Earnings call transcript Q1 2023

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Operator

Good morning, and welcome to the Aveanna Healthcare Holdings First Quarter 2023 Earnings Conference Call. Today’s call is being recorded, and we have allocated one hour for prepared remarks and Q&A.

At this time, I’d like to turn the call over to Shannon Drake, Aveanna’s Chief Legal Officer and Corporate Secretary. Thank you.

You may begin.

Shannon Drake

Maria. you, Thank welcome and first XXXX quarter Good to call. earnings morning, Aveanna’s Legal the Corporate Drake, Shannon Officer company’s I’m Chief and Secretary. Financial With me and Chief Officer; Chief our Officer. today is Dave Jeff Afshar, Shaner, Executive our

not we statements The forward-looking call, this factors any impact forward-looking and actual undertake from differ we release results make currently company are reports and During this statements. projected morning’s cause statements. could update press file results will to that SEC. any Risk may to does with materially the future those duty described the in such

GAAP. during certain useful we Additionally, substitute today’s The information measures, call, our in evaluating be discuss we presentation be a non-GAAP quarterly isolation reconciliation can found not results SEC. this as additional with Form will should posted for on believe prepared the performance. measures can of with morning’s which release, in in accordance considered and report recent or aveanna.com, these A our which be press of most on our is this in filed in XX-Q website,

With the to Officer, Executive Chief call Shaner. that, Jeff? turn Aveanna’s Jeff over will I

Jeff Shaner

investing you, better time progressing morning, Shannon. you you thank joining this today. near- and how our Thank against XXXX We quarter of beyond. each morning for and us to results first and understand appreciate are our for and Good your we objectives longer-term

to first results, and addressing with to along government quarter XXXX our call guidance. payers the for thoughts we and highlight I efforts into briefly liquidity markets will refreshed our labor over provide the prior in create will and are outlook the care details progress turning comments capacity. year provide making initial our My managed quarter to some with the early ongoing full further regarding additional then to Dave and

quarter. compared is year period. or period, And the flat approximately decrease current year $XX.X was prior year when representing X.X% over a costs comparable increase Gross highlights a EBITDA million, compared environment. was due labor to period. was essentially million XX%, the associated with the some primarily million, which prior the $XXX.X representing finally, for the margins prior adjusted Revenue when Starting to the $XXX.X XX% to with

represents discussed, aggressively we that previously addressing see the in to have challenge that our achieve. labor the Aveanna growth environment we company the XXXX primary As are we believe can trajectory resume

both not As have The a care and problem. has for a federal managed governments more create solutions care demand can asking community-based do organizations with we home- that state demand reminder, never capacity. been and and higher for

our best in recruit ability As function retain quarter, previous communicated and a the of to our talent rate. is

deep to need offers our themselves Our their that of is be teammates. work providing for a business and inflationary competitive this we must in families model environment, provide But setting offer a a and able sense mission-driven, our to preferred purpose wage. for caregivers

our and Since have progress improvement payers. the with year-end government care initiatives pleased managed both we rate earnings of several made with am our call, I on

rates Duty Specifically, Private for to which by and a California, that Services Texas XX% double-digit business, execute strategy goal it Duty our increase revenue. was in total XXXX to our states, legislative Private would approximately relates as of important percentages three Services represent our Oklahoma,

caregivers for to to have double-digit rate medically first January a which per we wage Oklahoma of Oklahoma, the were increase, demonstrate quarter, secured Oklahoma successfully retroactive value to and this number the on our profile. caregivers we X In at the rate patients week of we ability able create have the the fragile attract impact rate doubled right the increase, increases have in in year. was demonstrating Since hired

September Texas the with X. private our increase that gives targeted business double-digit increased will achieve we made significant legislature our rate beginning us also that strides have for We Texas duty optimism nursing

guaranteed rate indicators are our meaningful this that this optimism early increase While traction. at efforts isn’t gaining reinforce our stage,

Based believe that needed appropriate our upcoming Finally, actions we spent we this our care the July importance cost, of satisfaction increase demonstrating legislature and improve California how patient time these the health governor’s effective California cycle steps to outcomes. are rate an office, the and quality date, the budget is they considerable with on that lower in support we requested overall support taking to have increases X. and

accelerate While our on capacity hospitals home. bringing want By to in still parents comfort the children’s the their increasing a children we for comfort become passing meaningful caregiver the be solution that we overcrowded there through done work to we legislative be to and of more for who growth home. their caregivers, their distraught much is patients our and front, to believe by wages cared of can

