Release Date: March 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: As I look at the topline growth, it's slightly above 4%, implying flat EBITDA margins year over year. Would you consider this conservative as you've spoken to EBITDA margin expansion in '25 previously? A: Jeff Shaner, CEO: We prefer to use the term "prudent" rather than conservative. We are confident about 2025 and expect it to be a significant year of transformation for Aveanna. Matt Buckhalter, CFO: We have solid momentum from 2024 with rate increases and preferred payer execution. We expect EBITDA to build in Q2 and the second half of 2025.
Q: Can you speak to the M&A pipeline? What areas are you focused on and any specific characteristics you require when looking at assets? A: Jeff Shaner, CEO: We are focused on home health and private duty services for tuck-in M&A. We plan to stay within our capital structure and expect to be back in the acquisition business in fiscal year 2025.
Q: How should we think about modeling the cadence of both rate growth and gross margin progression in 2025 for the PDS segment? A: Jeff Shaner, CEO: We have great clarity for 2025 with momentum from 2024. We expect Q1 to face headwinds due to high payroll taxes and holiday seasonality. Matthew Buckhalter, CFO: We expect spread per hour to normalize in the $10 to $10.50 range for 2025.
Q: As your cash flow increases, how are you thinking about capital allocation? What sort of leverage would you be comfortable going up to? A: Matthew Buckhalter, CFO: We aim to continue deleveraging and expect to be a free cash flow business in 2025. We will focus on accelerating growth in EBITDA both organically and inorganically without opening the capital structure.
Q: Regarding your medical solutions payer strategy, could you walk us through your approach to payer negotiations and potential rate changes? A: Jeff Shaner, CEO: We are aligning our clinical capacity with payers that value our services. We have identified 17 preferred payers and expect to see margin expansion and improved cash collections. Matthew Buckhalter, CFO: We expect muted volume growth initially but positive revenue growth as the strategy takes hold.
Q: How are you approaching policy discussions with regulatory counterparts regarding potential Medicaid program changes? A: Jeff Shaner, CEO: We are aligned with federal and state goals for cost efficiency and high-quality outcomes. Aveanna is a cost saver for governments, and we are well-positioned to benefit from any changes.
Q: Can you provide more detail on what's implied in the revenue guidance for PDS, particularly between rate and volume growth? A: Matthew Buckhalter, CFO: We expect 3% to 5% total revenue growth in PDS. We have good visibility from 2024's rate enhancements and preferred payer growth, with 50% of MCO volume from preferred payers.
Q: The guide calls for flat EBITDA margins at the midpoint. Is it fair to think that most of the margin expansion would come from PDS and HHH? A: Matthew Buckhalter, CFO: We expect margin expansion primarily from SG&A leverage. We aim to drive volume growth and leverage SG&A to achieve margin expansion.
Q: What caused the slower growth in home health and hospice in Q4, and how are you addressing it? A: Jeff Shaner, CEO: We had some sales position vacancies in key markets, but we are pleased with the current trends and expect organic growth of 1% to 3% in 2025. We plan to expand geographically through tuck-ins.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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