• Aveanna Healthcare Holdings Announces First Quarter 2024 Financial Results and Revised 2024 Outlook

    Источник: Nasdaq GlobeNewswire / 09 май 2024 06:30:22   America/New_York

    • First Quarter Revenue was $490.7 million, a 5.2% increase over the prior year
      • Gross margin increased 1.0% to $145.9 million, compared to Q1 2023
    • First Quarter Net loss was $11.2 million, compared to net loss of $32.0 million in the comparable prior year period
      • Adjusted EBITDA was $34.9 million, a 22.5% increase as compared to the prior year quarter
    • Full Year 2024 Revenue guidance raised to greater than $1,970 million
      • Full Year 2024 Adjusted EBITDA guidance raised to greater than $150 million

    ATLANTA, May 09, 2024 (GLOBE NEWSWIRE) -- Aveanna Healthcare Holdings Inc. (NASDAQ: AVAH), a leading, diversified home care platform focused on providing care to medically complex, high-cost patient populations, today announced financial results for the three-month period March 30, 2024.

    Jeff Shaner, Chief Executive Officer, commented, “Our first quarter results reflect the continued positive momentum at Aveanna, highlighted by revenue and Adjusted EBITDA growth of 5.2% and 22.5% respectively, when compared to the prior year period. These results are the product of our continued approach to transform our business with an emphasis on expanding our position as a leading, value-based homecare provider. We believe enhanced payor partnerships allow us to further invest in our caregivers and deliver more care to more patients in need. Additionally, our revised outlook demonstrates the positive results from our Strategic Transformation and our continued execution of our business plans. I want to thank the dedicated team of Aveanna leaders and caregivers that deliver our mission every day to patients and families in need.”

    Three-Month Periods Ended March 30, 2024 and April 1, 2023

    Revenue was $490.7 million for the three-month period ended March 30, 2024, as compared to $466.4 million for the three-month period ended April 1, 2023, an increase of $24.2 million, or 5.2%. The overall increase in revenue was attributable to a $22.1 million increase in Private Duty Services (“PDS”) segment revenue and a $3.7 million increase in Medical Solutions ("MS") segment revenue, offset by a $1.5 million decrease in Home Health & Hospice (“HHH”) segment revenue over the comparable quarter.

    Gross margin was $145.9 million, or 29.7% of revenue, for the three-month period ended March 30, 2024, as compared to $144.5 million, or 31.0% of revenue, for the three-month period ended April 1, 2023, an increase of $1.4 million, or 1.0%.

    Net loss was $11.2 million for the first quarter of 2024, as compared to net loss of $32.0 million for the first quarter of 2023, primarily attributable to an increase in non-cash gains on our interest rate derivatives offset by higher income tax expense. Net loss per diluted share was $(0.06) for the first quarter of 2024, as compared to net loss per diluted share of $(0.17) for the first quarter of 2023. Adjusted net loss per diluted share was $(0.03) for the first quarter of 2024, as compared to adjusted net loss per diluted share of $(0.05) for the first quarter of 2023.

    Adjusted EBITDA was $34.9 million, or 7.1% of revenue, for the first quarter of 2024, as compared to $28.5 million, or 6.1% of revenue, for the first quarter of 2023, an increase of $6.4 million or 22.5%. See "Non-GAAP Financial Measures - EBITDA and Adjusted EBITDA" below.

    Liquidity, Cash Flow, and Debt

    • As of March 30, 2024, we had cash of $42.6 million and incremental borrowing capacity of $10.0 million under our securitization facility. Our revolver was undrawn, with approximately $168.2 million of borrowing capacity and approximately $31.8 million of outstanding letters of credit.
    • 2024 net cash used by operating activities was $12.0 million. Free cash flow was $(12.7) million for 2024. See “Non-GAAP Financial Measures - Free cash flow” below.
    • As of March 30, 2024 we had bank debt of $1,477.5 million. Our interest rate exposure under our credit facilities is currently hedged with the following instruments:
      • $520.0 million notional amount of interest rate swaps that convert variable rate debt to a fixed rate, and
      • $880.0 million notional amount of interest rate caps that cap our exposure to SOFR at 2.96%.

