Aveanna Healthcare Holdings Inc Q3 2025 Earnings Call Transcript

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

Question: Pito Chickering - Deutsche Bank - Analyst : Every year, the fourth quarter EBITDA has been higher than the third quarter. Are there any headwinds that we should be thinking about for the fourth quarter? Just trying to understand the implied guidance that you have for the fourth quarter after your very strong third quarter, or is it just the standard conservatism that you've been doing for the past few years?

Question: Pito Chickering - Deutsche Bank - Analyst : Right. And then -- So a follow-up here, you've scaled up your preferred payer agreements throughout 2025, which makes this a pretty funky sequential growth this year. In the last couple of years, you keep it at about 26% of annual EBITDA. So is it fair to take third-quarter results and annualize that as you think about a launch pad for 2026 earnings, and even that could be conservative, I guess, with the five preferred payers you signed this quarter?

Question: Benjamin Rossi - JPMorgan Chase & Co - Analyst : I guess just turning to the value-based care contracting, when thinking about your progress towards your broader goal of signing ten VBC contracts this year, can you walk us through the market appetite you're seeing from your payer partners here? And then have you seen any shift in how payers are maybe viewing value-based care contracts for private duty nursing going forward?

Question: Benjamin Rossi - JPMorgan Chase & Co - Analyst : Great, thanks for the comments. Just as a follow-up, maybe on the Home Health and Hospice front, seeing nice volume growth there, episodic mix picked up nicely. The cost of revenue seemed like that maybe ticked up a bit and was a bit of a drag on gross margin. I guess anything going on within that segment from the expense side, just with growth out there otherwise outpacing top-line?

Question: Raj Kumar - Raymond James - Analyst : Hi, good morning. Maybe kind of uncovering the hours growth, decently strong, so just maybe trying to get the disclosures on kind of how census or patients served trended relative to the hours per census yield and kind of remaining opportunities. Just trying to think about the spread normalizing and the company being able to hire and retain more nurses to be able to serve more volume. So maybe just trying to break that out and how much more room is there on the hours per census side, and then what are you seeing from the census opportunity perspective as well?

Question: Raj Kumar - Raymond James - Analyst : Yeah, and maybe on the Home Health and Hospice side, just with the preferred payer strategy, maybe just want to be able to compare overall reimbursement on your episodic rates versus fee-for-service and where that discount stands, or even if you're reaching parity. Any information on that would be helpful as well. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2025 / 3:00PM, AVAH.OQ - Q3 2025 Aveanna Healthcare Holdings Inc Earnings Call

Question: AJ Rice - UBS AG - Analyst : First, obviously you've made a big push and been successful in getting these preferred payers set up in the PDS business. I wonder if you have had enough time to sort of see over time how that relationship has evolved. Do you get annual updates consistent with what you've been getting historically? Have you seen it evolve in any way that's worth calling out?

Question: AJ Rice - UBS AG - Analyst : Okay, maybe for my follow-up, just thinking about the organic and inorganic growth in PDS as well as in adult home care. Some of your peers are saying if we can just get the final rate notice done, that could open the floodgates, give us more clarity on the deals and where to look for expansion REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2025 / 3:00PM, AVAH.OQ - Q3 2025 Aveanna Healthcare Holdings Inc Earnings Call opportunities. Others are saying that's not enough--we need more clarity on the long-term reimbursement profile. On the PDS side, you're saying you're seeing a little caution in some states. I guess I'm just wondering, is there anywhere where you're thinking about leaning in more to new opportunities, growth--either organic development or acquisitions--or where you're being a little more cautious?

Question: Andrew Mok - Barclays Services Corp - Analyst : Just to follow up on the hours growth, can you spike out the contribution of Thrive in the quarter and how volumes performed on the same-store basis? Because it still looks like a pretty meaningful increase year-over-year. And once Thrive is fully integrated, what is the annualized earnings contribution expected from that?

Question: Andrew Mok - Barclays Services Corp - Analyst : Great. I wanted to follow up on some of the comments around the uncertainty around state budgets and the indirect impact that might have on reimbursement. Are those comments more directional in nature, or are there specific actions that states are taking that are driving that more prudent posture?

Question: Andrew Mok - Barclays Services Corp - Analyst : You guys went on mute for a minute. So just going back to your payer relationships, what you said you offered to bend the cost curve and it's an upside-only deal. What does that mean exactly? And my follow-up is, does having a payer deal in pediatrics grease the skids for a payer deal on Home Health and Hospice and Medical Solutions?

Question: Andrew Mok - Barclays Services Corp - Analyst : And just to ask the obvious question, so the fact that you just have more nurses, you have more athletes on the field, one phone call from them and they can get more spots filled than calling five of your smaller competitors. I know it's probably not that simple, but is that a big piece of it?

Question: Michael Murray - RBC Capital Markets Inc - Analyst : Hi, this is Michael Murray on for Ben. Thanks for taking my question. We're getting a lot of questions on the sustainability of growth of the preferred payer relationships. Can you give us an idea of the room to run here? You targeted 30 in 2025. Any idea what the goal would be for 2026? And then what is the potential to increase the number of patients you take within a preferred payer relationship?

Question: Michael Murray - RBC Capital Markets Inc - Analyst : And then I had a follow-up question on capital structure. I wanted to see what your intermediate leverage targets were, and do you anticipate hitting those through EBITDA growth, or would you use cash flow to pay down debt?

Question: David MacDonald - Truist Securities - Analyst : Good morning. Thank you. Guys, just one last -- just kind of curious. Wanted to piggyback on AJ's question from earlier. Just with regards to Home Health and some of the uncertainty there. I'm just curious, has that impacted the strength of the pipeline of opportunities there for you guys? And what would you need to see in terms of the final rule to get comfortable starting to potentially more meaningfully deploy capital there just given some of the reimbursement uncertainty?