Q2 2024 Aveanna Healthcare Holdings Inc Earnings Call

August 8, 2024

Good morning and welcome to Aveanna Hlthcr's Holdings second quarter 2024 earnings conference call. Today's call is being recorded and we have allocated one hour for prepared remarks and Q&A. At this time, I'd like to turn the call over to Debbie Stewart, Aveanna's Chief Accounting Officer. Thank you. You may begin.

Operator: Today's call is being recorded, and we have allocated one hour for prepared remarks and Q&A. At this time, I'd like to turn the call over to Debbie Stewart, Aveanna's Chief Accounting Officer. Thank you.

Debbie Stewart: Good morning, and welcome to Aveanna's second quarter 2024 earnings call. I am Debbie Stewart, the company's Chief Accounting Officer. With me today is Jeff Shaner, our Chief Executive Officer, and Matt Buckhalter, our Chief Financial Officer.

Debbie Stewart: Good morning and welcome to Aveanna's second quarter 2024 earnings call. I am Debbie Stewart, the company's Chief Accounting Officer. With me today is Jeff Shaner, our Chief Executive Officer, and Matt Buckhalter, our Chief Financial Officer.

Debbie Stewart: During this call, we will make forward-looking statements. Risk factors that may impact those statements and could cause actual future results to differ materially from currently projected results are described in this morning's press release and the reports we file with the SEC. The company does not undertake any duty to update such forward-looking statements. Additionally, during today's call, we will discuss certain non-GAAP measures, which we believe can be useful in evaluating our performance.

During this call, we will make forward-looking statements. Risk factors that may impact those statements and could cause actual future results to differ materially from currently projected results are described in this morning's press release and the reports we file with the SEC.

The company does not undertake any duty to update such forward-looking statements.

Additionally, during today's call we will discuss certain non- GAAP measures , which we believe can be useful in evaluating our performance.

Debbie Stewart: The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of these measures can be found in this morning's press release, which is posted on our website, Aveanna.com, and in our most recent quarterly report on Form 10-Q when filed. With that, I will turn the call over to Aveanna's Chief Executive Officer, Jeff Shaner. Thank you, Jeff. Thank you, Debbie.

The presentation of this additional information should not be considered in isolation or is a substitute for results prepared in accordance with GAP.

Jeff Shaner: A reconciliation of these measures can be found in this morning's press release, which is posted on our website, Aveanna.com, and in our most recent quarterly report on Form 10-Q when filed. With that, I will turn the call over to Aveanna's Chief Executive Officer, Jeff Shaner. Jeff?

Jeff Shaner: Thank you, Debbie. Good morning, and thank you for joining us today. We appreciate each of you investing your time this morning to better understand our Q2 2024 results and how we are moving Aveanna forward in 2024 and beyond. My initial comments will briefly highlight our second quarter, along with steps we are taking to address the labor markets and our ongoing efforts with government and preferred payers to create additional capacity. I will then provide insight on how we are thinking about year two of our strategic transformation and our enhanced outlook for 2024 prior to turning the call over to Matt to provide further details on the quarter and our refreshed outlook. Moving on to highlights for the second quarter.

Jeff Shaner: Revenue for the second quarter was approximately $505 million, representing a 7% increase over the prior year period. Second quarter adjusted EBITDA was $45.6 million, representing a 27.3% increase over the prior year period, primarily due to the improved payer rate environment, as well as cost reduction efforts taking hold. As we have previously discussed, the labor environment represented the primary challenge that we needed to address to see Aveanna resume the growth trajectory that we believed our company could achieve. It is important to note that our industry does not have a demand problem.

Debbie Stewart: Thank you, Debbie. Good morning and thank you for joining us today. We appreciate each of you investing your time this morning to better understand our Q2 2024 results and how we are moving Aveanna forward in 2024 and beyond.

Debbie Stewart: My initial comments will briefly highlight our second quarter and steps we are taking to address the labor markets and our ongoing efforts with government and preferred payers to create additional capacity. I will then provide insight on how we are thinking about year two of our strategic transformation and our enhanced outlook for 2024 prior to turning the call over to Matt to provide further details on the quarter and our refreshed outlook.

Debbie Stewart: My initial comments will briefly highlight our second quarter along with steps we are taking to address the labor markets and our ongoing efforts with government and preferred payers to create additional capacity.

i will then provide inssideight on how we are thinking about year two of our strategic transformation and our enhanced outlook for two thousand and twenty -four prior toturning the call over to matt to provide further details into the quarter and our refresh outlook

Matt: Moving to highlights for the second quarter.

Matt: Revenue for the second quarter was approximately $505 million, representing a 7% increase over the prior year period.

Debbie Stewart: Second quarter adjusted EBITDA was $45.6 million, representing a 27.3% increase over the prior year period, primarily due to the improved payer rate environment, as well as cost reduction efforts taking hold. By focusing our clinical capacity on our preferred payers, we achieved solid year-over-year growth in revenue and adjusted EBITDA. We also experienced improvement in our caregiver hiring and retention trends by aligning our efforts with those payers willing to engage with us on enhanced reimbursement rates and value-based agreements.

Debbie Stewart: second quarter adjusted ebitda was forty-five point six million representing a twenty-seven point three percent increase over the prior year period primarily due to the improved payer rate environment as well as cost reduction efforts taking hold

As we have previously discussed, the labor environment represented the primary challenge that we needed to address to see Aveanna resume the growth trajectory that we believed our company could achieve.

Debbie Stewart: It is important to note that our industry does not have a demand problem. The demand for home and community-based care continues to be strong, with both state and federal governments and managed care organizations asking for solutions that can create more capacity.

Jeff Shaner: The demand for home and community-based care continues to be strong, with both state and federal governments and managed care organizations asking for solutions that can create more capacity. Our Q2 results highlight that we continue to align our objectives with those of our preferred payers and government partners. By focusing our clinical capacity on our preferred payers, we achieved solid year-over-year growth in revenue and adjusted EBITDA. We also experienced improvement in our caregiver hiring and retention trends by aligning our efforts to those payers willing to engage with us on enhanced reimbursement rates and value-based agreements. While we continue to operate in a challenging labor and inflationary environment, our preferred payer strategy allows us to return to a more normalized growth rate in our business segment.

Debbie Stewart: Our Q2 results highlight that we continue to align our objectives with those of our preferred payers and government partners.

Debbie Stewart: By focusing our clinical capacity on our preferred payers, we achieved solid year-over-year growth in revenue and adjusted EBITDA.

We also experienced improvement in our caregiver hiring and retention trends by aligning our efforts to those payers willing to engage with us on enhanced reimbursement rates and value-based agreements.

Debbie Stewart: While we continue to operate in a challenging labor and inflationary environment, our preferred payer strategy allows us to return to a more normalized growth rate in our business segment. Since our first quarter earnings call, I am pleased with the continued progress we have made on several of our rate improvement initiatives with both government and preferred payers, as well as continued signs of improvement in the caregiver labor market, specifically. I am pleased to report that we have secured double-digit rate improvements in both Georgia and Massachusetts effective in the second half of 2024.

Jeff Shaner: Since our first quarter earnings call, I am pleased with the continued progress we have made on several of our rate improvement initiatives with both government and preferred payers, as well as continued signs of improvement in the caregiver labor market, specifically. As it relates to our private duty services business, our goal for 2024 was to execute on our legislative strategy to improve reimbursement rates in various states, with particular emphasis on Georgia, Massachusetts, and California, which represent approximately 15 percent of our PDS revenue.

Debbie Stewart: Since our first quarter earnings call, I am pleased with the continued progress we have made on several of our rate improvement initiatives with both government and preferred payers, as well as continued signs of improvement in the caregiver labor market.

Debbie Stewart: specifically

Debbie Stewart: as it relates to our private duty services business

Debbie Stewart: Our goal for 2024 was to execute on our legislative strategy to improve reimbursement rates in various states with particular emphasis on Georgia, Massachusetts, and California, which represent approximately 15% of our PDS revenue.

Jeff Shaner: I am pleased to report that we have secured double-digit rate improvements in both Georgia and Massachusetts effective in the second half of 2024. These states demonstrate our government affairs strategy to partner with state legislatures and governors to identify shortfalls in private duty nursing wages and to align reimbursement rates to improve access to care for patients with complex medical conditions. I applaud the leadership in Georgia and Massachusetts for their partnership in investing in high-quality nursing care in the home setting.

Debbie Stewart: I am pleased to report that we have secured double-digit rate improvements in both Georgia and Massachusetts effective the second half of 2024.

Debbie Stewart: These states demonstrate our government affairs strategy to partner with state legislatures and governors to identify shortfalls in private duty nursing wages and align reimbursement rates to improve access to care for patients with complex medical conditions.

Debbie Stewart: These states demonstrate our government affairs strategy to partner with state legislatures and governors to identify shortfalls in private duty nursing wages and to align reimbursement rates to improve access to care for patients with complex medical conditions.

Debbie Stewart: I applaud the leadership in Georgia and Massachusetts for their partnership in investing in high-quality nursing care in the home setting. Year to date, we have secured 12 state rate increases, with a few states still finalizing their legislative processes. While we are pleased that our PDS legislative messaging has been well received by state legislatures, there is still work to do. Regardless of the outcome of Proposition 35, we will continue to advocate for California's children with complex medical conditions.

Debbie Stewart: I applaud the leadership in Georgia and Massachusetts for their partnership in investing in high-quality nursing care in the home setting.

Jeff Shaner: Year to date, we have secured 12 state rate increases, with a few states still finalizing their legislative processes. While we are pleased that our PDS legislative messaging has been well received by state legislatures, there is still work to do.

Debbie Stewart: year-to-date we have secured twelve state rate increases with a few states still finalizing their legislative process

Debbie Stewart: While we are pleased that our PDS legislative messaging has been well-received by state legislatures, there is still work to do.

