Agiliti Announces Financial Results for Second Quarter 2023 and Revises 2023 Outlook
Second Quarter 2023 Highlights
-
Revenue growth of
6.2% to$291 million -
Net loss of
$4 million $5 million $0.03 $0.04 -
Adjusted EBITDA1 of
$66 million $70 million $0.14 $0.19
“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
Net loss for the three months ended June 30, 2023 was
Adjusted EBITDA1 for the three months ended June 30, 2023 was
Revised 2023 Financial Outlook
The company revised its guidance for 2023 as follows:
-
Revenue of
$1.16 $1.19 billion -
Adjusted EBITDA of
$260 $270 million -
Adjusted earnings per share of
$0.54 $0.59 -
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
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
Agiliti, Inc. and Subsidiaries Consolidated Statements of Operations (in thousands, except share and per share information) (unaudited) |
|||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
|||||||||||
|
|
|
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,
|
||||
Assets |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
9,213 |
|
|
$ |
5,577 |
|
Accounts receivable, less allowance for credit losses of |
|
|
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, |
|
|
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
Agiliti, Inc. and Subsidiaries Non-GAAP Financial Measure: Adjusted EBITDA |
|||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
|||||||||||
(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
|
|
Six Months Ended
|
||||||||||||
(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 |
|
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 |
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20230808433915/en/
Solebury Strategic Communications
ir@agilitihealth.com
Source: Agiliti Inc.
