Aviana Healthcare at Bank of America Conference: Strategic Growth Focus

On Wednesday, 14 May 2025, Aviana Healthcare Holdings (NASDAQ:AVAH) presented at the Bank of America 2025 Healthcare Conference, outlining a strategic transformation marked by strong financial performance and ambitious future growth plans. The company emphasized scaling its home care services, enhancing partnerships, and modernizing medical solutions. While the tone was optimistic, challenges such as aligning clinical capacity with preferred payers were acknowledged.

Key Takeaways

• Aviana reported a 14% year-over-year increase in Q1 revenue, driven by organic growth.
• The company raised its 2025 revenue guidance to over $2.15 billion.
• The acquisition of Thrive Skilled Pediatric Care will expand Aviana’s footprint to 36 states.
• Aviana aims for organic growth of 5-7%, with strategic acquisitions pushing growth beyond 10%.
• The company maintains strong liquidity and is focused on deleveraging.

Financial Results

• Revenue:

- Q1 revenue rose 14% year-over-year, driven by organic growth.

- 2025 revenue guidance was increased to more than $2.15 billion.

- Private Duty Services (PDS) led with a 16.5% organic growth.

• Profitability:

- Adjusted EBITDA for Q1 surged 93.1% year-over-year to $67.4 million.

- 2025 adjusted EBITDA guidance was raised to over $207 million.

• Capital Structure:

- Liquidity remains robust at over $260 million.

- The company’s $1.47 billion variable rate debt is largely hedged.

- Free cash flow generation is expected to continue in 2025.

Operational Updates

• Geographic Expansion:

- Aviana operates in 34 states and will expand to 36 with the Thrive acquisition.

- Focus areas for densification include Arizona, Georgia, North Carolina, Texas, and Virginia.

• Payer Mix:

- No single payer contributes more than 10% of revenue.

- PDS MCO volumes grew to 54% by Q1 2025, with expectations to reach high 50s by year-end.

• Preferred Payer Agreements:

- The company aims to increase PDS preferred payer agreements from 22 to 30 by 2025.

- Two new agreements were secured in Q1 2025.

Future Outlook

• Organic Growth:

- Targeting 5-7% core organic growth, supported by payer and government strategies.

- Tuck-in acquisitions are expected to enhance growth beyond 10% annually.

• Strategic Initiatives:

- Focus on government partnerships and preferred payers.

- Aim to modernize medical solutions and manage capital efficiently.

- Engage leadership and employees to drive growth.

Aviana’s strategic focus and robust financial performance position it well for future growth. Readers are encouraged to refer to the full transcript for more detailed insights.

Full transcript - Bank of America 2025 Healthcare Conference:

Joanna Gajuk, Health Care Facilities Analyst: Thank you. Hello, everyone. Thanks so much for joining us. My name is Joanna Gajuk, I cover health care facilities in managed care. Thanks so much for joining the conference and the session.

So now we have know, very short presentation, but hopefully very punchy, from Aviana Healthcare. So, yeah, please introduce yourself, go ahead.

Matt Buckhalter, Chief Financial Officer, Aviana Healthcare: Thanks, Troy.

Jeff Shaner, Chief Executive Officer, Aviana Healthcare: And, very glad to be here. I’m Jeff Shaner, the CEO of Aviana Healthcare, and I’m here with, Matt Buckhalter, our our chief financial officer. And thank you for your time today. We’re excited to tell you about our Aviana story and and how we’re thinking about insights, on 2025 and an update on our year three of our strategic transformation plans. So let’s start with our our transformation of how we think of the value of home care.

I think first and foremost, what is what is key to us is we believe scale and density of services are key in the home in the home care market. We think it helps create value for our payer and government partners. And at Aviana, we are a leading scaled national provider of home care services. So I’d I’d start there. We’re a diversified platform, as you’ll you’ll see.

We provide both pediatric, adult, and geriatric, home care services, so that that makes us unique. We serve over 80,000 patients any given day and week. Our national footprint is really what is dedicated to driving high quality, cost effective clinical outcomes, and reducing total cost of health care for our payer and our government partners. And I’ll end the slide by saying we believe deeply in aligning our interest to those of our payer and government partners. And we believe by doing that, can improve access to cost effective, innovative care in the comfort of our patients’ home.

Just touching on a couple of company, highlights and updates. I mentioned we’re a national footprint. You’ll see the map here. We have just over 340 locations in 34 states and growing, and I’ll talk about that. We just recently announced plans to acquire Thrive Skilled Pediatric Care, and and that will further enhance our pediatric footprint.

Specifically, we’ll add two additional states, Medicaid states. We’ll add both New Mexico and Kansas to our current footprint, and take us to 36 states, as well as it will continue to help densify, five core states today, Arizona, Georgia, North Carolina, Texas, and Virginia. So really excited. We’ve been we’ve talked last last week on our earnings call. We expect to close that transaction transaction here in the next few weeks.

