business Agiliti, Inc. and its consolidated subsidiaries (Federal Street Acquisition Corp (“FSAC”), Agiliti Holdco, Inc. and Agiliti Health, Inc. and subsidiaries (the “Company” or “Agiliti”)) is a nationwide provider of healthcare technology management and service solutions to the United States healthcare industry. Agiliti, Inc. owns 100% of FSAC. FSAC owns 100% of Agiliti Holdco, Inc. Agiliti Holdco, Inc. owns 100% of Agiliti Health, Inc. Agiliti Health, Inc. owns 100% of Agiliti Surgical, Inc., Agiliti Imaging, Inc., Agiliti Surgical Equipment Repair, Inc. and Sizewise Rentals, LLC. Agiliti Health, Inc. and subsidiaries are the only entities with operations. All other entities have no material assets, liabilities, cash flows or operations other than their investment and ownership of Agiliti Health, Inc. and subsidiaries. Basis of Presentation The interim consolidated financial statements have been prepared by the Company without audit. Certain disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the related notes thereto in the Company’s Annual report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) on March 7, 2023 (“2022 Form 10-K Report”). The interim consolidated financial statements presented herein as of March 31, 2023, reflect, in the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations, comprehensive income, equity and cash flows for the periods presented. These adjustments are all of a normal, recurring nature. The results of operations for any interim period are not necessarily indicative of results for the full year. The Company is required to make estimates and assumptions about future events in preparing consolidated financial statements in conformity with GAAP. These estimates and assumptions affect the amounts of assets, liabilities, revenue and expenses at the date of the unaudited consolidated financial statements. While the Company believes that the past estimates and assumptions have been materially accurate, its current estimates are subject to change if different assumptions are utilized to predict the outcome of future events. The Company evaluates its estimates and judgments on an ongoing basis and predicate those estimates and judgments on historical experience and on various other factors that it believes to be reasonable under the circumstances. The Company makes adjustments to its assumptions and judgments when facts and circumstances dictate. Since future events and their effects cannot be determined with absolute certainty, actual results may differ from the estimates used in preparing the accompanying unaudited consolidated financial statements. A description of the Company's significant accounting policies is included in the audited consolidated financial statements. There have been no material changes to these policies for the quarter ended March 31, 2023. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Standards Adopted In October 2021, the FASB issued ASU No. 2021-08 Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 improves the accounting for acquired revenue contracts with customers in a business combination. The amendments in this ASU require that an entity ("Acquirer") recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. To achieve this, an acquirer may assess how the acquiree applied Topic 606 to determine what to record for the acquired revenue contracts. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company has adopted this standard as of January 1, 2023. The adoption of this standard did not have a material impact on the unaudited consolidated financial statements. Standards Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04 Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. In December 2022, the FASB issued ASU No. 2022-06 Reference Rate Reform (ASC 848): Deferral of the Sunset Date of ASC 848 ("ASU 2022-06"), which delayed the optional adoption of Reference Rate Reform from December 31, 2022 to December 31, 2024. The Company will continue to evaluate the phase out of LIBOR, but does not expect the adoption will have a material impact on the consolidated financial statements. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expect to receive in exchange for those products or services. Many of the Company’s customers have multiple contracts and have revenue reported in multiple service lines. The Company’s contracts may include a base level of services provided for a stated period of time, optional services provided upon request, or products. Each of these products and services are generally capable of being distinct and are accounted for as separate performance obligations. The price for each performance obligation is stated in the customer contract and is based upon a price that would be charged to a customer if the product or service were sold on a standalone basis (the list price). Any discount from the list price provided to a customer for a product or service is allocated among the performance obligations based upon their individual standalone selling prices. Service revenue is typically recognized over time as the services are provided. When services are provided for a stated period of time, revenue is generally recognized ratably over the period services are provided. In certain circumstance, optional services may be provided on a time and materials basis. In these circumstances, revenue is recognized in an amount that corresponds to the actual time and expense incurred. Product revenue is recognized when the Company transfers control of a good, which occurs at a point in time. Revenue is recognized net of allowances for estimated rebates and group purchasing organization ("GPO") fees, which are established at the time of sale. Adjustments are made to these allowances at each reporting period. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. In the following table, revenue is disaggregated by service solution: Three Months Ended (in thousands) 2023 2022 Equipment Solutions $ 120,866 $ 121,855 Clinical Engineering 113,475 102,799 Onsite Managed Services 65,563 69,790 Total revenue $ 299,904 $ 294,444 The Company capitalizes contract costs incurred in obtaining new contracts. The contract asset included in other long-term assets in the consolidated balance sheets as of March 31, 2023 and December 31, 2022 was $16.5 million and $17.3 million, respectively. Capitalized costs are amortized over the expected life of the related contracts, which is estimated to be five years. Amortization is computed on a straight-line basis, which coincides with the predominant expected life of the underlying contracts. Amortization costs are reflected in cost of revenue and selling, general and administrative expenses. The amount of amortization included in cost of revenue was $0.3 million and $0.2 million for three months ended March 31, 2023 and 2022, respectively. The amount of amortization included in selling, general and administrative expense was $1.2 million and $0.9 million for three months ended March 31, 2023 and 2022, respectively. There was no impairment loss in relation to the costs capitalized during three months ended March 31, 2023 and 2022. |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions On December 15, 2022, the Company completed the acquisition of certain assets of a surgical laser equipment solutions provider for total consideration of approximately $51.2 million funded by cash on hand and a draw on the line of credit. On December 1, 2022, the Company completed the acquisition of certain assets of a surgical equipment and repair services provider for total consideration of $9.7 million funded by cash on hand and common stock issuance. This acquisition resulted in $0.3 million of contingent consideration as of March 31, 2023 estimated utilizing a series of call options with strike prices at revenue thresholds defined in the acquisition purchase agreement. During the second quarter of 2022, the Company completed the acquisition of certain small surgical equipment repair companies. These acquisitions resulted in $2.6 million of contingent compensation as of March 31, 2023 estimated based on the historical trailing twelve months revenue of each acquisition fair valued on a quarterly basis. All fiscal year 2022 acquisitions qualify as business combinations under ASC 805, Business Combinations, and are accounted for using the acquisition method. The results of operations of acquisitions are included in the accompanying consolidated financial statements from the acquisition date. Unaudited pro forma financial information has not been disclosed for the fiscal year 2022 acquisitions as they are not considered material to the Company's consolidated results of operations. The following summarizes the final fair value of assets acquired and liabilities assumed within the consolidated balance sheet for the fiscal year 2022 transactions as of March 31, 2023: (in thousands) Accounts receivable $ 372 Prepaid expenses 80 Inventories 3,503 Property and equipment 9,001 Goodwill 26,312 Operating lease right-of-use assets 215 Other non-current assets 6 Other intangibles 24,980 Accrued expenses (455) Operating lease liability (209) Total purchase price $ 63,805 During three months ended March 31, 2023, adjustments affecting the fair values of assets acquired and liabilities assumed decreased inventories by $0.2 million and increased accrued expenses and goodwill by $0.1 million and $0.3 million, respectively. Purchase accounting is finalized for the fiscal year 2022 acquisitions. The Company incurred $0.3 million of expense for legal and other related costs in connection with the 2022 acquisitions, which were expensed as incurred for the three months ended March 31, 2023 . Transaction costs are included within selling, general, and administrative costs within the consolidated statement of operations. