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Agiliti Announces Financial Results for Third Quarter 2021 and Raises Full Year 2021 Guidance

November 9, 2021 GMT

MINNEAPOLIS--(BUSINESS WIRE)--Nov 9, 2021--

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 September 30, 2021, and raised its full-year guidance for 2021.

Third Quarter 2021 Highlights

  • Revenue growth of 35 percent year-over-year to $262 million
  • Net income of $9.7 million, up $19.9 million from the prior year period, and diluted income per share of $0.07, up $0.17 per share from the prior year period
  • Adjusted EBITDA 1 growth of 46 percent year-over-year to $82 million, and adjusted diluted earnings per share of $0.23, up $0.10 per share from the prior year period
  • Total debt of $1,044.4 million; Net debt 1 of $920.7 million; Net Leverage ratio 1 further reduced to 2.9x
  • Raised full year 2021 guidance with expected revenue of $1,010-1,020 million and Adjusted EBITDA of $300-310 million 2

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Our strong results from the quarter and our increased financial guidance for the year reflect the powerful fundamentals of our business” said Tom Leonard, Chief Executive Officer. “Agiliti’s nationwide maintenance and logistics infrastructure places us within the local community of the healthcare providers we serve each day. This same operations network is now supporting our recent acquisitions, with a unique and differentiated value proposition for our customers, delivered though our local service teams.”

Third Quarter and Year-to-Date 2021 Financial Results

Total revenue for the three months ended September 30, 2021, was $262.4 million, representing a 34.8 percent increase from total revenue of $194.7 million for the same period of 2020. Total revenue for the nine months ended September 30, 2021, was $748.2 million, representing a 33.8 percent increase from total revenue of $559.1 million for the same period of 2020.

Net income for the three months ended September 30, 2021, was $9.7 million compared to a net loss of $10.2 million for the same period of 2020. Net income for the nine months ended September 30, 2021, was $14.0 million, representing a $36.0 million increase compared to a net loss of $22.0 million for the same period of 2020.

Adjusted EBITDA for the three months ended September 30, 2021, was $81.9 million, a 46.2 percent increase from Adjusted EBITDA of $56.1 million for the same period of 2020. Adjusted EBITDA for the nine months ended September 30, 2021, was $245.8 million, a 51.6 percent increase from Adjusted EBITDA of $162.2 million for same period of 2020.

Subsequent Events

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On October 1, 2021, Agiliti completed its acquisition of Sizewise Rentals, Inc., (“Sizewise”), a manufacturer and distributor of specialty hospital beds, surfaces and patient handling equipment. The transaction was financed with a combination of cash on hand as well as an incremental $150M Term Loan B (fungible with the existing 0% LIBOR floor tranche). The combination enables Agiliti to broaden its portfolio and clinical expertise within the growing specialty equipment services market, expand its total addressable market opportunity and target meaningful growth and cost reduction synergies.

2021 Financial Outlook

For the full year 2021, the Company now expects revenue to be in the range of $1,010 million to $1,020 million, an increase from the prior range of $965 million to $980 million, representing growth of 31 to 32 percent. In addition, the Company now expects Adjusted EBITDA to be in the range of $300 million to $310 million, an increase from the prior range of $280 million to $290 million, representing growth of 28 to 31 percent. Finally, the Company expects capital expenditures for 2021 to be in the range of $67 million to $72 million, an increase from the prior range of $65 million to $70 million. Capex as a percentage of revenue is expected to remain in the range of 6 to 7 percent.

Conference Call Information

Agiliti will hold a conference call to discuss its 2021 third quarter results on Tuesday, November 9, at 5 p.m. Eastern Time (4 p.m. Central Time).

The conference call can be accessed live over the phone by dialing 1-877-300-8521 or for international callers, 1-412-317-6026. 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 10160759. The replay will be available until November 16, 2021.

Interested investors and other parties may view a simultaneous webcast of the conference call by visiting the Agiliti Investor Relations site at https://investors.agilitihealth.com. The webcast 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: Agiliti Inc., believes statements in this presentation looking forward in time, including preliminary results, 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; 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 final prospectus filed with the Securities and Exchange Commission (“SEC”), on April 26, 2021, and our quarterly reports on Form 10-Q.

1 Non-GAAP Measures. See further discussion below.

2 With regard to the non-GAAP Adjusted EBITDA 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.

Agiliti, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except share and per share information)
(unaudited)
 
Three Months EndedNine Months Ended
September 30,September 30,

2021

2020

2021

2020

Revenue$

262,424

$

194,721

 

$

748,212

$

559,121

 

Cost of revenue

158,990

120,115

 

444,346

359,239

 

Gross margin

103,434

74,606

 

303,866

199,882

 

Selling, general and administrative

75,052

71,732

 

225,334

180,838

 

Operating income

28,382

2,874

 

78,532

19,044

 

Loss on extinguishment of debt

 

10,116

 

Interest expense

10,711

13,560

 

40,444

46,532

 

Income (loss) before income taxes and noncontrolling interest

17,671

(10,686

)

27,972

(27,488

)

Income tax expense (benefit)

7,943

(573

)