Jeff Shaner: As an example of the work ahead, California continues to be a challenging landscape to secure funding for an appropriate PDN rate increase. We've made significant strides with the Governor, Medi-Cal Department, and California Legislature demonstrating the importance of PDN rate investment and how it supports an overall lower health care cost, improved patient satisfaction, and quality outcomes. During the latest legislative session, we were successful in obtaining an increase in the Medi-Cal PDN rates despite the headwinds of the anticipated California budget deficit.

Debbie Stewart: As an example of the work ahead, California continues to be a challenging landscape to secure funding for an appropriate PDN rate increase.

Speaker Change: we've made significant strides with the governor medicare department and california legislature demonstrating the importance of pdn rate investment and how it supports an overall lower health care cost improved patient satisfaction and quality outcomes

Debbie Stewart: During the latest legislative session, we were successful in obtaining an increase to the Medi-Cal PDN rates despite the headwinds with the anticipated California budget deficit.

Jeff Shaner: This PDN rate investment would be effective on January 1st, 2026 and funded under the MCO tax provision similar to numerous other Medi-Cal rate investments. However, our PDN rate investment, along with other Medi-Cal rate investments, is tied to a voter referendum on the upcoming November 5th election ballot, designated as Proposition 35. Regardless of the outcome of Proposition 35, we will continue to advocate for California's children with complex medical conditions.

Speaker Change: This PDN rate investment would be effective January 1st of 2026 and funded under the MCO tax provision similar to numerous other Medi-Cale rate investments.

Debbie Stewart: However, our PDN rate investment along with other MediCal rate investments is tied to a voter referendum on the upcoming November 5th election ballot designated as Proposition 35.

Debbie Stewart: regardless of the outcome of proposition thirty-five we will continue to advocate for for california' children with complex medical conditions

Jeff Shaner: We have a proven track record of expanding our preferred payer programs and will continue to enhance our efforts in California similar to our approach in other states. Now, moving on to our preferred payer initiatives in other states. Our goal for 2024 was to increase the number of private duty service preferred payer agreements from 14 to 22. Year-to-date, we have added 5 additional preferred pay agreements, increasing our total to 19.

Debbie Stewart: We have a proven track record of expanding our Preferred Payer Programs and will continue to enhance our efforts in California similar to our approach in other states.

Debbie Stewart: Now, moving on to our preferred payer initiatives in other states.

Debbie Stewart: Our goal for 2024 was to increase the number of private duty services preferred payer agreements from 14 to 22. Aveanna's preferred payer strategy is gaining momentum and allowing us to invest in caregiver wages and recruitment efforts to accelerate the hiring and staffing of nurses for our patients. Additionally, we introduced a new PDS volume indicator in Q1 that demonstrates how we think about our momentum with our preferred payers. We now report our preferred payer volumes against the total MCO opportunity, which we believe is a better way to evaluate our preferred payer volume performance.

Debbie Stewart: Our goal for 2024 was to increase the number of Private Duty Services Preferred Payer Agreements from 14 to 22. Year-to-date, we have added five additional Preferred Payer Agreements, increasing our total to 19.

Jeff Shaner: I am proud of our payer relations team as they continue to develop partnerships with managed care organizations to find solutions for children with complex medical conditions. Aveanna's preferred payer strategy is gaining momentum and allowing us to invest in caregiver wages and recruitment efforts to accelerate the hiring and staffing of nurses for our patients. Additionally, we introduced a new PDS volume indicator in Q1 that demonstrates how we think about our momentum with our preferred payers. We now report our preferred payer volumes against the total MCO opportunity, which we believe is a better way to evaluate our preferred payer volume performance.

Debbie Stewart: I am proud of our payer relations team as they continue to develop partnerships with managed care organizations to find solutions for children with complex medical conditions.

Debbie Stewart: Aveanna's preferred payer strategy is gaining momentum and allowing us to invest in caregiver wages and recruitment efforts to accelerate hiring and staffing of nurses for our patients.

Debbie Stewart: Additionally, we introduced a new PDS volume indicator in Q1 that demonstrates how we think about our momentum with our preferred payers.

Debbie Stewart: We now report our preferred payer volumes against the total MCO opportunity, which we believe is a better way to evaluate our preferred payer volume performance.

Jeff Shaner: Our Q2 preferred payer agreements account for approximately 45% of our total PDS MCO volumes, up from 40% in Q1. This positive momentum in preferred payer volumes continues to highlight the shift in our caregiver capacity and recruitment efforts towards our private duty services preferred payer partners, moving to our Preferred Payer Progress in Home Health. Our goal for 2024 was to maintain our episodic payer mix above 70% while returning to a more normalized growth rate. In Q2, our episodic mix was 76%.

Debbie Stewart: Our Q2 preferred payer agreements account for approximately 45% of our total PDS MCO volumes, up from 40% in Q1. This positive momentum in preferred payer volumes continues to highlight the shift in our caregiver capacity and recruitment efforts towards our private duty services preferred payer partners, moving to our Preferred Payer Progress in Home Health. Our goal for 2024 was to maintain our episodic payer mix above 70% while returning to a more normalized growth rate.

Debbie Stewart: Our Q2 preferred payer agreements account for approximately 45% of our total PDS MCO volumes, up from 40% in Q1.

Debbie Stewart: This positive momentum in preferred payer volumes continue to highlight the shift in our caregiver capacity and recruitment efforts towards our private duty services preferred payer partners.

Debbie Stewart: moving to our preferred paayer progress in home health our goal for two thousand and twenty four was to maintain our episodic payer mix above seventy percent while returning to a more normalized growth rate

Debbie Stewart: In Q2, our episodic mix was 76%.

Debbie Stewart: And we achieved positive total episodic growth of 4.5% over the prior year period. We expect our episodic volume growth to be in the 3-5% range moving forward. We also signed two additional episodic agreements in the quarter for a total of four year-to-date.

Jeff Shaner: And we achieved positive total episodic growth of 4.5% over the prior year period. We expect our episodic volume growth to be in the 3-5% range moving forward. We also signed two additional episodic agreements in the quarter for a total of four year-to-date.

Debbie Stewart: and we achieved positive total episodeof growth of four point five percent over the prior year period

Debbie Stewart: We expect our episodic volume growth to be in the 3-5% range moving forward.

Debbie Stewart: We also signed two additional episodic agreements in the quarter for a total of four year-to-date.

Debbie Stewart: I am extremely proud of our home health and hospice leadership teams and their commitment to driving positive clinical outcomes, episodic growth, and profitability. We will continue to remain focused on aligning our home health caregiver capacity with those payers willing to reimburse us on an episodic basis and focus on improved clinical and financial outcomes. We are encouraged by our 2024 rate increases, preferred payer agreements, and subsequent recruiting results. Our business is demonstrating solid signs of recovery as we achieve our rate goal, as previously discussed. And most importantly, we provide this care in the most desirable setting, the comfort of the patient's home.

Jeff Shaner: I am extremely proud of our home health and hospice leadership teams and their commitment to driving positive clinical outcomes, episodic growth, and profitability. We will continue to remain focused on aligning our home health caregiver capacity with those payers willing to reimburse us on an episodic basis and focus on improved clinical and financial outcomes. We are encouraged by our 2024 rate increases, preferential pay agreements, and subsequent recruiting results. Our business is demonstrating solid signs of recovery as we achieve our rate goal, as previously discussed.

Debbie Stewart: I am extremely proud of our home health and hospice leadership teams and their commitment to driving positive clinical outcomes, episodic growth, and profitability.

Debbie Stewart: We will continue to remain focused on aligning our home health caregiver capacity with those payers willing to reimburse us on an episodic basis and focus on improved clinical and financial outcomes.

Debbie Stewart: We are encouraged by our 2024 rate increases, prefer pay agreements, and subsequent recruiting results.

Debbie Stewart: Our business is demonstrating solid signs of recovery as we achieve our rate goals previously discussed.

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

Debbie Stewart: Home and community-based care will continue to grow, and Aveanna is a comprehensive platform with a diverse payer base, providing a cost-effective, high-quality alternative to higher-cost care settings.

Debbie Stewart: And most importantly, we provide this care in the most desirable setting, the comfort of the patient's home.

Jeff Shaner: Before I turn the call over to Matt, let me comment on our strategic plan and improved outlook for 2024. As we navigate year two of our strategic transformation, we remain highly focused on those initiatives that created positive momentum in 2023 and continued execution in 2024. We will continue to focus our efforts on four primary strategic initiatives. First, enhancing partnerships with government and preferred payers to create additional caregiver capacity. Second, identifying cost efficiencies and synergies that will allow us to leverage our growth.

Speaker Change: Before I turn the call over to Matt, let me comment on our strategic plan and improved outlook for 2024.

Debbie Stewart: As we navigate year two of our strategic transformation, we remain highly focused on those initiatives that created positive momentum in 2023 and continued execution in 2024.

Debbie Stewart: We will continue to focus our efforts on four primary strategic initiatives. First, enhancing partnerships with government and preferred payers to create additional caregiver capacity. Second, identifying cost efficiencies and synergies that allow us to leverage our growth. Third, managing our capital structure and collecting our cash while producing positive free cash flow. And fourth, engaging our leaders and employees in delivering our Aveanna mission. Based on the strength of our second quarter and year-to-date results and the continued execution of our key strategic initiatives, we now expect full year 2024 revenue to be greater than $1.985 billion and adjusted EBITDA to be greater than $158 million.

Jeff Shaner: Third, managing our capital structure and collecting our cash while producing positive free cash flow. And fourth, engaging our leaders and employees in delivering our Aveanna mission. Based on the strength of our second quarter and year-to-date results and the continued execution of our key strategic initiatives, we now expect full year 2024 revenue to be greater than $1.985 billion and adjusted EBITDA to be greater than $158 million.

