‘We’re Still In A Firefight’: Aveanna Battling Labor, Inflation Struggles

Aveanna Healthcare Holdings Inc. (Nasdaq: AVAH) is bullish on its company ethos, but is still trying to find its footing a little more than a year after going public.

Like many in the space, Aveanna continues to struggle with labor issues and inflation on a macro level, while simultaneously being able to tout a strong demand for home health services.

“The demand for home- and community-based care has never been higher,” CEO Tony Strange said during the company’s second-quarter earnings call Thursday. “I’ve been in this business for almost 35 years and for the first time, we have payers — both state governments and managed care organizations — reaching out and asking what can be done to create more capacity. We have a waiting list for new admissions in every branch. We have several examples of how value-based contracts can provide benefits to both payer and provider, but with all that said, we’re still in a firefight today.”


Based in Atlanta, Aveanna delivers home health, private-duty services and hospice care to a broad range of patients in 30 states. Though it is now heavily invested in the senior home health space, it began as one of the nation’s largest at-home pediatric care providers.

The company has said in the past that in order for it to increase wages, reimbursement rates would have to come up first in the states it serves. That’s been tricker in some states than others.

Strange pointed to the COVID-related disruption in the labor market and national inflation as reasons for a relatively weak quarter.


“The labor market related to our business continues to be challenging across all of our business segments, but particularly challenging in our private duty segment,” Strange said.

According to Aveanna, 60% of its private-duty service revenues are obtained through skilled nursing services, which includes one LPN at a patient’s bedside for a 10-12 hour shift. Historically, nurses are willing to work for hourly wages for Aveanna that might be slightly below those of skilled nursing facilities or other health care providers, Strange said.

There’s now been a shift in that trend, but Strange noted there is more flexibility when it comes to home health and hospice retention.

“Our home health and hospice business is also dependent on the ability to hire RNs and LPNs, and while we have similar constraints related to the competitive environment, we have greater flexibility to increase wages given the variable reimbursement models,” Strange said. “The significant shortage of nurses in the U.S. will continue for the foreseeable future. Nursing schools are operating at capacity and the timeline that it’ll take to increase that capacity will necessitate looking elsewhere to increase nursing capacity in the U.S.”

Strange called on the Biden administration to reverse some immigration policies that would make it easier for nurses from other countries to come to the U.S. looking for work as well.

During the second quarter, revenue for Aveanna saw a modest increase of 1.6% from 2021 to 2022, up from $436 million to $443 million.

The overall increase in revenue was attributable to an $11.3 million increase in Home Health & Hospice (“HHH”) segment revenue.

The home health and hospice was a lone bright spot while the company saw net decreases in medical solutions – $2.8 million decrease – and its private duty services, a $1.7 million decrease, compared to a year ago.

Despite overall struggles, COO Jeff Shaner said there were several bright spots in home health care and hospice, including a 3.7% increase in revenue per visit that was driven by better episodic management and being fully transitioned to Homecare Homebase.

While Shaner painted a rosy picture for home health care in the future, he didn’t pass up the opportunity to criticize the U.S. Centers for Medicare & Medicaid Services (CMS) for its proposed rule payment cut.

“This is the wrong time to be cutting reimbursement to the most effective, highest quality and patient-preferred health care setting,” Shaner said.

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