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Agiliti Announces Financial Results for Fourth Quarter and Full-Year 2022 and Provides 2023 Outlook

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 fourth quarter and year ended December 31, 2022, and provided its financial outlook for 2023.

Fourth Quarter 2022 Highlights

  • Revenue of $282 million, a decrease of 3 percent from the prior year’s Covid-impacted results
  • Net income of $3.4 million, down $6.6 million from the prior year period; diluted income per share of $0.02, down $0.05 per share from the prior year period
  • Adjusted EBITDA1 of $71 million, compared to $85 million in the prior year period; Adjusted Earnings Per Share1 of $0.18, down $0.07 compared to the prior year period

Full-Year 2022 Highlights

  • Revenue growth of 8 percent to $1.12 billion
  • Net income of $30.2 million, up $6.2 million from the prior year period; diluted income per share of $0.22, up $0.03 per share from the prior year period
  • Adjusted EBITDA1 of $297 million, compared to $331 million in the prior year period; Adjusted Earnings Per Share1 of $0.85, down $0.14 compared to the prior year period
  • Total debt of $1.10 billion; Net debt1 of $1.09 billion; and, Net Leverage ratio1 of 3.7x

“Agiliti achieved a number of important business milestones over the course of 2022, including successfully navigating our critical role during the Covid pandemic; securing a long-term renewal of our federal government medical device stockpile management contract; and, signing a record volume of new customer agreements,” said Tom Leonard, CEO of Agiliti. “We enter 2023 with confidence in our near-term financial outlook and excited about our longer-term potential. As I conclude my time as CEO of Agiliti, I could not be more proud of our team and of the company’s important mission in healthcare. I look forward to supporting Agiliti’s continued progress under Tom Boehning’s leadership.”

“In 2022, our performance demonstrated the strength and durability of our model—withstanding the transient impacts of pandemic recovery as we supported our customers through this challenging period for their own business,” said Tom Boehning, President of Agiliti. “As we turn the corner to 2023, our teams are squarely focused on sustaining our new business momentum and executing on our proven strategy to meet the steady demand from our customers. As the company’s next CEO, I am excited to continue working alongside our teams to deliver on our growth potential.

Fourth Quarter and Year-to-Date 2022 Financial Results

Total revenue for the three months ended December 31, 2022 was $281.7 million, representing a 3.0 percent decrease from total revenue of $290.5 million for the same period of 2021. Total revenue for the year ended December 31, 2022 was $1.12 billion, representing a 8.0 percent increase from total revenue of $1.04 billion for the same period of 2021.

Net income for the three months ended December 31, 2022 was $3.4 million, compared to $10 million for the same period of 2021. Net income for the year ended December 31, 2022 was $30.2 million, a $6.2 million increase from net income of $24.0 million for the same period of 2021.

Adjusted EBITDA1 for the three months ended December 31, 2022 was $71.4 million, a 15.9 percent decrease from Adjusted EBITDA1 of $84.9 million for the same period of 2021. Adjusted EBITDA1 for the year ended December 31, 2022 was $296.6 million, a 10.3 percent decrease from Adjusted EBITDA1 of $330.7 million for the same period of 2021.

2023 Financial Guidance

  • Revenue of $1.16 - $1.19 billion
  • Adjusted EBITDA of $295 - 305 million2
  • Adjusted earnings per share of $0.65 – $0.70 per share2
  • Capex investment expected in the range of $85 to $95 million

_____________________________

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 fourth quarter and full year 2022 results on Tuesday, March 7, at 5 p.m. Eastern Time (4 p.m. Central Time).

The conference call can be accessed live over the phone by dialing 1-844-512-2921 or for international callers, 1-412-317-6671. The passcode for the live call and the replay is 13735716. A replay will be available two hours after the call and can be accessed by dialing 1-877-407-0792, or for international callers, 1-201-689-8263. The Access ID for the replay call is 13735716. The replay will be available until March 13, 2023.

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 10,000 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: negative reaction of our investors, our suppliers, our customers or our employees to our leadership succession; market volatility of our common stock as a result of our leadership succession; the risk that the leadership succession may not provide the results that the company expects; 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; our potential inability to maintain the agreement with the U.S. Department of Health and Human Services’ (“HHS”) and Office of Assistant Secretary of Preparedness and Response (“ASPR”) (the “Agreement”) or comply with its terms and risks relating to extension, renewal or termination of the Agreement or any of our existing contacts with HHS and 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 most recent annual report on Form 10-K.