13,832

(5,678

)

Consolidated net income (loss)

9,728

(10,113

)

14,140

(21,810

)

Net income attributable to noncontrolling interest

60

95

 

117

198

 

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

9,668

$

(10,208

)

$

14,023

$

(22,008

)

 
Basic income (loss) per share$

0.07

$

(0.10

)

$

0.12

$

(0.22

)

Diluted income (loss) per share$

0.07

$

(0.10

)

$

0.11

$

(0.22

)

 
Weighted-average common shares outstanding:
Basic

130,380,551

98,983,296

 

117,578,750

98,973,853

 

Diluted

138,490,526

98,983,296

 

125,515,000

98,973,853

 

 
Agiliti, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share and per share information)
(unaudited)
 

September 30,

December 31,

2021

2020

Assets
Current assets:
Cash and cash equivalents$

123,713

 

$

206,505

 

Accounts receivable, less allowance for doubtful accounts of $2,500 at June 30, 2021 and $1,993 at December 31, 2020

200,779

 

154,625

 

Inventories

29,092

 

27,062

 

Other current assets

14,847

 

14,175

 

Total current assets

368,431

 

402,367

 

Property and equipment:
Medical equipment

301,189

 

285,723

 

Property and office equipment

140,138

 

112,646

 

Accumulated depreciation

(251,530

)

(183,953

)

Total property and equipment, net

189,797

 

214,416

 

Other long-term assets:
Goodwill

1,122,530

 

817,113

 

Operating lease right-of-use assets

56,692

 

51,214

 

Other intangibles, net

528,119

 

402,095

 

Other

18,884

 

16,151

 

Total assets$

2,284,453

 

$

1,903,356

 

Liabilities and Equity
Current liabilities:
Current portion of long-term debt$

15,849

 

$

16,044

 

Current portion of operating lease liability

15,607

 

14,155

 

Current portion of obligation under tax receivable agreement

15,691

 

15,572

 

Accounts payable

48,712

 

37,215

 

Accrued compensation

37,658

 

38,671

 

Accrued interest

2,784

 

6,347

 

Deferred revenue

6,858

 

8,800

 

Other accrued expenses

24,111

 

22,727

 

Total current liabilities

167,270

 

159,531

 

Long-term debt, less current portion

1,028,626

 

1,145,055

 

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

57,216

 

53,794

 

Operating lease liability, less current portion

45,919

 

40,283

 

Deferred income taxes, net

109,469

 

62,748

 

Commitments and contingencies (Note 11)
Equity
Common stock, $0.0001 par value; 350,000,000 shares authorized; 130,389,758 and 98,983,296 shares issued and outstanding at June 30, 2021 and December 31, 2020

13

 

10

 

Additional paid-in capital

932,867

 

513,902

 

Accumulated deficit

(54,469

)

(68,492

)

Accumulated other comprehensive loss

(2,581

)

(3,619

)

Total Agiliti, Inc. and Subsidiaries equity

875,830

 

441,801

 

Noncontrolling interest

123

 

144

 

Total equity

875,953

 

441,945

 

Total liabilities and equity$

2,284,453

 

$

1,903,356

 

Agiliti, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands, except share and per share information)
(unaudited)
 
Nine Months Ended
September 30,

2021

2020

Cash flows from operating activities:
Consolidated net income (loss)$

14,140

 

$

(21,810

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation

78,249

 

72,955

 

Amortization

63,482

 

54,536

 

Remeasurement of tax receivable agreement and contingent consideration

4,542

 

8,231

 

Loss on extinguishment of debt

7,716

 

 

Provision for doubtful accounts

1,121

 

1,336

 

Provision for inventory obsolescence

2,539

 

458

 

Non-cash share-based compensation expense

10,127

 

7,657

 

Gain on sales and disposals of equipment

(3,939

)

(852

)

Deferred income taxes

12,040

 

(5,967

)

Changes in operating assets and liabilities:
Accounts receivable

(30,305

)

(37,618

)

Inventories

1,241

 

(5,534

)

Other operating assets

(5,392

)

(6,431

)

Accounts payable

4,701

 

(1,138

)

Other operating liabilities

(21,849

)

33,903

 

Net cash provided by operating activities

138,413

 

99,726

 

Cash flows from investing activities:
Medical equipment purchases

(23,912

)

(22,806

)

Property and office equipment purchases

(15,539

)

(15,465

)

Proceeds from disposition of property and equipment

8,187

 

2,157

 

Acquisitions, net of cash acquired

(450,198

)

(89,706

)

Net cash used in investing activities

(481,462

)

(125,820

)

Cash flows from financing activities:
Proceeds under revolver

35,000

 

249,500

 

Payments under revolver

(35,000

)

(283,000

)

Proceeds under term loan

198,052

 

124,844

 

Payments under term loan

(326,770

)

(5,895

)

Payments of principal under finance lease liability

(6,721

)

(6,312

)

Payments of deferred financing costs

(229

)

(199

)

Payments under tax receivable agreement

(748

)

 

Distributions to noncontrolling interests

(138

)

(322

)

Proceeds from exercise of stock options

380

 

 

