AGTI - Earnings call transcript Q2 2022

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Operator

Good afternoon, and welcome to Agiliti's Second Quarter 2022 Earnings Conference Call. Today's call is being recorded, and we have allocated 1 hour for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Kate Kaiser, Senior Vice President of Corporate Communications and Investor Relations at Agiliti. Thank you.

You may begin.

Kate Kaiser

hello, and operator, you, everyone. Thank joining Thank we ending today's as on an you June overview XXXX. quarter for provide the of call for us Agiliti's XX, results

we'll remind consequently actual and subject results could us to Certain during begin, in are release uncertainties. are detailed you and and to in may these most forward-looking we Specific in statements that I'll differ today's Before our cause call, factors which be risks from the are press of making forward-looking our filings, in and those that expressed SEC agilitihealth.com. affect corporate materially found website the our section risk recent statements. be at factors can Investors future

not principles. presented accepted calculated with generally During accordance and to call, this also are be in accounting we'll referring that certain measures

will today's copy of can at our that to reconciliation agilitihealth.com, a comparable these the top the Investors measures and the those we and discussion, release. description website to press our screen measures To the GAAP measures at of Presentations. use find we You why a please the of then a in most section directly visit Events select presentation of use and download facilitate

I'll Agiliti Earnings QX Finally, CEO, selected presentation titled call Slides. turn With over Leonard. XXXX that, the Tom our to

Tom Leonard

review results the second from good Thanks, XXXX. join us Kate, Thank afternoon. you our and as quarter for to taking we time of

Tom and President, Pekarek; Joining Jim Boehning, leads me our today our is operations. our who commercial CFO,

within color continue expectations. the share ahead on range. year's to original largely our of at With expect finish our provide results on to be performance impacted year, guidance low XXXX. to us, our QX, we that end the the work but range, now of our full in outlook year we'll business factors and While we expect full remainder still quarter half that of of our our some from overall on perspective track the remains the for the financial differed aspects Today,

QX As our Jim caused the on year our the results I want that factors a take provide before detail results share financial call, today, discussing on provide assumptions performance the transient the confidence our factors high-level of business. will to of X core the on our drag on will and our our we And from your driving the emphasize our underlying in pause some full to update start Boehning in expectations. variance outlook. I'll and our for it we review additional Later questions. quarter, performance an consistently the strong by were Tom

First, you'll Services recall rescoped or of time for both that government a materials-based Human reflect a device management to our previously on awarded medical Health structure. simplicity, fee our Agreement. stockpile fee and up an Agiliti X year fixed This medical device of stockpile for and post-COVID of work HHS normalized was and agreement the extension management the extension to consists

with rescoped business. the show reported our full our agreement, decline of million million to a guidance year that $XX year-over-year Our difference HHS the on-site assumption from revenue accompanying which $XX was financial primarily within

award. X, and for a on next equipment. will HHS compared final government published formal expected However, related $XX A Health financial unexpectedly to On Jim federal million we contract to paused its million Consequently, incremental a multiyear expect the the is last steps now HHS awaiting direction. $XX submitted in time to agreement his and the emergency Human during we additional remarks. the proposal year. be from request and its medical provide stockpile at agreements. recently full The Agiliti perform QX, to materials to for response, their work Services the detail Department what management impact August that for we new the reduction note of new an of are to revenue X-year of to year be agreements

our The second from factor variance of our from business. expectations driving comes the portion rental

previously off Throughout less and our medical full and million year is base business HHS excess as towards from in has Meaning, to of point rebased guidance. business has a represent the pre-COVID implied device utilization same of at baseline to infusion XXXX to pumps, line need want assumption higher a these stabilized which peak impact in that for reversion at below utilization this may may growing that continued reporting results, $XX Starting patient device our We I our as period, in utilization first revenue. devices and tailwind have and million $XX been some favorable prove the suggest corresponding $XX fleet, rental we fleet. have levels. further million our and overall revenue jumping reported a our note to conceptual in this million underlying the impact have to variability in managing of COVID of expectations both our in here. XXXX COVID quarters and a appears our agreements conservative, the rental COVID-driven unfavorable financial see margin over historical level. the X and perform QX rental unexpected Both benefit which described guidance. drivers subset We level and our a public initial that rebaseline assumption with this simply would by the net and $XX during This XXXX is to XXXX primary company. XXXX ultimately ventilators recently our defines rental revenue for devices, lines primarily utilization level utilization include year, pre-pandemic for monitoring a rental

contracts our in base is business overcome range. been government performing short-term measures reaffirm and have performing initial these issues businesses the about combination full from our solution year and and unanticipated Medical. above in coming our the our and into COVID results well largely XXXX predictable Both it Sizewise some excited puts offerings. of quarters, expectations. position While momentum strong recent performance We're particularly we're to the from us and a acquisitions of well seeing our strong that guidance headwinds of topical Further, the are these Northfield

the which carry HHS expect few still both organic impacted growth lap momentum our and results, quarters, we we XXXX. As next contract include to COVID into

