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Agiliti Announces Financial Results for Second Quarter 2023 and Revises 2023 Outlook

Agiliti Inc. (NYSE: AGTI) (“Agiliti”), a nationwide provider of healthcare technology management and service solutions to the United States healthcare industry, today announced its financial results for the second quarter ended June 30, 2023, and revised its financial outlook for 2023.

Second Quarter 2023 Highlights

  • Revenue growth of 6.2% to $291 million
  • Net loss of $4 million, compared to net income of $5 million in the prior year period; loss per share of $0.03, compared to income per share of $0.04 per share in the prior year period
  • Adjusted EBITDA1 of $66 million, compared to $70 million in the prior year period; Adjusted Earnings Per Share1 of $0.14, compared to $0.19 in the prior year period

“In the second quarter we delivered solid topline performance supported by continued demand for our differentiated suite of essential services,” said Tom Boehning, Chief Executive Officer. “Our customers continue to rely on us to help them address the many challenges they’re facing, as we ultimately deliver improved clinical efficiencies, cost savings and enhanced patient outcomes. While we are maintaining our revenue guidance for the year, we are lowering our adjusted EBITDA and adjusted EPS guidance to reflect the near-term impact of the contraction of our peak need rental (PNR) business and the onboarding of larger contracts. However, we expect our mix of business to help support a more visible and predictable financial outlook moving forward, consistent with our long history as a company.”

Second Quarter 2023 Financial Results

Total revenue for the three months ended June 30, 2023 was $291.1 million, representing a 6.2 percent increase from $274.0 million for the same period of 2022. Total revenue for the six months ended June 30, 2023, was $591.0 million, representing a 4.0 percent increase from $568.4 million for the same period of 2022.

Net loss for the three months ended June 30, 2023 was $4.0 million, compared to net income of $5.0 million for the same period of 2022. Net loss for the six months ended June 30, 2023, was $1.0 million compared to net income of $24.9 million for the same period of 2022.

Adjusted EBITDA1 for the three months ended June 30, 2023 was $65.5 million, a 5.8 percent decline from $69.6 million for the same period of 2022. Adjusted EBITDA1 for the six months ended June 30, 2023, was $137.5 million, a 13.4 percent decline from $158.7 million for the same period of 2022.

Revised 2023 Financial Outlook

The company revised its guidance for 2023 as follows:

  • Revenue of $1.16 - $1.19 billion (consistent with prior guidance)
  • Adjusted EBITDA of $260 - $270 million2
  • Adjusted earnings per share of $0.54 – $0.59 per share2
  • Capex investment expected at $80 million

_____________________________

1
Non-GAAP Measures. See further discussion on page 6

2 With regard to the non-GAAP Adjusted EBITDA guidance and adjusted earnings per share guidance provided above, a reconciliation to GAAP net income has not been provided as the quantification of certain items included in the calculation of GAAP net income cannot be calculated or predicted at this time without unreasonable efforts. For example, the non-GAAP adjustment for stock-based compensation expense requires additional inputs such as number of shares granted and market price that are not currently ascertainable, and the non-GAAP adjustment for certain reserves and expenses depends on the timing and magnitude of these expenses and cannot be accurately forecasted. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could have a potentially unpredictable, and potentially significant, impact on its future GAAP financial results. See further discussion below regarding historical Adjusted EBITDA and historical adjusted earnings per share.

Conference Call Information

Agiliti will hold a conference call to discuss its second quarter 2023 results on Tuesday, August 8, at 5 p.m. Eastern Time (4 p.m. Central Time).

The conference call can be accessed live over the phone by dialing 1-877-407-0792 or for international callers, 1-201-689-8263. The passcode for the live call and the replay is 13739397. A replay will be available two hours after the call and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The Access ID for the replay call is 13739397. The replay will be available until August 22, 2023.

Interested investors and other parties may also listen to a simultaneous webcast of the conference call by visiting the Agiliti Investor Relations site at https://investors.agilitihealth.com. The online replay will be available for a limited time shortly following the call.