We care for also proven preferred the double payers We define exchange savings. XXXX. payments to above-market payers discussed offering support value-based by as the number payers that value-based in reimbursement rate preferred and in need those of an

from was volumes Duty from for by approximately our to of Private payers XXXX goal preferred double Our XXXX. XX% to XX% volumes Services year-end

preferred the in quarter, we’ve added key two markets. agreements In pay first additional

strategic payer to robust throughout execute pipeline preferred this XXXX. we continue of are payer will volumes initiative XX% increased a and preferred on approximately very optimistic to have Our Also, PDS – strategy we volumes. sorry,

for labor value reimburse us need to Finally, our current those provided. to capacity that shift care our services the the and we appropriately payers discussed

greater admissions. from times staffing to times three and benefited acute shift caregiver higher payers, nurse rates several our XX% to In the than XX% our staffing to patient experience begun to quarter, payer minimizing preferred two an capacity relationships in first up while continued have significantly to We other accelerated payers our more care with preferred optimize facility. hires days initiatives rates to we

is We clinical value-based staffed payers reimburse pay hours. us fair outcomes market rates nurse positive while improved proposition rate. Preferred competitive wage straightforward. and payments value a The achieving earning for also

rate we goals believe our increases achieve previously subsequent and our early rate business results, as by encouraged our quickly rebound discussed. are While we recruiting can XXXX we

most a providing home. a grow, base, community-based setting, and Home in will cost-effective, a platform continue with to the alternative payer And comfort most desirable high-quality settings. provide this comprehensive cost a care of patient’s the and care to higher diverse we care is importantly, Aveanna

Before I to outlook comment the me XXXX. refreshed for our briefly turn let over Dave, and liquidity call on

On flow our attaining front, by focusing to we liquidity and improving the on reimbursement cash our on progress continue rates adequate make growing volumes.

We are structure implementing our while rightsize corporate our to collections. cost also initiatives cash optimizing

work will discuss reflect rates payers As the we have the government operate to to and current improve our inflationary while Dave reimbursement further, ample liquidity we business to with environment.

have first and that our in come still to at the quarter, Texas year months $XXX for particular with over to EBITDA the and need rate quarter on refreshed we relates outlook the next million original reiterating $X.XX on revenue our the respectively. – it our several fruition full least in year, initiatives revenue of to results, of we the strength goals first said, being and emphasis exceeded our we are while and adjusted As revenue for than few adjusted EBITDA, billion EBITDA comfortable California. That greater guidance in

company We to will we transform to and that take set believe to return growth. continue important it environment is it our to expectations are time in acknowledge and the sustainable operating our proves the with hopefully, provides we outlook throughout as year. we view to it the execute We considering inflationary be face a believe current environment, labor conservative prudent challenges the our and

at power care as team partners. strategic referral objectives. remains Aveanna proud we am patients, government expanding payer The our efficiency increases the rate our end the value preferred families, our country and payers, of critical health through you execute a and and to results across our XXXX relationships. through as be sources on our forward workforce updating The look the recognized I Finally, of continues clinical to QX. home the our to of various setting on I of

details the Dave? the to quarter and provide turn to further me let on outlook. our over that, With Dave call XXXX

Dave Afshar

our and morning. I’ll refreshed Jeff, providing results Thanks, XXXX. additional liquidity about quarter details first talk outlook our for and before good first financial on

prior to as compared quarter. was adjusted to prior Health revenues top-line. a X.X% the growth the as segments, and Solutions X.X% declined over and the Private $XXX.X respectively, the Duty & to segment Hospice which while $XX.X our year Starting prior grew Consolidated with Services period by decrease million. XX.X%, Home year Medical revenue experienced rise compared saw our XX% year. both by We in XX.X% million, We EBITDA

of Now with of X.X% starting driven approximately year. was a care, Duty quarter the deeper million by was for volume into Revenue our segments, increase approximately of Services. and hours Private increase taking look a X.X% over each prior X.X million, $XXX the a