Let me now Tom perspective to offer turn his business quarter. Boehning on the the call in to the

Tom Boehning

context Well, thanks, our updates trends Tom, few some and commercial evolving opening Tom's on macro progress. a remarks with hello, brief everyone. build on I'll today and on

short-term Agiliti strong an clear longer-term and customers' only well focus our This shift mentioned, help. response of seeing First, been economic as a new initiatives, organization. mind Tom COVID There's accelerated to business within in from we control a on cost selling are our strategic momentum face on patient focus emphasizing customers the increasing outcomes. to today, and with quality our positioned shift remains challenges has share

are to gives solution within balanced our core demand seeing as shift result, This we of strength us business reliance the the across a continued confidence forward. COVID-driven we Agiliti, expected away mix rental portfolio. the our in offering our from return As on move

over M&A. repair separately the across with customer sheet The disciplined portfolio. our doing our solution we've taken point opportunities our are more Importantly, market procedural areas meaningfully of and combined neither for to local market-leading company the to broadened equipment recent the just equipment portfolio to our capabilities The year ago. of addition hospital success also mobility elevated strong from our balance our last bariatric that of accelerating for business into few additions approach surgical the was and the of our are capabilities, leveraging entirety example, years, enabling patient clinical our solution our and us us and services acquisition call beds, Sizewise compete has X

macro not chain their shared and on last seen Much impact touch briefly they wage provide the and as potential factor which described our skilled the I'll labor stack business in on scale availability, and quarters, risks subjects financial several and a Next, results. any calls, have how material meaningful used our to issues operations challenges local within of labor we've we've business, have to us from general In impact unique through our effectively we Agiliti. we manage prior market date. not infrastructure, inflation these our levers supply are

impact to navigate these however, continue the organizations are of the positioned and provider macro challenges. forces, Our helping remain we these well feeling customers,

long on momentum. noted of side Medical. have company ability right constraints, labor March cost, and of deliver of capital described completion our for the our of customers we climate Northfield agility accelerating acquisition clinical previously our the acquisitions, as our efficiencies meaningful a integration driving today's to health We Reflecting on our XXXX operational care. to activities In and is

our surgical our ahead years, we While Sizewise, focus accelerating cost of in repair negatively impacted seeing And the of expectations. solutions. of new customers for us wins achievement significant the volumes procedure and a to work already COVID-driven ahead area still much over of this integration contract complete have X our synergy hospital we comfortably are is focus last while equipment limited

active More the outlook. pursue financial broadly, newly us Reflecting this maintains more success key importantly, our M&A them. with giving our of combined and is in to offering commercial opportunities pipeline confidence early another Agiliti financial factor an flexibility

the we Agiliti seek for believe customers infrastructure, over owner, drive enhance that, Jim extend at-scale better competitiveness. details our evaluate provide we performance. our to profitable where meaning me things With volume the through continue our of targets We opportunities review be value can to where and we to our we nationwide let turn financial can

Jim Pekarek

Tom. comments year. I'll outlook then you, our some an QX for of financials start on Thank and our offer with the overview

totaled a totaled to XX% XX% over a year. Adjusted For revenue quarter, EBITDA last XXXX. the total of decrease increase Adjusted QX second X% totaled million, margins EBITDA $XXX representing $XX company compared for the year. QX prior million,

the quarter. As margins were medical in impacted device agreement the Tom negatively well by prior rental year lower utilization adjusted the as versus as described, EBITDA HHS

diluted quarter. solid increase $X.XX XXXX. of the decline million revenue $XX revenue. with growth net period, a a slight X for year up over solutions a delivered drove Our million, April million $X.XX quarter by to ago lines. outstanding, the year-to-date at compared second of primarily operating Taking earnings and service both in net expected per services performance in of to XX% year-over-year. our We increased the driven share company's and Solutions on-site in equipment income both net engineering $X On fully income revenue Equipment overall the associated Adjusted our in across million compares adjusted look $XXX income quarter basis, an across totaled and the XXXX clinical decline of closer IPO. managed shares each

nor Our of October excess approximately expected revenue in QX. COVID-driven in Sizewise neither any QX. We saw demand in contributed X acquisition million $XX

favorable a in reminder A prior that below expectations. from However, somewhat device when as pre-pandemic approximately below period, million. medical our we QX had year utilization our estimated and $X in quarter the was fleet comparing described, impact the of customer equipment Tom year-over-year, COVID-driven of demand levels