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements A description of the inputs used in the valuation of assets and liabilities is summarized as follows: Level 1 — Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets. Level 2 — Inputs include directly or indirectly observable inputs other than Level 1 inputs such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that are considered in fair value determinations of the assets or liabilities, such as interest rates and yield curves that are observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 — Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities or related observable inputs that can be corroborated at the measurement date. Measurements of non-exchange traded derivative contract assets and liabilities are primarily based on valuation models, discounted cash flow models or other valuation techniques that are believed to be used by market participants. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in pricing assets or liabilities. Financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 are summarized in the following tables by type of inputs applicable to the fair value measurements: Fair Value as of March 31, 2023 (in thousands) Level 1 Level 2 Level 3 Total Assets: Deferred compensation assets $ 2,840 $ — $ — $ 2,840 Interest rate swap — 3,870 — 3,870 Liabilities: Contingent compensation $ — $ — $ 2,632 $ 2,632 Contingent consideration — — 263 263 Obligation under tax receivable agreement — — 13,892 13,892 Deferred compensation liabilities 3,085 — — 3,085 Fair Value as of December 31, 2022 (in thousands) Level 1 Level 2 Level 3 Total Assets: Deferred compensation assets $ 2,681 $ — $ — $ 2,681 Interest rate swap — 9,212 — 9,212 Liabilities: Contingent compensation $ — $ — $ 1,898 $ 1,898 Contingent consideration — — 248 248 Obligation under tax receivable agreement — — 38,714 38,714 Deferred compensation liabilities 2,674 — — 2,674 The deferred compensation assets are held in mutual funds. The fair value of the deferred compensation assets and liabilities is based on the quoted market prices for the mutual funds and thus represents a Level 1 fair value measurement. During fiscal years 2022 and 2021, the Company completed the acquisition of several small surgical equipment repair companies and as a result, has accrued $2.6 million as of March 31, 2023 for future earn-out payments contingent upon the achievement of certain revenue results and the recipients' continued employment. No earn-out payments were made during the three months ended March 31, 2023. The Company also accrued contingent consideration of $0.3 million as of March 31, 2023 as part of the acquisition of another small surgical repair company during the year ended December 31, 2022. The fair value of contingent consideration was determined utilizing a series of call options with strike prices at revenue thresholds defined in the acquisition purchase agreement. In May 2020, the Company entered into an interest rate swap agreement to manage interest rate exposure. For additional information on the interest swap agreement, see Note 7, Long-Term Debt. The carrying value of interest rate swap contracts is at fair value, which is determined based on current interest rate and forward interest rates as of the balance sheet date and is classified within Level 2. On January 4, 2019, the Company entered into a tax receivable agreement (“TRA”) with its former owners. Historically, the fair value of the liability was estimated using a Monte Carlo simulation model, peer company cost of capital, discount rates and projected financial information. As realization of the tax benefits associated with the federal, state, and local net operating losses has become more certain, the reliance on the Monte Carlo model has decreased in favor of a discounted cash flow analysis given that the fair value of the liability is expected to approximate the maximum obligation under the TRA. The assumptions used in pr eparing the discounted cash flow analyses include estimates of interest rates and the timing and amount of incremental cash flows. Given that the information utilized in determining the obligation was not observable in the market, the measurement of the liability represents a Level 3 fair value measurement. The value of the obligation may decrease in-line with decreases in the Company's estimated taxable income. The Company did not make any remeasurement adjustments during three months ended March 31, 2023 and 2022. The Company made $24.8 million of payments under the TRA during the three months ended March 31, 2023 and no payments during the three months ended March 31, 2022. A reconciliation of the beginning and ending balance for the Level 3 measurement are as follows: (in thousands) Balance as of December 31, 2022 $ 40,860 Additions 749 Payments (24,822) Remeasurement adjustment (1) — Balance as of March 31, 2023 $ 16,787 ____________________ (1) Remeasurement adjustments are recognized in selling, general and administrative expense in the consolidated statement of operations. Fair Value of Other Financial Instruments The fair value of the Company's outstanding First Lien Term Loan (as defined in Note 7, Long-Term Debt) as of March 31, 2023, and December 31, 2022, is based on the quoted market price for the same or similar issues of debt, which represents a Level 2 fair value measurement, is approximately: March 31, 2023 December 31, 2022 (in thousands) Carrying Fair Carrying Fair First Lien Term Loan (1) $ 1,042,394 $ 1,050,320 $ 1,043,915 $ 1,030,072 ____________________ (1) The carrying value of the First Lien Term Loan is net of unamortized deferred financing costs of $7.4 million and $8.0 million and unamortized debt discount of $2.4 million and $2.6 million as of March 31, 2023 and December 31, 2022, respectively. |
Selected Financial Statement In
Selected Financial Statement Information | 3 Months Ended |
Mar. 31, 2023 | |
Selected Financial Statement Information [Abstract] | |
Selected Financial Statement Information | Selected Financial Statement Information Inventories The Company's inventories as of March 31, 2023 and December 31, 2022 consists of the following: (in thousands) March 31, December 31, Raw materials $ 13,842 $ 14,575 Work-in-process 633 692 Finished goods 59,101 54,865 Total inventories $ 73,575 $ 70,132 Property and Equipment The Company separates its property and equipment into two categories - medical equipment and property and office equipment. D epreciation of medical equipment is provided on the straight-line method over the equipment’s estimated useful life, generally five over the lesser of the remaining useful life or lease term for leasehold improvements and three . The Company's property and equipment as of March 31, 2023 and December 31, 2022 consists of the following: (in thousands) March 31, December 31, Medical equipment $ 417,035 $ 405,149 Less: Accumulated depreciation (258,677) (250,620) Medical equipment, net 158,358 154,529 Leasehold improvements 53,401 52,046 Office equipment and vehicles 174,350 165,737 227,751 217,783 Less: Accumulated depreciation (107,219) (98,354) Property and office equipment, net 120,532 119,429 Total property and equipment, net $ 278,890 $ 273,958 Depreciation expense recognized during the three months ended March 31, 2023 and 2022 was $19.6 million and $22.5 million, respectively. There were no impairment charges on property and equipment during the three months ended March 31, 2023 and 2022. Goodwill and Other Intangible Assets Goodwill was recognized during the three months ended March 31, 2023 due to purchase price adjustments for companies acquired