Aveanna Healthcare Holdings Inc.

Good morning and welcome to Aviana Healthcare Holdings third quarter 2025 earnings 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, Aviana's chief accounting officer. Thank you. You may begin.

Good morning and welcome to Aviana's third quarter 2025 earnings call. I am Debbie Stewart, the company's chief accounting officer. With me today is Jeff Shainer, our Chief Executive Officer, and Matt Buckhalter, our Chief Financial Officer. 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. 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, Aviana.com, and in our most recent quarterly report on Form 10-Q when filed. With that, I will turn the call over to Aviana's Chief Executive Officer, Jeff Shainer. Jeff?

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 Q3 2025 results and how we are moving Aviana forward in 2025. My initial comments will briefly highlight our third quarter results, along with the 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 updates on the ThriveSkill pediatrics integration, the current regulatory environment, and year three of our strategic plan before turning the call over to Matt to provide further details into the quarter. Moving to highlights for the third quarter. Revenue for the third quarter was approximately $622 million, representing a 22.2% increase over the prior year period. Third quarter adjusted EBITDA was $80.1 million, representing a 67.5% increase over the prior year period, primarily due to the improved rate and volume environment and continued cost savings initiatives. We continue to execute our strategic transformation strategy, focusing on obtaining adequate rates from our payer and government partners for the services we provide, which is clearly evidenced in our third quarter results. As we have previously discussed, the labor environment represented the primary challenge that we needed to address to see Aviano resume the growth trajectory that we believed our company could achieve. It is important to note 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 create more capacity while reducing the total cost of care. Our Q3 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 with those payers willing to engage with us on enhanced reimbursement rates and value-based agreements. While we continue to operate in a challenging environment, our preferred payer strategy supports our ability to achieve normalized growth rates in all three of our business segments. Since our second quarter earnings call, I am pleased with the continued progress we have made on several of our rate improvement initiatives with both government and payer partners, as well as continued signs of improvement in the caregiver labor market. Specifically, as it relates to our private duty services business, our government affairs strategy for 2025 is twofold. First, we are advancing our legislative agenda to improve reimbursement rates in at least 10 states. And second, we continue to advocate for Medicaid rate integrity on behalf of children with complex medical conditions. We have a strong advocacy presence with both federal and state legislatures, as well as solid support from our governors across our national footprint. State legislators have continued to recognize how meaningful private duty nursing is to the overall cost savings and improved outcomes of our nation's most vulnerable children. As it relates to private duty services rate updates, we achieved 10 rate enhancements this year, which was in line with our expectations. At this point, our private duty services legislative agenda is primarily wrapped up for this year, and we have transitioned our efforts towards similar legislative goals for 2026. Now, moving on to preferred payer initiatives. Our goal for 2025 was to increase the number of private duty services preferred payer agreements from 22 to 30. We added five additional preferred payer agreements in Q3 and are currently positioned at 30 agreements in total. Aviana's preferred payer strategy continues to gain momentum along with the Thrive SPC acquisition, which broadened our strategy into two new states, Kansas and New Mexico. Additionally, our Q3 preferred payer agreements account for approximately 56 percent of our total PDS MCO volumes, inclusive of our recent Thrive acquisition. 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. Now, moving to our preferred payer progress in home health. Our goal for 2025 was to maintain our episodic payer mix above 70% while returning to a more normalized growth rate. I am pleased to report in Q3 Our episodic mix was 77% and our total episodic volume growth was 14.2% compared with the prior year period. The continued investments in clinical outcomes, sales resources, and a focused approach to growth is now paying dividends with Q3 total admissions of 9,700 in total or 9% growth over the prior year period. We have 45 preferred payer agreements in home health. Our dedicated focus on aligning our home health caregiver capacity with those payers willing to reimburse us on an episodic basis has led to positive year-over-year growth and improvement in our clinical and financial outcomes. Finally, as we have achieved our desired preferred payer model in private duty services and home health and hospice, We are proceeding with a similar strategy in our medical solutions business. We're in the mid-stages of implementing our preferred payer strategy in medical solutions and believe it will be fully realized by early 2026. To date, we have 18 preferred payers in medical solutions, and we expect that number to grow as we achieve our desired preferred payer model. Our gross margins have stabilized in our desired range as we align our clinical capacity with those payers that value our services and pay us in a timely fashion. I am pleased with our Q3 volume of approximately 91,000 unique patients served as we work to achieve our target operating model. While we expect our volume growth to be muted for the remainder of the year, we are experiencing improvement in our clinical outcomes, customer satisfaction, and financial outcomes. Our medical solutions business is well on its way to achieving its target operating model, and we look forward to updating you on its continued progress. We are encouraged by our rate increases, preferred pay agreements, and subsequent recruiting results. Our business has demonstrated solid signs of recovery as we achieve our rate goals previously discussed. Home and community-based care will continue to grow, and Aviana 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 our patients' homes. As it relates to our recent acquisition of ThriveSkill Pediatrics, I am very pleased with the integration efforts and the continued focus on superior clinical and customer experiences with our patients and families. We are on target to complete our integration by the end of this year. Our leadership team has done a nice job staying focused on our mission while achieving the expected synergies in this transaction. The Thrive acquisition is accretive to our 25 results and a great addition to our Aviana family. Now turning to the current regulatory environment with Medicaid and Medicare updates. We continue to be quite busy with our advocacy efforts. We have focused our efforts on two fronts, supporting overall Medicaid policy and defending the Medicare home health benefit for American seniors. On the Medicaid front, We continue to believe our patient population fared relatively well in the OB-BBA legislation. Pediatric and adult patients with complex medical conditions were not directly targeted in the bill, and our view is that PDM was mostly insulated in the almost $1 trillion cut to Medicaid. With that said, we are experiencing general headwinds with state Medicaid directors and governors as they plan for potentially less overall Medicaid funding, and shouldering more of their Medicaid costs in the future. As it relates to the proposed home health rule for calendar year 2026, we continue to voice our disappointment by the significance of these proposed cuts. We are aligned with the National Alliance for Care at Home and our home health peers in our strong opposition to this proposed rule. Since our last call, we've had many productive conversations with legislative leaders, both Republican and Democrat, as well as CMS leadership on the devastating impacts of the proposed home health rule. We submitted our comment letter during the CMS open comment period and have continued to advocate in all 38 Aviana states for the current administration, CMS, and Congress to halt any cuts to home health. We do expect to receive the final calendar year 2026 rule in the coming days. And although not overly material to Aviana's 2026 results, this rule is critically important to millions of seniors in America. Before I turn the call over to Matt, let me comment on our strategic plan and enhanced outlook for 2025. We will continue to focus our efforts on five primary strategic initiatives. First, enhancing partnerships with government partners and preferred payers to create additional capacity and growth. Second, identifying cost efficiencies and synergies that allow us to leverage our growth. Third, modernizing our medical solutions business to achieve our target operating model. Fourth, managing our capital structure and collecting our cash while producing positive free cash flow. And finally, engaging our leaders and employees in delivering our Aviana mission. Based on the strength of our third quarter and year-to-date results, we now anticipate 2025 revenue to be greater than $2.375 billion and adjusted EBITDA to be greater than $300 million. We believe this enhanced 2025 outlook provides a prudent view considering the challenges we still face with the evolving regulatory environment. In closing, I am incredibly proud of our Aviana 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. We are the right solution for our payers, referral sources, and government partners. With that, let me turn the call over to Matt to provide further details on the quarter and our 2025 outlook. Matt.