Aveanna Healthcare Holdings (Nasdaq : AVAH), has been optimistic about its plans to grow into a major provider of senior home healthcare services since April’s public listing. The company was primarily a provider of pediatric services before its IPO. But, it has since aggressively acquired assets to realize the vision it had in spring.
Its leaders are happy to be there. Aveanna believes that the tailwinds outweigh the headwinds when it comes to home health.
Aveanna CEO Tony Strange stated Wednesday at the J.P. Morgan Healthcare Conference that he believes the rate environment is creating tailwinds in our favor right now. People in Washington, D.C., today see home care as an option and not a problem. I believe only good things will result from that.
Aveanna, based in Atlanta, provides home health, hospice and other services for a wide variety of patients in locations across 30 states.
Specific legislation, such as the Build back Better Act, is available. Which has been stalledAveanna is less concerned by this. Strange explained that it is almost unprecedented for lawmakers and policymakers to be on the same page regarding home-based care as part of the solution to many health care problems, both before and after the pandemic.
Strange stated that he believes this is evidenced in the fact that the final rule regarding home health was even better than what the industry expected. This is the first time this has happened in decades. [people]Home care is being seen as a valuable and accretive part of the overall cost reductions in health care. And I think we’re feeling that all around.
Aveanna is optimistic that the Home Health Value-Based Purchasing Model (HHVBP), has been expanded across the country. The final rule saw a 3.2% rate rise, which is far more than the 1.7% increase originally proposed.
Aveanna doesn’t rely entirely on Medicare-based home care reimbursement. Aveanna believes that its diversification of payer sources, which includes a greater reliance on Medicaid is one of its strengths.
We’ve continued double-digit revenue growth, and we have a very diversified and positive payer reimbursement environment, Strange said. We love the variety. [environment]Give us your right now.
Maintaining a positive position
Aveanna did not lower its revenue guidance for Q3 of 2021. However, it maintained its EBITDA guidance.
The company is confident that it will continue to be on track by managing its expenses more effectively and maintaining a disciplined approach when managing its gross profit margins through 2022.
These expenses were exacerbated by the near-term labor shortages. Strange stated that the company offered incentives and bonuses to employees, but many of those costs have already subsided.
He stated that we, along with all other health care providers, are engaged in hand to hand combat over every single caregiver and nurse on the company’s last earnings call.
It hasn’t had a significant impact on the labor market, as the 10-day quarantines were reduced to 5-day quarantines for COVID-19 infected workers. Strange said that it hasn’t had a material effect on their labor situation.
The company does not believe that the Omicron-induced price rise will cause any long-term problems.
We believe not only that we can weather the storm that we’re in with this pandemic, Strange said during the conference. But also that when we come through the other side, we’ll be well positioned.
It’s not like growth has stalled. Aveanna actually closed multiple deals during the fourth-quarter.
By protecting the margins through the pandemic, we’ll be well positioned to pick up the pace and start back on our path to growth [moving forward]Strange said it.