growth of top-line signs the constrained While our continue although shortage available beginning in we the to see early volumes are due in improved markets. year, labor the of to over prior improvement to we be caregivers

compared quarter to to and $XX.XX revenue up was QX as prior sequential improvement of X.X% hour as $X.XX $X.XX of the XXXX. a or is year compared or QX per X.X%

ability execute increase We continue be market to reimbursement our address attract as services initiatives, and in demand expect adequate with the improvement rate rates. XXXX continued obtain we our caregivers for our to we and we see when to on encouraged

to cost quarter. X.X% year or million the XX.X%, margin a from Turning gross and of of We achieved margin our gross labor metrics. prior $XXX.X decrease

which increase throughout saw rate labor prior pressures year, quarter the of in or revenue cost basis. Our compared we rate the cost in a represents $X.XX of X.X% is revenue improved XXXX. rate, first our being markets sequential X.X% said, on by That $XX.XX, the as the to

QX and of an X.X% XX.X% was XXXX. hour per spread to sequential year-over-year improvement QX Our a compared $XX.XX, as improvement representing

to improvement prior on decrease our the previous for million Home the $XX.X was quarter. over quarter but Health million, a Moving year of $X.X Revenue segment. a Hospice the over & XX.X% approximately sequential

XXXX in necessary gross additional to to indirect we the cost margins with pleased and the achieve range. the targeted to our to focus current We’re improvement in from as of initiatives in XX% XX.X% gross direct XX% XX.X% QX margin quarter on continue

We continue a to normalized to return see the for more level. division admission trends

at QX episodic of per XXXX, our low XXX XXX mid-summer, continued admissions in approximately the health lowest mix. home home admissions XXXs. QX in health weekly approximately with of where improving health an experienced XX%. In rate averaged a These episodic we As in while week admissions we were week reminder, home our trends point XXXX, positive per of our

revenue flat firmly poised we and segment, delivering quarter & total and quarter approximately first our on value quarter sound for Medicare the was sequentially. episodes in Home care. with Health Hospice patient episode by established long-term for the episodic operational care. difficult with & $XX.XX, Hospice excellence year believe growth, for of have XX,XXX total admissions delivering we an Home revenue – established this We’ve although value was its year prior and XX% a through Our proposition. essentially Health XX,XXX was And being and focused in XXXX driven management per business platform

indirect to and our initiatives expect take sequential direct cost hold. see We XXXX improvement as throughout

Medical Now Solutions to our QX. for segment results

Revenue year. XX,XXX prior revenue During the produced prior a margins a and UPS served $XXX.XX. per $X.X XX.X% of million patients increase the driven revenue we or by of million, million, was approximately quarter, $XX.X $XX.X over which Gross of XXXX. but X.X% were unique X.X% improvement prior compared improvement a margins, to the the fourth year in sequential X.X% represented year quarter XX.X% were quarter, to Gross over the compared quarter, decline as the quarter. as a

evaluate more effective overhead our to office and our continue efficient to as be we leverage in ways We to continue to back grow.

the further see decided to presence our in While exit an to enteral payer this and opportunity as other partnerships. our to providers expand we enteral national XXXX, market

difficult those us patients’ value the who everything clear In at is caregiver fight to the a while we of preferred path and summary, partnership keeping labor our Aveanna. It’s that to capacity our center environment to shifting forward inflationary do. through payers we at care continue

our is challenge reimbursement primary rates. Jeff As stated,

positive continue QX, sequential improvement with optimistic second we’re the into the all that expected will trends we in segments. quarter in With saw momentum such

will ongoing to in the we progress environment, other in with and effort benefits XXXX to improve As caregivers our wage make the pass better rate improvements we through our volumes.

the of to approximately on sheet $XX was $XX.X availability revolver, excess quarter. had securitization of on $XXX the at At on end liquidity. million, balance the which we of facility quarter, hand moving liquidity representing $XXX of and of availability and million approximately million million, undrawn in of end cash the Now our our first under

outstanding quarter. letters the of Lastly, $XX million we credit had the end of of at

items the that look XXXX year to flows all year, operating for timing-related to at revolver and, for short-term we’re realize of timing the year-end to we on of importantly are flows, throughout revolver in efforts while we the As the of positive on. be may as goals and the related earnings the the our begin draw cash the benefits so drive hard half undrawn cash second as we of working the more for

