Aveanna Healthcare Holdings Inc. (AVAH) Bundle
Understanding Aveanna Healthcare Holdings Inc. (AVAH) Revenue Streams
Understanding Aveanna Healthcare Holdings Inc.’s Revenue Streams
For the three-month period ended September 28, 2024, total revenue was $509.0 million, compared to $478.0 million for the same period in 2023, reflecting an increase of $31.0 million or 6.5%.
The revenue breakdown by segment for the three-month period is as follows:
| Segment | Revenue (2024) | Revenue (2023) | Change ($) | Change (%) |
|---|---|---|---|---|
| PDS | $409.4 million | $384.6 million | $24.8 million | 6.4% |
| HHH | $55.9 million | $54.7 million | $1.2 million | 2.2% |
| MS | $43.7 million | $38.6 million | $5.1 million | 12.6% |
For the nine-month period ended September 28, 2024, total revenue reached $1,504.6 million, compared to $1,416.4 million for the same period in 2023, signifying a year-over-year increase of $88.3 million or 6.2%.
The revenue breakdown by segment for the nine-month period is as follows:
| Segment | Revenue (2024) | Revenue (2023) | Change ($) | Change (%) |
|---|---|---|---|---|
| PDS | $1,212.4 million | $1,135.4 million | $77.1 million | 6.8% |
| HHH | $163.4 million | $164.5 million | $(1.1) million | (0.7%) |
| MS | $128.8 million | $116.5 million | $12.4 million | 10.6% |
Key observations from the revenue analysis indicate that the PDS segment remains the largest contributor to overall revenue, accounting for approximately 80.6% of total revenue for the nine-month period ended September 28, 2024. Conversely, the HHH segment experienced a slight decline, primarily due to an 8.1% decrease in total admissions, while the MS segment showed robust growth driven by a 7.8% increase in volume.
The year-over-year growth rates for the revenue segments illustrate significant trends:
- PDS: Increased by 6.8% for the nine-month period.
- HHH: Decreased by 0.7% for the nine-month period.
- MS: Increased by 10.6% for the nine-month period.
Overall, the company reported a total segment gross margin of $463.8 million for the nine-month period ended September 28, 2024, representing a gross margin percentage of 30.8%, a decrease from 31.6% in the prior year.
The following table summarizes the gross margin by segment:
| Segment | Gross Margin (2024) | Gross Margin (2023) | Change ($) | Change (%) |
|---|---|---|---|---|
| PDS | $320.8 million | $320.1 million | $0.7 million | 0.2% |
| HHH | $87.6 million | $77.3 million | $10.2 million | 13.2% |
| MS | $55.4 million | $49.5 million | $5.9 million | 12.0% |
In summary, the company’s revenue streams show resilience with overall growth driven primarily by the PDS and MS segments, while the HHH segment faces challenges with declining admissions but has maintained revenue stability through improved episodic mix and revenue per completed episode.
A Deep Dive into Aveanna Healthcare Holdings Inc. (AVAH) Profitability
A Deep Dive into Aveanna Healthcare Holdings Inc.'s Profitability
Gross Profit Margin: For the three-month period ended September 28, 2024, the gross margin was $159.7 million, which translates to a gross margin percentage of 31.4%. This is an increase from 30.8% for the same period in 2023. For the nine-month period ended September 28, 2024, the gross margin was $463.8 million, representing 30.8% of revenue, compared to 31.6% for the nine-month period ended September 30, 2023.
Operating Profit Margin: The operating income for the three-month period ended September 28, 2024, was $34.0 million, or 6.7% of revenue, compared to an operating loss of 76.4 million in the prior year, marking a significant turnaround. For the nine-month period, operating income was $94.0 million, representing 6.2% of revenue, up from an operating loss of $21.2 million in the same period of 2023.
Net Profit Margin: The net loss for the three-month period ended September 28, 2024, was $42.8 million, a substantial improvement from a net loss of $102.4 million in the same period of the previous year. The net loss per share for the third quarter was $0.22, compared to $0.54 in 2023. For the nine-month period, the net loss was $40.1 million, compared to $108.8 million in the prior year.
Trends in Profitability Over Time
The company has shown a significant improvement in profitability metrics over the past year. The gross margin increased from 30.8% to 31.4% in the most recent quarter, while the operating margin flipped from a loss to a positive margin of 6.7%. This trend reflects effective cost management and revenue growth strategies.