About Agiliti

Agiliti is an essential service provider to the U.S. healthcare industry with solutions that help support a more efficient, safe and sustainable healthcare delivery system. Agiliti serves more than 10,000 national, regional and local acute care and alternate site providers across the U.S. For more than eight decades, Agiliti has delivered medical equipment management and service solutions that help healthcare providers reduce costs, increase operating efficiencies and support optimal patient outcomes.

Forward-Looking Statements

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release are forward-looking in time, including financial outlook and other preliminary results, and involve risks and uncertainties. The following factors, among others, could adversely affect our business, operations and financial condition causing our actual results to differ materially from those expressed in any forward-looking statements: negative reaction of our investors, our suppliers, our customers or our employees to our leadership succession; market volatility of our common stock as a result of our leadership succession; the risk that the leadership succession may not provide the results that the company expects; our history of net losses and substantial interest expense; our need for substantial cash to operate and expand our business as planned; our substantial outstanding debt and debt service obligations; restrictions imposed by the terms of our debt; a decrease in the number of patients our customers are serving; our ability to effect change in the manner in which health care providers traditionally procure medical equipment; the absence of long-term commitments with customers; our potential inability to maintain the agreement with the U.S. Department of Health and Human Services’ (“HHS”) and Office of Assistant Secretary of Preparedness and Response (“ASPR”) (the “Agreement”) or comply with its terms and risks relating to extension, renewal or termination of the Agreement or any of our existing contacts with HHS and ASPR; our ability to renew contracts with group purchasing organizations and integrated delivery networks; changes in reimbursement rates and policies by third-party payors; the impact of health care reform initiatives; the impact of significant regulation of the health care industry and the need to comply with those regulations; the effect of prolonged negative changes in domestic and global economic conditions; difficulties or delays in our continued expansion into certain of our businesses/geographic markets and developments of new businesses/geographic markets; additional credit risks in increasing business with home care providers and nursing homes, impacts of equipment product recalls or obsolescence; increases in vendor costs that cannot be passed through to our customers; and other Risk Factors as detailed in our most recent annual report on Form 10-K.

Agiliti, Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands, except share and per share information)

(unaudited)

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

Revenue

 

$

291,081

 

 

$

273,984

 

 

$

590,985

 

 

$

568,428

Cost of revenue

 

 

191,677

 

 

 

175,819

 

 

 

382,207

 

 

 

346,636

Gross margin

 

 

99,404

 

 

 

98,165

 

 

 

208,778

 

 

 

221,792

Selling, general and administrative expense

 

 

81,230

 

 

 

82,121

 

 

 

170,067

 

 

 

168,259

Operating income

 

 

18,174

 

 

 

16,044

 

 

 

38,711

 

 

 

53,533

Loss on extinguishment / modification of debt

 

 

4,445

 

 

 

1,418

 

 

 

4,445

 

 

 

1,418

Interest expense

 

 

20,549

 

 

 

11,261

 

 

 

36,380

 

 

 

21,925

Income (loss) before income taxes and noncontrolling interest

 

 

(6,820

)

 

 

3,365

 

 

 

(2,114

)

 

 

30,190

Income tax (benefit) expense

 

 

(2,892

)

 

 

(1,698

)

 

 

(1,236

)

 

 

5,207

Consolidated net income (loss)

 

 

(3,928

)

 

 

5,063

 

 

 

(878

)

 

 

24,983

Net income attributable to noncontrolling interest

 

 

98

 

 

 

65

 

 

 

135

 

 

 

93

Net income (loss) attributable to Agiliti, Inc. and Subsidiaries

 

$

(4,026

)

 

$

4,998

 

 

$

(1,013

)

 

$

24,890

 

 

 

 

 

 

 

 

 

Basic income (loss) per share

 

$

(0.03

)

 

$

0.04

 

 

$

(0.01

)

 

$

0.19

Diluted income (loss) per share

 

$

(0.03

)

 

$

0.04

 

 

$

(0.01

)

 

$

0.18

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

134,661,933

 

 

 

132,556,645

 

 

 

134,258,271

 

 

 

131,856,267

Diluted

 

 

139,744,988

 

 

 

138,697,206

 

 

 

139,373,990

 

 

 

137,932,546

Agiliti, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share and per share information)

(unaudited)

 

 

