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What changed in Aveanna Healthcare Holdings, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Aveanna Healthcare Holdings, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+642 added−706 removedSource: 10-K (2025-03-13) vs 10-K (2024-03-14)

Top changes in Aveanna Healthcare Holdings, Inc.'s 2025 10-K

642 paragraphs added · 706 removed · 545 edited across 3 sections

Item 1. Business

Business — how the company describes what it does

111 edited+23 added−33 removed151 unchanged
Biggest changeThese trainings include new-hire compliance training for all new employees, annual compliance training for all employees, sales compliance training to all members of our sales team, billing compliance training to all members of our billing and revenue cycle team and other job-specific and role-based compliance training of certain employees; • monthly verification that current and potential employees are not classified as an excluded individual who is prohibited from participation in any federal healthcare program, such as Medicare or Medicaid; • implementing an annual compliance auditing and monitoring work plan and performing and following up on various risk-based auditing and monitoring activities, including both clinical and non-clinical auditing and monitoring activities at the corporate level and at the local agency/facility level; • monitoring, responding to and overseeing the resolution of compliance issues and concerns raised through the various means of reporting, including our confidential and anonymous compliance hotline; and • taking appropriate corrective and disciplinary action when noncompliant or improper conduct is identified.
Biggest changeOur compliance program includes, among other things: • drafting and revising the Company’s policies and procedures related to compliance and ethics issues; • reviewing, revising, and disseminating our Code of Conduct; • evaluating compliance with our policies and procedures, Code of Conduct and legal and regulatory requirements related to the Medicare and Medicaid programs and other government healthcare programs, laws and regulations; • providing new hire and annual training and education to all of our employees, officers, directors, contractors and other representatives and agents on our compliance program and potential compliance risks; • monthly verification that current and potential employees are not classified as an excluded individual who is prohibited from participation in any federal healthcare program, such as Medicare or Medicaid; • implementing an annual compliance work plan and performing and following up on various risk-based auditing and monitoring activities, including both clinical and non-clinical auditing and monitoring activities; • monitoring, responding to and overseeing the resolution of compliance issues and concerns raised through the various means of reporting, including our confidential and anonymous compliance hotline; and 19 • taking appropriate corrective and disciplinary action when noncompliant or improper conduct is identified.
Overview We are a leading, diversified home care platform focused on providing care to medically complex, high-cost patient populations. We directly address the most pressing challenges facing the U.S. healthcare system by providing safe, high-quality care in the home, a lower cost care setting preferred by patients.
Overview We are a leading, diversified home care platform focused on providing care to medically complex, high-cost patient populations. We directly address the most pressing challenges facing the U.S. healthcare system by providing safe, high-quality care in the home, the lower cost care setting preferred by patients.
From day one at Aveanna, we welcome new hires into our culture with training centered around our Core Values to deliver care with compassion , work with team 6 integrity , strive for inclusion , embody trust , seek innovation and have fun . Compliance is the backdrop that underscores everything we do.
From day one at Aveanna, we 6 welcome new hires into our culture with training centered around our Core Values to deliver care with compassion , work with team integrity , strive for inclusion , embody trust , seek innovation and have fun . Compliance is the backdrop that underscores everything we do.
We have made significant investments in our technology and corporate infrastructure to build a scalable care delivery platform. Our technology platform includes multiple cloud applications for managing our business which enable and automate all of our mission critical business functions including caregiver recruiting, staffing, electronic health data capture, financial management, payroll, human resources management and billing and logistics.
We have made significant investments in our technology and corporate infrastructure to build a scalable care delivery platform. Our technology platform includes multiple cloud applications for managing our business which enable and automate all of our mission critical business functions including caregiver recruiting, staffing, electronic health data capture, financial management, payroll, human resources management, billing, and logistics.
These state laws may mirror the federal Stark Law or may be different in scope. The available guidance and enforcement activity associated with such state laws varies considerably. We monitor all aspects of our business and have developed a comprehensive ethics and compliance program that is designed to meet or exceed applicable federal guidelines and industry standards.
These state laws may mirror the Stark Law or may be different in scope. The available guidance and enforcement activity associated with such state laws varies considerably. We monitor all aspects of our business and have developed a comprehensive ethics and compliance program that is designed to meet or exceed applicable federal guidelines and industry standards.
Stark Law Federal law includes a provision commonly known as the “Stark Law.” This law prohibits a physician (defined to include a doctor of medicine or osteopathy, a doctor of dental surgery or dental medicine, a doctor of podiatric medicine, a doctor of optometry, or a chiropractor) from referring Medicare and Medicaid patients to certain types of entities with which the physician or any of the physician’s immediate family members have a financial relationship, unless an exception to the law’s prohibition is met.
Stark Law Federal law includes a provision commonly known as the “Stark Law.” This law prohibits a physician (defined to include a doctor of medicine or osteopathy, a doctor of dental surgery or dental medicine, a doctor of podiatric medicine, a doctor of optometry, or a 14 chiropractor) from referring Medicare and Medicaid patients to certain types of entities with which the physician or any of the physician’s immediate family members have a financial relationship, unless an exception to the law’s prohibition is met.
Complying with these various laws, rules, regulations and standards, and with any new laws or regulations changes to existing laws, could cause us to incur substantial costs that are likely to increase over time, require us to 15 change our business practices in a manner adverse to our business, divert resources from other initiatives and projects, and restrict the way products and services involving data are offered.
Complying with these various laws, rules, regulations and standards, and with any new laws or regulations changes to existing laws, could cause us to incur substantial costs that are likely to increase over time, require us to change our business practices in a manner adverse to our business, divert resources from other initiatives and projects, and restrict the way products and services involving data are offered.
Our Growth Strategy Increase Volumes within Our Existing Footprint We expect to continue to gain share in our existing local markets through our “virtuous cycle” strategy, leveraging our highly regarded brand, service breadth, nurse recruiting and go-to-market capabilities to win a higher share of cases each year, expand our number of referral sources and grow our payer partnerships to deliver value in our services.
Our Growth Strategy Increase Volumes within Our Existing Footprint 8 We expect to continue to gain share in our existing local markets through our “virtuous cycle” strategy, leveraging our highly regarded brand, service breadth, nurse recruiting and go-to-market capabilities to win a higher share of cases each year, expand our number of referral sources and grow our payer partnerships to deliver value in our services.
We also administer payer authorized respite care (a form of non-medical personal care) and related services primarily to patients with intellectual and developmental disabilities or special needs. In the non-clinical business, the family primarily recruits and supervises the care provider. We oversee the administration of payroll taxes, provide cardiopulmonary resuscitation training and/or first aid certification and U.S.
We also administer payer authorized respite care (a form of non-medical personal care) and related services primarily to patients with intellectual and developmental disabilities or special needs. In this non-clinical business, the family primarily recruits and supervises the care provider. We oversee the administration of payroll taxes, provide cardiopulmonary resuscitation training and/or first aid certification and U.S.
The length of service for a patient under our care can be three or more years until the patient graduates from the need for a feeding tube, ventilator or tracheostomy. This affords us the distinct ability to improve outcomes and control costs. However, many of our highest acuity patients remain on our services for ten or more years.
The length of service for a patient under our care can be three or more years until 4 the patient graduates from the need for a feeding tube, ventilator or tracheostomy. This affords us the distinct ability to improve outcomes and control costs. However, many of our highest acuity patients remain on our services for ten or more years.
Violations may result in penalties of up to $1.0 million per violation and/or other disincentives. In addition to the federal HIPAA regulations, most states also have laws that regulate the collection, storage, use, retention, security, disclosure, transfer and other processing of health information and other confidential, sensitive and personal data.
Violations may result in penalties of up to $1.0 million per violation and/or other disincentives. 15 In addition to the federal HIPAA regulations, most states also have laws that regulate the collection, storage, use, retention, security, disclosure, transfer and other processing of health information and other confidential, sensitive and personal data.
We seek to meet a full range of care needs for patients while minimizing the complexity and potential disruption to patient care associated with procuring multiple types of care from a number of independent providers. We believe this positions us as the provider of choice for patients, families, referral sources and payers.
We seek to meet a full range of care needs for patients while minimizing the complexity and potential disruption to patient care associated with procuring multiple types of care services from a number of independent providers. We believe this positions us as the provider of choice for patients, families, referral sources and payers.
We also employ an equity incentive plan to attract, retain, motivate, and 20 reward certain employees and directors through the issuance of equity-based incentive compensation awards, provide for employee participation in our employee stock purchase plan on a discounted basis, as well as cash-based performance bonuses.
We also employ an equity incentive plan to attract, retain, motivate, and reward certain employees and directors through the issuance of equity-based incentive compensation awards, provide for employee participation in our employee stock purchase plan on a discounted basis, as well as cash-based performance bonuses.
The experience and discipline the collective team brings to our acquisition strategy enables us to pursue and integrate multiple acquisitions simultaneously without disruption to our business or that of a target. We believe this is a truly differentiated capability relative to our home health peers.
The experience and discipline the collective team brings to our acquisition strategy enables us to pursue and integrate multiple acquisitions simultaneously without disruption to our business or that of an acquisition target. We believe this is a truly differentiated capability relative to our home health peers.
In states that outsource some or all of the Medicaid administration to managed care, MCOs receive a per-member-per-month capitation payment from the state and then contract for reimbursement rates with each provider of services within the state.
In states that outsource some or all of the Medicaid administration to managed care, MCOs generally receive a per-member-per-month capitation payment from the state and then contract for reimbursement rates with each provider of services within the state.
This training focuses on intentional inclusion, intersectionality and personal awareness to further support an 21 inclusive, equitable workforce. Our goal for these training programs is to ensure all employees and stakeholders feel valued and supported. Cultural Assessment/Employee Engagement Surveys .
This training focuses on intentional inclusion, intersectionality, and personal awareness to further support an inclusive, equitable workforce. Our goal for these training programs is to ensure all employees and stakeholders feel valued and supported. Cultural Assessment/Employee Engagement Surveys .
Our caregivers, a majority of whom are registered nurses and licensed practical nurses, monitor an individual’s condition, administer medications and treatment regimens, provide enteral and other forms of tube feeding, monitor and maintain ventilators, administer pain management 4 treatments and coordinate other forms of medical care.
Our caregivers, a majority of whom are registered nurses and licensed practical nurses, monitor an individual’s condition, administer medications and treatment regimens, provide enteral and other forms of tube feeding, monitor and maintain ventilators, administer pain management treatments and coordinate other forms of medical care.
These include standards for common healthcare transactions, such as: claims information, plan eligibility, payment information and the use of 14 electronic signatures; unique identifiers for providers, employers, health plans and individuals; and security, privacy, breach notification and enforcement.
These include standards for common healthcare transactions, such as: claims information, plan eligibility, payment information and the use of electronic signatures; unique identifiers for providers, employers, health plans and individuals; and security, privacy, breach notification and enforcement.
Section 1861(dd) of the SSA and 42 CFR Part 418 establish the conditions that a hospice must meet in order to participate in the Medicare program. These COPs set forth the health and safety requirements that a hospice must meet.
Section 1861(dd) of the SSA and 42 CFR Part 418 establish the COPs that a hospice must meet in order to participate in the Medicare program. These COPs set forth the health and safety requirements that a hospice must meet.
Medicaid policy is determined at a state level across each of the states in which we offer these services, providing stability as compared to Medicare reimbursement, which is determined at the federal level.
Medicaid policy is generally determined at a state level across each of the states in which we offer these services, providing stability as compared to Medicare reimbursement, which is determined at the federal level.
Although traditional Medicaid eligibility is often determined by income or assets, private duty services patients typically qualify for Medicaid regardless of their family’s income 9 because of their medical conditions.
Although traditional Medicaid eligibility is often determined by income or assets, private duty services patients typically qualify for Medicaid because of their medical conditions, regardless of their family’s income.
We monitor all aspects of our business and have developed a comprehensive ethics and compliance program that is designed to monitor and address prevention of anti-fraud and kickback laws.
We monitor all aspects of our business and have developed a comprehensive ethics and compliance program that is designed to monitor and address prevention of anti-fraud and kickback laws violations.
Medicare Administrative Contractors are private health care insurers that have been awarded a geographic jurisdiction to process Medicare Part A and Part B (A/B) medical claims or durable medical equipment claims for Medicare fee-for-service beneficiaries. Final payments may reflect base payment adjustments for case-mix and geographic wage differences and 2% sequestration reduction for episodes that began after March 31, 2013.
Medicare Administrative Contractors are private health care insurers that have been awarded a geographic jurisdiction to process Medicare Part A and Part B medical claims or durable medical equipment claims for Medicare beneficiaries. Final payments may reflect base payment adjustments for case-mix and geographic wage differences and 2% sequestration reduction for episodes that began after March 31, 2013.
As a result, we are routinely the subject of such audits, reviews, and investigations. The DOJ, CMS or other federal and state enforcement and regulatory agencies may conduct additional investigations related to the Company’s businesses in the future. These audits and investigations could potentially cause delays in collections, recoupments, retroactive adjustment to amounts previously paid from governmental payers.
As a result, we are routinely the subject of such audits, reviews, and investigations. HHS, DOJ, CMS or other federal and state enforcement and regulatory agencies may conduct investigations related to the Company’s businesses in the future. These audits and investigations could potentially cause delays in collections, recoupments, retroactive adjustment to amounts previously paid from governmental payers.
As we acquire companies, we apply for accreditation 12 to 18 months after completing the acquisition. Federal and State Anti-Fraud and Anti-Kickback Laws As a provider under the Medicare and Medicaid systems, we are subject to various federal anti-fraud and abuse laws, including, without limitation, the federal healthcare programs’ anti-kickback statute, 42 U.S.C. § 1320a-7b (the “Anti-Kickback Statute”).
As we acquire companies, we apply for accreditation 12 to 18 months after completing the acquisition. Federal and State Anti-Fraud and Anti-Kickback Laws As a provider under the Medicare and Medicaid systems, we are subject to various federal anti-fraud and abuse laws, including, without limitation, the federal anti-kickback statute, 42 U.S.C. § 1320a-7b (the “Anti-Kickback Statute”).
The Company’s costs to respond to and defend any such audits, reviews and investigations could be significant and are likely to increase in the current enforcement environment. 16 FDA Regulation The U.S. Food and Drug Administration (“FDA”) regulates medical device user facilities, which include home health providers.
The Company’s costs to respond to and defend any such audits, reviews and investigations could be significant and are likely to increase in the current enforcement environment. FDA Regulation The U.S. Food and Drug Administration (“FDA”) regulates medical device user facilities, which include home health and hospice providers.
Changes to our reimbursement rates tend to mirror wage inflation, supporting historically stable gross margins. The majority of our caregivers earn well above minimum wage and are not impacted by minimum wage increases. Private Duty Services Reimbursement The primary payers for our private duty services are state-based Medicaid programs and MCOs.
Changes to our reimbursement rates tend to mirror wage inflation over time, supporting historically stable gross margins. The majority of our caregivers earn well above minimum wage and are not impacted by minimum wage increases. Private Duty Services Reimbursement The primary payers for our private duty services are state-based Medicaid programs and MCOs.
Scale Advantages Result in a Network Effect, Accelerating Growth Our scale enables a virtuous cycle of network effects and competitive advantages to our business.
Scale Advantages Result in a Network Effect, Accelerating Growth 7 Our scale enables a virtuous cycle of network effects and competitive advantages to our business.
Additionally, the DRA required providers who receive $5 million or more annually from Medicaid to include information on federal and state false claims acts, whistleblower protections and the providers’ own policies on detecting and preventing fraud in their written employee policies.
Additionally, the DRA requires providers who receive $5 million or more annually from Medicaid to include information on federal and state false claims acts, whistleblower protections and the providers’ own policies on detecting and preventing fraud in their written employee policies.
In addition to the FCA, the federal government may use several criminal statutes to prosecute the submission of false or fraudulent claims for payment to the federal government. Many states have false claims laws similar to the FCA that impose liability for the types of acts prohibited by the FCA.
In addition to the FCA, the federal government may use several criminal statutes to prosecute the submission of false or fraudulent claims for payment to the federal government. Further, many states have false claims laws similar to the FCA that impose liability for 16 the types of acts prohibited by the FCA.
These states limit the entry of new providers or services and the expansion of existing 12 providers or services in their markets through a CON process, which is periodically evaluated and updated as required by applicable state law.
These states limit the entry of new providers or services and the expansion of existing providers or services in their markets through a CON or POA process, which is periodically evaluated and updated as required by applicable state law.
We also enjoy strong satisfaction scores in patient surveys and benefit from a strong reputation with referral sources. Human Capital As of December 30, 2023, we employed approximately 3,500 full-time support staff personnel with the remainder of our 30,000 employees employed on a part-time, temporary, per-diem or full-time basis.
We also enjoy strong satisfaction scores in patient surveys and benefit from a strong reputation with referral sources. Human Capital As of December 28, 2024, we employed approximately 3,500 full-time support staff personnel with the remainder of our 30,000 employees employed on a part-time, temporary, per-diem or full-time basis.
Notably, CMS is required by the law to analyze data for CYs 2020-2026, retrospectively, to determine the impact of the difference between assumed and actual behavior changes and to make any such payment changes as are necessary to offset or supplement the adjustments based on anticipated behavior.
Notably, CMS is required by the law to analyze data for calendar years 2020-2026, retrospectively, to determine the impact of the difference between assumed and actual behavior changes and to make any such payment changes as are necessary to offset or supplement the adjustments based on anticipated behavior.
We have made these investments in anticipation of the industry's move to value-based care and are well-positioned to take advantage of this opportunity.
We have made these investments in anticipation of the industry's move to value-based care and we believe that we are well-positioned to take advantage of this opportunity.
In particular, FERA attempts to clarify that liability may be established not only for false claims submitted directly to the government, but also for claims submitted to government contractors and grantees. FERA also seeks to clarify that liability exists for attempts to avoid repayment of overpayments, including improper retention of federal funds.