Comparison of Profitability Ratios with Industry Averages
In comparison to industry averages, the company’s gross margin of 31.4% is competitive, as the healthcare services sector typically sees gross margins ranging from 25% to 35%. The operating margin of 6.7% also aligns well with the industry benchmark of approximately 5% to 10% for similar healthcare providers.
Analysis of Operational Efficiency
Cost Management: The cost of revenue, excluding depreciation and amortization, was $349.3 million for the three-month period ended September 28, 2024, up from $330.7 million in the same period of the previous year. This reflects a 5.6% increase, which is lower than the revenue growth of 6.5%.
Branch and Regional Administrative Expenses: These expenses decreased to $88.2 million for the three-month period, or 17.3% of revenue, down from 19.0% the previous year. This indicates improved operational efficiency.
| Metric | Q3 2024 | Q3 2023 | Change | 9M 2024 | 9M 2023 | Change |
|---|---|---|---|---|---|---|
| Revenue | $509.0 million | $478.0 million | +6.5% | $1,504.6 million | $1,416.4 million | +6.2% |
| Gross Margin | $159.7 million | $147.3 million | +8.4% | $463.8 million | $446.0 million | +3.8% |
| Operating Income | $34.0 million | $(76.4 million) | +144.6% | $94.0 million | $(21.2 million) | +543.0% |
| Net Loss | $(42.8 million) | $(102.4 million) | +58.2% | $(40.1 million) | $(108.8 million) | +63.1% |
Overall, the company has demonstrated a robust improvement in profitability metrics, highlighting effective cost management and a strategic focus on revenue growth in a competitive healthcare landscape.
Debt vs. Equity: How Aveanna Healthcare Holdings Inc. (AVAH) Finances Its Growth
Debt vs. Equity: How Aveanna Healthcare Holdings Inc. Finances Its Growth
As of September 28, 2024, the total indebtedness of Aveanna Healthcare Holdings Inc. is $1,480.15 million, comprised of various long-term and current obligations. The breakdown of these obligations is as follows:
| Instrument | Current Amount ($ thousands) | Long-term Amount ($ thousands) | Interest Rate | Interest Expense ($ thousands) |
|---|---|---|---|---|
| 2021 Extended Term Loan | $9,200 | $895,150 | S + 3.75% | $62,436 |
| Second Lien Term Loan | $0 | $415,000 | S + 7.00% | $39,258 |
| Revolving Credit Facility | $0 | $0 | S + 3.75% | $638 |
| Securitization Facility | $0 | $170,000 | S + 3.15% | $11,225 |
| Total Indebtedness | $1,480,150 | - | - | $118,505 |
The company’s debt-to-equity ratio stands at 8.16, which indicates a significantly leveraged position compared to the healthcare industry average of approximately 1.0 to 1.5. This highlights a reliance on debt financing to fuel growth and operations.
Recent debt issuances include the Securitization Facility, which was amended on May 31, 2024, to increase the maximum amount from $175 million to $225 million, subject to certain borrowing base requirements. The facility has a maturity date set for July 31, 2026 .
The current credit ratings reflect the company’s financial health, with a focus on maintaining compliance with all financial covenants related to existing credit facilities. As of September 28, 2024, the company has a weighted average interest rate of 9.7% .
Aveanna Healthcare balances its debt financing with equity funding through various means, including an Employee Stock Purchase Plan, where 1,751,909 shares were purchased at an average price of $1.76 per share for the nine-month period ended September 28, 2024. This equity funding helps mitigate the risks associated with high debt levels .
Overall, the company’s financial strategy demonstrates a clear preference for leveraging debt to support its growth initiatives while managing equity to maintain operational flexibility.
Assessing Aveanna Healthcare Holdings Inc. (AVAH) Liquidity
Assessing Aveanna Healthcare Holdings Inc.'s Liquidity
Current Ratio: As of September 28, 2024, the current ratio stands at 1.14, indicating that current assets exceed current liabilities.
Quick Ratio: The quick ratio is calculated at 0.81, suggesting potential liquidity concerns as it indicates that liquid assets may not fully cover current liabilities.
Analysis of Working Capital Trends
Working capital for the nine-month period ended September 28, 2024, was reported at $91.6 million, a significant improvement from $(8.0 million) for the same period in 2023. This reflects a positive trend in operational efficiency and asset management.
Cash Flow Statements Overview
For the nine-month period ended September 28, 2024, cash flow from operating activities was $19.2 million, compared to $25.7 million in the previous year. The decrease is attributed to changes in working capital and operational expenditures.