    Matt Buckhalter, Chief Financial Officer, commented “I am proud of our Revenue growth of 5.2% and our Adjusted EBITDA growth of 22.5% as compared to the prior year period. We managed through our seasonal low quarter of operating cash outflows at $12 million, and we expect to be operating cash flow positive for 2024. Furthermore, we have ample liquidity to invest and grow our business with over $220 million in available cash. We continue to leverage our growth through strategic cost reductions and lower overhead while building on the success of our preferred payor strategy and Government Affairs rate wins. Based on the strength of first quarter results and our expectations for the full year, we are comfortable raising our guidance to Revenue greater than $1,970 million and Adjusted EBITDA greater than $150 million. I am proud of our Aveanna Teammates who have executed our business plans in delivering solid growth, great clinical outcomes, and improved profitability.”

    Revised Full Year 2024 Guidance

    The following is our updated guidance reflecting our current expectations for revenue and Adjusted EBITDA for the full year 2024:

    • Revenue of greater than $1,970 million, updated from prior guidance of revenue of between $1,960 million and $1,980 million

    Consistent with prior practice, we are not providing guidance on net income at this time due to the volatility of certain required inputs that are not available without unreasonable efforts, including future fair value adjustments associated with our interest rate swaps and caps.

    • Adjusted EBITDA of greater than $150 million, updated from prior guidance of Adjusted EBITDA between $146 million and $150 million

    Non-GAAP Financial Measures

    In addition to our results of operations prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), we also evaluate our financial performance using EBITDA, Adjusted EBITDA, Field contribution, Field contribution margin, Adjusted net income or loss, Adjusted net income or loss per diluted share, and Free cash flow. Given our determination of adjustments in arriving at our computations, these non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as substitutes or alternatives to net income or loss, revenue, operating income or loss, cash flows from operating activities, total indebtedness or any other financial measures calculated in accordance with GAAP. The reconciliations of these non-GAAP financial measures to their most directly comparable GAAP measures are included in the financial tables below.

    EBITDA and Adjusted EBITDA

    EBITDA and Adjusted EBITDA are non-GAAP financial measures and are not intended to replace financial performance measures determined in accordance with GAAP, such as net income or loss. Rather, we present EBITDA and Adjusted EBITDA as supplemental measures of our performance. We define EBITDA as net income or loss before interest expense, net; income tax benefit (expense); and depreciation and amortization. We define Adjusted EBITDA as EBITDA, adjusted for the impact of certain other items that are either non-recurring, infrequent, non-cash, unusual, or items deemed by management to not be indicative of the performance of our core operations, including impairments of goodwill, intangible assets, and other long-lived assets; non-cash, share-based compensation; loss on extinguishment of debt; fees related to debt modifications; the effect of interest rate derivatives; acquisition-related and integration costs; legal costs and settlements associated with acquisition matters; restructuring costs; other legal matters; and other system transition costs, professional fees and other costs. As non-GAAP financial measures, our computations of EBITDA and Adjusted EBITDA may vary from similarly termed non-GAAP financial measures used by other companies, making comparisons with other companies on the basis of this measure impracticable.

    We believe our computations of EBITDA and Adjusted EBITDA are helpful in highlighting trends in our core operating performance. In determining which adjustments are made to arrive at EBITDA and Adjusted EBITDA, we consider both (1) certain non-recurring, infrequent, non-cash or unusual items, which can vary significantly from year to year, as well as (2) certain other items that may be recurring, frequent, or settled in cash but which we do not believe are indicative of our core operating performance. We use EBITDA and Adjusted EBITDA to assess operating performance and make business decisions.

    We have incurred substantial acquisition-related costs and integration costs. The underlying acquisition activities take place over a defined timeframe, have distinct project timelines and are incremental to activities and costs that arise in the ordinary course of our business. Therefore, we believe it is important to exclude these costs from our Adjusted EBITDA because it provides us a normalized view of our core, ongoing operations after integrating our acquired companies, which we believe is an important measure in assessing our performance.