Debbie Stewart: Second, identifying cost efficiencies and synergies that allow us to leverage our growth.

Debbie Stewart: Third, managing our capital structure and collecting our cash while producing positive free cash flow. And fourth, engaging our leaders and employees and delivering our Aveanna mission.

Debbie Stewart: Based on the strength of our second quarter and year-to-date results and the continued execution of our key strategic initiatives

Debbie Stewart: we now expect full year two thousand and twenty-four revenue to be greater than one point nine eight five billion and adjusted ebitda to be greater than one hundred and fifty eight million

Jeff Shaner: We believe our enhanced outlook provides a prudent view considering the challenges we still face with the evolving labor market, and hopefully, it proves to be conservative as we continue to execute throughout the year. In closing, I am so proud of our Aveanna team and their dedication to executing our strategic transformation while holding our mission at the core of everything we do. We offer a cost-effective, patient-preferred, and clinically sophisticated solution for our patients and families.

Debbie Stewart: We believe our enhanced outlook provides a prudent view considering the challenges we still face with the evolving labor market, and hopefully, it proves to be conservative as we continue to execute throughout the year. In closing, I am so proud of our Aveanna team and their dedication to executing our strategic transformation while holding our mission at the core of everything we do.

Debbie Stewart: We believe our enhanced outlook provides a prudent view considering the challenges we still face with the evolving labor market and hopefully it proves to be conservative as we continue to execute throughout the year.

Debbie Stewart: In closing, I am so proud of our Aveanna team and their dedication to executing our strategic transformation while holding our mission at the core of everything we do.

Debbie Stewart: We offer a cost-effective, patient-preferred, and clinically sophisticated solution for our patients and families. Furthermore, we are the right solution for our payers, referral sources, and government partners.

Jeff Shaner: Furthermore, we are the right solution for our payers, referral sources, and government partners. By partnering with preferred payers, we can and will move rate and wage metrics in meaningful ways that support our growth. This strategy allows us to hire, retain, and engage more caregivers in providing the mission of Aveanna every day. With that, let me turn the call over to Matt to provide further details on the quarter and our 2024 outlook. Matt?

Debbie Stewart: by partnering with preferred payers we can and will move rate and wage metrics in meaningful ways that support our growth

Debbie Stewart: This strategy allows us to hire, retain, and engage more caregivers in providing the mission of Aveanna every day.

Debbie Stewart: With that, let me turn the call over to Matt to provide further details on the quarter and our 2024 outlook.

Matt Buckhalter: Thanks, Jeff, and good morning. I'll first talk about our second quarter financial results and liquidity before providing additional details on our refreshed outlook for 2024. Starting with the top line, we saw revenues rise 7 percent over the prior year period to $505 million. We experienced strong year-over-year revenue growth in two of our operating divisions, led by our private duty services and medical solution segments, which grew by 8% and 9.3% respectively compared to the prior year quarter.

Debbie Stewart: Thanks Jeff and good morning. I'll first talk about our second quarter financial results and liquidity before providing additional details on our refreshed outlook for 2024.

Speaker Change: starting with the top line we saw revenues res seven percent over the prior year period to five hundred and five million dollars

Matt Buckhalter: We experienced strong year-over-year revenue growth in two of our operating divisions, led by our private duty services and medical solutions segments, which grew by 8% and 9.3%, respectively, compared to the prior year quarter. Now, taking a deeper look into each of our segments.

Matt Buckhalter: We experienced strong year-over-year revenue growth in two of our operating divisions led by our private duty services and medical solutions segments, which grew by 8% and 9.3% respectively compared to the prior year quarter.

Matt Buckhalter: Consolidated gross margin was $158.3 million, or 31.3%. Consolidated Adjusted EBITDA was $45.6 million, a 27.3% increase as compared to the prior year, reflecting the improved payorating environment as well as cost reduction efforts taking hold. Now, a deeper look at each of our segments.

Speaker Change: consolidated a gross margin was aone hundred and fifty eight point three million dollars or thirty- one point three percent

Matt Buckhalter: Consolidated Adjusted EBITDA was $45.6 million, a 27.3% increase as compared to the prior year, reflecting the improved payorating environment, as well as cost reduction efforts taking hold.

Matt Buckhalter: Starting with private duty services, revenue for the quarter was approximately $408 million, an 8% increase, and was driven by approximately 10.3 million hours of care, a volume increase of 4.8% over the prior year. While core volumes have improved over the prior year, we continue to be constrained in our top-line growth due to the shortage of available caregivers, although we are continuing to see signs of improvement in the labor market. Q2 revenue per hour of $39.46 was up $1.18 or 3.2% as compared to the prior year quarter. This was partially impacted by the timing of revenue reimbursements related to select Value-Based Care arrangements. We expect this to normalize in the second half of 2020.

Matt Buckhalter: Now taking a deeper look at each of our segments.

Matt Buckhalter: Starting with private duty services, revenue for the quarter was approximately $408 million, an 8% increase, and was driven by approximately 10.3 billion hours of care, a volume increase of 4.8% over the prior year.

Matt Buckhalter: While core volumes have improved over the prior year, we continue to be constrained in our top-line growth due to the shortage of available caregivers, although we are continuing to see signs of improvement in the labor market. We expect this to normalize in the second half of 2024. Turning to our cost of labor and gross margin metrics, we achieved $110.9 million in gross margin, or 27.2%. The cost of revenue rate of $28.73 in Q2 was essentially flat on a sequential basis.

Matt Buckhalter: While core volumes have improved over the prior year, we continue to be constrained in our top-line growth due to the shortage of available caregivers. Although, we are continuing to see signs of improvement in the labor markets.

Speaker Change: q two revenue per hour of thirty-nine dollars in forty six cents was up one dollar in eighteen cents or three point two percent as compared to the prior year quarter

Matt Buckhalter: This was partially impacted by the timing of...

Matt Buckhalter: of Revenue Reimbursements Related to Select Value-Based Care Arrangements. We expect this to normalize in the second half of 2024.

Matt Buckhalter: We remain optimistic about our ability to attract caregivers and address market demands for our services when we obtain acceptable reimbursement rates. Turning to our cost of labor and gross margin metrics, we achieved $110.9 million of gross margin, or 27.2%. The cost of revenue rate of $28.73 in Q2 was essentially flat on a sequential basis.

Matt Buckhalter: We remain optimistic about our ability to attract caregivers and address market demands for our services when we obtain acceptable reimbursement rates.

Matt Buckhalter: Turning to our cost of labor and gross margin metrics, we achieved $110.9 million of gross margin, or 27.2%.

Matt Buckhalter: the cost of revenue rate of twenty-eight dollars in seventy-three cents in q two was essentially flat on a sequential basis

Matt Buckhalter: Despite ongoing wage pressures in the labor markets, our Q2 spread per hour improved to $10.73. We expect this spread per hour to normalize in the $10 to $10.50 range in the second half of 2024. Moving on to our home health and hospice segment, revenue for the quarter was approximately $54.6 million, a 1.4 percent decrease over the prior year.

Speaker Change: despite ongoing wage pressures in the labor markets are q two spread for hour improved to ten dollars in seventy-three cents

Matt Buckhalter: We expect this spread per hour to normalize in the $10 to $10.50 range in the second half of 2024.

Matt Buckhalter: Moving on to our home health and hospice segment.

Matt Buckhalter: revenue for the quarter was approximately fifty-four point six million dollars a one point four percent decrease over the prior year

Matt Buckhalter: Revenue was driven by 9,400 total admissions, with approximately 76% being episodic and 11,600 total episodes of care, up 4.5% from the prior year quarter. Medicare revenue per episode for the quarter was $3,093, up 1.4% from the prior year quarter. We continue to focus on right-sizing our approach to growth in the near term by focusing on preferred payers that reimburse us on an episodic basis. This episodic focus has accelerated our margin expansion and improved our clinical outcomes.

Speaker Change: revenue was driven by nine thousand four hundred total emissions with approximately seventy-six percent being episodic and eleven thousand six hundred total episodes of care up four point five percent from the prior year quarter

Matt Buckhalter: Medicare revenue per episode for the quarter was $3,093, up 1.4% from the prior year quarter.

Matt Buckhalter: we continue to focus on right-sizing our approach to growth in the near term by focusing on preferred payers that reimburse us on an episodic basis

Matt Buckhalter: this ep episodic focus has accelerated our margin expansion and improved our clinical outcomes

Matt Buckhalter: With episodic admissions well over 70%, we have achieved our goal of rightsizing our margin profile and enhancing our clinical offerings. As we continue to navigate 2024, we believe our episodic volume will normalize in the 3-5% growth range.

Matt Buckhalter: With episodic emissions well over 70%, we have achieved our goal of right-sizing our margin profile and enhancing our clinical offerings.

Matt Buckhalter: As we continue to navigate 2024, we believe our episodic volume will normalize in the 3-5% growth range.

Matt Buckhalter: We are committed to a disciplined approach to growth while shifting our capacity to those payers who value our clinical resources. Revenue was driven by approximately 94,000 unique patients served, a 10.6% increase over the prior year period, and revenue per UPS of approximately $452.

Matt Buckhalter: We are committed to a disciplined approach to growth while shifting our capacity to those payers who value our clinical resources.

Matt Buckhalter: We are pleased with our Q2 gross margins of 53.8% up 5.2% over the prior year period and representing our continued focus on cost initiatives to achieve our targeted margin profile.

Matt Buckhalter: our home health and hospice platform as dedicated to creating value to effective operational management and the delivery of exceptional patient care

Matt Buckhalter: Now, to our medical solution segment results for Q2. During the quarter, we produced revenue of $42.5 million, a 9.3 percent increase over the prior year. Revenue was driven by approximately 94,000 unique patients served, a 10.6% increase over the prior year period, and revenue per UPS of approximately $452. Gross margins were approximately $18 million, or 42.4% for the quarter, up 6.8% over the prior year period and in line with our target and margin profile for medical solutions.