Moving stockpile. pricing year-over-year pause agreement a stockpile earlier, representing $XXX described quarter. we the quarter. devices in-market under engineering. our of Revenue QX active X% was longer-term for support with to revenue of and time in contract the work maintenance levels the was of as Further, resulted to move the the lower in deployment lower-than-expected and as from ongoing clinical revenue this million, year-over-year HHS materials growth the of associated the and from

were Finally, services for more X response of the year-over-year on is revenue for HHS revised broadly by expected. as focused XX% customers challenges. and This representing the our past decline totaled $XX on-site on-site related the our scope COVID a and renewal years, services, Reflecting primarily on managed pricing agreement of our primarily driven million, quarter.

Continuing with we quality through year-over-year. P&L. more initiatives, decrease managed Gross the longer-term, opportunities have down $XX our totaled and of on-site our million new $X million, successfully customers on see services strategic we moving cost reengaged margin funnel. their to for continue QX sales As a

a The Our QX basis factors to rate driven, SG&A HHS down totaled lower points margin due achieved which primarily related synergies. improvement year-over-year. SG&A period. the costs versus XX%, from to million was was from XXXX margin primarily prior was expenses medical rate prior device was acquisitions, due contract XX%, as of net an $XX for volume the gross in year and an XXX placements $X over described. decline revenue totaled year. the as percentage SG&A XXX The of of our to million, of increase basis increase points costs

continue to time. we and we acquisitions further our leverage integrate see our business, over grow As recent organically SG&A expect to

less our We sheet. on debt of cash which net balance QX the balance $XX $X.XX to with billion, on in Moving sheet. debt $X.XX includes of closed million billion hand

facility down cash as the million, part lien pay Our from lower through was of flow operating operations from resulting results IPO. strong driven XXXX interest costs $XXX second June of our debt and by the

leverage year-to-date In net over represents resulted and less ratio cash annually. totaled hand conversion QX. expected in quarter, income our obligations. debt to addition, operations to which of cash of In last down principal over a growth our we reported our pay from a adjusted roughly the Strong $XX utilized from on million, This payments a reduce our months XX in X.Xx cash flow activities million EBITDA cash X.Xx interest flow is $X reduction million $XX generation cash by investing flow basis. in on

Looking forward, in strong flow generation. our we optimal of remain will the determining diligent uses cash

of cash to credit position We expect as June revolving future cash continue to strong of range, hand. mid-Xx flow to maintains liquidity we $XXX generation M&A. XXXX. low use to balance as fund solid with target on sheet as our well includes leverage in as facility million the Agiliti a This opportunistic available our and

terms view a $X.XX swapped maintain provides on the interest any In debt reminder on next our rate a hedge billion increases over we agreement rate debt, in Finally, for for terms rates. terms. macro swap This anticipated year. rate the market our rate of in $XXX an given debt, interest the of fixed which floating has million near-term of total, partial our

outlook. XXXX our to now Turning

for We are adjusted expect reaffirming the the at low and of our to full revenue, in earnings year range guidance financial share. end per and EBITDA adjusted now come

current our last that line current outlook. CapEx outlook. reviewing range, reducing our our with key I'd are minutes forecast we Additionally, assumptions investment to in spend inform the like my few revenue

our million have our in As $XX our calls, prior would assumed earnings against of the tailwinds throughout XXXX. COVID-driven high-margin million that XXXX, from financial much guidance $XX results shared comp we to in revenue

the Accordingly, at equipment of in of some the full year, COVID-driven $XX we to range negative early the drop revenue of our an rebaselined balance we HX QX, current to margin levels. In pre-COVID assumption placements saw have the for below be on plan to with this the levels level, the return levels year. expected While utilization for utilization is that our and our equipment saw equipment million assumed impact XXXX year million. $XX pre-COVID demand a in

