Can PE-owned Aveanna Healthcare dig itself out from under a pile of debt?

Private equity-backed Aveanna Healthcare Holdings, Inc. is a home healthcare company that has been financially underperforming in recent years under a mountain of debt. It is majority owned by private equity firms Bain Capital and J.H. Whitney Capital Partners,[1] which founded it in 2017 through a partnership when they merged two home-based pediatric healthcare companies—Epic Health Services and PSA Healthcare.[2] The firms oversaw a period of rapid debt-funded growth via acquisitions before taking the company public in April 2021.[3]

Through its acquisitions, Aveanna’s service offerings have expanded beyond pediatric home nursing to include home health and hospice services for adults, as well as a medical solutions segment which supplies durable medical equipment and supplies to a subset of its patients. Most of the patients it serves are covered by Medicare, Medicaid or Medicaid Managed Care Organizations (MCOs) because they are low-income, disabled, elderly, or some combination of the above.[4] Despite its expansion into new service offerings, Aveanna’s private duty segment continues to be the main engine of its business, providing 80 percent of the company’s consolidated revenues.[5] This segment primarily serves pediatric patients with medically complex diagnoses and disabilities who need high levels of assistance from caregivers.[6]

Aveanna’s initial public offering (IPO) in April 2021 was met with lackluster results despite a high demand environment for home health care. Since then, Aveanna’s stock price has trended downward, from a high of $12.89 per share in June 2021 to just $1.57 as of August 22, 2023.[7] As of July 31, 2023, the company currently had negative shareholders’ equity,[8] and the stock experienced net losses in 2021 and 2022.[9] In its most recent earnings call, Aveanna’s executives chalk up its less than stellar performance to a challenging labor environment driven by nursing labor shortages and inflationary wage pressures.[10] However, there is another key factor contributing to the company’s struggles that executives are not emphasizing in these earnings calls: its $1.75 billion in total liabilities,[11] including $1.48 billion in variable rate debt,[12] and the associated millions in interest payments it must make each year.[13]

Excessive debt levels may not only harm a healthcare company’s finances and ability to grow but can also have detrimental impacts on workers and the patients for whom they care. That is because debt service obligations can lead to harmful cost cutting tactics. In healthcare, these can include understaffing, wage and hour violations, relying on temporary and per diem staff over full-time workers, not investing in adequate training for workers, and overburdening clinician workloads.

In 2019, Bloomberg published a damning investigation into Aveanna’s cost-cutting tactics that proliferated after the merger of Epic and PSA. The article highlighted the deaths of seven children under Aveanna’s care in Texas, Pennsylvania, and Colorado. It also presented a growing number of patient safety issues alongside criticism of the financial incentives built into the company policies that “favor corporate growth and cost-cutting over clinical care.”^[14] One former employee reported to Bloomberg that Aveanna “would often decline to send nurses if it was short-staffed and had to pay overtime.”[15]

More recently in 2021, the Centers for Medicare and Medicaid Services (CMS) terminated Aveanna’s Valparaiso, Indiana location’s contract to participate in Medicare due to quality-of-care issues.^[16] In the year leading up to the termination, the Indiana State Department of Health had documented over a dozen quality and safety deficiencies and issued plans of correction.^[17]

Currently, approximately 88 percent of Aveanna’s workforce are part-time, per diem or temporary workers.[18] In earnings calls, the company has indicated it is struggling to recruit and retain staff in the inflationary labor environment.[19] As of August 23, 2023, Aveanna had 861 open nursing jobs listed on its website.[20]

Aveanna’s growth through-debt funded acquisitions
Aveanna’s staffing strategies, recruitment challenges, and quality of care issues need to be examined in the context of its mountain of debt. This debt is the legacy of a rapid, debt-funded growth strategy that has made it vulnerable to default in a landscape of rising interest rates and a skilled nursing shortage.

