10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2022

or

o Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from              to

Commission File Number: 001-40361

AGILITI, INC.

(Exact name of registrant as specified in its charter)

Delaware	83-1608463
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

11095 Viking Drive

Eden Prairie, Minnesota 55344

(Address of principal executive offices, including zip code)

(952) 893-3200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.0001	AGTI	The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o   No x

Number of shares of common stock outstanding as of August 1, 2022: 133,201,821

Agiliti, Inc. and Subsidiaries

Table of Contents

		Page
PART I - FINANCIAL INFORMATION		1
ITEM 1.	Consolidated Financial Statements (unaudited)	1
	Consolidated Balance Sheets —June 30, 2022 and December 31, 2021	1
	Consolidated Statements of Operations—Three and six months ended June 30, 2022 and 2021	2
	Consolidated Statements of Comprehensive Income —Three and six months ended June 30, 2022 and 2021	3
	Consolidated Statements of Equity — Three and six months ended June 30, 2022 and 2021	4
	Consolidated Statements of Cash Flows — Six months ended June 30, 2022 and 2021	6
	Condensed Notes to Consolidated Financial Statements	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	27
ITEM 4.	Controls and Procedures	28
PART II - OTHER INFORMATION		28
ITEM 1.	Legal Proceedings	28
ITEM 1A.	Risk Factors	28
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
ITEM 6.	Exhibits	30
Signatures		31

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements — Unaudited

Agiliti, Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share and per share information)

(unaudited)

	June 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	16,524	$	74,325
Accounts receivable, less allowance for credit losses of $3,206 and $2,902	215,862		209,308
Inventories	59,137		55,307
Prepaid expenses	14,580		18,549
Other current assets	12,645		395
Total current assets	318,748		357,884
Property and equipment, net	251,490		258,370
Goodwill	1,218,329		1,213,121
Operating lease right-of-use assets	85,669		80,676
Other intangibles, net	530,474		573,159
Other	34,627		32,537
Total assets	$	2,439,337	$	2,515,747
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	17,735	$	17,534
Current portion of operating lease liability	23,198		22,826
Current portion of obligation under tax receivable agreement	29,710		29,187
Accounts payable	56,513		53,851
Accrued compensation	23,309		47,951
Accrued interest	3,490		3,473
Deferred revenue	9,207		5,808
Other accrued expenses	26,767		27,900
Total current liabilities	189,929		208,530
Long-term debt, less current portion	1,073,016		1,174,968
Obligation under tax receivable agreement, pension and other long-term liabilities	31,179		29,629
Operating lease liability, less current portion	73,122		63,241
Deferred income taxes, net	143,381		143,307
Commitments and contingencies (Note 11)
Equity:
Common stock, $0.0001 par value; 350,000,000 shares authorized; 133,188,231 and 130,950,061 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	13		13
Additional paid-in capital	938,906		938,888
Accumulated deficit	(19,596)		(44,486)
Accumulated other comprehensive income	9,221		1,537
Total Agiliti, Inc. and Subsidiaries equity	928,544		895,952
Noncontrolling interest	166		120
Total equity	928,710		896,072
Total liabilities and equity	$	2,439,337	$	2,515,747

The accompanying notes are an integral part of the unaudited consolidated financial statements.

