Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and welcome to Agiliti's First Quarter 2023 Earnings 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.

Kate Kaiser

Thank you.

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

we'll remind consequently actual and subject results could from us to Certain materially during begin, in are uncertainties. are you those and to these may we statements that differ I'll today's Before forward-looking expressed cause call, factors be risks the making forward-looking and statements. that in affect future

release press in our in in of detailed are factors which found risk recent most be our agilitihealth.com. filings, the and SEC at Specific our section corporate can website Investors

will also calculated generally not accordance We are with referring be accepted accounting measures this that presented during in certain and principles to call.

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

Finally, Slides. selected QX titled presentation Earnings Agiliti XXXX

the our Boehning. CEO, over now call Tom I'll turn to

Tom Boehning

as time quarter thanks we and us the Good afternoon, review from to of join results for making our today first XXXX.

me who forward in will face-to-face and with look in We shareholders participate the On ongoing opportunity Pekarek, have and of CFO, tomorrow, Agiliti Healthcare many Las expressed interest this with our Conference. with the we're call our from to Jim Annual is where those coming to Agiliti. of Vegas you to America meet Bank

results. our to now Turning

the in for progress. observations few of And our our offer X in our performance on color will I'll ahead us, our XXXX. results minutes. detail brief on in QX work our a for and Jim first with reaffirming were quarter provide more Our and first with additional just review guidance quarters some in quarter year we're expectations. still of X full Being financial line results

Agiliti quarter and our to well growth the in first our entered reflect momentum. positioned strategy XXXX execute positive our results

calls, As of the COVID-XX renewal. scope favorable on view balanced timing year on HHS impact of the and we prior from we've a the in described revised we're the the and lap the as year prior both contributions taking contract

towards customer half As second driven we this more clearly the business business turn come engine we organic demand the of connected year, our growth by expect of for solutions. new and our to steady focus momentum into consistent underlying the

been their more our seeing support shared, GPO we've from with meeting the strategic system-wide our has to needs transactional several facilities the of elevate from And years, of And relationships steady As for with Agiliti forefront discussions more has of partnerships. partnerships. to further commitments customers' demand has purchasing the our partners, immediate rate many the with our evolved individual hospital we're customers our customers. past these consolidation commitments. The for elevated system-wide of at

these that value implementations Accordingly, operations XX-plus value mentioned ever and more deals embed their annual On our now and X- company's than ourselves X-figure in to somewhat as chain. we're more medical unlock value customers' contracts require longer our history. prior larger calls, signing we've before device we deeply and complex year as into shared, in we've

in to the costs results implementation This in with process. a longer ramp front-loaded profitability

our in dynamic this that expect we shared, will financial some results. we've yield As near-term lumpiness

a history contracts the support these with financial year, predictable we once back As company. and multiyear more long will a as expect outlook our we half enter of the consistent again visible

customers on of now responsibility across last in role broad today's network supporting In from and in preparation myself found call, Agiliti's particular, industry evolution the our have and for health time year reflecting on the state of I care the of to the this nation. important

the post inflationary improved constraints, many pressures. and certainly system broad-based While facing pandemic, and shortages Agiliti The of remain seek patient labor vendors burdens the uniquely collective with causing meaningfully capital financial chain health outlook to while can care help costs enabling challenges to cost operational unchanged, better care supply health partnerships and of reduce them has care both. is who and executives continued the our our environment to help accomplish is surrounding outcomes. positioned uncertainty

when maintenance management the We medical believe it manufacturing, Agiliti stands devices. mobilization of alone to and comes

patient-ready need our care with simple to customers to the is delivered point to access confidence medical goal the clinicians the highest the that for they round-the-clock ensure have standards. are industry Our maintained to of devices they

a action few the benefits share in to me these examples and customers. quantify capabilities of Let our

our front, technicians burnout customers' overtime hospital's employee ability our supplement can minimizing short-term compensate labor team and the to Agiliti for eliminating shortages, expense. or staffing reducing biomed a On unique with