stockpile. had We shared consolidated agreements, previously our management prior scope Turning narrowed agreement. maintenance to device the the HHS several the agreement reflects and that ongoing new HHS and its of

in operational discloses government $XX Agiliti are permitted contract, disclose that to was our million a what our XXXX. the details beyond guidance prior not and would see expectation we of million in While $XX the financial directly, implicit to revenue reduction

learned million materials the shared Tom be in until that between in that QX, year. HHS be would $XX now HHS full our an As and we certain this impacting new With QX million agreement year We time compared impact year. is last roughly reduction to of to the business split to awarded. clinical to incremental reduction incremental and engineering revenue $XX and expect QX work his financial of contract opening deferred remarks, a

our with as turn role for strategic to initiatives to acquisitions. we and customers long-term the sign contracts business, important attentions play of financial our consistent Next, solutions an our solutions, their Gap] continue [Audio back ordinary implement new their where course impact and of

guidance Our organic revenue underlying to low high in current single-digit the double-digit growth range. implies

Our to in the full to XX% year XX%. be margins adjusted range are EBITDA expected of

T&M our representing financials. an part annual and effect HHS normal with will fourth we Any the our revenue this that of to to business addition seasonality Gap] would reminder that starting a [Audio experiences on QX agreement begin year. revenue under our seasonality, time recognize timing materials be in of our quarters, of new strongest first the and the the on in based assumption historically modest Finally, quarters fluid

confident the echo I our the XXXX. comments continued operator I opening to turn for instructions As call our outlook we momentum by Q&A. the see want noting to and Tom's remain that conclude, in expect to corner provide on year, our now turn I'll I to over to we as

Operator

from Bank comes question America. first Fischbeck line Our Kevin of Instructions] [Operator the of with

Kevin Fischbeck

a saw to bit about normalization? anything XXXX love QX. you're the lot guys this kind little to hear to a providers July kind of or want XXXX. volumes longer-term thinking dynamic this your getting to dynamic. a a you to you baseline? below in seems like bit of during of be the Would in dig core thinking point I a temporary sooner of about how about a little back are rebasing is commentary to later? Are placements as that happening seeing that It Clearly, that Great. of August the going rather than to this kind Or is

Tom Leonard

do fleet question. rebaseline our it is device us this business Tom. may Kevin, of really point assumption for a how way that for point to think medical jumping going think forward the overall conservative the as the the likely prove managing on this now off from This is rebaseline a this In say, let's becoming utilization and for assumption. starting about here. I you our, assumption? be a for regard, of Thanks

were and down over last As somewhat you had can. they expenses providers CFOs concerned tamp financial also the impacts some seeing to the know, tends to they providers wherever canceling that lower procedure of look when of do the who about that. -- utilization. outlook volumes course quarter had their We're

in certainly in that One they'll be to tend around that do months areas typically is of And summer to devices the their slower. it's things easier the push rental like facilities. medical that

we company what And number roughly to due if gives has medical reverse effectively confidence -- generally have is wave. back in a customers to we that as look purchases rebaselining, seen of is the impact that, what our form some made while likely some years. years, it the we in we each So back COVID back of additional And as look What has the last X one true a you me been is that assumption is last over this going offset of COVID. held X grown contracts logic the have over enjoy that it during rental -- during device mean. the

when and in So the went right came it Delta case, came went. initial went, subsequently about and to utilization wave and XXXX. came each was where resets Omicron In when

use mostly a simply here. from us business the factors potentially We're that. how it below it that point a as grow went for as to There now, came a it for more So are surprise that start driving just are rebaseline it that. we calling a conservative to

Kevin Fischbeck

And guess thinking about the how it the that companies not that. But the guess be have about guess about during that companies think feels about do agree to guess we theme right outpatient I baseline that thought shift shift is COVID, in are talked that in is cost -- that I there it the it does not reason to impact business? of your some actually if something it back? I particular, pronounced to way is think way that might be be as conservative potential, or that new assuming that the we -- a to we that back may of QX. upside come I hold is And might seem accelerated a baseline I how term? that to longer

Tom Leonard

factual. our it's the financial year. would update to Again, purposes, So be real. assuming for It conservative balance planning persists. guidance that's of the for it into what assumption, our built but we've a we're It's

be say, if turns there'd overly that to upside. conservative to I biased the be would So out assumption, that an

Kevin Fischbeck

the to your to business Is outpatient shift a or... drag

Tom Leonard

Yes.