 

June 30, 2023

 

December 31,

2022

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

9,213

 

 

$

5,577

 

Accounts receivable, less allowance for credit losses of $4,304 as of June 30,

2023 and $4,182 as of December 31, 2022

 

 

220,269

 

 

 

207,753

 

Inventories

 

 

79,154

 

 

 

70,132

 

Prepaid expenses

 

 

15,420

 

 

 

23,458

 

Other current assets

 

 

4,760

 

 

 

9,393

 

Total current assets

 

 

328,816

 

 

 

316,313

 

Property and equipment, net

 

 

284,132

 

 

 

273,958

 

Goodwill

 

 

1,239,432

 

 

 

1,239,106

 

Operating lease right-of-use assets

 

 

80,717

 

 

 

79,975

 

Other intangibles, net

 

 

470,420

 

 

 

512,020

 

Other

 

 

23,991

 

 

 

22,735

 

Total assets

 

$

2,427,508

 

 

$

2,444,107

 

Liabilities and Equity

 

 

 

 

Current liabilities:

 

 

 

 

Current portion of long-term debt

 

$

16,376

 

 

$

17,752

 

Current portion of operating lease liability

 

 

25,397

 

 

 

23,607

 

Current portion of obligation under tax receivable agreement

 

 

10,052

 

 

 

34,694

 

Accounts payable

 

 

70,328

 

 

 

59,163

 

Accrued compensation

 

 

20,620

 

 

 

25,928

 

Accrued interest

 

 

7,814

 

 

 

5,039

 

Other current liabilities

 

 

30,105

 

 

 

31,198

 

Total current liabilities

 

 

180,692

 

 

 

197,381

 

Long-term debt, less current portion

 

 

1,081,246

 

 

 

1,077,293

 

Obligation under tax receivable agreement, pension and other long-term liabilities

 

 

10,135

 

 

 

9,161

 

Operating lease liability, less current portion

 

 

67,046

 

 

 

67,332

 

Deferred income taxes, net

 

 

133,976

 

 

 

146,615

 

Commitments and contingencies

 

 

 

 

Equity:

 

 

 

 

Common stock, $0.0001 par value; 500,000,000 shares authorized; 134,987,003

and 133,608,495 shares issued and outstanding at June 30, 2023 and December 31, 2022

 

 

13

 

 

 

13

 

Additional paid-in capital

 

 

963,965

 

 

 

953,046

 

Accumulated deficit

 

 

(15,287

)

 

 

(14,274

)

Accumulated other comprehensive income

 

 

5,497

 

 

 

7,343

 

Total Agiliti, Inc. and Subsidiaries equity

��

 

954,188

 

 

 

946,128

 

Noncontrolling interest

 

 

225

 

 

 

197

 

Total equity

 

 

954,413

 

 

 

946,325

 

Total liabilities and equity

 

$

2,427,508

 

 

$

2,444,107

 

Agiliti, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

Consolidated net income (loss)

 

$

(878

)

 

$

24,983

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation

 

 

39,158

 

 

 

46,412

 

Amortization

 

 

46,858

 

 

 

47,119

 

Loss on extinguishment / modification of debt

 

 

4,445

 

 

 

1,418

 

Provision for credit losses

 

 

341

 

 

 

279

 

Provision for inventory obsolescence

 

 

1,129

 

 

 

568

 

Non-cash share-based compensation expense

 

 

10,474

 

 

 

10,206

 

Gain on sales and disposals of equipment

 

 

(1,177

)

 

 

(256

)

Deferred income taxes

 

 

(12,000

)

 

 

(2,567

)

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

(12,113

)

 

 

(8,833

)

Inventories

 

 

(10,319

)

 

 

(4,398

)

Other operating assets

 

 

4,345

 

 

 

(579

)

Accounts payable

 

 

10,606

 

 

 

8,702

 

Accrued and other operating liabilities

 

 

1,550

 

 

 

(21,916

)

Net cash provided by operating activities

 

 

82,419

 

 

 

101,138

 

Cash flows from investing activities:

 

 

 

 

Medical equipment purchases

 

 

(25,512

)

 

 

(22,823

)