1

Agiliti, Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands, except share and per share information)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenue	$	273,984	$	250,543	$	568,428	$	485,788
Cost of revenue	175,819		151,435		346,636		285,358
Gross margin	98,165		99,108		221,792		200,430
Selling, general and administrative expense	82,121		81,056		168,259		150,279
Operating income	16,044		18,052		53,533		50,151
Loss on extinguishment of debt	1,418		10,116		1,418		10,116
Interest expense	11,261		11,713		21,925		29,733
Income (loss) before income taxes and noncontrolling interest	3,365		(3,777)		30,190		10,302
Income tax (benefit) expense	(1,698)		1,394		5,207		5,890
Consolidated net income (loss)	5,063		(5,171)		24,983		4,412
Net income attributable to noncontrolling interest	65		27		93		57
Net income (loss) attributable to Agiliti, Inc. and Subsidiaries	$	4,998	$	(5,198)	$	24,890	$	4,355
Basic income (loss) per share	$	0.04	$	(0.04)	$	0.19	$	0.04
Diluted income (loss) per share	$	0.04	$	(0.04)	$	0.18	$	0.04
Weighted-average common shares outstanding:
Basic	132,556,645		122,908,065		131,856,267		111,071,756
Diluted	138,697,206		122,908,065		137,932,546		118,760,837

The accompanying notes are an integral part of the unaudited consolidated financial statements.

2

Agiliti, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Consolidated net income (loss)	$	5,063	$	(5,171)	$	24,983	$	4,412
Other comprehensive income (loss):
Gain on minimum pension liability, net of tax of $0,$19,0, and $37	—		54		—		109
Gain on cash flow hedge, net of tax of $774, $32, $2,641, and $303	2,255		96		7,684		892
Total other comprehensive income	2,255		150		7,684		1,001
Comprehensive income (loss)	7,318		(5,021)		32,667		5,413
Comprehensive income attributable to noncontrolling interest	65		27		93		57
Comprehensive income (loss) attributable to Agiliti, Inc. and Subsidiaries	$	7,253	$	(5,048)	$	32,574	$	5,356

The accompanying notes are an integral part of the unaudited consolidated financial statements.

3

Agiliti, Inc. and Subsidiaries

Consolidated Statements of Equity

(in thousands)

(unaudited)

	Common Stock		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Agiliti, Inc. and Subsidiaries		Noncontrolling Interests		Total Equity (Deficit)
Balance as of March 31, 2022	$	13	$	943,517	$	(24,594)	$	6,966	$	925,902	$	116	$	926,018
Net income	—		—		4,998		—		4,998		65		5,063
Other comprehensive income	—		—		—		2,255		2,255		—		2,255
Proceeds from issuance of common stock	—		2,159		—		—		2,159		—		2,159
Share-based compensation expense	—		5,810		—		—		5,810		—		5,810
Stock options exercised	—		993		—		—		993		—		993
Shares forfeited for taxes	—		(13,575)		—		—		(13,575)		—		(13,575)
Dividend forfeited, net of payable	—		2		—		—		2		—		2
Cash distributions to noncontrolling interests	—		—		—		—		—		(15)		(15)
Balance as of June 30, 2022	$	13	$	938,906	$	(19,596)	$	9,221	$	928,544	$	166	$	928,710
	Common Stock		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Agiliti, Inc. and Subsidiaries		Noncontrolling Interests		Total Equity (Deficit)
Balance as of March 31, 2021	$	10	$	527,626	$	(58,939)	$	(2,768)	$	465,929	$	124	$	466,053
Net income (loss)	—		—		(5,198)		—		(5,198)		27		(5,171)
Other comprehensive income	—		—		—		150		150		—		150
Share-based compensation expense	—		3,270		—		—		3,270		—		3,270
Stock options exercised	—		373		—		—		373		—		373
Issuance of common stock	3		401,438		—		—		401,441		—		401,441
Stock issuance costs	—		(4,084)		—		—		(4,084)		—		(4,084)
Cash distributions to noncontrolling interests	—		—		—		—		—		(33)		(33)
Balance as of June 30, 2021	$	13	$	928,623	$	(64,137)	$	(2,618)	$	861,881	$	118	$	861,999