X,XXX serve more customers, hospitals. than more far we just than So

systems, tend they is we hospitals before, as the that intensity. There be we've care that the is everywhere. customers, What shared really health to facilities primary [Indiscernible] Our own. medical including device and non-acute to means

the a hospital if a is So very procedure at at a us it to doesn't center, performed surgical procedures matter are likely there. we performed or

something our the follow shift customers and as it follow So we to no outpatients impact on our is has results.

Operator

comes Our question Mishan KeyBanc. with Matthew from next

Matthew Mishan

managed one on The first on-site services.

from clinical forward? thinking win a of it sequentially rebased seems that Or the quarter baseline services? materials like the begin full at on-site right engineering you contract, contracts? as Is be Now this ventilator to look in should managed is to about more that time we've we now going the segment that growing than of new

Jim Pekarek

Yes. Matt. Great question,

think right it You're on. exactly thinking the spot it. to It's way about about

Matthew Mishan

year the above a being Sizewise, -- or for the then be on and -- you How that thoughts your then bucking you've now. self-manufacturing? by updates follow-up had And received on at hospital. equipment seems all coming and expectations to as utilization just that And trend acquisition our customers? to in Any a is on on that, maybe that about

Tom Leonard

think capabilities acquired we So we the clear the of the in results, acceptance, from picked it's I Sizewise. terms of customer up combination when

we've powerful we X for and continues capabilities that aspect self-manufacture going those opportunity of well full As integrated in sourced be our thrills that the local have service portfolio, with plus and headwinds forward. to our driver the We're transaction. transient it others. us come important and in and from them described an teams of the transactions, very us within logistics our manufacturer have over been both one our was helps to very market with months terms our a range. meaningful had with just Sizewise year full guidance thrills the of that us. we've to infrastructure into -- ownership, continue traditionally the us, to in we results self for perform But the It's role confidence The of this factors now give overcome that expect

the that we integration and We without issue. manage the would really our of hesitate to that terms what about products portfolio. not doing capabilities in of continue opportunity in we're we to right self-manufacture for excited We're expand have, through

Operator

Jefferies. Our next Weiner of comes question the from line Zach with

Zach Weiner

Obviously, we've about forward? COVID. talking folks been procedural -- procedure about and Just we backlog a wanted seen how to impact are utilization And touch Is should backlog. delayed and potential that going that think on some volumes volumes through that? should

Tom Leonard

there. volumes The we would where procedure X let within us when me solutions. places be about in So think impact start equipment the won't P&L,

rental in volumes procedure the that's expectations. in off lower-than-expected rental, from within were quarter the factors one So our as of

Equipment come we Solutions. would that those to as see within benefit expect So back,

of place volumes repair one us for Engineering. engineering The other cases business, is and as be -- repair of more a as that so within clinical us drivers tailwind surgical back part it should surgical that a come impacts as small is higher Clinical equipment slight well our cases, the

Operator

line Amit question Hazan next of Sachs. with the Goldman from comes Our

Amit Hazan

I want back think to into I understand just come commentary customers. Equipment with the to visibility and going what's own your on your to solutions try

I As come for the U.S., hospitals they volumes I think XXXX have levels, about to never back really in pandemic. mean throughout the

XXXX a below not levels me. being So is really surprise to

just -- is can that here thing So here model sense normal which of curious this a of able be if the actually with expected what precision give been see. about relative some had achieved? guys on I'm you what you I'm based like not you is really us for you forward a wondering that to percent the has Or

surprise that So because didn't or much. a terms, at was absolute kind of I'm probably what's this trying figure you? in for a some you a to relative I'm normal to new out incremental and happen percent here guessing didn't return thing of you expecting were it just

Tom Leonard

more really kind me is in questions. good free made purchases normally customers we this. they would over and of to years medical unpack than a direction as the devices, X let more go last of What either set That's me that we know push of feel access And devices. have through it

make rental to headwind remains, inpatient over not new would contract the Offsetting offset in customers We that to the current impact that that return offset environment. as been still census our an X we a increase additional offsetting subsequent you that purchases us that with increase X said, the wave broadly. the in devices. for The be census of of we headwinds making because COVID, through on won these and that positions was as where things year pre-COVID well. right levels, solid be was And that headwinds to planning last from census purchases of knew felt seen from each would roughly generally Again, for the we assumptions, roughly would contracts that demand excess assumption that we assumption new a years. on place XXXX us So and the back has contracts have same would ongoing customer baseline. brought reset around