Property and office equipment purchases

 

 

(15,704

)

 

 

(12,776

)

Proceeds from disposition of property and equipment

 

 

2,115

 

 

 

1,763

 

Acquisitions, net of cash acquired

 

 

 

 

 

(3,125

)

Net cash used in investing activities

 

 

(39,101

)

 

 

(36,961

)

Cash flows from financing activities:

 

 

 

 

Proceeds under debt arrangements

 

 

1,208,937

 

 

 

20,000

 

Payments under debt arrangements

 

 

(1,205,049

)

 

 

(123,824

)

Payments of principal under finance lease liability

 

 

(4,687

)

 

 

(4,484

)

Payments of deferred financing costs

 

 

(9,489

)

 

 

 

Payments under tax receivable agreement

 

 

(24,822

)

 

 

 

Distributions to noncontrolling interests

 

 

(107

)

 

 

(47

)

Proceeds from exercise of stock options

 

 

2,102

 

 

 

1,971

 

Dividend and equity distribution payment

 

 

(321

)

 

 

(906

)

Shares forfeited for taxes

 

 

(6,246

)

 

 

(14,367

)

Payments of contingent consideration

 

 

 

 

 

(321

)

Net cash used in financing activities

 

 

(39,682

)

 

 

(121,978

)

Net change in cash and cash equivalents

 

 

3,636

 

 

 

(57,801

)

Cash and cash equivalents at the beginning of period

 

 

5,577

 

 

 

74,325

 

Cash and cash equivalents at the end of period

 

$

9,213

 

 

$

16,524

 

Use of non-GAAP information

This press release contains non-GAAP measures, including EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Net Debt and Net Leverage Ratio. We use these internally as measures of operational performance, or liquidity, as applicable, and disclose them externally to assist analysts, investors and lenders in their comparisons of operational performance, valuation and debt capacity across companies with differing capital, tax and legal structures. We believe the investment community frequently uses these measures in the evaluation of similarly situated companies. Adjusted EBITDA is also used by the Company as a factor to determine the total amount of incentive compensation to be awarded to executive officers and other employees. EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Net Debt and Net Leverage Ratio, however, are not measures of financial performance under accounting principles generally accepted in the United States of America (“GAAP”) and should not be considered as alternatives to, or more meaningful than, net income as measures of operating performance or to cash flows from operating, investing or financing activities or to total debt as measures of liquidity or debt capacity. Since EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Net Debt and Net Leverage Ratio are not measures determined in accordance with GAAP and are thus susceptible to varying interpretations and calculations, these measures, as presented, may not be comparable to other similarly titled measures of other companies. EBITDA, Adjusted EBITDA, and Adjusted Net Income do not represent amounts of funds that are available for management’s discretionary use. EBITDA and Adjusted EBITDA presented may not be the same as EBITDA and Adjusted EBITDA calculations as defined in the First Lien Credit Facilities. EBITDA is defined as earnings attributable to Agiliti, Inc. before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding non-cash share-based compensation expense, management fees and other non-recurring gains, expenses, or losses, transaction costs, remeasurement of the tax receivable agreement and loss on extinguishment of debt. LTM Adjusted EBITDA represents the last twelve months (“LTM”) of Adjusted EBITDA.

Agiliti, Inc. and Subsidiaries

Non-GAAP Financial Measure: Adjusted EBITDA

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

(in thousands)

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

Net income (loss) attributable to Agiliti, Inc. and Subsidiaries

 

$

(4,026

)

 

$

4,998

 

 

$

(1,013

)

 

$

24,890

Interest expense

 

 

20,549

 

 

 

11,261

 

 

 

36,380

 

 

 

21,925

Income tax (benefit) expense

 

 

(2,892

)

 

 

(1,698

)

 

 

(1,236

)

 

 

5,207

Depreciation and amortization

 

 

41,706

 

 

 

46,711

 

 

 

83,812

 

 

 

91,542

EBITDA

 

 

55,337

 

 

 

61,272

 

 

 

117,943

 

 

 

143,564

Non-cash share-based compensation expense

 

 

3,585

 

 

 

5,569

 

 

 

10,474

 

 

 

10,206

Management and other expenses (1)

 

 

2,067

 

 

 

 

 

 

3,028

 

 

 

Transaction costs (2)

 

 

83

 

 

 

1,295

 

 

 

1,595

 

 

 

3,521

Loss on extinguishment / modification of debt (3)

 

 

4,445

 

 

 

1,418

 

 

 

4,445

 

 

 

1,418

Adjusted EBITDA

 

$

65,517

 

 

$

69,554

 

 

$

137,485

 

 

$

158,709

_____________________________

(1)

Management and other expenses represent non-recurring expenses.