    Field contribution and Field contribution margin

    Field contribution and Field contribution margin are non-GAAP financial measures and are not intended to replace financial performance measures determined in accordance with GAAP, such as gross margin and gross margin percentage. Rather, we present Field contribution and Field contribution margin as supplemental measures of our performance. We define Field contribution as gross margin less branch and regional administrative expenses. Field contribution margin is Field contribution as a percentage of revenue. As non-GAAP financial measures, our computations of Field contribution and Field contribution margin may vary from similarly termed non-GAAP financial measures used by other companies, making comparisons with other companies on the basis of these measures impracticable.

    Field contribution and Field contribution margin have limitations as analytical tools and should not be considered in isolation or as substitutes or alternatives to gross margin, gross margin percentage, net income or loss, revenue, operating income or loss, cash flows from operating activities, total indebtedness or any other financial measures calculated in accordance with GAAP.

    Management believes Field contribution and Field contribution margin are helpful in highlighting trends in our core operating performance and evaluating trends in our branch and regional results, which can vary from year to year. We use Field contribution and Field contribution margin to make business decisions and assess the operating performance and results delivered by our core field operations, prior to corporate and other costs not directly related to our field operations. These metrics are also important because they guide us in determining whether or not our branch and regional administrative expenses are appropriately sized to support our caregivers and direct patient care operations. Additionally, Field contribution and Field contribution margin determine how effective we are in managing our field supervisory and administrative costs associated with supporting our provision of services and sale of products.

    Adjusted net loss and Adjusted net loss per diluted share

    Adjusted net loss represents net loss as adjusted for the impact of GAAP income tax, goodwill, intangible and other long-lived asset impairment charges, non-cash share-based compensation expense, loss on extinguishment of debt, interest rate derivatives, acquisition-related costs, integration costs, legal costs, restructuring costs, other legal matters, other system transition costs, professional fees and certain other miscellaneous items on a pre-tax basis. Adjusted net loss includes a provision for income taxes derived utilizing a combined statutory tax rate. The combined statutory tax rate is our estimate of our long-term tax rate. The most comparable GAAP measure is net loss.

    Adjusted net loss per diluted share represents adjusted net loss on a per diluted share basis using the weighted-average number of diluted shares outstanding for the period. The most comparable GAAP measure is net loss per share, diluted.

    Adjusted net loss and adjusted net loss per diluted share are important to us because they allow us to assess financial results, exclusive of the items mentioned above that are not operational in nature or comparable to those of our competitors.

    Free cash flow

    Free cash flow is a liquidity measure that represents operating cash flow, adjusted for the impact of purchases of property, equipment and software, principal payments on term loans, notes payable and financing leases, and settlements with swap counterparties. The most comparable GAAP measure is cash flow from operations.

    We believe free cash flow is helpful in highlighting the cash generated or used by the Company, after taking into consideration mandatory payments on term loans, notes payable and financing leases, as well as cash needed for non-acquisition related capital expenditures, and cash paid to or received from derivative counterparties.

    Conference Call

    Aveanna will host a conference call on Thursday, May 9, 2024, at 10:00 a.m. Eastern Time to discuss our first quarter results. The conference call can be accessed live over the phone by dialing 1-877-407-0789, or for international callers, 1-201-689-8562. A telephonic replay of the conference call will be available until May 16, 2024, by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the replay is 13740762. A live webcast of our conference call will also be available under the Investor Relations section of our website: https://ir.aveanna.com/. The online replay will also be available for one week following the call.