excess systems utilization maintenance a our device to still eliminate reduce or near-term medical equipment customers and operational we increasingly the during equipment rental the know, bear owned back makes too cost financial another we more rental as and improving helping generally Similarly, Even devices pandemic, negative own ongoing previously impact said, we Agiliti of their is help By many Yet health even other more many caused as strain That and equipment. systems equipment prior circulation require quickly, health and acquired that and preventative these the can the pandemic, device capital return of has now where into had difference. by operational volumes medical on a expense. of idle of also lack repair. assets which systems much subsequently stated. ownership reducing availability area impacts a health our expenses

expenses, this meet both investments from the helping engineering and address and COVID. resulting capital related management made programs our on-site customers can supplemental long-term operating challenge, free the clinical of capital having demands offering up short-term Agiliti's to

One order with speeds business implemented we're of of example customer benefits and implementing improve ordering, to integration of customer enabling EMR top them Agiliti. now simplifies such customers vendors, and we're requests existing the fulfilling our process by via our ordering product XX% that with On major experience an recent help the offerings, EMR broad the which and each the solutions also channel. XX% that service of within is our of to customer order ease execute who their doing workflow. Among EMR intake have

we onboard we portion As true to our to system-wide growth embed navigate of the our measurable more evolve company, our for history customer rapidly future. that optimize era the this a of this today chain. and within our our features ongoing name, as and and value our simultaneously enable with and deeply larger will a remains critical continue Staying to to customers' ability higher we help solutions post-pandemic customers ourselves that challenges continue bring care contracts, meaningful nature, us our underscored to as delivery more throughout has improve planned work systems in

collaborative of As disciplined on and we progress in strategy fostering on focused our strong execution our with customers. XXXX, and the teams our partnerships remain

even Looking momentum of enthusiastic ahead in us. the the forward, we're more and about our business opportunities

the Jim first on I'll quarter our now pass detail results. for to call

James Pekarek

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

representing revenue For prior the total year. company over increase the first was a $XXX million, X% quarter,

year, which decline Adjusted compared EBITDA impacted QX a and favorable the the approximately million margins was HHS Equipment XX% $XX the estimated primarily million margins X% business, mix Adjusted our totaled totaled million, in to COVID year-over-year. in Solutions to increased to and were Excluding $X scope impact last new as device of adjusted XX%. QX prior at year, by placements $X EBITDA revenue from lower affected the quarter. as medical renewal year rental the of EBITDA well compared revised prior the contract a in

net In the both quarter. Tom of quarter to in to lower share our ago Adjusted the the implementation to for contracts, negatively phase, as effective income front-loaded a EBITDA period, approximately were mentioned. decline which by the $X.XX larger earnings addition, on driven in the upfront impacted per and during interest in increase by $X.XX the rate with have margins year compares profitability more of in a costs amounted share adjusted debt, which onboarding an customer tend adjusted $X.XX

decline across of equipment Solutions first totaled the in customer look utilization our the lines. at The rental lower of closer service million, fleet Peak primarily to Taking $XXX quarter year-over-year. quarter. was our a revenue down need X% each Equipment attributable

prior Equipment Solutions benefit, X%. up COVID excess the approximately was year Excluding

Clinical to quarter. for $XXX was revenue QX Engineering. representing Moving million, the of XX% a increase year-over-year

the was growth our solutions, the organic increase of versus year as surgical driver business. customer for portions prior the to continue primary our equipment repair New the including advance we within

X% million, a representing managed decline of the services year-over-year totaled quarter. on-site for $XX revenue Finally,

million, a P&L. of dollars This managing renewal to and of the model devices. year-over-year. was Continuing for XX% pricing the our longer-term maintaining down stockpile the HHS which driven primarily margin and $XXX for pricing reset totaled by QX Gross was a scope decline agreement,

period. mix of in Our HHS year XX.X% margin need lower decline The compared factors as in primarily the agreement related gross was the to margin rate was the a previously COVID rate as due post to XX% to prior described. as placements well rental peak

$X for costs CEO with The increase million, of an our SG&A due $XX transition. million costs acquisitions associated increase XXXX primarily year-over-year. costs QX to totaled was QX our and with

with QX $X.XX of balance We billion. to sheet. Moving debt net the closed

the for first operations $XX from flow cash was Our quarter million.

end Our QX approximated of leverage the X.X ratio reported at turns.