The merger of Epic Health Services and PSA that formed Aveanna in 2017 was financed with $900 million in debt.^[21] The following year, Aveanna acquired Premier Healthcare Services, a pediatric nursing company servicing medically complex patients, for an undisclosed amount. PitchBook reports that Aveanna took on another $1.12 billion in acquisition financing at the time of the transaction.[22]

Aveanna maintained a steady pace of growth into 2021 via the typical private equity strategy of consolidation through rolling up smaller providers. A rollup involves using a platform company—in this case, Aveanna—to acquire multiple smaller companies and scale up the platform company to increase its value. Many of Aveanna’s early acquisitions fell below the Hart-Scott-Rodino threshold that triggers an antitrust review.^[23] Most of these acquired companies were mid-sized regional providers that offered home health, hospice, private duty nursing services, and/or durable medical equipment and medical supplies sales and rentals.^[24] In late 2020, Aveanna made five such acquisitions, with transaction prices ranging from $11.7 million to $64.4 million.^[25] Before it went public, its last acquisition was Doctors Choice Holdings for $115 million in April 2021.^[26] Through its dealmaking activity after the merger of Epic and PSA, Aveanna had expanded from 17 to 30 states by its IPO in April 2021 and reportedly increased its yearly revenues from $324.6 million to $1.5 billion.^[27]

In November 2021, Aveanna acquired Accredited Nursing Care for $180 million^[28] and entered into a $150 million three-year securitization facility.^[29] The following month, it acquired Comfort Care Home Health Services, LLC for $346.5 million, using a $415 million loan from a syndicate of lenders to finance the deal.^[30]

After the Comfort Care deal, Aveanna’s acquisition activity grinded to a halt. Since December 2021 and the date of this blog, the company has made no new acquisitions,^[31] likely due to its high levels of debt and rising interest rates that are impacting its ability to obtain more financing.

Aveanna has been financially underperforming since its IPO in 2021.[32] For its fiscal year ending December 31, 2022, Aveanna had net losses of $662.03 million, negative cash flow, and total liabilities of $1.72 billion.[33] The company’s liabilities exceeded its assets, resulting in negative shareholder’s equity.[34] Aveanna’s interest expense[35] was $107.72 million, a 56.27 percent increase from $68.93 million in 2021.[36] Its interest coverage[37] was -5.96 for 2022,[38] indicating the company’s earnings were insufficient to pay down its debt.

In December 2022, Moody’s Investors Service included Aveanna Healthcare in a list of 34 healthcare companies at risk for default.^[41] In its most recent rating action (November 2022), Moody’s cited “very aggressive financial policies” “constant misses of public earnings guidance,” and “very high financial leverage” as factors contributing to the downgraded rating, in addition to the outside factor of “persistent nursing labor shortages.”^[42]

The state of Aveanna’s financials
Aveanna’s quarterly financial statement filed with the SEC on August 10, 2023 shows that the company has made modest improvements to some of its financials in 2023. Quarter 2 saw net income and positive cash flow for the first time this year, although taken together with Quarter 1, Aveanna has seen overall net losses and negative operating cash flow for the six-month period ending July 1, 2023.[43]

Aveanna is somewhat insulated from the worst impacts of rising interest rates because of how it has structured its debt.[46] However, its interest expense is still rising. For the six-month period ending July 1, 2023, its interest expense was $73.94 million, a 63.3 percent increase from the comparable time period last year.[47] Its 0.75 interest coverage ratio, which measures a company’s ability to pay interest on its outstanding debt, suggests that Aveanna may be at risk for default on its debt.[48] The company will need to generate significantly higher operating profit in the coming months to lower its risk of default.

Examining the interest expense and interest coverage ratio for Aveanna helps demonstrate the uphill battle the company faces due to its debt load. Even with its improving financials (positive cash flow for Q2, net income for the first time since Quarter 3 of 2022), its interest payments are increasing alongside these improvements, cutting into net income. Compared to a less leveraged company, Aveanna has to divert more of its income to paying off debt, making it less competitive – especially in a challenging labor environment where companies need to pay above-market wages to attract and retain workers. If Aveanna cannot pay competitive rates for its workforce, it could struggle to recruit new hires and lose current workers to other companies, compounding its labor issues.