$XXX the exposure and at is rate is On interest billion $XXX X%. LIBOR to variable rate to increases this we debt in million debt approximately rate rate which QX. the cap, swaps amount, all front, Of debt service is limits of substantially hedged $X.XX further above end fixed an of subject our million had Accordingly, of variable with hedged.

extend swaps of through we interest mention extend to related XXXX, XXXX. have and rate item debt last interest rate One material July of our our caps maturities no through Our term will loan that XXXX. is June I until February

operating Cash quarter Looking by a for provided activities free of $X.X at flow was cash certain the capital flow. as result working $X.X was onetime items, and cash million. million

We expect cost fruition. XXXX management throughout to benefits come our see and to also cash flow initiatives top-line as

take to our Before let I Q&A, hand over outlook to call a moment me the the operator XXXX. for for address refreshed

$X.XX revenue than quarter and billion The saw the trends we We at our our EBITDA with prudent requisite first in least respectively. increases our of in quarter we’re million, of Texas. pleased $XXX the results, would and update half guidance we maintain first believe it’s greater needed obtaining we’re adjusted back original to While the in and plan the guidance successful to in and year. rate California continue, both

expect to grow. in half full volumes as the EBITDA to XX% revenue are We now grow expect first and our rate of think implemented recognized approximately XXXX. be about seasonality, our we our adjusted throughout As increases of guided year the year we

volumes. attract caregivers As our of increases ramp more the most annual become the EBITDA and retain we our we as typically year, expect effective adjusted drive increases second of half use to to the rate and in

we will as benefits also realize EBITDA ramp savings of initiatives. cost the our Our

lives tomorrow, And we Nurses recognize Week our to and patients as like the National of a and finally, moment caregivers families incredible would up the impact to we wrap make day. take their our they every in

And the over call with that, operator. I’ll turn to the

Operator

Please question. [Operator comes Tanquilut Jefferies. with first from Instructions] with question your Brian Our proceed

Brian Tanquilut

I morning know guys, CMS question, that guess personal on there’s I care Hey good my services. first proposal

under Just the that your that on And services cover want any provide you to segment? Thanks, CMS? will that thoughts from proposal clarify, I just mean, PDS rule

Jeff Shaner

think very in creates aware Association Yes, comment with we period the the acutely appropriate with We that both concerning. our of to to the a the And Home lot and proposed give Brian. Aveanna other that of the trade Thanks. with stand PMHC, stand And done. very, but the our yes, proposal a rule. firm work feedback we’re our And fact precedent be firm is industry. time is not certainly left peers, We now organizations National open trade material us, and for obviously, – is business, for we’re to it’s Care, associations, right to all CMS. that the state governments, the

think just open the direct create intent applaud concerning. quality an is rule, rate to precedent improve significantly that certainly appropriate. is measures of Medicaid would and would access that, CMS which don’t We that is But And workers’ transparency we setting. compensation to the the idea in for threshold the and beneficiaries XX% set care

our We training, as underestimates visit requirements already, as talked the electronic the onboarding that significantly also the expectation think, EVV CMS mandates. have peers or oversight Brian, proposed that rules that well verification as

for sure in in with good play make that in although just industry this So the material to with think the a firm months will not stand with place to the find next make open we this dialogue. CMS. a landing we rule to our end, And Aveanna’s few that sure good results, want peers we out we final

Brian Tanquilut

and you All great right. very employees. notable you out I hear uptick my Oklahoma, to in saw a makes That called for sense. new then Got it. guess interest applications about And and how follow-up,

we Or an that it you as get offer strategy is with people Like come more recruiting yields rates along and to get has did an higher? higher recruitment like to increase, we there drive as work? when So in coming as is and apply? to try you simple how that that advertising