4

	Common Stock		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income		Total Agiliti, Inc. and Subsidiaries		Noncontrolling Interests		Total Equity (Deficit)
Balance as of December 31, 2021	$	13	$	938,888	$	(44,486)	$	1,537	$	895,952	$	120	$	896,072
Net income	—		—		24,890		—		24,890		93		24,983
Other comprehensive income	—		—		—		7,684		7,684		—		7,684
Proceeds from issuance of common stock	—		2,159		—		—		2,159		—		2,159
Share-based compensation expense	—		10,235		—		—		10,235		—		10,235
Stock options exercised	—		1,971		—		—		1,971		—		1,971
Shares forfeited for taxes	—		(14,367)		—		—		(14,367)		—		(14,367)
Dividend forfeited, net of payable	—		20		—		—		20		—		20
Cash distributions to noncontrolling interests	—		—		—		—		—		(47)		(47)
Balance as of June 30, 2022	$	13	$	938,906	$	(19,596)	$	9,221	$	928,544	$	166	$	928,710
	Common Stock		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Agiliti, Inc. and Subsidiaries		Noncontrolling Interests		Total Equity (Deficit)
Balance as of December 31, 2020	$	10	$	513,902	$	(68,492)	$	(3,619)	$	441,801	$	144	$	441,945
Net income	—		—		4,355		—		4,355		57		4,412
Other comprehensive income	—		—		—		1,001		1,001		—		1,001
Share-based compensation expense	—		5,682		—		—		5,682		—		5,682
Stock options exercised	—		373		—		—		373		—		373
Issuance of common stock	3		412,738		—		—		412,741		—		412,741
Stock issuance costs	—		(4,084)		—		—		(4,084)		—		(4,084)
Dividend forfeited	—		12		—		—		12		—		12
Cash distributions to noncontrolling interests	—		—		—		—		—		(83)		(83)
Balance as of June 30, 2021	$	13	$	928,623	$	(64,137)	$	(2,618)	$	861,881	$	118	$	861,999

The accompanying notes are an integral part of the unaudited consolidated financial statements.

5

Agiliti, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended June 30,
	2022		2021
Cash flows from operating activities:
Consolidated net income	$	24,983	$	4,412
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	46,412		52,884
Amortization	47,119		40,955
Loss on extinguishment of debt	1,418		7,716
Remeasurement of tax receivable agreement	—		4,345
Provision for credit losses	279		573
Provision for inventory obsolescence	568		2,226
Non-cash share-based compensation expense	10,206		5,766
Gain on sales and disposals of equipment	(256)		(840)
Deferred income taxes	(2,567)		4,694
Changes in operating assets and liabilities:
Accounts receivable	(8,833)		6,047
Inventories	(4,398)		(1,414)
Other operating assets	(579)		(412)
Accounts payable	8,702		5,352
Other operating liabilities	(21,916)		(24,796)
Net cash provided by operating activities	101,138		107,508
Cash flows from investing activities:
Medical equipment purchases	(22,823)		(16,269)
Property and office equipment purchases	(12,776)		(10,612)
Proceeds from disposition of property and equipment	1,763		2,013
Acquisitions, net of cash acquired	(3,125)		(450,198)
Net cash used in investing activities	(36,961)		(475,066)
Cash flows from financing activities:
Proceeds under debt arrangements	20,000		233,052
Payments under debt arrangements	(123,824)		(359,805)
Payments of principal under finance lease liability	(4,484)		(4,270)
Payments of deferred financing costs	—		(229)
Payments under tax receivable agreement	—		(748)
Distributions to noncontrolling interests	(47)		(83)
Proceeds from exercise of stock options	1,971		373
Dividend and equity distribution payment	(906)		(924)
Proceeds from issuance of common stock	—		401,441
Stock issuance costs	—		(4,084)
Shares forfeited for taxes	(14,367)		—
Payments of contingent consideration	(321)		—
Net cash (used in) provided by financing activities	(121,978)		264,723
Net change in cash and cash equivalents	(57,801)		(102,835)
Cash and cash equivalents at the beginning of period	74,325		206,505
Cash and cash equivalents at the end of period	$	16,524	$	103,670
Supplemental cash flow information:
Interest paid	$	19,164	$	31,017
Income taxes paid	11,625		1,541

The accompanying notes are an integral part of the unaudited consolidated financial statements.