Looking at Aveanna’s competitors
Aveanna’s poor financials stand in contrast to its peers. For example, two of its publicly traded competitors, Amedisys and LHC Group,[49] had healthier key margins in 2022. Their operating profit and net income were well in the green, and both companies had healthy debt/equity ratios as well as interest coverage ratios that signaled their likelihood of meeting their debt service obligations.^[50]

The healthy metrics of Amedisys and LHC Group have rendered them attractive acquisition targets for UnitedHealth Group, a health insurance giant seeking vertical integration in its roll up of home health and hospice providers. In February 2023, UnitedHealth Group’s Optum segment acquired LHC Group in a $5.4 billion deal,^[51] and in early June it made a $3.26 billion all-cash offer to acquire Amedisys just a few months after Option Health Care had made a $3.6 billion all-stock offer.^[52]  In late June, Amedisys agreed to go with UnitedHealth in a $3.3 billion deal for $101 cash per share.[53]

Meanwhile, Aveanna’s leverage has made it a less attractive acquisition target. As UnitedHealth’s home health segment gains greater market power through its mergers, Aveanna is barely on the cusp of financial sustainability and will now have to compete with an increasingly powerful vertically integrated insurance company.

How Aveanna’s debt compounds its labor challenges
In its August 11 earnings call, Aveanna’s CEO Jeff Shaner explained that “…the labor environment remains the primary challenge that we are aggressively addressing in 2023 to see Aveanna resume the growth trajectory that we believe our company can achieve.”[54]

However, the challenging labor environment is impacting the entire home health sector,[55] and there are less-leveraged competitors who are better able to meet this challenge. Despite achieving net operating income and positive cash flow in Quarter 2, the company’s debt service obligations are cutting into net income.[56] With so much money diverted to debt, the company has little to reinvest in its workers and its stated growth strategy[57] to expand through acquisitions.

In order to be able to offer above market wages, it must rely on negotiating higher payment rates from the government and other payers. One strategy is to win Medicaid rate increases for its private duty services segment in key states, an endeavor that has not been immediately successful in its key markets of California and Texas.[58] 75 percent of Aveanna’s consolidated revenue comes from Medicaid and Medicaid Managed Care Organizations (MCOs),^[59] and therefore Medicaid rate changes carry significant impacts for the company’s finances.

Aveanna’s second strategy is to develop “preferred payer” relationships with managed care payers that agree to a value-based care payment system. This allows it to collect above-market rates in exchange for savings to the payer that arise from using home care over facility care. Aveanna then shifts its labor capacity to the preferred payers that “appropriately” reimburse it for its care services.[60] In other words, Aveanna will deprioritize or end its services for patients who happen to be covered by payers who cannot or will not increase their reimbursement rates to Aveanna.[61]

The two reimbursement strategies require a substantial investment of time and resources in lobbying and relationship-building that are not guaranteed to produce results. Without its debt service obligations, Aveanna would be less dependent on such strategies to pay its workers competitive rates and to achieve long term financial sustainability.

Private equity-owned healthcare companies are struggling under their debt
Aveanna is not alone in its debt-fueled financial struggles. Other private equity-owned healthcare companies in recent months have been suffocating under the weight of their debt. In May, KKR-owned Envision Healthcare filed for Chapter 11 bankruptcy;[62] in June, Blackstone-owned Center for Autism and Related Disorders filed for Chapter 11 bankruptcy;[63] and in July, American Physician Partners, backed by Brown Brothers Harriman Capital, announced it would close its business.[64]

Of the 34 healthcare companies that Moody’s listed as facing credit downgrades and risk for default as of December 2022, close to 90 percent were owned by private equity firms. Another Bain Capital-owned company, U.S. Renal Care, made the list.[65]

The debt burden Aveanna faces as a legacy of its private equity ownership limits its possibilities for achieving financial sustainability and for providing good jobs and quality patient care. Time will tell if Aveanna can dig itself out from under its debt. Like other private equity-owned companies struggling under unsustainable debt-loads, Aveanna is facing the music in an environment of rising interest rates. Its patients and workers will likely face the greatest impacts from its debt burden. Debt service obligations have the potential to lead to cost-cutting, and in healthcare, there are few ways to cut costs without impacting patient care and the workers who care for them.