Jeff Shaner

a inactive a like location, enjoyed nurses, great We’ve with setting home. a people home pipeline That’s setting worked patient got us, the every in care every I’ll one-on-one of who being market, the of quick. happens very be their honest. question, with Brian. the caregivers in It

over us left they just However, hour. an pure $X, $X wage, $X, wage,

increase an an to their what’s We she’s we nurse come are mute. more great in you It’s on he’s can or that and a needs great to like a bit when more us. us, we touch the meaningful," like on touch it’s yesterday. as California, them back "Hey, to them. say, can for of them. a to talk next your $X.XX little rate – excited jobs. so with until we a meet expectations, and And to see Texas proposed a increase able can stay is we Oklahoma, moved It’s of effective hour, moved see back But in $X The But with is we conversation moment and that call rate movement something their hour, strong nurses we meet to to relationship. stay just nurse to got

the other I examples a focus – we’re payers, Brian not in to we wages. a other we nor caregiver percent just but and we think will the of so And moment like our directly about Texas. And wages, be ability preferred California surprised direct surprised direct XX-ish in do pass-through benefits, Oklahoma, on to in were that, Oklahoma, negotiate rate, – not to higher able where the

– in meaningful soon effective California September be As wins, is X, effective hires. in execute we would X, improvement would July would we Texas rate expect effective as on July be those

do those nurses touch don’t that we also one have can nurses and When other incrementally many by they for we call are say, more they that that us. Brian, job for the push they’ll of an "Hey, hour," then, entire fill And us current the off or $X working we were that shifts are shifts on, times your they up fill working pieces hourly and we only wage $X normally not can jobs. second filling,

internally, organic of are with us. already patients our that a get we lift So in service too, already

So a strong conversations recognized resonating rate very seems that same the and well. with And It’s think our it’s are to story, through in opportunity really legislature win-win. of came very the the legislature that the I very increase. And it to Oklahoma. be and Oklahoma similar and California Texas

Brian Tanquilut

Awesome. Thanks Jeff. Thanks Dave.

Jeff Shaner

Thanks, Brian.

Operator

next Pito Bank. with Chickering your proceed Our Deutsche from with comes question Please question.

Kieran Ryan

there. Hi

question. the Ryan for You’ve for on got Kieran taking Thanks Pito.

volumes some on So looking think acceleration then quarter, them at nice you rates. obviously I PDS and this expected where in came about

the there progresses coming through, the other the is margin it these kind a early? too gross you think call use at to year Looking XQ at you rate volatile this point? Or as to a year of out that rest of increases there is still and think about this fair do the baseline make for little

Jeff Shaner

Yes.

all, pass-through question. And a is thoughtful the thing really think question. of we’ve then kept wage, rate like on it’s First I driving very just to Brian’s focusing that

And forward. gross get about that’s wage a so make we in you in a it that We temporary point but XX% margin push where than I QX, rate timing pass-through, a think think as be range as we more up we’ll issue.

Our goal move revenue. these caregivers is overall and the to to get and rates volumes

aggressively bump. shifts to I as your But rate to is drive Kieran, us more we’re a process, to probably the volume, the the that thing in we were XX.X%? be with more Could Absolutely. timing around we more think, as the missions. pushing game. Getting XX%. rate back caregiver through, that, years think in or get really intent is of what XX%, more ago, through couple to I touch it’s the a But and we that comes may really not a point, In see where little of you’ll

Kieran Ryan

much preferred quantify a helpful. quick you Thank how more maybe the That’s you. the in you. a more then of just Thank steering to rate just from or follow-up. speak little that Could performance Got came And PDS of it. overall to XQ business payers?

Jeff Shaner

Yes.

preferred our the we started We driven was payers in two we PDS about – with year, more seven of XX% I By our think the signed volume preferred quarter. the remarks, the into in talked by going payers. preferred year prepared payers.

segment. we’re moved We nice So volume XX% to bump. so volume, had we within at PDS XX% nine our a

to talk agreements more excited signed performance. QX’s We’re QX. We’ve effective about already already in

a So pipeline QX. we strong for have

preferred the smaller. payers Some are of

member at them, all the of some same covered they’re of the amount So not volume, lives. amount of same

by So But with the preferred the won’t current as out, year the we some playing of on XX%, to think and the payers an sign XX% as back of would we about half payer. should think to the But preferred and service. business in year. of we to you the about driving year we’ll was probably aggressive XX% line about think end now at in payers of XX% the teens that maybe be the XX% be preferred have I as at goal of big in XX% XX%, the that some ending right be the to QX high year, our is XX%,

asked the say, And at what’s right rate our rate wage is our So also question. I’ll look rate, rate the is almost wage right? in follow-up, PDS. our growing the you a are Yes, the driven is payers our government by rate, same our you as strategy. and this preferred if reimbursement being as reimbursement driving wins rate

day, the that’s it’s rate to that our and that pushing intention. we’re So caregiver proof through every

