Agiliti, Inc.

afternoon and welcome to Agility's second quarter 2023 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 conference over to Matt McCabe, Senior Vice President of Finance and Investor Relations at Agility. Thank you and 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 second quarter ending June 30th, 2023. Before we begin, I'll remind you that during today's call, we will 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 GAP measures and a description of why we use these measures in our press release. To download a copy of the presentation that we will use to facilitate today's discussion, please visit our website at agilityhealth.com Select the Investor section at the top of the screen, and then Events and Presentations. Finally, select the presentation titled Agility Q2 2023 Earnings Slide. I'll now turn the call over to our CEO, Tom Benning.

Good afternoon, and thank you for joining us today as we review our results from the second quarter of 2023. On the call with me today is our Senior Vice President of Finance and Investor Relations, Matt McCabe. and our Chief Financial Officer, Jim Pekarek. Jim will review our Q2 results in more detail and provide additional color on our performance and outlook. In the second quarter, revenue increased consistent with our forecast over a prior year. However, we did not see a corresponding increase in the EBITDA contributions that we expected due to a shift in our solutions mix. There are two main factors driving this shift. First, as discussed in recent quarters, we've seen a lower mix of peak need rental or P&R placements post-COVID, which has weighed on our EBITDA margins. Secondly, the volume of large deals require somewhat longer and more complex implementations, which result in a longer ramp to profitability due to the higher upfront servicing costs. The combination of these new larger contracts and a contraction in our P&R business weighed on our profitability in the second quarter. We expect this trend to continue and to impact full year results. Jim will discuss our guidance in more detail. To provide some additional background, we highlighted last year that we were experiencing a re-baselining of the utilization of our rental fleet, primarily in the areas of infusion pumps, ventilators, and patient monitoring devices. We experienced continued slowing in our P&R business during the second quarter of 2023, due to reduced demand that resulted from the significant medical equipment purchases made by our customers over the past few years. As our mix evolves, we're very encouraged by the benefits we expect to receive as our customer relationships mature into strategic partnerships resulting in longer and more mutually beneficial agreements. Over the long term, this mix shift will help to create a more valuable business with a more predictable revenue and EBITDA stream. In the near term, we expect to deliver solid revenue growth for the year in line with our forecast. As we look towards the second half of 2023 and beyond, our teams remain focused on identifying and prioritizing these strategic opportunities across health systems and securing enterprise-wide commitments to grow our opportunity set. Now I'll discuss three key trends that we're seeing in our business that showcase agility strengths and opportunities for growth. First, I'm proud to report that we continue to make good progress expanding our engagements with both new and existing customers. As our customers increasingly recognize our value, this translates into new opportunities for agility. Our sales teams are highly focused on growing our business and driving market share as we differentiate through the breadth and quality of our offerings and our unique ability to service large clients and provide IDM-wide solutions with our technology-enabled capabilities. At the ground level, Vigility stands alone when it comes to the manufacturing, management, maintenance, and mobilization of medical devices. We provide patient-ready medical devices, deliver where needed, when needed, and maintains the highest industry standard on a platform that's scaled to serve the entire healthcare continuum. Acknowledging the value we provide to our customers, we were pleased to have been awarded the Health Trust Performance Groups Clinical Supplier of the Year Award in July. The award is a testament to our impact in addressing some of the key financial, clinical, and operational constraints facing today's healthcare system. This award is meaningful as it's based on driving value and measurable outcomes for healthcare providers while empowering clinicians and healthcare workers to confront challenging circumstances every day. The second topic I'll discuss is converting new business into revenue. This has been and will continue to be a critical component of our growth strategy going forward, and I'm proud of the solid top line performance we delivered in the second quarter, thanks to our team's efforts to work with our customers and help them realize the full value of the solutions they've purchased. This conversion is especially important as we continue to secure more significant and strategic relationships with our customers. One notable area of recent growth for our business is in the ambulatory surgery center market. Over the last few months, we have won contracts with two of the largest ASC franchises for services including clinical engineering, surgical equipment repair, and surgical laser rental. In these cases, we have received corporate-level support to convert their sites from a myriad of local vendors to Agility. We're very pleased with our continued progress in this growing market, and we're excited to increase our footprint while continuing to provide meaningful support that improves patient outcomes. The third trend is ongoing optimization of our business structure by retaining and leveraging talent and identifying areas we can increase efficiencies to further strengthen our platform. Agility offers unique opportunities for career growth, advanced training as path to higher compensation, and paths to management, which attracts exceptional industry talent. Offered from within a rapidly growing company with a nationwide reach, It's a combination of benefits, opportunities, and mission-driven work that a health system just simply can't match. As a result, our employee retention has remained steady in many job categories over the last several years, but it's at record levels in some of our customer-facing roles. This has been particularly important as we've onboarded acquired businesses and we endeavor to leverage the skills of our talented teams to continue our growth momentum. We're also increasing efficiency by continuing to expand the implementation of solutions that help to improve the customer experience and streamline the process of doing business with agility. As discussed in our last call, our recent order intake integration with each of the major EMR vendors has simplified the ordering process while increasing the accuracy of the customer's ordering by enabling them to execute an order directly within their existing EMR workflow. Amongst customers who have implemented the EMR ordering, we're now fulfilling 60 to 80% of their requests via this channel and have seen an approximate 20% increase in order velocity due to the simplification and efficacy of ordering within current workflow. Before I wrap my prepared remarks, I'd like to highlight a few examples as to how Agility is helping health systems address complex challenges by leveraging our broad and unique nationwide footprint. First, Agility recently secured a single source supplier agreement with one of the largest group purchasing organizations for onsite managed services. This is a new category for this GPO and a revalidation of our value in this area. It also secures our ability to make progress scoring our overall onsite managed services platform as we progress through the second half of this year and into 2024. In addition, we recently secured a large program with a device manufacturer to provide targeted remediation efforts for their equipment fleet. With this agreement, we'll be providing clinical engineering services to bring their equipment back to required specifications. Finally, we continue to make progress with the government as we were just awarded another multi-million dollar agreement with the Veterans Administration. These are just a few illustrations of the progress we're making growing our business across both new and existing customers. As we move into the second half of the year, our teams remain focused on the discipline execution of our strategy. We understand the challenges healthcare facilities face. We continue to work hard to foster strong collaborative partnerships to create long-term value. Our goal is to help our customers realize measurable savings through improved operating performance which ultimately results in better patient care. I'll now pass the call on to Jim for details on our financials.