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    ACH
    Earnings call· Jun 2026(Q2 FY26)

    ACCENDRA HEALTH INC/VA/ Q2 FY26 earnings call ACH

    Aug 10, 2026 Source

    Executive summary

    Accendra Health Q2 FY26 — CEO Retirement, Revised Outlook, and Payer Collection Headwinds

    Accendra Health reported a challenging Q2 FY26, missing expectations due to slower revenue growth and significant headwinds from payer collection issues, which negatively impacted both revenue and EBITDA. The company has revised its full-year guidance downwards but is implementing cost reduction initiatives and securing new commercial agreements, expecting a stronger Q4 to set the stage for 2027. The CEO also announced his retirement by year-end, initiating a succession process.

    Highlights

    4

    • Q2 revenue, excluding the impact of a large commercial payer exit, grew 2% YoY, with mid-single-digit growth in the sleep category (5.5%) and 4% in diabetes.

    • Successfully completed balance sheet optimization in June, reducing total debt by nearly $400 million and net debt by over $55 million since March.

    • Secured key commercial agreements, including the renewal of the largest soft good contract with a major payer and a new sole-source agreement with a regional health system launching in early 2027.

    • Identified and eliminated over $125 million of annualized costs earlier in the year, with additional cost reductions executed in Q3.

    Concerns

    5

    • Q2 financial results did not meet expectations, with revenue growth below forecasts and adjusted EBITDA at just over $60 million.

    • Slower-than-expected recovery of collection rates negatively impacted revenue and adjusted EBITDA by approximately $10 million in Q2 and $20 million for the first half of the year.

    • Full-year 2026 revenue guidance revised down to $2.45 billion - $2.55 billion (from previous higher expectations).

    • Full-year 2026 adjusted EBITDA guidance revised down to $300 million - $320 million (from previous higher expectations).

    • Fully levered free cash flow for FY26 revised to breakeven to slightly positive, down from prior expectations.

    Guidance & targets

    4
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $2.45 billion - $2.55 billion
    high materiality
    Medium
    Full-year 2026 Adjusted EBITDA
    $300 million - $320 million
    high materiality
    Medium
    Full-year 2026 Free Cash Flow (fully levered)
    breakeven to slightly positive
    high materiality
    Medium
    Annual Free Cash Flow (normalized)
    around $100 million
    medium materiality
    High

    Operational metrics

    15
    Revenue growth (ex-payer exit)
    2YoY
    Q2 FY26

    Revenue in the second quarter, excluding the impact of a large commercial payer that rolled off in Q1, grew at 2%.

    Sleep category growth
    5.5YoY
    Q2 FY26

    Good mid-single-digit growth in sleep of about 5.5%, including a marked improvement in sleep equipment and continued strong growth in sleep supplies.

    Diabetes category growth
    4YoY
    Q2 FY26

    Diabetes grew 4%, which was a 500 basis point improvement in the year-over-year growth rate compared to Q1.

    Diabetes growth rate improvement
    500vs Q1 YoY growth rate
    Q2 FY26

    500 basis point improvement in the year-over-year growth rate compared to Q1 for Diabetes.

    Cost reductions (annualized)
    $125 millioneliminated
    FY26

    Identified and eliminated more than $125 million of annualized costs following separation from Owens & Minor and commercial payer transition.

    Collection rate impact
    $10 million
    Q2 FY26

    The overall adverse impact in Q2 of the change in collections was approximately $10 million.

    Collection rate impact
    $20 million
    H1 FY26

    The overall adverse impact on revenue and adjusted EBITDA was $20 million for the first 6 months ended June 30.

    Total Debt
    $1.72 billiondown by almost $400 million since end of March
    as of June 30, 2026

    Following balance sheet optimization, total debt of $1.72 billion was down by almost $400 million since the end of March.

    Net Debt reduction
    $55 millionlower over that period
    Q2 FY26

    Net debt was more than $55 million lower over the period from March to June 30, 2026.

    Debt structure weighted average life
    5.5doubled
    current

    The weighted average life of the debt structure has nearly doubled to 5.5 years.

    NOL carryforwards
    $200 millionexceed
    going into 2027

    The quantum of net operating loss carryforwards alone going into 2027 will exceed $200 million.

    Cash interest paid
    $12 million
    Q2 FY26

    Cash interest paid in the second quarter includes $12 million for the payment of interest accrued for the exchange 2029 and 2030 unsecured notes.

    Adjusted EBITDA less PSC CapEx
    $16.3 milliondown slightly from Q1
    Q2 FY26

    Adjusted EBITDA less patient service equipment (PSC) CapEx was $16.3 million, down slightly from the first quarter due to higher PSC CapEx.

    Cash balance
    $8 million
    current

    Analyst stated cash balance, management confirmed low cash levels.

    Teammates
    6000
    current

    The company has 6,000 teammates.

    Industry KPIs

    2
    MetricValueDetails
    Client retention new winsMultiple agreements
    Adjusted EPS EBITDA leverage guidance$60 million (Q2 FY26 actual); $300 million - $320 million (FY26 guidance)USD

    Deals & partnerships

    5
    Largest commercial payerRenewal of largest soft good contractfor years to come

    Renewal of the largest soft good contract with the largest commercial payer was formally executed during the second quarter.

