other a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 2025
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number: 001-40362
Aveanna Healthcare Holdings Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware
81-4717209
( State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
400 Interstate North Parkway SE, Atlanta, GA 30339
(Address of principal executive offices) (Zip code)
(770) 441-1580
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
AVAH
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of August 1, 2025, the registrant had 208,896,373 shares of common stock, $0.01 par value per share, outstanding.
Table of Contents
Page
Cautionary Note Regarding Forward-Looking Statements
1
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements
Consolidated Balance Sheets as of June 28, 2025 (Unaudited) and December 28, 2024
2
Consolidated Statements of Operations for the Three and Six-Month Periods Ended June 28, 2025 and June 29, 2024 (Unaudited)
3
Consolidated Statements of Stockholders’ Deficit for the Three and Six-Month Periods Ended June 28, 2025 and June 29, 2024 (Unaudited)
4
Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 28, 2025 and June 29, 2024 (Unaudited)
5
Notes to Consolidated Financial Statements (Unaudited)
6
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
19
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
38
Item 4.
Controls and Procedures
PART II. OTHER INFORMATION
Legal Proceedings
40
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
41
SIGNATURES
Signatures
42
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial condition, business strategy, and plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “anticipate,” “believe,” “continue,” “could,” “design,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “project,” “should,” “will,” “would,” or the negative of these terms or other similar expressions.
These statements are based on certain assumptions that we have made considering 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. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions. Many factors could affect our actual results and could cause actual results to differ materially from those expressed in the forward-looking statements. Forward-looking statements contained in this Quarterly Report on Form 10-Q are subject to risks that may cause actual results to differ materially from those expressed or implied in the forward-looking statements, including, but not limited to, the following risks:
Additionally, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time, and it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Considering these risks, uncertainties and assumptions, the forward-looking statements contained in this Quarterly Report on Form 10-Q might not prove to be accurate and you should not place undue reliance upon them or otherwise rely upon them as predictions of future events. All forward-looking statements made by us in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. We intend that all forward-looking statements be subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.
AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
As of
June 28, 2025
December 28, 2024
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
100,738
84,288
Patient accounts receivable
316,276
265,193
Receivables under insured programs
4,361
12,465
Prepaid expenses
18,323
17,477
Other current assets
10,217
13,247
Total current assets
449,915
392,670
Property and equipment, net
17,884
17,373
Operating lease right of use assets
38,643
41,278
Goodwill
1,118,730
1,054,552
Intangible assets, net
94,448
89,566
21,099
22,425
Other long-term assets
30,252
45,530
Total assets
1,770,971
1,663,394
LIABILITIES, DEFERRED RESTRICTED STOCK UNITS, AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and other accrued liabilities
46,592
36,435
Accrued payroll and employee benefits
92,105
87,672
Current portion of insurance reserves - insured programs
Current portion of insurance reserves
16,729
18,444
Securitization obligations
168,750
Current portion of long-term obligations
9,200
Current portion of operating lease liabilities
16,083
15,498
Other current liabilities
60,412
53,703
Total current liabilities
414,232
402,167
Revolving credit facility
-
Long-term obligations, less current portion
1,269,492
1,271,656
Long-term insurance reserves - insured programs
Long-term insurance reserves
42,386
44,506
Operating lease liabilities, less current portion
27,723
31,718
Deferred income taxes
6,501
5,894
Other long-term liabilities
800
7,118
Total liabilities
1,782,233
1,785,484
Commitments and contingencies (Note 11)
Deferred restricted stock units
730
1,461
Stockholders’ deficit:
Preferred stock, $0.01 par value as of June 28, 2025 and December 28, 2024
5,000,000 shares authorized; none issued or outstanding
Common stock, $0.01 par value, 1,000,000,000 shares authorized;
208,259,393 and 193,225,177 issued and outstanding, respectively
2,083
1,932
Additional paid-in capital
1,335,870
1,256,680
Accumulated deficit
(1,349,945
)
(1,382,163
Total stockholders’ deficit
(11,992
(123,551
Total liabilities, deferred restricted stock units, and stockholders’ deficit
The accompanying notes are an integral part of these unaudited consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
For the three-month periods ended
For the six-month periods ended
June 29, 2024
Revenue
589,553
504,958
1,148,777
995,611
Cost of revenue, excluding depreciation and amortization
378,753
346,691
754,419
691,490
Branch and regional administrative expenses
90,069
87,972
181,456
175,886
Corporate expenses
34,529
30,245
72,034
60,087
Depreciation and amortization
2,617
2,833
5,211
5,745
Acquisition-related costs
3,400
3,506
Other operating expense
151
91
316
2,411
Operating income
80,034
37,126
131,835
59,992
Interest income
129
95
261
197
Interest expense
(36,003
(39,613
(72,338
(79,260
Other (expense) income
(22
6,371
(5,472
24,540
Income before income taxes
44,138
3,979
54,286
5,469
Income tax (expense) benefit
(17,113
9,927
(22,068
(2,735
Net income
27,025
13,906
32,218
2,734
Net income per share:
Net income per share, basic
0.13
0.07
0.16
0.01
Weighted average shares of common stock outstanding, basic
200,968
192,600
197,819
192,420
Net income per share, diluted
Weighted average shares of common stock outstanding, diluted
210,442
196,869
206,763
196,274
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Amounts in thousands, except share data)
For the three-month period ended June 28, 2025
Common Stock
Additional Paid-in
Accumulated
Total Stockholders’
Shares
Amount
Capital
Deficit
Balance, March 29, 2025
195,093,866
1,951
1,274,889
(1,376,970
(100,130
Issuance of shares in connection with acquisition (Note 4)
11,184,588
112
59,726
59,838
Issuance of vested restricted shares
1,980,939
20
(3,904
(3,884
Non-cash share-based compensation
5,159
Balance, June 28, 2025
208,259,393
For the three-month period ended June 29, 2024
Equity
Balance, March 30, 2024
192,378,711
1,923
1,244,210
(1,382,406
(136,273
105,192
674
675
2,724
Balance, June 29, 2024
192,483,903
1,924
1,247,608
(1,368,500
(118,968
For the six-month period ended June 28, 2025
Balance, December 28, 2024
193,225,177
3,001,955
30
(5,591
(5,561
Employee stock purchase plan
847,673
9
1,782
1,791
23,273
For the six-month period ended June 29, 2024
Balance, December 30, 2023
190,733,153
1,907
1,239,757
(1,371,234
(129,570
1,010,635
10
1,339
1,349
740,115
7
668
5,844
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
Cash Flows From Operating Activities:
Adjustments to reconcile net income to net cash from operating activities:
Amortization of deferred debt issuance costs
3,350
2,484
Reduction in carrying amount of operating lease right of use assets
8,704
10,867
16,155
7,581
Loss on disposal or impairment of licenses, property and equipment, and software
319
308
Fair value adjustments on interest rate derivatives
17,580
(5,130
607
611
Changes in operating assets and liabilities, net of impact of acquisitions:
(31,033
(36,404
1,490
1,032
Other current and long-term assets
(3,813
(14,578
8,191
8,362
111
5,464
Insurance reserves
(4,929
7,365
Operating lease liabilities
(9,479
(10,277
Other current and long-term liabilities
(1,745
3,673
Net cash provided by (used in) operating activities
42,937
(10,163
Cash Flows From Investing Activities:
Acquisitions of businesses, net of cash acquired
(14,853
Purchases of property and equipment, and software
(3,477
(2,577
Net cash used in investing activities
(18,330
Cash Flows From Financing Activities:
Payments for shares withheld to cover employee taxes on vesting of restricted stock
(6,292
Proceeds from employee stock purchase plan
Proceeds from securitization obligation
25,000
Repayment of securitization obligation
(10,000
Principal payments on term loans
(4,600
Principal payments on notes payable
(4,086
(3,561
Principal payments on financing lease obligations
(131
Payment of debt issuance costs
(1,114
(267
Settlements with interest rate swap counterparties
6,144
8,669
Net cash (used in) provided by financing activities
(8,157
16,459
Net change in cash and cash equivalents
16,450
3,719
Cash and cash equivalents at beginning of period
43,942
Cash and cash equivalents at end of period
47,661
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest
69,193
77,232
Cash paid for income taxes, net of refunds received
15,723
4,939
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
Aveanna Healthcare Holdings Inc. (together with its consolidated subsidiaries, the “Company”) is headquartered in Atlanta, Georgia and has locations in 38 states with concentrations in Texas, Pennsylvania, and California, providing a broad range of pediatric and adult healthcare services, including nursing, hospice, rehabilitation services, occupational nursing in schools, therapy services, day treatment centers for medically fragile and chronically ill children and adults, as well as delivery of enteral nutrition and other products to patients. 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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying interim unaudited consolidated financial statements include the accounts of Aveanna Healthcare Holdings Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in the interim unaudited consolidated financial statements, and business combinations accounted for as purchases have been included in the interim unaudited consolidated financial statements from their respective dates of acquisition.
Basis of Presentation
The accompanying interim consolidated financial statements are unaudited and have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these interim unaudited consolidated financial statements do not include all the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, these interim unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company’s financial position as of June 28, 2025 and the results of operations for the three and six-month periods ended June 28, 2025 and June 29, 2024, respectively. The results reported in these interim unaudited consolidated financial statements should not be regarded as indicative of results that may be expected for any future period or the year ending January 3, 2026. These interim unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes for the fiscal year ended December 28, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 13, 2025.
Our fiscal year ends on the Saturday that is closest to December 31 of a given year, resulting in either a 52 or 53-week fiscal year. The interim unaudited consolidated balance sheets reflect the accounts of the Company as of June 28, 2025 and December 28, 2024. For the three-month periods ended June 28, 2025 and June 29, 2024, the interim unaudited consolidated statements of operations and stockholders' deficit reflect the accounts of the Company from March 30, 2025 through June 28, 2025 and March 31, 2024 through June 29, 2024, respectively, each of which includes 13 weeks. For the six-month periods ended June 28, 2025 and June 29, 2024, the interim unaudited consolidated statements of operations, stockholders' deficit, and cash flows reflect the accounts of the Company from December 29, 2024, through June 28, 2025 and December 31, 2023 through June 29, 2024, respectively, each of which includes 26 weeks.
Use of Estimates
The Company’s accounting and reporting policies conform with U.S. GAAP. In preparing the interim unaudited consolidated financial statements, the Company is required to make estimates and assumptions that impact the amounts reported in these interim unaudited consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard enhances income tax disclosure requirements for all entities by requiring specified categories and greater disaggregation within the rate reconciliation table, disclosure of income taxes paid by jurisdiction, and providing clarification on uncertain tax positions and related financial statement impacts. The standard will be effective for the fiscal year 2025 annual financial statements with early adoption permitted. The Company plans to adopt the standard when it becomes effective beginning with the Company's fiscal year 2025 annual financial statements, and the Company expects the adoption of the standard will impact certain of its income tax disclosures.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. This standard update requires additional disclosures about certain expenses in commonly presented expense captions. The Company is required to adopt the guidance for its 2027 annual report filed on Form 10-K, though early adoption is permitted. The Company is currently evaluating the impact of these amendments on its disclosures, but this standard update will not impact the Company's results of operations or financial position.