    Forward-Looking Statements

    Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements (other than statements of historical facts) in this press release regarding our prospects, plans, financial position, business strategy and expected financial and operational results may constitute forward-looking statements. Forward-looking statements generally can be identified by the use of terminology such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “seek,” “will,” “may,” “should,” “would,” “predict,” “project,” “potential,” “continue,” “could,” “design,” or the negatives of these terms or variations of them or similar expressions. These statements are based on certain assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate in these circumstances. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. Forward-looking statements involve a number of risks and uncertainties that may cause actual results to differ materially from those expressed or implied by such forward-looking statements, such as our ability to successfully execute our growth strategy, including through organic growth and the completion of acquisitions, effective integration of the companies we acquire, unexpected costs of acquisitions and dispositions, the possibility that expected cost synergies may not materialize as expected, the failure of Aveanna or the companies we acquire to perform as expected, estimation inaccuracies in revenue recognition, our ability to drive margin leverage through lower costs, unexpected increases in SG&A and other expenses, changes in reimbursement, changes in government regulations, changes in Aveanna’s relationships with referral sources, increased competition for Aveanna’s services or wage inflation, the failure to retain or attract employees, changes in the interpretation of government regulations or discretionary determinations made by government officials, uncertainties regarding the outcome of rate discussions with managed care organizations and our ability to effectively collect our cash from these organizations, changes in the case-mix of our patients, as well as the payor mix and payment methodologies, legal proceedings, claims or governmental inquiries, our ability to effectively collect and submit data required under Electronic Visit Verification regulations, our ability to comply with the terms and conditions of the CMS Review Choice Demonstration program, our ability to effectively implement and transition to new electronic medical record systems or billing and collection systems, a failure to maintain the security and functionality of our information systems or to defend against or otherwise prevent a cybersecurity attack or breach, changes in tax rates, our substantial indebtedness, the impact of adverse weather, the impact to our business operations, and other risks set forth under the heading “Risk Factors” in Aveanna’s Annual Report on Form 10-K for its 2023 fiscal year filed with the Securities and Exchange Commission on March 14, 2024, which is available at www.sec.gov. In addition, these forward-looking statements necessarily depend upon assumptions, estimates and dates that may prove to be incorrect or imprecise. Accordingly, forward-looking statements included in this press release do not purport to be predictions of future events or circumstances, and actual results may differ materially from those expressed by forward-looking statements. All forward-looking statements speak only as of the date made, and Aveanna undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

    About Aveanna Healthcare

    Aveanna Healthcare is headquartered in Atlanta, Georgia and has locations in 33 states providing a broad range of pediatric and adult healthcare services including nursing, rehabilitation services, occupational nursing in schools, therapy services, day treatment centers for medically fragile and chronically ill children and adults, home health and hospice services, as well as delivery of enteral nutrition and other products to patients. The Company also provides case management services in order to assist families and patients by coordinating the provision of services between insurers or other payers, physicians, hospitals, and other healthcare providers. In addition, the Company provides respite healthcare services, which are temporary care provider services provided in relief of the patient’s normal caregiver. The Company’s services are designed to provide a high quality, lower cost alternative to prolonged hospitalization. For more information, please visit www.aveanna.com.

    Cash Flow and Information about Indebtedness

    The following table sets forth a summary of our cash flows from operating, investing, and financing activities for the periods presented:

     For the three-month periods ended 
    (dollars in thousands)March 30, 2024 April 1, 2023 
    Net cash (used in) provided by operating activities$(11,972)$7,495 
    Net cash used in investing activities$(1,308)$(4,800)
    Net cash provided by financing activities$11,945 $12,521 
    Cash and cash equivalents at beginning of period$43,942 $19,217 
    Cash and cash equivalents at end of period$42,607 $34,433 


    The following table presents our long-term indebtedness as of March 30, 2024:

    (dollars in thousands)    
    InstrumentInterest Rate March 30, 2024 
    2021 Extended Term Loan (1)S + 3.75% $897,450 
    Second Lien Term Loan (1)S + 7.00%  415,000 
    Revolving Credit Facility (1)S + 3.75%  - 
    Securitization FacilityS + 3.50%  165,000 
    Total indebtedness  $1,477,450 
    (1) S = Greater of 0.50% or one-month SOFR, plus a CSA    


    Results of Operations

    The following table summarizes our consolidated results of operations for the periods indicated (amounts in thousands, except per share data):

