Aveanna Healthcare Holdings Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Meghan Holtz - Jefferies - Analyst : Good morning, guys. This is Meghan on for Bryan. Congrats on a really strong quarter. It's nice to see the work you guys are doing on rates finally coming through. I guess can you just discuss where you are in those ten states that you're targeting for the year and then the remaining six and the preferred payers and how to think about that long-term pipeline on the rate side?

Question: Meghan Holtz - Jefferies - Analyst : Great. And then, Matt, I appreciate your comments on the cash flow and the seasonality to it in 1Q, but can you walk us through the thoughts on the operating cash flow for the second quarter. And then how to think about the right EBITDA to cash flow conversion just given the improvement in margins we've seen?

Question: Meghan Holtz - Jefferies - Analyst : Thank you.

Question: Pito Chickering - Deutsche Bank - Analyst : Good morning, guys. Thanks for taking my questions. Nice job on the quarter. I guess going into sort of the quarter, I mean -- just want to think about what is the continuing, I guess, EBITDA, kind of -- as we think about the base coming from here and kind of what timers in there and any details you can give us on those one-timers.

Question: Pito Chickering - Deutsche Bank - Analyst : That is a perfect segue into, I guess, sort of the follow-up question here is, we saw these sort of rate increases on PDS in the fourth quarter. We saw this again, obviously, pretty high in the first quarter. You sort of talked about sort of that continuing until you convert that into the wages, I guess. How do we think about hours from here? So as you're converting these increase of rate, you're converting this into wages. Shouldn't we sort of see -- we saw the hours quite strong this quarter on the toughest comp of the year despite leap year. So how should we think about the hourly growth of PDS now that we're seeing this conversion? And then the follow-up is, on the AR stuff, is there any, I guess, brilliant job getting fully reserved DSOs on the P&L? Is there any more that you can do there? Thanks.

Question: Benjamin Rossi - JPMorgan - Analyst : Great. Thanks for the question here. Just turning to the Thrive Acquisition. So on the acquisition in early April, I know you previously mentioned a prudent approach towards M&A, maybe more favoring opportunistic tuck-ins. This seems a little bit more sizable here at 23 locations in seven states. Could you just provide any additional commentary regarding the expected contribution here in 2025 in terms of revenue, earnings, and maybe synergies within PDS? And then with the overlap in those five states and new entry into two states, was this part of a broader goal of adding density in these geographies or entering either of these new states?

Question: Benjamin Rossi - JPMorgan - Analyst : Great. Appreciate the commentary there. I guess as a follow-up, just on Medicaid policy side, broader development in your advocacy efforts there, could you just give us any updates on where those conversations stand with your federal counterparts? And did you notice any unfreeze over the past month or so with communications now that the new administration's settled in here at the federal level?

Question: Benjamin Rossi - JPMorgan - Analyst : Understood. Thanks.

Question: Ben Hendrix - RBC Capital Markets - Analyst : Great. Thanks, guys. Most of our questions have been answered. But just wanted to follow up on those five rate enhancements in the first quarter. Just wanted to get an idea of the size of those increases. I assume those are probably just normal course increases. But also wanted to get your comments there. And the outlook for larger double-digit wage increases. Is California still the next kind of catalytic update we're waiting for there? Thanks.

Question: Ben Hendrix - RBC Capital Markets - Analyst : Great. Thanks. And just to get an idea on the PDS side of how much volume could be coming into these preferred payer relationships, can you -- you mentioned 54% of the volume in preferred relationships currently. Where does that go pro forma for getting up to 30 relationships by the end of the year? Thanks.

Question: Ben Hendrix - RBC Capital Markets - Analyst : Great. Thank you.

Question: Grayson McAlister - Truist Securities - Analyst : Hey, guys. This is Grayson McAlister on for Dave. Like Ben, most of my questions have been answered, but just wanted to follow up on home health. Episodic mix was obviously strong in the quarter, but total episodes were flat. So just wanted to check on how that compared to your expectations and how we should think about volume growth through the remainder of the year. Thanks.

Question: Grayson McAlister - Truist Securities - Analyst : Great. Thanks, guys.