 

Agiliti, Inc. and Subsidiaries

Consolidated Statements of Operations

 

 

 

Three Months Ended

December 31

 

Year Ended

December 31

(in thousands, except share and per share information)

 

2022

 

2021

 

2022

 

2021

Revenue

 

$

281,679

 

$

290,478

 

$

1,121,292

 

 

$

1,038,690

Cost of revenue

 

 

174,100

 

 

169,727

 

 

690,318

 

 

 

614,073

Gross margin

 

 

107,579

 

 

120,751

 

 

430,974

 

 

 

424,617

Selling, general and administrative expense

 

 

84,685

 

 

95,053

 

 

338,988

 

 

 

320,387

Operating income

 

 

22,894

 

 

25,698

 

 

91,986

 

 

 

104,230

Loss on extinguishment of debt

 

 

 

 

 

 

1,418

 

 

 

10,116

Interest expense

 

 

14,983

 

 

13,070

 

 

49,439

 

 

 

53,514

Tax indemnification expense

 

 

 

 

 

 

11,918

 

 

 

Income before income taxes and noncontrolling interest

 

 

7,911

 

 

12,628

 

 

29,211

 

 

 

40,600

Income tax expense (benefit)

 

 

4,440

 

 

2,601

 

 

(1,232

)

 

 

16,433

Consolidated net income

 

 

3,471

 

 

10,027

 

 

30,443

 

 

 

24,167

Net income attributable to noncontrolling interest

 

 

100

 

 

44

 

 

231

 

 

 

161

Net income attributable to Agiliti, Inc. and Subsidiaries

 

$

3,371

 

 

9,983

 

$

30,212

 

 

$

24,006

 

 

 

 

 

 

 

 

 

Basic income per share

 

$

0.03

 

$

0.08

 

$

0.23

 

 

$

0.20

Diluted income per share

 

$

0.02

 

$

0.07

 

$

0.22

 

 

$

0.19

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

133,461,895

 

 

130,666,105

 

 

132,602,747

 

 

 

120,877,480

Diluted

 

 

139,001,770

 

 

138,525,173

 

 

138,381,295

 

 

 

128,497,220

Agiliti, Inc. and Subsidiaries

Consolidated Balance Sheets

 

(in thousands, except share and per share information)

 

December 31,

2022

 

December 31,

2021

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

5,577

 

 

$

74,325

 

Accounts receivable, less allowance for credit losses of $4,182 as of December 31, 2022 and $2,902 at December 31, 2021

 

 

207,753

 

 

 

209,308

 

Inventories

 

 

70,132

 

 

 

55,307

 

Prepaid expenses

 

 

23,458

 

 

 

18,549

 

Other current assets

 

 

9,393

 

 

 

395

 

Total current assets

 

 

316,313

 

 

 

357,884

 

Property and equipment, net

 

 

273,958

 

 

 

258,370

 

Goodwill

 

 

1,239,106

 

 

 

1,213,121

 

Operating lease right-of-use assets

 

 

79,975

 

 

 

80,676

 

Other intangibles, net

 

 

512,020

 

 

 

573,159

 

Other

 

 

22,735

 

 

 

32,537

 

Total assets

 

$

2,444,107

 

 

$

2,515,747

 

Liabilities and Equity

 

 

 

 

Current liabilities:

 

 

 

 

Current portion of long-term debt

 

$

17,752

 

 

$

17,534

 

Current portion of operating lease liability

 

 

23,607

 

 

 

22,826

 

Current portion of obligation under tax receivable agreement

 

 

34,694

 

 

 

29,187

 

Accounts payable

 

 

59,163

 

 

 

53,851

 

Accrued compensation

 

 

25,928

 

 

 

47,951

 

Accrued interest

 

 

5,039

 

 

 

3,473

 

Other current liabilities

 

 

31,198

 

 

 

33,708

 

Total current liabilities

 

 

197,381

 

 

 

208,530

 

Long-term debt, less current portion

 

 

1,077,293

 

 

 

1,174,968

 

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

 

 

9,161

 

 

 

29,629

 

Operating lease liability, less current portion

 

 

67,332

 

 

 

63,241

 

Deferred income taxes, net

 

 

146,615

 

 

 

143,307

 

Commitments and contingencies

 

 

 

 

Equity:

 

 

 

 

