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Aveanna Healthcare Holdings (AVAH) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Health Care· Aug 13, 2026

Source: earnings call transcript

Executive summary

Aveanna Healthcare Holdings Inc. Q2 FY26 — Strong Organic Growth and California Rate Increase

Aveanna Healthcare delivered a strong second quarter, driven by improved rate and volume environments across all segments and continued operational efficiencies. The company significantly advanced its preferred payer strategy and secured a landmark rate increase in California, underpinning an enhanced long-term organic growth outlook. Management remains focused on strategic initiatives, including labor market improvements and thoughtful M&A, to achieve double-digit annual revenue growth and deleverage the company.

Highlights

5

  • Q2 revenue increased by 13.7% year-over-year to approximately $670 million.

  • Q2 adjusted EBITDA grew 8% year-over-year to $95.4 million.

  • Achieved 7 state rate enhancements in Private Duty Services (PDS) as of Q2, with California's significant pediatric PDN rate increase effective January 1, 2027.

  • Signed 3 additional Preferred Payer Agreements in Q2, bringing the total to 37, and exceeded the 2026 goal of 50 Preferred Payers in Home Health & Hospice.

  • Increased full-year 2026 revenue guidance to greater than $2.68 billion and adjusted EBITDA guidance to greater than $365 million.

Concerns

2

  • The cost of revenue rate in Private Duty Services was up $2.06 or 7.8% from the prior year period, reflecting ongoing caregiver wage adjustments.

  • Q2 2025 included approximately $9 million of non-recurring, favorable items in the PDS division, impacting year-over-year comparisons.

Guidance & targets

CategoryTargetConfidence
Full-year 2026 Revenue
greater than $2.68 billion
high materiality
High
Full-year 2026 Adjusted EBITDA
greater than $365 million
high materiality
High
Long-term Private Duty Services Organic Growth Rate
5% to 6%
high materiality
High
Long-term Home Health and Hospice Organic Growth Rate
8% to 10%
high materiality
High
Long-term Medical Solutions Organic Growth Rate
8% to 10%
medium materiality
High
Annual Revenue Growth
double-digit
high materiality
High
Medical Solutions Revenue Growth
high single digits
medium materiality
Medium
Medical Solutions Revenue Growth
double-digit growth
medium materiality
Medium
PDS Preferred Payer Agreements
exceed 38
medium materiality
High
Medical Solutions Preferred Payer Agreements
25
medium materiality
High
Deleveraging Target
under three times leverage
high materiality
High
PDS Gross Margin Percentage
28% to 29%
medium materiality
High
Home Health & Hospice Episodic Mix
high 70s, low 80s
medium materiality
High
Home Health & Hospice Episodic Mix Target
north of 75%
low materiality
Medium
PDS Preferred Payer MCO Volumes
slightly above mid-60s
medium materiality
Medium
PDS Preferred Payer MCO Volumes
mid-80s, maybe high 80s
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Consolidated
Consolidated revenue growth was driven by all three operating divisions. Adjusted EBITDA increased 8% year-over-year to $95.4 million, reflecting improved rates, volumes, and operational efficiencies.
Gross margin: 32.6%
$670.5 million13.7%—$218.5 million
Private Duty Services
Revenue growth was driven by preferred payer volume and updated reimbursement agreements. Gross margin was in line with expectations, with spread per hour reflecting caregiver wage adjustments.
Revenue per hour: $44.62Revenue per hour YoY growth: 1.7%Gross margin: 28.9%Cost of revenue rate: $31.74Cost of revenue rate YoY increase: $2.06Cost of revenue rate YoY growth: 7.8%Spread per hour: $12.88
—14.0%—$159.9 million
Home Health and Hospice
Revenue growth was driven by increased admissions and episodes, with a strong episodic mix. Margin expansion and improved clinical outcomes were noted due to episodic focus and cost initiatives.
Total admissions: 10,500Episodic admissions: 81%Total episodes of care: 14,700Total episodes of care YoY growth: 18.5%Medicare revenue per episode: $3,202Gross margin: 53.9%
$69 million14.8%——
Medical Solutions
Revenue growth was driven by an increase in unique patients served and higher revenue per patient. Gross margins have stabilized in the desired range as the preferred payer strategy progresses.
Unique patients served: 95,000Unique patients served YoY growth: 4.4%Revenue per UPS: $500Revenue per UPS YoY growth: 5%Gross margin: 45.1%
$47.5 million9.4%—$21.4 million

Deals & partnerships

Family First Home Care Florida-based company with a reputation for quality in-home pediatric care.