utilization So started go early time, was that when -- the QX, in first to new that us. below for to

is do we we with simply assumption. what then started rebaseline So a

to see here of like uncertainty. that do manage do when is devices be summer with are remember out are costs today the tie we to push and $XX is million may that where they bottom the that implied our assume described is normal, year guidance line they year. again And one of the and the top new it's impact to to then million would care for $XX they the just CFOs this by to It we summer, Let's want short-term full to line, if and that and rental revised be And that happen. in Well, push the Why? every reasons back case drivers. the will renting try we throughout the years. what end case to an that assumption. baseline time not often others because being too delivered lower and But of that's that off has periods volumes don't excess the costs wave conservative last they to that utilization the be up creeps efficiently, is did over each X low And tended there XXXX that first which up end for the in. back This are devices more with ultimately, of tend system

million this are planning the That's just to of million that line there for assume is balance purposes, new new represents of our impact tailwinds top year. start couple on things we $XX point. baseline. us the a I that But for So think It's and the bottom $XX overall for assumption. conservative

like is our this -- this more to ventilator, been but In is really going of driver Not in data the really of it -- There's COVID been manufacturers. a ability by even say a this I the in by only really just would in we've but product the specific -- for terms business. in XX model It's forward, business. touches line business years. than aggregate, lot by even

this This We point model new to with hope level precision. extraordinary data. it of the This have always proves an very start the assume about we able that historically way be we begin have amount assumption high a again, business have of in then that -- rebaseline. is those conservative. position been a that to our that's to goal the with and and is And that think

Amit Hazan

this said IPO. and coming to July August, we of take that, to you that division expected case to IPO customers had Just as back and know And before, as you it one if not on-site and quick and is second I'm -- like I for you. it prior has the the to the around of on I focus and out but through comment if I'm pre-IPO the feels IPO is question early of services. follow-up subsequent, caused the think you've managed if it's a piece curious your you're elsewhere. true government the kind heard us on able curious that's COVID definitely kind to actually

out doubles, digits, here the OMS fees us should confident But being maybe that's low grow point, out this help case. But high on that's these nongovernment the just that we I we continue improvement be aggressive if little of customers our come why as for also a of bit by expected kind should fault single too that. that. on to So COVID, get some

Tom Leonard

month again utilization I the difference Yes, question of your to or low August I'll I expect would first months, the around July say August be in lowest typically the part of seeing but with tends wouldn't meaningful, the nothing for fleet. to summer is either to date. start

expecting in of seen not we medical utilization the have sleep. So device any weren't and change

instantaneous we on-site we year-over-year These managed, what of than tend new terms continue impact when we faster. on we the have a certainly and government on to growth that larger sign just In deals federal obviously, deals. the engineering, the from the to a be be comp is described show contracts the longer Larger ramp rental perspective, to in revenue to to to tend implementations of into business. and overcome taking have those, drop off. margin ramp lot equipment And longer and clinical which tends -- she

starting into it, see point We that signing and folks comes as our to business they're you'll why it's this continue and we this beyond is attention of to we've of COVID described. historically business has there a turning we transition organic business guidance for the good modeling the customers provided that very comfortable year, haven't and performance now of that it with historical through XXXX we much to done implementing I And progression that what XXXX be with appointed get out this business. along their think as the have

Operator

Our comes Borsch of next line question Capital Matthew with from Markets. BMO the

Matthew Borsch

are or labor more utilization through your a as interested in they on -- all I'm key what sure it's might from of continuing lower you factor Yes. of on level call there's explaining caregiver suppose, same availability could, What utilization generally just If their I'm clients? of topic. environment I not a volumes, the what if just demand the guess I system? the I is, organic coming you but is -- your are hearing any. the constraints to thing, pointing lower

Tom Boehning

Tom. ahead Go

Tom Leonard

No Please.

we're procedures. including customers higher by cancellations, labor. need to chain So of what seeing availability ability impacted get to they support due We're supply to seeing the

their including labor, labor, of to cost have they We are performance, hour using driven like they and by concern labor shortages. that also financial especially have to companies turn when seeing the staffing uncertainty temp about

them things challenges of some labor cancellations created not some to So to overall, I know level cost the Tom, staffing you of and access are else anything the seeing were expecting don't were of having they if back uncertainty, and have and companies same you row expecting this that through in have drivers quarter. certainly demands like add wanted to some past we color nurses plus that they as with that.