Kieran Ryan

much. so Thanks

Jeff Shaner

you. Thank

Operator

A.J. from comes proceed Suisse. question. with your Credit with Please question next Our Rice

A.J. Rice

Thanks. California. understand. sure to Texas just and Hi everybody. I about I appreciate Oklahoma, make want the I comments

half? guidance the your the and I rate states – market the back of California? comment what you from that you, other seeing any in in Texas have big know now, that those the embed And and step-up those of the you’re rate part increases are of does terms So but on that updates? rest for Is

Jeff Shaner

XX of through push But I’ll of we their state and budgets. included we probably XX budgets then ahead increases the to today in pleased this most back are or Oklahoma the we’re buying We most in at year. at are the their we sit days slightly their final the guidance. other, I morning. are known where with not into of to what to our important guidance putting as or going Good did we’ll include annual our year with say weeks equal guidance. next coming year the kind Oklahoma out expectations governments did. start have very A.J. rate Yes, place. and six kind Thanks, eight think I’ll the into the of days point the in

And hand both so and states the think about we half rate, two that I do some the have California. in but of as we But think rate a year, guidance oriented. again, you California, Texas of ask our think we not on assumes in PDS that year second the good legislatures in lift I those in to Texas things this non-Medicare A.J., be all and expected get

May, I in in think we ultimately here we very good place. as sit a sit

I’ll we to need finish And and Texas emphasize, California.

for outcomes families days us us most but of really entire finish both Texas year. as now pushing the about to not for It’s you can get a impact and governor’s comments engaged the conclusion, both are we they ensure them for two important to finishing XX us those industry, for California, the over meaningfully those guidance? hospitals. office the out almost in with to and a So children’s have two, come and exercise. XX to legislatures Dave, We’ve just next that important that been

Dave Afshar

it – increases. high does incorporate, when statement, you rate it, are guidance – And increases does that’s our to states. say it, we And single-digit we mean, about Jeff. A.J., in a fair I mid- I’d think expecting both do call Yes, rate

lot well up collaboratively we’re single think for the said, can think things states to those, come we mid- down, Obviously, with moving As the a but But states. working positioned pretty high and – it. of guidance I those there’s to on achieve digits and and – Jeff we’re parts.

A.J. Rice

updates All I right. wondered improve? within easier Maybe can of sort parts country? environment of any recruit turnover the you my with get seeing follow-up you Any economy you’re ask of volatility steady-state the a increases, is seeing? labor the environment, your getting you Are situation. rate steady-state I it incremental the you the get rate of on in around caregivers. about Okay. sort to sort and if to caregivers what understand the certain

Jeff Shaner

bit as we I a March, more and A.J., out little engaged. the first large settled. recruitment – applicants, pop Yes. holidays more people XXXX, our really a in coming large, the Indeed think platforms. felt of both said That’s out We some of we of into in of saw

slugfest. think we’re preferred eating to our struggle rates. in have with why term, a continue rate in steady-state or so steady to and think it’s payer And we’re current inflation this because we’re up to still I state, going any strategy, I just we committed long

yes, part the here sit to we just love I’d saw are little and nurses and think So a back, you, year. no, tell first I the but coming they’re – pop of

through. states growth our Our rate been in in paid, has our volumes, growth the growth in really our passed our our caregivers and in hours is around which payers preferred

strategy. our that’s so And

We’re it. sticking to

just show is got great media recruitment And We’re wage. to ads, up. but the number rate, strategies, social nurses move move volume, strategy for waiting pass-through around not we’ve one

XXXX, where I as us you’ll focused so see in think that’s well. but And in only XXXX not

Medicaid And partners, feel $X – it’s improvement. MCO savings numerous larger feel the hospitalizations, They And our from Less they I tell you can talking a less discharges. to faster days. of almost to that’s $X A.J., them. to hospitalized

every For the center. save and from they dollar acute PDN, costs, total care health spend care in between they $X $X specifically in

us our I with hearing long-term. to we’re you’ll see telling to capacity want think continue to partner us those payer it’s partners partners So that our Aveanna shift caregiver But working.