3. REVENUE
The Company evaluates the nature, amount, timing and uncertainty of revenue and cash flows using the five-step process. The Company uses a portfolio approach to group contracts with similar characteristics and analyze historical cash collection trends.
Revenue is primarily derived from (i) pediatric healthcare services provided to patients, including private duty nursing and therapy services; (ii) adult home health and hospice services (collectively “patient revenue”); and (iii) the delivery of enteral nutrition and other products to patients (“product revenue”). The services provided by the Company have no fixed duration and can be terminated by the patient or the facility at any time; therefore, each service provided is its own stand-alone contract. Incremental costs of obtaining a contract are expensed as incurred due to the short-term nature of the contracts.
Services ordered by a healthcare provider in an episode of care are not separately identifiable and therefore have been combined into a single performance obligation for each contract. The Company recognizes revenue as its performance obligations are completed. For patient revenue, the performance obligation is satisfied over time as the customer simultaneously receives and consumes the benefits of the healthcare services provided. For product revenue, the performance obligation is satisfied at the point in time of delivery of the product to the patient. The Company recognizes patient revenue equally over the number of treatments provided in a single episode of care. Typically, patients and third-party payers are billed within several days of the service being performed, and payments are due based on contract terms.
The Company’s lines of business are generally classified into the following categories: private duty services; home health and hospice; and medical solutions.
Private Duty Services (“PDS”). The PDS business includes a broad range of pediatric and adult healthcare services, including private duty skilled nursing, non-clinical services, which include support services and personal care services, pediatric therapy services, rehabilitation services, and nursing services in schools and pediatric day healthcare centers.
Home Health & Hospice (“HHH”). The HHH business provides home health, hospice, and personal care services to predominately elderly patients.
Medical Solutions (“MS”). The MS business includes the delivery of enteral nutrition and other products to patients.
For the PDS, HHH, and MS businesses, the Company receives payments from the following sources for services rendered: (i) state governments under their respective Medicaid programs (“Medicaid”); (ii) Managed Care providers of state government Medicaid programs (“Medicaid MCO”); (iii) commercial insurers; (iv) other government programs including Medicare, Tricare and ChampVA (collectively, “Medicare”); and (v) individual patients. As the period between the time of service and time of payment is typically one year or less, the Company does not adjust for the effects of a significant financing component.
Most contracts contain variable consideration; however, it is unlikely that a significant reversal of revenue will occur when the uncertainty is resolved, and therefore, the Company has included the variable consideration in the estimated transaction price. The Company determines the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payers and by implicit price concessions which the Company estimates based on its historical collection experience. Management estimates the transaction price on a payer-specific basis given its interpretation of the applicable regulations or contract terms. Updated regulations and contract negotiations occur frequently, necessitating regular review and assessment by management. There were no material revenue adjustments recognized from performance obligations satisfied or partially satisfied in previous periods for the three and six-month periods ended June 28, 2025 or June 29, 2024, respectively.
As of June 28, 2025 and December 28, 2024, estimated contractual adjustments and implicit price concessions of $107.0 million and $90.6 million, respectively, were recorded as reductions to patient accounts receivable balances to arrive at the estimated collectible revenue and patient accounts receivable. Subsequent changes resulting from a patient’s ability to pay are recorded as bad debt expense, which is included as a component of operating expenses in the consolidated statements of operations. The
Company did not record any bad debt expense for the three and six-month periods ended June 28, 2025 or June 29, 2024, respectively.
The following table presents revenue by payer type as a percentage of total revenue for the three and six-month periods ended June 28, 2025 and June 29, 2024, respectively:
Medicaid MCO
58.6
%
56.2
56.1
Medicaid
22.2
22.9
22.5
22.6
Commercial
9.4
10.5
9.1
10.7
Medicare
9.7
10.3
Self-pay
0.1
Total revenue
100.0
4. ACQUISITION
On April 1, 2025, the Company, Thrive Skilled Pediatric Care, LLC, a Delaware limited liability company (“Thrive”), and other parties thereto entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which, following a series of mergers, Thrive would become a wholly-owned subsidiary of the Company (collectively, the "Merger"). Thrive is an independent provider of pediatric home care with 23 locations in seven states including Arizona, Georgia, Kansas, New Mexico, North Carolina, Virginia, and Texas. Thrive primarily provides skilled Private Duty Nursing services, but also provides Pediatric Therapy, Licensed Health Aide Services, and Certified Nurse Assistant Services.
On June 2, 2025, the Company paid approximately $75.7 million as consideration upon consummation of the Merger, including the issuance of 11.2 million shares of common stock, equating to $59.8 million based on the opening market price of the Company’s common stock on the closing date. This issuance of the shares of common stock did not involve a public offering and was exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act, which exempts transactions by an issuer not involving any public offering.
The Merger Agreement provides for customary purchase price adjustments, and approximately 1.3 million shares of the Company’s common stock is being held in escrow for a period of up to 12 months following the closing to support obligations under the Merger Agreement.
The preliminary purchase price allocation as of the acquisition date, reflecting measurement period adjustments made during the respective period, are as follows (amounts in thousands):
8
Entity
Thrive
Acquisition Date
June 2, 2025
Cash consideration
15,855
Share-based consideration
Total
75,693
1,002
20,050
306
494
Property and equipment
131
1,835
Intangible assets - licenses
5,000
Intangible assets - trade names
540
Receivables under insured programs - long term
1,439
1,095
1,754
4,322
679
741
9,935
2,160
1,094
Total identifiable net assets
11,515
64,178
The purchase price allocation is preliminary pending a final analysis of the impact of income taxes and finalization of the fair value of intangible assets and net working capital. The preliminary goodwill recognized is attributable to the excess of the particular purchase price of the acquisition over the fair value of identifiable net assets acquired, including other identified intangible assets. Goodwill is primarily attributable to expected synergies resulting from the acquisition. Preliminary goodwill from the Merger was allocated to segments as follows (amounts in thousands):
PDS
HHH
MS
Balance at December 28, 2024 and March 29, 2025, net (1)
897,728
46,188
110,636
Acquisition
Balance at June 28, 2025, net (1)
961,906
(1) Goodwill balance is net of accumulated impairment losses of $608.0 million for PDS, $119.8 million for MS, and $487.4 million for HHH.
The Company incurred transaction costs of $3.4 million and $3.5 million during the three and six-month periods ended June 28, 2025, respectively. No such cost was recognized during either the three or six-month period ended June 29, 2024. These costs are included in acquisition-related costs in the accompanying consolidated statement of operations.
Pro forma financial information related to the above acquisitions has not been provided as it is not material to the Company’s consolidated results of operations. The results of operations of the above acquisition are included in the Company’s consolidated results of operations from the date of acquisition and were not significant for the six-month period ended June 28, 2025.
5. LONG-TERM OBLIGATIONS
Long-term obligations consisted of the following as of June 28, 2025 and December 28, 2024, respectively (dollar amounts in thousands):
Instrument
StatedMaturityDate
Contractual Interest Rate
Interest Rateas of June 28, 2025
2021 Extended Term Loan (1)
07/2028
S + 3.75%
8.18%
885,950
890,550
Second Lien Term Loan (1)
12/2029
S + 7.00%
11.48%
415,000
Revolving Credit Facility (1)
04/2028
Total principal amount of long-term obligations
1,300,950
1,305,550
Less: unamortized debt issuance costs
(22,258
(24,694
Total amount of long-term obligations, net of unamortized debt issuance costs
1,278,692
1,280,856
Less: current portion of long-term obligations
(9,200
Total amount of long-term obligations, net of unamortized debt issuance costs, less current portion
(1) S = Greater of 0.50% or one-month SOFR, plus a credit spread adjustment
The 2021 Extended Term Loan bears interest, at the Company’s election, at a variable interest rate based on either SOFR (subject to a minimum of 0.50%), or an alternative base rate ("ABR") (subject to a minimum of 2.00%) for the interest period relevant to such borrowing, plus a credit spread adjustment ("CSA") of 0.10% and an applicable margin of 3.75% for loans accruing interest based on SOFR, and an applicable margin of 2.75% for loans accruing interest based on ABR. The Revolving Credit Facility bears interest, at the Company’s election, at a variable interest rate based on either SOFR (subject to a minimum of 0.50%) or ABR (subject to a minimum of 2.00%), for the interest period relevant to such borrowing, plus a CSA of 0.10% and an applicable margin of 3.75% for loans accruing interest based on SOFR, and an applicable margin of 2.75% for loans accruing interest based on ABR. As of June 28, 2025, the principal amount of the 2021 Extended Term Loan and borrowings under the Revolving Credit Facility each accrued interest at a rate of 8.18%.
The Second Lien Term Loan bears interest at a rate per annum equal to, at the Company’s election, either (1) an applicable margin (equal to 6.00%) plus a base rate determined by reference to the highest of (a) 0.50% per annum plus the Federal Funds Effective Rate, (b) the Prime Rate and (c) the SOFR rate for an interest period of one month plus a CSA depending on the interest period plus 1.00%; or (2) an applicable margin (equal to 7.00%) plus SOFR and a CSA depending on the interest period; provided that such rate is not lower than a floor of 0.50%. As of June 28, 2025, the principal amount of the Second Lien Term Loan accrued interest at a rate of 11.48%.
Debt issuance costs related to the term loans are recorded as a direct deduction from the carrying amount of the debt. The balances for debt issuance costs related to the term loans as of June 28, 2025 and December 28, 2024 were $22.3 million and $24.7 million, respectively. Debt issuance costs related to the Revolving Credit Facility are recorded within other long-term assets. The balances for debt issuance costs related to the Revolving Credit Facility as of June 28, 2025 and December 28, 2024 were $1.0 million and $1.6 million, respectively. The Company recognized interest expense related to the amortization of debt issuance costs of $1.5 million and $3.1 million for the three and six-month periods ended June 28, 2025, respectively, and $1.1 million and $2.2 million for the three and six-month periods ended June 29, 2024, respectively.
Issued letters of credit as of June 28, 2025 and December 28, 2024 were $23.3 million and $32.3 million, respectively. There were no swingline loans outstanding as of June 28, 2025 or December 28, 2024. Borrowing capacity under the Company's Revolving Credit Facility was approximately $147.0 million as of June 28, 2025 and $138.0 million as of December 28, 2024. Available borrowing capacity under the Revolving Credit Facility is subject to a maintenance leverage covenant that becomes effective if more than 30% of the total commitment is utilized.
The fair value of the Company's long-term obligations was estimated using market-observable inputs from the Company’s comparable peers with public debt, including quoted prices in active markets, which are considered Level 2 inputs. The aggregate fair value of the Company's long-term obligations was $1,272.8 million at June 28, 2025.
The Company was in compliance with all financial covenants and restrictions under the foregoing instruments at June 28, 2025.
6. SECURITIZATION FACILITY
On November 12, 2021, the Company (through a wholly owned special purpose entity, Aveanna SPV I, LLC) (the “special purpose entity”) and a lending institution entered into a Receivables Financing Agreement, which, as amended, has a scheduled termination date of June 25, 2028 (as amended, the “Securitization Facility”). On June 25, 2025, the Company amended the Securitization Facility to increase the maximum amount available thereunder from $225.0 million to $275.0 million, subject to certain borrowing base requirements. The balances for debt issuance costs related to the Securitization Facility as of June 28, 2025 and December 28, 2024 were $1.9 million and $1.1 million, respectively and included in other long-term assets. The Company recognized interest expense related to the amortization of debt issuance costs of $0.2 million and $0.3 million for the three and six-month periods ended June 28, 2025, respectively, and $0.2 million and $0.3 million for the three and six-month periods ended June 29, 2024, respectively.