Matt Buckhalter: Now, to our medical solution segment results for Q2.

Matt Buckhalter: During the quarter, we produced revenue of $42.5 million, a 9.3% increase over the prior year.

Matt Buckhalter: Revenue was driven by approximately 94,000 unique patients served, a 10.6% increase over the prior year period, and revenue for UPS of approximately $452.

Matt Buckhalter: Gross margins were approximately 18 million dollars or 42.4% for the quarter up 6.8% over the prior year period and in line with our target and margin profile for medical solutions.

Matt Buckhalter: We continue to implement initiatives to be more effective and efficient in our operations to leverage our overhead as we continue to grow. We are accelerating our preferred payer strategy in medical solutions by aligning our capacity with those payers that value our services and appropriately reimburse us for the care we provide. In summary, we continue to fight through a difficult labor environment while keeping our patients' care at the center of everything we do. It is clear to us that shifting caregiver capacity to preferred payers who value our partnership is the path forward at Aveanna.

Matt Buckhalter: We continue to implement initiatives to be more effective and efficient in our operations to leverage our overhead as we continue to grow.

Matt Buckhalter: We are accelerating our preferred payer strategy in medical solutions by aligning our capacity with those payers that value our services and appropriately reimburse us for the care we provide.

Matt Buckhalter: in summary we continue to fight through a difficult labor environment while keeping our patients' care at the center of everything we do

Matt Buckhalter: It is clear to us that shifting caregiver capacity to those preferred payers who value our partnership is the path forward at Aveanna.

Matt Buckhalter: As Jeff stated, our primary challenge continues to be reimbursement rates. With the positive momentum we experienced in Q2, we remain optimistic that such trends will continue throughout 2024. As we continue to make progress with the rate environment, we'll pass through wage improvements and other benefits to our caregivers in the ongoing effort to better improve volume.

Matt Buckhalter: As Jeff stated, our primary challenge continues to be reimbursement rates.

Speaker Change: posma momentum ly experienced in q two we remain optimistic that such trends will continue throughout two thousand and twenty four

Matt Buckhalter: As we continue to make progress with the rate environment, we'll pass through wage improvements and other benefits to our caregivers, and the ongoing effort to better improve volumes.

Matt Buckhalter: Now, moving to our balance sheet and liquidity. At the end of the second quarter, we had liquidity of $269 million, representing cash on hand of approximately $47.7 million. 53 million of availability under our securitization facility and approximately $168 million of availability on our revolver, which was undrawn as of the end of the quarter. We had $32 million in outstanding letters of credit at the end of Q2. The overall improvement in liquidity was driven by a $50 million upsizing of our securitization facility in late May.

Matt Buckhalter: Now, moving to our balance sheet and liquidity.

Matt Buckhalter: At the end of the second quarter, we had liquidity of $269 million and approximately $168 million of availability on our revolver, which was undrawn as of the end of the quarter. Accordingly, substantially all of our variable rate debt is hedged.

Matt Buckhalter: At the end of the second quarter, we had liquidity of $269 million, representing cash on hand of approximately $47.7 million.

Matt Buckhalter: 53 million of availability under our securitization facility and approximately 168 million of availability on our revolver which was undrawn as of the end of the quarter

Speaker Change: we have thirty-two million dollars and outstanding letters a credit at the end of q two

Matt Buckhalter: The overall improvement in liquidity was driven by a $50 million upsizing of our securitization facility in late May.

Matt Buckhalter: Our ample liquidity provides room to operate the business and invest in the company to support our continued growth. On the debt service front, we had approximately $1.48 billion of variable rate debt at the end of Q2. Of this amount, $520 million is hedged with fixed rate swaps, and $880 million is subject to an interest rate cap that permits further exposure to increases in SOFR above 3%. Accordingly, substantially all of our variable rate debt is hedged.

Matt Buckhalter: Our ample liquidity provides room to operate the business and invest in the company to support our continued growth.

Speaker Change: on the debt service front we had approximately one point four eight billion dollars a varable rate debt at theend of q two

Speaker Change: of this amount five hundred andtwenty million this edged with fixed rate swapps

Speaker Change: and one hundred and eighty million to subject to an interest rate cap has further exposure to increases in soof for above three percent

Matt Buckhalter: accordingly substantially all of our variable rate debt is hedged

Matt Buckhalter: Our interest rate swaps extend through June 2026, and our interest rate caps extend through February 2027. One last item I will mention related to our debt is that we have no material term loan maturities until July 2028. Looking at year-to-date cash flow, cash provided by operating activities was negative $10.2 million, and free cash flow was negative approximately $12.4 million.

Matt Buckhalter: Our interest rate swaps extend through June 2026.

Matt Buckhalter: in our interest rate caps extend through february two thousand and twenty seven

Matt Buckhalter: One last item I will mention related to our debt is that we have no material term loan maturities until July 2028.

Matt Buckhalter: and Matt Buckhalter.

Matt Buckhalter: Looking at year-to-date cash flow, cash provided by operating activities was negative ten point two million dollars and free cash flow was negative approximately twelve point four

Matt Buckhalter: Q2 cash flow was in line with our expectations, and we continue to expect to be a positive operating cash flow company for full year 2020. We also expect to see continued cash flow benefits as our top line and cost management initiatives come to fruition. Before I hand the call over to the operator for Q&A, let me take a moment to address the revised outlook for 2024. As Jeff mentioned, we currently expect full-year revenue to be greater than $1.985 billion and adjusted EBITDA greater than $158 million.

Matt Buckhalter: the two cash flow was in line with our expectations and we continue to expect to be a positive operating cash flow company for full year two thousand and twenty-four

Matt Buckhalter: We also expect to see continued cash flow benefits as our top line and cost management initiatives come to fruition.

Matt Buckhalter: Before I hand the call over to the operator for Q&A, let me take a moment to address the revised outlook for 2024. As Jeff mentioned, we currently expect full-year revenue to be greater than $1.985 billion. As we have previously discussed, Q3 experiences softness in our core volumes due to summer seasonality, and therefore, we believe our adjusted EBITDA will reflect that seasonality before building in the fourth quarter. In closing, I'm proud of all of our Aveanna team members and their hard work in achieving our Q2 results. I look forward to the continued execution of our 2024 strategic plan and updating you further at the end of Q3. With that, let me turn the call over to the operator. Thank you.

Matt Buckhalter: Before I hand the call over to the operator for Q&A, let me take a moment to address the revised outlook for 2024.

Matt Buckhalter: As Jeff mentioned, we currently expect full-year revenue to be greater than $1.985 billion.

Matt Buckhalter: and adjusted EBITDA greater than $158 million.

Matt Buckhalter: As we have previously discussed, Q3 experiences softness in our core volumes due to summer seasonality, and therefore, we believe our adjusted EBITDA will reflect that seasonality before building in the fourth quarter. In closing, I'm proud of all of our Aveanna team members and their hard work in achieving our Q2 results. I look forward to the continued execution of our 2024 Strategic Plan and updating you further at the end of Q3. With that, let me turn the call over to the operator.

Matt Buckhalter: as we have previously discussed q three experiences softness in our core volumes due to sumer seasonality and therefore we believe our adjusted ebitda will reflect that seasonality before building in the fourth quarter

Matt Buckhalter: In closing, I'm proud of all of our Aveanna team members and their hard work in achieving our Q2 results. I look forward to the continued execution of our 2024 strategic plan and updating you further at the end of Q3. With that, let me turn the call over to the operator.

Operator: Thank you. We'll now be conducting a question and answer session. In the interest of time, we ask that you please limit yourselves to one question and one follow-up.

Operator: Thank you. We'll now be conducting a question and answer session. In the interest of time, we ask that you please limit yourselves to one question and one follow-up. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star 2. One moment, please, while we pull for your questions. Our first question comes from the line of Ben Hendrix with RBC. Please proceed with your question.

Speaker Change: Thank you. We'll now be conducting a question and answer session. In the interest of time, we ask that you please limit yourselves to one question and one follow-up. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Operator: If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 2. One moment, please, while we queue your questions.

Operator: You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for your questions.

Speaker Change: Our first question comes from the line of Ben Hendrix with RBC. Please proceed with your question.

Ben Hendrix: Hey, thank you very much. Congratulations on the quarter. You know, the higher guidance bar appears consistent with the 2Q outperformance, and it sounds like you guys are seeing really good rate momentum continue through the second half. Any reason we shouldn't see the same level of outperformance through the balance of the year? Any unusual cost items ahead in 2Q other than the seasonality you mentioned?

Speaker Change: Hey, thank you very much. Congratulations on the quarter. You know, the higher guidance bar appears consistent with the 2Q outperformance, and it sounds like you guys are seeing really good rate momentum continue through the second half. Any reason we shouldn't see the same level of outperformance through the balance of the year?

Speaker Change: Any unusual cost items ahead in 2Q other than the seasonality you mentioned?

Jeff Shaner: Hey, Ben. Good morning. Thanks. I heard a compliment in there, so thank you.

Jeff Shaner: You know, I think, as Matt laid out in his prepared remarks, Q3 for us is a soft seasonality in our skill business, primarily just driven by the school season, you know, the season when schools are out, as well as the two holidays, both July 4th and Labor Day, you know, following in Q3. So, that's the one thing we point out. It's consistent with the last, you know, a few years, that Q3s are a little bit soft on our core volumes from our skilled business. With that said, Matt, anything that you'd point out just from... No, you know...

Jeff Shaner: You know, I think, as Matt laid out in his prepared remarks, Q3 for us is a soft seasonality in our skilled business, primarily just driven by the school season, you know, the season when schools are out, as well as the two holidays, both July 4th and Labor Day, you know, following in Q3. So, that's the one thing we point out. It's consistent with the last, you know, a few years, that Q3s are a little bit soft on our core volumes from our skilled business. With that said, Matt, anything that you'd point out just from... No, you know...

