Agiliti, Inc.

Good afternoon, and welcome to Agility's second quarter 2021 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 would like to turn the conference over to Kate Kaiser, Vice President of Corporate Communication and Investor Relations at Agility. Thank you. You may begin.

Thank you, Operator, and hello, everyone. Thank you for joining us on today's call as we provide an overview of Agility's results for the quarter ending June 30th, 2021. Before we begin, I'll remind you that during today's call, we'll be making statements that are forward-looking and consequently are subject to risks and uncertainties. Certain factors may affect us in the future and could cause actual results to differ materially from those expressed in these forward-looking statements. Specific risk factors are detailed in our press release, and our most recent SEC filings, which can be found in the investor section of our corporate website at agilityhealth.com. We will also be referring to certain measures that are not calculated and presented in accordance with generally accepted accounting principles during this call. You can find a reconciliation of those measures to the nearest comparable gap measures and a description of why we use these measures in our press release and in the slide presentation we will use to facilitate today's discussion. If you'd like to download a copy of the presentation, please visit our website at agilityhealth.com. Select the Investors section at the top of the screen, and then Events and Presentations. Finally, select the presentation titled Agility Q2 2021 Earnings Slides. With that, I'll turn the call over to our CEO, Tom Leonard, for his remarks on our second quarter.

Thanks, Kate, and good afternoon. Thank you for taking time to join us as we review our results from the second quarter of 2021. Joining me to discuss our performance is our CFO, Jim Picaret, and our president, Tom Benning, who leads our commercial operations. I'm pleased to share that our results for Q2 and for 2021 to date are slightly ahead of our initial expectations. Turning directly to the highlights, Total revenue for the quarter was 251 million, representing a 35% increase from Q2 of 2020. Adjusted EBITDA was 78 million, also a 35% increase compared to Q2 of last year. And our adjusted earnings per share for the second quarter was 23 cents, compared to an adjusted EPS of 14 cents for the prior year period and representing an increase of 64%. In line with these results, we have raised our guidance for a full year 2021 to reflect expected revenue in the range of $965 to $980 million and adjusted EBITDA in the range of $280 to $290 million. Jim will provide more detail on our financial outlook and the principal drivers behind our Q2 performance. But first, let me take a moment to highlight the stable and durable nature of our business in the context of the recent performance of our three service lines. Over the course of Q2, and as we previewed during our Q1 earnings call, we saw a return to pre-COVID demand for our rental services. favorably offset by a return to more normalized demands for our clinical engineering and onsite managed services. Clinical engineering services revenue in Q2 totaled 101 million, representing a 51% increase year over year. As a reminder, clinical engineering is our business of medical device repair and maintenance. Historically, it's our fastest growing business. and it's in the largest market segments that we participate in. Agility deploys trained technicians to repair and maintain virtually all of the medical equipment you'd expect to find in a hospital. We perform this work both at our customers' facilities as well as in our local service network, a model which is unique to Agility. On-site managed services revenue was $77 million for Q2, representing 74% growth year over year. For our on-site solution, our teams work in hospital facilities. They work shoulder to shoulder with clinicians, helping to manage and mobilize our customers' medical devices. We ensure clinicians never have to hunt for the devices they need to care for their patients. The devices they need are patient-ready and delivered right to the bedside. We deliver this service through a dedicated on-site team that performs these duties and proprietary software platform, which we integrate into our customers' hospital information systems and use to manage our team's workflow and to optimize our customers' medical device utilization. In Q2, our equipment solutions revenue totaled $72 million, representing a decline of 2% for the quarter. driven by the expected normalization of customer demand for equipment rental back to pre-COVID levels. As a reminder, Equipment Solutions is the cornerstone of our comprehensive medical device management solution. We provide our customers with access to medical devices to meet peak census needs or to provide access to a high-cost, low-utilization device which it wouldn't otherwise make sense for our customers to own. We enjoy by far the largest medical device fleet in the country, owning more than a quarter million capital medical devices and related accessories. Importantly, we focus on device categories where we can wrap a differentiated service around access to the device. For example, surgical lasers. where we provide a laser technician to support the surgeon in the use of the device during the procedure. With our specialty beds and clinical services, where our on-staff clinical team provides training and hands-on support in the setup, use, and maintenance of these devices. Last year, we saw outsized demand for these services as providers augmented their own equipment with Agility's medical device fleet, to handle the surge in patient volumes at the onset of the pandemic. And as we previewed last quarter, in Q2, we saw a return to pre-pandemic levels of customer utilization of our rental device fleet. The year-over-year growth we experienced during Q2 within clinical engineering and onsite managed services reflects, in part, the expected rebalancing I mentioned on our last earnings call. As customers transition back to pre-pandemic operations, they have the opportunity to take a longer-term view of the medical device management needs. The growth in these two service lines also came in part from our contract with the Department of Health and Human Services for management of the strategic national stockpile of medical devices. As we previously shared, last July, Agility entered into a new contract with the Department of Health and Human Services to manage the federal government's emergency medical device stockpile. This one-year initial contract awarded under the CARES Act in direct response to COVID-19 was an expansion of the federal government's pre-existing medical device stockpile, which Agility had already been managing. We are currently operating under a 60-day extension to that initial contract. while the government prepares for a new formal process and contract award. This contract extension runs through September 27th of 2021. We currently expect HHS to award a new contract prior to the end of September, which would also align with the start of the government's new fiscal year. The timing of the process and subsequent award of a new contract is entirely under the control of the federal government. and may occur earlier or later than our current expectation. And of course, Agility fully intends to compete for this new contract award. Our financial guidance for 2021 continues to include the assumption that Agility is successful in securing a renewal of this government contract. Based on our long and successful history serving the federal governments, state and local agencies, as well as our domestic military healthcare infrastructure, we believe Agility is uniquely capable of supporting the needs of these government agencies. Please understand that we operate under a strict non-disclosure agreement with HHS regarding the details of this sensitive contract. As such, the information we can discuss today is limited to what the federal government discloses publicly and what we have provided here in our prepared remarks. Let me now turn the call to Tom Benning to offer his perspective on the performance of our business during the second quarter.