[1] “Aveanna Healthcare Holdings Inc. (AVAH) Stock Major Holders – Yahoo Finance.” Accessed July 19, 2023. https://finance.yahoo.com/quote/AVAH/holders/.

[2] “Stockholders Agreement, Dated as of March 16, 2017, by and among Aveanna Healthcare Holdings, Inc. | Business Contracts | Justia,” March 16, 2017. https://contracts.justia.com/companies/aveanna-healthcare-holdings-inc-12758/contract/170865/. McNulty, John. “Aveanna Formed by Bain and J.H. Whitney.” Private Equity Professional, March 17, 2017. https://peprofessional.com/blog/2017/03/17/aveanna-formed-bain-j-h-whitney/.

[3] Vossel, Holly. “Aveanna’s Home Health, Hospice Business Takes Punches During First Year as Publicly Traded Company.” Hospice News (blog), November 10, 2022. https://hospicenews.com/2022/11/10/aveannas-home-health-hospice-business-takes-punches-during-first-year-as-publicly-traded-company/.

[4] Slides 4-5 of Shaner, Jeff, and David Afshar. “Aveanna Healthcare Investor Presentation.” May 22, 2023. https://drive.google.com/file/d/1J-Jw4yNwSEqxYF5wNA0cY0aMk3vfkHig/view?usp=sharing.

[5] Slide 6 of Shaner, Jeff, and David Afshar. “Aveanna Healthcare Investor Presentation.” May 22, 2023. https://drive.google.com/file/d/1J-Jw4yNwSEqxYF5wNA0cY0aMk3vfkHig/view?usp=sharing.

[6] Pg. 4 of Aveanna Healthcare Holdings, Inc., December 31, 2022 Form 10-K (filed March 16, 2023), from SEC EDGAR website, https://www.sec.gov/Archives/edgar/data/1832332/000095017023008309/avah-20221231.htm

[7] nasdaq.com. “AVAH.” Accessed August 23, 2023. https://www.nasdaq.com/market-activity/stocks/avah.

[8] Pg. 2 of “Aveanna Healthcare Holdings, Inc. Form 10-Q, Filed August 10, 2023.” United States Securities and Exchange Commission, July 31, 2023. https://www.sec.gov/ix?doc=/Archives/edgar/data/1832332/000095017023040918/avah-20230701.htm#consolidated_balance_sheets.

[9] Pg. 82 of “Aveanna Healthcare Holdings, Inc. Form 10-K, Filed March 16, 2023.” United States Securities and Exchange Commission, December 31, 2022. https://www.sec.gov/Archives/edgar/data/1832332/000095017023008309/avah-20221231.htm.

[10] yahoo!finance. “Aveanna Healthcare Holdings, Inc. Q2 2023 Earnings Call,” August 11, 2023. https://finance.yahoo.com/news/q2-2023-aveanna-healthcare-holdings-080339993.html.

[11] Pg. 2 of “Aveanna Healthcare Holdings, Inc. Form 10-Q, Filed August 10, 2023.” United States Securities and Exchange Commission, July 31, 2023. https://www.sec.gov/ix?doc=/Archives/edgar/data/1832332/000095017023040918/avah-20230701.htm#consolidated_balance_sheets.

[12] yahoo!finance. “Aveanna Healthcare Holdings, Inc. Q2 2023 Earnings Call,” August 11, 2023. https://finance.yahoo.com/news/q2-2023-aveanna-healthcare-holdings-080339993.html.

[13] See “Interest Expense” on pg. 3 of “Aveanna Healthcare Holdings, Inc. Form 10-Q, Filed August 10, 2023.” United States Securities and Exchange Commission, July 31, 2023.

