Aveanna Healthcare Q2 Earnings Call Highlights

Key Points

• Strong Q2 performance: Revenue rose 13.7% year over year to $670.5 million, while adjusted EBITDA increased 8% to $95.4 million, driven by growth across all three operating divisions, higher reimbursement and operational efficiencies.
• Raised 2026 outlook: Aveanna now expects full-year revenue above $2.68 billion and adjusted EBITDA above $365 million. It also increased long-term organic growth targets for Private Duty Services to 5%–6% and Home Health and Hospice to 8%–10%.
• Expansion and reimbursement opportunities: The company is integrating its Family First acquisition, funded entirely with cash, and expects a meaningful California pediatric nursing rate increase beginning in January 2027. Management plans to use higher reimbursement to support caregiver wage increases, staffing and capacity growth.

Aveanna Healthcare NASDAQ: AVAH reported higher second-quarter revenue and adjusted EBITDA, supported by growth across its three operating divisions, improved reimbursement rates, increased volumes and operational efficiencies. The company also raised its full-year outlook and updated its long-term organic growth targets for its Private Duty Services and Home Health and Hospice businesses.

Revenue for the second quarter of 2026 increased 13.7% year over year to $670.5 million, while adjusted EBITDA rose 8% to $95.4 million. Consolidated gross margin was $218.5 million, or 32.6% of revenue.

Chief Executive Officer Jeff Shaner said Aveanna’s strategy of concentrating clinical capacity among government partners and managed-care organizations willing to provide enhanced reimbursement or value-based arrangements helped drive growth. “The demand for home and community-based care continues to be strong,” Shaner said, noting that payers and government agencies are seeking ways to expand care capacity while lowering the total cost of care.

Growth Across Operating Divisions

Aveanna reported year-over-year revenue growth in each of its operating segments. Home Health and Hospice revenue increased 14.8%, Private Duty Services revenue rose 14.0%, and Medical Solutions revenue grew 9.4%.

• Private Duty Services: Revenue per hour was $44.62, up 1.7% from the prior-year period, driven by preferred-payer volume growth and updated reimbursement agreements. Gross margin was $159.9 million, or 28.9%. The cost of revenue rate rose 7.8% to $31.74 per hour, reflecting caregiver wage adjustments. Aveanna’s spread per hour was $12.88.
• Home Health and Hospice: Revenue was approximately $69 million. The segment recorded 10,500 total admissions and 14,700 total episodes of care, with episodes rising 18.5% year over year. About 81% of admissions were episodic, above the company’s target of 75%. Medicare revenue per episode was $3,202, while gross margin reached 53.9%.
• Medical Solutions: Revenue was $47.5 million, with approximately 95,000 unique patients served, up 4.4% from the year-earlier quarter. Revenue per unique patient served increased 5% to about $500. Gross margin was approximately $21.4 million, or 45.1%.

Shaner said Aveanna had signed three additional preferred-payer agreements in Private Duty Services during the second quarter, bringing its total to 37. The company expects to exceed its 2026 goal of reaching 38 agreements. Preferred-payer agreements represented approximately 64% of the company’s Private Duty Services managed-care organization volume at the end of the quarter, compared with 60% at the end of the first quarter.

In Home Health, Aveanna reached its 2026 target of 50 preferred-payer agreements during the second quarter. Shaner said the company’s episodic mix and double-digit admissions and episode growth reflected its efforts to align capacity with payers reimbursing on an episodic basis.

Medical Solutions had 20 preferred-payer agreements at the end of the second quarter, compared with 18 at the end of 2025. The company continues to target 25 such agreements by the end of 2026. Shaner said Medical Solutions revenue growth is expected to remain in the high-single-digit range for the next several quarters before returning to double-digit growth by the start of 2027.

California Rate Increase and Labor Strategy

A key development for Aveanna was the inclusion of an investment in pediatric private duty nursing rates in California’s 2027 budget, effective Jan. 1, 2027. Shaner said the company is awaiting final details from the Medi-Cal department but expects the investment to represent a meaningful increase in California private duty nursing reimbursement rates.

The CEO said California’s last rate increase occurred in 2018 and that reimbursement and nursing wages had fallen behind the competitive market. Aveanna plans to begin raising nurse wages during the fall, before the new reimbursement rates take effect, in an effort to recruit and retain caregivers and increase staffing capacity.

“The very first thing that we want to do is get the caregivers who are working to work more hours on the shifts on the patients that they currently have,” Shaner said during the question-and-answer session. He also cited opportunities to help discharge medically fragile children from hospitals and to assist families providing care themselves because they have been unable to find nurses.

Aveanna said it had achieved seven state rate enhancements as of the second quarter and expects additional states to complete their budget processes during the third quarter. Shaner said the California development completed the company’s multiyear objective to secure enhanced private duty nursing rates and caregiver wages across its operating footprint.

Family First Integration and Financial Position

The company closed its acquisition of Florida-based pediatric home-care provider Family First Homecare in early June. Shaner said integration efforts were progressing as planned, with most work expected to be completed by late in the fourth quarter. The integration includes back-office and electronic medical record transitions.

Chief Financial Officer Matt Buckhalter said Aveanna funded the acquisition and related closing costs entirely with cash on hand. The company ended the quarter with approximately $433 million in liquidity, including $97 million in cash, $110 million available under its securitization facility and approximately $226 million available on its undrawn revolver.

Aveanna had approximately $1.48 billion of variable-rate debt at quarter-end, including $1.4 billion hedged with interest-rate caps. The company also repriced its term loan during the second quarter, reducing its interest rate by 75 basis points. Buckhalter said the repricing is expected to lower annual interest expense by approximately $10 million.

Year-to-date operating cash flow totaled $85.3 million, and free cash flow was $75.4 million. Buckhalter said the company expects similar cash-flow performance in the second half of 2026.

Raised Outlook and Long-Term Targets

Aveanna raised its 2026 guidance and now expects full-year revenue of more than $2.68 billion and adjusted EBITDA of more than $365 million. Buckhalter said the increase reflected operational performance in the core business rather than an additional contribution from Family First, whose expected impact had already been incorporated into prior guidance.

The company also raised its long-term organic growth outlook for Private Duty Services to 5% to 6%, from 3% to 5%, and increased its Home Health and Hospice target to 8% to 10%, from 5% to 7%. Aveanna maintained its Medical Solutions growth target of 8% to 10%.

Management said its gross-margin percentage is expected to remain generally consistent as reimbursement gains are passed through to caregivers in the form of higher wages. Shaner said the company remains focused on reaching its long-term goal of leverage below three times, which management said it believes it can achieve in 2027.

About Aveanna Healthcare (NASDAQ:AVAH)

Aveanna Healthcare, Inc NASDAQ: AVAH is a national provider of in-home health care services, specializing in pediatric skilled nursing, therapy, and related support for medically complex and chronically ill children. The company delivers a range of clinical and therapeutic solutions designed to enable patients to receive care in the comfort of their own homes, reducing the need for hospital stays and long-term institutional care. Aveanna's offerings include registered nursing, physical, occupational and speech therapy, behavioral health counseling, and durable medical equipment coordination.

In addition to pediatric home health services, Aveanna operates adult home health and personal care support programs, assisting elderly and disabled adults with daily living activities, medication management, and rehabilitation therapies.

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