in 2022. The Company's goodwill as of March 31, 2023 and December 31, 2022 consists of the following: (in thousands) Balance as of December 31, 2022 $ 1,239,106 Acquisitions 326 Balance as of March 31, 2023 $ 1,239,432 There were no impairment losses recorded on goodwill during the three months ended March 31, 2023 and 2022. The Company's other intangible assets are amortized over their estimated economic lives of two certain of its customer relationships, the Company uses the sum-of-the-years-digits amortization method to more appropriately allocate the cost to earnings in proportion to the estimated amount of economic benefit obtained. The Company's other intangible assets as of March 31, 2023 and December 31, 2022 consist of the following: March 31, 2023 (in thousands) Cost Accumulated Impairment Net Finite-life intangibles Customer relationship $ 780,806 $ (295,251) $ — $ 485,555 Non-compete agreements 1,225 (157) — 1,068 Trade names 7,806 (4,134) — 3,672 Developed technology 2,300 (1,572) — 728 Patents 20 $ — $ — $ 20 Total other intangible assets $ 792,157 $ (301,114) $ — $ 491,043 December 31, 2022 (in thousands) Cost Accumulated Impairment Net Finite-life intangibles Customer relationship $ 780,806 $ (275,522) $ — $ 505,284 Non-compete agreements 6,225 (5,096) — 1,129 Trade names 7,826 (3,311) — 4,515 Developed technology 2,300 (1,208) — 1,093 Total other intangible assets $ 797,157 $ (285,137) $ — $ 512,020 Total amortization expense related to intangible assets was $21.0 million and $21.2 million for the three months ended March 31, 2023 and 2022, respectively. There were no impairment charges during the three months ended March 31, 2023 and 2022 with respect to other intangible assets. The estimated future amortization expense for identifiable intangible assets during the remainder of 2023 and the next five years is as follows: (in thousands) Remainder of 2023 $ 61,321 2024 71,598 2025 65,036 2026 58,465 2027 51,900 Thereafter 182,723 $ 491,043 Supplementary Cash Flow Information Supplementary cash flow information is as follows: Three Months Ended (in thousands) 2023 2022 Non-cash activities: Property and equipment purchases included in accounts payable (at end of period) $ 2,090 $ 1,037 Finance lease assets and liability additions 3,989 1,655 Operating lease right-of-use assets and operating lease liability additions 3,650 15,189 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consists of the following: (in thousands) March 31, December 31, First Lien Term Loan $ 1,052,198 $ 1,054,549 Revolving Loan 35,000 28,500 Finance lease liability 25,540 23,892 1,112,738 1,106,941 Less: unamortized deferred financing costs and debt discount (11,338) (11,896) 1,101,400 1,095,045 Less: Current portion of long-term debt (17,828) (17,752) Total long-term debt $ 1,083,572 $ 1,077,293 First Lien Credit Facilities The Company is party to a seven-year senior secured delayed draw term loan facility due January 2026 which, as amended, provides an aggregate principal amount of $1.285 billion in borrowing capacity (the “First Lien Term Loan”). The Company also has access to a senior secured revolving credit facility due January 2026 in an aggregate principal amount of $250.0 million (the “Revolving Credit Facility”). Additional information regarding the Company's indebtedness arrangements can be found within the notes to the consolidated financial statements in the most recently filed Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The Company was in compliance with all financial debt covenants for all periods presented. Interest Rate Swap In May 2020, the Company entered into an interest rate swap agreement for a total notional amount of $500.0 million, which has the effect of converting a portion of the First Lien Term Loan to fixed interest rates. The effective date for the interest rate swap agreement was June 2020 and the expiration date is June 2023. The interest rate swap agreement qualifies for cash flow hedge accounting under ASC 815, Derivatives and Hedging . Both at inception and on an on-going basis, the Company performs an effectiveness test. The fair value of the interest rate swap agreement as of March 31, 2023 was $3.9 million, all of which is included in other current assets on the consolidated balance sheet. The change in fair value was recorded as a component of accumulated other comprehensive loss on the consolidated balance sheet, net of tax, since the instrument was determined to be an effective hedge as of March 31, 2023. The Company has not recorded any amounts due to ineffectiveness for any periods presented. As a result of the interest rate swap agreement, the Company expects the effective interest rate on $350.0 million and $150.0 million of the First Lien Term Loan to be 0.3396% and 0.3290%, respectively, plus the Applicable Margin through June 2023. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Leases | Leases The Company leases facilities under operating lease agreements, which include both monthly and longer-term arrangements. The Company's finance leases consist primarily of leased vehicles. The lease assets and liabilities as of March 31, 2023 and December 31, 2022 are as follows: (in thousands) March 31, December 31, Lease Assets Classification Operating lease assets Operating lease right-of-use assets $ 78,289 $ 79,975 Finance lease assets Property and equipment (1) 27,263 23,231 Total leased assets $ 105,552 $ 103,206 Lease Liabilities Current: Operating Current portion of operating lease liability $ 24,403 $ 23,607 Finance Current portion of long-term debt 8,431 8,354 Noncurrent: Operating Operating lease liability, less current portion 64,974 67,332 Finance Long-term debt, less current portion 17,109 15,538 Total lease liabilities $ 114,917 $ 114,831 ____________________ (1) Finance lease assets are recorded net of accumulated depreciation of $32.3 million and $29.6 million as of March 31, 2023 and December 31, 2022, respectively. The lease cost for the three months ended March 31, 2023 and 2022 was as follows: Three Months Ended (in thousands) 2023 2022 Lease Cost Finance lease cost: Amortization of right-of-use assets $ 2,383 $ 2,145 Interest on lease liabilities 198 192 Operating lease cost 7,610 7,275 Short-term lease cost 92 245 Variable lease cost 1,728 1,506 Total lease cost $ 12,011 $ 11,363 The maturity of lease liabilities as of March 31, 2023 was as follows: (in thousands) Operating Finance Total 2023 remaining $ 19,904 $ 7,016 $ 26,920 2024 23,996 5,142 29,138 2025 19,630 3,892 23,522 2026 14,747 2,943 17,690 2027 4,805 2,241 7,046 Thereafter 11,587 6,814 18,401 Total lease payments $ 94,669 $ 28,048 $ 122,717 Less: Interest 5,292 2,508 7,800 Present value of lease liabilities $ 89,377 $ 25,540 $ 114,917 The lease term and discount rate as of March 31, 2023 were as follows: March 31, Lease Term and Discount Rate Weighted-average remaining lease term (years) Operating leases 4.7 Finance leases 2.7 Weighted-average discount rate Operating leases 2.6 % Finance leases 2.6 % Other information related to cash paid related to lease liabilities and lease assets obtained for the three months ended March 31, 2023 and 2022 was as follows: Three Months Ended (in thousands) 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for finance leases $ 198 $ 192 Operating cash flows for operating leases 6,501 6,352 Financing cash flows for finance leases 2,297 2,223 Lease asset obtained in exchange for new finance lease liabilities 3,989 1,655 Lease asset obtained in exchange for new operating lease liabilities 3,650 15,189 |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Compensation | Share-Based CompensationAs of March 31, 2023, the 2018 Omnibus Incentive Plan (“2018 Plan”) provides for the issuance of 24.6 million restricted stock units, performance restricted stock units, and nonqualified stock options to any of the Company’s executives, other key employees and certain non-employee directors, of which up to 16.7 million may be nonqualified stock options. The stock options allow for the purchase of shares of common stock of the Company at prices equal to the stock’s fair market value at the date of grant. Options granted had a ten-year contractual term and vest over three one The shares issued to a grantee upon the exercise of such grantee’s options will be subject to certain restrictions on transferability as provided in the 2018 Plan. Grantees are subject to non-competition, non-solicitation and confidentiality requirements as set forth in their respective stock option grant agreements. Forfeited options, restricted stock units and performance restricted stock units are available for future issue. Stock Options The Company determines the fair value of stock options using