Pursuant to two separate sale agreements, each of which is among Aveanna Healthcare, LLC, as initial servicer, certain of the Company's subsidiaries and the special purpose entity, the subsidiaries sold substantially all of their existing and future accounts receivable balances to the special purpose entity. The special purpose entity uses the accounts receivable balances to collateralize loans made under the Securitization Facility. The Company retains the responsibility of servicing the accounts receivable balances pledged as collateral under the Securitization Facility and provides a performance guaranty.
The outstanding balance under the Securitization Facility was $168.8 million at both June 28, 2025 and December 28, 2024, respectively. The balance accrues interest at a rate equal to the SOFR rate, plus a CSA, plus an applicable margin. The interest rate under the Securitization Facility was 7.57% at June 28, 2025.
The Securitization Facility is accounted for as a collateralized financing activity, rather than a sale of assets; therefore: (i) accounts receivable balances pledged as collateral are presented as assets and the borrowings are presented as liabilities in the interim unaudited consolidated balance sheets; (ii) the consolidated statements of operations reflect the interest expense associated with the collateralized borrowings; and (iii) receipts from customers related to the underlying accounts receivable are reflected as operating cash flows and borrowings and repayments under the collateralized loans are reflected as financing cash flows within the consolidated statements of cash flows. The Securitization Facility is included within current liabilities on the interim unaudited consolidated balance sheets as it is collateralized by current patient accounts receivable and not because payments are due within one year of the balance sheet date.
7. FAIR VALUE MEASUREMENTS
The carrying amounts of cash and cash equivalents, patient accounts receivable, accounts payable, accrued expenses and other current liabilities approximate their fair values due to the short-term maturities of the instruments.
The Company’s other assets measured at fair value were as follows (amounts in thousands):
11
Fair Value Measurements at June 28, 2025
Level 1
Level 2
Level 3
Assets:
Interest rate cap agreements
11,417
Interest rate swap agreements
9,283
Total derivative assets
20,700
Fair Value Measurements at December 28, 2024
22,543
15,737
38,280
The fair values of the interest rate swap and cap agreements are based on the estimated net proceeds or costs to settle the transactions as of the respective balance sheet dates. The valuations are based on commercially reasonable industry and market practices for valuing similar financial instruments. See Note 8 – Derivative Financial Instruments for further details on the Company’s interest rate swap and cap agreements.
8.DERIVATIVE FINANCIAL INSTRUMENTS
The Company’s earnings and cash flows are subject to fluctuations due to changes in interest rates, and the Company seeks to mitigate a portion of this risk by entering into derivative contracts. The derivatives the Company currently uses are interest rate swaps and interest rate caps. The Company recognizes derivatives as either assets or liabilities at fair value on the interim unaudited consolidated balance sheets and does not designate the derivatives as hedging instruments. Changes in the fair value of derivatives are therefore recorded in earnings throughout the terms of the respective derivatives.
The Company currently has two interest rate swap agreements intended to limit its exposure to interest rate risk on its variable rate debt. These swaps expire on June 30, 2026. Since July 1, 2023, the interest rate swap agreements have paid a fixed rate of 2.03% and received the one-month SOFR rate, subject to a 0.50% floor. The aggregate notional amount of the interest rate swaps remained unchanged at $520.0 million at June 28, 2025 and December 28, 2024, respectively. The fair value of the interest rate swaps was $9.3 million at June 28, 2025 and $15.7 million at December 28, 2024 and is included in other long-term assets in the interim unaudited consolidated balance sheets. The Company does not apply hedge accounting to these agreements and records all mark-to-market adjustments directly to other (expense) income in the consolidated statements of operations, which are included within cash flows from operating activities in the consolidated statements of cash flows. The net settlements incurred with swap counterparties under the swap agreements are recognized through cash flows from financing activities in the consolidated statements of cash flows due to an other-than-insignificant financing element on the interest rate swaps.
The Company has interest rate cap agreements with an aggregate notional amount of $880.0 million and a cap rate of 2.96%. The cap agreements have an expiration date of February 28, 2027. The cap agreements provide that the counterparty pays the Company the amount by which SOFR exceeds 2.96%. The fair value of the interest rate cap agreements was $11.4 million at June 28, 2025 and $22.5 million at December 28, 2024 and is included in other long-term assets on the interim unaudited consolidated balance sheets. The Company does not apply hedge accounting to interest rate cap agreements and records all mark-to-market adjustments directly to other (expense) income in the consolidated statements of operations, which are included within cash flows from operating activities in the consolidated statement of cash flows. The proceeds received from cap counterparties under the cap agreements are recognized through cash flows from operating activities in the consolidated statements of cash flows.
12
The following losses and gains from these derivatives not designated as hedging instruments were recognized in the Company’s consolidated statements of operations for the three and six-month periods ended June 28, 2025 and June 29, 2024, respectively (amounts in thousands):
Statement of Operations
Classification
(3,656
(1,408
(2,322
(1,738
(11,126
3,430
(6,454
1,700
The Company does not utilize financial instruments for trading or other speculative purposes.
9. INCOME TAXES
On July 4, 2025, H.R. 1., also known as the One Big Beautiful Bill Act ("OBBBA) was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. The Company is evaluating the full effects of the legislation on its estimated annual effective tax rate and cash tax position. As the legislation was signed into law after the close of our second quarter, the impacts are not included in the operating results for the three and six-month periods ended June 28, 2025.
The Company records its provision for income taxes on an interim basis based upon the estimate of the annual effective income tax rate for the full year applied to “ordinary” income or loss, adjusted each quarter for discrete items. The Company analyzes various factors to determine the estimated annual effective income tax rate, including projections of annual earnings, the impact of state and local income taxes, its ability to use tax credits and net operating loss carryforwards, and available tax planning alternatives.
The Company recorded income tax expense of $17.1 million and $22.1 million for the three and six-month periods ended June 28, 2025, respectively, and income tax benefit of $9.9 million and income tax expense of $2.7 million for the three and six-month periods ended June 29, 2024, respectively.
The Company’s effective tax rate was 38.8% and 40.7% for the three and six-month periods ended June 28, 2025, respectively, and negative 249.5% and 50.0% for the three and six-month periods ended June 29, 2024, respectively. The effective tax rates for the three and six-month periods ended June 28, 2025 and June 29, 2024 differed from the statutory rate of 21% primarily due to certain non-deductible expenses, most notably interest expense, and the changes in the valuation allowance recorded against certain deferred tax assets.
For the three and six-month periods ended June 28, 2025, there were no material changes to the Company's uncertain tax positions. There has been no change to the Company’s policy that recognizes potential interest and penalties related to uncertain tax positions in income tax expense in the accompanying consolidated statements of operations.
10. SHARE-BASED COMPENSATION
Pre-IPO Options and Management Restricted Units
The Company recorded compensation expense, net of forfeitures, of $0.7 million and $1.4 million for the three and six-month periods ended June 28, 2025, respectively, and $0.0 million and $0.8 million for the three and six-month periods ended June 29, 2024, respectively, which is included in corporate and branch and regional administrative expenses in the accompanying consolidated statements of operations. Unrecognized compensation expense as of June 28, 2025 associated with these outstanding awards was $1.5 million.
Director Restricted Stock Units
13
In February 2025, the Compensation Committee of the Company's Board of Directors (the "Compensation Committee") approved grants of 173,914 restricted stock units, with a grant date per share fair value of $4.26, to certain independent Directors ("Director RSUs") under the Company's 2021 Omnibus Stock Incentive Plan (the "2021 Omnibus Incentive Plan"). Director RSUs vest on the first anniversary of the grant date, and each RSU settles for one share of common stock upon vesting. The Company recorded compensation expense of $0.3 million and $0.4 million for the three and six-month periods ended June 28, 2025, respectively, and $0.3 million and $0.5 million for the three and six-month periods ended June 29, 2024, respectively, which is included in corporate expenses in the accompanying consolidated statements of operations. Unrecognized compensation expense as of June 28, 2025 associated with outstanding director restricted stock units was $0.4 million.
Long-Term Incentive Plan ("LTIP")
In February 2025, the Compensation Committee approved grants of restricted stock units ("RSUs") and performance stock units ("PSUs") under the Company's 2021 Omnibus Stock Incentive Plan. Annual grants of RSUs and PSUs have been awarded since fiscal year 2022. Upon vesting, each RSU and each PSU settles for one share of common stock.
The RSUs are subject to a three-year service-based cliff vesting schedule commencing on the date of grant. Compensation cost for the RSUs is measured based on the grant date fair value of each underlying share of common stock and the number of RSUs granted and is recognized over the applicable vesting period on a straight-line basis. In February 2025, the Company granted 1,649,109 RSUs with a grant date per share fair value of $4.26. The Company recorded compensation expense, net of forfeitures, of $1.5 million and $3.1 million for the three and six-month periods ended June 28, 2025, respectively, and $1.1 million and $2.1 million for the three and six-month periods ended June 29, 2024, respectively, which is included in corporate and branch and regional administrative expenses in the accompanying consolidated statements of operations. Unrecognized compensation expense was $11.1 million as of June 28, 2025.
The PSUs contain performance criterion based on adjusted EBITDA targets for each of the three years during the vesting period. Achievement of any annual target during the three years subsequent to the grant date results in a cumulative achievement event for the target year and any prior year award not previously achieved. Additionally, the PSUs are subject to a three-year service-based cliff vesting schedule commencing on the date of grant. The PSUs have service and performance conditions, and compensation cost is initially measured based on the grant date fair value of each underlying share of common stock. Cumulative compensation cost is subsequently adjusted at the end of each reporting period to reflect the current estimation of achieving the performance condition. In February 2025, the Company granted 1,649,014 PSUs with a weighted average grant date per share fair value of $4.26. Further, during three-month period ended March 29, 2025, the Compensation Committee modified PSUs originally issued during the three-month period ended April 2, 2022. The previous performance criterion were replaced with an Adjusted EBITDA target for the fiscal year ending January 3, 2026. Effects of the modification are reflected in compensation expense, net of forfeitures, for the three and six-month periods ended June 28, 2025. The Company recorded compensation expense, net of forfeitures, of $2.2 million and $2.7 million for the three and six-month periods ended June 28, 2025, respectively, and $0.9 million and $1.6 million for the three and six-month periods ended June 29, 2024, respectively, which is included in corporate and branch and regional administrative expenses in the accompanying consolidated statements of operations. Unrecognized compensation expense was $12.5 million as of June 28, 2025.
Senior Management Retention Plan ("SMRP")
In the second quarter of 2023, the Compensation Committee approved SMRP awards to certain members of management to be paid in the form of RSUs under the 2021 Omnibus Stock Incentive Plan. The awards were granted based on a fixed dollar value for each member of senior management included in the plan. The performance condition related to the SMRP was achieved on March 29, 2025, resulting in the acceleration of the related compensation expense of the awards. The Company recorded no compensation expense during the three-month period ended June 28, 2025 and compensation expense, net of forfeitures, of $7.6 million during the six-month period ended June 28, 2025, and $0.8 million and $1.7 million during the three and six-month periods ended June 29, 2024, respectively, which is included in corporate expenses and branch and regional administrative expenses in the accompanying consolidated statements of operations. There was no unrecognized compensation expense as of June 28, 2025.
