TechDogs-"Agiliti Announces Financial Results For Fourth Quarter And Full-Year 2023"

Manufacturing Technology

Agiliti Announces Financial Results For Fourth Quarter And Full-Year 2023

By Business Wire

Business Wire
Overall Rating

EDEN PRAIRIE, Minn.--(BUSINESS WIRE)--Agiliti Inc. (NYSE: AGTI) (“Agiliti”), a nationwide provider of healthcare technology management and service solutions to the healthcare industry, today announced its financial results for the fourth quarter and year ended December 31, 2023.

Fourth Quarter 2023 Highlights

  • Revenue growth of 4% to $292 million
  • Net loss of $5.7 million, compared to net income of $3.4 million in the prior year period; diluted loss per share of $0.04, compared to diluted earnings per share of $0.02 in the prior year period
  • Adjusted EBITDA1 of $67.3 million, compared to $71.4 million in the prior year period; Adjusted Earnings Per Share1 of $0.13, compared to $0.18 in the prior year period

Full-Year 2023 Highlights

  • Revenue growth of 5% to $1.17 billion
  • Net loss of $19.4 million, compared to net income of $30.2 million in the prior year period; diluted loss per share of $0.14, compared to diluted earnings per share of $0.22 in the prior year period
  • Adjusted EBITDA of $266.9 million, compared to $296.6 million in the prior year period; Adjusted Earnings Per Share1 of $0.55, compared to $0.85 in the prior year period
  • Total debt of $1.08 billion; Net debt1 of $1.06 billion; and, Net leverage ratio1 of 3.97x

Fourth Quarter and Year-to-Date 2023 Financial Results

Total revenue for the three months ended December 31, 2023 was $292.0 million, representing a 3.7 percent increase from total revenue of $281.7 million for the same period of 2022. Total revenue for the year ended December 31, 2023 was $1.17 billion, representing a 4.8 percent increase from total revenue of $1.12 billion for the same period of 2022.

Net loss for the three months ended December 31, 2023 was $5.7 million, compared to net income of $3.4 million for the same period of 2022. Net loss for the year ended December 31, 2023 was $19.4 million compared to net income of $30.2 million for the same period of 2022.

Adjusted EBITDA1 for the three months ended December 31, 2023 was $67.3 million, a 5.7 percent decrease from Adjusted EBITDA1 of $71.4 million for the same period of 2022. Adjusted EBITDA1 for the year ended December 31, 2023 was $266.9 million, a 10.0 percent decrease from Adjusted EBITDA1 of $296.6 million for the same period of 2022.

Agiliti to be Taken Private by THL Partners

On Monday, February 26, 2024, the company announced it has entered into a definitive merger agreement pursuant to which an affiliate of private equity firm Thomas H. Lee Partners, L.P. (“THL”), the company’s majority shareholder, will acquire all outstanding shares of Agiliti common stock not currently owned by THL and its affiliates and certain management shareholders for $10.00 per share in cash, implying an enterprise value of approximately $2.5 billion.

The transaction is expected to close in the first half of 2024, subject to customary closing conditions. The transaction has been approved by THL Agiliti LLC in its capacity as the majority shareholder of Agiliti and no other shareholder approval is required. Upon completion of the transaction, Agiliti will become a private company and will no longer be publicly listed or traded on the New York Stock Exchange. In light of this agreement, Agiliti will no longer hold a conference call to discuss financial results for the fourth quarter and full year 2023. Further detail on the transaction agreement can be found in the company’s press release at investors.agilitihealth.com.

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.

1 See further discussion below under "Use of non-GAAP information."

Forward-Looking Statements

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements in this presentation and the related conference call are looking forward 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 forwardlooking statements: negative reaction of our investors, our suppliers, our customers or our employees to our leadership transition; market volatility of our common stock as a result of our leadership transition; the risk that the leadership transition may not provide the results that the company expects; imbalances in our selling mix; effects from political and policy changes that could limit our growth opportunities; our ability to maintain existing contracts or contract terms with, or enter into new contracts with customers; cancellations by or disputes with customers; our ability to maintain our reputation, including by protecting intellectual property; effects of a global economic downturn on our customers and suppliers; competitive practices by our competitors that could cause us to lose market share, reduce our prices or increase our expenditures; the bundling of products and services by our competitors, some of which we do not offer; consolidation in the healthcare industry; adverse developments with supplier relationships; our potential inability to attract and retain key personnel; our potential inability to make attractive acquisitions or successfully integrate acquire businesses; 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; 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; impairment charges for goodwill or other long-lived assets; an increase in expenses related to our pension plan; potential claims related to the medical equipment that we outsource and service; incurrence of costs that we cannot pass through to our customers; a failure of our management information systems; limitations inherent in all internal controls systems over financial reporting; our failure to keep up with technological changes; our failure to coordinate the management of our equipment; challenges to our tax positions or changes in taxation laws; litigation that may be costly to defend; federal privacy laws that may subject us to more stringent penalties; our contracts with the federal government that subject us to additional oversight; effects of high interest rates; potential recall or obsolescence of our large fleet of medical equipment; risks associated with transaction with THL generally, such as the inability to obtain, or delays in obtaining, any required regulatory approvals or other consents; the failure to consummate or delay in consummating the merger for other reasons; the risk that a condition to closing of the merger may not be satisfied; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; the outcome of any legal proceedings that may be instituted following announcement of the merger; failure to retain key management and employees of Agiliti; unfavorable reaction to the merger by customers, competitors, suppliers and employees and other Risk Factors as detailed in our most recent annual report on Form 10-K.

