Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call

Agiliti Announces Financial Results for Second Quarter 2022


Agiliti Inc. (NYSE: AGTI) ("Agiliti"), a nationwide provider of healthcare technology management and service solutions to the United States healthcare industry, today announced its financial results for the quarter ended June 30, 2022, and reaffirmed its full-year financial guidance with results expected at the lower end of its range.

Second Quarter 2022 Highlights

"While our outlook remains largely on track for the full year, our results in Q2 were impacted by the unexpected, temporary deferral of time-and-materials work on our government medical device stockpile management agreement, as well as lower than expected medical device rental utilization?two short-term factors that have caused modest variability in our results throughout the Covid-19 era," said Tom Leonard, Chief Executive Officer. "Nearly offsetting those impacts and giving us confidence in our full-year guidance range is the continued strength of our underlying business and better than expected performance resulting from the integration of our 2021 acquisitions of Northfield Medical and Sizewise."

Second Quarter 2022 Financial Results

Total revenue for the three months ended June 30, 2022, was $274.0 million, representing a 9.4 percent increase from total revenue of $250.5 million for the same period of 2021. Total revenue for the six months ended June 30, 2022, was $568.4 million, representing a 17.0 percent increase from total revenue of $485.8 million for the same period of 2021.

Net income for the three months ended June 30, 2022, was $5.0 million, a $10.2 million increase from the same period of 2021. Net income for the six months ended June 30, 2022, was $24.9 million, a $20.5 million increase from net income of $4.4 million for the same period of 2021.

Adjusted EBITDA1 for the three months ended June 30, 2022, was $69.6 million, a 10.4 percent decrease from Adjusted EBITDA1 of $77.7 million for the same period of 2021. Adjusted EBITDA1 for the six months ended June 30, 2022, was $158.7 million, a 3.2 percent decrease from Adjusted EBITDA1 of $163.9 million for the same period of 2021.

2022 Financial Guidance

The company maintains its guidance for 2022 as follows with results expected at the lower end of each range:

_________________________

  1. Non-GAAP Measures. See further discussion below.
  2. With regard to the non-GAAP Adjusted EBITDA guidance and adjusted earnings per share guidance provided above, a reconciliation to GAAP net income has not been provided as the quantification of certain items included in the calculation of GAAP net income cannot be calculated or predicted at this time without unreasonable efforts. For example, the non-GAAP adjustment for stock-based compensation expense requires additional inputs such as number of shares granted and market price that are not currently ascertainable, and the non-GAAP adjustment for certain reserves and expenses depends on the timing and magnitude of these expenses and cannot be accurately forecasted. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could have a potentially unpredictable, and potentially significant, impact on its future GAAP financial results. See further discussion below regarding historical Adjusted EBITDA and historical adjusted earnings per share.

Conference Call Information

Agiliti will hold a conference call to discuss its second quarter 2022 results on Tuesday, August 9, at 5 p.m. Eastern Time (4 p.m. Central Time).

The conference call can be accessed live over the phone by dialing 1-877-407-0792 or for international callers, 1-201-689-8263. A replay will be available two hours after the call and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the live call and the replay is 13731000. The replay will be available until August 16, 2022.

Interested investors and other parties may also listen to a simultaneous webcast of the conference call by visiting the Agiliti Investor Relations site at https://investors.agilitihealth.com. The online replay will be available for a limited time shortly following the call.

About Agiliti

Agiliti is an essential service provider to the U.S. healthcare industry with solutions that help support a more efficient, safe and sustainable healthcare delivery system. Agiliti serves more than 9,000 national, regional and local acute care and alternate site providers across the U.S. For more than eight decades, Agiliti has delivered medical equipment management and service solutions that help healthcare providers reduce costs, increase operating efficiencies and support optimal patient outcomes.