Total compensation expense, net of forfeitures, for all awards under the Company's previous stock incentive plan (the "Amended 2017 Plan") and 2021 Omnibus Incentive Plan was $4.7 million and $15.2 million for the three and six-month periods ended June 28, 2025 and $3.1 million and $6.7 million for the three and six-month periods ended June 29, 2024, respectively. Total unrecognized compensation expense for all awards under the Amended 2017 Plan and 2021 Omnibus Incentive Plan was $25.5 million as of June 28, 2025.
14
Employee Stock Purchase Plan
During the three-month periods ended June 28, 2025 and June 29, 2024, no purchase events related to the Employee Stock Purchase Plan occurred. During the six-month period ended June 28, 2025, participants purchased a total of 847,673 shares of common stock at an average price of $2.11 per share. During the six-month period ended June 29, 2024, participants purchased 1,010,635 shares of common stock at a weighted average price of approximately $1.33 per share.
The Company recorded compensation expense of $0.5 million and $0.9 million for the three and six-month periods ended June 28, 2025, respectively, and $0.4 million and $0.8 million for the three and six-month periods ended June 29, 2024, respectively, which is included in corporate expenses, branch and regional administrative expenses and cost of revenue, excluding depreciation and amortization in the accompanying consolidated statements of operations.
11. COMMITMENTS AND CONTINGENCIES
Insurance Reserves
As is typical in the healthcare industry, the Company is subject to claims that its services have resulted in patient injury or other adverse effects.
The accrued professional liability insurance reserves included in the interim unaudited consolidated balance sheets include estimates of the ultimate costs, including third-party legal defense costs, in the event the Company was unable to receive funds from claims made under commercial insurance policies, for claims that have been reported but not paid and claims that have been incurred but not reported at the balance sheet dates. Although substantially all reported claims are paid directly by the Company’s commercial insurance carriers (after the Company satisfies the applicable policy deductible and/or retention), the Company is ultimately responsible for payment of these claims in the event its insurance carriers become insolvent or otherwise do not honor the contractual obligations under the liability policies. The Company is required under U.S. GAAP to recognize these estimated liabilities in its consolidated financial statements on a gross basis; with a corresponding receivable from the insurance carriers reflecting the contractual indemnity provided by the carriers under the related liability policies.
Since October 1, 2024, the Company has maintained primary commercial insurance coverage on a claims-made basis for professional liability claims with a $2.0 million per claim deductible, a $2.0 million aggregate buffer retention, and $5.0 million per claim and annual aggregate limits. Prior to October 1, 2024, the Company maintained primary commercial insurance coverage on a claims made basis for professional liability claims with varying deductibles by policy year from $0.5 million to $2.0 million on a per claim basis and $4.5 million to $6.0 million per claim and annual aggregate limits. Moreover, the Company maintains excess insurance coverage for professional liability claims to cover any claims over the aggregate limits. In addition, the Company maintains workers’ compensation insurance with $0.5 million per claim deductible and statutory limits. The Company reimburses insurance carriers for deductible losses under these policies. The Company’s insurance carriers require collateral to secure the Company’s obligation to reimburse insurance carriers for these deductible payments. Collateral as of June 28, 2025 was comprised of $23.1 million of issued letters of credit and $0.7 million in cash collateral. Collateral as of December 28, 2024 was comprised of $23.1 million of issued letters of credit and $0.7 million in cash collateral.
As of June 28, 2025, insurance reserves totaling $84.6 million were included on the interim unaudited consolidated balance sheets, representing $36.2 million and $48.4 million of reserves for professional liability claims and workers’ compensation claims, respectively. At December 28, 2024, insurance reserves totaling $97.8 million were included on the consolidated balance sheets, representing $42.7 million and $55.1 million of reserves for professional liability claims and workers’ compensation claims, respectively.
Litigation and Other Current Liabilities
15
On January 18, 2023, an arbitration award in the amount of $7.9 million was rendered against the Company related to a claim under the Company's Texas non-subscriber benefit plan. In September 2023, upon entry of the court’s final judgment, we promptly obtained a $9.1 million appellate bond with the trial court. The appellate bond was collateralized with letters of credit. In May 2025, a settlement agreement between all parties was reached. On June 9, 2025, the court entered an agreed final judgment in the matter and ordered the release of the bond. The letters of credit securing the bond were released on June 16, 2025. As a result, amounts previously reserved for under Insurance Reserves were reduced and resulted in a net reduction to Cost of Revenue, excluding depreciation and amortization, of $6.2 million for both the three and six-month periods ended June 28, 2025.
The Company is currently a party to various routine litigation incidental to the business. While management currently believes that the ultimate outcome of such proceedings, individually and in the aggregate, will not have a material adverse effect on the Company’s financial position or overall trends in results of operations, litigation is subject to inherent uncertainties. Management has established provisions within other current liabilities in the accompanying consolidated balance sheets, which in the opinion of management represents the best estimate of exposure and adequately provides for such losses that may occur from asserted claims related to the provision of professional services and which may not be covered by the Company’s insurance policies. Management believes that any additional unfavorable provisions would not be material to the Company’s results of operations or financial position; however, if an unfavorable ruling on any asserted or unasserted claim were to occur, there exists the possibility of a material adverse impact on the Company’s net earnings or financial position. The estimate of the potential impact from legal proceedings on the Company’s financial position or overall results of operations could change in the future.
Healthcare Regulatory Matters
Starting on October 30, 2019 the Company has received grand jury subpoenas issued by the U.S. Department of Justice, Antitrust Division (the “Antitrust Division”), requiring the production of documents and information pertaining to nurse wages, reimbursement rates, and hiring activities in a few of its local markets. The Company is fully cooperating with the Antitrust Division with respect to this investigation, and management believes that a loss event is not probable. Based on the information currently available to the Company, management cannot predict the timing or outcome of this investigation or predict the possible loss or range of loss, if any, associated with the resolution of this matter.
On July 19, 2023, the Company received a Civil Investigation Demand issued by the U.S. Department of Justice, United States Attorney’s Office, Middle District of Alabama (the “AUSA”), requiring the production of documents and information pertaining to Comfort Care Hospice, LLC, an indirect wholly owned subsidiary of the Company, regarding issues of (1) improper submission of claims to Medicare and other federal healthcare programs for service to patients who were ineligible or not properly certified for said healthcare services and (2) improper remuneration to medical directors and skilled nursing facilities for patient referrals in violation of certain federal regulations. The Company is fully cooperating with the AUSA with respect to this investigation, and management believes that a loss event is not probable and that this matter will not materially impact the Company’s business, results of operations or financial condition. However, based on the information currently available to the Company, management cannot predict the timing or outcome of this investigation or predict the possible loss or range of loss, if any, associated with the resolution of this matter.
Laws and regulations governing the government payer programs are complex and subject to interpretation. Compliance with such laws and regulations can be subject to future governmental review and interpretation as well as significant regulatory action. From time to time, governmental regulatory agencies conduct inquiries and audits of the Company’s practices. It is the Company’s practice to cooperate fully with such inquiries. In addition to laws and regulations governing the Medicaid, Medicaid Managed Care, and Tricare programs, there are a number of federal and state laws and regulations governing matters such as the corporate practice of medicine, fee splitting arrangements, anti-kickback statues, physician self-referral laws, false or fraudulent claims filing and patient privacy requirements. Failure to comply with any such laws or regulations could have an adverse impact on the Company’s operations and financial results. The Company believes that it is in material compliance with all applicable laws and regulations and is not aware of any pending or threatened investigations involving allegations of wrongdoing.
12. RELATED PARTY TRANSACTIONS
As of June 28, 2025, one of the Company’s significant shareholders owned 9.2% of the 2021 Extended Term Loan.
13. SEGMENT INFORMATION
16
The Company’s operating segments have been identified based upon how management has organized the business by services provided to customers and how the chief operating decision maker ("CODM") manages the business and allocates resources. The CODM for the Company is the Chief Executive Officer. The Company has three operating segments and three reportable segments, Private Duty Services, Home Health & Hospice, and Medical Solutions. The PDS segment predominantly includes private duty skilled nursing services, non-clinical and personal care services, and pediatric therapy services. The HHH segment provides home health and hospice services to predominately elderly patients. Through the MS segment, the Company provides enteral nutrition and other products to adults and children, delivered on a periodic or as-needed basis.
The CODM evaluates segment performance using gross margin (and gross margin percentage). Gross margin includes revenue less all costs of revenue, excluding depreciation and amortization, but excludes branch and regional administrative expenses, corporate expenses and other non-field expenses. Revenue and cost presented below for the PDS and HHH segments primarily relate to patient services, while the MS segment’s revenue and cost are primarily from products. The CODM does not evaluate a measure of assets when assessing performance. The CODM uses gross margin and gross margin percentage to assess the performance of each segment compared to historical trends, forecasted performance, and industry peers, as well as ensure that each segment has appropriate operational support to manage performance.
Results shown for the three and six-month periods ended June 28, 2025 and June 29, 2024 are not necessarily those which would be achieved if each segment was an unaffiliated business enterprise. There are no intersegment transactions.
The following tables summarize the Company’s segment information for the three and six-month periods ended June 28, 2025 and June 29, 2024, respectively (amounts in thousands):
486,012
60,112
43,429
328,078
27,048
23,627
Gross margin
157,934
33,064
19,802
210,800
Gross margin percentage
32.5
55.0
45.6
35.8
407,851
54,630
42,477
296,983
25,227
24,481
110,868
29,403
17,996
158,267
27.2
53.8
42.4
31.3
946,010
116,845
85,922
653,391
53,041
47,987
292,619
63,804
37,935
394,358
30.9
54.6
44.2
34.3
802,860
109,243
83,508
591,857
50,866
48,767
211,003
58,377
34,741
304,121
26.3
53.4
41.6
30.5
17
Segment Reconciliation:
Total segment gross margin
14. NET INCOME PER SHARE
Basic net income per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding for the period. Diluted net income per share is calculated by dividing net income by the diluted weighted average number of shares of common stock outstanding for the period. For purposes of this calculation, outstanding stock options, RSUs and PSUs are considered potential dilutive shares of common stock. The following is a computation of basic and diluted net income per share (amounts in thousands, except per share amounts):
Numerator:
Denominator:
Weighted average shares of common stock outstanding (1), basic
Weighted average shares of common stock outstanding (1), diluted
Dilutive securities outstanding not included in the computation of diluted net income per share, as their effect is antidilutive:
RSUs
70
1,478
PSUs
Stock options
3,206
13,088
18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides information we believe is relevant to an assessment and understanding of our results of operations, financial condition, liquidity and cash flows for the periods presented below. This discussion should be read in conjunction with the interim unaudited consolidated financial statements and related notes contained elsewhere in this Quarterly Report on Form 10-Q and in conjunction with the audited consolidated financial statements and related notes, our “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in each case included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024 filed with the SEC. As discussed in the section above titled “Cautionary Note Regarding Forward-Looking Statements,” the following discussion contains forward-looking statements that are based upon our current expectations, including with respect to our future revenues and operating results. Our actual results may differ materially from those anticipated in such forward-looking statements as a result of various factors. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included under Part II, Item 1A below as well as in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.
