Hindered By The Labor Environment, Aveanna’s Home Health Segment Struggles Continue

The home health and hospice segments of Aveanna Healthcare Holdings Inc. (Nasdaq: AVAH) continue to struggle.

Nevertheless, company leaders strongly believe in those segments’ long-term value proposition.

“Our home health and hospice platform, which is primed for growth, is dedicated to creating value through effective operational management and the delivery of exceptional patient care,” Matt Buckhalter, interim CFO at Aveanna, said during the company’s second-quarter earnings call Thursday. “We’d expect to see improvements throughout 2023 as our direct and indirect cost initiatives continue to take hold.”


Reimbursement rate challenges and labor struggles remain two of the company’s top concerns.

Based in Atlanta, Aveanna provides home health, hospice and pediatric care services across 33 states.

Overall, revenue checked in at $471.9 million in the second quarter, a 6.5% year-over-year increase. Home health and hospice revenue, however, was $61.4 million, a 9.7%% year-over-year decrease.


On the positive side, Aveanna saw strong growth in its private-duty services with an 8.5% year-over-year increase in revenue.

“A positive 2.7% year-over-year growth in PDS hours for us is a good thing because it’s been a couple of years since we’ve had positive growth [there],” Shaner said. “At the end of the day, we see our preferred payer strategy working both in rates and volume. Obviously, we’ve made a strong commitment to shifting caregiver capacity to those payers that are leaning into us — both in our PDS and in our home health and hospice lines of business. We’re committed to those payers that are paying us either on an episodic basis or as an aligned, preferred payer.”

Growth, though, is still being stymied by the labor environment.

“We do not have a demand problem,” Shaner said. “Demand for home- and community-based care has never been higher with both state and federal governments — and managed care organizations — asking for solutions that can create more critical capacity. Our ability to recruit and retain the best talent is a function of rates.”

Offering the preferred work setting that is mission-driven and one that provides a “deep sense of purpose for our teammates,” is a start, Shaner said.

“However, our caregivers need to be able to provide for themselves and their families in this inflationary environment, and we must offer a competitive wage,” he added.

One of Aveanna’s goals for 2023 was to lay out a legislative strategy that would increase rates by double-digit percentages across a number of the states it operates in, with a particular emphasis on California, Texas and Oklahoma.

Those three states represent about 25% of its total PDS revenue.

In six months, Aveanna has obtained double-digit PDS rate increases in six key states, including Oklahoma. Meanwhile, the company saw modest increases in Texas, but has not made progress in California on that front.

“We have also achieved rate wins in an additional 11 states that were either in line or slightly better than our expectations,” Shaner said. “These combined 17 states represent approximately 50% of our PDS footprint, and we should continue to see positive progress throughout 2023 and into 2024.”

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