It wasn’t too long ago when Aveanna Healthcare Holdings Inc. (NASDAQ: AVAH) was a company mostly focused on in-home care to pediatric populations.
When the Atlanta-based provider filed to go public in April 2021, however, it revealed ambitious plans to expand into the arenas of Medicare-certified home health and hospice care.
“We believe that we have the opportunity to leverage our national home health infrastructure to develop an industry leading adult home health and hospice business similar in size and scale to our pediatric home health business,” Aveanna noted in an S-1 financial filing at the time.
So far, Aveanna’s expansion into home health and hospice has hit a few snags, with one of the most prominent examples being ongoing labor challenges that have affected all providers. In mid-2023, the company’s leadership team now believes Aveanna is starting to see signs of progress.
“The labor environment remains the primary challenge that we are aggressively addressing in 2023 to see Aveanna resume that growth trajectory that we believe our company can achieve,” the company’s CEO, Jeff Shaner, said Thursday during a second-quarter earnings call. “As a reminder, we do not have a demand problem.”
Aveanna provides a range of pediatric and adult health care services, from pediatric nursing and rehabilitation services, to home health, hospice and other offerings. As of the beginning of August, the company operated in 33 states.
Shaner and the rest of his team are bullish on Aveanna’s future because of tailwinds propelling most of its business segments.
The company’s private-duty services business, for instance, has seen rate improvements with both government and managed care payers. Aveanna has worked to obtain double-digit private-duty services rate increases in six key states, according to Shaner, with “rate wins” also coming in 11 additional states.
Meanwhile, Aveanna’s home health arm has benefited by focusing on preferred payers that reimburse at above-market levels or on an episodic basis.
“I think you’ll find us … firing, terminating more contracts as we align ourselves in home health to those payers who will ultimately pay us a fair rate, market-fair rate and/or an episodic rate,” Shaner said.
Hospice, in particular, will be buoyed by a rate increase hitting Oct. 1.
“We hold a strong belief in this business and its lasting value proposition,” Matt Buckhalter, Aveanna’s interim CFO, said on the call. “Our home health and hospice platform, which is primed for growth, is dedicated to creating value through effective operational management and delivery of exceptional patient care.”
Overall, Aveanna reported Q2 2023 revenue of $471.9 million, a 6.5% increase year over year. The company’s net income for the quarter was $25.6 million, compared to a net loss of $473.9 million in the comparable prior year period.
Home health and hospice segment revenue during the second quarter was about $55.4 million, a 9.7% decrease over the prior year. Revenue was driven by 9,900 total admissions, with approximately 69% being episodic, and 11,100 total episodes of care.
“Even though our admissions are down year over year, even quarter-over-quarter, sequentially, even though our revenue is down year over year, we have made a commitment in home health to not give away our capacity to low-dollars, low-margin payers,” Shaner said.
“It is still early in our transformation story,” he added.
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