Unless otherwise provided, “Aveanna,” “we,” “our” and the “Company” refer to Aveanna Healthcare Holdings Inc. and its consolidated subsidiaries.
Our fiscal year ends on the Saturday that is closest to December 31 of a given year, resulting in either a 52-week or 53-week fiscal year. “Fiscal year 2025” refers to the 53-week fiscal year ending on January 3, 2026. “Fiscal year 2024” refers to the 52-week fiscal year ended on December 28, 2024. The “three-month period ended June 28, 2025”, or “second quarter of 2025” refers to the 13-week fiscal quarter ended on June 28, 2025. The “three-month period ended June 29, 2024” or “second quarter of 2024” refers to the 13-week fiscal quarter ended on June 29, 2024. The "six-month period ended June 28, 2025", or "first six months of 2025", refers to the period from December 29, 2024 through June 28, 2025. The "six-month period ended June 29, 2024", or "first six months of 2024", refers to the period from December 31, 2023 through June 29, 2024.
Overview
We are a leading, diversified home care platform focused on providing care to medically complex, high-cost patient populations. We directly address the most pressing challenges facing the U.S. healthcare system by providing safe, high-quality care in the home, the lower cost care setting preferred by patients. Our patient-centered care delivery platform is designed to improve the quality of care our patients receive, which allows them to remain in their homes and minimizes the overutilization of high-cost care settings such as hospitals. Our clinical model is led by our caregivers, primarily skilled nurses, who provide specialized care to address the complex needs of each patient we serve across the full range of patient populations: newborns, children, adults and seniors. We have invested significantly in our platform to bring together best-in-class talent at all levels of the organization and support such talent with industry leading training, clinical programs, infrastructure and technology-enabled systems, which are increasingly essential in an evolving healthcare industry. We believe our platform creates sustainable competitive advantages that support our ability to continue driving rapid growth, both organically and through acquisitions, and positions us as the partner of choice for the patients we serve.
Segments
We deliver our services to patients through three segments: Private Duty Services (“PDS”); Home Health & Hospice (“HHH”); and Medical Solutions (“MS”).
The following table summarizes the revenues generated by each of our segments for the three-month periods ended June 28, 2025 and June 29, 2024, respectively:
(dollars in thousands)
Consolidated
Percentage of consolidated revenue
83
81
The following table summarizes the revenues generated by each of our segments for the six-month periods ended June 28, 2025 and June 29, 2024, respectively:
82
PDS Segment
Private Duty Services predominantly includes private duty nursing (“PDN”) services, as well as pediatric therapy services. Our PDN patients typically enter our service as children, as our most significant referral sources for new patients are children’s hospitals. It is common for our PDN patients to continue to receive our services into adulthood, as approximately 30% of our PDN patients are over the age of 18.
Our PDN services involve the provision of clinical and non-clinical hourly care to patients in their homes, which is the preferred setting for patient care. PDN services typically last four to 24 hours a day, provided by our registered nurses, licensed practical nurses, home health aides, and other non-clinical caregivers who are focused on providing high-quality short-term and long-term clinical care to medically fragile children and adults with a wide variety of serious illnesses and conditions. Patients who typically qualify for our PDN services include those with the following conditions:
Our PDN services include:
Through our pediatric therapy services, we provide a valuable multidisciplinary approach that we believe serves all of a child’s therapy needs. We provide both in-clinic and home-based therapy services to our patients. Our therapy services include physical, occupational and speech services. We regularly collaborate with physicians and other community healthcare providers, which allows us to provide more comprehensive care.
HHH Segment
Our Home Health and Hospice segment predominantly includes home health services, as well as hospice and specialty program services. Our HHH patients typically enter our service as seniors, and our most significant referral sources for new patients are hospitals, physicians and long-term care facilities.
Our home health services involve the provision of in-home services to our patients by our clinicians which may include nurses, therapists, social workers and home health aides. Our caregivers work with our patients’ physicians to deliver a personalized plan of care to our patients in their homes. Home healthcare can help our patients recover after a hospitalization or surgery and assist patients in managing chronic illnesses. We also help our patients manage their medications. Through our care, we help our patients recover more fully in the comfort of their own homes, while remaining as independent as possible. Our home health services include: in-home skilled nursing services; physical, occupational and speech therapy; medical social services and aide services.
Our hospice services involve a supportive philosophy and concept of care for those nearing the end of life. Our hospice care is a positive, empowering form of care designed to provide comfort and support to our patients and their families when a life-limiting illness no longer responds to cure-oriented treatments. The goal of hospice is to neither prolong life nor hasten death, but to help our patients live as dignified and pain-free as possible. Our hospice care is provided by a team of specially trained professionals in a variety of living situations, including at home, at the hospital, a nursing home, or an assisted living facility.
MS Segment
Through our Medical Solutions segment, we offer a comprehensive line of enteral nutrition supplies and other products to adults and children, delivered on a periodic or as-needed basis. We provide our patients with access to one of the largest selections of enteral formulas, supplies and pumps in our industry, with more than 300 nutritional formulas available. Our registered nurses, registered dietitians and customer service technicians support our patients 24 hours per day, 365 days per year, in-hospital, at-home, or remotely to help ensure that our patients have the best nutrition assessments, change order reviews and formula selection expertise.
Recent Developments
Acquisition-related Activities
On June 2, 2025, we acquired Thrive Skilled Pediatric Care, LLC ("Thrive"), which provides home care operating 23 locations across seven states Arizona, Georgia, Kansas, New Mexico, North Carolina, Virginia, and Texas. The Thrive acquisition expands our patient care delivery into two new states and provides added local market density in our existing geographic footprint. We report the results of Thrive from the date of acquisition in our PDS segment.
Regulatory Developments
On June 30, 2025, the Centers for Medicare & Medicaid Services (“CMS”) issued its calendar year 2026 proposed rule for the home health prospective payment system. CMS estimates the proposed rule would reduce home health payments by 6.4% in CY 2026 relative to 2025. This update includes a 3.2% market basket update, reduced by a 0.8% cut for productivity. The rule also includes several reductions that CMS proposes as necessary to achieve budget neutral implementation of the Patient-driven Groupings Model (“PDGM”), which are a 4.1% permanent reduction to the standard payment rate to prevent future overpayments, as well as a temporary but indefinite 5.0% reduction to recoup past overpayments. CMS also proposes a 0.5% reduction related to high-cost outlier payments. The proposed rule is subject to comment through August 29, 2025. The ultimate impact of any final rule would likely negatively affect reimbursement rates in our HHH segment.
On July 4, 2025, H.R. 1, also known as the One Big Beautiful Bill Act ("OBBBA") was enacted into law. The Congressional Budget Office projects OBBBA will result in a reduction to federal Medicaid spending by an estimated $1.15 trillion over the next 10 years. The OBBBA changes to Medicaid include provisions expected to reduce the population of Medicaid recipients through more stringent eligibility requirements, reductions in provider taxes, work (community engagement) requirements, limits on state-directed payments, and other changes. Most of the provisions have implementation dates of December 31, 2026, or later. While there were no specific changes to the Medicaid waiver programs that a majority of our patient population qualifies for services under, and no provisions that we believe directly impact the reimbursement rates of the services we provide, the resulting reductions to state Medicaid budgets may indirectly impact future rate expansion for certain Medicaid-funded services.
Important Operating Metrics
We review the following important metrics on a segment basis and not on a consolidated basis:
PDS and MS Segment Operating Metrics
Volume
Volume represents PDS hours of care provided and MS unique patients served, which is how we measure the amount of our patient services provided. We review the number of hours of PDS care provided on a weekly basis and the number of MS unique patients served on a weekly basis. We believe volume is an important metric because it helps us understand how the Company is growing in each of these segments through strategic planning and acquisitions. We also use this metric to inform strategic decision making in determining opportunities for growth.
Revenue Rate
For our PDS and MS segments, revenue rate is calculated as revenue divided by PDS hours of care provided or the number of MS unique patients served, respectively. We believe revenue rate is an important metric because it represents the amount of revenue we receive per PDS hour of patient service or per individual MS patient transaction and helps management assess the amount of fees that we are able to bill for our services. Management uses this metric to assess how effectively we optimize reimbursement rates.
Cost of Revenue Rate
For our PDS and MS segments, cost of revenue rate is calculated as cost of revenue divided by PDS hours of care provided or the number of MS unique patients served, respectively. We believe cost of revenue rate is an important metric because it helps us understand the cost per PDS hour of patient service or per individual MS patient transaction. Management uses this metric to understand how effectively we manage labor and product costs.
Spread Rate
For our PDS and MS segments, spread rate represents the difference between the respective revenue rates and cost of revenue rates. Spread rate is an important metric because it helps us better understand the margins being recognized per PDS hour of patient service
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or per individual MS patient transaction. Management uses this metric to assess how successful we have been in optimizing reimbursement rates, managing labor and product costs, and assessing opportunities for growth.
HHH Segment Operating Metrics
Home Health Total Admissions and Home Health Episodic Admissions
Home health total admissions represents the number of new patients who have begun receiving services. We review the number of home health admissions on a daily basis as we believe it is a leading indicator of our growth. We measure home health admissions by reimbursement structure, separating them into home health episodic admissions, which are reimbursed for a fixed duration of care - typically 30 days, and other admissions, which primarily follow a per-visit reimbursement model. This allows us to better understand the payor mix of our home health business.
Home Health Total Episodes
Home health total episodes represents the number of episodic admissions and episodic recertifications to capture patients who have either started to receive services or have been recertified for another episode of care. Management reviews home health total episodes on a monthly basis as to understand the volume of patients who were authorized to receive care during the month.
Home Health Episodic Mix
Home health episodic mix is calculated by dividing the total home health episodic admissions by the home health total admissions. Management monitors home health episodic mix as a simplified metric representing our home health admissions by reimbursement structure, which allows us to better understand the payer mix of our home health business.
Home Health Revenue Per Completed Episode
Home health revenue per completed episode is calculated by dividing total payments received from completed episodes by the number of completed episodes during the period. Episodic payments are determined by multiple factors including type of referral source, patient diagnoses, and utilization. Management tracks home health revenue per completed episode over time to evaluate both the clinical and financial profile of the business in a single metric.