     For the three-month periods ended 
     March 30, 2024 April 1, 2023 
    Revenue$490,653 $466,413 
    Cost of revenue, excluding depreciation and amortization 344,799  321,948 
    Branch and regional administrative expenses 87,914  91,708 
    Corporate expenses 29,842  30,935 
    Depreciation and amortization 2,912  4,041 
    Acquisition-related costs -  70 
    Other operating expense 2,320  72 
    Operating income 22,866  17,639 
    Interest income 102  75 
    Interest expense (39,647) (35,958)
    Other income (expense) 18,169  (12,188)
    Income (loss) before income taxes 1,490  (30,432)
    Income tax expense (12,662) (1,566)
    Net loss$(11,172)$(31,998)
    Net loss per share:    
    Net loss per share, basic and diluted$(0.06)$(0.17)
    Weighted average shares of common stock outstanding, basic and diluted 192,241  189,054 


    The following tables summarize our consolidated key performance measures, including Field contribution and Field contribution margin, which are non-GAAP measures, for the periods indicated:

     For the three-month periods ended 
    (dollars in thousands)March 30, 2024 April 1, 2023 Change % Change 
    Revenue$490,653 $466,413 $24,240  5.2%
    Cost of revenue, excluding depreciation and amortization 344,799  321,948  22,851  7.1%
    Gross margin$145,854 $144,465 $1,389  1.0%
    Gross margin percentage 29.7% 31.0%    
    Branch and regional administrative expenses 87,914  91,708  (3,794) -4.1%
    Field contribution$57,940 $52,757 $5,183  9.8%
    Field contribution margin 11.8% 11.3%    
    Corporate expenses$29,842 $30,935 $(1,093) -3.5%
    As a percentage of revenue 6.1% 6.6%    
    Operating income$22,866 $17,639 $5,227  29.6%
    As a percentage of revenue 4.7% 3.8%    


    The following tables summarize our key performance measures by segment for the periods indicated:

     PDS  
     For the three-month periods ended  
    (dollars and hours in thousands)March 30, 2024 April 1, 2023 Change % Change  
    Revenue$395,009 $372,947 $22,062  5.9% 
    Cost of revenue, excluding depreciation and amortization 294,874  268,763  26,111  9.7% 
    Gross margin$100,135 $104,184 $(4,049) -3.9% 
    Gross margin percentage 25.4% 27.9%   -2.5%(4)
    Hours 10,264  9,783  481  4.9% 
    Revenue rate$38.48 $38.12 $0.36  1.0%(1)
    Cost of revenue rate$28.73 $27.47 $1.26  4.8%(2)
    Spread rate$9.76 $10.65 $(0.89) -8.8%(3)
              
     HHH  
     For the three-month periods ended  
    (dollars and admissions/episodes in thousands)March 30, 2024 April 1, 2023 Change % Change  
    Revenue$54,613 $56,126 $(1,513) -2.7% 
    Cost of revenue, excluding depreciation and amortization 25,639  31,095  (5,456) -17.5% 
    Gross margin$28,974 $25,031 $3,943  15.8% 
    Gross margin percentage 53.1% 44.6%   8.5%(4)
    Home health total admissions (5) 10.1  11.7  (1.6) -13.7% 
    Home health episodic admissions (6) 7.6  8.0  (0.4) -5.0% 
    Home health total episodes (7) 12.1  11.9  0.2  1.7% 
    Home health revenue per completed episode (8)$3,070 $2,969 $101  3.4% 
              
     MS  
     For the three-month periods ended  
    (dollars and UPS in thousands)March 30, 2024 April 1, 2023 Change % Change  
    Revenue$41,031 $37,340 $3,691  9.9% 
    Cost of revenue, excluding depreciation and amortization 24,286  22,090  2,196  9.9% 
    Gross margin$16,745 $15,250 $1,495  9.8% 
    Gross margin percentage 40.8% 40.8%   0.0%(4)
    Unique patients served (“UPS”) 92  85  7  8.2% 
    Revenue rate$445.99 $439.29 $6.70  1.7%(1)
    Cost of revenue rate$263.98 $259.88 $4.10  1.7%(2)
    Spread rate$182.01 $179.41 $2.60  1.6%(3)
                  