(2)

Transaction costs represent costs associated with potential and completed mergers and acquisitions.

(3)

Loss on extinguishment / modification of debt for the six months ended June 30, 2023 consists of the write-off of unamortized costs and new costs incurred in relation to the amendment of the First Lien Term Loan and Revolving Credit Facility. Loss on extinguishment / modification of debt for the six months ended June 30, 2022 consists of the write-off of the unamortized debt discount related to the partial prepayment of the First Lien Term Loan.

Agiliti, Inc. and Subsidiaries

Non-GAAP Financial Measure: Adjusted Net Income and Adjusted EPS

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

(in thousands, except share and per share information)

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Net income (loss) attributable to Agiliti, Inc. and Subsidiaries

 

$

(4,026

)

 

$

4,998

 

 

$

(1,013

)

 

$

24,890

 

Amortization

 

 

22,167

 

 

 

22,797

 

 

 

44,654

 

 

 

45,130

 

Non-cash share-based compensation expense

 

 

3,585

 

 

 

5,569

 

 

 

10,474

 

 

 

10,206

 

Management and other expenses (1)

 

 

2,067

 

 

 

 

 

 

3,028

 

 

 

 

Transaction costs (2)

 

 

83

 

 

 

1,295

 

 

 

1,595

 

 

 

3,521

 

Loss on extinguishment / modification of debt (3)

 

 

4,445

 

 

 

1,418

 

 

 

4,445

 

 

 

1,418

 

Income tax benefit associated with pre-tax adjustments (4)

 

 

(8,510

)

 

 

(10,276

)

 

 

(15,901

)

 

 

(18,245

)

Adjusted net income

 

$

19,811

 

 

$

25,801

 

 

$

47,282

 

 

$

66,920

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - diluted

 

 

139,744,988

 

 

 

138,697,206

 

 

 

139,373,990

 

 

 

137,932,546

 

Adjusted EPS

 

$

0.14

 

 

$

0.19

 

 

$

0.34

 

 

$

0.49

 

_____________________________

(1)

Management and other expenses represent non-recurring expenses.

(2)

Transaction costs represent costs associated with potential and completed mergers and acquisitions.

(3)

Loss on extinguishment / modification of debt for the six months ended June 30, 2023 consists of the write-off of unamortized costs and new costs incurred in relation to the amendment of the First Lien Term Loan and Revolving Credit Facility. Loss on extinguishment / modification of debt for the six months ended June 30, 2022 consists of the write-off of the unamortized debt discount related to the partial prepayment of the First Lien Term Loan.

(4)

Income tax benefit associated with pre-tax adjustments represents the tax benefit associated with the reconciling items between net income and Adjusted Net Income and includes both the current and deferred income tax impact of the adjustments. To determine the aggregate tax effect of the reconciling items, we utilized statutory income tax rates ranging from 0% to 26%, depending upon the applicable jurisdictions of each adjustment.

Agiliti, Inc. and Subsidiaries

Non-GAAP Financial Measure: Net Debt and Net Leverage Ratio

 

(in thousands)

 

June 30, 2023

First Lien Term Loan, due 2030

 

$

1,075,000

 

Revolving Loan, due 2028

 

 

20,000

 

Finance lease liability

 

 

25,476

 

Less: Unamortized Deferred Financing Costs and Debt Discount

 

 

(22,854

)

Total Debt

 

 

1,097,622

 

Less: Cash

 

 

(9,213

)

Net Debt

 

$

1,088,409

 

 

 

 

LTM Adjusted EBITDA

 

$

275.3

 

 

 

 

Net Leverage

 

3.95x

 

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