In particular, FERA clarifies that liability may be established not only for false claims submitted directly to the government, but also for claims submitted to government contractors and grantees. FERA also clarifies that liability exists for attempts to avoid repayment of overpayments, including improper retention of federal funds.
Furthermore, we believe that there is an opportunity for us to capture additional volume from the shift to managed care as MCOs prefer to partner with scale providers like Aveanna who deliver a broad range of services with consistently high-quality care and can demonstrate appropriate cost savings for MCOs by avoiding unplanned hospitalizations.
Furthermore, we believe that we have an opportunity to capture additional volume from the shift to managed care as MCOs prefer to partner with scale providers like Aveanna who deliver a broad range of services with consistently high-quality care and can demonstrate appropriate cost savings for MCOs by avoiding unplanned hospitalizations.
Our DEI Mission Our DEI mission is to attract and sustain a diverse and inclusive workforce by recruiting, hiring, developing, retaining and promoting high-performing individuals who work collaboratively with one another to achieve our vision as defined by our core values. Our DEI Strategic Initiative We understand that the most effective business strategies require vision and long-term commitment.
Our DEI Mission Our DEI mission is to attract and sustain a diverse and inclusive workforce by recruiting, hiring, developing, retaining, and promoting high-performing individuals who collaborate with one another to achieve our vision as defined by our Core Values. 20 Our DEI Strategic Initiative We understand that the most effective business strategies require vision and long-term commitment.
Our Aveanna Hope Devices and point-of-care technology that we have deployed to our frontline caregivers on tablets and mobile devices significantly improves caregiver efficiency and data collection. We believe our platform is a significant competitive advantage in the marketplace, driving superior operating performance and margins that enable us to reinvest in growth.
Our Aveanna Hope Devices and point-of-care technology that we have deployed to our frontline caregivers on tablets and mobile devices significantly improves caregiver efficiency and data collection. We believe our care delivery platform provides us with a significant competitive advantage in the marketplace, driving superior operating performance and margins that enable us to reinvest in growth.
Reinvest in Our Platform to Optimize Performance We believe ongoing investment in our platform drives greater efficiency across our business, generating a virtuous cycle that allows us to continue growing. We plan to continually invest in improving our people, technology and processes to further drive volumes, leverage our corporate infrastructure and drive higher margins over time.
Reinvest in Our Platform to Optimize Performance and Deliver Data-Driven Results We believe ongoing investment in our platform drives greater efficiency across our business, generating a virtuous cycle that allows us to continue growing. We plan to continually invest in improving our people, technology and processes to further drive volumes, leverage our corporate infrastructure and drive higher margins over time.
We leverage extensive recruiting and employee data to identify, attract, and engage a skilled and diverse talent pool to assist us in the management, development and retention of our valuable workforce. Our Diversity, Equity & Inclusion (“DEI”) Vision Aveanna is a company where all employees of various cultures, walks of life, and abilities are valued.
We leverage extensive recruiting and employee data to identify, attract, and engage a skilled and diverse talent pool to assist us in the management, development and retention of our valuable workforce. Our Diversity, Equity & Inclusion (“DEI”) Vision Aveanna is a company with a truly diverse workforce, where all employees of various cultures and abilities are valued.
The base payment rate does not take into consideration the 2% sequestration payment reduction mandated by the Budget Control Act of 2011. 10 Home health payment rates are updated annually by the home health market basket percentage as adjusted by Congress. The U.S.
The base payment rate does not take into consideration the 2% sequestration payment reduction mandated by the Budget Control Act of 2011. Home health payment rates are updated annually by the home health market basket percentage as adjusted by Congress.
FERA also included amendments to FCA procedures, expanding the government’s ability to use the Civil Investigative Demand process to investigate defendants, and permitting government complaints in intervention to relate back to the filing of the whistleblower’s original complaint. FERA has increased both the volume and liability exposure of FCA cases brought against healthcare providers.
FERA included revisions to FCA procedures, expanding the government’s ability to use its civil investigative demand process to investigate defendants, and permitting government complaints in intervention to relate back to the filing of the whistleblower’s original complaint. FERA has increased both the volume and liability exposure of FCA cases brought against healthcare providers.
Acquirer of Choice with Proven Ability to Integrate Acquisitions and Realize Synergies Our scaled, national platform in otherwise highly fragmented markets positions us as a clear acquirer of choice for smaller providers seeking to partner with a leading platform. Since 2017, we have completed and integrated seventeen acquisitions.
Acquirer of Choice with Proven Ability to Integrate Acquisitions and Realize Synergies Our scaled, national platform in otherwise highly fragmented markets positions us as a clear acquirer of choice for smaller providers seeking to partner with an industry leader. Since 2017, we have completed and integrated seventeen acquisitions.
Our reimbursement sources are comprised of more than 1,750 distinct payers that include Medicaid managed care organizations (“MCOs”), state-based Medicaid programs, Medicare, Medicare Advantage plans, commercial insurance plans and other governmental payers across 33 states. Each contract we have with our payers is unique and specific to that payer, creating additional diversification benefits.
Our reimbursement sources are comprised of more than 1,500 distinct payers that include Medicaid managed care organizations (“MCOs”), 9 state-based Medicaid programs, Medicare, Medicare Advantage plans, commercial insurance plans and other governmental payers across 34 states. Each contract we have with our payers is unique and specific to that payer, creating additional diversification benefits.
Qualifying patients also may receive reimbursement for occupational therapy, medical social services, and home health aide services if these additional services are part of a plan of care prescribed by a physician. We submit all home health Medicare claims through Medicare Administrative Contractors for the federal government.
Qualifying patients also may receive reimbursement for occupational therapy, medical social services, and home health aide services if these additional services are part of a plan of care prescribed by a physician. We submit all home health Medicare claims through Medicare Administrative Contractors for CMS.
Aveanna’s Medicare MS business line could be impacted by the future Durable Medical Equipment, Prosthetics, Orthotics and Supplies (“DMEPOS”) competitive bid award that sets payment rates for DMEPOS items and services. The DMEPOS program provides Medicare reimbursement to suppliers of medical items, including, among such other things, enteral nutrition products and oxygen, for Medicare beneficiaries.
Aveanna’s Medicare MS business line could be impacted if CMS reinitiates the Durable Medical Equipment, Prosthetics, Orthotics and Supplies (“DMEPOS”) competitive bid award that sets payment rates for DMEPOS items and services. The DMEPOS program provides Medicare reimbursement to suppliers of medical items, including, among such other things, enteral nutrition products and oxygen, for Medicare beneficiaries.
These audits evaluate the appropriateness of billings submitted for payment. In addition to identifying overpayments, audit contractors can refer suspected violations of law to government enforcement authorities.
These ADRs and other audits evaluate the appropriateness of billings submitted for payment. In addition to identifying overpayments, audit contractors can refer suspected violations of law to government enforcement authorities.
Our patient-centered care delivery platform is designed to improve the quality of care our patients receive, which allows them to remain in their homes and minimizes the overutilization of high-cost care settings such as hospitals or skilled nursing facilities.
Our patient-centered care delivery platform is designed to improve the quality of care our patients receive, which allows them to remain in their homes and minimizes the overutilization of high-cost care settings such as hospitals.
Payers • We are a trusted frontline caregiver with close relationships with our payer partners, giving Aveanna the ability to deliver faster discharges into the home or allow patients to remain in the home as opposed to an acute care setting. • We offer efficiency as a single-source contracting solution across a wide range of services and markets. • We continuously engage in and pursue value-based care models to align interests and save costs for payers.
Payers • We are a trusted frontline caregiver with close relationships with our payer partners, giving Aveanna the ability to deliver faster discharges into the home or allow patients to remain in the home as opposed to an acute care setting. • We offer efficiency as a single-source contracting solution across a wide range of services and markets. • We continuously engage in and pursue value-based care models (for example, tying compensation for services to enhancing patient outcomes and quality of care) in order to align interests and save costs for payers.
For 2023, penalties for HIPAA violations can range from $137 to $2.067 million per violation with a maximum fine of $2.067 million for identical violations during a calendar year. ARRA also authorized State Attorneys General to bring civil enforcement actions under HIPAA, and attorney generals are actively engaged in enforcement.
For 2024, penalties for HIPAA violations can range from $141 to $2.134 million per violation with a maximum fine of $2.134 million for identical violations during a calendar year. ARRA also authorized State Attorneys General to bring civil enforcement actions under HIPAA, and attorney generals are actively engaged in enforcement.
Our DEI Committee is composed of diverse members from our various business units who are passionate about helping us continue to develop a more inclusive workplace.
Inclusion Ambassadors . This committee of ambassadors is composed of diverse members from our various business units who are passionate about helping us continue to develop a more inclusive workplace.
Federal and State Privacy and Security Laws The Health Insurance Portability and Accountability Act (“HIPAA”) requires our covered entities to comply with standards for the exchange of health information within our company and with third parties, such as payers, business associates and patients.
Federal and State Privacy and Security Laws The Health Insurance Portability and Accountability Act, as amended by the Health Information Technology for Economic and Clinical Health Act. (collectively, “HIPAA”) requires our covered entities to comply with standards for the exchange of health information within our company and with third parties, such as payers, business associates and patients.
Our clinical model is led by our caregivers, who provide a range of specialized clinical care and non-clinical services to address the complex needs of each patient we serve across the full range of patient populations: newborns, children, adults and seniors.
Our clinical model is led by our caregivers, primarily skilled nurses, who provide specialized care to address the complex needs of each patient we serve across the full range of patient populations: newborns, children, adults and seniors.
A related law forbids the offer or transfer of anything of value, including certain waivers of co-payment obligations and deductible amounts, to a beneficiary of Medicare or Medicaid that is likely to influence the beneficiary’s selection of healthcare providers, again, subject to certain exceptions.
A related law, which among other things imposes monetary penalties, forbids the offer or transfer of anything of value, including certain waivers of co-payment obligations and deductible amounts, to a beneficiary of Medicare or Medicaid that is likely to influence the beneficiary’s selection of healthcare providers, again, subject to certain exceptions.
CMS assumed that home health agencies will change their documentation and coding practices and will put the highest paying diagnosis code as the principal diagnosis code in order to have a 30-day period be placed into a higher-paying clinical group.
On October 31, 2019, CMS assumed that home health agencies will change their documentation and coding practices by putting the highest paying diagnosis code as the principal diagnosis code in order to have a 30-day period be placed into a higher-paying clinical group.
Because such adjustments are determined upon the completion date of the episode, retroactive adjustments could impact our financial results. The base payment rate for Medicare home nursing was $2,010.69 per 30-day episode for the year ended December 30, 2023.
Because such adjustments are determined upon the completion date of the episode, retroactive adjustments could impact our financial results. The base payment rate for Medicare home nursing was $2,038.13 per 30-day episode for the year ended December 31, 2024.
Home Health and Hospice Services (HHH) 11 The home health market is highly competitive and fragmented. According to the Medicare Payment Advisory Commission (“MedPac”), an independent agency that advises Congress on various Medicare issues, there were approximately 11,474 Medicare-certified home health agencies in the United States in 2021.
Home Health and Hospice Services (HHH) The home health market is highly competitive and fragmented. According to the Medicare Payment Advisory Commission (“MedPac”), an independent agency that advises Congress on various Medicare issues, there were over 12,000 Medicare-certified home health agencies in the United States in 2023.
As of December 2023, sanctions within Stark Law include significant civil penalties including over $29,000 for each violation, over $199,000 for schemes to circumvent the Stark Law restrictions and up to $10,000 for each day an entity fails to report required information and exclusion from the federal healthcare programs.
As of December 2024, sanctions within Stark Law include significant civil penalties including over $30,000 for each violation, over $205,000 for schemes to circumvent the Stark Law restrictions and over $24,000 for each day an entity fails to report required information and exclusion from the federal healthcare programs.
Our 19 compliance program focuses on regulations related to the federal False Claims Act, the Stark Law, the federal Anti-Kickback Statute, fraud, waste and abuse, privacy, billing, and overall adherence to healthcare regulations.
Our compliance program focuses on laws and regulations related to the federal False Claims Act, the Stark Law, the federal Anti-Kickback Statute and their state counterparts, and overall adherence to healthcare laws and regulations pertaining to fraud, waste and abuse, privacy, billing, and collection.
We cannot predict whether new federal and state budgetary proposals will be adopted or the effect, if any, such proposals would have on its financial condition and results of operations. Quality Improvement and Regulatory Services Aveanna performs quality improvement and regulatory services.
Federal and state budgetary and other cost-containment pressures will continue to impact the DME industry. We cannot predict whether new federal and state budgetary proposals will be adopted or the effect, if any, such proposals would have on its financial condition and results of operations. Quality Improvement and Regulatory Services Aveanna performs quality improvement and regulatory services.
Violations of the Stark Law may also result in payment denials, false claim recoveries, civil monetary penalties, and/or federal program exclusion. Several of the states in which we conduct business have also enacted statutes similar in scope and purpose to the federal fraud and abuse laws and the Stark Law.
Violations of the Stark Law trigger overpayment liability, and may also result in payment denials, false claim recoveries, civil monetary penalties, and/or federal program exclusion. Several of the states in which we conduct business have also enacted statutes similar in scope and purpose to the Stark Law's self-referral prohibitions.
In states where traditional FFS Medicaid is the primary payer source for PDN services, there is no rate negotiation; providers simply must accept the rate offered by the state Medicaid system or choose not to accept Medicaid patients and/or be reimbursed by the state Medicaid system.
In states where traditional FFS Medicaid is the primary payer source for PDN services, providers do not have the ability to negotiate reimbursement rates; providers simply must accept the rate offered by the state Medicaid system or choose not to accept Medicaid patients and/or be reimbursed by the state Medicaid system.
Government Regulation General Aveanna’s business is subject to extensive federal, state and, in some instances, local regulations and standards which govern, among other things: Medicare, Medicaid, TRICARE (the Department of Defense’s managed healthcare program for military personnel/retirees and their families) and other government-funded reimbursement programs; reporting requirements, certification and licensing standards and in some cases, Certificate of Need (“CON”) requirements for certain home health agencies and hospices.
Government Regulation General Aveanna’s business is subject to extensive federal, state and, in some instances, local regulations and standards which govern, among other things: Medicare, Medicaid, TRICARE (the Department of Defense’s managed healthcare program for military personnel/retirees and their families) and other government-funded reimbursement programs; reporting requirements, certification and licensing standards and in some cases, Certificate of Need (“CON”) requirements for certain home health agencies and hospices. 12 Aveanna’s compliance with these regulations and standards may affect its participation in Medicare, Medicaid, TRICARE and other federal and state healthcare programs, as well as its ability to be reimbursed by private payers.
While Aveanna cannot predict the outcome of the DMEPOS Competitive Bidding Program on its MS business in the future, nor the Medicare payment rates that will be in effect in future years for the items subjected to competitive bidding, the program may materially adversely affect its financial condition and results of operations.
While Aveanna cannot predict when CMS will reinitiate the DMEPOS bidding program or its outcome, including the Medicare payment rates that will be in effect in future years for the items subjected to competitive bidding; however, the outcome of the program may materially adversely affect the Company's financial condition and results of operations.
The DEI Committee has been designed as a core group to propose ideas and develop programming to support a sense of belonging and community in collaboration with our DEI Leadership Team and through our growing Employee Resource Groups (“ERGs”). Annual Enterprise-Wide Inclusion Sensitivity Training . We provide our employees programming, education and training on diversity, inclusion, and belonging.
The committee has been designed as a core group to propose ideas and develop programming to support a sense of belonging and community in collaboration with our DEI Executive Committee through our growing Aveanna Connection Groups and Aveanna Social Circles. Enterprise-Wide Inclusion Training . We provide our employees with programming, education and training on diversity, inclusion, and belonging.
High error rates could lead to further audit activity and regulatory burdens and could result in Aveanna making significant refunds and other payments to Medicare and other government programs. Accordingly, Aveanna’s future revenues and cash flows from government healthcare programs may be reduced. Private payers also may conduct audits and may take legal action to recover alleged overpayments.
High error rates could lead to further audit activity and regulatory burdens and could result in Aveanna making significant refunds and other payments to Medicare and other government programs. Accordingly, Aveanna’s future revenues and cash flows from government healthcare programs may be reduced.
The DMEPOS Competitive Bidding Program was mandated by Congress through the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. The statute requires that Medicare replace the DMPEOS fee schedule payment methodology for selected DMEPOS items with a competitive bid process. Under the program, a competition among suppliers who operate in a particular competitive bidding area (“CBA”) is conducted.
The DMEPOS Competitive Bidding Program was mandated by Congress through the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. The statute requires that Medicare replace the DMPEOS fee schedule payment methodology for selected DMEPOS items with a competitive bid process.
Our IMO team has developed a proven playbook over long merger and acquisition careers to lead the quick and synergistic integration of our acquisitions.
Our IMO team has developed a proven playbook over long merger and acquisition careers to lead the timely integration of our acquisitions while rapidly gaining synergies.
We maintain discipline in our approach to valuation and have consistently realized our deal-related growth and operational objectives. We have historically targeted two types of acquisitions: tuck-in and expansion. Our tuck-in acquisitions are smaller in scale, highly synergistic and are meant to drive further density in existing markets, with integration time generally measured in weeks.
We have historically targeted two types of acquisitions: tuck-in and expansion. Our tuck-in acquisitions are smaller in scale, highly synergistic and are meant to drive further density in existing markets, with integration time generally measured in weeks.
The final rule also established a six-year lookback period, meaning overpayments must be reported and returned if a person identifies the overpayment within six years of the date the overpayment was received. A provider must report and return overpayments even if the provider did not cause the overpayment.
“Identification” occurs when a person “knowingly receives or retains an overpayment.” The regulations also established a six-year lookback period, meaning overpayments must be reported and returned if a person identifies the overpayment within six years of the date the overpayment was received. A provider must report and return overpayments even if the provider did not cause the overpayment.