March have late of as paid the approximated businesses, XXXX. our Excluding price acquisitions the the for the impact associated turns would purchase ratio XXXX of and QX leverage X.X

of uses solid cash will of is XXXX. Looking Agiliti of diligent $XXX of our million position $XX with maintains determining credit on revolving our of optimal comprised generation. million available hand the and liquidity million March forward, remain under $XXX as facility a available and we in cash

in QX by extended April million term addition, XXXX, credit $XX our revolving to and the In we expanded XXXX. agreement

fixed terms a July the in rate early a X, forma effective to a XXXX, of million. swap rate this duration. and for at and transitioned extension and We This May, underlying terms. key our interest of completed of floating term loan, which basis, X-year SOFR our availability Further, swap benchmark in end million LIBOR the rate of QX from interest the term the June QX XXXX. This X, XXXX. X.XX% market our agreement Anticipating in totaled On a new the rate on $XXX our has we April debt with on $XXX our and we total hedge rate in extended SOFR-based is into an million, short expiration modification view given for in rates. the QX interest partial at we new will A maturity rate of to macro a effect provides fixing the entered agreement any anticipated near-term an which increases reminder our swap terms debt, rate maintain agreement of our billion on swap $X.XX is of $XXX on XXXX. date Of date debt expire pro

to XXXX our now Turning outlook.

We our are full financial reaffirming year guidance.

in revenue to range $X.XX X% of growth of range to XXXX deliver the of the to in million. adjusted $XXX Specifically, $X.XX We to top we $XXX line expect X%. million billion, anticipate representing billion EBITDA

the CapEx of reinvestment to guidance our net range into reflects cash Our business $XX expected $XX million. in million

continue each COVID $X estimate per in XXXX. our the share results in million we be million shared per to $X From share we in the against perspective, share. the $X.XX A qualitative adjusted in negative our to impact share. of interest $X.XX will impact financial of XXXX, calls, to per a to expense of that of $X.XX be favorable Finally, comping earnings $X.XX expect higher and range in we the have QX as of per reminder earnings range of to

as shared have of of lower-than-expected XXXX calls, in rental as out earnings In QX fleet below we leveling last equipment saw utilization year, our levels. pre-pandemic addition, our we prior

assumes guidance year. XXXX to placements will the continue we from Our new at and level this baseline benefit will normal remain seasonality throughout that

of guidance the second growth Finally, weighting to business. of onboard we revenue as towards our year a new implies half continue the

I'll to call our to Q&A. now for provide operator, our turn instructions the over

Operator

be this will question to at call you Thank Instructions] session. [Operator one a question-and-answer limit conducting sir. request gentlemen, and us for off please We you, Ladies that time, we questions.

Markets. Our first Mishan Matthew question from of KeyBanc Capital is

Matthew Mishan

guys in as mentioned that I the came quarter think expected. first you

better Did a procedural demand I -- than for to it better and activity hospital of Street kind guys? our bit was the better think volumes translate at hospital expectations. little you

Tom Boehning

implement Matt, in benefited us Yes, the What's of about that you was these thank larger we some for spoke deals begun to question. QX frequently. really had

to the admissions I of but that to health translate positivity So the revenue. it wouldn't deals driven really start systems, by to these ability our within suggest of some larger rather get was into

Matthew Mishan

you these expect than are of out, are you'll lumpiness front-loaded the contracts here these of about onboarding, that talk you when are on assuming And always you'd contracts the type previously? I'm what just had And -- these specifically contracts, be you from then have larger expecting.

kind X is forward? So this see necessarily the regularly you is change be in more X size of just time? like lumpiness kind wouldn't or a like it this and And going it a of quarter something contracts of

James Pekarek

Yes.

contrast driver is You're exactly now and the It's you onboarding -- scale when that's And Matt. size up. history, the versus key gone what has right, for compare and that, Matthew. what we're