Common stock, $0.0001 par value; 500,000,000 shares authorized; 133,608,495 and 130,950,061 shares issued and outstanding as of December 31, 2022 and December 31, 2021

 

 

13

 

 

 

13

 

Additional paid-in capital

 

 

953,046

 

 

 

938,888

 

Accumulated deficit

 

 

(14,274

)

 

 

(44,486

)

Accumulated other comprehensive income

 

 

7,343

 

 

 

1,537

 

Total Agiliti, Inc. and Subsidiaries equity

 

 

946,128

 

 

 

895,952

 

Noncontrolling interest

 

 

197

 

 

 

120

 

Total equity

 

 

946,325

 

 

 

896,072

 

Total liabilities and equity

 

$

2,444,107

 

 

$

2,515,747

 

Agiliti, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

 

 

 

Year Ended December 31,

(in thousands)

 

2022

 

2021

Cash flows from operating activities:

 

 

 

 

Consolidated net income

 

$

30,443

 

 

$

24,167

 

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

 

 

 

 

Depreciation

 

 

84,331

 

 

 

103,805

 

Amortization

 

 

95,452

 

 

 

88,240

 

Remeasurement of tax receivable agreement

 

 

(2,124

)

 

 

4,542

 

Loss on extinguishment of debt

 

 

1,418

 

 

 

7,716

 

Provision for credit losses

 

 

3,903

 

 

 

2,023

 

Provision for inventory obsolescence

 

 

1,034

 

 

 

2,424

 

Non-cash share-based compensation expense

 

 

18,775

 

 

 

13,960

 

Gain on sales and disposals of equipment

 

 

(1,101

)

 

 

(3,735

)

Deferred income taxes

 

 

1,292

 

 

 

12,004

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

(3,976

)

 

 

(8,915

)

Inventories

 

 

(12,188

)

 

 

3,052

 

Other operating assets

 

 

(10,144

)

 

 

(9,044

)

Accounts payable

 

 

15,753

 

 

 

718

 

Accrued and other operating liabilities

 

 

(23,092

)

 

 

(30,640

)

Net cash provided by operating activities

 

 

199,776

 

 

 

210,317

 

Cash flows from investing activities:

 

 

 

 

Medical equipment purchases

 

 

(55,864

)

 

 

(37,377

)

Property and office equipment purchases

 

 

(31,600

)

 

 

(29,121

)

Proceeds from disposition of property and equipment

 

 

2,963

 

 

 

9,242

 

Acquisitions, net of cash acquired

 

 

(62,339

)

 

 

(676,878

)

Intangible asset purchases

 

 

(20

)

 

 

 

Net cash used in investing activities

 

 

(146,860

)

 

 

(734,134

)

Cash flows from financing activities:

 

 

 

 

Proceeds under debt arrangements

 

 

60,000

 

 

 

381,927

 

Payments under debt arrangements

 

 

(160,023

)

 

 

(364,119

)

Payments of principal under finance lease liability

 

 

(8,812

)

 

 

(9,097

)

Payments of deferred financing costs

 

 

 

 

 

(229

)

Payments under tax receivable agreement

 

 

 

 

 

(15,577

)

Distributions to noncontrolling interests

 

 

(154

)

 

 

(185

)

Proceeds from exercise of stock options

 

 

3,101

 

 

 

1,409

 

Dividend and equity distribution payment

 

 

(908

)

 

 

(928

)

Proceeds from issuance of common stock

 

 

 

 

 

402,815

 

Stock issuance costs

 

 

 

 

 

(4,379

)

Shares forfeited for taxes

 

��

(14,547

)

 

 

 

Payments of contingent consideration

 

 

(321

)

 

 

 

Net cash (used in) provided by financing activities

 

 

(121,664

)

 

 

391,637

 

Net change in cash and cash equivalents

 

 

(68,748

)

 

 

(132,180

)

Cash and cash equivalents at the beginning of period

 

 

74,325

 

 

 

206,505

 

Cash and cash equivalents at the end of period

 

$

5,577

 

 

$

74,325

 

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

 

 

 

Three Months Ended

December 31

 

Year Ended

December 31

(in thousands)

 

2022

 

2021

 

2022

 

2021

Net income attributable to Agiliti, Inc. and Subsidiaries

 

$

3,371

 

 

$

9,983

 

$

30,212

 

 

$

24,006

Interest expense

 

 

14,983

 

 

 

13,070

 

 