    Regional health systemNew sole-source agreement

    Signed a new sole-source agreement with a regional health system that is expected to launch in early 2027.

    Another payerBroader enterprise-wide fee-for-service agreement

    Executed a broader enterprise-wide fee-for-service agreement with another payer to drive additional patient volume and improve capacity utilization.

    Not specifiedSale of small noncore asset

    Closed on the sale of a small noncore asset at the end of July.

    Not specifiedSale of another small noncore asset

    Expect another small noncore asset sale to close in late Q3 or early Q4.

    Risks & headwinds

    4
    Slower-than-expected recovery of collection rates due to increased payer audit activity and inefficiencies.Near-term (Q2, Q3 FY26)

    Approximately $10 million negative impact on revenue and adjusted EBITDA in Q2, and $20 million for H1 FY26.

    Mitigation: Implemented mitigation plans with payers, seeing encouraging progress, with efforts trending toward resolution in Q3.

    Revenue growth below expectations.Q2 FY26, expected to continue through Q3 FY26.

    Q2 revenue growth (excluding large commercial payer exit) at 2%, below expectations.

    Mitigation: Targeted changes within commercial and operational organizations, new agreements, and sales force reinvigoration.

    Expenses as a percentage of revenue running above historic rates.Q1 and Q2 FY26.

    Not quantified, but stated as a 'drag on adjusted EBITDA'.

    Mitigation: Actions planned and underway to address both cost of net revenue and SG&A.

    Potential for inadvertent loss of Net Operating Loss (NOL) tax attributes due to shareholder trading activity.Ongoing.

    NOL carryforwards exceed $200 million going into 2027.

    Mitigation: Implementing a Net Operating Loss (NOL) rights plan to protect the value of these tax attributes.

    What to watch in Q3 FY26

    5

    Payer collection rate recovery

    Q3 FY26
    Current~$10M negative impact in Q2, ~$20M in H1 FY26
    TargetResolution of audit issues, improved cash flow, reduced income statement impact

    Why it matters

    Critical for improving revenue, adjusted EBITDA, and free cash flow, as it has been a significant drag.

    Efforts are constructively trending toward resolution in the third quarter, and we believe realized cash flow will improve upon conclusion.

    Q&A highlights

    5

    Can you elaborate on the payer collection issues, confirm no supplier contract terminations, and clarify if the expected strong Q4 is indicative of a normalized run-rate for 2027?

    Management explained that payer audits increased exponentially, causing payment delays and diverting resources, but progress is being made towards resolution in Q3. They confirmed no supplier contracts have been terminated and that Q4 is expected to be the best quarter, serving as a jump-off point for 2027 due to new agreements, sales execution, sleep center expansion, and cost reductions.

    “Q4 will be the jump-off point really for 2027.”

    asked by Kevin Caliendo · answered by Edward Pesicka

    2 min read5 chapters

    Detailed Narrative

    01

    CEO Transition and Strategic Foundation

    Ed Pesicka announced his retirement by the end of 2026, marking the culmination of an 8-year tenure focused on stabilizing the company, navigating the pandemic, divesting the PNHS segment, and optimizing the balance sheet. The Board has a succession plan in place, aiming for a smooth transition to a new CEO who will build on the established pure-play home-based healthcare business. This decision reflects a belief that the company is well-positioned for its next chapter after significant foundational milestones.

    02

    Q2 Performance and Headwinds

    The company's Q2 results fell short of expectations, primarily due to revenue growth below forecast, delayed timing of📎 planned cost reductions, and a slower-than-expected recovery in collection rates. These discrete headwinds, particularly from an exponential increase in payer audit activity and inefficiencies, negatively impacted revenue and adjusted EBITDA by approximately $10 million in Q2 and $20 million year-to-date. Management expects these collection issues to resolve in Q3.

    03

    Cost Optimization and Operational Efficiency

    Accendra Health previously eliminated over $125 million in annualized costs following its separation from Owens & Minor and the exit of a large commercial payer. After a period of stabilization, the company has initiated the next phase of targeted cost reductions in Q3 and is exploring new arrangements with logistics providers to lower operating costs and reduce inventory. These efforts are expected to drive operational savings and working capital improvements, contributing to future profitability.

    04

    Commercial Momentum and Strategic Agreements

    Despite the challenges, the company reported progress in strategic initiatives. This includes the formal execution of a renewed soft good contract with its largest commercial payer, a new sole-source agreement with a regional health system launching in early 2027, and an enterprise-wide fee-for-service agreement with another payer to drive patient volume and capacity utilization. The national rollout of the sleep center of excellence is also advancing, expected to contribute to growth and profitability in late 2026 and 2027.

    05

    Balance Sheet and Liquidity Management

    Accendra Health successfully completed a balance sheet optimization in June, reducing total debt by nearly $400 million and net debt by over $55 million since March, extending debt maturities to 2029. To further strengthen its financial profile, the company plans to activate a small at-the-market (ATM) equity program for debt reduction and implement a Net Operating Loss (NOL) rights plan to protect its valuable tax attributes, which exceed $200 million, from inadvertent ownership changes.

    AI-generated summary of the company’s earnings call. Not investment advice.