Our diversified, payer mix helps support our impressive 7.5% rent revenue CAGR over the last five years. And I’ll point out that no single payer contributes more than 10% of our total revenue that happens to be Medicare. It’s one of our, one of our smaller payer groups. Last thing on this slide, I’ll just point to, we recently updated our guidance, both revenue and adjusted EBITDA guidance, at at our q one results. And and we now expect 2025 revenue to be greater than 2,150,000,000.00 and 2025 adjusted EBITDA to be greater than $207,000,000.

So excited about coming out of the year strong, a strong beat and raise in q one, and, ready to upgrade guidance right out of the year. I’ll end this slide with our business plan is underpinned by thousands of dedicated clinicians and caregivers who provide compassionate care to our nation’s most vulnerable patients. That is the Avionna mission. Just a comment or two on the things as we think about year three of our strategic transformation. We continue to focus on the things that have helped to rightsize our business over the last two years.

There are five things that are primarily five strategic initiatives that are primary drivers for 2025. They are, first, to enhance our partnerships with government partners and preferred payers to create additional capacity and growth. That is at the core of our preferred payer and government affairs strategy. Second is to continue identifying cost efficiencies and synergies that allow us to leverage our growth. That that’s been key to Matt Matt and I’s tenure at Aviana.

Third is to modernize our medical solutions. You’ll hear the word modernize used quite a bit with Matt and I in our businesses. We’re focused on medical solutions this year to to achieve our target operating model model in our med solutions business. Fourth, managing our capital structure and collecting our cash while producing positive free cash flow. It’s very important to us.

And fifth, and it’s probably most important, engaging our leaders and our employees at Aviana and delivering our mission every day. So those five core strategies are what really underpins our business plan for 2025 and how we think about the continued progress of the company. I do think it’s important to note when we talk about our business plans that our business, as Joanna knows, we do our industry does not have a demand problem. Demand for our services, for home and community based care continues to be strong, with both state and federal governments and managed care organizations looking for solutions that create more capacity while reducing the total cost of care. But but I think as you’ll hear us talk about, it’s really leveraging and leaning into those partners.

Talking about our success with our preferred payers and government partners, this this slide really highlights the success of the last three years. First of all, in all three of our business segments, both private duty services, home health and hospice, and medical solutions. We have a dedicated preferred payer and government affairs strategy for each of our businesses. On the left side of this chart, you’ll see this is a dedicated to our private services preferred payer goal. Our goal for for 2025 is to increase the number of preferred payer agreements from 22 to 30.

We achieved two additional preferred payer agreements in q one, so we’re well under our way of reaching a goal of 30. You’ll see over the three years, we’ve gone from seven initially in our first year to now 22 at the end of twenty four. So almost three times growth with with an additional eight focused on 2025. I’ll add to that that our MCO our PDS MCO volumes, another key indicator that we report, moved from 50% at the end of the year and ’24 to 54% at the end of q one. And, Matt, I would tell you, we expect that to to reach the high 50 percents by the end of twenty twenty five.

So our clinical capacity is aligning with our preferred payers. Accompanying that is the need for value based agreements. It’s important for us to add add value based agreements to our preferred payers. We start with enhanced reimbursement rates to to attract nurses and track caregivers through additional wages. But the addition of value based agreements, are bonus oriented for achieving specific, clinical outcomes and cost targets are important.

So continued evolution from originally three back in 2022 to eight at the end of twenty four with a goal of reaching 12 at the end of this year. So excited about the continued growth of that. As we move over to our government affairs strategy for 2025, it it is twofold. First is to continue to execute on our legislative agenda to improve reimbursement rates in at least 10 states. So so at least 10 states, and, we had five in the first quarter.

A really really nice start to the year with five, state rate increases in our PDS business coming into, the beginning of of this 2025. So off to a nice start for ’25. And secondly is is really to focus on the continue to advocate for Medicaid rate integrity on behalf of the children with with complex medical conditions. We think it’s critically important for us to advocate on behalf of of our families, especially in the current Medicaid rate environment. Lastly, I’ll I’ll touch on home health and hospice.

We’ve put a tremendous amount of focus on this business in the last two years. And our goal for 2025 was to maintain our episodic payer mix above 70% while returning to a more normalized growth rate in that business. In q one, our episodic mix was 77%, and we also currently set up 45 preferred pay agreements for home health. So really nice momentum in our home health business. We are well positioned for growth in 2025 and beyond.

And finally, although it’s not on here, I talked about our medical solutions business. As we as we have achieved our desired preferred preferred payer model in both private duty services and home health and hospice. We now have embarked on a similar strategy in our medical solutions business. To date, we have 17 preferred payers in medical solutions, and we do expect that number to grow as we as we, achieve our desired preferred payer model in in all three of our businesses. Lastly, before I hand it over to Matt, just touch on our growth, our growth plan for Aviana.