the Black-Scholes option pricing model. The estimated fair value of options is recognized as an expense on a straight-line basis over the options’ expected vesting periods. The assumptions in the table below were used to determine the Black-Scholes fair value of stock options granted for the three months ended March 31, 2023 and 2022: Three Months Ended 2023 2022 Risk-free interest rate 3.91 % 1.76 % Expected volatility 39.71 % 33.36 % Dividend yield N/A N/A Expected option life (years) 6.00 6.00 Black-Scholes value of options $ 6.64 $ 6.53 Restricted Stock Units and Performance Restricted Stock Units Share-based compensation expense related to restricted stock units and performance restricted stock units is recorded based on the market value of the Company's common stock on the date of grant. The expense is recognized over the requisite service period within the statement of operations line item cash compensation paid to the same employees is recorded. The amount of compensation expense recognized for performance restricted stock units is dependent upon an assessment of the likelihood of achieving the performance and market conditions and is subject to adjustment based on management’s assessment of the Company’s performance relative to the target number of shares performance criteria. No performance restricted stock units have been granted for the three months ended March 31, 2023. The fair value of the market-based performance restricted stock units is estimated at the grant date using a Monte-Carlo simulation model which included the following assumptions for performance restricted stock units granted for three months ended March 31, 2022: Three Months Ended Risk-free interest rate 1.65% Expected dividend yield N/A Average expected volatility of the peer companies in the S&P Index 52.10% Expected volatility of the Company (1) 52.50% Expected term 2.83 ____________________ (1) Expected volatility of the Company was calculated using a weighted-average of historical data available (0.85 years) and the remaining weight split equally among guideline public companies. Employee Stock Purchase Program The Company adopted an Employee Stock Purchase Plan (“ESPP”) in April 2021. A total of 3.3 million shares of its common stock are reserved for issuance under the ESPP as of March 31, 2023. Employees are permitted to purchase the Company’s common stock at 85% of market value at the end of the six-month offering period ending on April 30 and October 31 each year. The fair value of purchases is estimated based on actual employee contributions during the offering period. The Company recognizes share-based compensation expense for the discount received by participating employees. No shares were issued under the ESPP during three months ended March 31, 2023. The Company recognized $0.2 million |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and ContingenciesThe Company, in the ordinary course of business, is subject to liability claims related to employees and the equipment that it rents and services. Asserted claims are subject to many uncertainties and the outcome of individual matters is not predictable. For certain claims where the loss is probable, a provision is recorded based on the Company’s best estimate. While the ultimate resolution of these actions may have an impact on the Company’s financial results for a particular reporting period, management believes that any such resolution would not have a material adverse effect on the financial position, results of operations or cash flows of the Company and the chance of a negative outcome on outstanding litigation is considered remote. |
Employee Benefit Plans
Employee Benefit Plans | 3 Months Ended |
Mar. 31, 2023 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans Pension plan benefits are to be paid to eligible employees after retirement based primarily on years of credited service and participants’ compensation. The Company uses a December 31 measurement date. Effective December 31, 2002, the Company froze the benefits under the pension plan. The components of net periodic benefit (income) are as follows: Three Months Ended (in thousands) 2023 2022 Interest cost $ 293 $ 211 Expected return on plan assets (358) (285) Recognized net actuarial (gain) (47) — Net periodic benefit (income) $ (112) $ (74) The Company made no contributions to the pension plan during the three months ended March 31, 2023. The Company expects to make additional contributions of approximately $0.7 million for the remainder of 2023. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesFor the three months ended March 31, 2023 and 2022, the Company recorded income tax expense of $1.7 million and $6.9 million, respectively. The income tax expense for the three months ended March 31, 2023 and 2022 is primarily attributable to the tax-effect of pre-tax income from operations plus addbacks for non-deductible expenses related to executive compensation disallowed under Internal Revenue Code Section 162(m) and windfall benefits received from exercised stock options. |
Concentration
Concentration | 3 Months Ended |
Mar. 31, 2023 | |
Risks and Uncertainties [Abstract] | |
Concentration | Concentration On December 14, 2022, the Company received a modification to the Company’s current U.S. Department of Health and Human Services (“HHS”) and the Assistant Secretary for Preparedness and Response (“ASPR”) agreement that expires on February 27, 2023 incorporating Federal Acquisition Regulation (“FAR”) 52.217-8, which resulted in the government extending the term of this current agreement to August 27, 2023. Additionally, on December 14, 2022, the Company entered into a new agreement with HHS/ASPR (the "Agreement") for preventive maintenance services (“PMS”), management and storage for ventilator and powered air purifying respirator (“PAPR”) systems. The Agreement’s performance period commences on August 28, 2023 and is anticipated to have a period of performance of four years and six months, consisting of a base period of twelve months, three one-year option periods and an additional six-month option period. For the three months ended March 31, 2023 and 2022, approximately 11.1% and 11.6%, respectively, of total revenue related to various contracts with the HHS/ASPR. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following is a reconciliation of the basic and diluted number of shares used in computing earnings per share: Three Months Ended 2023 2022 Basic weighted average shares outstanding 133,850,124 131,148,108 Net effect of dilutive stock awards based upon the treasury stock method 5,443,538 8,278,226 Dilutive weighted average shares outstanding 139,293,662 139,426,334 Basic earnings per share $ 0.02 $ 0.15 Diluted earnings per share $ 0.02 $ 0.14 Anti-dilutive share-based awards excluded from the calculation of dilutive earnings per share 521,829 9,203 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Revolving Credit Facility Amendment On April 6, 2023, the Company entered into Amendment No. 6 (“Amendment No. 6”) to the credit agreement, dated as of January 4, 2019 (as further amended, supplemented, amended and restated or otherwise modified from time to time, the “First Lien Credit Agreement”), with JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and the lenders from time to time party thereto. Amendment No. 6, among other things (i) provides for a refinancing of the existing Revolving Credit Facility through a replacement of the existing $250.0 million Revolving Credit Facility with a $300.0 million revolving credit facility, (ii) extends the maturity of the Revolving Credit Facility to April 6, 2028; and (iii) updates the benchmark interest rate provisions to replace the LIBOR with a term rate based on the Secured Overnight Financing Rate (“Term SOFR”), for revolving loans extended in dollars, a term rate based on the Euro InterBank Offered Rate (“Adjusted EURIBOR”), for revolving loans extended in euros, and a daily rate (“Daily Simple RFR”) based on the Sterling Overnight Index Average (“SONIA”), for revolving loans extended in sterling, as the reference rates for purposes of calculating interest under the Revolving Credit Facility. Following the Amendment, the interest rate margin for borrowings under the Revolving Credit Facility will be set at Adjusted EURIBOR, Daily Simple RFR or Term SOFR plus 2.75%, with step downs to (A) Adjusted EURIBOR, Daily Simple RFR or Term SOFR plus 2.50% if the first lien leverage ratio (as calculated under the First Lien Credit Agreement) is less than or equal to 3.75:1.00 and (B) Adjusted EURIBOR, Daily Simple RFR or Term SOFR plus 2.25% if the first lien leverage ratio is less than or equal to 3.25:1.00. Interest Rate Swap Agreement On April 17, 