In particular, we believe that (1) our larger nursing panel and one stop shop service offering translate into higher referent satisfaction levels, higher win rates and more case volumes, (2) our advantaged nurse recruiting, training and staffing capability translate into higher case fill rates and a higher quality of care, (3) our large and sophisticated business development team translates into higher rates of referent penetration in local hospitals, (4) our robust experience with managing payer relations gives us the ability to have conversations with our Managed Care partners to create value-based care arrangements, (5) our stronger set of regional management leaders translates into better execution, and (6) our investments in technology drive efficiency and quality.
In particular, we believe that (1) our larger nursing panel and one stop shop service offering translate into higher referent satisfaction levels, higher win rates and more case volumes, (2) our advantaged nurse recruiting, training and staffing capability translate into higher case fill rates and a higher quality of care, (3) our large and sophisticated business development team translates into higher rates of referent penetration in local hospitals, as well as better relationships with payers allowing for meaningful partnerships that help drive volume and rate while creating value-based care arrangements with our managed care organization partners, (4) our stronger set of regional management leaders translates into better execution, and (5) our investments in technology drive efficiency and quality.
Each employee has an equal opportunity for growth and success; thereby increasing organizational capacity to achieve our mission of revolutionizing the way home care is delivered - one patient at a time - while preserving and cultivating our culture of corporate and social responsibility.
Each employee has an equal opportunity for growth and success here at Aveanna, thereby increasing organizational capacity as we work together to achieve our mission of revolutionizing the way home care is delivered, one patient at a time.
Each day of hospice benefit, a level of care is assigned based on one of four case types: routine home care, continuous home care, inpatient respite care and general inpatient care.
Medicare pays hospices a daily rate for each day a beneficiary is enrolled in the hospice benefit. Each day of hospice benefit, a level of care is assigned based on one of four case types: routine home care, continuous home care, inpatient respite care and general inpatient care.
Additionally, Aveanna’s competitors will likely strive to improve their service offerings and drive growth in non-government reimbursed programs. Aveanna also expects its competitors to develop new strategic relationships with providers, referral sources and payers, which could result in increased competition. Medical Solutions (MS) The medical solutions industry in which Aveanna operates is highly competitive, fragmented and market specific.
Aveanna also expects its competitors to develop new strategic relationships with providers, referral sources and payers, which could result in increased competition. Medical Solutions (MS) The medical solutions industry in which Aveanna operates is highly competitive, fragmented and market specific.
Aveanna believes that it has a favorable competitive position, attributable mainly to the consistently high quality and targeted services it has historically provided to its patients, as well as to its screening and evaluation procedures and training programs for clinical associates who provide direct care to patients.
Aveanna believes that it has a favorable competitive position, attributable mainly to the consistently high quality and targeted services it has historically provided to its patients, as well as to its screening and evaluation procedures and training programs for clinical associates who provide direct care to patients. 11 Additionally, Aveanna’s competitors will likely strive to improve their service offerings and drive growth in non-government reimbursed programs.
Failure to report such data when required would subject a facility to a 2.0% reduction in market basket prices then in effect.
If we fail to report such data when required, we could be subject to a 2.0% reduction in market basket prices then in effect.
We utilize a robust cultural assessment (employee engagement) tool to track our progress in creating a more diverse, equitable and inclusive workplace over time and identify new opportunities in this space. Employee Resource Groups .
We utilize a robust cultural assessment (employee engagement) tool to track our progress in creating a more diverse, equitable and inclusive workplace over time and identify new opportunities in this space. Aveanna Connection Groups . We have established numerous Connection Groups to foster an inclusive workplace and thereby increase employee engagement to cultivate a sense of connection and belonging.
We have created a repeatable, data-driven playbook to expand our presence across the United States and made substantial investments to support each key component of our approach.
We have proven our ability to execute our model in multiple geographies with various payers across all three verticals. We have created a repeatable, data-driven playbook to expand our presence across the United States and made substantial investments to support each key component of our approach.
CMS has adopted alternative sanction enforcement options which allow CMS to (i) impose temporary management, direct plans of correction or direct training and (ii) impose payment suspensions and civil monetary penalties in each case on providers out of compliance with the COPs.
They provide a framework for patient care, administrative and organizational processes, and quality improvement, as well as compliance with federal and state laws and regulations. 13 CMS has adopted alternative sanction enforcement options which allow CMS to (i) impose temporary management, direct plans of correction or direct training and (ii) impose payment suspensions and civil monetary penalties in each case on providers out of compliance with the COPs.
The IMO team leverages technology to develop and measure progress against each integration plan. Significant emphasis is placed on clear, early and ongoing communication and rolling out the Aveanna culture to our newly acquired companies. Our Competitive Strengths Technology-Enabled Operating Platform and Corporate Infrastructure The Aveanna platform was purpose-built to deliver high-quality clinical care efficiently.
The IMO team leverages technology to develop and measure progress against each integration plan. Significant emphasis is placed on clear, early and ongoing communication and rolling out the Aveanna culture to our newly acquired companies.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSimilarly, in the Calendar Year 2015 Home Health Final Rule, CMS established a new “Pay-for-Reporting Performance Requirement” with which provider compliance with quality reporting program requirements can be measured. Home health agencies that do not submit quality measure data to CMS are subject to a 2% reduction in their annual home health payment update percentage.
Biggest changeFailure to report data as required will subject providers to a 2% reduction in market basket prices then in effect. Similarly, in the Calendar Year 2015 Home Health Final Rule, CMS established a new “Pay-for-Reporting Performance Requirement” with which provider compliance with quality reporting program requirements can be measured.
Subject to certain exceptions, the 36 Month Rule prohibits buyers of certain home health agencies – those that either enrolled in Medicare or underwent a change in majority 36 ownership fewer than 36 months prior to the acquisition – from assuming the Medicare billing privileges of the acquired branch locations.
Subject to certain exceptions, the 36 Month Rule prohibits buyers of certain home health agencies – those that either enrolled in Medicare or underwent a change in majority ownership fewer than 36 months prior to the acquisition – from assuming the Medicare billing privileges of the acquired branch locations.
Among other things, our Amended Charter and/or Amended Bylaws include the following provisions: • a staggered board, which means that our Board of Directors is classified into three classes of directors with staggered three-year terms and directors are only able to be removed from office for cause; • limitations on convening special stockholder meetings, which could make it difficult for our stockholders to adopt desired governance changes; 47 • a prohibition on stockholder action by written consent from and after the date on which the Sponsors and each of their respective affiliates cease to beneficially own in the aggregate at least 50% of the outstanding shares of common stock (the “Trigger Event”); • a forum selection clause, which means certain litigation against us can only be brought in Delaware; • from and after the Trigger Event, the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of all of the then-outstanding shares of our common stock entitled to vote thereon; • from and after the Trigger Event, requiring the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then outstanding shares of common stock to amend provisions of our Amended Charter relating to the management of our business, our Board of Directors, stockholder action by written consent, calling special meetings of stockholders, competition and corporate opportunities, Section 203 of the Delaware General Corporation Law (the “DGCL”), forum selection and the liability of our directors, or to amend, alter, rescind or repeal our Amended Bylaws; • the authorization of undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and • advance notice procedures, which apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
Among other things, our Amended Charter and/or Amended Bylaws include the following provisions: • a staggered board, which means that our Board of Directors is classified into three classes of directors with staggered three-year terms and directors are only able to be removed from office for cause; • limitations on convening special stockholder meetings, which could make it difficult for our stockholders to adopt desired governance changes; • a prohibition on stockholder action by written consent from and after the date on which the Sponsors and each of their respective affiliates cease to beneficially own in the aggregate at least 50% of the outstanding shares of common stock (the “Trigger Event”); • a forum selection clause, which means certain litigation against us can only be brought in Delaware; • from and after the Trigger Event, the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of all of the then-outstanding shares of our common stock entitled to vote thereon; • from and after the Trigger Event, requiring the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then outstanding shares of common stock to amend provisions of our Amended Charter relating to the management of our business, our Board of Directors, stockholder action by written consent, calling special meetings of stockholders, competition and corporate opportunities, Section 203 of the Delaware General Corporation Law (the “DGCL”), forum selection and the liability of our directors, or to amend, alter, rescind or repeal our Amended Bylaws; • the authorization of undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and • advance notice procedures, which apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
However, our Amended Charter contains similar provisions providing that we many not engage in certain “business combinations” with any “interested stockholder” for a three-year period following the time that the stockholder became an interested stockholder, unless (i) prior to the time such stockholder became an interested stockholder, the Board of Directors approved the transaction that resulted in such stockholder becoming an interested stockholder, (ii) upon consummation of the transaction that resulted in such stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the common stock or (iii) following Board of Directors approval, the business combination receives the approval of the holders of at least two-thirds of our outstanding common stock not held by such interested stockholder at an annual or special meeting of stockholders.
However, our Amended Charter contains similar provisions providing that we many not engage in certain “business combinations” with any “interested stockholder” for a three-year period following the time that the stockholder became an interested stockholder, unless (i) prior to the time such stockholder became an interested stockholder, the Board of Directors approved the transaction that resulted in such stockholder becoming an interested stockholder, (ii) upon consummation of 47 the transaction that resulted in such stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the common stock or (iii) following Board of Directors approval, the business combination receives the approval of the holders of at least two-thirds of our outstanding common stock not held by such interested stockholder at an annual or special meeting of stockholders.
Given the rapid development of 44 cybersecurity and data privacy laws, we expect to encounter inconsistent interpretation and enforcement of these laws and regulations, as well as frequent changes to these laws and regulations which may expose us to significant penalties or liability for non-compliance, the possibility of fines, lawsuits (including class action privacy litigation), regulatory investigations, criminal or civil sanctions, audits, adverse media coverage, public censure, other claims, significant costs for remediation and damage to our reputation, or otherwise have a material adverse effect on our business and operations.
Given the rapid development of cybersecurity and data privacy laws, we expect to encounter inconsistent interpretation and enforcement of these laws and regulations, as well as frequent changes to these laws and regulations which may expose us to significant penalties or liability for non-compliance, the possibility of fines, lawsuits (including class action privacy litigation), regulatory investigations, criminal or civil sanctions, audits, adverse media coverage, public censure, other claims, significant costs for remediation and damage to our reputation, or otherwise have a material adverse effect on our business and operations.
Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • allocation of expenses to and among different state taxing jurisdictions; • changes in the valuation of our deferred tax assets and liabilities; • expected timing and amount of the release of any tax valuation allowances; • tax effects of stock-based compensation; • costs related to intercompany restructurings; • future acquisitions or dispositions; • changes in tax laws, tax treaties, regulations or interpretations thereof; or 39 • lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates.
Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • allocation of expenses to and among different state taxing jurisdictions; • changes in the valuation of our deferred tax assets and liabilities; • expected timing and amount of the release of any tax valuation allowances; • tax effects of stock-based compensation; • costs related to intercompany restructurings; • future acquisitions or dispositions; • changes in tax laws, tax treaties, regulations or interpretations thereof; or • lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates.
The ultimate outcome of any allegation is often 34 uncertain and, regardless of the outcome, any such claim, with or without merit, may be time-consuming, result in costly litigation, divert management’s time and attention from our business, and require us to, among other things, redesign or stop providing our products or services, pay substantial amounts to satisfy judgments or settle claims or lawsuits, pay substantial royalty or licensing fees, or satisfy indemnification obligations that we have with certain parties with whom we have commercial relationships.
The ultimate outcome of any allegation is often uncertain and, regardless of the outcome, any such claim, with or without merit, may be time-consuming, result in costly litigation, divert management’s time and attention from our business, and require us to, among other things, redesign or stop providing our products or services, pay substantial amounts to satisfy judgments or settle claims or lawsuits, pay substantial royalty or licensing fees, or satisfy indemnification obligations that we have with certain parties with whom we have commercial relationships.
If the economy were to contract into a recession (for example, as a result of a public health emergency, inflation or as a result of the recent significant increase in prevailing interest rates), our government payers or other counterparties that owe us money could be delayed in obtaining, or may not be able to obtain, necessary funding and/or financing to meet their cash flow needs.
If the economy were to contract into a recession (for example, as a result of a public health emergency, inflation or as a result of the recent significant increase in prevailing interest rates), our government payers or other counterparties that 31 owe us money could be delayed in obtaining, or may not be able to obtain, necessary funding and/or financing to meet their cash flow needs.
Costs and expenses related to these requirements are a significant operating expense and may increase as a result of, among other things, changes in federal, state or local laws or regulations, or the interpretation thereof, requiring employers to provide specified benefits or rights to employees, increases in the minimum wage and local living wage ordinances, increases in the level of existing benefits or the lengthening of periods for which unemployment benefits are available.
Costs and expenses related to these requirements are a significant operating expense and may increase as a result of, among other things, changes in federal, state or local laws or regulations, or the interpretation thereof, requiring employers to provide specified benefits or rights to employees, increases in the minimum wage and local living wage ordinances, increases in the level of existing benefits or the lengthening of periods for which unemployment benefits 44 are available.
Such person will therefore have no duty to communicate or present corporate opportunities to us, and will have the right to either hold any corporate opportunity for their (and their affiliates’) own account and benefit or to recommend, assign or otherwise transfer such corporate opportunity to persons other than us, including to any officers, directors or stockholders or their respective affiliates (other than those who are employees of the Company or its subsidiaries).
Such person will therefore have no duty to communicate or present corporate opportunities to us, and will 48 have the right to either hold any corporate opportunity for their (and their affiliates’) own account and benefit or to recommend, assign or otherwise transfer such corporate opportunity to persons other than us, including to any officers, directors or stockholders or their respective affiliates (other than those who are employees of the Company or its subsidiaries).
In accordance with Accounting Standards Codification Topic 350 “Intangibles—Goodwill and Other,” we test goodwill for impairment annually and on an interim date if factors or indicators become apparent that would require an interim test. In evaluating the potential for impairment of goodwill, we make assumptions regarding future operating performance, business trends, and market and economic conditions.
In accordance with Accounting Standards Codification Topic 350 “Intangibles—Goodwill and Other,” we test goodwill for impairment annually and on an interim date if factors or indicators become apparent that would require an interim test. 37 In evaluating the potential for impairment of goodwill, we make assumptions regarding future operating performance, business trends, and market and economic conditions.
Because we are limited in our ability to control reimbursement rates received for our services, our business could be materially adversely affected if we are not able to maintain or reduce our costs to provide such services. 26 We receive fixed payments at rates established through federal and state legislation from Medicare and Medicaid, our most significant payers, for our services.
Because we are limited in our ability to control reimbursement rates received for our services, our business could be materially adversely affected if we are not able to maintain or reduce our costs to provide such services. We receive fixed payments at rates established through federal and state legislation from Medicare and Medicaid, our most significant payers, for our services.
We expect efforts to impose greater discounts and more stringent cost controls by government and other third-party payers to continue, thereby reducing the payments we receive for our services. For example, the Medicaid Integrity Program is increasing the scrutiny placed on Medicaid payments and could result in recoupments of alleged overpayments.
We expect efforts to impose greater discounts and more stringent cost controls by government and other third-party payers to continue, thereby reducing the payments we receive for our services. For example, the CMS Medicaid Integrity Program is increasing the scrutiny placed on Medicaid payments and could result in recoupments of alleged overpayments.
While the impacts on us of the COVID-19 pandemic began to subside in the second quarter of fiscal year 2022, the labor markets remained challenging as a 31 result of both shortages in workforce and inflationary wage pressures, which have constrained our ability to recruit and retain caregivers to meet patient demand.
While the impacts of the COVID-19 pandemic on us began to subside in the second quarter of fiscal year 2022, the labor markets remained challenging as a result of both shortages in workforce and inflationary wage pressures, which have constrained our ability to recruit and retain caregivers to meet patient demand.
These increased costs require us to divert a significant amount of money that could otherwise be used to expand 46 our business and achieve certain strategic objectives. Advocacy efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs.
These increased costs require us to divert a significant amount of money that could otherwise be used to expand our business and achieve certain strategic objectives. Advocacy efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs.
If we are unable to maintain relationships with existing patient referral sources, our business and consolidated financial condition, results of operations and cash flows could be materially adversely affected. Our success depends on referrals from physicians, hospitals and other sources in the communities we serve and on our ability to maintain good relationships with existing referral sources.
If we are unable to maintain relationships with existing patient referral sources, our business and consolidated financial condition, results of operations and cash flows could be materially adversely affected. 22 Our success depends on referrals from physicians, hospitals and other sources in the communities we serve and on our ability to maintain good relationships with existing referral sources.
Specifically, we have cybersecurity management processes, independent of enterprise risk management, which adhere to an internally developed Intelligence Policy and a Vulnerability Management Framework, and in accordance therewith we have installed privacy protection systems and devices on our network and point of care tablets in an attempt to prevent unauthorized access to information in our database.
Specifically, we 27 have cybersecurity management processes, independent of enterprise risk management, which adhere to an internally developed Intelligence Policy and a Vulnerability Management Framework, and in accordance therewith we have installed privacy protection systems and devices on our network and point of care tablets in an attempt to prevent unauthorized access to information in our database.
Additionally, CMS initiated the Value Based Purchasing Demonstration (VBP) Project for nine states, including Arizona, Florida, Iowa, Massachusetts, Maryland, Nebraska, North Carolina, Tennessee, and Washington in 2016 for the purpose of using Medicare data to provide greater transparency on quality in order to deliver care based on value over volume.
Additionally, CMS initiated the Value Based Purchasing Demonstration ("VBP") for nine states, including Arizona, Florida, Iowa, Massachusetts, Maryland, Nebraska, North Carolina, Tennessee, and Washington in 2016 for the purpose of using Medicare data to provide greater transparency on quality in order to deliver care based on value over volume.
For example, our information systems are vulnerable to damage or interruption from fire, flood, earthquake, terrorist attacks, natural disasters, power loss, telecommunications failure, break-ins, attacks from malicious third parties, improper operation, computer viruses, unauthorized entry, data loss, cybersecurity attacks, acts or war and similar events.