6

Agiliti, Inc. and Subsidiaries

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.    Basis of Presentation

Description of Business

Agiliti, Inc. and its consolidated subsidiaries (Federal Street Acquisition Corp (“FSAC”), Agiliti Holdco, Inc. and Agiliti Health, Inc. and subsidiaries (“we”, “our”, “us”, the “Company” or “Agiliti”)) is a nationwide provider of healthcare technology management and service solutions to the United States healthcare industry. Agiliti, Inc. owns 100% of FSAC. FSAC owns 100% of Agiliti Holdco, Inc. Agiliti Holdco, Inc. owns 100% of Agiliti Health, Inc. Agiliti Health, Inc. owns 100% of Agiliti Surgical, Inc., Agiliti Imaging, Inc., Agiliti Surgical Equipment Repair, Inc. and Sizewise Rentals, LLC. Agiliti Health, Inc. and its subsidiaries are the only entities with operations. All other entities have no material assets, liabilities, cash flows or operations other than their investment and ownership of Agiliti Health, Inc. and subsidiaries.

Initial Public Offering

On April 22, 2021, our registration statement on Form S-1 (File No. 333-253947) related to our initial public offering (“IPO”) was declared effective by the SEC, and our common stock began trading on the New York Stock Exchange (“NYSE”) on April 23, 2021. Our IPO closed on April 27, 2021.

Basis of Presentation

The interim consolidated financial statements have been prepared by the Company without audit. Certain disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the related notes thereto in the Company’s Annual report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (“SEC”) on March 8, 2022 (“2021 Form 10-K Report”).

The interim consolidated financial statements presented herein as of June 30, 2022, reflect, in the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations, comprehensive income, equity and cash flows for the periods presented. These adjustments are all of a normal, recurring nature. The results of operations for any interim period are not necessarily indicative of results for the full year.

We are required to make estimates and assumptions about future events in preparing consolidated financial statements in conformity with GAAP. These estimates and assumptions affect the amounts of assets, liabilities, revenue and expenses at the date of the unaudited consolidated financial statements. While we believe that our past estimates and assumptions have been materially accurate, our current estimates are subject to change if different assumptions as to the outcome of future events are made. We evaluate our estimates and judgments on an ongoing basis and predicate those estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances. We make adjustments to our assumptions and judgments when facts and circumstances dictate. Since future events and their effects cannot be determined with absolute certainty, actual results may differ from the estimates used in preparing the accompanying unaudited consolidated financial statements.

A description of our significant accounting policies is included in the audited consolidated financial statements. There have been no material changes to these policies for the quarter ended June 30, 2022.

2.    Recent Accounting Pronouncements

Standards Adopted

No recent accounting pronouncements have been issued or adopted since those discussed in the 2021 Form 10-K Report that are of material significance, or have potential material significance, to the Company.

Standards Not Yet Adopted

In October 2021, the FASB issued ASU No. 2021-08 Business Combinations (Topic 805)-Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 improves the accounting for

7

acquired revenue contracts with customers in a business combination. The amendments in this ASU require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. To achieve this, an acquirer may assess how the acquiree applied Topic 606 to determine what to record for the acquired revenue contracts. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption of the amendments is permitted. We will continue to evaluate ASU 2021-08, but do not expect the adoption will have a material impact on our consolidated financial statements.

In June 2020, the FASB issued ASU No. 2020-04 Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The ASU may be applied through December 31, 2022. We will continue to evaluate the phase out of LIBOR but do not expect the adoption will have a material impact on our consolidated financial statements.