Speaker Change: bing good morning and thanks i heard to complement there so thank you you think its met laid in his prepared remarks q three for us is a soft seasonality and our skill business primarily just driven by

Matt Buckhalter: The season of schools being out, as well as the two holidays, both July 4th and Labor Day, following in Q3. So that's the one thing we point out. It's consistent with the last few years, is that Q3s are a little bit soft on our core volumes from our skilled business.

Jeff Shaner: No, you know, Jeff, I would probably say, you know, the team's really just started 2024 right where they left off in 2023 as well. You know, with the accelerated growth that we're seeing in PDS, as well as in AMS, on top of the, you know, great clinical care that the teams are providing, we're really proud of all they've achieved. To your point, we will experience a little bit of softness and seasonality in Q3, which we'll see a step back in our EBITDA, but then I would expect in Q4 to see a ramp from there as well.

Jeff Shaner: With that said, Matt, anything that you'd point out just from...

Matt Buckhalter: No, you know, Jeff, I would probably say, you know, the team's really just...

Matt Buckhalter: started 2024 right where they left off in 2023 as well. You know with the accelerated growth that we're seeing in PDS as well as in AMS.

Matt Buckhalter: On top of the great clinical care that the teams are providing, we're really proud of all they've achieved. To your point, there will be experiencing a little bit of softness and seasonality in Q3, which we'll see a step back in our EBITDA. But then I would expect in Q4 to see a ramp from there as well.

Jeff Shaner: Great. Just as a quick follow-up, any investments, capital outlays, or other efforts you guys are taking in advocacy of Prop 35 in California?

Jeff Shaner: Great, just as a quick follow-up, any investments, capital outlays, or other efforts you guys are taking in advocacy of Prop 35 in California?

Speaker Change: Great. Just as a quick follow-up, any investments, capital outlays, or other efforts you guys are taking in advocacy of the Prop 35 in California? Thanks.

Jeff Shaner: Great question, Ben. I wouldn't say capital-type expenses, but if you step back, I think we, you know, we've been in California now since 2018, right? So we've been in California for six years. We're the largest provider of PDN in the state, so we're meaningful in nature. We've been advocating for a PDN rate increase for three fiscal years. This is our third fiscal year.

Jeff Shaner: Great question, Ben. I wouldn't say capital-type expenses, but if you step back, I think we

Jeff Shaner: You know, we've been in California now since 2018, right, so we've been in California for six years. We're the largest provider of PDN in the state, so we're meaningful in nature. We've been advocating for a PDN rate increase now for three fiscal years, this is our third fiscal year.

Jeff Shaner: I think the thing that we would point out is there's a lot of time between now and January 1st of 26. So we keep our heads down, we just continue to work, advocate, legislate, you know, meet with legislators. You know, we've met with the governor and his team numerous times, met with the head of the Medicare department, and we will continue to do so. Although Prop 35 is a significant day for us on November 5th, it doesn't change the way we think about California.

Jeff Shaner: I think the thing that we would point out is there's a lot of time between now and January 1st, 26. So we keep our heads down, we just continue to work, advocate, legislate, you know, meet with legislators. You know, we've met with the governor and his team numerous times, met with the head of the Medicaid department, and we will continue to do so. Although Prop 35 is a significant day for us on November 5th, it doesn't change the way we think about California.

Jeff Shaner: I think the thing that we would point out is there's a lot of time between now and January 1st to 26th. So we keep our heads down. We just continue to work, advocate, legislate, you know, meet with legislatures. You know, we've met with the governors and the governor's team numerous times. We met with the head of the Medicare department. We'll continue to do so.

Jeff Shaner: Although Prop 35 is a significant day for us on November 5th, it doesn't stop the way we think about California. We are in California for the long term.

Jeff Shaner: We are in California for the long term, we're committed to California for the long term, and we will continue to both push our preferred payer strategy with MCOs, of which we have numerous preferred payers in California, as well as continue to advocate for meaningful rate lifts on the Medi-Cal side. I wouldn't say there's any specific spend around November 5th. I would just tell you we've been spending a significant amount of money the last few years, and we'll continue to spend a significant amount of money the next few years because there's still a lot of time between now and 2026. Thanks, Ben.

Jeff Shaner: We're committed to California for the long term, and we will continue to both push our preferred payer strategy with MCOs, of which we have numerous preferred payers in California, as well as continue to advocate for meaningful rate lift on the Medi-Cal side.

Jeff Shaner: I wouldn't say there's any specific spend around the November 5th, I would just tell you we've been spending a significant amount of money the last few years, we'll continue to spend a significant amount of money the next few years because there's still a lot of time between now and 2026.

Operator: Thank you. Our next question comes from the line of Scott Fidel with Steven Zink. Please proceed with your question.

Scott Fidel: Thanks, Ben.

Operator: Thank you. Our next question comes from the line of Scott Fidel with Steven Zink. Please proceed with your question.

Scott Fidel: Hi, thanks and good morning. First question, just on some of the updates that you gave us on the rate wins. First, on the 12 states where you've now secured rate wins, do you have what the average rate increase is that you've gotten to turn in those 12 states? And then I know that you mentioned two states that were key where you secured double-digit rating improvements in Georgia and Massachusetts. You mentioned that those two with California represent 15% of PDS business. Do you have what the percent of business just for Georgia and Massachusetts is, so we can sort of isolate out California?

Scott Fidel: Hi, thanks and good morning. First question, just on some of the updates that you gave us on the rate wins.

Speaker Change: First, on the 12 states where you've now secured rate wins, do you have what the average rate increase is that you've gotten secured in those 12 states? And then I know that you mentioned two states that were key that you secured double-digit rate improvements in with Georgia.

Speaker Change: In Massachusetts, you mentioned that those two with California represent 15% of PDS business. Do you have what percent of business just for Georgia and Massachusetts are so we can sort of isolate out California?

Jeff Shaner: Yes, Scott, great question. I think I'll start with 23 and then roll into 24. You know, we had 19 state rate wins last year. I think we pointed out, Matt, three specific states last year that were double digit winners, like Oklahoma and Nature. We knew 19 was probably, it was the highest we'd ever had, and we felt like that was probably a little bit aggressive. Our guidance this year was to be over 10, right, to be 10 or greater.

Speaker Change: Yes, Scott, great question. I think I'll, I'm gonna start with 23 and then roll into 24. You know, we had 19 state rate wins last year. I think we pointed out, Matt, three three specific states last year that were double-digit like Oklahoma and Nature. We knew 19 was probably, it was the highest we'd ever had and we felt like that was probably a little bit aggressive. Our guidance this year was to be over 10, right, to be 10 or greater.

Jeff Shaner: So I think we're gonna see ourselves landing probably just above where we thought for 2024. And remember, some of these rate wins we're winning are effective on 1-1 of 25. So they really roll full year into 25, with a lot of momentum. So the year's still not quite finished.

Speaker Change: So, I think we're going to see ourselves landing.

Speaker Change: Probably just above where we thought for for 2024 and remember some of these great wins and winning are effective on 1-1 of 25 So that they they really roll full year and into 25 a lot of momentum

Jeff Shaner: You know, the 12 may tick up another one or two or three as we kind of tie up the last few states, but we're pleased overall and it is baked into our guidance, the fact that we would have north of 10 state rate wins. So I'd start with that, then go to Georgia, Massachusetts, and California, which we called out. Georgia and Massachusetts specifically, we were, like California, significantly underpaid for the market wage of nurses.

Speaker Change: So, the year's still not quite finished, you know, the 12 may take up another one or two or three as we kind of tie up the last few states.

Speaker Change: But we're pleased overall, and is baked into our guidance, the fact that we would have north of 10 state rate wins. So I'd start with that, then go to Georgia, Massachusetts, and California we called out.

Jeff Shaner: And I'm really proud to say in Georgia and Massachusetts, both the state legislatures and the governors, the governors of Georgia and Massachusetts both weighed in in support of what they would call home nursing wage rates and reimbursement rates. So significant rate wins in both, I would say in Georgia and Massachusetts, above our expectations, above what we asked for from both states. And we're not quantifying the exact percentage or number, but it is meaningful enough for us to move the wage to the market level, the higher the nurses.

Speaker Change: Georgia and Massachusetts specifically, we were, like California, we were significantly underpaid for the market wage of nurses, and I'm really proud to say in Georgia and Massachusetts

Speaker Change: both the state legislatures and the governors. The governors of Georgia and Massachusetts both weighed in in support of what they would call home nursing wage rates and reimbursement rates.

Speaker Change: Significant rate wins in both, I would say in Georgia and Massachusetts, above our expectations, above what we asked for from both states.

Speaker Change: And we're not quantifying the exact percentage or number, but meaningful enough for us to move the wage.

Jeff Shaner: And I can tell you, especially in Georgia, the rate went into effect, July 1st was the new budget year, and we started passing through the wage map back in May. So we got ahead of it with a large provider, a PDM in the state of Georgia, and really was able to pass through significant, I'm talking 30, 35, 40% increases in wages to attract nurses. And we're seeing fantastic recruiting and retention results in the state of Georgia.

Speaker Change: to the market level to hire nurses and I can tell you

Speaker Change: Specially in Georgia, the rate went into, in fact, July 1st was the new budget year and we started passing through the wage map back in May. So we got ahead of it with the largest provider of PD in the state of Georgia and really was able to pass through significant, I'm talking

Speaker Change: 35-40% increases in wages to attract nurses and we're seeing fantastic recruiting and retention results in the state of Georgia. Similar will happen in Massachusetts as that rate plays in later this month.