Closed in early June. Integration progressing nicely, strengthening business in Florida and bolstering service areas in Iowa and South Dakota.

Risks & headwinds

Challenging labor environment Ongoing

Cost of revenue rate in PDS up $2.06 or 7.8% YoY.

Mitigation:Aligning with preferred payers for enhanced reimbursement rates, proactive caregiver wage adjustments, and strategic investments in recruitment and onboarding.

State funding constraints and OB-BBA legislation Ongoing

State budgets still look constrained, and OB-BBA is being implemented.

Mitigation:Long-term government affairs strategy, geographic diversity, and highlighting cost savings of PDN. PDN is insulated from OB-BBA cuts and benefits from reallocation of funds.

What to watch in Q3 FY26

California PDN rate schedule details

By end of September
Current Significant investment announced, effective Jan 1, 2027
Target Medi-Cal Department's updated 2027 rate schedule

Why it matters

Final details of the rate increase are crucial for understanding the full financial impact and operational planning for 2027.

We would expect by the end of September for the Medi-Cal department to have updated 2027 rate schedule to include the updated investment from the legislators.

Find out whether AVAH delivers this. Inve re-checks your case every morning.

Q&A highlights

Given the raised long-term revenue growth rates, should investors expect a corresponding increase in segment margins?

Management expects gross margin percentages to remain consistent, with gross margin dollars increasing as revenue accelerates. The focus is on wage pass-through to caregivers, maintaining a stable gross margin profile, and leveraging SG&A for EBITDA growth.

“From a gross margin standpoint, I would think about the gross margin percentage staying pretty consistent. Clearly, gross margin dollars will increase as revenue accelerates and revenue dollars accelerate.”

asked by Megan Holtzahn · answered by Jeff Shainer

2 min read 5 chapters

Detailed narrative

California Private Duty Nursing Rate Increase

Aveanna announced a significant investment in pediatric private duty nursing rates in California, effective January 1, 2027. This achievement follows four years of dedicated advocacy, addressing rates that had fallen far behind the competitive market. Management expects the Medi-Cal Department to release final details and an updated 2027 rate schedule by the end of September. The company plans to proactively increase nurse wages in Q4 2026 in anticipation of the rate increase to attract and retain caregivers and facilitate patient discharges from hospitals.

Preferred Payer Strategy Momentum

The preferred payer strategy continues to gain momentum across all segments. In Private Duty Services, the company signed 3 new agreements in Q2, bringing the total to 37, and expects to exceed its 2026 goal of 38. Preferred payer agreements accounted for approximately 64% of total PDS MCO volumes, up from 60% in Q1. In Home Health & Hospice, the company achieved its 2026 goal of 50 preferred payers year-to-date. Medical Solutions now has 20 preferred payer agreements, targeting 25 by year-end 2026.

Labor Market and Capacity Improvements

Aveanna is seeing continued signs of improvement in caregiver hiring and retention trends, driven by aligning efforts with payers offering enhanced reimbursement rates and value-based agreements. The California rate increase is expected to significantly improve the ability to attract and retain nurses in the state. The company's infrastructure and scale, including a national onboarding team, facilitate efficient recruitment and training of caregivers, enabling faster onboarding and better matching to cases.

Family First Home Care Integration

The acquisition of Family First Home Care, closed in early June, is progressing nicely in its early stages of integration. The company expects to wrap up the majority of integration efforts by late Q4 2026. Family First has already positively impacted Aveanna, strengthening its business in key markets like Florida and bolstering service areas in rural communities such as Iowa and South Dakota. The integration leverages Aveanna's experience from previous acquisitions and its robust integration management office.

Strategic Initiatives and Long-term Outlook

Aveanna continues to focus on five primary strategic initiatives: strengthening partnerships with government and preferred payers, improving clinical outcomes and customer engagement, implementing AI and automation for efficiency, growing through M&A while improving leverage and free cash flow, and engaging employees. The company updated its long-term core organic growth rates, raising PDS to 5-6% and Home Health & Hospice to 8-10%, while maintaining Medical Solutions at 8-10%. This enhanced outlook, combined with thoughtful M&A, positions Aveanna for double-digit annual revenue growth.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.