[14] Willmer, Sabrina. “When Wall Street Took Over This Nursing Company, Profits Grew and Patients Suffered.” Bloomberg.Com, October 22, 2019. https://www.bloomberg.com/news/features/2019-10-22/death-and-deals-sick-children-suffer-private-equity-profits.

[15] Willmer, Sabrina. “When Wall Street Took Over This Nursing Company, Profits Grew and Patients Suffered.” Bloomberg.Com, October 22, 2019. https://www.bloomberg.com/news/features/2019-10-22/death-and-deals-sick-children-suffer-private-equity-profits.

[16] Centers for Medicare and Medicaid Services. “Termination Notice.” Centers for Medicare and Medicaid Services, May 13, 2021. https://www.cms.gov/files/document/indianaaveanna-healthcare-04282021.pdf.

[17] Indiana State Department of Health. “Statement of Deficiencies and Plan of Correction – Aveanna Healthcare,” April 2021. https://www.in.gov/health/reports/QAMIS/hharpt/3bo113_sod.pdf; Indiana State Department of Health. “Statement of Deficiencies and Plan of Correction – Aveanna Healthcare,” November 2020.

[18] Calculated from pg. 21 of “Aveanna Healthcare Holdings, Inc. Form 10-K.” United States Securities and Exchange Commission, March 16, 2023. https://www.sec.gov/Archives/edgar/data/1832332/000095017023008309/avah-20221231.htm.

[19] yahoo!finance. “Aveanna Healthcare Holdings, Inc. Q2 2023 Earnings Call,” August 11, 2023. https://finance.yahoo.com/news/q2-2023-aveanna-healthcare-holdings-080339993.html.

[20] “Aveanna Healthcare Careers.” Accessed August 23, 2023. https://jobs.aveanna.com/jobs/.

[21] “Barclays, RBC and Other Major Banks Provide Financing for Merger Forming Nation’s Largest Pediatric Home Health Provider | Paul Hastings LLP,” March 7, 2017. https://www.paulhastings.com/news/news-barclays-rbc-and-other-major-banks-provide-financing-for-merger-forming-nations-largest-pediatric-home-health-provider.

[22] PitchBook Profile – Aveanna Healthcare.” Accessed July 19, 2023. https://my.pitchbook.com/profile/12219-67/company/profile#deal-history/160490-35T. Link to screenshot: https://drive.google.com/file/d/18q99icivvQ2PGIkao1I_-icxNNoE3y5Z/view?usp=sharing

[23] Gidley, J. Mark, George L. Paul, Rebecca Farrington, and Martin M. Toto. “FTC Announces Annual Changes to HSR Thresholds (2021) | White & Case LLP,” February 1, 2021. https://www.whitecase.com/insight-alert/ftc-announces-annual-changes-hsr-thresholds-2021.

[24] “Aveanna Healthcare Holdings Inc, Amendment No. 1 to Forms S-1 Registration Statement.,” pg. 10, from United States Securities and Exchange Commission, April 20, 2021. https://www.sec.gov/Archives/edgar/data/1832332/000119312521121965/d63831ds1a.htm.

[25] MarketScreener. “Aveanna Healthcare Holdings Inc. Acquired Total Care, Inc. from the Seller Family for $11.7 Million.” MarketScreener, December 11, 2020. https://www.marketscreener.com/quote/stock/AVEANNA-HEALTHCARE-HOLDIN-122045493/news/Aveanna-Healthcare-Holdings-Inc-acquired-Total-Care-Inc-from-the-seller-family-for-11-7-million-33588568/; MarketScreener. “Aveanna Healthcare Holdings Inc. Acquired Preferred Pediatric Home Health Care, Inc. for $40.6 Million.,” December 11, 2020. https://www.marketscreener.com/quote/stock/AVEANNA-HEALTHCARE-HOLDIN-122045493/news/Aveanna-Healthcare-Holdings-Inc-acquired-Preferred-Pediatric-Home-Health-Care-Inc-for-40-6-milli-33588569/; “Aveanna Healthcare Holdings Inc, Amendment No. 1 to Forms S-1 Registration Statement.,” pg. 10, from United States Securities and Exchange Commission, April 20, 2021. https://www.sec.gov/Archives/edgar/data/1832332/000119312521121965/d63831ds1a.htm; MarketScreener. “Aveanna Healthcare Holdings Inc. Acquired Five Points Healthcare, LLC for $64.4 Million.,” April 20, 2021. https://www.marketscreener.com/quote/stock/AVEANNA-HEALTHCARE-HOLDIN-122045493/news/Aveanna-Healthcare-Holdings-Inc-acquired-Five-Points-Healthcare-LLC-for-64-4-million-33434843/.