Forward-Looking Statements

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release are forward-looking in time, including financial outlook and other preliminary results, and involve risks and uncertainties. The following factors, among others, could adversely affect our business, operations and financial condition causing our actual results to differ materially from those expressed in any forward-looking statements: our history of net losses and substantial interest expense; our need for substantial cash to operate and expand our business as planned; our substantial outstanding debt and debt service obligations; restrictions imposed by the terms of our debt; a decrease in the number of patients our customers are serving; our ability to effect change in the manner in which health care providers traditionally procure medical equipment; the absence of long-term commitments with customers including our agreement with HHS/ASPR; our ability to renew contracts with group purchasing organizations and integrated delivery networks; changes in reimbursement rates and policies by third-party payors; the impact of health care reform initiatives; the impact of significant regulation of the health care industry and the need to comply with those regulations; the effect of prolonged negative changes in domestic and global economic conditions; difficulties or delays in our continued expansion into certain of our businesses/geographic markets and developments of new businesses/geographic markets; additional credit risks in increasing business with home care providers and nursing homes, impacts of equipment product recalls or obsolescence; increases in vendor costs that cannot be passed through to our customers; and other Risk Factors as detailed in our annual report on Form 10-K.

Agiliti, Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands, except share and per share information)

(unaudited)

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2022

 

2021

 

2022

 

2021

Revenue

$ 273,984

 

$ 250,543

 

$ 568,428

 

$ 485,788

Cost of revenue

175,819

 

151,435

 

346,636

 

285,358

Gross margin

98,165

 

99,108

 

221,792

 

200,430

Selling, general and administrative expense

82,121

 

81,056

 

168,259

 

150,279

Operating income

16,044

 

18,052

 

53,533

 

50,151

Loss on extinguishment of debt

1,418

 

10,116

 

1,418

 

10,116

Interest expense

11,261

 

11,713

 

21,925

 

29,733

Income (loss) before income taxes and noncontrolling interest

3,365

 

(3,777)

 

30,190

 

10,302

Income tax (benefit) expense

(1,698)

 

1,394

 

5,207

 

5,890

Consolidated net income (loss)

5,063

 

(5,171)

 

24,983

 

4,412

Net income attributable to noncontrolling interest

65

 

27

 

93

 

57

Net income (loss) attributable to Agiliti, Inc. and Subsidiaries

$ 4,998

 

$ (5,198)

 

$ 24,890

 

$ 4,355

 

 

 

 

 

 

 

 

Basic income (loss) per share

$ 0.04

 

$ (0.04)

 

$ 0.19

 

$ 0.04

Diluted income (loss) per share

$ 0.04

 

$ (0.04)

 

$ 0.18

 

$ 0.04

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

132,556,645

 

122,908,065

 

131,856,267

 

111,071,756

Diluted

138,697,206

 

122,908,065

 

137,932,546

 

118,760,837

Agiliti, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share and per share information)

(unaudited)

 

June 30,
2022

 

December 31,
2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$ 16,524

 

$ 74,325

Accounts receivable, less allowance for credit losses of $3,206 and $2,902

215,862

 

209,308

Inventories

59,137

 

55,307

Prepaid expenses

14,580

 

18,549

Other current assets

12,645

 

395

Total current assets

318,748

 

357,884

Property and equipment, net

251,490

 

258,370

Goodwill

1,218,329

 

1,213,121

Operating lease right-of-use assets

85,669

 

80,676

Other intangibles, net

530,474

 

573,159

Other

34,627

 

32,537

Total assets

$ 2,439,337

 

$ 2,515,747

Liabilities and Equity

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$ 17,735

 

$ 17,534

Current portion of operating lease liability

23,198

 

22,826

Current portion of obligation under tax receivable agreement

29,710

 

29,187

Accounts payable

56,513

 

53,851

Accrued compensation

23,309

 

47,951

Accrued interest

3,490

 

3,473

Deferred revenue

9,207

 

5,808

Other accrued expenses

26,767

 

27,900

Total current liabilities

189,929

 

208,530

Long-term debt, less current portion

1,073,016

 

1,174,968

Obligation under tax receivable agreement, pension and other long-term liabilities

31,179

 

29,629

Operating lease liability, less current portion

73,122

 

63,241

Deferred income taxes, net

143,381

 

143,307

Commitments and contingencies

 

 

 

Equity:

 

 

 

Common stock, $0.0001 par value; 350,000,000 shares authorized; 133,188,231 and 130,950,061 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

13

 

13

Additional paid-in capital

938,906

 

938,888

Accumulated deficit

(19,596)

 

(44,486)

Accumulated other comprehensive income

9,221

 

1,537

Total Agiliti, Inc. and Subsidiaries equity

928,544

 

895,952

Noncontrolling interest

166

 

120

Total equity

928,710

 

896,072

Total liabilities and equity

$ 2,439,337

 

$ 2,515,747

Agiliti, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

Six Months Ended

June 30,

 

2022

 

2021

Cash flows from operating activities:

 

 

 

Consolidated net income

$ 24,983

 

$ 4,412

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation

46,412

 

52,884

Amortization

47,119

 

40,955

Loss on extinguishment of debt

1,418

 

7,716

Remeasurement of tax receivable agreement

?