Operator

from is question of next Jason The Citi. Cassorla

Jason Cassorla

Can wanted to throughout just in you The the in decent about rest hit large at the in of progression in how to quarter ask progression helpful. through mortgage outside contracts walk of factors a develop would just the drive XX%. of be us I margin ramp in margins quarter? was that It saw the guidance. coming margins lift midpoint helped these the you up the new year

James Pekarek

question. Yes. No for problem, the Jason. Thanks

margins QX was script, drivers to a the relative for EBITDA in year. the in mentioned I As few prior the there

lapping on side in the we're other did that, have we're impact Now of that an that QX. COVID, but

piece impact piece second of onboarding some the an had agreement. that of the the renewal of just contracts. is then was And the The these HHS larger third

right that for And improve. do us, in one half again, back as is to that's Growth assume the growth, friend. EBITDA of our of revenue assumes key math the is the You're we've the year, half back shared, margins line elements top the the to back right? that

Hope more shared perspective, bottom this Jason. are as infrastructure, infrastructure, we're and only the to not top you, helps from this a have put through line the We we better able shared growth that well.

Jason Cassorla

clinical follow-up, the I almost engineering strength quarter, XX%. And out stood the in in guess, up a revenue just maybe

year? in right, double-digit contracts think growth. low we This these or new revenue of? you that we And consider customer the and about year, to XQ should from nuances think New that? we as on related there about the generating should momentum aware Or rest coming the of the is is are of bogey growth revenue in otherwise, rest as fair be business, a the

James Pekarek

Good Yes. question.

to clinical for does represent previously, greater for a answer wallet about talked question yes. of share is the and opportunity we've As market of engineering, The it share us.

Some on quarters, in Jason. it provide guidance guide about year, to although the of as you can onboard use we the these larger did the quarter, history the think don't deals for full

Operator

The next comes Kevin UBS. from question from Caliendo

Kevin Caliendo

if is First change in of to getting behind understand acting seeing question, for differently Utilization kind or It are And maybe is types just the different how were them. Are of now. ordering? impact maybe better. how does hospitals of changed? products, kind trying demand Like they than types of services different like you any asking the are feels has they worst you now ago? the a anything year that

Tom Boehning

question. answer Thanks, Yes. the the Kevin, for yes. is And

of It's customers And meet in our last at calls, in year, all shared enterprise. needs we in the but decisions we in medical focused, about is customers. their time patient making elevate facility earnings the started the near-term customers importance until they been previous it's very the year only were what's to system-wide, last with been now up As trying to we're historically, this the that realize transactionally populations. constituencies their many a circumstances, circumstances, where of in management seeing it's device across level. changed conversations the because But not really

depending regionally because do services we that we're on And that they're our nationally, to consider can that conversations we unique or individual we of making looking infrastructure a vendor strategic hey, and transactional them for. the a have, that as from the across facility to, need to IDN support really enterprise. only have make So we the they've can the very shifted system, or can and from either it, an shifted decision

Kevin Caliendo

and way I of it little that guidance, to sort the expect asking all to per whatever, we want a be se. momentum. new your business, sounds potential meaning there's As or easy for Is a growth second we of think onboarding and without that fair plays carry know but there's about to accelerated lot a for bit this going normalizes. comps out I to a half, about if think say like it some don't Should forward,

James Pekarek

half just that would if year, share -- I in of you with And you half, The conclude second half, first math do we we've first and second from you what When kind be perspective. shared this think where Yes. the in on terms will second stronger right? of shared the terms half, can year-over-year half about a you of going. is is second what half

growth our to the and full in terms script, X% I've year, X% QX. of guidance the was you did As what indicated year see we for in full

Operator

Brian from is of Jefferies. Tanquilut question next The

Unidentified Analyst

renewals. a of of I expectations expire. I could amount renewals I [Indiscernible] to just had on for set estimate clarity contract follow-up, get This for your are a is the for remainder question to on And about that Brian. in contracts the the give an want some maybe year?