[26] “Aveanna Healthcare Holdings Inc, Amendment No. 1 to Forms S-1 Registration Statement.,” pg. 10, from United States Securities and Exchange Commission, April 20, 2021. https://www.sec.gov/Archives/edgar/data/1832332/000119312521121965/d63831ds1a.htm.

[27] Holly, Robert. “Aveanna Files for $100M IPO, Announces Major Expansion Plans.” Home Health Care News, April 4, 2021. https://homehealthcarenews.com/2021/04/aveanna-files-for-100m-ipo-announces-major-expansion-plans/.

[28] Aveanna Healthcare Holdings, Inc,, January 1, 2022 Form 10-K (filed March 28, 2022), pg. 102, aveanna.com, https://ir.aveanna.com/static-files/de8e3ad1-7191-4cf0-8ed7-94f0440fceb1.

[29]Aveanna Healthcare Holdings, Inc,, January 1, 2022 Form 10-K (filed March 28, 2022), pg. 81, aveanna.com, https://ir.aveanna.com/static-files/de8e3ad1-7191-4cf0-8ed7-94f0440fceb1.

[30] Aveanna Healthcare Holdings, Inc,, January 1, 2022 Form 10-K (filed March 28, 2022), pgs. 102, 81, aveanna.com, https://ir.aveanna.com/static-files/de8e3ad1-7191-4cf0-8ed7-94f0440fceb1.

[31] Aveanna Healthcare Holdings, Inc., December 31, 2022 Form 10-K (filed March 16, 2023), pg. 56, from SEC EDGAR website, https://www.sec.gov/Archives/edgar/data/1832332/000095017023008309/avah-20221231.htm; PitchBook. “PitchBook Profile – Aveanna Healthcare.” Accessed August 24, 2023. https://my.pitchbook.com/profile/12219-67/company/profile#service-providers.

[32] Vossel, Holly. “Aveanna’s Home Health, Hospice Business Takes Punches During First Year as Publicly Traded Company.” Hospice News (blog), November 10, 2022. https://hospicenews.com/2022/11/10/aveannas-home-health-hospice-business-takes-punches-during-first-year-as-publicly-traded-company/.

[33] Pgs. 81-84 of Aveanna Healthcare Holdings, Inc., December 31, 2022 Form 10-K (filed March 16, 2023), from SEC EDGAR website, https://www.sec.gov/Archives/edgar/data/1832332/000095017023008309/avah-20221231.htm.

[34] Pg. 81 of Aveanna Healthcare Holdings, Inc., December 31, 2022 Form 10-K (filed March 16, 2023), from SEC EDGAR website, https://www.sec.gov/Archives/edgar/data/1832332/000095017023008309/avah-20221231.htm.

[35] As defined by Investopedia, interest expense “represents interest payable on any borrowings –bonds, loans, convertible debt or lines of credit.”

[36] Calculated from pg. 82 of Aveanna Healthcare Holdings, Inc., December 31, 2022 Form 10-K (filed March 16, 2023), from SEC EDGAR website, https://www.sec.gov/Archives/edgar/data/1832332/000095017023008309/avah-20221231.htm.