    1. Represents the period over period change in revenue rate, plus the change in revenue rate attributable to the change in volume.
    2. Represents the period over period change in cost of revenue rate, plus the change in cost of revenue rate attributable to the change in volume.
    3. Represents the period over period change in spread rate, plus the change in spread rate attributable to the change in volume.
    4. Represents the change in margin percentage year over year (or quarter over quarter).
    5. Represents home health episodic and fee-for-service admissions.
    6. Represents home health episodic admissions.
    7. Represents episodic admissions and recertifications.
    8. Represents Medicare revenue per completed episode.


    The following table reconciles gross margin and gross margin percentage to Field contribution and Field contribution margin:

     For the three-month periods ended 
    (dollars in thousands)March 30, 2024 April 1, 2023 
    Gross margin$145,854 $144,465 
    Branch and regional administrative expenses 87,914  91,708 
    Field contribution$57,940 $52,757 
    Revenue$490,653 $466,413 
    Field contribution margin 11.8% 11.3%

    The following table reconciles net loss to EBITDA and Adjusted EBITDA:

      For the three-month periods ended 
    (dollars in thousands) March 30, 2024 April 1, 2023 
    Net loss $(11,172)$(31,998)
    Interest expense, net  39,545  35,883 
    Income tax expense  12,662  1,566 
    Depreciation and amortization  2,912  4,041 
    EBITDA  43,947  9,492 
    Goodwill, intangible and other long-lived asset impairment  2,320  68 
    Non-cash share-based compensation  4,081  2,442 
    Interest rate derivatives (1)  (17,918) 11,922 
    Acquisition-related costs (2)  -  70 
    Integration costs (3)  299  1,133 
    Legal costs and settlements associated with acquisition matters (4)  402  304 
    Restructuring (5)  1,470  2,127 
    Other legal matters (6)  1,095  - 
    Other system transition costs, professional fees and other (7)  (813) 923 
    Total adjustments $(9,064)$18,989 
    Adjusted EBITDA $34,883 $28,481 


    The following table reconciles net loss to adjusted net loss and presents adjusted net loss per diluted share:

     For the three-month periods ended 
    (dollars in thousands, except share and per share data)March 30, 2024 April 1, 2023 
    Net loss$(11,172)$(31,998)
    Income tax expense 12,662  1,566 
    Goodwill, intangible and other long-lived asset impairment 2,320  68 
    Non-cash share-based compensation 4,081  2,442 
    Interest rate derivatives (1) (17,918) 11,922 
    Acquisition-related costs (2) -  70 
    Integration costs (3) 299  1,133 
    Legal costs and settlements associated with acquisition matters (4) 402  304 
    Restructuring (5) 1,470  2,127 
    Other legal matters (6) 1,095  - 
    Other system transition costs, professional fees and other (7) (813) 923 
    Total adjustments 3,598  20,555 
    Adjusted pre-tax net loss (7,574) (11,443)
    Income tax expense on adjusted pre-tax loss (8) 1,894  2,861 
    Adjusted net loss$(5,680)$(8,582)
    Weighted average shares outstanding, diluted 192,241  189,054 
    Adjusted net loss per diluted share (9)$(0.03)$(0.05)


    The following footnotes are applicable to tables above that reconcile (i) net loss to EBITDA and Adjusted EBITDA and (ii) net loss to adjusted net loss.