Tom Boehning

think I you said it No, Tom.

Matthew Borsch

clear the extent contract -- come But I to per you looking government the you how it's it's maybe do that quarter why -- fourth were that a of not that happened if what understanding comment mean and And se. a to expecting? quarter, mean that can the I the right? with did mean, with on decision is I'm just continued that for I'm HHS deferral do not me necessarily time -- the how in the Is going the and up know labor? just third you there materials financial extension, through? through pick understand, to not I you terms Was it deferral

Tom Leonard

Yes. Great question.

to current see of that under time contract through hope of first received there a the materials X-year normally to which, fixed we've the as award, on on something been that new us we year time attention after We made HHS provided at contract time the in as for restart We terms agreement shortly would Shortly we informed they part award until in work it's the street. be this the the the the is time plus quarter. better directors of in described, as a stockpile. And portion, near be in it such but a understanding our both from extension, up would would basis because RFP response. shared manage QX our of duties that part work of still normal the contained the do but agreement. that materials do current such we've materials done We the end award, of work an So the to put cost post a we do only deferred has We the called that to needs year. of the provisions as the award, restart the instruction, portion, is that other described, on decision government is quarter, which that under that that first original X work to we the to but is that time and time. due government is nets which were guidance completed, then

Matthew Borsch

one services your managed segment? lower-than-expected talked in that that's if by But high still the maybe on-site know of you and touched been growth, maybe I'm single-digit the HHS curious of had or about the And I missed quarter. this, I sort know utilization? before excluding I still has I if level you apologize that's influenced talked last could. you you are seeing last it. on question, case if I somewhat what

Tom Leonard

for had at to middle he seem out out, of phone, my his Jim's take speaker microphones on you. revenue the double-digit least impacts, seems described shared is course, current adjust growth and guidance drop the And underlying remarks. unfortunately, low in then, of high HHS to for continues single-digit you What So in when transient we've acquisitions, organic the imply of quantified is drop what to our impact out COVID range. and the annualized to which you

Matthew Borsch

specific It's on-site managed Right. services. to

Tom Leonard

Oh, I'm sorry, this is for the overall. business

Matthew Borsch

sort I did was I actually Jim I and guess coming part. that's that got appreciate. out, No, more I a understood. question a granular question that within that but I catch very in was helpful. one that of I

equipment if in if that that's thought out even high I said the just correct on-site solutions changed. I know single-digit was at you HHS strip though as had chugging wondered factor wrong, result hasn't You specifically range. an me, the And that last services growth a that organic I'm utilization, mostly it changed if quarter, or all perhaps of I had that managed you along

Tom Leonard

you can comment that? on Jim,

Jim Pekarek

QX shared, in that did out. from Yes. apologize changed if my to Matthew. the not line It terms I and prior of And had guidance we that realize I Matthew. went hasn't in QX

Tom Leonard

work during... Always

Matthew Borsch

most the got important We of stuff.

Jim Pekarek

later, All right. We'll get the rest a Matthew. bit

Operator

And have turn gentlemen, closing remarks. the call to of back session. [Operator we would reached end I and the Leonard like Instructions] Tom to the Ladies for question-and-answer

Tom Leonard

Thank you, operator.

our we messages our want we remarks to hope So I the reiterate conclude today, that today. call do you as heard key prepared during

periods the and by transient few over and COVID quarters. factors expect of favorable variance, next currently unfavorable our First, primary our HHS in financial our drivers these do have IPO. We since the been impacted agreement both the results to lap

has continue and absorb to operations supply our chain including us availability, to to impacts without labor Second, performance. infrastructure impact headwinds, material allowed inflation macroeconomic unique

that to and our headwinds. call. at company reported Third, are meaningfully momentum this contributing same base a growth interest to that side integrating help these results, the and We're enhance of health to to business want of lap remains and that Fourth, now you a successful value underlying overall care. that result, remains demonstrable Agiliti, And identifying into thank finally, in as we performance. our Agiliti well address your will I impacting XXXX. on strong. economic conclude our With we organic our the bring right for that, to headwinds we've customers customers our transient Agiliti as very been the positioned acquisitions expect today's And

Operator

for thank time, and Ladies and Thank your you gentlemen, thank participation. for you. your you

Agiliti (AGTI) 13 Aug 222022 Q2 Earnings call transcript