A.J. Rice

lot. a Thanks Okay.

Jeff Shaner

A.J. you, Thank

Operator

America. Joanna question with with next Gajuk your question. of proceed comes [Operator Bank Instructions] Our from Please

Joanna Gajuk

you morning. so Thank question. much Good for the taking the

quarter. XX-Q $X.X million the settlement talked money, received in I you in So about think, you the I actually first your question, guess,

adjusted did So cash that benefit your and EBITDA? flow

Dave Afshar

million can clarify settlement? Joanna, you the $X.X on

Joanna Gajuk

looks you It I’m reading quarter, the a received money it like if positive, that correctly. it Yes. in was like

Dave Afshar

is of letters end in legal Joanna, cash where to quarter, in $XX matter we we were from a Overall, substituted we first legal that bond, cash for matter, the and $XX cash had could we what the about and posted connection we approximately [ph] with some about recover talked that tell pellet able garnished credit for the I you, in that before quarter, a million. was of of then the and million accounts

the So outcome there positive while we case. had that appeal pursue on we a

There was end subsequent another But Epic a from sit overall, sellers in pleased legal we’re to the now. escrow transaction. case an perspective, account with $X that we million of we about right with funded to the connection where quarter

Jeff Shaner

EBITDA. Yes. our And cash to impact but It it flow positive no QX, EBITDA. impact did adjusted help QX adjusted had not flow although in a our it on – nothing Joanna, have cash did our

Joanna Gajuk

Because talked my Any year? was guess, And out just full because the full follow-up. color turn year? about give Okay. clarify How of cash you flow the should yes, positive about right? was flow might actually trying think I half. us I cash how will kind second positive, flow, was actually for that you previously, in we to cash the

Dave Afshar

Joanna, a I capital disclosed, like Yes. we of to onetime QX us. positive couple had to we’ve benefits in related cash mean, flow that working were items

the that about the the operating goal, business, which to drive execute and is the remain That’s in it’s flows half. whether positive to is to flow positive QX – QX. in the talking drive drive goals cash second same, operating year, cash all of is the our initiatives Our we’ve be been which on half or second

Jeff Shaner

or the slightly said QX So Joanna, surprised that one-timers again, year flow is well, goal I cash those some be and negative company not think would as about. footing. this a end And even cash drove that to think potentially QX Dave is positive But negative right? positive XXXX our on slightly of QX is and start it breakeven, flow talked we Dave about if I

Operator

with Please proceed Fidel Our Scott with comes your Inc. question from Stephens question. next

Scott Fidel

thanks. Good morning. Hi,

be question, just on get a proposed more little into of effect, was Just more whether secure just I term it if is margin to cap potentially of first or – specific just did XX% clarification on to rule rule cap? there actually guess, First about hoping gross to nursing be the here, also you would the be a the think I gross that precedent to having is that private understand to could PDN? in lead attributable whether would actually that the that a margin margin just go concerned that. you’re margin question gross longer gross Jeff, to this cap. duty risk there Or whether trying is sort

Jeff Shaner

and way, today. we the read to their precedent offices, that oversight legal as of right and of private as lawyers of it in of right, state it, create their to nursing, Medicaid this they read a does like state. idea lot have of reading a governors, workforce precedent, the program that a you’re be many oversight And and unfounded lobbyists Medicaid the our of think have it as our I don’t Medicaid it it not pertain does they would but lot because own the we in talked duty

Many care of encouraging operate think services health long have is a set. for that would minimum we set to care is supporter of we’ve precedent of just we wage, of part your wage answer, health that minimum dangerous and be precedent them minimum all all been it’s with. movements just a it’s of – driving really wage So states Scott, the it But lifts. the our already in first

especially you state And on agree in all are our mandated have oversight. I the industry our again, by that EVV when do compliance and of like partners the many and we to law things think disclude that, that so legislatures and

we it it’s dangerous but – do is to lawyers think as set it Aveanna written we yes, today, have industry. material our viewed a the it’s not in and So precedent is co-propose, and have viewed to it as it, its

Scott Fidel

Got Okay. it.