Jeff Shaner: Similar outcomes will happen in Massachusetts as that rate plays in later this month. With that said, Scott, you know, I think without quantifying specifically state by state that we try to stay away from, you know, we see the light in California, although it's still 18 months out in the future. A similar outcome will play out in California. When we achieve the rate increase that we have proposed with the legislation, the governor that they've supported, we will meaningfully be able to help the families in California just like we did in Georgia, Massachusetts, and just like last year we did in Oklahoma, Minnesota, and other states.

Speaker Change: With that said, Scott, I think without quantifying specifically state-by-state, that we try to stay away from.

Speaker Change: We see the light in California, although it's still 18 months out in the future.

Speaker Change: The similar outcome will play through in California when we achieve the rate increase that we have proposed with the legislation the governor that they've supported.

Speaker Change: We will meaningfully be able to help the families in California, just like we've done in Georgia, Massachusetts, and just like last year we did in Oklahoma, Minnesota, and other states. So, nice win for us, nice win for the families in these states.

Jeff Shaner: So, nice win for us, nice win for the families in these states, and I think, nice. I think you'll see that momentum. As Matt said, we're really pleased right now with the volume in our PDS business. And you can, you know, we're above our guidance and volume. And I think that's being driven by these nice rate investments from the legislatures as well as payers.

Jeff Shaner: Nice. I think you'll see that momentum. As Matt said, we're really pleased right now with the volume in our PDS business. And you can, you know, we're above our guidance in volume. And I think that's being driven by these nice rate investments from the legislatures as well as payers.

Jeff Shaner: I think you'll see that momentum, as Matt said, we're really pleased right now with the volume in our PDS business, and we're above our guidance in volume, and I think that's being driven by these nice rate investments from the legislatures as well as payers.

Matt Buckhalter: Yeah, I'd just like to add to that, Jeff. You know, obviously, we've seen great revenue growth in our PDS segment, 8% in Q2, 7% year-to-date. We mentioned that, you know, Q2 did benefit from a little bit of value-based care payments that came in, though they were not, you know, overly material to our results. This is really because of the efforts of our preferred payer initiatives and because of our governor's affairs.

Jeff Shaner: Yeah, I'd just like to add on to that, Jeff, as well, you know, I mean, obviously we've seen great revenue growth in our PDS segment, you know, 8% in Q2, 7% year-to-date.

Speaker Change: You know, we mentioned that, you know, Q2 did benefit from a little bit of value-based care payments that came in, though they were not, you know, overly material to our results. This is really...

Matt Buckhalter: Those two areas have really been able to push us forward, allowed us to bring kids home from the hospital, and allowed us to hire caregivers and make that care happen between them. So hats off to that team and everybody at Aveanna for making that happen.

Speaker Change: because of the efforts of our preferred payer initiatives and because of our governor affairs. Those two areas have really been able to push us forward, allowed us to bring kids home from the hospital, allowed us to hire caregivers and make that care happen in between them. So hats off to that team and everybody at Aveanna for making that.

Jeff Shaner: I will kind of temper expectations a little bit. 8% is a little high in PDS, you know, and eventually, this will start working its way back down closer to that 5%, you know, kind of range that we've guided to historically for those out years. But as you can see, with rate, we're able to drive our volume and drive care in the home, and we're seeing that, you know, in full right now.

Matt Buckhalter: I will kind of temper expectations a little bit.

Speaker Change: 8% is a little strong in PDS, you know, and eventually this will start working its way back down closer to that 5%, you know, kind of range that we've guided to historically for those out years. But as you can see, with the rate, we're able to drive our volume and drive care in the home, and we're seeing that, you know.

Jeff Shaner: Sorry Scott, that was a long answer to that question, but we thought it was an important point.

Scott Fidel: Sorry Scott, that was a long answer to that question, but we thought it was an important point.

Jeff Shaner: in full right now.

Scott Fidel: No, a great caller, I appreciate that. And then just a follow-up question, just a modeling question just around gross margins. For PDS, you know, it looks like you're sort of in that 27% range exiting out of 2Q, which I think is sort of a pretty good spot for you guys, right? So, you know, is that, would you say, sort of that 27 to 28% range is a good sort of modeling spot for what's implied in the updated guidance?

Jeff Shaner: Sorry, Scott, that was a long answer to that, but we thought it was an important point.

Scott: Great caller, appreciate that. And then just a follow-up question, just a modeling question just around gross margins.

Scott: For PDS, you know, it looks like you're sort of in that 27% range exiting.

Speaker Change: add of to q which i think it's sort of a pretty good spot for you guys right so you that would you say or thats twenty- seven twenty eight percent range is a good

Scott: sort of modeling spot for what's implied in the updated guidance to that

Scott Fidel: And then similarly on Triple H, you know, where Matt had talked about having sort of achieved your, you know, your margin objectives through preferred contracting, would we, and you had that sort of nice, you know, been running in that 53 to 54% gross margin, is that a good run rate as well? Do you see sort of holding the line on those types of margins in the back half of the year? Do you see any movement up or down on those? Thanks so much. Yeah, that's good.

Speaker Change: similarly the on triple age where badhad talked about having sort of achieved your your margin objectives through the preferred

Scott: contracting, would we, and you had that sort of nice, you know, been running in that 53 to 54% gross margin. Is that a good run rate as well? Do you see sort of holding the line on those types of margins in the back half of the year? Do you see any movement up or down on those? Thanks.

Matt Buckhalter: Good question, Scott. I would tell you that, you know, on the PDS segment, I think the 26 to 28 percent kind of margin profile is a great area for us to be, and we're right in the middle of it at, you know, right around 27, and I think that's where we'll stand. Obviously, we saw, you know, a significant expansion in our spread per hour from, I think it was 976 in Q1 up to 1073 here in Q2, which gets us to a 1024 year-to-date, which is right dead center of our $10 to $10.50 range. So, you know, I think that's all kind of worked itself out.

Jeff Shaner: Good question, Scott. I would tell you that, you know, on PDS segment, I think the 26 to 28 percent kind of margin profile is a great area for us to be, and we're right in the middle of it at, you know, right around 27, and I think that's where we'll stand at.

Scott: Obviously, we saw, you know, significant expansion in our spread per hour from, I think it was $9.76 in Q1 up to $10.73 here in Q2, which gets us to a $10.24 year-to-date, which is right dead center of our $10 to $10.50 range. So, you know, I think that's all kind of worked itself out. That will continue in the back half of this year, even with these rate improvements that Jeff has mentioned. And that's because we're taking these dollars and we're investing them into our caregivers, investing them into our teams, and that's what's really driving our growth perspective in PDS.

Matt Buckhalter: That will continue in the back half of this year, even with these rate improvements that Jeff mentioned, and that's because we're taking these dollars and investing them in our caregivers, investing them in our teams, and that's what's really driving our growth perspective in PDS. To your point in Triple H, you know, 53.8 percent, hats off to the team. They have done a phenomenal job driving that business, right-sizing it, and, you know, getting back to good core episodic growth that will drive that business and produce great clinical outcomes.

Speaker Change: To your point, Triple H, you know, 53.8% hats off to the team. They have done a phenomenal job driving that business, right-sizing it, and, you know, getting back to good core episodic growth that will drive that business and produce great clinical outcomes.

Matt Buckhalter: You know, we think that will continue to stay in that 50-51, just north of 50 percent gross margin range. 54 might be a little stronger this time, and we're aware of that, but it's because of how well they've executed that these results are reflecting that as well.

Speaker Change: We think that will continue to stay in that 50-51, just north of 50% gross margin range. 54 might be a little stronger this time, and we're aware of that, but it's because of how well they've executed that these results are reflecting that as well. Thanks, Scott.

Operator: Thank you. Our next question comes from the line of A.J. Rice with UBS. Please proceed with your question.

Speaker Change: Thank you. Our next question comes from the line of A.J. Rice with UBS. Please proceed with your question.

Jeff Shaner: Hi everybody. Just to follow up on these states where you're getting these above-average rate increases, I know the dynamic has historically been that it takes you a quarter or two to be able to get that translated into increased rates for you to pass through to your underlying nurses. Should we think about that as being something that therefore suggests some boost for the back half of the year? And then, as you think about these updates as well, how quickly can you ramp up the hiring and take advantage of that and see growth? And do you retain any of that in your own operating income line, or does it all pretty much get passed through to the underlying employee?

Albert Rice: Hi everybody. Just to follow up on these states where you're getting these above-average rate increases, I know the dynamic has historically been that it takes you a quarter or two to be able to get that translated into increased rates for you to pass through to your underlying nurses. Should we think about that as being something that therefore suggests some boost for the back half of the year? And then, as you think about these updates as well, how quickly can you ramp up the hiring and take advantage of that and see growth? And do you retain any of that in your own operating income line, or does it all pretty much get passed through to the underlying employee?

Jeff Shaner: Hi, everybody. Just to follow up on these states where you're getting these above-average rate increases, I know the dynamic has been, historically, it takes you a quarter or two to be able to get that translated into increased rates for your.

Jeff Shaner: to pass through to your underlying nurses. Should we think about that as being something that therefore suggests some boost to the back half the year? And then as you think about these updates as well,

Jeff Shaner: How quick can you ramp up the hiring and take advantage of that and start to see growth? And do you retain any of that to your own operating income line, or does it all pretty much get passed through to the underlying employees?

Jeff Shaner: Hey Jay, good morning. Thanks for the question. I'll use Georgia as a great example. We haven't had a meaningful rate increase in Georgia in a long, long time. I mean, pushing a decade, the rates, the home nursing rates in Georgia had fallen way, way, way behind nursing rates in the state of Georgia. So the industry was pretty desperate. I'll go as far as saying most of our competitors left the state of Georgia because it was that bad of an environment. Now, I understand why.

Jeff Shaner: Hey Jay, good morning.

