Strengthening partnerships with authorities and most well-liked payers to create further healthcare capability. Determine value efficiencies and synergies. Managing the capital construction. Involving enterprise leaders and staff.

As Aveanna Healthcare Holdings (Nasdaq: AVAH) enters the second yr of its strategic transformation, these are the 4 key methods the corporate is specializing in.

In 2023, Aveanna carried out a brand new technique centered on improved partnerships with payers and governments. The objective was to additional encourage value-based care whereas righting the ship after a uneven entry into the general public market.

Jeff Shaner, CEO of Aveanna, has identified that the corporate doesn’t function in a vacuum and that its transformation can’t be completed in a single day.

“As we execute on the important thing methods above, we nonetheless imagine it is very important set expectations that take note of the atmosphere through which we function, and the time it should take to completely rework our enterprise to help progress” , Shaner stated throughout Aveanna's fourth-quarter earnings name. name on Thursday.

Based mostly in Atlanta, Aveanna gives house well being, hospice and pediatric care in 33 states.

Shaner famous that by focusing its scientific capability on most well-liked payers, Aveanna achieved year-over-year income and adjusted EBITDA progress.

Aveanna's objective for 2023 was to double the variety of personal providers with most well-liked payers from seven to 14. Within the fourth quarter, the corporate added two further most well-liked payer agreements and achieved this objective.

In house care, Aveanna's objective was to enhance its episodic payer combine by 10% by the tip of 2023, from 60% to greater than 70%. The corporate signed eight episodic agreements and improved its episodic payer combine by 60% at finish. from 2022 to 74% within the fourth quarter.

Aveanna additionally noticed enhancements in hiring and retention of healthcare suppliers by aligning with payers who had been keen to have interaction with the corporate on higher reimbursement charges and value-based agreements, Shaner stated.

“Whereas we proceed to function in a difficult labor and inflation atmosphere, our most well-liked payer technique permits us to return to a extra normalized progress charge in our enterprise segments,” he stated on the decision. “Since our third quarter earnings name, I’m happy with the continued progress we have now made on a number of of our charge enchancment initiatives throughout each authorities and most well-liked payers, in addition to the continued indicators of enchancment within the healthcare supplier labor market.”

With Aveanna's personal providers, the corporate aimed to extend charges by double digits in a number of states, particularly California, Texas and Oklahoma. These states signify 25% of the corporate's complete personal providers revenues.

In late 2023, Aveanna acquired double-digit charge will increase for personal providers in eight of its states, together with Oklahoma.

The corporate additionally achieved “charge wins” in an extra 11 states. The mixed 19 states signify 55% of Aveanna's personal providers footprint.

Whereas the corporate has made vital progress within the state legislature, Shaner believes Aveanna nonetheless has work to do.

“For example of the work forward, our PDN charge request was not included within the California Governor's proposed price range,” Shaner stated. significance of PDN charge will increase, and the way they contribute to decrease healthcare prices, enhance affected person satisfaction, and enhance the standard of outcomes. Nonetheless, it’s clear that we should additional speed up our most well-liked payer technique and authorities affairs efforts to proceed advocating for kids with complicated medical situations.”

Total, Aveanna's fourth quarter 2023 income was $478.8 million, up 6.1% in comparison with $451.1 million for a similar interval final yr.

“We skilled income progress in two of our working divisions, led by our personal providers and medical options segments,” Aveanna CFO Matt Buckhalter stated on the decision.

Annual income for 2023 was nearly $1.9 billion, in comparison with nearly $1.8 billion in 2022. This was a rise of 6%.

Aveanna's payer technique can be important by the rest of 2024, partly resulting from the truth that the corporate's payer combine is ​​closely skewed towards authorities payers, stated Stephens analyst Scott Fidel.

“AVAH generates a major proportion of revenues (~90%) from authorities payers,” Fidel and colleagues wrote in a be aware Thursday. “AVAH might expertise strain on income/adjusted EBITDA resulting from surprising adjustments in authorities reimbursement charges.”