49,439

 

 

 

53,514

Income tax expense ( benefit) (1)

 

 

4,440

 

 

 

2,601

 

 

(1,232

)

 

 

16,433

Depreciation and amortization

 

 

42,053

 

 

 

49,287

 

 

175,764

 

 

 

187,963

EBITDA

 

 

64,847

 

 

 

74,941

 

 

254,183

 

 

 

281,916

Non-cash share-based compensation expense

 

 

3,710

 

 

 

3,833

 

 

18,775

 

 

 

13,960

Tax indemnification expense

 

 

 

 

 

 

 

11,918

 

 

 

Management and other expenses (2)

 

 

451

 

 

 

286

 

 

2,411

 

 

 

7,926

Transaction costs (3)

 

 

4,519

 

 

 

5,797

 

 

9,984

 

 

 

12,222

Tax receivable agreement remeasurement

 

 

(2,124

)

 

 

 

 

(2,124

)

 

 

4,542

Loss on extinguishment of debt (4)

 

 

 

 

 

 

 

1,418

 

 

 

10,116

Adjusted EBITDA

 

$

71,403

 

 

$

84,857

 

$

296,565

 

 

$

330,682

_____________________________

(1)

 

Income tax expense (benefit) includes the $11.9 million tax benefit due to the release of the reserve and associated interest and penalties related to the Sizewise Acquisition offset in tax indemnification expense.

(2)

 

Management and other expenses represent (a) management fees and buyout termination fee under the Advisory Services Agreement, which was terminated in connection with the initial public offering and (b) employee related non-recurring expenses.

(3)

 

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

(4)

 

Loss on extinguishment of debt for 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 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

 

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

(in thousands, except share and per share information, unaudited)

 

2022

 

2021

 

2022

 

2021

Net income attributable to Agiliti, Inc. and Subsidiaries

 

$

3,371

 

 

$

9,983

 

 

$

30,212

 

 

$

24,006

 

Amortization

 

 

23,223

 

 

 

23,731

 

 

 

91,432

 

 

 

84,158

 

Non-cash share-based compensation expense

 

 

3,710

 

 

 

3,833

 

 

 

18,775

 

 

 

13,960

 

Tax indemnification expense

 

 

 

 

 

 

 

 

11,918

 

 

 

 

Management and other expenses (1)

 

 

451

 

 

 

286

 

 

 

2,411

 

 

 

7,926

 

Transaction costs (2)

 

 

4,519

 

 

 

5,797

 

 

 

9,984

 

 

 

12,222

 

Tax receivable agreement remeasurement

 

 

(2,124

)

 

 

 

 

 

(2,124

)

 

 

4,542

 

Loss on extinguishment of debt (3)

 

 

 

 

 

 

 

 

1,418

 

 

 

10,116

 

Income tax benefit associated with pre-tax adjustments (4)

 

 

(8,630

)

 

 

(9,462

)

 

 

(46,538

)

 

 

(29,920

)

Adjusted net income

 

$

24,520

 

 

$

34,168

 

 

$

117,488

 

 

$

127,010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - diluted

 

 

139,002

 

 

 

138,525

 

 

 

138,381

 

 

 

128,497

 

Adjusted EPS

 

$

0.18

 

 

$

0.25

 

 

$

0.85

 

 

$

0.99

 

_____________________________

(1)

 

Management and other expenses represent (a) management fees and buyout termination fee under the Advisory Services Agreement, which was terminated in connection with the initial public offering and (b) employee related non-recurring expenses.

(2)

 

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

(3)

 

Loss on extinguishment of debt for 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 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.

(4)

 

Income tax (benefit) expense includes the $11.9 million tax benefit due to the release of the reserve and associated interest and penalties related to the Sizewise Acquisition offset in tax indemnification expense.

Agiliti, Inc. and Subsidiaries

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

 

(in millions, unaudited)

 

December 31, 2022

First Lien Term Loan, due 2026

 

$

1,054.5

 

Revolving Loan, due 2026

 

 

28.5

 

Finance lease liability

 

 

23.9

 

Less: Unamortized Deferred Financing Costs and Debt Discount

 

 

(11.9

)

Total Debt

 

$

1,095.0

 

Less: Cash

 

 

(5.6

)

Net Debt

 

$

1,089.4

 

 

 

 

LTM Adjusted EBITDA

 

$

296.6

 

 

 

 

Net Leverage

 

3.7

x

 

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