Jay: p jacie morning and int takes a question you know i'll use georgia is as a great example you know r increaseinje we have a r meanfor rateincrease georgia and a long long time i mean i pushing a decade the rates the home nursing rates in geororgge at vonan way way way behind nursing rates in the state of georgia

Jeff Shaner: Thanks for the question. I'll use Georgia as a great example. We haven't had a meaningful rate increase in Georgia in a long, long time. I mean, pushing a decade, the rates, the home nursing rates in Georgia have fallen way, way, way behind nursing rates in the state of Georgia. So the industry was pretty desperate. I'll go as far as saying most of our competitors left the state of Georgia because it was that bad of an environment. I understand why.

Jeff Shaner: So the industry was pretty desperate. I'll go as far as saying most of our competitors left the state of Georgia because it was that bad of an environment, and I understand why.

Jeff Shaner: We're headquartered in Atlanta. We're seeing Atlanta right now. We were not going to leave Georgia.

Jeff Shaner: With that said, we've actually gotten ahead of the date. So the effective date of the rate increase in Georgia was July 1st of 24. We started passing the wage through to our nurses in May to get ahead of it because it was such a big deal. It was such a meaningful rate increase for the industry. I do think that's a little bit more of the new norm, A.J., with these meaningful rate increases. You've got to get out in front of it, you know, or be right at the date of the effective increase.

Jeff Shaner: With that said, we've actually gotten ahead of the date. So the effective date of the rate increase in Georgia was July 1st of 24. We started passing the wage through to our nurses in May to get ahead of it because it was such a big deal. It was such a meaningful rate increase for the industry. So I do think that's a little bit more of the new norm, AJ, with these meaningful rate increases. You've got to get out in front of it, you know, or be right at the date of the effective increase.

Speaker Change: we' headarte in land 're seeing we werenot going to georgia with that said we we've actually gotten theahead of the date so the effective dateof the rateincrease in georgia was july first of twenty four we started passing the wage through our nurses in may to to get ahead of it because it was such a big deal and was such a meaningful while wage ate increase for for the industry so

Jeff Shaner: I do think that's a little bit more of the new norm, AJ, is with these meaningful rate increases, you've got to get out in front of it, you know, or be right at the date of the effective increase.

Jeff Shaner: Most of the nurses hear the noise in the market, they hear the date, and they hear a swell of, "There's a rate increase coming." So we have found in, you know, I'll call it the post-COVID time frame, 23-24, it's better to get out in front of this immediately and meaningfully move the wages. Now with that said, our spread per hour in Georgia will significantly change for the better moving forward, meaning our spread per hour in Georgia, I don't know the exact number, but it was way, way below $10 an hour.

Speaker Change: most of the nurses herear the noise in the market that hear of the date in the hear a swell of there's a rate increase coming so

Jeff Shaner: We have found in, you know, I'll call it post-COVID time frame 23-24, it's better to get out in front of this immediately and meaningfully move the wages. Now with that said...

Jeff Shaner: Our spread per hour in Georgia will significantly change to the better moving forward, meaning our spread per hour in Georgia, I don't know the exact number, but it was way, way below $10 an hour and now we'll see it more in that $10 to $11 range, which is great, because that says we can grow the business.

Jeff Shaner: And now we'll see it more in that $10 to $11 range, which is great because that says we can grow the business. We do pass the wage increases through to both our entire current nursing pool and future nurses. And again, I'm using Georgia as an example. We could have used Oklahoma last year, or Minnesota last year. We'll use California in 2026. But you see a meaningful step up in employment. And I think we would tell you from our last three or four years post-COVID, it lasts for about 18 to 24 months before it really starts to subside, and you probably need another step increase. So I think we'll see in Georgia and Massachusetts that these are meaningful step-ups in volume. Number of cases, number of nurses, revenue, and ultimately margin for all of 24 and most of 25.

Jeff Shaner: we do pass the wage increases through gi both our entire current nursing pool and the future nurses and again i'm using george as an example we could it use oklahomalast year nesota last year it will use california in two thousand and twenty six

Jeff Shaner: but you see a meaningful step up in employment

Jeff Shaner: And I think we would tell you from our last three or four years post-COVID.

Jeff Shaner: It lasts for about 18 to 24 months before it really starts to subside and you probably need another step increase. So, I think we'll see in the Georgia and Massachusetts that these are meaningful step-ups in volume.

Jeff Shaner: Number of cases, number of nurses, revenue, and ultimately margin for all of 24 and most of 25.

Albert Rice: Okay, thanks so much. Take care.

Jeff Shaner: Okay, thanks so much, take care.

Operator: Thank you. Our next question comes from the line of Peter Chickering with Deutsche Bank. Please proceed with your question.

Peter Chickering: Thanks, AJ.

Peto Chickering: Our next question comes from the line of Peto Chickering with Deutsche Bank. Please proceed with your question. Hey, just actually following up on Adia's question here. So just confirming, the PBS hourly wait you saw in 2Q step up sequentially from 1Q, that's all from estate increases and no one-time payments in there, right?

Peter Chickering: Hey, just actually following up on AJ's question here. So, just confirming the PBS hourly weight you saw in 2Q step up sequentially from 1Q. That's all from estate increases and no one-time payments in there, right?

Matt Buckhalter: Peter, we did have a little bit of value-based care payments in there, but, you know, we're talking very, very low single millions on that one, which is, you know, not overly material to impact the rate itself. So beyond that, that was just normal state rate increases, as well as the mix in the business of skilled versus unskilled workers kind of adjusting a little bit. But that's just kind of our run rate going forward and where we expect our business to be.

Speaker Change: Peter, we did have a little bit of value-based care payments in there, but, you know, we're talking very, very low single millions on that one, which is, you know...

Speaker Change: very not overly material to impact the rate itself. So beyond that, that was just normal state rate increases as well as the mix in the business of skilled versus unskilled kind of adjusting a little bit. But that's just kind of our run rate going forward and where we expect our business to be. And AJ, I'm sorry, Peto, we pointed towards Q3. And remember, our skilled mix does go down in Q3. Some of our unskilled stays pretty stable. So I think Matt in his prepared remarks was pointing towards the fact that we don't expect to see as strong of a rate slash maybe growth rate in Q3 specifically in our PDS sector. So that's probably the one thing that we're pointing out.

Jeff Shaner: We pointed towards Q3 and remember our skilled mix does go down in Q3. Some of our unskilled stays pretty stable, so I think Matt, in his prepared remarks, was pointing towards the fact that we don't expect to see as strong of a rate slash, or growth rate, in Q3 specifically in our PDS sector. So that's probably the one thing that we're pointing out even though these rates are coming to fruition in the second half of the year. Our seasonality will still overplay that, so I just be careful in Q3; we'll see a little bit of a step back in Q3 as then we move forward in Q4 and into 25.

Matt Buckhalter: And AJ, I'm sorry, Peter. We, we, pointed out that, you know, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we, we,

Operator: Even though these rates are coming to fruition, second half of the year, our seasonality will still overplay that. So just be careful in Q3. We'll see a little bit of a step back in Q3 as then we move forward in Q4 and into 2025.

Jeff Shaner: Great, so I guess on that, I mean, you know, looking at the correlation, I mean, I guess two questions on that one. The first one is looking at the seasonality in the last two years, definitely not seeing a step back. So I guess why 24 different and looking at the correlation between rates and hours. It's a pretty quick correlation here, and you're not going to be changing the guidance, you know, for the year except for the beat this quarter.

Peter Chickering: Great, so I guess on that, I mean, you know, looking at the correlation, I mean, I guess two questions on that one. The first one is looking at the seasonality in the last two years, definitely not seeing a step back. So I guess why 24 different and looking at the correlation between rates and hours. It's a pretty quick correlation here, and you're not going to be changing the guidance for the year except for the beat this quarter.

Speaker Change: the great so so i guess on that i mean you know looking at the coralation i mean so ess two quest one the first one is looking at seasonalityand the last two years not seeing step back so guess why is twenty four different and looking at the correlation between

Jeff Shaner: Rates and hours, it's a pretty quick correlation here and you're not really changing the guidance.

Jeff Shaner: Is there anything that we should be thinking about? Why the 2Q step up and then the 3Q step up from Georgia shouldn't lead to sort of increased hours in the back half of the year versus, you know, expectations last quarter, or is that just pure conservatism?

Peter Chickering: Is there anything that we should be thinking about why the 2Q step up and then the 3Q step up from Georgia shouldn't lead to increased hours in the back half of the year versus expectations last quarter, or is that just pure conservatism?

Jeff Shaner: for the year ac cance in the beatest quarter i guess there's anything that we been thinking about

Jeff Shaner: why the 2Q step up and the 3Q step up from Georgia shouldn't lead to increased hours in the back half of the year versus expectations last quarter, or is that just pure conservatism?

Jeff Shaner: Well, we use the word prudent conservatism versus pure conservatism, but I don't think you're missing anything except for... Remember, in the last two years, our unskilled business in the summer stays pretty consistent, meaning it doesn't drop. But our skilled nursing business in the summer does drop, and our Medicaid-type business. So that was the only point to your PDS revenue by hour.

Jeff Shaner: Well, we use the word prudent conservatism versus pure conservatism, but I don't think you're missing anything except for... Remember, in the last two years, our unskilled business in the summer stays pretty consistent, meaning it doesn't drop. But our skilled nursing business in the summer does drop, and our Medicaid type of business. So that was the only point to your PDS revenue by rate by hour.

Jeff Shaner: Well, we use the word prudent conservatism versus pure conservatism, but I don't think you're missing anything except for...

Jeff Shaner: Remember, in the last two years, our unskilled business in the summer stays pretty...