Investing activities showed cash used of $(4.8 million) for the nine-month period ended September 28, 2024, a decrease from $(7.2 million) in the prior year, indicating reduced capital expenditure.
Cash flow from financing activities was $20.1 million, up from $10.6 million in the same period last year, primarily due to increased proceeds from the employee stock purchase plan and securitization obligations.
| Cash Flow Category | September 28, 2024 | September 30, 2023 |
|---|---|---|
| Operating Activities | $19.2 million | $25.7 million |
| Investing Activities | $(4.8 million) | $(7.2 million) |
| Financing Activities | $20.1 million | $10.6 million |
Potential Liquidity Concerns or Strengths
The company holds $78.5 million in cash as of September 28, 2024, with an additional $168.2 million available under the revolving credit facility, reflecting a solid liquidity position. However, the quick ratio of 0.81 suggests a reliance on inventory and receivables to meet short-term obligations.
Days Sales Outstanding (DSO) is reported at 48.1 days, indicating a manageable collection period for receivables but also suggesting room for improvement in cash flow management.
Overall, while the company has sufficient cash on hand and available credit, the quick ratio and DSO signal areas to monitor closely to enhance liquidity management.
Is Aveanna Healthcare Holdings Inc. (AVAH) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The current P/E ratio for Aveanna Healthcare Holdings Inc. is not explicitly provided in the available data. However, based on the net loss per share of $0.22 for the three-month period ended September 28, 2024, it indicates that the company is currently operating at a loss, making the P/E ratio negative and suggesting potential overvaluation relative to earnings.
Price-to-Book (P/B) Ratio
The total stockholders' deficit as of September 28, 2024, was $156.442 million, with total common stock shares outstanding at 193,225,177. The book value per share is calculated as follows:
Book Value per Share = Total Stockholders' Deficit / Total Shares Outstanding
Book Value per Share = -$156,442,000 / 193,225,177 = -$0.81
As the book value is negative, the P/B ratio cannot be computed meaningfully, indicating potential overvaluation.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EBITDA for the nine-month period ended September 28, 2024, is not explicitly provided. However, the operating income for the same period was $94.016 million. Adjusting for depreciation and amortization of $8.332 million, the EBITDA can be estimated:
EBITDA = Operating Income + Depreciation and Amortization
EBITDA = $94.016 million + $8.332 million = $102.348 million
Considering the enterprise value is not provided, a complete EV/EBITDA ratio cannot be calculated, which limits valuation insights.
Stock Price Trends
The stock price for Aveanna Healthcare Holdings Inc. has shown volatility over the last 12 months. As of September 28, 2024, the stock was trading at approximately $2.35. Prior to this, the stock had seen fluctuations due to market conditions and operational performance.
Dividend Yield and Payout Ratios
Aveanna Healthcare Holdings Inc. does not currently pay dividends, thus the dividend yield is 0%. The payout ratio is also not applicable as there are no dividends distributed.
Analyst Consensus on Stock Valuation
As of the latest analysis, the consensus on the stock valuation is mixed, with some analysts recommending a hold position due to the company's ongoing losses and operational challenges, while others suggest a buy based on potential recovery and market positioning.
| Metric | Value |
|---|---|
| P/E Ratio | Negative |
| P/B Ratio | Not computable (Negative Book Value) |
| EV/EBITDA Ratio | Not computable (Missing EV) |
| Current Stock Price | $2.35 |
| Dividend Yield | 0% |
| Analyst Consensus | Mixed (Hold/Buy) |
Key Risks Facing Aveanna Healthcare Holdings Inc. (AVAH)
Key Risks Facing Aveanna Healthcare Holdings Inc.
The financial health of Aveanna Healthcare Holdings Inc. (AVAH) is influenced by various internal and external risk factors. Below is a comprehensive breakdown of those risks as of 2024.
Industry Competition
The healthcare sector is highly competitive, with numerous providers vying for market share. Aveanna competes with both large national firms and smaller local providers. As of September 28, 2024, the company reported a revenue increase of $31.0 million or 6.5% compared to the prior year, but continued competition could pressure margins and market position.
Regulatory Changes
Healthcare providers face stringent regulations which can affect operational costs and compliance. Changes in government healthcare policies, particularly those related to Medicaid reimbursement rates, can significantly impact revenue. The company has noted a 2.3% increase in revenue rates attributed to reimbursement rate increases from various state Medicaid programs.
Market Conditions
Fluctuations in economic conditions can affect patient volumes and reimbursements. For instance, economic downturns may lead to reduced patient admissions, impacting overall revenue. The company’s total revenue for the nine-month period ended September 28, 2024, was $1,504.6 million, reflecting a 6.2% increase year-over-year.