2023, the Company entered into an interest rate swap agreement for a total notional amount of $500.0 million, which has the effect of converting a portion of its First Lien Term Loan to fixed interest rates. The effective date for the interest rate swap agreement is July 1, 2023 and the expiration date is July 1, 2025. As a result of the interest rate swap agreement, the Company expects the effective interest rate on $500.0 million of the First Lien Term Loan to be 4.0685%, plus the Applicable Margin, through July 2025. First Lien Term Loan Amendment On May 1, 2023, the Company entered into the amended and restated credit agreement, dated as of May 1, 2023 (the “A&R First Lien Credit Agreement”), by and among Agiliti Health, Inc., as borrower (the “Borrower”), Agiliti Holdco, Inc., as holdings, the subsidiaries of the Borrower from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and the lenders from time to time party thereto, which amends and restates the First Lien Credit Agreement. The A&R First Lien Credit Agreement, among other things (i) provides for a refinancing of the existing term loan credit facility with a $1,075,000,000 term loan credit facility (the “Term Loan Credit Facility”), (ii) extends the maturity of the Term Loan Credit Facility to May 1, 2030; and (iii) updates the benchmark interest rate provisions to replace LIBOR with a term rate based on the Term SOFR, for term loans extended in dollars. Following the A&R First Lien Credit Agreement, the interest rate margin for the term loan borrowings under the Term Loan Credit Facility will be set at Term SOFR plus 3.00%. Except as described above, the A&R First Lien Credit Agreement does not give effect to other material changes to the terms of the First Lien Credit Agreement, including with respect to the representations and warranties, events of default and affirmative and negative covenants. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Standards Adopted and Not Yet Adopted | Standards Adopted In October 2021, the FASB issued ASU No. 2021-08 Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 improves the accounting for acquired revenue contracts with customers in a business combination. The amendments in this ASU require that an entity ("Acquirer") recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. To achieve this, an acquirer may assess how the acquiree applied Topic 606 to determine what to record for the acquired revenue contracts. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company has adopted this standard as of January 1, 2023. The adoption of this standard did not have a material impact on the unaudited consolidated financial statements. Standards Not Yet Adopted In March 2020, the FASB issued ASU No. 2020-04 Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. In December 2022, the FASB issued ASU No. 2022-06 Reference Rate Reform (ASC 848): Deferral of the Sunset Date of ASC 848 ("ASU 2022-06"), which delayed the optional adoption of Reference Rate Reform from December 31, 2022 to December 31, 2024. The Company will continue to evaluate the phase out of LIBOR, but does not expect the adoption will have a material impact on the consolidated financial statements. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Summary of revenue disaggregated | In the following table, revenue is disaggregated by service solution: Three Months Ended (in thousands) 2023 2022 Equipment Solutions $ 120,866 $ 121,855 Clinical Engineering 113,475 102,799 Onsite Managed Services 65,563 69,790 Total revenue $ 299,904 $ 294,444 |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of the fair values of the assets acquired and liabilities assumed at the acquisition date | The following summarizes the final fair value of assets acquired and liabilities assumed within the consolidated balance sheet for the fiscal year 2022 transactions as of March 31, 2023: (in thousands) Accounts receivable $ 372 Prepaid expenses 80 Inventories 3,503 Property and equipment 9,001 Goodwill 26,312 Operating lease right-of-use assets 215 Other non-current assets 6 Other intangibles 24,980 Accrued expenses (455) Operating lease liability (209) Total purchase price $ 63,805 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of assets and liabilities measured on a recurring basis | Financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 are summarized in the following tables by type of inputs applicable to the fair value measurements: Fair Value as of March 31, 2023 (in thousands) Level 1 Level 2 Level 3 Total Assets: Deferred compensation assets $ 2,840 $ — $ — $ 2,840 Interest rate swap — 3,870 — 3,870 Liabilities: Contingent compensation $ — $ — $ 2,632 $ 2,632 Contingent consideration — — 263 263 Obligation under tax receivable agreement — — 13,892 13,892 Deferred compensation liabilities 3,085 — — 3,085 Fair Value as of December 31, 2022 (in thousands) Level 1 Level 2 Level 3 Total Assets: Deferred compensation assets $ 2,681 $ — $ — $ 2,681 Interest rate swap — 9,212 — 9,212 Liabilities: Contingent compensation $ — $ — $ 1,898 $ 1,898 Contingent consideration — — 248 248 Obligation under tax receivable agreement — — 38,714 38,714 Deferred compensation liabilities 2,674 — — 2,674 |
Schedule of reconciliation of the beginning and ending balance for the Level 3 measurement | A reconciliation of the beginning and ending balance for the Level 3 measurement are as follows: (in thousands) Balance as of December 31, 2022 $ 40,860 Additions 749 Payments (24,822) Remeasurement adjustment (1) — Balance as of March 31, 2023 $ 16,787 ____________________ (1) Remeasurement adjustments are recognized in selling, general and administrative expense in the consolidated statement of operations. |
Schedule of carrying value and fair value of long term debt | The fair value of the Company's outstanding First Lien Term Loan (as defined in Note 7, Long-Term Debt) as of March 31, 2023, and December 31, 2022, is based on the quoted market price for the same or similar issues of debt, which represents a Level 2 fair value measurement, is approximately: March 31, 2023 December 31, 2022 (in thousands) Carrying Fair Carrying Fair First Lien Term Loan (1) $ 1,042,394 $ 1,050,320 $ 1,043,915 $ 1,030,072 ____________________ (1) The carrying value of the First Lien Term Loan is net of unamortized deferred financing costs of $7.4 million and $8.0 million and unamortized debt discount of $2.4 million and $2.6 million as of March 31, 2023 and December 31, 2022, respectively. |
Selected Financial Statement _2
Selected Financial Statement Information (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Selected Financial Statement Information [Abstract] | |
Schedule of inventory | The Company's inventories as of March 31, 2023 and December 31, 2022 consists of the following: (in thousands) March 31, December 31, Raw materials $ 13,842 $ 14,575 Work-in-process 633 692 Finished goods 59,101 54,865 Total inventories $ 73,575 $ 70,132 |
Schedule of property and equipment | The Company's property and equipment as of March 31, 2023 and December 31, 2022 consists of the following: (in thousands) March 31, December 31, Medical equipment $ 417,035 $ 405,149 Less: Accumulated depreciation (258,677) (250,620) Medical equipment, net 158,358 154,529 Leasehold improvements 53,401 52,046 Office equipment and vehicles 174,350 165,737 227,751 217,783 Less: Accumulated depreciation (107,219) (98,354) Property and office equipment, net 120,532 119,429 Total property and equipment, net $ 278,890 $ 273,958 |
Schedule of goodwill | The Company's goodwill as of March 31, 2023 and December 31, 2022 consists of the following: (in thousands) Balance as of December 31, 2022 $ 1,239,106 Acquisitions 326 Balance as of March 31, 2023 $ 1,239,432 |
Schedule of other intangible assets | The Company's other intangible assets as of March 31, 2023 and December 31, 2022 consist of the following: March 31, 2023 (in thousands) Cost Accumulated Impairment Net Finite-life intangibles Customer relationship $ 780,806 $ (295,251) $ — $ 485,555 Non-compete agreements 1,225 (157) — 1,068 Trade names 7,806 (4,134) — 3,672 Developed technology 2,300 (1,572) — 728 Patents 20 $ — $ — $ 20 Total other intangible assets $ 792,157 $ (301,114) $ — $ 491,043 December 31, 2022 (in thousands) Cost Accumulated Impairment Net Finite-life intangibles Customer relationship $ 780,806 $ (275,522) $ — $ 505,284 Non-compete agreements 6,225 (5,096) — 1,129 Trade names 7,826 (3,311) — 4,515 Developed technology 2,300 (1,208) — 1,093 Total other intangible assets $ 797,157 $ (285,137) $ — $ 512,020 |
