Aveanna outlines 2025 revenue target above $2.375B while expanding preferred payer strategy and integration of Thrive

Earnings Call Insights: Aveanna Healthcare Holdings Inc. (AVAH) Q3 2025

MANAGEMENT VIEW

* CEO Jeffrey Shaner highlighted third quarter revenue of approximately $622 million, a 22.2% increase over the prior year period, and adjusted EBITDA of $80.1 million, a 67.5% increase, primarily due to improved rate and volume environment and ongoing cost savings initiatives.
* Shaner stated, "We continue to execute our strategic transformation strategy, focusing on obtaining adequate rates from our payer and government partners for the services we provide, which is clearly evidenced in our third quarter results."
* The company achieved 10 reimbursement rate enhancements in private duty services, aligning with expectations, and has now wrapped up its legislative agenda for the year, shifting focus to 2026.
* Aveanna increased its private duty services preferred payer agreements to 30, adding 5 in Q3, now representing approximately 56% of total PDS MCO volumes, including the Thrive acquisition which expanded the company into Kansas and New Mexico.
* Shaner shared, "Our goal for 2025 was to increase the number of private duty services preferred payer agreements from 22 to 30. We added 5 additional preferred payer agreements in Q3 and are currently positioned at 30 agreements in total."
* In home health, Aveanna maintained its episodic payer mix above 70%, reporting 77% in Q3, with total episodic volume growth of 14.2% and total admissions of 9,700, a 9% year-over-year increase.
* The integration of Thrive Skilled Pediatrics remains on track to complete by year-end, with Shaner noting, "The Thrive acquisition is accretive to our '25 results and a great addition to our Aveanna family."
* CFO Matt Buckhalter reported, “Revenues rose 22.2% over the prior year period to $621.9 million. We achieved year-over-year revenue growth in 2 of our operating divisions, led by our Private Duty Services and Home Health and Hospice division, which grew by 25.6% and 15.3% compared to the prior year quarter.”

OUTLOOK

* Shaner stated Aveanna now anticipates 2025 revenue to be greater than $2.375 billion and adjusted EBITDA to be greater than $300 million, raising guidance from the previous quarter’s target.
* Management described the outlook as “prudent,” considering the evolving regulatory environment.
* The company expects volume growth to be muted for the remainder of the year but highlighted improvements in clinical outcomes, customer satisfaction, and financial results.
* Buckhalter added, "This year's fourth quarter includes an additional 53rd week, which will have a positive impact on both revenue and earnings."

FINANCIAL RESULTS

* Consolidated gross margin was $202.8 million or 32.6% in Q3.
* Private Duty Services revenue was approximately $514 million, representing a 25.6% increase, driven by about 11.8 million hours of care and a revenue per hour of $43.51, up 12.7% year-over-year.
* Home Health and Hospice reported revenue of about $62.4 million, a 15.3% increase, with a gross margin of 53.3%.
* Medical Solutions revenue was $45.1 million, flat year-over-year, with 91,000 unique patients served and a gross margin of 45%.
* The company reported liquidity of approximately $479 million at quarter end, with $146 million in cash, $106 million of availability under its securitization facility, and $227 million in revolver availability.
* Buckhalter noted, “Cash generated by operating activities was $76.1 million and free cash flow was $86.2 million.”

Q&A

* Pito Chickering, Deutsche Bank, asked about potential headwinds for Q4 and the implied guidance. Shaner responded, "Q4 with the exception of the 53rd week... should be very similar to Q3. We do have some seasonality... But no, fundamentally, we think of Q4 in the same realm as we think of the performance of the business in Q3."
* Chickering followed up on preferred payer agreements and launch pad for 2026. Shaner indicated focus remains on finishing 2025 strong and pointed to wage pass-through and Medicaid headwinds impacting next year.
* Brian Tanquilut, Jefferies, asked if rate increases in PDS would translate into better hours and capacity for 2026. Shaner confirmed Q3’s 11.8 million hours with Thrive included and expects smaller, targeted rate wins going forward.
* Benjamin Rossi, JPMorgan, inquired about value-based care contracting and market appetite. Shaner stated, “Our preferred payers just want more nurses and they want more of our capacity... it’s only upside. So there’s no -- we don’t take institutional risk today in any of our value-based agreements.”
* Albert Rice, UBS, asked about the evolution of preferred payer relationships. Shaner said, "Some of the soft stuff that then kind of adds on over time really becomes the value-based agreement, but also the collections... every one of them wants more of our nurses, and that is the constant theme."

SENTIMENT ANALYSIS

* Analysts focused on sustainability of growth, rate increases, and preferred payer strategy, with a tone that was generally positive but occasionally probing for risk and sustainability.
* Management maintained a confident and constructive tone, emphasizing ongoing momentum and prudent guidance. Shaner described the outlook as "prudent" but highlighted "solid signs of recovery."
* Compared to the prior quarter, both analysts and management continued a largely positive dialogue, with slightly more discussion of regulatory and Medicaid headwinds this quarter.

QUARTER-OVER-QUARTER COMPARISON

* Guidance was raised from revenue of greater than $2.3 billion and adjusted EBITDA of greater than $270 million to greater than $2.375 billion and $300 million, respectively.
* Preferred payer agreements increased from 25 to 30 in private duty services, and the company completed 10 rate enhancements as planned.
* Integration of Thrive moved from ongoing to nearly complete, now seen as accretive.
* Gross margins stabilized, and the company reported improved liquidity compared to the previous quarter.
* Analysts continued to focus on labor, capacity, margin sustainability, and regulatory issues, while management’s tone remained constructive, emphasizing a "beat and raise" mentality and ongoing momentum.

RISKS AND CONCERNS

* Management noted ongoing headwinds from state Medicaid directors and governors due to potential reductions in Medicaid funding, with some states enacting temporary rate cuts.
* There is uncertainty around the final Medicare home health rule for 2026, which management opposes; however, it is not expected to be material to Aveanna’s 2026 results.
* Wage pass-through pressures and the need to align with preferred payers for sustainable growth were highlighted as ongoing challenges.
* Analysts expressed concern regarding the sustainability of rate increases, labor market pressures, and the impact of state budget constraints.

FINAL TAKEAWAY

Aveanna’s leadership emphasized a strong third quarter with significant revenue and adjusted EBITDA growth, driven by successful execution of its preferred payer strategy and ongoing cost initiatives. The company increased its full-year 2025 outlook to revenue above $2.375 billion and adjusted EBITDA above $300 million, reflecting confidence in its business model despite regulatory and Medicaid funding uncertainties. Integration of Thrive Skilled Pediatrics is nearly complete and is contributing to results as planned. Management remains focused on expanding preferred payer agreements, driving operational efficiencies, and maintaining a prudent approach to guidance in light of evolving industry headwinds.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/avah/earnings/transcripts]

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