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

EDEN PRAIRIE, Minn.--(BUSINESS WIRE)--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

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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

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(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