For example, our information systems are vulnerable to damage or interruption from fire, flood, earthquake, terrorist attacks, natural disasters, power loss, telecommunications failure, break-ins, attacks from malicious third parties, 32 improper operation, computer viruses, unauthorized entry, data loss, cybersecurity attacks, acts or war and similar events.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness”. We may not be able to identify, acquire, successfully integrate and obtain financing for strategic and accretive acquisitions. We regularly evaluate opportunities to acquire other companies and have undertaken, and may in the future undertake, strategic and accretive acquisitions.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness”. We may not be able to identify, acquire, successfully integrate and obtain financing for strategic and accretive acquisitions. 35 We regularly evaluate opportunities to acquire other companies and have undertaken, and may in the future undertake, strategic and accretive acquisitions.
Enrollment in our Support Services or day health centers, for example, could experience sharp declines as patients and their families may avoid venturing out in public as a result of one or more of these events. We depend on the services of our executive officers and other key employees.
Enrollment in our Support Services or day health centers, for example, could experience sharp declines as patients and their families may avoid venturing out in public as a result of one or more of these events. 38 We depend on the services of our executive officers and other key employees.
An increasing level of governmental and private resources are being devoted to the investigation of allegations of fraud and abuse in the Medicare and Medicaid programs, and federal and state regulatory authorities are taking an increasingly strict view of the requirements imposed on healthcare providers by the Social Security Act, the Medicare and Medicaid programs, and other applicable laws.
An increasing 41 level of governmental and private resources are being devoted to the investigation of allegations of fraud and abuse in the Medicare and Medicaid programs, and federal and state regulatory authorities are taking an increasingly strict view of the requirements imposed on healthcare providers by the Social Security Act, the Medicare and Medicaid programs, and other applicable laws.
In addition, any testing conducted by us, or any testing conducted by our independent registered public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement.
In addition, any testing conducted by us, or any testing conducted by our independent registered public accounting 46 firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement.
Additionally, states participating in the RCD Project are excluded from certain other CMS Audits referenced above. The Consolidated Appropriations Act passed by Congress at the end of 2022 (also referred to as the “Omnibus Budget Bill”) contained several provisions that could impact our business.
Additionally, states participating in the RCD are excluded from certain other CMS Audits referenced above. The Consolidated Appropriations Act passed by Congress at the end of 2022 (also referred to as the “Omnibus Budget Bill”) contained several provisions that could impact our business.
The extensive federal and state regulations affecting the healthcare industry include, but are not limited to, regulations relating to licensure, billing, provision of services, 40 conduct of operations, allowable costs, and prices for services, facility staffing requirements, qualifications and licensure of staff, environmental and occupational health and safety, and the confidentiality and security of health-related information.
The extensive federal and state regulations affecting the healthcare industry include, but are not limited to, regulations relating to licensure, billing, provision of services, conduct of operations, allowable costs, and prices for services, facility staffing requirements, qualifications and licensure of staff, environmental and occupational health and safety, and the confidentiality and security of health-related information.
If we do not comply with the requirements of the RCD Project we are at risk for significant advance payment or post-payment reviews and our reimbursement from the Medicare program could be delayed or reduced, thereby adversely impacting our results of operations, net income and cash flows.
If we do not comply with the requirements of the RCD, we are at risk for significant advance payment or post-payment reviews and our reimbursement from the Medicare program could be delayed or reduced, thereby adversely impacting our results of operations, net income and cash flows.
The ACA and other laws and regulations that 29 limit or restrict Medicare and Medicaid payments to our customers could adversely impact our customers, resulting in their inability to pay us, or pay us in a timely manner, for our services. Efforts to repeal or substantially modify provisions of the ACA continue in the federal courts.
The ACA and other laws and regulations that limit or restrict Medicare and Medicaid payments to our customers could adversely impact our customers, resulting in their inability to pay us, or pay us in a timely manner, for our services. Efforts to repeal or substantially modify provisions of the ACA continue in the federal courts.
Our inability, or the inability of such third parties, to continue to maintain and upgrade our information systems and software could disrupt or reduce the 32 efficiency of our operations. Hardware, software, or applications we develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security.
Our inability, or the inability of such third parties, to continue to maintain and upgrade our information systems and software could disrupt or reduce the efficiency of our operations. Hardware, software, or applications we develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security.
Unfavorable outcomes from these claims, lawsuits and governmental inquiries could adversely affect our business, results of operations or financial condition, and we could incur substantial monetary liability and/or be required to change our business practices. The nature of our business subjects us to inherent risk of professional liability and substantial damage awards.
Unfavorable outcomes from these claims, lawsuits and governmental inquiries could adversely affect 36 our business, results of operations or financial condition, and we could incur substantial monetary liability and/or be required to change our business practices. The nature of our business subjects us to inherent risk of professional liability and substantial damage awards.
The ACA also provides for reductions to the annual market basket payment updates for home health agencies, which could result in lower reimbursement than in preceding years, and additional annual “productivity adjustment” reductions to the annual market basket payment update as determined by CMS for home health agencies. Further, the ACA mandates changes to home health benefits under Medicare.
The ACA also provides for reductions to the annual market basket payment updates for home health agencies, which could result in lower reimbursement than in preceding years, and additional annual “productivity adjustment” reductions to the annual market basket payment update as determined by CMS for home health agencies. 39 Further, the ACA mandates changes to home health benefits under Medicare.
If, in the future, our operating or financial results for a particular period do not meet any guidance we provide or the expectations of investment analysts, or if we reduce our guidance for future periods, the market price of our common stock may decline. It em 1B. Unresolved Staff Comments. None. 49
If, in the future, our operating or financial results for a particular period do not meet any guidance we provide or the expectations of investment analysts, or if we reduce our guidance for future periods, the market price of our common stock may decline. It em 1B. Unresolved Staff Comments. None.
In June 2019, CMS implemented the Review Choice Demonstration ("RCD") Project for home health providers who submit claims to Palmetto GBA Medicare Administrative Contractor, specifically home health providers in Illinois, Ohio, Texas, North Carolina, and Florida. On September 1, 2021, CMS mandated participation for North Carolina and Florida providers.
In June 2019, CMS implemented the Review Choice Demonstration ("RCD") for home health providers who submit claims to Palmetto GBA Medicare Administrative Contractor, specifically home health providers in Illinois, Ohio, Texas, North Carolina, and Florida. On September 1, 2021, CMS mandated participation for North Carolina and Florida providers.
We are a party to lawsuits, claims and governmental inquiries in the normal course of our business. See Note 13 – Commitments and Contingencies to the Consolidated Financial Statements included in Part II, Item 8, of this Annual Report on Form 10-K.
We are a party to lawsuits, claims and governmental inquiries in the normal course of our business. See Note 13 – Commitments and Contingencies to the audited consolidated financial statements included in Part II, Item 8, of this Annual Report on Form 10-K (the "Consolidated Financial Statements").
We regularly evaluate whether events and 37 circumstances have occurred indicating that any portion of our intangible assets and goodwill may not be recoverable. When factors indicate that intangible assets and goodwill should be evaluated for possible impairment, we may be required to reduce the carrying value of these assets.
We regularly evaluate whether events and circumstances have occurred indicating that any portion of our intangible assets and goodwill may not be recoverable. When factors indicate that intangible assets and goodwill should be evaluated for possible impairment, we may be required to reduce the carrying value of these assets.
Initiatives related to health care technology and interoperability may require changes to our operations, impose new and complex obligations on us, affect our relationships with other providers, vendors and other third parties and require investments in infrastructure. We may be subject to penalties for failure to comply.
Initiatives related to health care technology and interoperability may require changes to our operations, impose new and complex obligations on us, affect our relationships with other providers, vendors and other third parties and require investments in infrastructure, and we may be subject to penalties for failure to comply with these initiatives.
In many areas in which our home health, hospice and durable medical equipment programs are located, we compete with a large number of organizations, including: • community-based home health providers; • national, regional and local companies; • national, regional and local hospice agencies; 22 • hospital-based home health agencies; and • nursing homes.
In many areas in which our home health, hospice and durable medical equipment programs are located, we compete with a large number of organizations, including: • community-based home health providers; • national, regional and local companies; • national, regional and local hospice agencies; • hospital-based home health agencies; and • nursing homes.
In addition, we may experience delays in reimbursement as a result of the failure 27 to receive prompt approvals related to change of ownership applications for acquired or other facilities or from delays caused by our or other third parties’ information system failures.
In addition, we may experience delays in reimbursement as a result of the failure to receive prompt approvals related to change of ownership applications for acquired or other facilities or from delays caused by our or other third parties’ information system failures.
Our failure to negotiate, secure, and maintain favorable managed care contracts could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows. Furthermore, managed care contracts typically have complicated authorization, billing and collection provisions.
Our failure to negotiate, secure, and maintain favorable managed care contracts could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows. Furthermore, 30 managed care contracts typically have complicated authorization, billing and collection provisions.
The Delaware Forum Provision and the Federal Forum Provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and 48 our directors, officers and other employees.
The Delaware Forum Provision and the Federal Forum Provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees.
These states ration the entry of new providers or services and the expansion of existing providers or services in their markets through a CON or other approval process, which is periodically evaluated and updated as required by applicable state law.
These states ration the entry of new providers or services and the expansion of existing providers or services in their markets through a CON, POA, or other approval process, which is periodically evaluated and updated as required by applicable state law.
Our failure to develop and properly manage new intellectual property could hurt our market position and business opportunities. Furthermore, recent changes to U.S. intellectual property laws may jeopardize the enforceability and validity of our intellectual property portfolio.
Our failure to develop and properly manage new intellectual property could hurt our market position and 33 business opportunities. Furthermore, recent changes to U.S. intellectual property laws may jeopardize the enforceability and validity of our intellectual property portfolio.
These conditions generally require our home health and hospice agencies to meet specified standards relating to personnel, patient rights, 33 patient care, patient records, administrative reporting and legal compliance.
These conditions generally require our home health and hospice agencies to meet specified standards relating to personnel, patient rights, patient care, patient records, administrative reporting and legal compliance.
HHAs must have met a 90% target full provisional affirmation rate based on a minimum 10 requests/claims submitted to have successfully completed Cycle 1. For those HHAs who met the target affirmation rate and demonstrated compliance with certain Medicare rules, an additional review option of 5% Spot Check Review was available to choose for subsequent Cycles 2-6.
HHAs must have met a 90% target full provisional affirmation rate based on a minimum 10 requests/claims submitted to have successfully completed Cycle 1. For those HHAs who met the target affirmation rate and demonstrated compliance with certain Medicare rules, an additional review option of 5% Spot Check Review was available to choose for subsequent cycles.
In addition, we could be forced to expend considerable resources responding to investigations, audits or other enforcement actions related to these laws, regulations or prohibitions.
In addition, we could be forced to expend considerable resources responding to investigations, audits or other enforcement 40 actions related to these laws, regulations or prohibitions.
If interest rates continue to increase, our debt service obligations on our variable rate indebtedness would likewise increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease, which could have a material adverse effect on our overall financial condition.
If interest rates increase, our debt service obligations on our variable rate indebtedness would likewise increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease, which could have a material adverse effect on our overall financial condition.
In December 2021, Congress extended the suspension of the automatic 2% reduction through March 2022 and reduced the sequestration adjustment to 1% beginning on April 1, 2022 through June 30, 2022, with the full 2% reduction for sequestration resuming thereafter. Further, Medicare routinely reclassifies home health resource groups.
In December 2021, Congress extended the suspension of the automatic 2% reduction through March 2022 and reduced the sequestration adjustment to 1% beginning on April 1, 2022 through June 30, 2022, with the full 2% reduction for sequestration resuming on July 1, 2022. Further, Medicare routinely reclassifies home health resource groups.
Reductions in Medicare reimbursement could be caused by many factors, including: • administrative or legislative changes to the base rates under the applicable prospective payment systems; • the reduction or elimination of annual rate increases; 24 • the imposition or increase by Medicare of mechanisms shifting more responsibility for a portion of payment to beneficiaries, such as co-payments; • adjustments to the relative components of the wage index used in determining reimbursement rates; • changes to case mix or therapy thresholds; or • the reclassification of home health resource groups or long-term care diagnosis-related groups.
Reductions in Medicare and Medicaid reimbursement could be caused by many factors, including: 23 • administrative or legislative changes to the base rates under the applicable prospective payment systems; • the reduction or elimination of annual rate increases; • the imposition or increase by Medicare or Medicaid of mechanisms shifting more responsibility for a portion of payment to beneficiaries, such as co-payments; • adjustments to the relative components of the wage index used in determining reimbursement rates; • changes to case mix or therapy thresholds; or • the reclassification of home health resource groups or long-term care diagnosis-related groups.
We expect audits under the CMS RAC program, the CMS TPE program, the UPIC program and other federal and state audits evaluating the medical necessity of services to further intensify the regulatory environment surrounding the healthcare industry as third-party firms engaged by CMS and others conduct extensive reviews of claims data and medical and other records to identify improper payments to healthcare providers under the Medicare and Medicaid programs.
We see the possibility of audits under the CMS RAC program, the CMS TPE program, the UPIC program and other federal and state audits evaluating the medical necessity of services to further intensify the regulatory environment surrounding the healthcare industry as third-party firms engaged by CMS and others conduct extensive reviews of claims data and medical and other records to identify improper payments to healthcare providers under the Medicare and Medicaid programs.
As a result, our business, financial condition, results of operations and liquidity could be materially and adversely affected. 28 The occurrence of any actual or attempted cybersecurity attack or other security-related incident, the reporting of such an incident, whether accurate or not, or our failure to make adequate or timely disclosures to the public or law enforcement agencies following any such event, whether due to delayed discovery or a failure to follow existing protocols, could result in liability to our patients and/or regulators, which could result in significant fines, litigation penalties, orders, sanctions, adverse publicity, litigation or actions against us or our service providers by governmental bodies and other regulatory authorities, patients or third parties, that could have a material adverse effect on our business, consolidated financial condition, results of operations, cash flows and liquidity.
The occurrence of any actual or attempted cybersecurity attack or other security-related incident, the reporting of such an incident, whether accurate or not, or our failure to make adequate or timely disclosures to the public or law enforcement agencies following any such event, whether due to delayed discovery or a failure to follow existing protocols, could result in liability to our patients and/or regulators, which could result in significant fines, litigation penalties, orders, sanctions, adverse publicity, litigation or actions against us or our service providers by governmental bodies and other regulatory authorities, patients or third parties, that could have a material adverse effect on our business, consolidated financial condition, results of operations, cash flows and liquidity.
Our failure or inability to obtain a required CON, license or any necessary approvals could adversely affect our ability to expand into new markets and to expand our services and facilities in existing markets.
Our failure or inability to obtain a required CON, POA, license or any other necessary approvals could adversely affect our ability to expand into new markets and to expand our services and facilities in existing markets.
Delays in collection or non-collection of our patient accounts receivable, or recoupment of payments previously received, particularly during the business integration process, or during system transitions, or in connection with complying with EVV data collection and submission requirements, could adversely affect our business, financial position, results of operations and liquidity.
Delays in collection or non-collection of our patient accounts receivable, or recoupment of payments previously received, particularly during the business integration process, or during system transitions, or in connection with complying with Electronic Visit Verification ("EVV") data collection and submission requirements, could adversely affect our business, financial position, results of operations and liquidity.
As to budget enforcement rules previously enacted by Congress, Section 1001 of the Omnibus Budget Bill waives Statutory Pay-As-You-Go (S-PAYGO) for two years through December 31, 2024. The S-PAYGO 4% mandatory sequestration of Medicare benefit payments that previously would have become effective on January 1, 2023 has now been delayed until January 1, 2025.
As to budget enforcement rules previously enacted by Congress, Section 1001 of the Omnibus Budget Bill waives Statutory Pay-As-You-Go (S-PAYGO) for two years through December 31, 2024. The S-PAYGO 4% mandatory sequestration of Medicare benefit payments that previously would have become effective on January 1, 2023 has now become 24 effective January 1, 2025.
These payer audits are conducted by CMS contractors, many of whom are incentivized based upon the dollar value of said recoupments, specifically Recovery Audit Contractor (“RAC”) and Supplemental Medical Review Contractor (“SMRC”) audits, as well as the Unified Program Integrity Contractors (“UPIC”) program and the Zone Program Integrity Contractor (“UPIC”) program audits.
These payer audits are conducted by CMS contractors, many of whom are incentivized based upon the dollar value of said recoupments, such as Recovery Audit Contractor (“RAC”) and Supplemental Medical Review Contractor (“SMRC”) audits, as well as the Unified Program Integrity Contractors (“UPIC”) program and the Zone Program Integrity Contractor (“ZPIC”) program audits.
In addition, we, like other healthcare providers, are subject to ongoing investigations by the OIG, the United States DOJ and State Attorneys General into the billing of services provided to Medicare and Medicaid patients, including whether such services were properly documented and billed, whether services provided were medically necessary, and general compliance with conditions of participation in the Medicare and Medicaid programs.
In addition, we, like other healthcare providers, are subject to ongoing investigations by the OIG, DOJ, State Attorneys General, and other government agencies into the billing of services provided to Medicare and Medicaid patients, including whether such services were properly documented and billed, whether services provided were medically necessary, and general compliance with conditions of participation in the Medicare and Medicaid programs.
Data is pulled from OASIS, Medicare claims data and patient satisfaction scores. The Demonstration Project ended in December 2022 and effective January 1, 2023, CMS expanded VBP nationally to all providers. HHA performance in 2024 will determine payments in 2026. Our hospice operations are subject to annual Medicare caps.
Data is pulled from OASIS, Medicare claims data and patient satisfaction scores. The Demonstration Project ended in December 2022 and effective January 1, 2023, CMS expanded VBP nationally to all providers. HHA performance in 2025 will determine payments in 2027. Our hospice operations are subject to annual Medicare caps.
For example, on July 31, 2013, CMS implemented a six-month moratorium on new Medicare (and Medicaid) home health agencies in Florida’s Miami-Dade County and Illinois’ Cook County. The moratorium on enrollment of additional home health agencies in the Medicare (and Medicaid programs) was a way to combat fraud, waste and abuse, while assuring patient access to care.
