Agiliti Announces Financial Results for First Quarter 2021 and Provides Full Year 2021 Outlook

·13 min read

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 March 31, 2021, and provided a preliminary outlook for the full year 2021.

Highlights

  • Revenue growth of 31 percent to $235 million

  • Net income of $9.6 million, up $22.2 million from Q1 2020, and diluted earnings per share of $0.09, up $0.22 per share from the prior year period

  • Adjusted EBITDA growth of 77 percent to $86 million, and adjusted diluted earnings per share of $0.30, up $0.25 per share from the prior year period

  • Leverage ratio reduced to 3.3x following the close of its initial public offering

  • Full year 2021 guidance for revenue of $950-$975 million and Adjusted EBITDA of $275-$285 million

"Our strong first quarter results reflect the continued execution of our growth strategy and the extraordinary work of our entire team at Agiliti," said Tom Leonard, Chief Executive Officer. "The challenges of the past year helped raise awareness of the unique and essential nature of what we do, while also demonstrating the stable and predictable nature of our business model. Agiliti is a critical part of our national healthcare infrastructure, and as the events of 2020 highlight, the services we provide are always necessary and in high demand. This long term consistency gives us confidence in our 2021 outlook and beyond."

Total revenue for the three months ended March 31, 2021, was $235.2 million, representing a 31 percent increase from total revenue of $179.2 million for the same period of 2020.

Net income for the first quarter was $9.6 million, representing a $22.2 million increase compared to a net loss of $12.6 million for the same period of 2020.

Adjusted EBITDA for the three months ended March 31, 2021, was $86.2 million, a 77 percent increase from Adjusted EBITDA of $48.7 million for the same period of 2020.

Balance Sheet

Following the close of its initial public offering ("IPO") on April 27, 2021, the Company used net proceeds from the offering to repay outstanding borrowings and related fees and expenses under the Company’s credit facilities. Post IPO proceeds and following its acquisition of Northfield Medical on March 19, 2021, it’s pro-forma leverage ratio approximates 3.3x.

Financial Guidance

For the full year 2021, the Company expects revenue to be in the range of $950 million to $975 million and Adjusted EBITDA to be in the range of $275 million to $285 million. Additionally, the Company expects capital expenditures for 2021 to be in the range of $65 million to $70 million.

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.

Conference Call Information

Agiliti will hold a conference call to discuss its 2021 first quarter results on Tuesday, May 18, 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 13719551. The replay will be available until May 25, 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 7,000 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.

Agiliti, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except share and per share information)

(unaudited)

Three Months Ended

March 31,

2021

2020

Revenue

$

235,245

$

179,240

Cost of revenue

133,922

121,433

Gross margin

101,323

57,807

Selling, general and administrative

69,224

56,566

Operating income

32,099

1,241

Interest expense

18,021

17,817

Income (loss) before income taxes and noncontrolling interest

14,078

(16,576

)

Income tax expense (benefit)

4,495

(4,028

)

Consolidated net income (loss)

9,583

(12,548

)

Net income attributable to noncontrolling interest

30

74

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

$

9,553

$

(12,622

)

Basic income (loss) per share

$

0.10

$

(0.13

)

Diluted income (loss) per share

$

0.09

$

(0.13

)

Weighted-average common shares outstanding:

Basic

99,103,933

98,954,862

Diluted

106,090,703

98,954,862

Agiliti, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share and per share information)

(unaudited)

March 31,

December 31,

2021

2020

Assets

Current assets:

Cash and cash equivalents

$

13,328

$

206,505

Accounts receivable, less allowance for doubtful accounts of $2,020 at March 31, 2021 and $1,993 at December 31, 2020

168,679

154,625

Inventories

27,699

27,062

Other current assets

13,129

14,175

Total current assets

222,835

402,367

Property and equipment:

Medical equipment

295,398

285,723

Property and office equipment

124,054

112,646

Accumulated depreciation

(208,484

)

(183,953

)

Total property and equipment, net

210,968

214,416

Other long-term assets:

Goodwill

1,122,530

817,113

Operating lease right-of-use assets

53,447

51,214

Other intangibles, net

569,343

402,095

Other

16,713

16,151

Total assets

$

2,195,836

$

1,903,356

Liabilities and Equity

Current liabilities:

Current portion of long-term debt

$

19,060

$

16,044

Current portion of operating lease liability

14,985

14,155

Current portion of obligation under tax receivable agreement

15,650

15,572

Accounts payable

47,523

37,215

Accrued compensation

38,864

38,671

Accrued interest

3,533

6,347

Deferred revenue

11,356

8,800

Other accrued expenses

29,394

22,727

Total current liabilities

180,365

159,531

Long-term debt, less current portion

1,350,035

1,145,055

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

56,182

53,794

Operating lease liability, less current portion

41,904

40,283

Deferred income taxes, net

101,297

62,748

Commitments and contingencies (Note 11)

Equity

Common stock, $0.0001 par value; 350,000,000 shares authorized; 99,843,335 and
98,983,296 shares issued and outstanding at March 31, 2021 and December 31, 2020

