Aveanna Healthcare Holdings Inc. (Nasdaq: AVAH) continues to pursue its most popular payer technique and strategic transformation regardless of the challenges the corporate has confronted since going public in 2021.

Throughout its second-quarter earnings name on Thursday, the corporate reported whole income of $505 million, up 7% from the identical interval final 12 months. That development was pushed by a $30.2 million enhance in private-duty companies (PDS) and a $3.6 million enhance within the medical options section.

Nonetheless, these positive aspects have been partially offset by a $0.8 million decline in income from the house well being and hospice (HHS) section. However, the corporate is making progress in closing the income hole within the HHS section, because it reported a $1.5 million decline in the identical section within the first quarter.

Aveanna CEO Jeff Shaner attributed the upper income to an improved fee setting and the corporate’s cost-saving efforts. He acknowledged that whereas the trade is benefiting from important demand, the important thing to continued enchancment is recruiting and retaining high-quality caregivers.

“Our continued enhanced partnerships with payers permit us to supply extra care to extra sufferers by investing in our caregivers,” Shaner mentioned on the decision. “The important thing to our present and future success continues to be our devoted staff of Aveanna leaders and caregivers who persistently ship distinctive care each day.”

Navigating legislative headwinds

The corporate’s 2024 objective was to implement a legislative technique to enhance reimbursement charges for house and community-based companies (HCBS) in particular states, with a concentrate on Georgia, Massachusetts and California. These states contribute roughly 15% of Aveanna’s PDS income.

The corporate aimed to extend the variety of PDS privileged fee agreements from 14 to 22 by 2024. At present there are 19.

“We have now achieved double-digit fee enhancements in Georgia and Massachusetts, efficient within the second half of 2024,” Shaner mentioned. “Our technique contains working with state legislators and governors to handle non-public observe nurse pay gaps. Our objective is to regulate reimbursement charges to enhance entry to look after sufferers with advanced medical circumstances.”

California continues to be a problem for Aveanna in IBS. Shaner famous that the corporate has made strides with Gov. Gavin Newsom, Medi-Cal and the state legislature, demonstrating the significance of IBS fee investments and the way they assist decrease well being care prices, improved affected person satisfaction and high quality outcomes.

“Throughout the latest legislative session, we efficiently secured a rise in Medi-Cal PDS charges regardless of the challenges posed by California’s projected finances deficit,” Shaner mentioned. “The elevated PDS fee will take impact on January 1, 2026.”

He additionally indicated that this fee enhance is contingent on the approval of a referendum on the upcoming November 5 election, generally known as Proposition 35.

“Whereas Prop 35 is vital to us, it doesn’t change how we take into consideration California,” Shaner mentioned. “We’re dedicated to California for the long run and can proceed to push our most popular payer technique and advocate for a significant fee enhance on the Medi-Cal aspect.”

Keep focus

On the house care aspect, Shaner cited the corporate’s 2024 objective of sustaining an episodic payer combine above 70% whereas returning to a extra normalized development fee. Within the second quarter, the episodic payer combine was 76%, representing development of 4.5% in comparison with the identical interval final 12 months.

“As we enter the second 12 months of our strategic transformation, we stay laser-focused on the initiatives that generated optimistic momentum in 2023 and can proceed that momentum in 2024,” Shaner mentioned. “Our efforts will proceed to concentrate on 4 major strategic initiatives. First, we are going to strengthen partnerships with authorities and most popular payers to increase supplier capability. Second, we are going to search value financial savings and synergies to capitalize on our development. Third, we are going to handle our capital construction, prioritize money collections and pursue optimistic free money circulation. Lastly, we are going to interact our leaders and workers to successfully execute our mission.”