Schedule of estimated future amortization expense for identifiable intangible assets | The estimated future amortization expense for identifiable intangible assets during the remainder of 2023 and the next five years is as follows: (in thousands) Remainder of 2023 $ 61,321 2024 71,598 2025 65,036 2026 58,465 2027 51,900 Thereafter 182,723 $ 491,043 |
Summary of supplementary cash flow information | Supplementary cash flow information is as follows: Three Months Ended (in thousands) 2023 2022 Non-cash activities: Property and equipment purchases included in accounts payable (at end of period) $ 2,090 $ 1,037 Finance lease assets and liability additions 3,989 1,655 Operating lease right-of-use assets and operating lease liability additions 3,650 15,189 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt consists of the following: (in thousands) March 31, December 31, First Lien Term Loan $ 1,052,198 $ 1,054,549 Revolving Loan 35,000 28,500 Finance lease liability 25,540 23,892 1,112,738 1,106,941 Less: unamortized deferred financing costs and debt discount (11,338) (11,896) 1,101,400 1,095,045 Less: Current portion of long-term debt (17,828) (17,752) Total long-term debt $ 1,083,572 $ 1,077,293 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Summary of lease assets and liabilities | The lease assets and liabilities as of March 31, 2023 and December 31, 2022 are as follows: (in thousands) March 31, December 31, Lease Assets Classification Operating lease assets Operating lease right-of-use assets $ 78,289 $ 79,975 Finance lease assets Property and equipment (1) 27,263 23,231 Total leased assets $ 105,552 $ 103,206 Lease Liabilities Current: Operating Current portion of operating lease liability $ 24,403 $ 23,607 Finance Current portion of long-term debt 8,431 8,354 Noncurrent: Operating Operating lease liability, less current portion 64,974 67,332 Finance Long-term debt, less current portion 17,109 15,538 Total lease liabilities $ 114,917 $ 114,831 ____________________ (1) Finance lease assets are recorded net of accumulated depreciation of $32.3 million and $29.6 million as of March 31, 2023 and December 31, 2022, respectively. |
Summary of lease cost | The lease cost for the three months ended March 31, 2023 and 2022 was as follows: Three Months Ended (in thousands) 2023 2022 Lease Cost Finance lease cost: Amortization of right-of-use assets $ 2,383 $ 2,145 Interest on lease liabilities 198 192 Operating lease cost 7,610 7,275 Short-term lease cost 92 245 Variable lease cost 1,728 1,506 Total lease cost $ 12,011 $ 11,363 |
Summary of maturity of lease liabilities | The maturity of lease liabilities as of March 31, 2023 was as follows: (in thousands) Operating Finance Total 2023 remaining $ 19,904 $ 7,016 $ 26,920 2024 23,996 5,142 29,138 2025 19,630 3,892 23,522 2026 14,747 2,943 17,690 2027 4,805 2,241 7,046 Thereafter 11,587 6,814 18,401 Total lease payments $ 94,669 $ 28,048 $ 122,717 Less: Interest 5,292 2,508 7,800 Present value of lease liabilities $ 89,377 $ 25,540 $ 114,917 |
Summary of lease term and discount rate | The lease term and discount rate as of March 31, 2023 were as follows: March 31, Lease Term and Discount Rate Weighted-average remaining lease term (years) Operating leases 4.7 Finance leases 2.7 Weighted-average discount rate Operating leases 2.6 % Finance leases 2.6 % |
Summary of additional information of leases | Other information related to cash paid related to lease liabilities and lease assets obtained for the three months ended March 31, 2023 and 2022 was as follows: Three Months Ended (in thousands) 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for finance leases $ 198 $ 192 Operating cash flows for operating leases 6,501 6,352 Financing cash flows for finance leases 2,297 2,223 Lease asset obtained in exchange for new finance lease liabilities 3,989 1,655 Lease asset obtained in exchange for new operating lease liabilities 3,650 15,189 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of assumptions used in determining the fair value of awards | The assumptions in the table below were used to determine the Black-Scholes fair value of stock options granted for the three months ended March 31, 2023 and 2022: Three Months Ended 2023 2022 Risk-free interest rate 3.91 % 1.76 % Expected volatility 39.71 % 33.36 % Dividend yield N/A N/A Expected option life (years) 6.00 6.00 Black-Scholes value of options $ 6.64 $ 6.53 The fair value of the market-based performance restricted stock units is estimated at the grant date using a Monte-Carlo simulation model which included the following assumptions for performance restricted stock units granted for three months ended March 31, 2022: Three Months Ended Risk-free interest rate 1.65% Expected dividend yield N/A Average expected volatility of the peer companies in the S&P Index 52.10% Expected volatility of the Company (1) 52.50% Expected term 2.83 ____________________ (1) Expected volatility of the Company was calculated using a weighted-average of historical data available (0.85 years) and the remaining weight split equally among guideline public companies. |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Retirement Benefits [Abstract] | |
Schedule of components of net periodic pension costs | The components of net periodic benefit (income) are as follows: Three Months Ended (in thousands) 2023 2022 Interest cost $ 293 $ 211 Expected return on plan assets (358) (285) Recognized net actuarial (gain) (47) — Net periodic benefit (income) $ (112) $ (74) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Summary of earnings per share, basic and diluted | The following is a reconciliation of the basic and diluted number of shares used in computing earnings per share: Three Months Ended 2023 2022 Basic weighted average shares outstanding 133,850,124 131,148,108 Net effect of dilutive stock awards based upon the treasury stock method 5,443,538 8,278,226 Dilutive weighted average shares outstanding 139,293,662 139,426,334 Basic earnings per share $ 0.02 $ 0.15 Diluted earnings per share $ 0.02 $ 0.14 Anti-dilutive share-based awards excluded from the calculation of dilutive earnings per share 521,829 9,203 |
Basis of Presentation (Details)
Basis of Presentation (Details) | Mar. 31, 2023 |
Agiliti, Inc. | Federal Street Acquisition Corp | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |
Ownership percentage | 100% |
Federal Street Acquisition Corp | Agiliti Holdco Inc | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |
Ownership percentage | 100% |
Agiliti Holdco Inc | Agiliti Health Inc | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |
Ownership percentage | 100% |
Agiliti Health Inc | Agiliti Surgical Inc., Agiliti Imaging, Inc. Northfield Medical, Inc. and Sizewise Rentals, LLC | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |
Ownership percentage | 100% |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Revenues by service solution | |||
Total revenue | $ 299,904,000 | $ 294,444,000 | |
Contract asset | $ 16,500,000 | $ 17,300,000 | |
Capitalized costs amortization period | 5 years | 5 years | |
Impairment loss | $ 0 | 0 | |
Cost of Sales | |||
Revenues by service solution | |||
Cost amortization | 300,000 | 200,000 | |
Selling, General and Administrative Expenses | |||
Revenues by service solution | |||
Cost amortization | 1,200,000 | 900,000 | |
Equipment Solutions | |||
Revenues by service solution | |||
Total revenue | 120,866,000 | 121,855,000 | |
Clinical Engineering | |||
Revenues by service solution | |||
Total revenue | 113,475,000 | 102,799,000 | |
Onsite Managed Services | |||
Revenues by service solution | |||
Total revenue | $ 65,563,000 | $ 69,790,000 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Dec. 15, 2022 | Dec. 01, 2022 | Mar. 31, 2023 | |
Acquisitions | |||
Adjustments affecting the fair values of assets acquired and liabilities assumed, decrease in inventories | $ 0.2 | ||
Adjustments affecting the fair values of assets acquired and liabilities assumed, increase in accrued expenses | 0.1 | ||
Adjustments affecting the fair values of assets acquired and liabilities assumed, increase in goodwill | 0.3 | ||
Acquisition related expenses | 0.3 | ||
Surgical Equipment Repair And Maintenance Service Provider | |||
Acquisitions | |||
Business combination, contingent consideration | 2.6 | ||
Surgical Laser Equipment Solutions Provider | |||
Acquisitions | |||
Consideration transferred | $ 51.2 | ||
Surgical Equipment Repair And Maintenance Service Provider | |||
Acquisitions | |||
Consideration transferred | $ 9.7 | ||
Asset acquisition, contingent consideration | $ 0.3 |
Acquisitions - Preliminary Fair
Acquisitions - Preliminary Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Acquisitions | ||
Inventories | $ 200 | |
Goodwill | 1,239,432 | $ 1,239,106 |
Accrued expenses | (100) | |
Operating lease liability | (89,377) | |