For example, on July 31, 2013, CMS implemented a six-month moratorium on new Medicare (and Medicaid) home health agencies in Miami-Dade County, Florida, and Cook County, Illinois. The moratorium on enrollment of additional home health agencies in the Medicare (and Medicaid programs) was a way to combat fraud, waste and abuse, while assuring patient access to care.
Any further additional federal fund rate increases could in turn make our financing activities, including those related to our acquisition activity, more costly and limit our ability to refinance existing debt when it matures or pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness.
Any future additional federal fund rate increases could make our financing activities, including those related to our acquisition activity, more costly and limit our ability to refinance existing debt when it matures or pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness.
Any successful cybersecurity attack or other unauthorized attempt to access our systems or facilities, or those of our patients or third-party service providers, also could result in negative publicity which could damage our reputation or brand with our patients, referral sources, payers or other third parties and could subject us to substantial sanctions, fines and damages and other additional civil and criminal penalties under HIPAA, the HITECH Act, the HIPAA Omnibus Rule (the “Omnibus Rule”) and other federal and state privacy laws, in addition to litigation with those affected.
Any successful cybersecurity attack or other unauthorized attempt to access our systems or facilities, or those of our patients or third-party service providers, also could result in negative publicity which could damage our reputation or brand with our patients, referral sources, payers or other third parties and could subject us to substantial sanctions, fines and damages and other additional civil and criminal penalties under HIPAA and other federal and state privacy laws, in addition to litigation with those affected.
The Demonstration Project runs in six-month cycles until July 31, 2024, and is intended to reduce the number of Medicare appeals, and improve provider compliance with Medicare program requirements. Upon initiation of RCD or Cycle 1, HHAs had three initial choices; pre-claim review of 100% of claims; post-payment review; or minimal post-payment review with a 25% payment reduction.
The Demonstration Project runs in six-month cycles until May 31, 2029, and is intended to reduce the number of Medicare appeals, and improve provider compliance with Medicare program requirements. Upon initiation of RCD, HHAs had three initial choices; pre-claim review of 100% of claims; post-payment review; or minimal post-payment review with a 25% payment reduction.
If we are found to have violated the HIPAA privacy or security regulations or other federal or state laws protecting the confidentiality of patient health or personal information, 43 including but not limited to the HITECH Act and the Omnibus Rule, we could be subject to sanctions, fines, damages and other additional civil or criminal penalties, including litigation with those affected, which could increase our liabilities, harm our reputation and have a material adverse effect on our business, financial position, results of operations and liquidity.
If we are found to have violated the HIPAA privacy or security regulations or other federal or state laws protecting the confidentiality of patient health or personal information, we could be subject to sanctions, fines, damages and other additional civil or criminal penalties, including litigation with those affected, which could increase our liabilities, harm our reputation and have a material adverse effect on our business, financial position, results of operations and liquidity.
We do not intend to pay dividends for the foreseeable future. 45 We currently intend to retain all available funds and any future earnings to fund the development and growth of our business, and therefore we do not anticipate paying any cash dividends in the foreseeable future.
We currently intend to retain all available funds and any future earnings to fund the growth of our business; therefore, we do not anticipate paying any cash dividends in the foreseeable future.
The 36 Month Rule may restrict bona fide transactions and potentially block new investments in home health agencies. These changes in federal laws and regulations, and similar future changes, may further increase competition for acquisition targets and could have a material adverse effect on any acquisition strategy.
In 2023, CMS extended the 36 Month Rule to apply to hospices. The 36 Month Rule may restrict bona fide transactions and potentially block new investments in home health agencies. These changes in federal laws and regulations, and similar future changes, may further increase competition for acquisition targets and could have a material adverse effect on any acquisition strategy.
The HITECH Act strengthened HIPAA enforcement provisions and authorized State Attorneys General to bring civil actions for HIPAA violations. It permits the HHS to conduct audits of HIPAA compliance and impose significant civil monetary penalties even if we did not know or reasonably could not have known about the violation.
HIPAA also authorized State Attorneys General to bring civil actions for HIPAA violations. It permits the HHS to conduct audits of HIPAA compliance and impose significant civil monetary penalties even if we did not know or reasonably could not have known about the violation.
Changes in payment methodologies by third-party payers could have a material adverse effect on our financial position, results of operations and cash flow. On November 1, 2023, CMS released its final rule for fiscal year 2024 (the “2024 HH Rule”). With respect to Medicare reimbursement rates, the 2024 HH Rule implements a home health payment increase of 0.8%.
Changes in payment methodologies by third-party payers could have a material adverse effect on our financial position, results of operations and cash flow. On November 7, 2024, CMS released its final rule for fiscal year 2025 (the “2025 HH Rule”). With respect to Medicare reimbursement rates, the 2025 HH Rule implements a home health payment increase of 0.5%.
The impacts of any future public health emergencies on our results of operations may include: decreased demand for our services; lower volumes of our services provided, including due to lack of availability of caregivers in the workforce ; interruptions in the provision of our services, including due to the interruption of the operations of our referral sources ; increased costs of services in order to attract and retain qualified caregivers; increased costs necessary to comply with federal, state and local mandates and other regulations associated with any public health emergency; civil monetary penalties from CMS if we are unable to comply with vaccination requirements; and a reduction in our liquidity position, which may limit our ability to service our indebtedness and our future ability to incur additional indebtedness or financing.
The impacts of any future public health emergencies on our results of operations may include: decreased demand for our services; lower volumes of our services provided, including due to lack of availability of caregivers in the workforce; interruptions in the provision of our services, including due to the interruption of the operations of our referral sources; increased costs of services in order to attract and retain qualified caregivers; increased costs necessary to comply with federal, state and local mandates and other regulations associated with any public health emergency; and a reduction in our liquidity position, which may limit our ability to service our indebtedness and our future ability to incur additional indebtedness or financing.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly. 35 Our variable rate debt instruments are primarily indexed to the secured overnight financing rate (“SOFR”) and have a SOFR floor of 50 basis points. Our outstanding variable rate indebtedness at December 30, 2023 was $1,470 million.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly. Our variable rate debt instruments are primarily indexed to the secured overnight financing rate (“SOFR”) and have a SOFR floor of 50 basis points. Our outstanding variable rate indebtedness at December 28, 2024 was $1,474 million.
Our status as a controlled company could make our common stock less attractive to some investors or otherwise harm our stock price. Our Sponsors can significantly influence our business and affairs and may have conflicts of interest with us in the future. The Sponsor Affiliates collectively own approximately 68.3% of our common stock.
Our status as a controlled company could make our common stock less attractive to some investors or otherwise harm our stock price. Our Sponsors can significantly influence our business and affairs and may have conflicts of interest with us in the future. The Sponsor Affiliates collectively own approximately 70.4% of our common stock as of December 28, 2024.
This reflects a market basket increase of 3.3% and an outlier payment increase of 0.4% offset by a productivity adjustment of -0.3% and a PDGM behavioral assumption adjustment of -5.78%.
This reflects a market basket increase of 3.2% and an outlier payment increase of 0.4% offset by a productivity adjustment of -0.5% and a PDGM behavioral assumption adjustment of -1.8%.
Our balance sheet includes a significant amount of goodwill and intangible assets. Goodwill and intangible assets, net, together accounted for approximately 71% of total assets on our balance sheet as of December 30, 2023. The impairment of a significant portion of these assets would negatively affect our financial condition or results of operations.
Our balance sheet includes a significant amount of goodwill and intangible assets. Goodwill and intangible assets, net, together accounted for approximately 69% of total assets on our balance sheet as of December 28, 2024. The impairment of a significant portion of these assets would negatively affect our financial condition or results of operations.
Our second amended and restated certificate of incorporation (the “Amended Charter”) authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designation, preferences, limitations and relative rights, including preferences over our common stock with respect to dividends and distributions, as our Board of Directors may determine.
Our Amended Charter authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designation, preferences, limitations and relative rights, including preferences over our common stock with respect to dividends and distributions, as our Board of Directors may determine.
Whitney Capital Partners (collectively, our “Sponsors”) or their respective affiliates (the “Sponsor Affiliates”), who collectively own 68.3% of our outstanding common stock, differ from those of other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance rules for publicly listed companies.
Whitney Capital Partners (collectively, our “Sponsors”) or their respective affiliates (the “Sponsor Affiliates”), who, as of December 28, 2024, collectively own 70.4% of our outstanding common stock, differ from those of other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance rules for publicly listed companies.
Many government and commercial payers are transitioning providers to alternative payment models that are designed to promote cost-efficiency, quality and coordination of care. For example, accountable care organizations (“ACOs”) incentivize hospitals, physician groups, and other providers to organize and coordinate patient care while reducing unnecessary costs.
Many government and commercial payers are transitioning providers to alternative payment models that are designed to promote cost-efficiency, quality and coordination of care. For example, an accountable care organization (“ACO”) incentivizes hospitals, physician groups, and other providers to organize and coordinate patient care while reducing unnecessary costs.
The management of PHI is subject to several regulations at the federal level, including HIPAA and the HITECH Act.
The management of PHI is subject to several regulations at the federal level, including HIPAA.
For example, recruitment of qualified caregivers in our private duty services businesses is highly competitive. The majority of our HHH and PDN caregivers are LPN and we compete for this labor pool both with competitors in our private duty services industry as well as other healthcare organizations outside our industry, to include hospitals.
For example, recruitment of qualified caregivers in our private duty services businesses is highly competitive. The majority of our HHH and PDN caregivers are licensed practical nurses (“LPN”) and we compete for this labor pool both with competitors in our private duty services industry as well as other healthcare organizations outside our industry, including hospitals.
Effective October 2012, Medicare began to impose a financial penalty upon hospitals that have excessive rates of patient readmissions within 30 days from hospital discharge.
Effective October 2012, Medicare imposed a financial penalty upon hospitals that have excessive rates of patient 29 readmissions within 30 days from hospital discharge.
While we will make every effort to mitigate the impact of behavioral adjustments in 2024, we cannot assure you that implementation and application of the remaining 2.89% behavioral adjustment (reduction) beginning on January 1, 2024 will not have a material adverse effect on our business.
While we will make every effort to mitigate the impact of reduction adjustments in 2025, we cannot assure you that implementation and application of any other reduction adjustment beginning on January 1, 2025 will not have a material adverse effect on our business.
The 21st Century Cures Act, as amended, mandated that states implement EVV, which is used to collect home visit data, such as when the visit begins and ends. In several states, providers are now required to obtain state licenses or registrations and must comply with laws and regulations governing standards of practice.
The 21st Century Cures Act, as amended, mandated that states implement EVV, a technology that collects and verifies data that home services are rendered, such as when the visit begins and ends. In several states, providers are now required to obtain state licenses or registrations and must comply with laws and regulations governing standards of practice.
These changes, including retroactive adjustments, if adopted in the future by CMS, could have a material adverse effect on our business, financial position, results of operations and liquidity. Changes to Medicare rates or methods governing Medicare payments for our services could materially adversely affect our business. We derive substantial revenue from Medicare for our adult home health and hospice services.
These changes, including retroactive adjustments, if adopted in the future by CMS, could have a material adverse effect on our business, financial position, results of operations and liquidity. Changes to Medicare and Medicaid rates or methods governing Medicare and Medicaid payments for our services could materially adversely affect our business.
For fiscal year 2024, CMS increased the hospice market basket rate by 3.3% and implemented a productivity adjustment of -0.2% resulting in a net hospice increase for fiscal year 2024 of 3.1%.
For fiscal year 2025, CMS increased the hospice market basket rate by 3.4% and implemented a productivity adjustment of -0.5% resulting in a net hospice increase for fiscal year 2025 of 2.9%.
If we are unable to attract and retain qualified personnel, the quality of our services may decline and we could lose patients and referral sources, which could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows.
We compete with other healthcare providers for our employees, both professional employees and management. If we are unable to attract and retain qualified personnel, the quality of our services may decline and we could lose patients and referral sources, which could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

321 edited+40 added−101 removed216 unchanged
Biggest changeResults of Operations Fiscal Year Ended December 30, 2023 Compared to the Fiscal Year Ended December 31, 2022 The following table summarizes our consolidated results of operations for the fiscal years indicated: For the fiscal years ended (dollars in thousands) December 30, 2023 % of Revenue December 31, 2022 % of Revenue Change % Change Revenue $ 1,895,209 100.0 % $ 1,787,645 100.0 % $ 107,564 6.0 % Cost of revenue, excluding depreciation and amortization 1,299,777 68.6 % 1,234,418 69.1 % 65,359 5.3 % Gross margin $ 595,432 31.4 % $ 553,227 30.9 % $ 42,205 7.6 % Branch and regional administrative expenses 360,978 19.0 % 357,230 20.0 % 3,748 1.0 % Corporate expenses 113,034 6.0 % 137,864 7.7 % (24,830 ) -18.0 % Goodwill impairment 105,136 5.5 % 675,346 37.8 % (570,210 ) -84.4 % Depreciation and amortization 13,778 0.7 % 21,313 1.2 % (7,535 ) -35.4 % Acquisition-related costs 466 0.0 % 99 0.0 % 367 370.7 % Other operating (income) expense (6,032 ) -0.3 % 3,651 0.2 % (9,683 ) -265.2 % Operating income (loss) $ 8,072 0.4 % $ (642,276 ) -35.9 % $ 650,348 101.3 % Interest expense, net (152,919 ) (107,041 ) (45,878 ) 42.9 % Other income 5,851 85,503 (79,652 ) -93.2 % Income tax benefit 4,472 1,780 2,692 151.2 % Net loss $ (134,524 ) $ (662,034 ) $ 527,510 -79.7 % 55 The following table summarizes our consolidated key performance measures, including Field contribution and Field contribution margin, which are non-GAAP measures (see “Non-GAAP Financial Measures” below), for the fiscal years indicated: For the fiscal years ended (dollars in thousands) December 30, 2023 December 31, 2022 Change % Change Revenue $ 1,895,209 $ 1,787,645 $ 107,564 6.0 % Cost of revenue, excluding depreciation and amortization 1,299,777 1,234,418 65,359 5.3 % Gross margin $ 595,432 $ 553,227 $ 42,205 7.6 % Gross margin percentage 31.4 % 30.9 % Branch and regional administrative expenses 360,978 357,230 3,748 1.0 % Field contribution $ 234,454 $ 195,997 $ 38,457 19.6 % Field contribution margin 12.4 % 11.0 % Corporate expenses $ 113,034 $ 137,864 $ (24,830 ) -18.0 % As a percentage of revenue 6.0 % 7.7 % Operating income (loss) $ 8,072 $ (642,276 ) $ 650,348 101.3 % As a percentage of revenue 0.4 % -35.9 % The following tables summarize our key performance measures by segment for the fiscal years indicated: 56 PDS For the fiscal years ended (dollars and hours in thousands) December 30, 2023 December 31, 2022 Change % Change Revenue $ 1,518,811 $ 1,415,105 $ 103,706 7.3 % Cost of revenue, excluding depreciation and amortization 1,095,091 1,022,640 72,451 7.1 % Gross margin $ 423,720 $ 392,465 $ 31,255 8.0 % Gross margin percentage 27.9 % 27.7 % 0.2 % (4) Hours 39,818 38,461 1,357 3.5 % Revenue rate $ 38.14 $ 36.79 $ 1.35 3.8 % (1) Cost of revenue rate $ 27.50 $ 26.59 $ 0.91 3.6 % (2) Spread rate $ 10.64 $ 10.20 $ 0.44 4.5 % (3) HHH For the fiscal years ended (dollars and admissions/episodes in thousands) December 30, 2023 December 31, 2022 Change % Change Revenue $ 218,628 $ 232,584 $ (13,956 ) -6.0 % Cost of revenue, excluding depreciation and amortization 113,762 130,721 (16,959 ) -13.0 % Gross margin $ 104,866 $ 101,863 $ 3,003 2.9 % Gross margin percentage 48.0 % 43.8 % 4.2 % (4) Home health total admissions (5) 40.1 49.0 (8.9 ) -18.2 % Home health episodic admissions (6) 28.6 30.2 (1.6 ) -5.3 % Home health total episodes (7) 45.5 48.5 (3.0 ) -6.2 % Home health revenue per completed episode (8) $ 3,032 $ 2,987 $ 45 1.5 % MS For the fiscal years ended (dollars and UPS in thousands) December 30, 2023 December 31, 2022 Change % Change Revenue $ 157,770 $ 139,956 $ 17,814 12.7 % Cost of revenue, excluding depreciation and amortization 90,924 81,057 9,867 12.2 % Gross margin $ 66,846 $ 58,899 $ 7,947 13.5 % Gross margin percentage 42.4 % 42.1 % 0.3 % (4) Unique patients served (“UPS”) 348 320 28 8.8 % Revenue rate $ 453.36 $ 437.36 $ 16.00 3.9 % (1) Cost of revenue rate $ 261.28 $ 253.30 $ 7.98 3.4 % (2) Spread rate $ 192.09 $ 184.06 $ 8.02 4.7 % (3) 1.