slippery impact. the a of concern around direct to a more as slope compared So

that on three yes, it, California to that from in appreciate then if XX% ring-fence but And and the willing just extent clarification. independently so follow-up, out could – guys that’s you comfortable either Okay. to doing a are or know Texas the we aggregate break just key just are you I that? Then what would don’t I states, be

you to are achieve partners? sort Or preferred as sort two higher it benefits moving we financial that’s on a drive the do see preferred margin and over Thanks. providers better to gross you that with part plus of would potential do be you there that about one. guess those just gross to think I So then more volume actually of relates And partners, margin? able those the part XX% be

Jeff Shaner

Scott. drive just of backwards. payer wants. hour we’re incremental as What temporarily although not more engaged question, that percentage, the home we’ve preferred what preferred of you. that’s more the hospitals, we Great We’ll get the seen that caregivers. all payer preferred passing Thank it are a both happen them also The is with not most or the volume, we’re our Great. patients of temporarily, of really And kind and payers, payer start all preferred intent but in bump getting percentage. staff relationship more because to some of margin does of more us in the really, We’ll payers patients work from to more hours wants are current get and margin them. and authorized, them nine the staff. it but to in The rate through is the

And have preferred then on then payments of value-based is a the quarterly second part of bonus our many Scott, it, basis. payers

so And bonuses admitting of cost will think us be now hospitalization will quarters as to really well that we more in patients eventually, reducing both in for new to and More some as days earning And hours. volume we’re and payers our in move more well. three value-based patients. of as staffing

do and bonuses. three So now confident those in, we’re quarters what earn we to comfortable with can

QX. bonuses – And those of through in well. getting our it’s those beginning comfortable and more QX earning as some pass We’re it’s in earning both and bonuses. results, us, are the to to caregivers Those to

curve best a patient for largest long us is partner, cost a payers being volume the truly long Aveanna. So with bend nation’s with and them aligns a again, but not the the drives Medicaid provider America term, improve partner, us To and satisfaction. ultimately that the being here helping and MCOs game in more

and Anything the Scott, on your on payer, questions to we switch preferred Texas? back California before else

Scott Fidel

great, Jeff. No, was Appreciate that that.

back, California and yes, Texas. guess, I Thanks. on So just

Jeff Shaner

in volume states amount disclose largest clear. a rate. operate three the standpoint. of These specifically the or that don’t of amount we two So we But Medicaid been of I from our are we’ve think

we states. leading are so the And both we – in charge are Aveanna

mentioned what on and call, did group private last Washington, D.C. means out we of engaged both in think on care to a it We we the studies the California, I duty health Texas In overall spend. research – California have have of the we day value Texas, nursing We saved day that was but outcome, showed in states. in a because a $X,XXX $X,XXX we In a hospital. home. every two for those of it out day the rate difference can them save of $X,XXX similar a We just a it by getting get child economics showed

of some total But in more crystal PDN, clear. the It’s billion both hundreds studies pushing care it’s material. invests $X And were they In in it’s The savings. a millions California, Texas, savings. net in save health a state dollars. more cases, year of

really, that so Sacramento directors. resonated has really And Austin well really, and Medicaid both both Governor’s with offices, in

again, And peer partnering our group. we’re with

not half getting our very Aveanna guidance to as the We’re we of think or states. partnering so greater we’ve But relates digit associations. with our And to leadership it’s I’ll say good XX% that appropriately in the position state back rate the year use increases certainly, include but role states, we vague a today both get something both and in been both believe us or in does I that meaningful to in [ph] to that we’ve either of guidance. double expect states, taken we’re

also call a by then. opportunity the And know to both readdress trending going great XXXX we’re in in We half we August so August, – that the see we is back great opportunity. in and it’s as a really and obviously, point. see outcomes of see at year our that how we’ll And next

Scott Fidel

Okay. Thank you.

Jeff Shaner

Thanks, Scott.

Operator

the to for back turn question-and-answer I would Shaner over of the We have session. Jeff comments. reached our closing end now floor like to

Jeff Shaner

joining call today. Maria, for the you, interest and again, August. for thank And earnings QX in QX at forward a you, Aveanna great you story. in you to our progress and look our our updating We thank have Thanks, Thank everyone, end your on of day.

Operator

conference. This concludes today’s

disconnect lines you may time. your your at You for participation. Thank this

Aveanna Healthcare (AVAH) 11 May 232023 Q1 Earnings call transcript