Surgical Laser Equipment Solutions Provider | ||
Acquisitions | ||
Accounts receivable | 372 | |
Prepaid expenses | 80 | |
Inventories | 3,503 | |
Property and equipment | 9,001 | |
Goodwill | 26,312 | |
Operating lease right-of-use assets | 215 | |
Other non-current assets | 6 | |
Other intangibles | 24,980 | |
Accrued expenses | (455) | |
Operating lease liability | (209) | |
Total purchase price | $ 63,805 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of fair value of assets and liabilities measured on a recurring basis (Details) - Fair Value, Recurring - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Assets: | ||
Deferred compensation assets | $ 2,840 | $ 2,681 |
Interest rate swap | 3,870 | 9,212 |
Liabilities: | ||
Contingent compensation | 2,632 | 1,898 |
Contingent consideration | 263 | 248 |
Obligation under tax receivable agreement | 13,892 | 38,714 |
Deferred compensation liabilities | 3,085 | 2,674 |
Level 1 | ||
Assets: | ||
Deferred compensation assets | 2,840 | 2,681 |
Interest rate swap | 0 | 0 |
Liabilities: | ||
Contingent compensation | 0 | 0 |
Contingent consideration | 0 | 0 |
Obligation under tax receivable agreement | 0 | 0 |
Deferred compensation liabilities | 3,085 | 2,674 |
Level 2 | ||
Assets: | ||
Deferred compensation assets | 0 | 0 |
Interest rate swap | 3,870 | 9,212 |
Liabilities: | ||
Contingent compensation | 0 | 0 |
Contingent consideration | 0 | 0 |
Obligation under tax receivable agreement | 0 | 0 |
Deferred compensation liabilities | 0 | 0 |
Level 3 | ||
Assets: | ||
Deferred compensation assets | 0 | 0 |
Interest rate swap | 0 | 0 |
Liabilities: | ||
Contingent compensation | 2,632 | 1,898 |
Contingent consideration | 263 | 248 |
Obligation under tax receivable agreement | 13,892 | 38,714 |
Deferred compensation liabilities | $ 0 | $ 0 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Fair value measurements | ||
Earn out payment | $ 0 | |
Payments under tax receivable agreement | (24,800) | |
Surgical Equipment Repair And Maintenance Service Provider | ||
Fair value measurements | ||
Asset acquisition, contingent consideration | 300 | |
Fair Value, Recurring | ||
Fair value measurements | ||
Contingent compensation | 2,632 | $ 1,898 |
Level 3 | Fair Value, Recurring | ||
Fair value measurements | ||
Contingent compensation | $ 2,632 | $ 1,898 |
Fair Value Measurements - Recon
Fair Value Measurements - Reconciliation (Details) - Level 3 - Fair Value, Recurring $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance at the beginning of the year | $ 40,860 |
Additions | 749 |
Payments | (24,822) |
Remeasurement adjustment | 0 |
Balance at the end of the year | $ 16,787 |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule of carrying value and fair value of long term debt (Details) - First Lien Term Loan - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Long-Term Debt | ||
Carrying Value | $ 1,042,394 | $ 1,043,915 |
Fair Value | 1,050,320 | 1,030,072 |
Unamortized deferred financing costs | 7,400 | 8,000 |
Unamortized debt discount | $ 2,400 | $ 2,600 |
Selected Financial Statement _3
Selected Financial Statement Information - Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Selected Financial Statement Information [Abstract] | ||
Raw materials | $ 13,842 | $ 14,575 |
Work-in-process | 633 | 692 |
Finished goods | 59,101 | 54,865 |
Total inventories | $ 73,575 | $ 70,132 |
Selected Financial Statement _4
Selected Financial Statement Information - Property and equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Property and Equipment | |||
Medical equipment | $ 417,035 | $ 405,149 | |
Less: Accumulated depreciation | (258,677) | (250,620) | |
Medical equipment, net | 158,358 | 154,529 | |
Property and office equipment | 227,751 | 217,783 | |
Less: Accumulated depreciation | (107,219) | (98,354) | |
Property and office equipment, net | 120,532 | 119,429 | |
Total property and equipment, net | 278,890 | 273,958 | |
Depreciation | 19,620 | $ 22,498 | |
Intangible asset impairment charge | $ 0 | $ 0 | |
Medical Equipment | Minimum | |||
Property and Equipment | |||
Estimated useful life | 5 years | ||
Medical Equipment | Maximum | |||
Property and Equipment | |||
Estimated useful life | 10 years | ||
Office Equipment | Minimum | |||
Property and Equipment | |||
Estimated useful life | 3 years | ||
Office Equipment | Maximum | |||
Property and Equipment | |||
Estimated useful life | 10 years | ||
Leasehold improvements | |||
Property and Equipment | |||
Property and office equipment | $ 53,401 | 52,046 | |
Office equipment and vehicles | |||
Property and Equipment | |||
Property and office equipment | $ 174,350 | $ 165,737 |
Selected Financial Statement _5
Selected Financial Statement Information - Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Goodwill | |||
Balance at the beginning of the period | $ 1,239,106 | ||
Acquisitions | 326 | ||
Balance at the end of the period | 1,239,432 | $ 1,239,106 | |
Impairment, goodwill | 0 | $ 0 | |
Other intangible assets | |||
Accumulated Amortization | (301,114) | (285,137) | |
Impairment | 0 | 0 | |
Net | 491,043 | ||
Gross, intangible assets excluding goodwill | 792,157 | 797,157 | |
Net intangible assets excluding goodwill | 491,043 | 512,020 | |
Total amortization expense | 21,000 | 21,200 | |
Intangible asset impairment charge | $ 0 | $ 0 | |
Minimum | |||
Other intangible assets | |||
Estimated remaining useful life | 2 years | ||
Maximum | |||
Other intangible assets | |||
Estimated remaining useful life | 15 years | ||
Customer relationship | |||
Other intangible assets | |||
Cost | $ 780,806 | 780,806 | |
Accumulated Amortization | (295,251) | (275,522) | |
Impairment | 0 | 0 | |
Net | 485,555 | 505,284 | |
Non-compete agreements | |||
Other intangible assets | |||
Cost | 1,225 | 6,225 | |
Accumulated Amortization | (157) | (5,096) | |
Impairment | 0 | 0 | |
Net | 1,068 | 1,129 | |
Trade names | |||
Other intangible assets | |||
Cost | 7,806 | 7,826 | |
Accumulated Amortization | (4,134) | (3,311) | |
Impairment | 0 | 0 | |
Net | 3,672 | 4,515 | |
Developed technology | |||
Other intangible assets | |||
Cost | 2,300 | 2,300 | |
Accumulated Amortization | (1,572) | (1,208) | |
Impairment | 0 | 0 | |
Net | 728 | $ 1,093 | |
Patents | |||
Other intangible assets | |||
Cost | 20 | ||
Accumulated Amortization | 0 | ||
Impairment | 0 | ||
Net | $ 20 |
Selected Financial Statement _6
Selected Financial Statement Information - Future Estimated Amortization Expense (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Future estimation amortization expense | |
Remainder of 2023 | $ 61,321 |
2024 | 71,598 |
2025 | 65,036 |
2026 | 58,465 |
2027 | 51,900 |
Thereafter | 182,723 |
Finite-lived intangible assets, net | $ 491,043 |
Selected Financial Statement _7
Selected Financial Statement Information - Summary of Supplementary Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Selected Financial Statement Information [Abstract] | ||
Property and equipment purchases included in accounts payable (at end of period) | $ 2,090 | $ 1,037 |
Finance lease assets and liability additions | 3,989 | 1,655 |
Operating lease right-of-use assets and operating lease liability additions | $ 3,650 | $ 15,189 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Long-Term Debt | ||
Long-term debt current and noncurrent | $ 1,112,738 | $ 1,106,941 |
Less: unamortized deferred financing costs and debt discount | (11,338) | (11,896) |
Long-term debt | 1,101,400 | 1,095,045 |
Less: Current portion of long-term debt | (17,828) | (17,752) |
Total long-term debt | 1,083,572 | 1,077,293 |
First Lien Term Loan | ||
Long-Term Debt | ||
Long-term debt current and noncurrent | 1,052,198 | 1,054,549 |
Revolving Loan | ||
Long-Term Debt | ||
Long-term debt current and noncurrent | 35,000 | 28,500 |
Finance lease liability | ||
Long-Term Debt | ||
Long-term debt current and noncurrent | $ 25,540 | $ 23,892 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | May 31, 2020 | |
Interest Rate Swap | ||
Long-Term Debt | ||
Aggregate outstanding principal amount | $ 500 | |
Interest rate swap | $ 3.9 | |
First Lien Term Loan | ||
Long-Term Debt | ||
Debt instrument, term | 7 years | |
Aggregate outstanding principal amount | $ 1,285 | |
First Lien Term Loan | Fed Funds Effective Rate Overnight Index Swap Rate [Member] | ||
Long-Term Debt | ||
Margin over base rate (as a percent) | 0.50% | |
First Lien Term Loan | Interest Rate Swap | Debt One | ||
Long-Term Debt | ||
Aggregate outstanding principal amount | $ 350 | |
Interest rate at period end | 0.3396% | |
First Lien Term Loan | Interest Rate Swap | Debt Two | ||
Long-Term Debt | ||
Aggregate outstanding principal amount | $ 150 | |
Interest rate at period end | 0.329% | |
Revolving Loan | ||
Long-Term Debt | ||