Biggest changeResults of Operations Fiscal Year Ended December 28, 2024 Compared to the Fiscal Year Ended December 30, 2023 The following table summarizes our consolidated results of operations for the fiscal years indicated: For the fiscal years ended (dollars in thousands) December 28, 2024 % of Revenue December 30, 2023 % of Revenue Change % Change Revenue $ 2,024,506 100.0 % $ 1,895,209 100.0 % $ 129,297 6.8 % Cost of revenue, excluding depreciation and amortization 1,388,964 68.6 % 1,299,777 68.6 % 89,187 6.9 % Gross margin $ 635,542 31.4 % $ 595,432 31.4 % $ 40,110 6.7 % Branch and regional administrative expenses 352,814 17.4 % 360,978 19.0 % (8,164 ) -2.3 % Corporate expenses 125,402 6.2 % 113,034 6.0 % 12,368 10.9 % Goodwill impairment - 0.0 % 105,136 5.5 % (105,136 ) -100.0 % Depreciation and amortization 10,778 0.5 % 13,778 0.7 % (3,000 ) -21.8 % Acquisition-related costs 1,490 0.1 % 466 0.0 % 1,024 219.7 % Other operating expense (income) 5,271 0.3 % (6,032 ) -0.3 % 11,303 -187.4 % Operating income $ 139,787 6.9 % $ 8,072 0.4 % $ 131,715 NM Interest expense, net (156,104 ) (152,919 ) (3,185 ) 2.1 % Other income 21,389 5,851 15,538 265.6 % Income tax (expense) benefit (16,001 ) 4,472 (20,473 ) -457.8 % Net loss $ (10,929 ) $ (134,524 ) $ 123,595 -91.9 % The following table summarizes our consolidated key performance measures, including Field contribution and Field contribution margin, which are non-GAAP measures (see “Non-GAAP Financial Measures” below), for the fiscal years indicated: 54 For the fiscal years ended (dollars in thousands) December 28, 2024 December 30, 2023 Change % Change Revenue $ 2,024,506 $ 1,895,209 $ 129,297 6.8 % Cost of revenue, excluding depreciation and amortization 1,388,964 1,299,777 89,187 6.9 % Gross margin $ 635,542 $ 595,432 $ 40,110 6.7 % Gross margin percentage 31.4 % 31.4 % Branch and regional administrative expenses 352,814 360,978 (8,164 ) -2.3 % Field contribution $ 282,728 $ 234,454 $ 48,274 20.6 % Field contribution margin 14.0 % 12.4 % Corporate expenses $ 125,402 $ 113,034 $ 12,368 10.9 % As a percentage of revenue 6.2 % 6.0 % Operating income $ 139,787 $ 8,072 $ 131,715 NM As a percentage of revenue 6.9 % 0.4 % The following tables summarize our key performance measures by segment for the fiscal years indicated: 55 PDS For the fiscal years ended (dollars and hours in thousands) December 28, 2024 December 30, 2023 Change % Change Revenue $ 1,634,609 $ 1,518,811 $ 115,798 7.6 % Cost of revenue, excluding depreciation and amortization 1,190,148 1,095,091 95,057 8.7 % Gross margin $ 444,461 $ 423,720 $ 20,741 4.9 % Gross margin percentage 27.2 % 27.9 % -0.7 % (4) Hours 41,562 39,818 1,744 4.4 % Revenue rate $ 39.33 $ 38.14 $ 1.19 3.2 % (1) Cost of revenue rate $ 28.64 $ 27.50 $ 1.14 4.3 % (2) Spread rate $ 10.69 $ 10.64 $ 0.05 0.5 % (3) HHH For the fiscal years ended (dollars and admissions/episodes in thousands) December 28, 2024 December 30, 2023 Change % Change Revenue $ 217,805 $ 218,628 $ (823 ) -0.4 % Cost of revenue, excluding depreciation and amortization 101,310 113,762 (12,452 ) -10.9 % Gross margin $ 116,495 $ 104,866 $ 11,629 11.1 % Gross margin percentage 53.5 % 48.0 % 5.5 % (4) Home health total admissions (5) 36.9 40.1 (3.2 ) -8.0 % Home health episodic admissions (6) 28.0 28.6 (0.6 ) -2.1 % Home health total episodes (7) 46.2 45.5 0.7 1.5 % Home health episodic mix (8) 75.9 % 71.3 % 4.6 % Home health revenue per completed episode (9) $ 3,099 $ 3,032 $ 67 2.2 % MS For the fiscal years ended (dollars and UPS in thousands) December 28, 2024 December 30, 2023 Change % Change Revenue $ 172,092 $ 157,770 $ 14,322 9.1 % Cost of revenue, excluding depreciation and amortization 97,506 90,924 6,582 7.2 % Gross margin $ 74,586 $ 66,846 $ 7,740 11.6 % Gross margin percentage 43.3 % 42.4 % 0.9 % (4) Unique patients served (“UPS”) 367 348 19 5.5 % Revenue rate $ 468.92 $ 453.36 $ 15.56 3.6 % (1) Cost of revenue rate $ 265.68 $ 261.28 $ 4.40 1.7 % (2) Spread rate $ 203.24 $ 192.08 $ 11.16 6.1 % (3) 1.
The Second Lien Term Loan bears interest at a rate per annum equal to, at the Company’s option, either (1) an applicable margin (equal to 6.00%) plus a base rate determined by reference to the highest of (a) 0.50% per annum plus the Federal Funds Effective Rate, (b) the Prime Rate and (c) the SOFR rate for an interest period of one month plus a CSA depending on the interest period plus 1.00%; or (2) an applicable margin (equal to 7.00%) plus SOFR and a CSA depending on the interest period; provided that such rate is not lower than a floor of 0.50%.
The Second Lien Term Loan bears interest at a rate per annum equal to, at the Company’s option, either (1) an applicable margin (equal to 6.00 %) plus a base rate determined by reference to the highest of (a) 0.50 % per annum plus the Federal Funds Effective Rate, (b) the Prime Rate and (c) SOFR for an interest period of one month plus a CSA depending on the interest period plus 1.00 %; or (2) an applicable margin (equal to 7.00 %) plus SOFR and a CSA depending on the interest period; provided that such rate is not lower than a floor of 0.50 %.
Estimates of fair value may differ from actual results due to, among other things, economic conditions, changes to business models or changes in operating performance. These factors increase the risk of differences between projected and actual performance that could impact future estimates of fair value of all reporting units.
Estimates of fair value may differ from actual results due to, among other things, economic conditions, changes to business models or changes in operating performance. These factors increase the risk of differences between projected and actual performance that could impact future estimates of fair value of all reporting units.
If this is the case, the single identifiable asset or the group of similar assets is not deemed to be a business and is instead deemed to be an asset.
If this is the case, the single identifiable asset or the group of similar assets is not deemed to be a business and is instead deemed to be an asset.
For the PDS, HHH, and MS businesses, the Company receives payments from the following sources for services rendered: (i) state governments under their respective Medicaid programs (“Medicaid”); (ii) Managed Care providers of state government Medicaid programs (“Medicaid MCO”); (iii) commercial insurers; (iv) other government programs including Medicare and Tricare and ChampVA (“Medicare”); and (v) individual patients.
For the PDS, HHH, and MS businesses, the Company receives payments from the following sources for services rendered: (i) state governments under their respective Medicaid programs (“Medicaid”); (ii) Managed Care providers of state government Medicaid programs (“Medicaid MCO”); (iii) commercial insurers; (iv) other government programs including Medicare, Tricare and ChampVA (“Medicare”); and (v) individual patients.
A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly 108 reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
The Amended 2017 Plan (i) provides for the issuance of shares of common 95 stock, as opposed to the Class B common stock previously issuable under the plan, to align with the Company’s Amended and Restated Certificate of Incorporation and (ii) modified the vesting terms of the existing issued performance-vesting options to vest upon the achievement of volume weighted average price (“VWAP”) per share hurdles for any ninety consecutive days commencing on or after the nine-month anniversary of the IPO.
The Amended 2017 Plan (i) provides for the issuance of shares of common stock, as opposed to the Class B common stock previously issuable under the plan, to align with the Company’s Amended and Restated Certificate of Incorporation and (ii) modified the vesting terms of the existing issued performance-vesting options to vest upon the achievement of volume weighted average price (“VWAP”) per share hurdles for any ninety consecutive days commencing on or after the nine-month anniversary of the IPO.
We have minimal unsatisfied performance obligations at the end of the reporting period as our patients typically are under no obligation to remain under our care. All revenue is recognized based on established billing rates reduced by contractual adjustments provided to third-party payers and implicit price concessions which are estimated based on historical collection experience.
We have minimal unsatisfied performance obligations at the end of the reporting period as our patients typically are under no obligation to remain under our care. 65 All revenue is recognized based on established billing rates reduced by contractual adjustments provided to third-party payers and implicit price concessions which are estimated based on historical collection experience.
The premium paid for the interest rate cap agreements was $ 11.7 million. The cap agreements have an expiration date of February 28, 2027 . Prior to the quarter ended July 1, 2023, the cap agreements provided that the counterparty would pay the Company the amount by which LIBOR exceeded 3.00 % in a given measurement period.
The premium paid for the interest rate cap agreements was $ 11.7 million. The cap agreements have an expiration date of February 28, 2027 . Prior to the quarter ended July 1, 2023, the cap agreements provided that the counterparty would pay the Company the amount by which LIBOR exceeded 3.00 % in 89 a given measurement period.
The services provided by the Company have no fixed duration and can be terminated by the patient or the facility at any time, and therefore, each service 86 provided is its own stand-alone contract. Incremental costs of obtaining a contract are expensed as incurred due to the short-term nature of the contracts.
The services provided by the Company have no fixed duration and can be terminated by the patient or the facility at any time, and therefore, each service provided is its own stand-alone contract. Incremental costs of obtaining a contract are expensed as incurred due to the short-term nature of the contracts.
We review the number of home health admissions on a daily basis because we believe it is a leading indicator of our growth. We measure home health admissions by reimbursement structure, separating them into home health episodic admissions and fee-for-service admissions (other admissions), which allows us to better understand the payer mix of our home health business.
We review the number of home health admissions on a daily basis because we believe it is a leading indicator of our growth. We measure home health admissions by 53 reimbursement structure, separating them into home health episodic admissions and fee-for-service admissions (other admissions), which allows us to better understand the payer mix of our home health business.
We use EBITDA and Adjusted EBITDA to assess operating performance and make business decisions. 61 We have occasionally incurred substantial acquisition-related costs and integration costs. The underlying acquisition activities take place over a defined timeframe, have distinct project timelines and are incremental to activities and costs that arise in the ordinary course of our business.
We use EBITDA and Adjusted EBITDA to assess operating performance and make business decisions. We have occasionally incurred substantial acquisition-related costs and integration costs. The underlying acquisition activities take place over a defined timeframe, have distinct project timelines and are incremental to activities and costs that arise in the ordinary course of our business.
Our future capital requirements will depend on many factors that are difficult to predict, including the size, timing and structure of any future acquisitions, future capital investments and future results of operations. We cannot assure you that cash provided by operating activities or cash and cash equivalents will be sufficient to meet our future needs.
Our future capital requirements will depend on many factors that are difficult to predict, including the size, timing and structure of any future acquisitions, future capital investments and future results of operations. We cannot assure you that cash provided by operating activities or cash and cash equivalents on hand will be sufficient to meet our future needs.
Fair value is measured based on a projected discounted cash flow model using a discount rate that the Company believes is commensurate with the risk inherent in its business. Any impairment charge would be recognized within operating expenses as other operating expense in the fiscal year incurred.
Fair value is measured based on a projected discounted cash flow model using a discount rate that the Company believes is commensurate with the risk inherent in its business. Any impairment charge would be recognized within operating expenses as other operating expense (income) in the fiscal year incurred.
Failure to comply with any such laws or regulations could have an adverse impact on the Company’s operations and financial results. The Company believes that it is in material compliance with all applicable laws and regulations and is not aware of any pending or threatened investigations involving allegations of wrongdoing. 14.
Failure to comply with any such laws or regulations could have an adverse impact on the Company’s operations and financial results. The Company believes that it is in material compliance with all applicable laws and regulations and is not aware of any pending or threatened investigations involving allegations of wrongdoing. 98 14.
How We Addressed the Matter in Our Audit To test the estimated fair value of the five reporting units, we performed audit procedures that included, among others, assessing valuation methodologies and testing the significant assumptions discussed above and the completeness and accuracy of underlying data used by the Company in its analysis.
How We Addressed the Matter in Our Audit To test the estimated fair value of the reporting units, we performed audit procedures that included, among others, assessing valuation methodologies and testing the significant assumptions discussed above and the completeness and accuracy of underlying data used by the Company in its analysis.
When the components within our operating segments have similar economic characteristics, we aggregate the components of our operating segments into one reporting unit. Since quoted market prices for our reporting units are not available, we apply judgment in determining the fair value of these reporting units for purposes of performing the goodwill impairment test.
When the components within our operating segments have similar economic characteristics, we aggregate the components of our operating 66 segments into one reporting unit. Since quoted market prices for our reporting units are not available, we apply judgment in determining the fair value of these reporting units for purposes of performing the goodwill impairment test.
The following are certain of the key assumptions and other factors that significantly influence our estimate of insurance reserves: • historical claims experience; • trending of loss development factors; • trends in the frequency and severity of claims; • coverage limits of third-party insurance; • statistical confidence levels; 70 • medical cost inflation; and • payroll dollars.
The following are certain of the key assumptions and other factors that significantly influence our estimate of insurance reserves: • historical claims experience; • trending of loss development factors; • trends in the frequency and severity of claims; • coverage limits of third-party insurance; • statistical confidence levels; • medical cost inflation; and • payroll dollars.
The awards were granted based on a fixed dollar value for each member of senior management included in the plan. The number of RSUs to be paid as compensation is dependent on the share price of the Company's common stock upon completion of both of the SMRP awards' performance criteria.
The awards were granted based on a fixed dollar value for each member of senior management included in the plan. The number of RSUs to be paid as compensation is dependent on the share price of the Company's common stock upon completion of the SMRP awards' performance criteria.
See Note 9 – Derivative Financial Instruments for further details on the interest rate derivative instruments. 85 The Company maintains its cash in bank deposit accounts with major financial institutions, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts.
See Note 9 – Derivative Financial Instruments for further details on the interest rate derivative instruments. The Company maintains its cash in bank deposit accounts with major financial institutions, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts.
The Company has three operating segments and three reportable segments, Private Duty Services (“PDS”), Medical Solutions (“MS”) and Home Health & Hospice (“HHH”). All of the Company’s identifiable assets are located in the United States, which is where the Company is domiciled. The Company does not generate revenue outside the United States.
The Company has three operating segments and three reportable segments, Private Duty Services (“PDS”), Medical Solutions (“MS”) and Home Health & Hospice (“HHH”). 82 All of the Company’s identifiable assets are located in the United States, which is where the Company is domiciled. The Company does not generate revenue outside the United States.
We believe cost of revenue rate is an important metric because it helps us understand 54 the cost per PDS hour of patient service or per individual MS patient transaction. Management uses this metric to understand how effectively we manage labor and product costs.
We believe cost of revenue rate is an important metric because it helps us understand the cost per PDS hour of patient service or per individual MS patient transaction. Management uses this metric to understand how effectively we manage labor and product costs.
We define Adjusted EBITDA as EBITDA, adjusted for the impact of certain other items that are either non-recurring, infrequent, non-cash, unusual, or items deemed by management to not be indicative of the performance of our core operations, including impairments of goodwill, intangible assets, and other long-lived assets; non-cash, share-based compensation; loss on extinguishment of debt; fees related to debt modifications; the effect of interest rate derivatives; acquisition-related and integration costs; legal costs and settlements associated with acquisition matters; COVID-19 related costs; restructuring costs; other legal matters; other system transition costs, professional fees; and other costs including gains and losses on acquisitions and dispositions of certain businesses.
We define Adjusted EBITDA as EBITDA, adjusted for the impact of certain other items that are either non-recurring, infrequent, non-cash, unusual, or items deemed by management to not be indicative of the performance of our core operations, including impairments of goodwill, intangible assets, and other long-lived assets; non-cash, share-based compensation; loss on extinguishment of debt; fees related to debt modifications; the effect of interest rate derivatives; acquisition-related and integration costs; legal costs and settlements associated with acquisition matters; restructuring costs; other legal matters; other system transition costs, professional fees; and other costs including gains and losses on acquisitions and dispositions of certain businesses.
DERIVATIVE FINANCIAL INSTRUMENTS The Company’s earnings and cash flows are subject to fluctuations due to changes in interest rates, and the Company seeks to mitigate a portion of this risk by entering into derivative contracts. The Company currently uses interest rate swaps and interest rate caps.
DERIVATIVE FINANCIAL INSTRUMENTS The Company’s earnings and cash flows are subject to fluctuations due to changes in interest rates, and the Company seeks to mitigate a portion of this risk by entering into derivative contracts. The derivatives the Company currently uses are interest rate swaps and interest rate caps.
Business Combinations In determining whether an acquisition should be accounted for as a business combination or an asset acquisition, the Company first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets.
Business Combinations 79 In determining whether an acquisition should be accounted for as a business combination or an asset acquisition, the Company first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets.
Patient Services and Product Revenue 68 Because our services have no fixed duration and can be terminated by the patient or the facility at any time, we consider each treatment as a stand-alone contract for revenue recognition purposes.
Patient Services and Product Revenue Because our services have no fixed duration and can be terminated by the patient or the facility at any time, we consider each treatment as a stand-alone contract for revenue recognition purposes.
Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
Diluted net loss per share is calculated by dividing net loss by the diluted weighted average number of common shares outstanding for the period. For purpose of this calculation, outstanding stock options and unvested deferred restricted stock units are considered potentially dilutive common shares.
Diluted net loss per share is calculated by dividing net loss by the diluted weighted average number of common shares outstanding for the period. For purpose of this calculation, outstanding stock options and unvested restricted stock units are considered potentially dilutive common shares.
Department of Justice, United States Attorney’s Office, Middle District of Alabama (the “AUSA”), requiring the production of documents and information pertaining to Comfort Care Hospice, LLC, an indirect wholly owned subsidiary of the Company, regarding allegations of (1) improper submission of claims to Medicare and other federal healthcare programs for service to patients who were ineligible or not properly certified for said healthcare services and (2) improper remuneration to medical directors and skilled nursing facilities for patient referrals in violation of certain federal regulations.
Department of Justice, United States Attorney’s Office, Middle District of Alabama (the “AUSA”), requiring the production of documents and information pertaining to Comfort Care Hospice, LLC, an indirect wholly owned subsidiary of the Company, regarding issues of (1) improper submission of claims to Medicare and other federal healthcare programs for service to patients who were ineligible or not properly certified for said healthcare services and (2) improper remuneration to medical directors and skilled nursing facilities for patient referrals in violation of certain federal regulations.
The Securitization Facility is included within current liabilities on the consolidated balance sheets as it is collateralized by current patient accounts receivable and not because payments are due within one year of the balance sheet date. 91 8.
