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Agiliti Announces Financial Results for First Quarter 2022 and Reaffirms 2022 Outlook

AGTI

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, 2022, and reaffirmed its financial outlook for 2022.

First Quarter 2022 Highlights

  • Revenue growth of 25 percent to $294 million
  • Net income of $19.9 million, up $10.3 million from the prior year period; diluted income per share of $0.14, up $0.05 per share from the prior year period
  • Adjusted EBITDA1 growth of 3 percent to $89 million, and Adjusted Earnings Per Share1 of $0.29, a three percent decrease over the prior year period
  • Total debt of $1,121 million; Net debt1 of $1,069 million; and, Net Leverage ratio1 of 3.2x

“We are pleased with our Q1 performance, with results that reflect the importance of our value proposition and the durability of our business model,” said Tom Leonard, Chief Executive Officer. “Our customers are emerging from the pandemic with a new set of economic challenges, and we are proud to bring solutions that address many of the financial, clinical and operational constraints facing our healthcare system today. That critical work continues to drive the momentum in our business and gives us confidence in our outlook for the year.”

First Quarter 2022 Financial Results

Total revenue for the three months ended March 31, 2022, was $294.4 million, representing a 25.2 percent increase from total revenue of $235.2 million for the same period of 2021.

Net income for the three months ended March 31, 2022, was $19.9 million, a 108.2 percent increase from net income of $9.6 million for the same period of 2021.

Adjusted EBITDA1 for the three months ended March 31, 2022, was $89.2 million, a 3.4 percent increase from Adjusted EBITDA1 of $86.2 million for the same period of 2021.

2022 Financial Outlook

The company reaffirmed its guidance for 2022 as follows:

  • Revenue of $1,160 - $1,190 million
  • Adjusted EBITDA of $305-315 million2
  • Adjusted earnings per share of $0.89 – 0.94 per share2
  • Capex investment expected in the range of $80 to $90 million

__________________________

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 first quarter 2022 results on Tuesday, May 10, 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 13728694. The replay will be available until May 17, 2022.

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 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: 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: 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 including our agreement with HHS/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 annual report on Form 10-K.

Agiliti, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except share and per share information)
(unaudited)
Three Months Ended
March 31,

2022

2021

Revenue $

294,444

$

235,245

Cost of revenue

170,817

133,922

Gross margin

123,627

101,323

Selling, general and administrative

86,138

69,224

Operating income

37,489

32,099

Interest expense

10,664

18,021

Income before income taxes and noncontrolling interest

26,825

14,078

Income tax expense

6,905

4,495

Consolidated net income

19,920

9,583

Net income attributable to noncontrolling interest

28

30

Net income attributable to Agiliti, Inc. and Subsidiaries $

19,892

$

9,553

Basic income per share $

0.15

$

0.10

Diluted income per share $

0.14

$

0.09

Weighted-average common shares outstanding:

Basic

131,148,108

99,103,933

Diluted

139,426,334

106,090,703

Agiliti, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

March 31,

December 31,

2022

2021

Assets
Current Assets:
Cash and cash equivalents $

52,103

$

74,325

Accounts receivable, less allowance for credit losses of $3,006 at March 31, 2022 and $2,902 at December 31, 2021

213,547

209,308

Inventories

55,954

55,307

Prepaid expenses

14,614

18,549

Other current assets

6,453

395

Total current assets

342,671

357,884

Property and equipment, net

256,667

258,370

Goodwill

1,213,121

1,213,121

Operating lease right-of-use assets

85,960

80,676

Other intangibles, net

551,996

573,159

Other

36,846

32,537

Total assets $

2,487,261

$

2,515,747

Liabilities and Equity

Current Liabilities:

Current portion of long-term debt $

17,693

$

17,534

Current portion of operating lease liability

22,883

22,826

Current portion of obligation under tax receivable agreement

29,397

29,187

Accounts payable

57,454

53,851

Accrued compensation

36,396

47,951

Accrued interest

3,269

3,473

Deferred revenue

6,918

5,808

Other accrued expenses

29,539

27,900

Total current liabilities

203,549

208,530

Long-term debt, less current portion

1,103,785

1,174,968

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

31,196

29,629

Operating lease liability, less current portion

73,142

63,241

Deferred income taxes, net

149,571

143,307

Commitments and contingencies

Equity:

Common stock, $0.0001 par value; 350,000,000 shares authorized; 131,476,924 and 130,950,061 shares issued and outstanding at March 31, 2022 and December 31, 2021

