On August 13, Aveanna Healthcare (NASDAQ:AVAH) held its second-quarter earnings call, and the tone was different from prior quarters spent explaining away a caregiver shortage. Revenue climbed 13.7% year over year to roughly $670 million, and every one of the company's three divisions grew. But the headline moment came when CEO Jeffrey Shaner announced that California's 2027 budget will finally include a meaningful pediatric private duty nursing rate increase, effective January 1, 2027, closing out an advocacy push that took four years and now touches all 32 of Aveanna's private duty states.
Aveanna's core strategy for the past several years has been aligning caregiver capacity with the payers willing to pay for it, and the numbers on the call suggest that bet is paying off. Home health and hospice revenue rose 14.8% year over year, private duty services grew 14.0%, and medical solutions added 9.4%, with adjusted EBITDA up 8% to $95.4 million. On the government side, Aveanna landed seven state rate enhancements by the second quarter and expects more once state budget processes wrap up in the third quarter, with California standing as the biggest prize of all. On the payer side, private duty services now has 37 preferred payer agreements after adding three in the quarter, and those agreements cover 64% of the division's managed care volume, up from 60% in the first quarter. Home health has already hit its full-year goal of 50 preferred payers, with episodic admissions running at 81% of the mix and episodic volume growth of 18.5%.
Management also pointed to CMS's proposed home health rule, published July 1, and its finalized hospice rule, published August 6, as supportive of stable industry rates. Layered on top is the Family First Homecare acquisition, closed in early June and on track to finish integrating by late in the fourth quarter, plus guidance raised to more than $2.68 billion in revenue and more than $365 million in adjusted EBITDA for the year.
Not every figure on the call moved in the company's favor. Private duty services revenue per hour rose just 1.7% to $44.62, while the segment's cost of revenue per hour jumped 7.8% to $31.74, and the spread per hour landed at $12.88 as caregiver wage increases continue working their way through the business. Management also noted that the year-ago quarter in that same segment included about $9 million in nonrecurring favorable items, which makes the current growth rate a harder comparison than it first appears. Much of the good news still depends on government timing that Aveanna does not control: the California rate increase is pending final details from the Medi-Cal department, and additional state wins hinge on budget cycles still playing out. The Family First Homecare deal was funded entirely out of cash on hand, and its integration is not expected to finish until late in the fourth quarter, so the returns on that spending have not fully shown up yet.
#quarter #private #duty #rate
Aveanna's core strategy for the past several years has been aligning caregiver capacity with the payers willing to pay for it, and the numbers on the call suggest that bet is paying off. Home health and hospice revenue rose 14.8% year over year, private duty services grew 14.0%, and medical solutions added 9.4%, with adjusted EBITDA up 8% to $95.4 million. On the government side, Aveanna landed seven state rate enhancements by the second quarter and expects more once state budget processes wrap up in the third quarter, with California standing as the biggest prize of all. On the payer side, private duty services now has 37 preferred payer agreements after adding three in the quarter, and those agreements cover 64% of the division's managed care volume, up from 60% in the first quarter. Home health has already hit its full-year goal of 50 preferred payers, with episodic admissions running at 81% of the mix and episodic volume growth of 18.5%.
Management also pointed to CMS's proposed home health rule, published July 1, and its finalized hospice rule, published August 6, as supportive of stable industry rates. Layered on top is the Family First Homecare acquisition, closed in early June and on track to finish integrating by late in the fourth quarter, plus guidance raised to more than $2.68 billion in revenue and more than $365 million in adjusted EBITDA for the year.
Not every figure on the call moved in the company's favor. Private duty services revenue per hour rose just 1.7% to $44.62, while the segment's cost of revenue per hour jumped 7.8% to $31.74, and the spread per hour landed at $12.88 as caregiver wage increases continue working their way through the business. Management also noted that the year-ago quarter in that same segment included about $9 million in nonrecurring favorable items, which makes the current growth rate a harder comparison than it first appears. Much of the good news still depends on government timing that Aveanna does not control: the California rate increase is pending final details from the Medi-Cal department, and additional state wins hinge on budget cycles still playing out. The Family First Homecare deal was funded entirely out of cash on hand, and its integration is not expected to finish until late in the fourth quarter, so the returns on that spending have not fully shown up yet.
#quarter #private #duty #rate
2 months ago