Agiliti, Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands, except share and per share information)

Three Months Ended
December 31,

Year Ended
December 31,

2023

2022

2023

2022

Revenue

$

291,986

$

281,679

$

1,174,604

$

1,121,292

Cost of revenue

193,430

174,100

770,501

690,318

Gross margin

98,556

107,579

404,103

430,974

Selling, general and administrative expense

81,939

84,685

339,312

338,988

Operating income

16,617

22,894

64,791

91,986

Loss on extinguishment / modification of debt

4,527

1,418

Interest expense

23,461

14,983

84,115

49,439

Tax indemnification expense

11,918

Income (loss) before income taxes and noncontrolling interest

(6,844

)

7,911

(23,851

)

29,211

Income tax (benefit) expense

(1,225

)

4,440

(4,732

)

(1,232

)

Consolidated net income (loss)

(5,619

)

3,471

(19,119

)

30,443

Net income attributable to noncontrolling interest

92

100

306

231

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

$

(5,711

)

$

3,371

$

(19,425

)

$

30,212

Basic income (loss) per share

$

(0.04

)

$

0.03

$

(0.14

)

$

0.23

Diluted income (loss) per share

$

(0.04

)

$

0.02

$

(0.14

)

$

0.22

Weighted-average common shares outstanding:

Basic

135,090,561

133,461,895

134,647,238

132,602,747

Diluted

135,090,561

139,001,770

134,647,238

138,381,295

Agiliti, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share information)

December 31,
2023

December 31,
2022

Assets

Current assets:

Cash and cash equivalents

$

20,037

$

5,577

Accounts receivable, less allowance for credit losses of $6,236 as of December 31, 2023 and $4,182 as of December 31, 2022

215,684

207,753

Inventories

74,484

70,132

Prepaid expenses

20,231

23,458

Other current assets

7,307

9,393

Total current assets

337,743

316,313

Property and equipment, net

292,684

273,958

Goodwill

1,239,432

1,239,106

Operating lease right-of-use assets

78,157

79,975

Other intangibles, net

430,002

512,020

Other

20,926

22,735

Total assets

$

2,398,944

$

2,444,107

Liabilities and Equity

Current liabilities:

Current portion of long-term debt

$

18,468

$

17,752

Current portion of operating lease liability

25,603

23,607

Current portion of obligation under tax receivable agreement

12,796

34,694

Accounts payable

58,518

59,163

Accrued compensation

28,866

25,928

Accrued interest

21,451

5,039

Other current liabilities

30,906

31,198

Total current liabilities

196,608

197,381

Long-term debt, less current portion

1,061,062

1,077,293

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

10,467

9,161

Operating lease liability, less current portion

63,765

67,332

Deferred income taxes, net

126,219

146,615

Commitments and contingencies

Equity:

Common stock, $0.0001 par value; 500,000,000 shares authorized; 135,368,025 and 133,608,495 shares issued; 135,352,336 and 133,608,495 outstanding as of December 31, 2023 and December 31, 2022, respectively

14

13

Treasury stock, at cost; 54,256 and — shares as of December 31, 2023 and December 31, 2022, respectively

(419

)

Additional paid-in capital

972,156

953,046

Accumulated deficit

(33,699

)

(14,274

)

Accumulated other comprehensive income

2,505

7,343

Total Agiliti, Inc. and Subsidiaries equity

940,557

946,128

Noncontrolling interest

266

197

Total equity

940,823

946,325

Total liabilities and equity

$

2,398,944

$

2,444,107

Agiliti, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

Year Ended December 31,

2023

2022

Cash flows from operating activities:

Consolidated net income (loss)

$

(19,119

)

$

30,443

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

Depreciation

80,249

84,331

Amortization

93,683

95,452

Remeasurement of tax receivable agreement

1,042

(2,124

)

Loss on extinguishment / modification of debt

4,527

1,418

Provision for credit losses

2,305

3,903

Provision for inventory obsolescence

1,725

1,034

Non-cash share-based compensation expense

20,186

18,775

Gain on sales and disposals of equipment

(1,331

)

(1,101

)

Deferred income taxes

(17,321

)

1,292

Changes in operating assets and liabilities:

Accounts receivable

(9,330

)

(3,976

)

Inventories

(5,547

)

(12,188

)

Other operating assets

(1,532

)

(10,144

)

Accounts payable

1,077

15,753

Accrued and other operating liabilities

19,202

(23,092

)

Net cash provided by operating activities

169,816

199,776

Cash flows from investing activities:

Medical equipment purchases

(52,118

)

(55,864

)