Aggregate outstanding principal amount | $ 250 |
Leases - Summary of lease asset
Leases - Summary of lease assets and liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Lease Assets | ||
Operating lease assets | $ 78,289 | $ 79,975 |
Finance lease assets | 27,263 | 23,231 |
Total leased assets | $ 105,552 | $ 103,206 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property and equipment, net | Property and equipment, net |
Current: | ||
Operating | $ 24,403 | $ 23,607 |
Finance | $ 8,431 | $ 8,354 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Current portion of long-term debt | Current portion of long-term debt |
Noncurrent: | ||
Operating | $ 64,974 | $ 67,332 |
Finance | $ 17,109 | $ 15,538 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Long-term debt, less current portion | Long-term debt, less current portion |
Total lease liabilities | $ 114,917 | $ 114,831 |
Finance lease assets, accumulated depreciation | $ 32,300 | $ 29,600 |
Leases - Summary of lease cost
Leases - Summary of lease cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Leases [Abstract] | ||
Amortization of right-of-use assets | $ 2,383 | $ 2,145 |
Interest on lease liabilities | 198 | 192 |
Operating lease cost | 7,610 | 7,275 |
Short-term lease cost | 92 | 245 |
Variable lease cost | 1,728 | 1,506 |
Total lease cost | $ 12,011 | $ 11,363 |
Leases - Summary of maturity of
Leases - Summary of maturity of lease liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Operating Leases | ||
2023 remaining | $ 19,904 | |
2024 | 23,996 | |
2025 | 19,630 | |
2026 | 14,747 | |
2027 | 4,805 | |
Thereafter | 11,587 | |
Total lease payments | 94,669 | |
Less: Interest | 5,292 | |
Present value of lease liabilities | 89,377 | |
Finance Leases | ||
2023 remaining | 7,016 | |
2024 | 5,142 | |
2025 | 3,892 | |
2026 | 2,943 | |
2027 | 2,241 | |
Thereafter | 6,814 | |
Total lease payments | 28,048 | |
Less: Interest | 2,508 | |
Present value of lease liabilities | 25,540 | |
Total | ||
2023 remaining | 26,920 | |
2024 | 29,138 | |
2025 | 23,522 | |
2026 | 17,690 | |
2027 | 7,046 | |
Thereafter | 18,401 | |
Total lease payments | 122,717 | |
Less: Interest | 7,800 | |
Total lease liabilities | $ 114,917 | $ 114,831 |
Leases - Summary of lease term
Leases - Summary of lease term and discount rate (Details) | Mar. 31, 2023 |
Weighted-average remaining lease term (years) | |
Operating leases | 4 years 8 months 12 days |
Finance leases | 2 years 8 months 12 days |
Weighted-average discount rate | |
Operating leases | 2.60% |
Finance leases | 2.60% |
Leases - Summary of additional
Leases - Summary of additional information of leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Leases [Abstract] | ||
Operating cash flows for finance leases | $ 198 | $ 192 |
Operating cash flows for operating leases | 6,501 | 6,352 |
Financing cash flows for finance leases | 2,297 | 2,223 |
Lease asset obtained in exchange for new finance lease liabilities | 3,989 | 1,655 |
Lease asset obtained in exchange for new operating lease liabilities | $ 3,650 | $ 15,189 |
Share-Based Compensation - Narr
Share-Based Compensation - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Apr. 27, 2021 | Jan. 04, 2019 | |
2018 Omnibus Incentive Plan | ||||
Stock-based compensation | ||||
Shares authorized under the plan (in shares) | 16,700,000 | 24,600,000 | ||
Share-based compensation arrangement by share-based payment award, options, granted contractual term | 10 years | |||
Common shares reserved for future issuance (in shares) | 14,400,000 | |||
Employee Stock Purchase Plan ("ESPP") | ||||
Stock-based compensation | ||||
Common shares reserved for future issuance (in shares) | 3,300,000 | |||
Shares issued under ESPP (in shares) | 0 | |||
Non-cash share-based compensation expense | $ 0.2 | $ 0.2 | ||
Share-based Payment Arrangement, Option | ||||
Stock-based compensation | ||||
Percentage of shares to be purchased at market value | 85% | |||
Share-based Payment Arrangement, Option | 2018 Omnibus Incentive Plan | Minimum | ||||
Stock-based compensation | ||||
Share-based compensation arrangement by share-based payment award, options, vested term | 3 years | |||
Share-based Payment Arrangement, Option | 2018 Omnibus Incentive Plan | Maximum | ||||
Stock-based compensation | ||||
Share-based compensation arrangement by share-based payment award, options, vested term | 4 years | |||
Restricted Stock Units (RSUs) | 2018 Omnibus Incentive Plan | Minimum | ||||
Stock-based compensation | ||||
Share-based compensation arrangement by share-based payment award, options, vested term | 1 year | |||
Restricted Stock Units (RSUs) | 2018 Omnibus Incentive Plan | Maximum | ||||
Stock-based compensation | ||||
Share-based compensation arrangement by share-based payment award, options, vested term | 4 years | |||
Performance Restricted Stock Units | ||||
Stock-based compensation | ||||
Number of shares, granted (in shares) | 0 | |||
Performance Restricted Stock Units | 2018 Omnibus Incentive Plan | ||||
Stock-based compensation | ||||
Share-based compensation arrangement by share-based payment award, options, vested term | 3 years |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Assumptions used to Determine Black-Scholes Fair Value (Details) - Parent Company - Share-based Payment Arrangement, Option - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Stock-based compensation | ||
Risk-free interest rate | 3.91% | 1.76% |
Expected volatility | 39.71% | 33.36% |
Expected option life (years) | 6 years | 6 years |
Black-Scholes Value of Options (in dollars per share) | $ 6.64 | $ 6.53 |
Share-Based Compensation - Su_2
Share-Based Compensation - Summary of Assumptions used for Monte-Carlo Simulation (Details) - Restricted Stock Units (RSUs) | 3 Months Ended |
Mar. 31, 2022 | |
Stock-based compensation | |
Expected volatility | 52.10% |
Parent Company | |
Stock-based compensation | |
Risk-free interest rate | 1.65% |
Expected volatility | 52.50% |
Expected option life (years) | 2 years 9 months 29 days |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - Pension Plan - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Net Periodic Benefit Cost | ||
Interest cost | $ 293 | $ 211 |
Expected return on plan assets | (358) | (285) |
Recognized net actuarial (gain) | (47) | 0 |
Net periodic benefit (income) | (112) | $ (74) |
Contributions | ||
Employer contribution | 0 | |
Expected contribution in 2023 | $ 700 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense | $ 1,656 | $ 6,905 |
Concentration (Details)
Concentration (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
US Department Of Health and Human Services | Sales | Geographic Concentration Risk | ||
Concentration | ||
Concentration risk (as a percent) | 11.10% | 11.60% |
Earnings Per Share - Summary of
Earnings Per Share - Summary of Earnings Per Share, Basic and Diluted (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Earnings Per Share [Abstract] | ||
Basic weighted average shares outstanding (in shares) | 133,850,124 | 131,148,108 |
Net effect of dilutive stock awards based upon the treasury stock method (in shares) | 5,443,538 | 8,278,226 |
Dilutive weighted average shares outstanding (in shares) | 139,293,662 | 139,426,334 |
Basic income per share (in dollars per share) | $ 0.02 | $ 0.15 |
Diluted income per share (in dollars per share) | $ 0.02 | $ 0.14 |
Anti-dilutive share-based awards excluded from the calculation of dilutive earnings per share (in shares) | 521,829 | 9,203 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | May 01, 2023 USD ($) | Apr. 06, 2023 USD ($) | Apr. 17, 2023 USD ($) | Mar. 31, 2023 USD ($) |
Interest Rate Swap | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Notional amount | $ 500 | |||
Expected effective interest rate | 4.0685% | |||
Line of Credit | Revolving Loan | ||||
Subsequent Event [Line Items] | ||||
Maximum borrowing capacity | $ 250 | |||
Line of Credit | New Revolving Credit Facility | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Maximum borrowing capacity | $ 300 | |||
Margin over base rate (as a percent) | 2.75% | |||
Line of Credit | New Revolving Credit Facility | Variable Rate Component One | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Margin over base rate (as a percent) | 2.50% | |||
Debt covenant, leverage ratio, maximum | 3.75 | |||
Line of Credit | New Revolving Credit Facility | Variable Rate Component Two | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Margin over base rate (as a percent) | 2.25% | |||
Debt covenant, leverage ratio, maximum | 3.25 | |||
Line of Credit | Term Loan Credit Facility | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Maximum borrowing capacity | $ 1,075 | |||
Margin over base rate (as a percent) | 3% |