Operational Risks
Operational risks include challenges related to staffing and service delivery. The company has reported a 9.4% increase in PDS cost of revenue, driven by higher caregiver labor costs. Additionally, there was a 3.8% increase in volume, indicating a need for adequate staffing to meet demand.
Financial Risks
Financial risks encompass debt levels and interest rates. As of September 28, 2024, the company’s total liabilities were reported at $1,799.1 million, with significant interest expenses incurred. The company’s long-term obligations had a fair value of $1,260.6 million. Additionally, the effective interest rates on various loans ranged from 8.11% to 12.21%.
Strategic Risks
Strategic decisions, including mergers and acquisitions, can pose risks if not executed successfully. The company has faced goodwill impairment charges, with a decrease of $105.1 million in such expenses noted in the latest earnings. These strategic moves must align with market trends and operational capabilities to mitigate risks effectively.
Mitigation Strategies
The company has implemented several strategies to mitigate these risks. This includes ongoing monitoring of regulatory changes and adjusting operational practices accordingly. The restructuring of branch and regional operations has led to a 3.1% decrease in administrative expenses as a percentage of revenue.
| Risk Factor | Description | Impact on Revenue |
|---|---|---|
| Industry Competition | High competition from national and local providers | Potential pressure on margins |
| Regulatory Changes | Changes in Medicaid reimbursement rates | Direct impact on revenue streams |
| Market Conditions | Fluctuating economic conditions affecting patient volumes | Increased risk of reduced admissions |
| Operational Risks | Challenges in staffing and service delivery | Increased operational costs |
| Financial Risks | High levels of debt and interest rates | Increased interest expenses impacting net income |
| Strategic Risks | Risks associated with mergers and acquisitions | Potential for goodwill impairment |
Future Growth Prospects for Aveanna Healthcare Holdings Inc. (AVAH)
Future Growth Prospects for Aveanna Healthcare Holdings Inc.
Analysis of Key Growth Drivers
The growth of the company is largely driven by several key factors, including:
- Product Innovations: The company has seen a significant uptick in demand for non-clinical services, contributing to a 3.8% increase in volume in the PDS segment.
- Market Expansions: Revenue for the three-month period ended September 28, 2024, reached $509.0 million, an increase of 6.5% compared to $478.0 million in the same period the previous year.
- Acquisitions: Strategic acquisitions have positioned the company to leverage new markets and enhance service offerings.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is projected to be robust, with estimates indicating an increase in consolidated revenue by 6.2% to $1.504 billion for the nine-month period ended September 28, 2024, compared to $1.416 billion for the same period in 2023. Earnings estimates suggest a continued improvement in operating income, which reached $94.0 million for the nine-month period ended September 28, 2024, compared to an operating loss of $21.2 million for the same period in 2023.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company is actively pursuing partnerships and strategic initiatives aimed at enhancing service delivery and expanding its market footprint. These initiatives include:
- Expansion of Services: Increasing the range of non-clinical services offered to meet the growing demand.
- Technological Advancements: Investing in technology to improve operational efficiencies and patient care.
- Collaborative Partnerships: Forming alliances with healthcare providers and payers to enhance service offerings and access to new patient populations.
Competitive Advantages That Position the Company for Growth
The company has several competitive advantages that position it favorably for growth, including:
- Established Market Presence: A solid reputation and established relationships with healthcare providers and payers.
- Diverse Service Offerings: A comprehensive portfolio of healthcare services that cater to a wide range of patient needs.
- Operational Efficiency: Improved cost management, evidenced by a 1.7% decrease in branch and regional administrative expenses as a percentage of revenue, down to 17.6% for the nine-month period ended September 28, 2024.
Financial Overview and Key Statistics
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Revenue | $509.0 million | $478.0 million | $1.504 billion | $1.416 billion |
| Operating Income | $34.0 million | ($76.4 million) | $94.0 million | ($21.2 million) |
| Net Loss | ($42.8 million) | ($102.4 million) | ($40.1 million) | ($108.8 million) |
| Field Contribution Margin | 14.0% | 11.8% | 13.3% | 12.2% |
| Weighted Average Shares Outstanding | 193.4 million | 189.1 million | 192.7 million | 189.6 million |
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Resources:
- Aveanna Healthcare Holdings Inc. (AVAH) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Aveanna Healthcare Holdings Inc. (AVAH)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Aveanna Healthcare Holdings Inc. (AVAH)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.