[37] As defined by Investopedia, interest coverage is “the ratio of a company’s operating income…to its interest expense. The ratio measures a company’s ability to meet the interest expense on its debt with its operating income.”

[38] Calculated from pg. 82 (operating profit/interest expense) of Aveanna Healthcare Holdings, Inc., December 31, 2022 Form 10-K (filed March 16, 2023), from SEC EDGAR website, https://www.sec.gov/Archives/edgar/data/1832332/000095017023008309/avah-20221231.htm.

[39] All table numbers in thousands; except where otherwise noted, numbers are taken directly from Aveanna’s Form 10-K, filed March 16, 2023.

[40] Calculated from pg. 82 (operating profit/interest expense) of Aveanna Healthcare Holdings, Inc., December 31, 2022 Form 10-K (filed March 16, 2023), from SEC EDGAR website, https://www.sec.gov/Archives/edgar/data/1832332/000095017023008309/avah-20221231.htm.

[41] Thomas, Nick. “34 Healthcare Companies at Risk of Default as Debt Rises amid Weak Operating Performance: Moody’s.” Becker’s Hospital CFO Report, December 13, 2022. https://www.beckershospitalreview.com/finance/34-healthcare-companies-at-risk-of-default-as-debt-rises-amid-weak-operating-performance-moodys.html.

[42] “Moody’s Downgrades Aveanna Healthcare’s CFR to Caa1; Outlook Remains Negative | Rating Action | Moody’s.” Moody’s Investors Service, November 17, 2022. https://www.moodys.com/research/Moodys-downgrades-Aveanna-Healthcares-CFR-to-Caa1-outlook-remains-negative-Rating-Action–PR_471363.

[43] “Aveanna Healthcare Holdings, Inc. Form 10-Q, Filed August 10, 2023.” United States Securities and Exchange Commission, July 31, 2023. https://www.sec.gov/ix?doc=/Archives/edgar/data/1832332/000095017023040918/avah-20230701.htm#consolidated_balance_sheets.

[44] All numbers in thousands; except where otherwise noted, numbers are taken directly from Aveanna’s Form 10-Q, filed August 10, 2023.

[45] Calculated from pg. 3 (operating profit/interest expense) of “Aveanna Healthcare Holdings, Inc. Form 10-Q, Filed August 10, 2023.” United States Securities and Exchange Commission, July 31, 2023. https://www.sec.gov/ix?doc=/Archives/edgar/data/1832332/000095017023040918/avah-20230701.htm#consolidated_balance_sheets.

[46] $520 million of its variable rate debt is hedged with fix rate swaps, and another $880 million is subject to an interest rate cap, as detailed on its most recent earnings call; See yahoo!finance. “Aveanna Healthcare Holdings, Inc. Q2 2023 Earnings Call,” August 11, 2023. https://finance.yahoo.com/news/q2-2023-aveanna-healthcare-holdings-080339993.html.

[47] Calculated from pg. 3 of “Aveanna Healthcare Holdings, Inc. Form 10-Q, Filed August 10, 2023.” United States Securities and Exchange Commission, July 31, 2023. https://www.sec.gov/ix?doc=/Archives/edgar/data/1832332/000095017023040918/avah-20230701.htm#consolidated_balance_sheets.

[48] Although its interest expense has increased since 2022, it has seen an improvement in its interest coverage ratio, which measures its ability to meet debt obligations. While an improvement from -5.96 in 2022, its interest coverage ratio of 0.75 is still indicative that Aveanna is struggling under its debt and could be at risk for default.

[49] Alternative competitors that more closely match Aveanna’s business offerings and size exist, but these companies are privately held with limited available financial information.

[50] Ratios and margins for competitor companies were obtained from each company’s profile page on the data provider PitchBook.

[51] Minemyer, Paige. “UnitedHealth, LHC Group Close $5.4B Merger Deal.” Fierce Healthcare, February 22, 2023, sec. Fierce Healthcare Homepage, Finance. https://www.fiercehealthcare.com/payers/unitedhealth-lhc-group-close-54b-merger-deal.