The Securitization Facility is included within current liabilities on the consolidated balance sheets as it is collateralized by current patient accounts receivable and not because payments are due within one year of the balance sheet date. 8.
The Company is also subject to credit risk due to the variable interest rates on its term loan obligations. As a result, the Company has entered into interest caps and interest rate swap agreements to limit its exposure to risk on its variable rate debt.
The Company is also subject to interest rate risk due to the variable interest rates on its term loan debt obligations. As a result, the Company has entered into interest rate caps and interest rate swap agreements to limit its exposure to risk on its variable rate debt.
Under the ESPP, shares of common stock may be purchased by eligible participants during defined purchase periods at 85 % of the lesser of the closing price of the Company’s common stock on the first day or last day of each purchase period.
Under the ESPP, shares of common stock may be purchased by eligible participants during defined purchase periods at 85 % of the lesser of the closing price of the Company’s common stock on the first 95 day or last day of each purchase period.
The impairment test is a single-step process. The process requires us to estimate and compare the fair value of a reporting unit to its carrying amount, including goodwill. If the fair value exceeds 69 the carrying amount, the goodwill is not considered impaired.
The impairment test is a single-step process. The process requires us to estimate and compare the fair value of a reporting unit to its carrying amount, including goodwill. If the fair value exceeds the carrying amount, the goodwill is not considered impaired.
Most contracts contain variable consideration, however, it is unlikely a significant reversal of revenue will occur when the uncertainty is resolved, and therefore, the Company has included the variable consideration in the estimated transaction price.
Most contracts contain variable consideration, however, it is unlikely that a significant reversal of revenue will occur when the uncertainty is resolved, and therefore, the Company has included the variable consideration in the estimated transaction price.
We use Field contribution and 63 Field contribution margin to make business decisions and assess the operating performance and results delivered by our core field operations, prior to corporate and other costs not directly related to our field operations.
We use Field contribution and Field contribution margin to make business decisions and assess the operating performance and results delivered by our core field operations, prior to corporate and other costs not directly related to our field operations.
We further assessed the reasonableness of the Company’s revenue growth rates and projected EBITDA margins by comparing those assumptions to recent 74 historical performance and current economic and industry trends.
We further assessed the reasonableness of the Company’s revenue growth rates and projected EBITDA margins by comparing those assumptions to recent historical performance and current economic and industry trends.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 114 32.2** Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.3** Certification of Principal Accounting Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2** Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.3** Certification of Principal Accounting Officer Pursuant to 18 U.S.C.
Rather, we present EBITDA and Adjusted EBITDA as supplemental measures of our performance. We define EBITDA as net loss before interest expense, net; income tax benefit; and depreciation and amortization.
Rather, we present EBITDA and Adjusted EBITDA as supplemental measures of our performance. We define EBITDA as net loss before interest expense, net; income tax expense or benefit; and depreciation and amortization.
Our insurance reserves are not discounted. We believe our insurance reserves are adequate to cover projected costs for claims that have been reported but not paid and for claims that have been incurred but not reported.
Our insurance reserves are not discounted. 67 We believe our insurance reserves are adequate to cover projected costs for claims that have been reported but not paid and for claims that have been incurred but not reported.
Receivables under insured programs that are expected to be paid within the 83 next twelve months are classified as current assets. All other receivables under insured programs are classified as long-term assets.
Receivables under insured programs that are expected to be paid within the next twelve months are classified as current assets. All other receivables under insured programs are classified as long-term assets.
The accrued insurance reserves included in the accompanying consolidated balance sheets include estimates of the ultimate costs, including third-party legal defense costs, in the event the Company was unable to receive funds from claims made under commercial insurance policies, for claims that have been reported but not paid and claims that have been incurred but not reported at the balance sheet dates.
The accrued professional liability insurance reserves included in the accompanying consolidated balance sheets include estimates of the ultimate costs, including third-party legal defense costs, in the event the Company was unable to receive funds from claims made under commercial insurance policies, for claims that have been reported but not paid and claims that have been incurred but not reported at the balance sheet dates.
We believe our platform creates sustainable competitive advantages that support our ability to continue driving rapid growth, both organically and through acquisitions, and positions us as the partner of choice for the patients we serve. 52 Segments We deliver our services to patients through three segments: Private Duty Services (“PDS”); Home Health & Hospice (“HHH”); and Medical Solutions (“MS”).
We believe our platform creates sustainable competitive advantages that support our ability to continue driving rapid growth, both organically and through acquisitions, and positions us as the partner of choice for the patients we serve. 51 Segments We deliver our services to patients through three segments: Private Duty Services (“PDS”); Home Health & Hospice (“HHH”); and Medical Solutions (“MS”).
Although substantially all reported claims are paid directly by the Company’s commercial insurance carriers (after the Company satisfies the applicable policy deductible and/or retention), the Company is ultimately responsible for payment of these claims in the event its insurance carriers become insolvent or otherwise do not honor the contractual obligations under the malpractice policies.
Although substantially all reported claims are paid directly by the Company’s commercial insurance carriers (after the Company satisfies the applicable policy deductible and/or retention), the Company is ultimately responsible for payment of these claims in the event its insurance carriers become insolvent or otherwise do not honor the contractual obligations under the liability policies.
The Company’s lines of business are generally classified into the following categories: private duty services; home health and hospice; and medical solutions. Private Duty Services (“PDS”).
The Company’s lines of business are generally classified into the following categories: private duty services; home health and hospice; and medical solutions. 83 Private Duty Services (“PDS”).
The AVP of Cybersecurity works directly with the CIO to create and maintain cyber policies, standards, and processes that support the Company’s overall strategy and the current cyber environment. We believe our cybersecurity program and policies are aligned with industry standards and best practices, such as the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework.
The AVP of Cybersecurity works directly wit h the CIO to create and maintain cyber policies, standards, and processes that support the Company’s overall strategy and the current cyber environment. We believe our cybersecurity program and policies are aligned with industry standards and best practices, such as the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework.
INCOME TAXES Beginning in 2022, the 2017 Tax Cuts and Jobs Act, as amended, eliminated current-year deductibility of research and experimentation ("R&E") expenditures and software development costs (collectively, "R&E expenditures") and instead requires the Company to charge its R&E expenditures to a capital account amortized over five years.
Beginning in 2022, the 2017 Tax Cuts and Jobs Act, as amended, eliminated current-year deductibility of research and experimentation ("R&E") expenditures and software development costs (collectively, "R&E expenditures") and instead requires the Company to charge its R&E expenditures to a capital account amortized over five years.
The following exhibits are submitted with this Annual Report on Form 10-K or, where indicated, incorporated by reference to other filings. 112 Exhibit Index Exhibit Number Description 3.1 Second Amended and Restated Certificate of Incorporation of Aveanna Healthcare Holdings Inc.
The following exhibits are submitted with this Annual Report on Form 10-K or, where indicated, incorporated by reference to other filings. 107 Exhibit Index Exhibit Number Description 3.1 Second Amended and Restated Certificate of Incorporation of Aveanna Healthcare Holdings Inc.
Properties. Aveanna’s corporate headquarters is leased and is located at 400 Interstate North Parkway, Suite 1600, Atlanta, Georgia 30339. Aveanna also maintains approximately 300 leases for other offices and medical sites with various expiration terms from more than one year to over 10 years. Aveanna does not currently own any real estate. Ite m 3. Legal Proceedings.
It em 2. Properties. Aveanna’s corporate headquarters is leased and is located at 400 Interstate North Parkway, Suite 1600, Atlanta, Georgia 30339. Aveanna also maintains approximately 300 leases for other offices and medical sites with various expiration terms from more than one year to over 10 years. Aveanna does not currently own any real estate. Ite m 3. Legal Proceedings.
Prior to October 1, 2023, the Company maintained primary commercial insurance coverage on a claims made basis for professional malpractice claims with varying deductibles by policy year from $ 0.5 million to $ 1.5 million on a per claim basis and $ 5.0 million to $ 6.0 million per claim and annual aggregate limits .
Prior to October 1, 2023, the Company maintained primary commercial insurance coverage on a claims made basis for professional liability claims with varying deductibles by policy year from $ 0.5 million to $ 1.5 million on a per claim basis and $ 5.0 million to $ 6.0 million per claim and annual aggregate limits .
Moreover, the Company maintains excess insurance coverage for professional malpractice claims to cover any claims over the aggregate limits. In addition, the Company maintains workers’ compensation insurance with a $ 0.5 million per claim deductible and statutory limits. The Company reimburses insurance carriers for deductible losses under these policies.
Moreover, the Company maintains excess insurance coverage for professional liability claims to cover any claims over the aggregate limits. In addition, the Company maintains workers’ compensation insurance with a $ 0.5 million per claim deductible and statutory limits. The Company reimburses insurance carriers for deductible losses under these policies.
The 2021 Extended Term Loan and the Delayed Draw Term Loan bear interest, at the Company’s election, at a variable interest rate based on either SOFR (subject to a minimum of 0.50%), or prime or federal funds rate (“Annual Base Rate” or “ABR”) (subject to a minimum of 2.00%) for the interest period relevant to such borrowing, plus a CSA of 0.10% and an applicable margin of 3.75% for loans accruing interest based on SOFR and an applicable margin of 2.75% for loans accruing interest based on ABR.
The 2021 Extended Term Loan and the Delayed Draw Term Loan bear interest, at the Company’s election, at a variable interest rate based on either SOFR (subject to a minimum of 0.50 % ), or prime or federal funds rate (“Annual Base Rate” or “ABR”) (subject to a minimum of 2.00 % ) for the interest period relevant to such borrowing, plus a credit spread adjustment ("CSA") of 0.10 % and an applicable margin of 3.75 % for loans accruing interest based on SOFR and an applicable margin of 2.75 % for loans accruing interest based on ABR.
Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies and procedures. 107 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Aveanna Healthcare Holdings Inc.
Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies and procedures. 103 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Aveanna Healthcare Holdings Inc.
Under SEC rules and regulations, as a smaller reporting company we are not required to provide the information otherwise required by this Item. 71 It em 8. Financial Statements and Supplementary Data.
Under SEC rules and regulations, as a smaller reporting company we are not required to provide the information otherwise required by this Item. 68 It em 8. Financial Statements and Supplementary Data.
A potential impairment has occurred if the projected future undiscounted cash 80 flows expected to result from the use and eventual disposition of the asset or asset group are less than the carrying value of the asset or asset group.
A potential impairment has occurred if the projected future undiscounted cash 77 flows expected to result from the use and eventual disposition of the asset or asset group are less than the carrying value of the asset or asset group.
The net settlements incurred with swap 92 counterparties under the swap agreements were recognized through cash flows from operating activities in the accompanying consolidated statements of cash flows. On February 9, 2022, the Company entered into interest rate cap agreements for an aggregate notional amount of $ 880.0 million and a cap rate of 3.00 %.
The net settlements incurred with swap counterparties under the swap agreements were recognized through cash flows from financing activities in the accompanying consolidated statements of cash flows. On February 9, 2022, the Company entered into interest rate cap agreements for an aggregate notional amount of $ 880.0 million and a cap rate of 3.00 %.
For more information about the cybersecurity risks we face, see the risk factor entitled “ Failure to maintain the security and functionality of our information systems, or to defend against or otherwise prevent a cybersecurity attack or breach, could adversely affect our business, financial position, results of operations and liquidity ” described under “Risk Factors” contained in Item 1A of this Annual Report on Form 10-K. 50 It em 2.
For more information about the cybersecurity risks we face, see the risk factor entitled “ Failure to maintain the security and functionality of our information systems, or to defend against or otherwise prevent a cybersecurity attack or breach, could adversely affect our business, financial position, results of operations and liquidity ” described under “Risk Factors” contained in Item 1A of this Annual Report on Form 10-K.
(together with its consolidated subsidiaries, referred to herein as the “Company”) is headquartered in Atlanta, Georgia and has locations in 33 states with concentrations in Texas, Pennsylvania, and California, providing a broad range of pediatric and adult healthcare services, including nursing, hospice, rehabilitation services, occupational nursing in schools, therapy services, day treatment centers for medically fragile and chronically ill children and adults, as well as delivery of enteral nutrition and other products to patients.
(together with its consolidated subsidiaries, the “Company”) is headquartered in Atlanta, Georgia and has locations in 34 states with concentrations in Texas, Pennsylvania, and California, providing a broad range of pediatric and adult healthcare services, including nursing, hospice, rehabilitation services, occupational nursing in schools, therapy services, day treatment centers for medically fragile and chronically ill children and adults, as well as delivery of enteral nutrition and other products to patients.
This increase in tax benefit was primarily driven by the release of uncertain tax positions, as well as changes in federal and state valuation allowances, changes in uncertain tax positions, and federal and state current tax expense. Non-GAAP Financial Measures In addition to our results of operations prepared in accordance with U.S. generally accepted accounting principles (“U.S.
This increase in tax expense was primarily driven by the increases to uncertain tax positions, as well as changes in federal and state valuation allowances, and federal and state current tax expense. Non-GAAP Financial Measures In addition to our results of operations prepared in accordance with U.S. generally accepted accounting principles (“U.S.
The calculation of weighted average shares of common stock outstanding includes all vested deferred restricted stock units. 18. CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY) 104 Aveanna Healthcare Holdings Inc.
The calculation of weighted average shares of common stock outstanding includes all vested deferred restricted stock units. 18. CONDENSED FINANCIAL INFORMATION OF REGISTRANT (PARENT COMPANY ONLY) 100 Aveanna Healthcare Holdings Inc.
For the year ended December 30, 2023, the Company recognized a non-cash purchase gain on the acquisition of a business of $ 5.1 million, which was recorded in Other Operating (Income) Expense. Debt Issuance Costs The Company defers costs directly associated with acquiring third-party financing.
For the year ended December 30, 2023, the Company recognized a $ 5.1 million non-cash purchase gain on the acquisition of a business, which was recorded in other operating expense (income) in the consolidated statements of operations . Debt Issuance Costs The Company defers costs directly associated with acquiring third-party financing.
Represents costs associated with restructuring our branch and regional administrative footprint as well as our corporate overhead infrastructure costs in order to appropriately size our resources to current volumes, including (i) branch and regional salary and severance costs; (ii) corporate salary and severance costs; (iii) rent and lease termination costs associated with the closure of certain office locations; and (iv) certain consulting costs related to the restructuring of our branch and regional administrative footprint.
Represents costs associated with restructuring our branch and regional administrative footprint as well as our corporate overhead infrastructure costs in order to appropriately size our resources to current volumes, including (i) branch and regional salary and severance costs; (ii) corporate salary and severance costs; (iii) rent and lease termination costs associated with the closure of certain office locations.
Home healthcare can help our patients recover after hospitalization or surgery and assist patients in managing chronic illnesses. We also help our patients manage their medications. Through our care, we help our patients recover more fully in the comfort 53 of their own homes, while remaining as independent as possible.
Home healthcare can help our patients recover after a hospitalization or surgery and assist patients in managing chronic illnesses. We also help our patients manage their medications. Through our care, we help our patients recover more fully in the 52 comfort of their own homes, while remaining as independent as possible.
Basis of Presentation The Company's fiscal year ends on the Saturday that is closest to December 31 of a given year, resulting in either a 52 or 53-week fiscal year. The accompanying consolidated balance sheets reflect the accounts of the Company as of December 30, 2023 and December 31, 2022.
Basis of Presentation The Company's fiscal year ends on the Saturday that is closest to December 31 of a given year, resulting in either a 52 or 53-week fiscal year. The accompanying consolidated balance sheets reflect the accounts of the Company as of December 28, 2024 and December 30, 2023.
Significant differences between these estimates and actual future performance could result in additional impairment in future fiscal years. The Company determined that it had six reporting units for the fiscal years ended December 30, 2023 and December 31, 2022 . Intangible Assets, Net Intangible assets consist of licenses (including certificates of need), acquired trade names, non-compete agreements, and internal-use software.
Significant differences between these estimates and actual future performance could result in additional impairment in future fiscal years. The Company determined that it had six reporting units for the fiscal years ended December 28, 2024 and December 30, 2023 . Intangible Assets, Net Intangible assets consist of licenses (including certificates of need), acquired trade names, non-compete agreements, and internal-use software.
These approaches use primarily unobservable inputs, including revenue growth rates, projected EBITDA margins, and discount rates, which are considered Level 3 fair value measurements. The fair value analysis takes into account recent and expected operating performance. See Note 11 – Share-Based Compensation for further details on the Company’s deferred restricted stock units. 9.
These approaches use primarily unobservable inputs, including revenue growth rates, projected EBITDA margins, and discount rates, which are considered Level 3 fair value measurements. The fair value analysis takes into account recent and expected operating performance. See Note 11 – Share-Based Compensation for further details on the valuation methodologies related to the Company’s deferred restricted stock units. 9.