 

4,345

Provision for credit losses

279

 

573

Provision for inventory obsolescence

568

 

2,226

Non-cash share-based compensation expense

10,206

 

5,766

Gain on sales and disposals of equipment

(256)

 

(840)

Deferred income taxes

(2,567)

 

4,694

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

(8,833)

 

6,047

Inventories

(4,398)

 

(1,414)

Other operating assets

(579)

 

(412)

Accounts payable

8,702

 

5,352

Other operating liabilities

(21,916)

 

(24,796)

Net cash provided by operating activities

101,138

 

107,508

Cash flows from investing activities:

 

 

 

Medical equipment purchases

(22,823)

 

(16,269)

Property and office equipment purchases

(12,776)

 

(10,612)

Proceeds from disposition of property and equipment

1,763

 

2,013

Acquisitions, net of cash acquired

(3,125)

 

(450,198)

Net cash used in investing activities

(36,961)

 

(475,066)

Cash flows from financing activities:

 

 

 

Proceeds under debt arrangements

20,000

 

233,052

Payments under debt arrangements

(123,824)

 

(359,805)

Payments of principal under finance lease liability

(4,484)

 

(4,270)

Payments of deferred financing costs

?

 

(229)

Payments under tax receivable agreement

?

 

(748)

Distributions to noncontrolling interests

(47)

 

(83)

Proceeds from exercise of stock options

1,971

 

373

Dividend and equity distribution payment

(906)

 

(924)

Proceeds from issuance of common stock

?

 

401,441

Stock issuance costs

?

 

(4,084)

Shares forfeited for taxes

(14,367)

 

?

Payments of contingent consideration

(321)

 

?

Net cash (used in) provided by financing activities

(121,978)

264,723

Net change in cash and cash equivalents

(57,801)

 

(102,835)

Cash and cash equivalents at the beginning of period

74,325

 

206,505

Cash and cash equivalents at the end of period

$ 16,524

 

$ 103,670

Use of non-GAAP information

This press release contains non-GAAP measures, including EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Net Debt and Net Leverage Ratio. We use these internally as measures of operational performance, or liquidity, as applicable, and disclose them externally to assist analysts, investors and lenders in their comparisons of operational performance, valuation and debt capacity across companies with differing capital, tax and legal structures. We believe the investment community frequently uses these measures in the evaluation of similarly situated companies. Adjusted EBITDA is also used by the Company as a factor to determine the total amount of incentive compensation to be awarded to executive officers and other employees. EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Net Debt and Net Leverage Ratio, however, are not measures of financial performance under accounting principles generally accepted in the United States of America ("GAAP") and should not be considered as alternatives to, or more meaningful than, net income as measures of operating performance or to cash flows from operating, investing or financing activities or to total debt as measures of liquidity or debt capacity. Since EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Net Debt and Net Leverage Ratio are not measures determined in accordance with GAAP and are thus susceptible to varying interpretations and calculations, these measures, as presented, may not be comparable to other similarly titled measures of other companies. EBITDA, Adjusted EBITDA, and Adjusted Net Income do not represent amounts of funds that are available for management's discretionary use. EBITDA and Adjusted EBITDA presented may not be the same as EBITDA and Adjusted EBITDA calculations as defined in the First Lien Credit Facilities. EBITDA is defined as earnings attributable to Agiliti, Inc.before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding non-cash share-based compensation expense, management fees and other non-recurring gains, expenses, or losses, transaction costs, remeasurement of the tax receivable agreement and loss on extinguishment of debt. LTM Adjusted EBITDA represents the last twelve months ("LTM") of Adjusted EBITDA.

Agiliti, Inc. and Subsidiaries

Non-GAAP Financial Measure: Adjusted EBITDA

(in thousands)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2022

 

2021

 

2022

 

2021

Net income (loss) attributable to Agiliti, Inc. and Subsidiaries

 

$ 4,998

 

$ (5,198)

 

$ 24,890

 

$ 4,355

Interest expense

 

11,261

 

11,713

 

21,925

 

29,733

Income tax (benefit) expense

 

(1,698)

 

1,394

 

5,207

 

5,890

Depreciation and amortization

 

46,711

 

48,250

 

91,542

 

91,814

EBITDA

 

61,272

 

56,159

 

143,564

 

131,792

Non-cash share-based compensation expense

 

5,569

 

3,355

 

10,206

 

5,766

Management and other expenses

 

?