[52]mHealthIntelligence. “About Amedisys, a Home Health Provider That Sparked a Bidding War.” June 14, 2023. https://mhealthintelligence.com/features/about-amedisys-a-home-health-provider-that-sparked-a-bidding-war.

[53] Pifer, Rebecca. “UnitedHealth Acquires Amedisys for $3.3B after Home Health Provider Reneges on Option Deal.” Healthcare Dive, June 26, 2023. https://www.healthcaredive.com/news/unitedhealth-optum-amedisys-acquisition-option-care/653870/.

[54] yahoo!finance. “Aveanna Healthcare Holdings, Inc. Q2 2023 Earnings Call,” August 11, 2023. https://finance.yahoo.com/news/q2-2023-aveanna-healthcare-holdings-080339993.html.

[55] “Industry Outlook – 62161 Home Care Providers in the US,” MyIBISWorld, accessed July 27, 2023. https://my-ibisworld-com.proxy.library.cornell.edu/us/en/industry/62161/industry-outlook; “Industry Outlook – 62412 Elderly & Disabled Services in the US,” MyIBISWorld, accessed July 27, 2023. https://my-ibisworld-com.proxy.library.cornell.edu/us/en/industry/62412/industry-outlook.

[56] See financial analysis based on most recent 10K filing: https://docs.google.com/spreadsheets/d/1sJY3VXnAMyELd0PUiOg5L9LXmwwW7Qhj/edit?usp=sharing&ouid=114019279977311504164&rtpof=true&sd=true

[57] Pgs. 8-9 of Aveanna Healthcare Holdings, Inc., December 31, 2022 Form 10-K (filed March 16, 2023), from SEC EDGAR website, https://www.sec.gov/Archives/edgar/data/1832332/000095017023008309/avah-20221231.htm.

[58] yahoo!finance. “Aveanna Healthcare Holdings, Inc. Q2 2023 Earnings Call,” August 11, 2023. https://finance.yahoo.com/news/q2-2023-aveanna-healthcare-holdings-080339993.html.

[59]Shaner, Jeff, and David Afshar. “Aveanna Healthcare Investor Presentation.” May 22, 2023. https://drive.google.com/file/d/1J-Jw4yNwSEqxYF5wNA0cY0aMk3vfkHig/view?usp=sharing.

[60] yahoo!finance. “Aveanna Healthcare Holdings, Inc. Q2 2023 Earnings Call,” August 11, 2023. https://finance.yahoo.com/news/q2-2023-aveanna-healthcare-holdings-080339993.html.

[61] “And 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 fare rate and/or an episodic grade,” from yahoo!finance. “Aveanna Healthcare Holdings, Inc. Q2 2023 Earnings Call,” August 11, 2023. https://finance.yahoo.com/news/q2-2023-aveanna-healthcare-holdings-080339993.html.

[62] Bugbee. “It Should Come as No Surprise That KKR-Owned Envision Healthcare Has Finally Declared Bankruptcy.” Private Equity Stakeholder Project (blog), June 6, 2023. https://pestakeholder.org/news/it-should-come-as-no-surprise-that-kkr-owned-envision-healthcare-has-finally-declared-bankruptcy/.

[63] O’Grady, Eileen. “PE’s Failed Autism Failed Bets Harm Workers and Consumers.” Private Equity Stakeholder Project (blog), July 28, 2023. https://pestakeholder.org/news/pes-failed-autism-failed-bets-harm-workers-and-consumers/.

[64] Gamble, Molly. “American Physician Partners to Close.” Becker’s ASC Review, July 18, 2023. https://www.beckershospitalreview.com/hospital-physician-relationships/american-physician-partners-to-close.html.

[65] O’Grady, Eileen. “Almost 90% of Most Distressed Healthcare Companies Are Owned by PE Firms.” Private Equity Stakeholder Project (blog), January 3, 2023. https://pestakeholder.org/news/almost-90-of-most-distressed-healthcare-companies-are-owned-by-pe-firms/.