Results of Operations
Three-Month Period Ended June 28, 2025 Compared to the Three-Month Period Ended June 29, 2024
The following table summarizes our consolidated results of operations, including Field contribution, which is a non-GAAP measure (see “Non-GAAP Financial Measures” below), for the three-month periods indicated:
% of Revenue
Change
% Change
84,595
16.8
64.2
68.7
32,062
9.2
52,533
33.2
15.3
17.4
2,097
2.4
Field contribution
120,731
20.5
70,295
13.9
50,436
71.7
5.9
6.0
4,284
14.2
0.4
0.6
(216
-7.6
0.0
60
65.9
13.6
7.4
42,908
115.6
Interest expense, net
(35,874
(39,518
3,644
-9.2
(6,393
-100.3
(27,040
-272.4
13,119
94.3
22
The following table summarizes our consolidated key performance measures, including Field contribution and Field contribution margin, which are non-GAAP measures (see “Non-GAAP Financial Measures” below), for the three-month periods indicated:
4.5
(1)
Field contribution margin
As a percentage of revenue
23
The following tables summarize our key performance measures by segment for the three-month periods indicated:
(dollars and hours in thousands)
78,161
19.2
31,095
47,066
42.5
5.3
(4)
Hours
11,053
10,336
717
6.9
Revenue rate
43.97
39.46
4.51
12.3
Cost of revenue rate
29.68
28.73
0.95
3.6
(2)
Spread rate
14.29
10.73
3.56
35.6
(3)
(dollars and admissions/episodes in thousands)
5,482
10.0
1,821
7.2
3,661
12.5
1.2
Home health total admissions (5)
9.8
4.3
Home health episodic admissions (6)
7.3
7.1
0.2
2.8
Home health total episodes (7)
12.4
11.6
0.8
Home health episodic mix (8)
74.5
75.5
-1.0
Home health revenue per completed episode (9)
3,231
3,093
138
(dollars and UPS in thousands)
952
2.2
(854
-3.5
1,806
3.2
Unique patients served (“UPS”)
94
(3
-3.2
477.24
451.88
25.36
5.4
259.64
260.44
(0.80
-0.3
217.60
191.45
26.16
13.2
The following discussion of our results of operations should be read in conjunction with the foregoing tables summarizing our consolidated results of operations and key performance measures, as well as our interim unaudited consolidated financial statements of operations contained in this Quarterly Report on Form 10-Q (our "Quarterly Financial Statements") and our audited consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.
Summary Operating Results
24
Operating Income
Operating income was $80.0 million, or 13.6% of revenue, for the three-month period ended June 28, 2025, as compared to operating income of $37.1 million, or 7.4% of revenue, for the three-month period ended June 29, 2024, an increase of $42.9 million.
Operating income for the second quarter of 2025 was positively impacted by an increase of $50.4 million, or 71.7%, in Field contribution, as compared to the second quarter of 2024. The $50.4 million increase in Field contribution resulted from a $84.6 million, or 16.8%, increase in consolidated revenue and a 6.6% increase in our Field contribution margin to 20.5% for the second quarter of 2025 from 13.9% for the second quarter of 2024. The primary driver of our higher Field contribution margin over the comparable quarter was an increase in gross margin percentage of 4.5%, along with a 2.1% decrease in branch and regional administrative expenses as a percentage of revenue to 15.3% for the second quarter of 2025 from 17.4% for the second quarter of 2024.
The following items primarily contributed to the $42.9 million increase in operating income over the comparable second quarter period:
Net Income
Net income for the three-month period ended June 28, 2025 was $27.0 million, as compared to net income of $13.9 million for the three-month period ended June 29, 2024. The $13.1 million increase in net income was primarily driven by the following:
Revenue was $589.6 million for the three-month period ended June 28, 2025, as compared to $505.0 million for the three-month period ended June 29, 2024, an increase of $84.6 million, or 16.8%. This increase resulted from the following segment activity:
Our PDS segment revenue growth of $78.2 million, or 19.2%, for the three-month period ended June 28, 2025 was attributable to a 6.9% increase in volume and a 12.3% increase in revenue rate. The 6.9% increase in volume was primarily attributable to growth in demand for non-clinical services. Additionally, the PDS segment revenue benefited from volume attributed to the Thrive acquisition which was completed on June 2, 2025.
The 12.3% increase in PDS revenue rate for the three-month period ended June 28, 2025, as compared to the three-month period ended June 29, 2024, resulted primarily from the following: (i) reimbursement rate increases issued by various state Medicaid programs and Managed Medicaid payers, including payments received in the current period related to certain rate increases applied retroactively for services provided since January 1, 2025, for which there is currently no associated wage pass-through reflected in segment cost of revenue, excluding depreciation and amortization; (ii) increases in value-based payments from certain payors; and (iii) improved collections on fully reserved aged receivables.
Our HHH segment revenue increase of $5.5 million, or 10.0%, for the three-month period ended June 28, 2025, as compared to the three-month period ended June 29, 2024, resulted primarily from a 6.9% increase in total episodes and an increase in home health revenue per completed episode due to improvements in patient mix compared to the second quarter of 2024.
The $1.0 million, or 2.2%, increase in MS segment revenue for the three-month period ended June 28, 2025, as compared to the three-month period ended June 29, 2024, was attributable to a 5.4% increase in revenue rate, partially offset by a decline in volume of 3.2% compared to the second quarter of 2024.
25
Cost of Revenue, Excluding Depreciation and Amortization
Cost of revenue, excluding depreciation and amortization, was $378.8 million for the three-month period ended June 28, 2025, as compared to $346.7 million for the three-month period ended June 29, 2024, an increase of $32.1 million, or 9.2%. This increase resulted from the following segment activity:
The 10.5% increase in PDS cost of revenue for the three-month period ended June 28, 2025 resulted from the previously described 6.9% increase in PDS volume combined with a 3.6% increase in PDS cost of revenue rate. The 3.6% increase in cost of revenue rate primarily resulted from higher caregiver labor costs, including the pass-through of reimbursement rate increases net of $6.2 million lower general and professional liability reserve associated with the release of certain accrued legal settlements.
The 7.2% increase in HHH cost of revenue for the three-month period ended June 28, 2025 was driven primarily by higher home health total episodes.
The 3.5% decrease in MS cost of revenue for the three-month period ended June 28, 2025 was driven primarily by the previously described 3.2% decline in MS volumes.
Gross Margin and Gross Margin Percentage
Gross margin was $210.8 million, or 35.8% of revenue, for the three-month period ended June 28, 2025, as compared to $158.3 million, or 31.3% of revenue, for the three-month period ended June 29, 2024. Gross margin increased $52.5 million, or 33.2%, from the comparable prior year quarter. The 4.5% increase in gross margin percentage for the three-month period ended June 28, 2025 resulted from the combined changes in our revenue rates and cost of revenue rates in each of our segments, which we refer to as the change in our spread rate, as follows:
Branch and Regional Administrative Expenses
Branch and regional administrative expenses were $90.1 million, or 15.3% of revenue, for the three-month period ended June 28, 2025, as compared to $88.0 million, or 17.4% of revenue, for the three-month period ended June 29, 2024, an increase of $2.1 million, or 2.4%.
The 2.4% increase in branch and regional administrative expenses for the three-month period ended June 28, 2025, as compared to the three-month period ended June 29, 2024, was primarily due to an increase in incentive compensation expense during the current three-month period due to improved forecasted performance compared to annual targets and the additional branch operations associated with the Thrive acquisition. The overall 2.1% decrease in branch and regional administrative expenses as a percentage of revenue for the three-month period ended June 28, 2025, as compared to the three-month period ended June 29, 2024, resulted from leveraging our branch and administrative expense structure as a result of our restructuring efforts.
Field Contribution and Field Contribution Margin
Field contribution was $120.7 million, or 20.5% of revenue, for the three-month period ended June 28, 2025, as compared to $70.3 million, or 13.9% of revenue, for the three-month period ended June 29, 2024. Field contribution increased $50.4 million, or 71.7%, for the three-month period ended June 28, 2025, as compared to the three-month period ended June 29, 2024. The 6.6% increase in Field contribution margin for the three-month period ended June 28, 2025 resulted from the following:
26
Field contribution and Field contribution margin are non-GAAP financial measures. See “Non-GAAP Financial Measures” below.
Corporate Expenses
Corporate expenses as a percentage of revenue for the three-month periods ended June 28, 2025 and June 29, 2024 were as follows:
Corporate expense components:
Compensation and benefits
19,334
3.3
16,797
3,436
3,438
0.7
Professional services
6,231
1.1
4,565
0.9
Rent and facilities expense
2,933
0.5
3,203
Office and administrative
527
384
Other
2,068
1,858
Total corporate expenses
Corporate expenses were $34.5 million, or 5.9% of revenue, for the three-month period ended June 28, 2025, as compared to $30.2 million, or 6.0% of revenue, for the three-month period ended June 29, 2024. The $4.3 million, or 14.2%, increase in corporate expenses resulted primarily from severance and additional compensation and benefits costs necessary to support the integration of the Thrive acquisition and increased professional services expenses related to legal matters.
Depreciation and Amortization
Depreciation and amortization was $2.6 million for the three-month period ended June 28, 2025, as compared to $2.8 million for the three-month period ended June 29, 2024, a decrease of $0.2 million, or 7.6%. The $0.2 million decrease primarily resulted from improved capital asset management.
Acquisition related costs were $3.4 million for the three-month period ended June 28, 2025, associated with the acquisition of Thrive.
Other Operating Expense
Other operating expense was $0.2 million for the three-month period ended June 28, 2025, as compared to other operating expense of $0.1 million for the three-month period ended June 29, 2024, a decrease in other operating expense of $0.1 million. The $0.1 million decrease primarily resulted from the value associated with certain licenses impaired in the comparative periods.
Interest Expense, net of Interest Income
Interest expense, net of interest income was $35.9 million for the three-month period ended June 28, 2025, as compared to $39.5 million for the three-month period ended June 29, 2024, a decrease of $3.6 million, or 9.2%. The decrease was primarily driven by a lower principal balance on the 2021 Extended Term Loan (as described in Note 5 to our Quarterly Financial Statements) and decreases in the U.S. federal funds rate. See further analysis under Liquidity and Capital Resources below.
Other (Expense) Income
Other expense was $0.0 million for the three-month period ended June 28, 2025, as compared to other income of $6.4 million for the three-month period ended June 29, 2024, a decrease to other income of $6.4 million. We realized a $2.8 million increase in non-cash valuation losses associated with interest rate derivatives resulting from changes in market expectations of future interest rates as of the comparable quarter-end valuation date, as well as a $3.5 million decrease in net settlements with interest rate derivative counterparties as interest rates decreased compared to the prior year fiscal quarter due to lower market interest rates. Details of other (expense) income included the following:
27
Valuation loss to state interest rate derivatives at fair value
(5,978
(3,146
Net settlements received from interest rate derivative counterparties
6,050
9,587
(94
(70
Total other (expense) income
Income Taxes
We record income tax expense during interim periods based on our estimate of the annual effective income tax rate, adjusted each quarter for discrete items. We analyze various factors to determine the estimated annual effective income tax rate, including projections of our annual earnings, the impact of state and local income taxes, our ability to use tax credits and net operating loss carryforwards, and available tax planning alternatives. We incurred income tax expense of $17.1 million for the three-month period ended June 28, 2025, as compared to income tax benefit of $9.9 million for the three-month period ended June 29, 2024. This increase in tax expense was primarily driven by differences in our projections of annual earnings at the end of each comparable three-month period, as well as changes in federal and state valuation allowances, and changes to federal and state current tax expense due to certain non-deductible expenses, most notably interest expense.
On July 4, 2025, the OBBBA was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. We are evaluating the full effects of the legislation on our estimated annual effective tax rate and cash tax position. As the legislation was signed into law after the close of our second quarter, the impacts are not included in our operating results for the three-month period ended June 28, 2025.