    1. Represents valuation adjustments and settlements associated with interest rate derivatives that are not included in interest expense, net. Such items are included in other income.
    2. Represents transaction costs incurred in connection with planned, completed, or terminated acquisitions, which include investment banking fees, legal diligence and related documentation costs, and finance and accounting diligence and documentation, as presented on the Company’s consolidated statements of operations.
    3. Represents (i) costs associated with our Integration Management Office, which focuses on our integration efforts and transformational projects such as systems conversions and implementations, material cost reduction and restructuring projects, among other things, of $0.3 million and $0.4 million for the three-month periods ended March 30, 2024 and April 1, 2023, respectively; and (ii) transitionary costs incurred to integrate acquired companies into our field and corporate operations of $0.0 million and $0.7 million for the three-month periods ended March 30, 2024 and April 1, 2023, respectively. Transitionary costs incurred to integrate acquired companies include IT consulting costs and related integration support costs; salary, severance and retention costs associated with duplicative acquired company personnel until such personnel are exited from the Company; accounting, legal and consulting costs; expenses and impairments related to the closure and consolidation of overlapping markets of acquired companies, including lease termination and relocation costs; costs associated with terminating legacy acquired company contracts and systems; and one-time costs associated with rebranding our acquired companies and locations to the Aveanna brand.
    4. Represents legal and forensic costs, as well as settlements associated with resolving legal matters arising during or as a result of our acquisition-related activities. This primarily includes costs of $0.4 million and $0.1 million for the three-month periods ended March 30, 2024 and April 1, 2023, respectively, to comply with the U.S. Department of Justice, Antitrust Division’s grand jury subpoena related to nurse wages and hiring activities in certain of our markets, in connection with a terminated transaction.
    5. Represents costs associated with restructuring our branch and regional administrative footprint as well as our corporate overhead infrastructure costs in order to appropriately size our resources to current volumes, including: (i) branch and regional salary and severance costs; (ii) corporate salary and severance costs; and (iii) rent and lease termination costs associated with the closure of certain office locations. Restructuring costs also include compensation, severance and related benefits costs associated with an executive transition plan initiated in the first quarter of 2024.
    6. Represents activity related to accrued legal settlements and the related costs and expenses associated with certain judgments and arbitration awards rendered against the Company where certain insurance coverage is in dispute.
    7. Represents (i) costs associated with the implementation of, and transition to, new electronic medical record systems, billing and collection systems, duplicative system costs while such transformational projects are in-process, and other system transition costs of $0.7 million for the three-month period ended April 1, 2023, there were no such costs incurred in the three-month period ended March 30, 2024; (ii) professional fees associated with preparation for Sarbanes-Oxley compliance of $0.5 million for the three-month period ended April 1, 2023, there were no such expenses recorded during the three-month-period ended March 30, 2024; (iii) other costs or (income) that are either non-cash or non-core to the Company’s ongoing operations of $(0.8) million and $(0.3) million for the three-month periods ended March 30, 2024 and April 1, 2023, respectively.
    8. Derived utilizing a combined statutory rate of 25% for the for the three-month periods ended March 30, 2024, and April 1, 2023, respectively, and applied to the respective adjusted pre-tax loss.
    9. Adjustments used to reconcile net loss per diluted share on a GAAP basis to adjusted net loss per diluted share are comprised of the same adjustments, inclusive of the tax impact, used to reconcile net loss to adjusted net loss divided by the weighted-average diluted shares outstanding during the period.


    The table below reflects the increase or decrease, and aggregate impact, to the line items included on our consolidated statements of operations based upon the adjustments used in arriving at Adjusted EBITDA from EBITDA for the periods indicated.

     For the three-month periods ended 
    (dollars in thousands)March 30, 2024 April 1, 2023 
    Cost of revenue, excluding depreciation and amortization$95 $145 
    Branch and regional administrative expenses 1,312  1,641 
    Corporate expenses 5,378  4,874 
    Acquisition-related costs -  70 
    Other operating expense 2,320
    		  - 
    Other income (expense) (18,169) 12,259 
    Total adjustments$(9,064)$18,989 


    The following table reconciles the net cash used in operating activities to free cash flow:

      For the three-month period ended 
    (dollars in thousands) March 30, 2024 
    Net cash used in operating activities  (11,972)
    Purchases of property and equipment, and software  (1,308)
    Principal payments of term loans  (2,300)
    Principal payments of notes payable and financing lease obligations  (1,448)
    Settlements with swap counterparties  4,344 
    Free cash flow $(12,684)


    Investor Contact

    Matt Buckhalter
    Chief Financial Officer
    Ir@aveanna.com

     


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