Aveanna Healthcare Holdings, Inc. Q3 FY2024 earnings call

• Focus on preferred payer strategy: Aligned clinical capacity with preferred payers to drive growth in Private Duty Services and Home Health & Hospice.
• Labor market challenge: Industry has strong demand for home/community care, but labor was a primary challenge; however, caregiver hiring/retention trends improved with preferred payers.
• Rate increases in Private Duty Services: Secured double-digit rate improvements in Georgia and Massachusetts, with 12 state rate increases year-to-date.
• Home Health & Hospice progress: Achieved 76% episodic mix, positive episodic volume growth, and signed 38 episodic agreements.
• Medical Solutions strategy: Early stages of implementing preferred payer strategy, aiming for full realization by end-2025.
• Strategic initiatives: Focus on enhancing payer partnerships, cost efficiencies, managing capital structure, and engaging employees.

Private Duty Services: Revenue was approximately $409 million, accounting for about 80.3% of the total $509 million revenue. Home Health & Hospice: Revenue was approximately $54.1 million, representing around 10.6% of total revenue. Medical Solutions: Revenue was $45.3 million, making up roughly 8.9% of total revenue.

• Full year 2024 revenue is expected to be approximately $2 billion, with adjusted EBITDA greater than $168 million.
• Enhanced outlook for 2024 due to rate increases, preferred payer agreements, and improving caregiver labor market.

• Challenging labor and inflationary environment.
• Difficulty in securing appropriate PDN rate increase in California.
• Impact of hurricanes on Southeast business, temporarily affecting Q4 margins.

Q: Ben Hendrix asked about progress in Home Health preferred payer relationships and long-term episodic growth.

A: Jeff Shaner stated they are in the later innings of the preferred payer strategy in Home Health, aiming for 3+% organic growth for the Home Health & Hospice business.

Q: Pito Chickering inquired about 2025 pricing, labor market, and preferred payer networks.

A: Jeff and Matt discussed continued rate momentum, labor market softening, and the implementation of the preferred payer strategy in Medical Solutions.

Q: Brian Tanquilut asked about free cash flow sustainability and PDS gross margins.

A: Matt Buckhalter talked about free cash flow strength due to operational execution, and Jeff Shaner explained the spread per hour and margin impact of rate wins.

Q: Grayson McAlister asked about cost savings initiatives and hiring trends in Georgia/Massachusetts.

A: Jeff and Matt discussed completed cost reduction efforts in most segments, and Jeff shared hiring improvements in Georgia with significant fill rate and discharge improvements.

Q: Unidentified Analyst asked about geographic expansion via acquisitions.

A: Jeff Shaner mentioned reentering the M&A market in 2025, focusing on Private Duty Services and Home Health & Hospice.