 

7,064

 

?

 

7,626

Transaction costs (1)

 

1,295

 

801

 

3,521

 

4,252

Tax receivable agreement remeasurement

 

?

 

197

 

?

 

4,345

Loss on extinguishment of debt (2)

 

1,418

 

10,116

 

1,418

 

10,116

Adjusted EBITDA

 

$ 69,554

 

$ 77,692

 

$ 158,709

 

$ 163,897

_____________________________

(1) Transaction costs represent costs associated with potential and completed mergers and acquisitions and are primarily related to the Northfield and Sizewise acquisitions.

(2) Loss on extinguishment of debt for the six months ended June 30, 2022 consists of the write-off of the unamortized debt discount related to the partial prepayment of the First Lien Term Loan. Loss on extinguishment of debt for the six months ended June 30, 2021 consists of the write-off of the unamortized deferred financing costs and debt discount and an additional 1% redemption price related to the repayment of our Second Lien Term Loan and the write-off of the unamortized deferred financing cost related to the amendment of our Revolving Credit Facility.

Agiliti, Inc. and Subsidiaries

Non-GAAP Financial Measure: Adjusted Net Income and Adjusted EPS

(in thousands, except share and per share information)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2022

 

2021

 

2022

 

2021

Net income (loss) attributable to Agiliti, Inc. and Subsidiaries

 

$ 4,998

 

$ (5,198)

 

$ 24,890

 

$ 4,355

Amortization

 

22,797

 

21,582

 

45,130

 

38,930

Non-cash share-based compensation expense

 

5,569

 

3,355

 

10,206

 

5,766

Management and other expenses

 

?

 

7,064

 

?

 

7,626

Transaction costs (1)

 

1,295

 

801

 

3,521

 

4,252

Tax receivable agreement remeasurement

 

?

 

197

 

?

 

4,345

Loss on extinguishment of debt (2)

 

1,418

 

10,116

 

1,418

 

10,116

Income tax benefit associated with pre-tax adjustments (3)

 

(10,276)

 

(8,267)

 

(18,245)

 

(13,728)

Adjusted net income

 

$ 25,801

 

$ 29,650

 

$ 66,920

 

$ 61,662

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - diluted

 

138,697

 

130,699

 

137,933

 

118,761

Adjusted EPS

 

$ 0.19

 

$ 0.23

 

$ 0.49

 

$ 0.52

_____________________________

(1) Transaction costs represent costs associated with potential and completed mergers and acquisitions and are primarily related to the Northfield and Sizewise acquisitions.

(2) Loss on extinguishment of debt for the six months ended June 30, 2022 consists of the write-off of the unamortized debt discount related to the partial prepayment of the First Lien Term Loan. Loss on extinguishment of debt for the six months ended June 30, 2021 consists of the write-off of the unamortized deferred financing costs and debt discount and an additional 1% redemption price related to the repayment of our Second Lien Term Loan and the write-off of the unamortized deferred financing cost related to the amendment of our Revolving Credit Facility.

(3) Income tax benefit associated with pre-tax adjustments represents the tax benefit or provision associated with the reconciling items between net income and Adjusted Net Income and includes both the current and deferred income tax impact of the adjustments. To determine the aggregate tax effect of the reconciling items, we utilized statutory income tax rates ranging from 0% to 26%, depending upon the applicable jurisdictions of each adjustment.

Agiliti, Inc. and Subsidiaries

Non-GAAP Financial Measure: Net Debt and Net Leverage Ratio

(in millions)

 

 

 

June 30,
2022

Revolving Loan, due 2026

 

$ 20.0

First Lien Term Loan, due 2026

 

1,059.2

Finance lease liability

 

25.3

Less: Unamortized Deferred Financing Costs and Debt Discount

 

(13.8)

Total Debt

 

$ 1,090.7

Less: Cash

 

(16.5)

Net Debt

 

$ 1,074.2

 

 

 

LTM Adjusted EBITDA

 

$ 325.5

 

 

 

Net Leverage

 

3.3x

 


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