(f/k/a BCPE Eagle Buyer LLC) as borrower, the other credit parties, Barclays Bank PLC as administrative agent and the lenders party thereto (incorporated by reference to Exhibit 10.2 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.2 Joinder Agreement and Amendment to the First Lien Credit Agreement, dated as of July 1, 2018, by and among Aveanna Healthcare LLC as borrower, the other credit parties, Barclays Bank PLC as administrative agent and the lenders party thereto (incorporated by reference to Exhibit 10.3 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.3 Amendment No. 2 to the First Lien Credit Agreement, dated as of March 19, 2020, by and among Aveanna Healthcare LLC as borrower, the other credit parties, Barclays Bank PLC as administrative agent and the lenders party thereto (incorporated by reference to Exhibit 10.4 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.4 Amendment No. 3 to the First Lien Credit Agreement, dated as of April 1, 2020, by and among Aveanna Healthcare LLC as borrower, the other credit parties, Barclays Bank PLC as administrative agent and the lenders party thereto (incorporated by reference to Exhibit 10.5 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.5 Second Joinder Agreement and Fourth Amendment to the First Lien Credit Agreement, dated as of September 21, 2020, by and among Aveanna Healthcare LLC as borrower, the other credit parties, Barclays Bank PLC as the administrative agent and the lenders party thereto (incorporated by reference to Exhibit 10.6 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.6 Amended and Restated 2017 Stock Incentive Plan (incorporated by reference to Exhibit 10.8 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.7+ Amended and Restated Employment Agreement, dated as of March 15, 2017, by and among Aveanna Healthcare LLC (f/k/a BCPE Eagle Buyer LLC), Pediatric Services of America, Inc. and Jeffrey Shaner (incorporated by reference to Exhibit 10.13 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.8+ First Amendment to Amended and Restated Employment Agreement, dated as of January 23, 2018, by and among Aveanna Healthcare LLC (f/k/a BCPE Eagle Buyer, LLC), Pediatric Services of America, Inc. and Jeffrey Shaner (incorporated by reference to Exhibit 10.14 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.9 Third Joinder Agreement and Fifth Amendment to the First Lien Credit Agreement, dated as of March 11, 2021, by and among Aveanna Healthcare LLC as borrower, the other credit parties, Barclays Bank PLC as administrative agent and the lenders party thereto (incorporated by reference to Exhibit 10.19 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.10 Extension Amendment to First Lien Credit Agreement, dated as of July 15, 2021, by and among Aveanna Healthcare LLC, Aveanna Healthcare Intermediate Holdings LLC, Barclays Bank PLC as administrative agent and the other lenders, agents and guarantors party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on July 20, 2021). 10.11 Amendment No. 7 to the First Lien Credit Agreement, dated as of August 9, 2021, by and among Aveanna Healthcare LLC, Aveanna Healthcare Intermediate Holdings LLC, Barclays Bank PLC as 113 administrative agent and other lenders, agents, and guarantors party thereto (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q, filed with the SEC on August 11, 2021). 10.12+ 2021 Stock Incentive Plan (incorporated by reference to Exhibit 10.20 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.13+ Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.21 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021. 10.14+ Form of Indemnification Agreement (incorporated by reference to Exhibit 10.22 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.15 Second Lien Credit Agreement, dated December 10, 2021, by and among Aveanna Healthcare Intermediate Holdings LLC, Aveanna Healthcare LLC, the several lenders from time to time parties thereto, Barclays Bank PLC as the Administrative agent and Collateral agent, and Barclays Bank PLC, BMO Capital Markets Corp., JP Morgan Chase Bank, N.A., Royal Bank of Canada, Credit Suisse Loan Funding LLC, Goldman Sachs Banks USA, Bank of America, N.A., Deutsche Bank Securities Inc. and Jeffries Finance LLC, as the Joint Lead Arrangers and Bookrunners (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 16, 2021). 10.16 Receivable Financing Agreement, dated as of November 12, 2021, by and among Aveanna SPV I, LLC, as borrower, Aveanna Healthcare LLC, as initial servicer, PNC Bank, as administrative agent, and other lenders and agents party thereto (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q, filed with the SEC on November 15, 2021). 10.17 Second Amendment to the Receivable Financing Agreement, dated August 8, 2022, by and among Aveanna SPV I, LLC, as borrower, Aveanna Healthcare, LLC, as initial servicer, PNC Bank, National Association, as administrative agent, and PNC Capital Markets LLC, as structuring agent (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed with the SEC on August 11, 2022). 10.18* Eighth Amendment to the First Lien Credit Agreement, dated as of March 3, 2023, by and among Aveanna Healthcare LLC, Barclays Bank PLC as administrative agent and other lenders, agents, and guarantors party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2023). 10.19* Third Amendment to the Receivables Financing Agreement, dated July 31, 2023, by and among, Aveanna SPV I, LLC as borrower, Aveanna Healthcare LLC as initial servicer, PNC Bank, National Association as administrative agent, and PNC Capital Markets LLC as structuring agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on August 4, 2023). 10.20 Amendment No. 1 to Second Lien Credit Agreement, dated as of June 30, 2023, by and between Aveanna Healthcare LLC as Borrower Representative and a Borrower and Barclays Bank PLC, as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 10, 2023). 10.21 Ninth Amendment to First Lien Credit Agreement, dated as of June 30, 2023, by and between Aveanna Healthcare LLC as Borrower and Barclays Bank PLC as administrative agent (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 10, 2023). 10.22*+ Amended and Restated Employment Agreement, dated as of January 1, 2022, by and among Aveanna Healthcare LLC (f/k/a BCPE Eagle Buyer LLC), Pediatric Services of America, Inc. and Ed Reisz 21.1* List of Subsidiaries. 23.1* Consent of Ernst & Young, LLP 31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.3* Certification of Principal Accounting Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1** Certification of Principal Executive Officer Pursuant to 18 U.S.C.
(f/k/a BCPE Eagle Buyer LLC) as borrower, the other credit parties, Barclays Bank PLC as administrative agent and the lenders party thereto (incorporated by reference to Exhibit 10.2 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.2 Joinder Agreement and Amendment to the First Lien Credit Agreement, dated as of July 1, 2018, by and among Aveanna Healthcare LLC as borrower, the other credit parties, Barclays Bank PLC as administrative agent and the lenders party thereto (incorporated by reference to Exhibit 10.3 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.3 Amendment No. 2 to the First Lien Credit Agreement, dated as of March 19, 2020, by and among Aveanna Healthcare LLC as borrower, the other credit parties, Barclays Bank PLC as administrative agent and the lenders party thereto (incorporated by reference to Exhibit 10.4 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.4 Amendment No. 3 to the First Lien Credit Agreement, dated as of April 1, 2020, by and among Aveanna Healthcare LLC as borrower, the other credit parties, Barclays Bank PLC as administrative agent and the lenders party thereto (incorporated by reference to Exhibit 10.5 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.5 Second Joinder Agreement and Fourth Amendment to the First Lien Credit Agreement, dated as of September 21, 2020, by and among Aveanna Healthcare LLC as borrower, the other credit parties, Barclays Bank PLC as the administrative agent and the lenders party thereto (incorporated by reference to Exhibit 10.6 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.6 Amended and Restated 2017 Stock Incentive Plan (incorporated by reference to Exhibit 10.8 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.7+ Amended and Restated Employment Agreement, dated as of March 15, 2017, by and among Aveanna Healthcare LLC (f/k/a BCPE Eagle Buyer LLC), Pediatric Services of America, Inc. and Jeffrey Shaner (incorporated by reference to Exhibit 10.13 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.8+ First Amendment to Amended and Restated Employment Agreement, dated as of January 23, 2018, by and among Aveanna Healthcare LLC (f/k/a BCPE Eagle Buyer, LLC), Pediatric Services of America, Inc. and Jeffrey Shaner (incorporated by reference to Exhibit 10.14 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.9 Third Joinder Agreement and Fifth Amendment to the First Lien Credit Agreement, dated as of March 11, 2021, by and among Aveanna Healthcare LLC as borrower, the other credit parties, Barclays Bank PLC as administrative agent and the lenders party thereto (incorporated by reference to Exhibit 10.19 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.10 Extension Amendment to First Lien Credit Agreement, dated as of July 15, 2021, by and among Aveanna Healthcare LLC, Aveanna Healthcare Intermediate Holdings LLC, Barclays Bank PLC as administrative agent and the other lenders, agents and guarantors party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on July 20, 2021). 10.11 Amendment No. 7 to the First Lien Credit Agreement, dated as of August 9, 2021, by and among Aveanna Healthcare LLC, Aveanna Healthcare Intermediate Holdings LLC, Barclays Bank PLC as 108 administrative agent and other lenders, agents, and guarantors party thereto (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q, filed with the SEC on August 11, 2021). 10.12+ 2021 Stock Incentive Plan (incorporated by reference to Exhibit 10.20 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.13+ Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.21 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021. 10.14+ Form of Indemnification Agreement (incorporated by reference to Exhibit 10.22 to the registration statement on Form S-1 (File No. 333-254981), filed with the SEC on April 28, 2021). 10.15 Second Lien Credit Agreement, dated December 10, 2021, by and among Aveanna Healthcare Intermediate Holdings LLC, Aveanna Healthcare LLC, the several lenders from time to time parties thereto, Barclays Bank PLC as the Administrative agent and Collateral agent, and Barclays Bank PLC, BMO Capital Markets Corp., JP Morgan Chase Bank, N.A., Royal Bank of Canada, Credit Suisse Loan Funding LLC, Goldman Sachs Banks USA, Bank of America, N.A., Deutsche Bank Securities Inc. and Jeffries Finance LLC, as the Joint Lead Arrangers and Bookrunners (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 16, 2021). 10.16 Receivable Financing Agreement, dated as of November 12, 2021, by and among Aveanna SPV I, LLC, as borrower, Aveanna Healthcare LLC, as initial servicer, PNC Bank, as administrative agent, and other lenders and agents party thereto (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q, filed with the SEC on November 15, 2021). 10.17 Second Amendment to the Receivable Financing Agreement, dated August 8, 2022, by and among Aveanna SPV I, LLC, as borrower, Aveanna Healthcare, LLC, as initial servicer, PNC Bank, National Association, as administrative agent, and PNC Capital Markets LLC, as structuring agent (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed with the SEC on August 11, 2022). 10.18* Eighth Amendment to the First Lien Credit Agreement, dated as of March 3, 2023, by and among Aveanna Healthcare LLC, Barclays Bank PLC as administrative agent and other lenders, agents, and guarantors party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 11, 2023). 10.19* Third Amendment to the Receivables Financing Agreement, dated July 31, 2023, by and among, Aveanna SPV I, LLC as borrower, Aveanna Healthcare LLC as initial servicer, PNC Bank, National Association as administrative agent, and PNC Capital Markets LLC as structuring agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on August 4, 2023). 10.20 Amendment No. 1 to Second Lien Credit Agreement, dated as of June 30, 2023, by and between Aveanna Healthcare LLC as Borrower Representative and a Borrower and Barclays Bank PLC, as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 10, 2023). 10.21 Ninth Amendment to First Lien Credit Agreement, dated as of June 30, 2023, by and between Aveanna Healthcare LLC as Borrower and Barclays Bank PLC as administrative agent (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 10, 2023). 10.22+ Amended and Restated Employment Agreement, dated as of January 1, 2022, by and among Aveanna Healthcare LLC (f/k/a BCPE Eagle Buyer LLC), Pediatric Services of America, Inc. and Ed Reisz (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2024) 10.23*+ Employment Agreement, dated March 13, 2024 by and among Aveanna Healthcare LLC and Matt Buckhalter 10.24*+ Employment Agreement, dated April 29, 2024, by and among Aveanna Healthcare LLC and Jerry Perchik 10.25 Fourth Amendment to the Receivables Financing Agreement, dated May 31, 2024, by and among Aveanna SPV I, LLC, as borrower, Aveanna Healthcare LLC, as initial servicer, PNC Bank, National Association, as administrative agent, and PNC Capital Markets LLC, as structuring agent (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on June 5, 2024). 10.26++ Tenth Amendment to First Lien Credit Agreement, dated September 30, 2024, among Aveanna Healthcare LLC, Barclays Bank PLC, as administrative agent, and the other lenders, agents and 109 guarantors party thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on October 4, 2024). 19.1* Aveanna Securities Trading Policy 21.1* List of Subsidiaries. 23.1* Consent of Ernst & Young, LLP 31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.3* Certification of Principal Accounting Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1** Certification of Principal Executive Officer Pursuant to 18 U.S.C.
Our PDN services include: • In-home skilled nursing services to medically fragile children and adults; • Nursing services in school settings in which our caregivers accompany patients to school; • Services to patients in our Pediatric Day Healthcare Centers (“PDHC”); and • Non-clinical care, including programs such as employer of record support services and personal care services.
Our PDN services include: • In-home skilled nursing services to medically fragile children and adults; • Nursing services in school settings in which our caregivers accompany patients to school; • Services to patients in our Pediatric Day Healthcare Centers (“PDHC”); and • Non-clinical care, including programs such as support services and personal care services.
Payment of interest and related fees under our credit facilities is the most significant use of our operating cash flow. Our goal is to use cashflow provided by operations as a source of cash to reduce our net leverage and supplement the purchase price of acquisitions.
Payment of interest and related fees under our credit facilities is currently the most significant use of our operating cash flow. Our goal is to use cashflow provided by operations primarily as a source of cash to supplement the purchase price for acquisitions and reduce our net leverage.
The existence of this put right prevents the Participant from bearing the risks and rewards of ownership during the six month period following the vesting date as the put right requires the Company to purchase all shares the Participant received at fair market value on the repurchase date.
The existence of this put right prevented the recipient from bearing the risks and rewards of ownership during the six month period following the vesting date as the put right requires the Company to purchase all shares the Participant received at fair market value on the repurchase date.
There was no impairment of depreciable or amortizable long-lived assets recorded in the fiscal years ended December 30, 2023 and December 31, 2022. Property and Equipment, Net Property and equipment are stated at cost less accumulated depreciation and amortization and are depreciated on a straight-line basis over the estimated useful lives of the assets. Additions and improvements are capitalized.
There was no impairment of depreciable or amortizable long-lived assets recorded in the fiscal years ended December 28, 2024 and December 30, 2023 . Property and Equipment, Net Property and equipment are stated at cost less accumulated depreciation and amortization and are depreciated on a straight-line basis over the estimated useful lives of the assets. Additions and improvements are capitalized.
Represents (i) costs associated with our Integration Management Office, which focuses on our integration efforts and transformational projects such as systems conversions and implementations, material cost reduction and restructuring projects, among other things, of $1.5 million and $2.8 million for the fiscal years ended December 30, 2023 and December 31, 2022, respectively; and (ii) transitionary costs incurred to integrate acquired companies into our field and corporate operations of $0.8 million and $15.0 million for the fiscal years ended December 30, 2023 and December 31, 2022, respectively.
Represents (i) costs associated with our Integration Management Office, which focuses on our integration efforts and transformational projects such as systems conversions and implementations, material cost reduction and restructuring projects, among other things, of $1.0 million and $1.5 million for the fiscal years ended December 28, 2024 and December 30, 2023, respectively; and (ii) transitionary costs incurred to integrate acquired companies into our field and corporate operations of $0.2 million and $0.8 million for the fiscal years ended December 28, 2024 and December 30, 2023, respectively.
In September 2023, in response to a $7.9 million arbitration award rendered against us in connection with a civil litigation matter, we promptly obtained a $9.1 million appellate bond with the trial court. The $9.1 million appellate bond has been collateralized with letters of credit.
In September 2023, in response to a $7.9 million arbitration award rendered against us in connection with a civil litigation matter, we promptly obtained a $9.1 million appellate bond with the trial court. The $9.1 million appellate bond was collateralized with letters of credit.
The fiscal years ended December 30, 2023 and December 31, 2022 each included 52 weeks. Use of Estimates The Company’s accounting and reporting policies conform with U.S. GAAP. In preparing the consolidated financial statements, the Company is required to make estimates and assumptions that impact the amounts reported in these consolidated financial statements and accompanying notes.
The fiscal years ended December 28, 2024 and December 30, 2023 each included 52 weeks. Use of Estimates The Company’s accounting and reporting policies conform with U.S. GAAP. In preparing the consolidated financial statements, the Company is required to make estimates and assumptions that impact the amounts reported in these consolidated financial statements and accompanying notes.
The Company plans to adopt the standard when it becomes effective beginning in the fiscal year 2025 annual financial statements, and the Company expects the adoption of the standard will impact certain of our income tax disclosures. 3. REVENUE The Company evaluates the nature, amount, timing and uncertainty of revenue and cash flows using the five-step process.
The Company plans to adopt the standard when it becomes effective beginning with the fiscal year 2025 annual financial statements, and the Company expects the adoption of the standard will impact certain of its income tax disclosures. 3. REVENUE The Company evaluates the nature, amount, timing and uncertainty of revenue and cash flows using the five-step process.
As the put right is exercisable only when the Participant terminates his or her service, which is outside the control of the Company, the Company has classified the awards outstanding subsequent to the initial six-month period as temporary equity.
As the put right is exercisable only when the 93 recipient terminates his or her service, which is outside the control of the Company, the Company has classified the awards outstanding subsequent to the initial six-month period as temporary equity.
After the trial court entered a judgment to enforce the arbitration award, the Company promptly obtained a $ 9.1 million collateralized appellate bond and intends to avail itself of all appellate options. The ultimate resolution of these litigated matters is not expected to have a material impact on the consolidated financial statements.
After the trial court entered a judgment to enforce the arbitration award, the Company promptly obtained a $ 9.1 million collateralized appellate bond and intends to avail itself of all appellate options. The ultimate resolution of this litigated matter is not expected to have a material impact on the consolidated financial statements.
Our Vulnerability Management Framework addresses discovery, risk rating, remediation timeliness required per risk, and obligations on reoccurring third-party security products. Risks that fall outside the required remediation timeline are documented on the risk register, which is discussed during periodic Cybersecurity Steering Committee meetings.
Cybersecurity risk management is currently independent of enterprise risk management. Our Vulnerability Management Framework addresses discovery, risk rating, remediation timeliness required per risk, and obligations on reoccurring third-party security products. Risks that fall outside the required remediation timeline are documented on the risk register, which is discussed during periodic Cybersecurity Steering Committee meetings.
There was no difference between net loss and comprehensive loss presented in the accompanying consolidated financial statements for the fiscal years ended December 30, 2023 and December 31, 2022 . Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of patient accounts receivable.
There was no difference between net loss and comprehensive loss presented in the accompanying consolidated financial statements for the fiscal years ended December 28, 2024 and December 30, 2023 . Concentration of Credit Risk Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of patient accounts receivable.
Date: March 14, 2024 By: /s/ Jeff Shaner Jeff Shaner President, Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
Date: March 13, 2025 By: /s/ Jeff Shaner Jeff Shaner President, Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.
Diluted net loss per share is calculated by dividing net loss by the diluted weighted average number of shares of common stock outstanding for the period. For purposes of this calculation, outstanding stock options are considered potential dilutive shares of common stock.
Diluted net loss per share is calculated by dividing net loss by the diluted weighted average number of shares of common stock outstanding for the period. For purposes of this calculation, outstanding stock options, RSUs, and PSUs are considered potential dilutive shares of common stock.

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