James Pekarek

Yes, go terms of by customer. of in that I appreciate into the don't the question. We granularity level the --

about think which And knowledge, GPO I this, no is arrangements light of thing, correct more the shed up terms where terms TB chooses to on there if is I'm for can of and my if we we he wrong, contracts it renewal. one picture feel comfortable sit. in in in major just but the very me thinking TB, maybe some of GPO bigger

Tom Boehning

No, that's correct.

added new our fact, GPO agreements. service we've In to lines

front So the guidance our that and pretty and for it's we're already pretty are solid. solid renewal that on XXXX the renewals confident considered in --

Unidentified Analyst

you're year going you into curious about ratio, and is and this that potentially M&A forward how to XXXX? I'm there know thinking leverage and And noted potential an expansion through

James Pekarek

back is that you higher the we're for Look, use deal. and intentional the to year each where we macro the year reviewing with our the That very M&A expense I certainly of the until about Yes. see the every goal is things balance pay being intention broadly, tell a excess to more half our tuck-ins down improve interest in from of will cash debt. perspective. more smaller and

Tom Boehning

pipeline a tuck-ins But maintaining solid opportunities. it sense make Jim well. very of We're for good strategic summarized in still We're that those I being very think thoughtful us.

Operator

Ranieri Stanley. next of Morgan The is from question Drew

Drew Ranieri

maybe just Tom, start. for to you

business Just embedded what left a us sense in there, from the remarks, is much you the of Can from great acceleration where a give same-hospital go could some of could if little with? are EMR see prepared growth customer in you more -- on of and you're that mean EMRs. standpoint, more bit your kind like hear customers' you what from about maybe of maybe give you maybe you Just in looking How us kind forward, -- be to detail go? it'd into an kind that your maybe color for embedded those perspective? to that being customers any talked are even for

Tom Boehning

Yes. customers go question. tell. workflow. tell that's the And coming going integration. Thank early because workflow extraordinarily tell to don't ability so. to our for happy customer for And in long to leave able We're lens, in I with our of clinicians' in we too do XX% were how to reverse they XX% those circumstance, you as our I mentioned remarks, where to solution have our through directly competitors. Too to excited really but they they're that. that on impact -- financially, be having to the that early often, getting I'll critical provide we're to need integrated, very about us my that's once can their term in And with our EMR. you orders integrated through order Too prepared meaningfully

financial of but implement. amount our of received to we evidenced we're impacts, in early well the when as too getting again, utilization very terms from So customers it the long-term tell by

Drew Ranieri

Jim just And but about small you us those last couple maybe just what I the more of quarter closed, couple what But And for they was made or think here. of talk can you contribution they segments quick a acquisitions for were question a in. revenue deals? remind

James Pekarek

overall immaterial a financial from were They worries. perspective. No Yes.

in shared didn't we As last quarter, the disclose we it.

small terms numbers. You should about those think of truly in

those within it where us, a smidge, impacts equipment But of immaterial terms in a In within us tiny again, were principally bit Drew, clinical totality. impacted and both engineering. of it solutions

Operator

question actually This The Bank for on from Fischbeck [Indiscernible] Kevin is America. of next of is Navia Kevin.

Unidentified Analyst

in I think Can Solutions drove talk quarter. about revenues you up were you noncoded said that? X% that the Equipment what

James Pekarek

I appreciate Yes, the sure. question.

onboard Equipment need about surgical in peak call Solutions of as really nice seeing solutions, rental, or and well the nicely which areas as specialty a urology business. customer, think of beds within is One of we around the to those of nice other require either a of both between with rental with rental it's help terms capital-enabled primarily balanced technician respect which things and what the to clinician momentum couple we're

Operator

further Ladies in and the queue. gentlemen, questions we have no

Tom Boehning

the here, to for all Well, we next thank sharing call progress forward Thank you. joining us and We'll look on continued today, you operator. our our call. close

Operator

much, may Thank sir. your you and lines, participation. and you your you thank for gentlemen, disconnect Ladies now very

Agiliti (AGTI) 9 May 232023 Q1 Earnings call transcript