13

13

Additional paid-in capital

943,517

938,888

Accumulated deficit

(24,594

)

(44,486

)

Accumulated other comprehensive income

6,966

1,537

Total Agiliti, Inc. and Subsidiaries equity

925,902

895,952

Noncontrolling interest

116

120

Total equity

926,018

896,072

Total liabilities and equity

2,487,261

$

2,515,747

Agiliti, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
March 31,

2022

2021

Cash flows from operating activities:
Consolidated net income $

19,920

$

9,583

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

22,498

26,217

Amortization

23,358

18,399

Remeasurement of tax receivable agreement

4,148

Provision for credit (gains) losses

(27

)

18

Provision for inventory obsolescence

325

1,532

Non-cash share-based compensation expense

4,637

2,412

Gain on sales and disposals of equipment

(593

)

(647

)
Deferred income taxes

4,398

3,932

Changes in operating assets and liabilities:

Accounts receivable

(6,212

)

2,898

Inventories

(972

)

3,641

Other operating assets

1,132

226

Accounts payable

5,351

1,361

Other operating liabilities

(6,691

)

(10,811

)
Net cash provided by operating activities

67,124

62,909

Cash flows from investing activities:

Medical equipment purchases

(10,005

)

(4,415

)
Property and office equipment purchases

(5,215

)

(3,915

)
Proceeds from disposition of property and equipment

644

1,003

Acquisitions, net of cash acquired

(450,198

)
Net cash used in investing activities

(14,576

)

(457,525

)
Cash flows from financing activities:

Proceeds under revolver

10,000

Proceeds under term loan

198,052

Payments under term loan

(71,474

)

(2,840

)
Payments of principal under finance lease liability

(2,223

)

(2,051

)
Payments under tax receivable agreement

(748

)
Distributions to noncontrolling interests

(32

)

(50

)
Proceeds from exercise of stock options

978

Dividend and equity distribution payment

(906

)

(924

)
Shares forfeited for taxes

(792

)

Payments of contingent consideration

(321

)

Net cash provided by (used in) financing activities

(74,770

)

201,439

Net change in cash and cash equivalents

(22,222

)

(193,177

)
Cash and cash equivalents at the beginning of period

74,325

206,505

Cash and cash equivalents at the end of period $

52,103

$

13,328

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
(in thousands)
Three Months Ended
March 31,

2022

2021

Net income attributable to Agiliti, Inc. and Subsidiaries $

19,892

$

9,553

Interest expense

10,664

18,021

Income tax expense

6,905

4,495

Depreciation and amortization

44,831

43,563

EBITDA

82,292

75,632

Non-cash share-based compensation expense

4,637

2,412

Management and other expenses

563

Transaction costs (1)

2,226

3,451

Tax receivable agreement remeasurement

4,148

Adjusted EBITDA $

89,155

$

86,206

__________________________

(1) Transaction costs represent costs associated with potential and completed mergers and acquisitions and are primarily related to the Northfield and Sizewise acquisitions.

Agiliti, Inc. and Subsidiaries
Non-GAAP Financial Measure: Adjusted Net Income and Adjusted EPS
(in thousands, except share and per share information)
Three months ended
March 31,

2022

2021

Net income attributable to Agiliti, Inc.

$

19,892

$

9,553

and Subsidiaries
Amortization

22,333

17,348

Non-cash share-based compensation expense

4,637

2,412

Management and other expenses

-

563

Transaction costs (1)

2,226

3,451

Tax receivable agreement remeasurement(2)

-

4,148

Income tax benefit associated with pre-tax adjustments (3)

(7,969

)

(5,463

)

Adjusted Net Income

$

41,119

$

32,012

Weighted average shares outstanding - diluted

139,426

106,091

Adjusted EPS

$

0.29

$

0.30

__________________________

(1) Transaction costs represent costs associated with potential and completed mergers and acquisitions and are primarily related to the Northfield and Sizewise acquisitions.

(2) Tax receivable agreement remeasurement represents the change in the fair value of the tax receivable agreement.

(3) 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 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
(in millions)
March 31,

2022

Term Loan B (due 2026)

$

1,111.6

Consolidated Capital Leases

26.0

Less: Deferred Financing Fees

(16.2

)

Debt

$

1,121.5

Less: Cash

(52.1

)

Net Debt

$

1,069.4

LTM Adjusted EBITDA

$

333.6

Net Leverage 3.2x

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