Our core organic growth at Aviana target is five to 7%, and that is really underpinned by the two strategies we just talked about, both the preferred payer and the government affairs strategies. By aligning our clinical capacity with those government and payer partners that value our services, we can achieve accelerated growth in our business. Also, with the addition of value based agreements, that gives us the potential for both upside to earn bonuses and achieve metrics and cost savings and accelerated growth. Lastly, how do we get from kind of 7% growth, annually to 10%? Truly tuck in m and a, you know, deals like Thrive, a skilled pediatrics, and other home health and hospice tuck ins that we could do would would allow us to really move from kind of that seven, seven and a half, 8% growth rate organically that we’ve achieved last five years and push us beyond the 10% growth rate on an annual basis.

So really excited about about where Avion is positioned right now from a growth standpoint and being underpinned by over 7% growth is organically is a great place to be. Matt will add some color on our capital structure and how we continue to delever as our revenue and EBITDA grows. And I guess the last thing I’ll say before I turn over to Matt really is I’m incredibly optimistic about our future. We offer a cost effective patient preferred, and clinically sophisticated solution for our patients and our families. And we are the right solutions for our payers, referral sources, and government partners.

So with that, let me turn it to Matt. He’s gonna touch on our our capital structure and and liquidity. Matt?

Matt Buckhalter, Chief Financial Officer, Aviana Healthcare: Thanks, Shneur. Now let’s let’s get into and talk a couple numbers here really quickly and start boring everybody on some of that. So just a quick overview of our operating segments. Aviana has three primary operating divisions. Our largest division is PDS or private duty services.

This represents approximately 82% of our total company revenue. Historically, this division has grown in a three to 5% range in a stable market. However, we are currently experiencing accelerated growth in this division. That’s mostly being driven by that government affairs strategy and payer relations strategy that Jeff alluded to earlier. Our medical solutions segment, which we’re very excited about, has a much higher trajectory growth trajectory historically.

It’s an eight eight to 10% organic growth business, has been consistently for quite some time. We will expect that to be a little bit muted in 2025 on a volume aspect, not necessarily on a revenue aspect, but on volume as we execute on this modernization strategy that Jeff talked about earlier. Lastly, but surely not least, our home health and hospice segment makes up the rain remaining 10% of our total revenue. We believe Triple H can grow in that five to 7% organic range. We are very, very committed, to episodic growth, and we believe that is the right outcomes for our patients and our families.

It not only produces better financial outcomes for the organization, but much better clinical outcomes for the organization as well. As a whole, really excited about all three of these divisions. They continue to operate at a very, very high level. And as Jeff talked about previously, we’ll strategically bring in tuck in acquisitions through m and a when appropriate and when it makes sense to our geography. So let’s chat some numbers really quick.

So taking a brief view at q one financials here, we saw revenues rise 14% year over year. That’s all organic growth that we saw. We achieved year over year revenue growth in all three of our operating divisions. EDS services was the leader of the pack there at the 16.5% organic growth that we saw. So that 3% to 5% range that I alluded to earlier, we’re seeing quite that enhancement driven by that preferred payers and government affairs strategy in this division.

Consolidated adjusted EBITDA of $67,400,000 was up 93.1% year over year, so this was definitely driven by that payer relations and government affairs strategy and driving great clinical outcomes for this this organization. Our preferred payer strategy is focused on delivering these results continuously and not only enhances, once again, those financial outcomes, but also those clinical outcomes, and it really does position ourselves to be a best and leading class home care provider. Quick view at our capital structure just for everybody. We maintain a strong liquidity excess of $260,000,000. That’s kinda spread between cash, securitization facility, and our revolver, which was undrawn at the end of at the end of the quarter.

A variable rate debt, we’ve got about $1,470,000,000 of variable rate debt, most of all of which is hedged with fixed rate or with caps and swaps, so leads us any volatility to the rate market out there. We are really proud of our organization in generating free cash flow and continue to generate free cash flow. We did in 2023 and 2024, and we expect to be in 2025 as well on a stand alone basis. Last but not least, also wanna highlight that we’ll continue to delever this organization significantly. We did a full turn in q one on a LTM basis, and, we’re executing the strategy at a very, very high level, and that’s different that’s driven by exceptional growth, cost management, and really, really effective cash collections.

So with fifteen seconds left, you know, I’ll just kinda close this out really quickly. Thanks again for everybody’s time. As we outlined and Jeff did a great job outlining, we’re gonna continue to execute on a very high level and stay very, very focused on a disciplined strategy built around scale, clinical excellence, and strong partnerships in government and payer payer relations. With a growing national footprint, balanced capital structure, and strong momentum in ’25, Aviana is well positioned to deliver long term value to patients, families, and our stakeholders. On behalf of Jeff, rest of the Aviana management team, thanks for the time, guys, and look forward to updating you after q two.

Jeff Shaner, Chief Executive Officer, Aviana Healthcare: Thank you. Appreciate it.

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