Six-Month Period Ended June 28, 2025 Compared to the Six-Month Period Ended June 29, 2024
The following table summarizes our consolidated results of operations, including Field contribution, which is a non-GAAP measure (see “Non-GAAP Financial Measures” below), for the six-month periods indicated:
153,166
15.4
65.7
69.5
62,929
90,237
29.7
15.8
17.7
5,570
6.3
11,947
19.9
(534
-9.3
0.3
(2,095
-86.9
11.5
71,843
119.8
(72,077
(79,063
6,986
-8.8
(30,012
-122.3
Income tax expense
(19,333
706.9
29,484
NM
NM = A percentage calculation that is not meaningful due to a percentage change greater than 1000%.
The following table summarizes our consolidated key performance measures, including Field contribution and Field contribution margin, which are non-GAAP measures (see “Non-GAAP Financial Measures” below), for the six-month periods indicated:
28
3.8
212,902
128,235
84,667
66.0
18.5
12.9
The following tables summarize our key performance measures by segment for the six-month periods indicated:
143,150
17.8
61,534
10.4
81,616
38.7
4.6
21,940
20,600
1,340
6.5
43.12
38.97
4.15
11.3
29.78
1.05
3.9
13.34
10.24
3.10
32.2
7,602
7.0
2,175
5,427
9.3
19.5
14.8
14.7
24.5
23.7
3.4
75.9
75.4
3,193
3,082
2,414
2.9
(780
-1.6
3,194
2.6
180
186
(6
477.34
448.97
28.37
6.1
266.59
262.19
4.40
1.6
210.75
186.78
23.97
29
The following discussion of our results of operations should be read in conjunction with the foregoing tables summarizing our consolidated results of operations and key performance measures, as well as our audited consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.
Operating income was $131.8 million for the six-month period ended June 28, 2025, as compared to operating income of $60.0 million for the six-month period ended June 29, 2024, an increase of $71.8 million, or 119.8%.
Operating income for the six-month period of 2025 was positively impacted by an increase of $84.7 million, or 66.0%, in Field contribution as compared to the six-month period of 2024. The $84.7 million increase in Field contribution resulted from a $153.2 million, or 15.4%, increase in consolidated revenue and a 5.6% increase in our Field contribution margin to 18.5% for the six-month period of 2025 from 12.9% for the six-month period of 2024. The primary driver of our higher Field contribution margin year over year was an increase in gross margin percentage of 3.8% compared to the first six months of 2024 and a 1.9% decrease in branch and regional administrative expenses as a percentage of revenue to 15.8% for the six-month period of 2025 from 17.7% for the six-month period of 2024.
The overall $71.8 million increase in operating income compared to the first six months of 2024 primarily consists of:
Net income for the six-month period ended June 28, 2025 was $32.2 million, as compared to net income of $2.7 million for the six-month period ended June 29, 2024. The $29.5 million increase in net income was primarily driven by the following:
Revenue was $1,148.8 million for the six-month period ended June 28, 2025, as compared to $995.6 million for the six-month period ended June 29, 2024, an increase of $153.2 million, or 15.4%. This increase resulted from the following segment activity:
Our PDS segment revenue growth of $143.2 million, or 17.8%, for the six-month period ended June 28, 2025 was attributable to a 6.5% increase in volume and a 11.3% increase in revenue rate. The 6.5% increase in volume was primarily attributable to growth in demand for non-clinical services.
The 11.3% increase in PDS revenue rate for the six-month period ended June 28, 2025, as compared to the six-month period ended June 29, 2024, resulted primarily from the following: (i) reimbursement rate increases issued by various state Medicaid programs and Managed Medicaid payers, including payments received in the current period related to certain rate increases applied retroactively for services provided since July 1, 2024 and January 1, 2025, for which there is currently no associated wage pass-through reflected in segment cost of revenue, excluding depreciation and amortization; (ii) increases in value-based payments from certain payors; and (iii) improved collections on fully reserved aged receivables.
Our HHH segment revenue increase of $7.6 million, or 7.0%, for the six-month period ended June 28, 2025 resulted primarily from a 3.4% increase in total episodes and a 3.6% increase in home health revenue per completed episode due to improvements in patient mix compared to the first six months of 2024.
The $2.4 million, or 2.9%, increase in MS segment revenue for the six-month period ended June 28, 2025, as compared to the six-month period ended June 29, 2024, was attributable to a 6.1% increase in revenue rate offset by a decline in volume of 3.2% compared to the first six months of 2024.
Cost of revenue, excluding depreciation and amortization, was $754.4 million for the six-month period ended June 28, 2025, as compared to $691.5 million for the six-month period ended June 29, 2024, an increase of $62.9 million, or 9.1%. This increase resulted from the following segment activity:
The 10.4% increase in PDS cost of revenue for the six-month period ended June 28, 2025 resulted from the previously described 6.5% increase in PDS volume combined with a 3.9% increase in PDS cost of revenue rate. The 3.9% increase in cost of revenue rate primarily resulted from higher caregiver labor costs, including the pass-through of reimbursement rate increases net of $6.2 million lower general and professional liability expense associated with certain accrued legal settlements.
The 4.3% increase in HHH cost of revenue for the six-month period ended June 28, 2025 was driven primarily by higher home health total episodes.
The 1.6% decrease in MS cost of revenue for the six-month period ended June 28, 2025 was driven by the previously described 3.2% decline in MS volumes offset by a 1.6% increase in cost of revenue rate.
Gross margin was $394.4 million, or 34.3% of revenue, for the six-month period ended June 28, 2025, as compared to $304.1 million, or 30.5% of revenue, for the six-month period ended June 29, 2024. Gross margin increased $90.2 million, or 29.7%, from the comparable prior year quarter. The 3.8% increase in gross margin percentage for the six-month period ended June 28, 2025 resulted from the combined changes in our revenue rates and cost of revenue rates in each of our segments, which we refer to as the change in our spread rate, as follows:
Branch and regional administrative expenses were $181.5 million, or 15.8% of revenue, for the six-month period ended June 28, 2025, as compared to $175.9 million, or 17.7% of revenue, for the six-month period ended June 29, 2024, an increase of $5.6 million, or 3.2%.
31
The 3.2% increase in branch and regional administrative expenses for the six-month period ended June 28, 2025, as compared to the six-month period ended June 29, 2024, was primarily due to an increase in incentive compensation expense during the six-month period due to improved forecasted performance compared to annual targets and acceleration of certain non-cash share-based compensation awards during the first six months of 2025. The overall 1.9% decrease in branch and regional administrative expenses as a percentage of revenue for the six-month period ended June 28, 2025, as compared to the six-month period ended June 29, 2024 resulted from leveraging our branch and regional administrative expense structure as a result of our restructuring efforts.
Field contribution was $212.9 million, or 18.5% of revenue, for the six-month period ended June 28, 2025, as compared to $128.2 million, or 12.9% of revenue, for the six-month period ended June 29, 2024. Field contribution increased $84.7 million, or 66.0%, for the six-month period ended June 28, 2025, as compared to the six-month period ended June 29, 2024. The 5.6% increase in Field contribution margin for the six-month period ended June 28, 2025 resulted from the following:
Corporate expenses as a percentage of revenue for the six-month periods ended June 28, 2025 and June 29, 2024 were as follows:
38,466
32,675
10,879
5,860
11,672
1.0
10,878
6,012
6,216
917
961
4,088
3,497
Corporate expenses were $72.0 million, or 6.3% of revenue, for the six-month period ended June 28, 2025, as compared to $60.1 million, or 6.0% of revenue, for the six-month period ended June 29, 2024. The $11.9 million, or 19.9%, increase in corporate expenses resulted primarily from higher compensation and benefits and higher non-cash share-based compensation costs, primarily due to the acceleration of the SMRP in the first quarter of 2025.
Depreciation and amortization was $5.2 million for the six-month period ended June 28, 2025, as compared to $5.7 million for the six-month period ended June 29, 2024, a decrease of $0.5 million, or 9.3%. The $0.5 million decrease primarily resulted from improved capital asset management.
Acquisition related costs were $3.5 million for the six-month period ended June 28, 2025, primarily associated with the acquisition of Thrive.
32
Other operating expense was $0.3 million for the six-month period ended June 28, 2025, as compared to other operating expense of $2.4 million for the six-month period ended June 29, 2024, a decrease in other operating expense of $2.1 million. The $2.1 million decrease primarily resulted from impairment of a certain facility lease asset recorded in the prior year six-month period.
Interest expense, net of interest income was $72.1 million for the six-month period ended June 28, 2025, as compared to $79.1 million for the six-month period ended June 29, 2024, a decrease of $7.0 million, or 8.8%. The decrease was primarily driven by a lower U.S. federal funds rate during the six-month period ended June 28, 2025 compared to the six-month period ended June 29, 2024. See further analysis under Liquidity and Capital Resources below.
Other Expense (Income)
Other expense was $5.5 million for the six-month period ended June 28, 2025, as compared to other income of $24.5 million for the six-month period ended June 29, 2024. We realized a $22.7 million decrease in non-cash valuation gains on interest rate derivatives resulting from changes in market expectations of future interest rates as of the comparable valuation dates, and a $7.2 million decline in net settlements with interest rate derivative counterparties as interest rates decreased compared to the prior year period due to lower market interest rates. Details of other expense (income) included the following:
Valuation (loss) gain to state interest rate derivatives at fair value
(17,580
5,130
12,057
19,228
51
182
We record income tax expense during interim periods based on our estimate of the annual effective income tax rate, adjusted each quarter for discrete items. We analyze various factors to determine the estimated annual effective income tax rate, including projections of our annual earnings, the impact of state and local income taxes, our ability to use tax credits and net operating loss carryforwards, and available tax planning alternatives. We incurred income tax expense of $22.1 million for the six-month period ended June 28, 2025, as compared to income tax expense of $2.7 million for the six-month period ended June 29, 2024. This increase in tax expense was primarily driven by differences in our projections of annual earnings at the end of each comparable six-month period, as well as the changes to federal and state current tax expense and the changes in federal and state valuation allowances due to certain non-deductible expenses, most notably interest expense.
On July 4, 2025, the OBBBA was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. We are evaluating the full effects of the legislation on our estimated annual effective tax rate and cash tax position. As the legislation was signed into law after the close of our second quarter, the impacts are not included in our operating results for the six-month period ended June 28, 2025.
Non-GAAP Financial Measures
In addition to our results of operations prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), which we have discussed above, we also evaluate our financial performance using EBITDA, Adjusted EBITDA, Field contribution and Field contribution margin.
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 U.S. 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 expense or benefit; 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, and associated employer payroll taxes; 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; other system transition costs, professional fees; and other costs including gains and losses on
33
acquisitions and dispositions of certain businesses. 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.
Management believes 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, management considers 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 management does 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 management a normalized view of our core, ongoing operations after integrating our acquired companies, which is an important measure in assessing our performance.
Given our determination of adjustments in arriving at our computations of EBITDA and Adjusted EBITDA, 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 U.S. GAAP.
