Agiliti, Inc.

Good afternoon and welcome to Agility's first quarter 2023 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 conference over to Kate Kaiser, Senior Vice President of Corporate Communication and 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 March 31, 2023. 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 in 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 most directly comparable GAAP measures and a description of why we use these measures in our press release. To download a copy of the presentation that we'll use to facilitate today's discussion, 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 Q1 2023 Earnings Slides. I'll now turn the call over to our CEO, Tom Benning.

Good afternoon, and thanks for making time to join us today as we review our results from the first quarter of 2023. On the call with me is our CFO, Jim Pekarek, and we're coming to you from Las Vegas, where tomorrow, Agility will participate in the annual Bank of America Healthcare Conference. We look forward to this opportunity to meet face to face with many of our shareholders and with those who have expressed ongoing interest in agility. Turning now to our results. Our financial results for the first quarter were in line with our expectations. Being just one quarter in and with three quarters of work still ahead of us, we're reaffirming our full year guidance for 2023. Jim will review our Q1 results in more detail and provide additional color on our performance in a few minutes. I'll first offer some brief observations on our progress. Agility entered 2023 well positioned to execute our growth strategy and our results in the first quarter reflect our positive momentum. As we've described on prior calls, we're taking a balanced view on the year as we lap both the favorable contributions from COVID-19 in the prior year and the impact of the timing and revised scope of the HHS contract renewal. As we turn toward the second half of this year, we expect the underlying organic growth engine of the business to come more clearly into focus, driven by our consistent new business momentum and steady customer demand for our connected solutions. As we've shared, our relationships with many of our customers has evolved from meeting their immediate transactional needs to more strategic partnerships. And with the support of our GPO partners, we're seeing our customers' purchasing commitments elevate from individual facilities to system-wide commitments. The steady rate of hospital consolidation has further elevated the demand for more system-wide partnerships. And for the past several years, agility has been at the forefront of these discussions with our customers. Accordingly, and as we shared, We're now signing more seven and eight figure annual value contracts than ever before in our company's 80 plus year history. On prior calls, we've mentioned that these larger deals require somewhat longer and more complex implementations as we embed ourselves deeply into our customer's operations to unlock value in their medical device value chain. This results in a longer ramp to profitability with implementation costs front loaded in the process. As we've shared, we expect that this dynamic will yield some near-term lumpiness in our financial results. As we enter the back half of the year, we expect these multi-year contracts will once again support a more visible and predictable financial outlook consistent with our long history as a company. In preparation for today's call, I found myself reflecting on the state of the healthcare industry from this time last year to now. and in particular, on the evolution of agility's important role and responsibility in supporting our broad network of customers across the nation. While our collective outlook has certainly improved post-pandemic, many of the challenges facing our healthcare system remain unchanged. The burdens of capital constraints, labor and supply chain shortages, and broad-based inflationary cost pressures. The continued uncertainty surrounding the financial and operational environment is causing healthcare executives to seek partnerships with vendors who can help to meaningfully reduce costs while enabling better patient care and outcomes. Agility is uniquely positioned to help them accomplish both. We believe agility stands alone when it comes to the manufacturing, management, maintenance, and mobilization of medical devices. Our goal for our customers is simple, to ensure clinicians have around-the-clock access to the patient-ready medical devices they need delivered to the point of care with the confidence that they're maintained to the highest industry standards. Let me share a few examples of these capabilities in action and quantify the benefits to our customers. On the labor front, our unique ability to supplement a hospital's biomed team with agility technicians can compensate for our customers' short-term staffing shortages, minimizing employee burnout and reducing or eliminating overtime expense. By helping our customers return their own devices back into circulation more quickly, we can also help reduce or eliminate other operational impacts caused by a lack of equipment availability and excess rental expense. Similarly, improving medical device utilization and reducing the cost of device ownership is another area where agility makes a difference. Even prior to the pandemic, health systems generally owned too much capital medical equipment. Yet, as we know, many health systems subsequently acquired even more equipment during the pandemic, which has had a near-term negative impact on our equipment rental volumes, as we previously stated. That said, many of these health systems now bear the financial and operational strain of expenses and increasingly idle assets that still require ongoing preventative maintenance and repair. Agility supplemental clinical engineering offering and our on-site management programs can address this challenge, helping customers free up both the capital and related operating expenses resulting from having made long-term capital investments to meet the short-term demands of COVID. On top of the broad benefits of our product and service offerings, we're also implementing solutions that help improve the customer experience and ease the process of doing business with Agility. One such example is our recent order intake integration with each of the major EMR vendors, which speeds and simplifies customer ordering by enabling them to execute an order within their existing EMR workflow. Among customers who have implemented our EMR ordering, we're now fulfilling 60 to 80% of customer requests via that channel. As we continue to onboard a higher portion of larger customer contracts, more system-wide in nature, we will continue to optimize our systems with features that enable us to embed ourselves more deeply within our customers' value chain. Staying true to our name, our ability to rapidly evolve and bring meaningful and measurable solutions that improve care delivery has underscored our growth throughout our history as a company, and this work remains critical today as we help our customers navigate the ongoing challenges of this post-pandemic era and simultaneously plan for the future. As we progress in 2023, our teams remain focused on the disciplined execution of our strategy and on fostering strong and collaborative partnerships with our customers. Looking forward, we're even more enthusiastic about the momentum in our business and the opportunities ahead of us. I'll now pass the call to Jim for detail on our first quarter results.