10

10

Additional paid-in capital

527,626

513,902

Accumulated deficit

(58,939

)

(68,492

)

Accumulated other comprehensive loss

(2,768

)

(3,619

)

Total Agiliti, Inc. and Subsidiaries equity

465,929

441,801

Noncontrolling interest

124

144

Total equity

466,053

441,945

Total liabilities and equity

$

2,195,836

$

1,903,356

Agiliti, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended

March 31,

2021

2020

Cash flows from operating activities:

Consolidated net income (loss)

$

9,583

$

(12,548

)

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

Depreciation

26,217

23,377

Amortization

18,399

17,756

Remeasurement of tax receivable agreement

4,148

Provision for doubtful accounts

18

656

Provision for inventory obsolescence

1,532

233

Non-cash share-based compensation expense

2,412

2,383

Gain on sales and disposals of equipment

(647

)

(165

)

Deferred income taxes

3,932

(4,195

)

Changes in operating assets and liabilities:

Accounts receivable

2,898

(10,709

)

Inventories

3,641

(1,539

)

Other operating assets

226

565

Accounts payable

1,361

4,378

Other operating liabilities

(10,811

)

7,487

Net cash provided by operating activities

62,909

27,679

Cash flows from investing activities:

Medical equipment purchases

(4,415

)

(9,165

)

Property and office equipment purchases

(3,915

)

(3,003

)

Proceeds from disposition of property and equipment

1,003

524

Acquisitions, net of cash acquired

(450,198

)

(89,495

)

Net cash used in investing activities

(457,525

)

(101,139

)

Cash flows from financing activities:

Proceeds under new revolver

10,000

178,000

Payments under new revolver

(161,500

)

Proceeds under new term loan

198,052

124,844

Payments under new term loan

(2,840

)

(1,650

)

Payments of principal under finance lease liability

(2,051

)

(1,857

)

Payments of deferred financing costs

(199

)

Payments under tax receivable agreement

(748

)

Distributions to noncontrolling interests

(50

)

(124

)

Dividend and equity distribution payment

(924

)

(1,115

)

Shares forfeited for taxes

(145

)

Change in book overdrafts

(1,771

)

Net cash provided by financing activities

201,439

134,483

Net change in cash and cash equivalents

(193,177

)

61,023

Cash and cash equivalents at the beginning of period

206,505

Cash and cash equivalents at the end of period

$

13,328

$

61,023

Supplemental cash flow information:

Interest paid

$

19,746

$

16,523

Income taxes (refund) paid

(715

)

5

Agiliti, Inc. and Subsidiaries

Adjusted EBITDA

(unaudited)

Three Months Ended

March 31,

(in thousands)

2021

2020

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

$

9,553

$

(12,622

)

Interest expense

18,021

17,817

Income tax expense (benefit)

4,495

(4,028

)

Depreciation and amortization

43,563

40,166

EBITDA

75,632

41,333

Non-cash share-based compensation expense

2,412

2,383

Management and other expenses (1)

563

4,111

Transaction costs (2)

3,451

889

Tax receivable agreement remeasurement

4,148

Adjusted EBITDA

$

86,206

$

48,716

_________________________
(1) Management and other expenses represent (a) the Advisory Services Fees, which were subsequently terminated in connection with the initial public offering and (b) employee related non-recurring expenses.
(2) Transaction costs represent costs associated with potential mergers and acquisitions and are primarily related to the Northfield acquisition.

EBITDA is defined as earnings attributable to Agiliti before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding non-cash shared-based compensation expense, management fees and other non-recurring gains, expenses or losses, transaction costs and remeasurement of the tax receivable agreement. In addition to using EBITDA and Adjusted EBITDA internally as measures of operational performance, we 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 EBITDA and Adjusted EBITDA 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 and Adjusted EBITDA, 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 and Adjusted EBITDA are not measures determined in accordance with GAAP and are thus susceptible to varying interpretations and calculations, EBITDA and Adjusted EBITDA, 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

Non-GAAP Financial Measure: Adjusted EPS

(unaudited)

Three months ended

March 31,

(in thousands)

2021

2020

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

$

9,553

$

(12,622

)

Amortization

17,348

16,788

Non-cash share-based compensation expense

2,412

2,383

Management & other expenses (1)

563

4,111

Transaction costs (2)

3,451

889

Tax receivable agreement remeasurement(3)

4,148

-

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

(5,463

)

(6,223

)

Adjusted Net Income

$

32,012

$

5,326

Weighted average shares outstanding - diluted

106,091

103,695

Adjusted EPS

$

0.30

$

0.05

____________________________
(1) Represents management and advisory fees, which were subsequently terminated in connection with the initial public offering and employee related non-recurring expenses. (2) Represents costs associated with potential mergers and acquisitions and are primarily related to the Northfield acquisition. (3) Represents the change in the fair value of the tax receivable agreement. (4) 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210518006057/en/

Contacts

Kate Kaiser
Corporate Communication and Investor Relations
kate.kaiser@agilitihealth.com