Speaker Change: pretty consistent me it doesn't drop our skilled nursing business in the summer does dp in our medicaid of businessso that's that was goingone point to your really your pds revenue by rate by our it's a little bit lower revenue per our business that low through q three

Jeff Shaner: It's a little bit lower revenue per hour business that flows through Q3. But I think at the end of the day, though, as you think about it, all we're trying to do is moderate. We believe Q3 will be a slight step back in EBITDA before we propel forward. And I think we're hopeful that in November, we're talking about another beat and raise and kind of pointing towards 2025. I will say, PDO

Jeff Shaner: It's a little bit lower revenue per hour business that flows through Q3. I think at the end of the day, though, as you think about it, all we're trying to do is moderate. We believe Q3 will be a slight step back in EBITDA before we propel forward. And I think we're hopeful that in November, we'll be talking about another beat and raise and kind of pointing towards 2025. I will say, PDO. You can read into Georgia and Massachusetts, as well as the other 10 state rate increases, the other, you know, the five year-to-date preferred payer wins.

Jeff Shaner: I think at the end of the day, though, as you think about it, all we're trying to do is moderate. Q3 will be, we believe Q3 will be a slight step back in EBITDA before we propel forward. And I think we're hopeful that in November we're talking about another beat and raise and kind of pointing towards 2025. I will say, Peto,

Jeff Shaner: You can read into Georgia and Massachusetts, as well as the other 10 state rate increases, the other, you know, the five year-to-date preferred payer wins. We have a nice, robust book of preferred payers that we're working on for Q3 and Q4. We expect to be in around 22, 23 preferred payers by the end of the year, as well as home health and hospice continuing to execute on their plan of episodic contracts. I think it's too early for us to talk about 25.

Jeff Shaner: You can read into Georgia, Massachusetts, as well as the other 10.

Jeff Shaner: state rate increases, the other...

Jeff Shaner: We have a nice, robust book of preferred payers that we're working on for Q3 and Q4. We expect to be in around 22, 23 preferred payers by the end of the year, as well as home health and hospice continuing to execute on their plan of episodic contracts. I think it's true, really, if I was talking about 25.

Jeff Shaner: you know the five year to date preferred payer wins. We have a nice robust book of preferred payers that we're working for the for Q3 and Q4. We expect to be in around 22-23 preferred payers by the end of the year as well as home health and hospice continuing to execute on their plan episodic episodic contract.

Jeff Shaner: We have strong momentum going into the second half of the year. We also have strong momentum going into 2025. We have a lot of confidence building to do. And then lastly, we haven't talked about SG&A, but I think you saw in Q1, you'll see in Q2, and you'll see it again in the second half of the year. We continue to have nice SG&A leverage. We still have work we're doing. We talked about it in Q1.

Jeff Shaner: We have strong momentum going into the second half of the year. We also have strong momentum going into 2025. We have a lot of confidence building to do. And then lastly, we haven't talked about SG&A, but I think you saw in Q1, you see in Q2, and you'll see it again in the second half of the year. We continue to have nice SG&A leverage. We still have work we're doing. We talked about it in Q1.

Jeff Shaner: I think it's too early for us to talk about 25. We have strong momentum going into the second half of the year. We have strong momentum going into 2025. We have a lot of confidence building. And then lastly, we haven't talked about SG&A, but I think you saw in Q1, you see in Q2, you'll see it again in the second half of the year.

Jeff Shaner: we continue to have nice sgna leverage

Jeff Shaner: We still are focusing on our PDS and our AMS businesses, just to make sure that we have really efficient models moving forward. Matt pointed out in his last two prepared remarks quarters, we're really honed in on our medical solutions business and making sure that that model is highly efficient, because we want to scale that business to 100 plus thousand UPS a quarter. And to do it, we've got to be a little bit more efficient. So anyways, all that to be said.

Jeff Shaner: We still have work we're doing. We talked about it in Q1. We still are focusing on our PDS and our AMS businesses, just to make sure that we have really efficient models moving forward. And Matt's pointed out in his last two...

Jeff Shaner: Prepare Remarks Quarters were really honed on our medical solutions business and making sure that that model is highly efficient because we want to scale that business to 100 plus thousand UPS a quarter and to do it. We got to be a little more efficient. So anyways all that to be said

Jeff Shaner: You know, we've had six quarters in a row now. I think it's fair to say we expect to be beat and raised in the next two quarters. That is our goal and a strong momentum going into 2025.

Speaker Change: You know, we've been six quarters in a row now. I think it's fair to say we expect to be beat and raised, you know, in the next two quarters. That is our goal and a strong momentum going into 2025.

Peter Chickering: Okay, two quick follow-up questions, you know, looking at MS, at the, how we relate to the UPS, like how should that be trending in the back half of the year? And the second question is on share count, a big step up with share count sequentially, I guess, how should we, you know, I guess why was that, and how should we be thinking about that in the back half of the year. Thank you.

Jeff Shaner: yeah

Speaker Change: Okay, two quick follow-up questions, you know, looking at MS, at the, you know, how we relate in the...

Speaker Change: UPS, like how should that be trending on back half a year? And the second question is on share count. Big step up with share count sequentially, I guess. How should we, you know, I guess why was that? How should we be thinking about that back half a year? Thank you.

Jeff Shaner: Yeah, I'm glad you asked about Medical Solutions. You know, Matt had prepared, in his prepared remarks, talks about realigning our Medical Solutions business around our preferred payers. And I would tell you that we've been in the Medical Solutions business now for over eight years. We're just now, I think, getting the Medical Solutions business. Honed into our preferred payer strategy and as we think about 2025 I think we'll be as excited about medical solutions in 25 as we've been about home health and hospice and PDS in 24 And by that I mean we're going to start to call our our payers and medicine business that that if you aren't a preferred payer With us our capacity is going to be focused on those preferred payers And so I think you'll see us, you know be a little bit more focused on the payers that we're accepting We've got tons of demand in that business So it's really getting the right payers through that business model, and we're thinking that of that as a 2025 You know, we're really really honing that 25 meaning doing the work in 24 to really execute on that in 25 So I temper a little bit medical solutions UPS The second half of this year as we really hone that those efforts and you know kind of call some of those payers I don't recall anything in the share count, but

Speaker Change: Yeah, I'm glad you asked about medical solutions. Matt had prepared, in his prepared remarks, talks about...

Speaker Change: realigning our medical solutions business around our around our preferred payers and I would tell you that we've been in the medical solutions business now for over eight years. We're just now I think getting the medical solutions business.

Jeff Shaner: Honed into our preferred payer strategy and as we think about 2025 I think we'll be as excited about medical solutions in 25 as we've been about home health and hospice and PDS in 24 And by that I mean we're going to start to call our our payers in the medical business that if you aren't a preferred Payer with us our capacity is going to be focused on those preferred payers And so I think you'll see us, you know be a little bit more focused on the payers that we're accepting We've got tons of demand in that business So it's really getting the right payers through that business model, and we're thinking that of that as a 2025 You know, we're really really honing that in 25 meaning doing the work in 24 to really execute on that in 25 So I temper it a little bit medical solutions UPS The second half of this year as we really hone that those efforts and you know kind of call some of those payers I don't recall anything in the share count, but

Jeff Shaner: honed into our preferred payer strategy and as we think about 2025 I think we'll be as excited about medical solutions in 2025 as we've been about home health and hospice and PDS in 2024.

Jeff Shaner: And by that I mean we're going to start to call our payers in the medical assistant business that if you aren't a preferred payer with us our capacity is going to be focused on those preferred payers and so I think you'll see us

Jeff Shaner: You know, be a little bit more focused on the payers that we're accepting. We've got tons of demand in that business. So it's really getting the right payers through that business model. And we're thinking of that as a 2025, you know, really honing that in 2025. Meaning,

Jeff Shaner: Doing the work in 24 to really execute on that in 25 So I tempered a little bit medical solutions UPS The second half of this year as we really hone that those efforts and you know kind of call some of those payers I don't recall anything in the share count, but

Matt Buckhalter: The share counts are increasing mainly driven by our employee stock purchase program and then our annual share-based compensation award.

Speaker Change: The share counts increase mainly driven by our employee stock purchase program and then our annual share-based comp award.

Peter Chickering: Great. Thanks so much guys and a great quarter. Thank you.

Jeff Shaner: Thank you. We have reached the end of our question and answer session. I'd like to turn the call back over to Mr. Shaner for any closing remarks.

Speaker Change: Great. Thanks so much guys and great quarter. Thank you.

Jeff Shaner: Thank you. We have reached the end of our question and answer session. I'd like to turn the call back over to Mr. Shaner for any closing remarks.

Operator: Awesome. Thank you, operator. And I just want to thank everyone for joining us on our Q2 call for 2024. We look forward to catching up in early November on our Q3 results. Thank you for your time.

Jeff Shaner: The share counts are increasing mainly driven by our employee stock purchase program and then our annual share-based compensation awards.

Jeff Shaner: Great. Thanks so much, guys, and a great quarter.

Jeff Shaner: Awesome. Thank you, operator. And I just want to thank everyone for joining us on our Q2 call for 2024. We look forward to catching up in early November on our Q3 results. Thank you for your time.

Jeff Shaner: Awesome. Thank you, Operator. And I just want to thank everyone for joining us on our Q2 call for 2024. We look forward to catching up in early November on our Q3 results. Thank you for your time.

Operator: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your...

Operator: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Operator: thank you this concludes today's sleconference you may disconnect your lines at this time thank you for your participation and have a wonderful day

Operator: [music]

Matt Buckhalter: We are committed to a disciplined approach to growth while shifting our capacity to those pairs to value our clinical resources. We are pleased with our Q2 gross margins of 53.8%, up 5.2% over the prior year period and representing our continued focus on cost initiatives to achieve our targeted margin profile. Our home health and hospice platform is dedicated to creating value through effective operational management and the delivery of exceptional patient care.

Q2 2024 Aveanna Healthcare Holdings Inc Earnings Call

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