The following table reconciles net income to EBITDA and Adjusted EBITDA for the periods indicated:
35,874
39,518
72,077
79,063
Income tax expense (benefit)
17,113
(9,927
22,068
2,735
EBITDA
82,629
46,330
131,574
90,277
Goodwill, intangible and other long-lived asset impairment
153
80
2,400
3,500
Interest rate derivatives (1)
(72
(6,441
5,523
(24,359
Acquisition-related costs (2)
3,507
Integration costs (3)
2,269
388
2,543
687
Legal costs and settlements associated with acquisition matters (4)
639
173
1,678
575
Restructuring (5)
1,718
416
3,188
Other legal matters (6)
(6,014
(197
(5,938
898
Other adjustments (7)
96
(50
(717
Total adjustments (8)
(683
24,153
(9,747
Adjusted EBITDA
88,374
45,647
155,727
80,530
34
Impact to Adjusted EBITDA
(5,878
(5,578
176
1,599
1,561
4,837
2,874
6,451
3,958
15,599
9,335
109
168
47
2,120
Other expense (income)
64
(6,451
5,742
(24,252
Total adjustments
Field contribution and Field contribution margin are non-GAAP financial measures and are not intended to replace financial performance measures determined in accordance with U.S. 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, gross margin, or gross margin percentage or any other financial measures calculated in accordance with U.S. 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
35
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.
The following table reconciles gross margin to Field contribution and Field contribution margin for the periods indicated:
Liquidity and Capital Resources
Our principal sources of cash have historically been from cash provided by operating activities. Our principal source of liquidity in addition to cash provided by operating activities, or when we have used net cash in our operating activities, has historically been from proceeds from our credit facilities and issuances of common stock.
Our principal uses of cash and liquidity have historically been for acquisitions, interest and principal payments under our credit facilities, payments under our interest rate derivatives, and financing of working capital. Payment of interest and related fees under our credit facilities is currently the most significant use of our operating cash flow. Our goal is to use cashflow provided by operations primarily as a source of cash to supplement the purchase price for acquisitions.
In September 2023, in response to a $7.9 million arbitration award rendered against us in connection with a civil litigation matter, we promptly obtained a $9.1 million appellate bond with the trial court. The $9.1 million appellate bond was collateralized with letters of credit. During the second fiscal quarter, a settlement agreement between all parties was reached. On June 9, 2025, the court entered an agreed final judgment in the matter and ordered release of the bond. The letters of credit securing the bond were released on June 16, 2025.
For additional information with respect to the foregoing litigation matters, please see "Litigation and Other Current Liabilities" set forth in Note 11 to our Quarterly Financial Statements.
At June 28, 2025 we had $100.7 million in cash on hand, $106.3 million available to us under our Securitization Facility and approximately $147.0 million of borrowing capacity under the Revolving Credit Facility. Available borrowing capacity under the Revolving Credit Facility is subject to a maintenance leverage covenant that becomes effective if more than 30% of the total commitment is utilized, subject to a $15.0 million carve-out for letters of credit. We believe that our operating cash flows, available cash on hand, and availability under our Securitization Facility and Revolving Credit Facility will be sufficient to meet our cash requirements for at least the next twelve months. Our future capital requirements will depend on many factors that are difficult to predict, including the size, timing and structure of any future acquisitions, future capital investments and future results of operations. We cannot assure you that cash provided by operating activities or cash and cash equivalents on hand will be sufficient to meet our future needs. If we are unable to generate sufficient cash flows from operations in the future, we may have to obtain additional financing. If we obtain additional capital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness, that indebtedness may contain significant financial and other covenants that may significantly restrict our operations. We cannot assure you that we could obtain refinancing or additional financing on favorable terms or at all.
Cash Flow Activity
The following table sets forth a summary of our cash flows from operating, investing, and financing activities for the six-month periods presented:
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Operating Activities
The primary sources or uses of our operating cash flow are operating income or operating losses, as well as any other significant non-cash items such as depreciation, amortization and share-based compensation, and cash paid for interest. The timing of collections of accounts receivable and the payment of accounts payable, other accrued liabilities and accrued payroll can also impact and cause fluctuations in our operating cash flow. Cash provided by operating activities increased by $53.1 million for the six-month period ended June 28, 2025 compared to the six-month period ended June 29, 2024, primarily due to:
Days Sales Outstanding (“DSO”)
DSO provides us with a gauge to measure the timing of cash collections against accounts receivable and related revenue. DSO is derived by dividing our average patient accounts receivable for the fiscal period by our average daily revenue for the fiscal period. The collection cycle for our HHH segment is generally longer than that of our PDS segment, primarily due to longer billing cycles for HHH, which is generally billed in thirty-day increments. The following table presents our trailing five quarter DSO for the periods presented below:
September 28, 2024
March 29, 2025
Days Sales Outstanding
47.8
48.1
46.4
47.2
Investing Activities
Net cash used in investing activities was $18.3 million for the six-month period ended June 28, 2025, as compared to $2.6 million for the six-month period ended June 29, 2024. The primary driver of the $15.8 million increase in cash used in the current period was the purchase of Thrive.
Financing Activities
Net cash (used in) provided by financing activities increased by $24.6 million, from $16.5 million net cash provided by financing activities for the six-month period ended June 29, 2024 to $8.2 million net cash used in financing activities for the six-month period ended June 28, 2025. The $24.6 million increase in net cash used was primarily attributable to payments for shares withheld to cover employee taxes on vesting of restricted stock during the current year period and borrowings under the Securitization Facility during the prior year period. There were no borrowings made under our Securitization Facility during the six-month period ended June 28, 2025.
Indebtedness
We typically incur term loan indebtedness to finance our acquisitions, and we borrow under our Securitization Facility and Revolving Credit Facility from time to time for working capital purposes, as well as to finance acquisitions, as needed. The following table presents our current and long-term obligations under our credit facilities as of June 28, 2025 and December 28, 2024, as well as related interest expense for the six-month periods ended June 28, 2025 and June 29, 2024, respectively:
Current and Long-term
Interest Expense
Obligations
Interest Rate
37,029
41,834
Term Loan - Second Lien Term Loan (1)
24,201
26,241
349
425
Securitization Facility (2)
S + 2.75%
6,599
7,467
Amortization of debt issuance costs
810
809
Total Indebtedness
1,469,700
1,474,300
72,338
79,260
Weighted Average Interest Rate (3)
9.0
37
We were in compliance with all financial covenants and restrictions related to existing credit facilities at June 28, 2025.
On September 30, 2024 and further on April 16, 2025, we amended the terms of our revolving credit facility (the "Revolving Credit Facility") under our first lien credit agreement to extend the Revolving Credit Facility’s maturity date from April 29, 2026 to the earlier of (i) April 15, 2028 and (ii) May 1, 2026 if by such date the Securitization Facility has not been renewed or replaced or paid-off, in each case, in full, with a maturity date that is January 14, 2028, or later. Additionally, the maximum borrowing availability under the Revolving Credit Facility was reduced from $200.0 million to $170.3 million through April 29, 2026, and then subsequently reduces availability to $148.9 million from April 29, 2026 through the amended maturity date.
On June 25, 2025, we amended the Securitization Facility (the "Seventh Amendment") to increase the maximum amount available thereunder from $225.0 million to $275.0 million, subject to certain borrowing base requirements. The amendment also, among other things, provided for an extension to the scheduled termination date of the Securitization Facility to three years from the effective date of the Seventh Amendment. As a result of the Seventh Amendment to the Securitization Facility the Revolving Credit Facility's maturity date was effectively extended to April 15, 2028.
Contractual Obligations
Our contractual obligations consist primarily of long-term debt obligations, interest payments, operating and financing leases. These contractual obligations impact our short-term and long-term liquidity and capital needs. As of June 28, 2025, there were no material changes to our contractual obligations from those described in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.
Critical Accounting Estimates
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024 for accounting policies and related estimates we believe are the most critical to understanding our consolidated financial statements, financial condition and results of operations and which require complex management judgment and assumptions, or involve uncertainties. These critical accounting estimates include patient services and product revenue; business combinations; goodwill; and insurance reserves. There have been no changes to our critical accounting estimates or their application since the date of our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for a smaller reporting company.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, we conducted an evaluation, under the supervision and with the participation of our principal executive officer, principal financial officer, and principal accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"). Based on this evaluation, our principal executive officer, principal financial officer and principal accounting officer concluded that our disclosure controls and procedures were effective as of June 28, 2025.
During the three-month period ended June 28, 2025, we completed the Mergers. As permitted by the Securities and Exchange Commission staff interpretive guidance that an assessment of a recently acquired business may be omitted from the scope of evaluation in the year of acquisition, management excluded Thrive from its interim evaluation of internal control over financial reporting.
Changes in Internal Control over Financial Reporting
On June 2, 2025, we completed the Mergers. As part of the ongoing integration, we are in the process of incorporating the controls and related procedures of Thrive. Other than incorporating Thrive's controls, there were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) that have occurred during the three-month period ended June 28, 2025, that have materially impacted, or are reasonably likely to materially impact, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
Our management, including our principal executive officer, principal financial officer, and principal accounting officer, does not expect that our disclosure controls or our internal controls over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls’ effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies and procedures.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
Information in response to this Item is included in “Part I – Item 1 - Note 11 – Commitments and Contingencies” and is incorporated by reference into this Part II, Item 1 of this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors
There have been no material changes to the risk factors described in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Except as previously disclosed in Current Reports on Form 8-K, no unregistered sales of the Company's equity securities were made during the three-month period ended June 28, 2025.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the quarter ended June 28, 2025, none of the directors or officers of the Company adopted, modified, or terminated any contract, instruction or written plan for the purchase or sale of the Company's securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1 (c) under the Exchange Act or any "non-Rule 10b5-1 trading arrangement", as defined in Item 408 of Regulation S-K, except as follows:
On June 11, 2025, the officers of the Company listed in the chart below adopted Rule 10b5-1 trading arrangements intended to provide solely for "eligible sell-to-cover transactions" (as described in Rule 10b5-1(c)(1) under the Exchange Act) to satisfy the applicable tax withholding obligations in connection with the vesting of certain restricted stock unit awards. The number of shares to be sold pursuant to each officer's Rule 10b5-1 trading arrangement is dependent on the applicable tax obligations incurred in connection with the vesting of each officer's restricted stock unit awards and, therefore, is indeterminable at this time, but in no event exceed the aggregate number of shares of our common stock listed below.
Name
Title
Adoption Date
Expiration Date
Aggregate # of securities to be sold (2)
Jeff Shaner
Chief Executive Officer
June 11, 2025
January 9, 2026 (1)
180,000
February 28, 2026 (1)
978,851
Matthew Buckhalter
Chief Financial Officer
115,000
106,427
Deborah Stewart
SVP, Chief Accounting Officer
75,000
89,788
Edwin C. Reisz
Chief Administrative Officer
125,000
425,304
Each of the 10b5-1 plans in the above table included a representation from the officer to the Company, in accordance with the Company's securities trading policy, that such individual was not in possession of any material nonpublic information regarding the Company or the securities subject to the plan on the date of adoption.
Item 6. Exhibits
The following exhibits are filed or furnished herewith:
Exhibit
Number
Description
10.1
Seventh Amendment to the Receivables Financing Agreement, dated June 25, 2025, by and among, Aveanna SPV I, LLC, Aveanna Healthcare LLC, and a bank (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K on June 27, 2025 and incorporated herein by reference).
10.2
Amendment to Amended and Restated Shareholder Agreement dated, June 6, 2025.
31.1
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Accounting Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.3*
Certification of Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Furnished herewith.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 7, 2025
By:
/s/ Jeff Shaner
(Principal Executive Officer)
/s/ Matthew Buckhalter
(Principal Financial Officer)
/s/ Deborah Stewart
Chief Accounting Officer
(Principal Accounting Officer)