Dividend and equity distribution payment

(926

)

(1,138

)

Proceeds from issuance of common stock

401,441

 

 

Stock issuance costs

(4,084

)

 

Shares forfeited for taxes

 

(145

)

Change in book overdrafts

 

(1,771

)

Net cash provided by financing activities

260,257

 

75,562

 

Net change in cash and cash equivalents

(82,792

)

49,468

 

Cash and cash equivalents at the beginning of period

206,505

 

 

Cash and cash equivalents at the end of period$

123,713

 

$

49,468

 

 
Supplemental cash flow information:
Interest paid$

40,991

 

$

41,279

 

Income taxes paid

2,647

 

1,007

 

 

Use of non-GAAP information

This press release contains non-GAAP measures, including EBITDA, Adjusted EBITDA, Adjusted EPS and Net Leverage Ratio. We use these internally as measures of operational performance 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 EPS 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 as measures of liquidity. Since EBITDA, Adjusted EBITDA, Adjusted EPS 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 and Adjusted EBITDA 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.

Agiliti, Inc. and Subsidiaries
Adjusted EBITDA
(unaudited)
 

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands)

2021

2020

2021

2020

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

9,668

$

(10,208

)

$

14,023

$

(22,008

)

Interest expense

10,711

13,560

 

40,444

46,532

 

Income tax expense (benefit)

7,943

(573

)

13,832

(5,678

)

Depreciation and amortization

46,860

42,597

 

138,676

124,659

 

EBITDA

75,183

45,376

 

206,975

143,505

 

Non-cash share-based compensation expense

4,360

3,206

 

10,127

7,657

 

Management and other expenses (1)

(3,266

)

7,626

(256

)

Transaction costs (2)

2,189

1,137

 

6,440

1,699

 

Tax receivable agreement remeasurement

197

9,600

 

4,542

9,600

 

Loss on extinguishment of debt (3)

 

10,116

 

Adjusted EBITDA$

81,929

$

56,053

 

$

245,826

$

162,205

 

(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 acquisition for the nine months ended September 30, 2021.
(3) Loss on extinguishment of debt 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 costs related to the amendment of our Revolving Credit Facility.

Agiliti, Inc. and Subsidiaries
Non-GAAP Financial Measure: Adjusted EPS
(unaudited)
 
Three months endedNine months ended
September 30,September 30,
(in thousands)

2021

2020

2021

2020

 
Net income (loss) attributable to Agiliti, Inc.

$

9,668

 

$

(10,208

)

$

14,023

 

$

(22,008

)

and Subsidiaries
Amortization

 

21,497

 

 

17,558

 

 

60,427

 

 

51,702

 

Non-cash share-based compensation expense

 

4,360

 

 

3,206

 

 

10,127

 

 

7,657

 

Management and other expenses (1)

 

-

 

 

(3,266

)

 

7,626

 

 

(256

)

Transaction costs (2)

 

2,189

 

 

1,137

 

 

6,440

 

 

1,699

 

Tax receivable agreement remeasurement(3)

 

197

 

 

9,600

 

 

4,542

 

 

9,600

 

Loss on extinguishment of debt (4)

 

-

 

 

-

 

 

10,116

 

 

-

 

Income tax benefit associated with pre-tax adjustments (5)

 

(6,724

)

 

(4,733

)

 

(20,452

)

 

(15,527

)

 
Adjusted Net Income

$

31,187

 

$

13,294

 

$

92,849

 

$

32,867

 

 
 
Weighted average shares outstanding - diluted

 

138,491

 

 

103,706

 

 

125,515

 

 

103,680

 

Adjusted EPS

$

0.23

 

$

0.13

 

$

0.74

 

$

0.32

 

(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 acquisition for the nine months ended September 30, 2021. (3) Tax receivable agreement remeasurement represents the change in the fair value of the tax receivable agreement. (4) Loss on extinguishment of debt 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 costs related to the amendment of our Revolving Credit Facility. (5) Income tax benefit associated with pre-tax adjustments represents the tax benefit or provision associated with the reconciling items between net income (loss) and Adjusted Net Income. 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 Leverage Ratio
(unaudited)
 

September 30,

(in millions)

2021

Term Loan B (due 2026)

$

1,035.4

 

Consolidated Capital Leases

 

26.1

 

Less: Deferred Financing Fees

 

(17.1

)

Debt

$

1,044.4

 

Less: Cash

 

(123.7

)

Net Debt

$

920.7

 

 
LTM Adjusted EBITDA

$

317.8

 

 
 
Net Leverage2.9x

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20211109006341/en/

CONTACT: Kate Kaiser

Corporate Communication and Investor Relations

kate.kaiser@agilitihealth.com

KEYWORD: MINNESOTA UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: INSURANCE MEDICAL DEVICES MEDICAL SUPPLIES PROFESSIONAL SERVICES PRACTICE MANAGEMENT OTHER HEALTH MANAGED CARE HEALTH OTHER PROFESSIONAL SERVICES

SOURCE: Agiliti, Inc.

Copyright Business Wire 2021.

PUB: 11/09/2021 04:10 PM/DISC: 11/09/2021 04:11 PM

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