Property and office equipment purchases

(34,230

)

(31,600

)

Proceeds from disposition of property and equipment

3,895

2,963

Acquisitions, net of cash acquired

(1,350

)

(62,339

)

Intangible asset purchases

(89

)

(20

)

Net cash used in investing activities

(83,892

)

(146,860

)

Cash flows from financing activities:

Proceeds under debt arrangements

1,302,937

60,000

Payments under debt arrangements

(1,321,737

)

(160,023

)

Payments of principal under finance lease liability

(9,502

)

(8,812

)

Payments of deferred financing costs

(9,579

)

Payments under tax receivable agreement

(24,822

)

Distributions to noncontrolling interests

(237

)

(154

)

Proceeds from exercise of stock options

3,057

3,101

Dividend and equity distribution payment

(321

)

(908

)

Purchases of treasury stock

(3,761

)

Shares forfeited for taxes

(6,301

)

(14,547

)

Acquisition holdback and contingent consideration

(1,198

)

(321

)

Net cash used in financing activities

(71,464

)

(121,664

)

Net change in cash and cash equivalents

14,460

(68,748

)

Cash and cash equivalents at the beginning of period

5,577

74,325

Cash and cash equivalents at the end of period

$

20,037

$

5,577

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

(unaudited)

Three Months Ended
December 31,

Year Ended
December 31,

(in thousands)

2023

2022

2023

2022

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

$

(5,711

)

$

3,371

$

(19,425

)

$

30,212

Interest expense

23,461

14,983

84,115

49,439

Income tax (benefit) (1)

(1,225

)

4,440

(4,732

)

(1,232

)

Depreciation and amortization

42,564

42,053

168,841

175,764

EBITDA

59,089

64,847

228,799

254,183

Non-cash share-based compensation expense

4,325

3,710

20,186

18,775

Tax indemnification expense

11,918

Management and other expenses (2)

1,811

451

9,409

2,411

Transaction costs (3)

1,068

4,519

2,900

9,984

Tax receivable agreement remeasurement

1,042

(2,124

)

1,042

(2,124

)

Loss on extinguishment / modification of debt (4)

4,527

1,418

Adjusted EBITDA

$

67,335

$

71,403

$

266,863

$

296,565

_____________________________

  1. 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.
  2. Management and other expenses represent non-recurring expenses, including a severance charge related to the Chief Executive Officer transition and charges related to a reduction in workforce.
  3. Transaction costs represent costs associated with potential and completed mergers and acquisitions.
  4. Loss on extinguishment / modification of debt for 2023 consists of the write-off of the unamortized costs and new costs incurred in relation to the amendment of the First Lien Term Loan and Revolving Credit Facility. Loss on extinguishment / modification 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.

Agiliti, Inc. and Subsidiaries

Non-GAAP Financial Measure: Adjusted Net Income and Adjusted EPS

(unaudited)

Three Months Ended
December 31,

Year Ended
December 31,

(in thousands, except share and per share information)

2023

2022

2023

2022

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

$

(5,711

)

$

3,371

$

(19,425

)

$

30,212

Amortization

21,745

23,223

88,593

91,432

Non-cash share-based compensation expense

4,325

3,710

20,186

18,775

Tax indemnification expense (1)

11,918

Management and other expenses (2)

1,811

451

9,409

2,411

Transaction costs (3)

1,068

4,519

2,900

9,984

Tax receivable agreement remeasurement

1,042

(2,124

)

1,042

(2,124

)

Loss on extinguishment / modification of debt (4)

4,527

1,418

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

(6,950

)

(8,630

)

(30,655

)

(46,538

)

Adjusted net income

$

17,330

$

24,520

$

76,577

$

117,488

Weighted average shares outstanding - diluted

136,382,223

139,001,770

138,057,476

138,381,295

Adjusted EPS

$

0.13

$

0.18

$

0.55

$

0.85

_____________________________

  1. 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.
  2. Management and other expenses represent non-recurring expenses, including a severance charge related to the Chief Executive Officer transition and charges related to a reduction in workforce.
  3. Transaction costs represent costs associated with potential and completed mergers and acquisitions.
  4. Loss on extinguishment / modification of debt for 2023 consists of the write-off of the unamortized costs and new costs incurred in relation to the amendment of the First Lien Term Loan and Revolving Credit Facility. Loss on extinguishment / modification 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.
  5. Income tax benefit associated with pre-tax adjustments represents the tax benefit associated with the reconciling items between net income and Adjusted Net Income and includes both the current and deferred income tax impact of the adjustments. 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 Debt and Net Leverage Ratio

(unaudited)

(in thousands)

December 31, 2023

First Lien Term Loan, due 2030

$

1,072,313

Revolving Credit Facility, due 2028

Finance Lease Liability

27,374

Less: Unamortized Deferred Financing Costs and Debt Discount

(20,157

)

Total Debt

1,079,530

Less: Cash

(20,037

)

Net Debt

$

1,059,493

LTM Adjusted EBITDA

$

266,863

Net Leverage

3.97 x


Contacts

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

First published on Wed, Mar 6, 2024

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