3.    Revenue Recognition

Customer arrangements typically have multiple performance obligations to provide equipment solutions, clinical engineering and/or onsite equipment managed services on a per use and/or over time basis. Contractual prices are established within our customer arrangements that are representative of stand-alone selling prices. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. The Company’s performance obligations that are satisfied at a point in time are recognized when the service is performed or equipment is delivered to the customer. For performance obligations satisfied over time, the Company uses a straight-line method to recognize revenue ratably over the contract period, as this coincides with the Company’s performance under the contract.

In the following table, revenue is disaggregated by service solution:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Equipment Solutions	$	106,852	$	72,140	$	228,707	$	154,611
Clinical Engineering	104,412		101,141		207,211		176,247
Onsite Managed Services	62,720		77,262		132,510		154,930
Total revenue	$	273,984	$	250,543	$	568,428	$	485,788

The Company capitalizes contract costs incurred in obtaining new contracts. The contract asset included in other long-term assets in the consolidated balance sheets as of June 30, 2022 and December 31, 2021 was $17.5 and $15.9 million, respectively. Capitalized costs are amortized over the expected life of the related contracts, which is estimated to be five years.

The Company had a balance of $9.2 and $5.8 million of deferred revenue as of June 30, 2022 and December 31, 2021, respectively. During the three and six months ended June 30, 2022, $0.5 and $1.5 million, respectively, of revenue was recognized that was included in deferred revenue at the beginning of the period.

4.    Acquisitions

During the three months ended June 30, 2022, we completed the acquisition of several small surgical equipment repair companies. These business combinations were immaterial in relation to our consolidated balance sheets and statements of operations and as a result, additional purchase accounting disclosures have been omitted.

On October 1, 2021, we completed a stock purchase agreement to purchase all of the outstanding capital stock of Sizewise Rentals, LLC (“Sizewise”), a privately held manufacturer and distributor of specialty patient handling equipment, for a total consideration of approximately $234.8 million (“Sizewise Acquisition”). The results of Sizewise’s operations have been included in the consolidated financial statements since October 1, 2021.

8

The following summarizes the fair values of assets acquired and liabilities assumed at the date of the Sizewise Acquisition within our consolidated balance sheet as of December 31, 2021:

(in thousands)
Cash	$	9,977
Accounts receivable	31,005
Inventories	27,911
Other current assets	2,968
Property and equipment	59,042
Goodwill	87,867
Operating lease right-of-use assets	16,754
Other intangibles	67,700
Other long-term assets	10,368
Accounts payable	(3,362)
Accrued compensation	(12,576)
Other accrued expenses	(4,525)
Operating lease liability	(16,953)
Other long-term liabilities	(9,924)
Deferred income taxes	(31,470)
Total purchase price	$	234,782

On March 19, 2021, we completed a stock purchase agreement to purchase all of the outstanding capital stock of Northfield Medical, Inc. (“Northfield”), a company specializing in the service and repair of medical equipment and instruments for a total consideration of approximately $472.3 million (“Northfield Acquisition”). The consideration consisted of $461.0 million of cash paid and $11.3 million in issuance of 752,328 shares of common stock. The results of Northfield’s operations have been included in the consolidated financial statements since March 19, 2021. During the year ended December 31, 2021, adjustments affecting the fair values of assets acquired and liabilities assumed decreased accounts receivable $0.2 million, increased goodwill $1.3 million, increased accounts payable $0.1 million, and increased deferred income taxes $1.0 million. All adjustments net to zero.

The following summarizes the fair values of assets acquired and liabilities assumed at the date of acquisition within our consolidated balance sheet as of December 31, 2021:

(in thousands)
Cash	$	10,767
Accounts receivable	16,786
Inventories	5,810
Other current assets	502
Property and equipment	11,713
Goodwill	306,678
Operating lease right-of-use assets	4,815
Other intangibles	183,700
Accounts payable	(7,412)
Accrued compensation	(7,948)
Other accrued expenses	(9,620)
Finance lease liability	(2,340)
Operating lease liability	(5,025)
Other long-term liabilities	(837)
Deferred income taxes	(35,324)
Total purchase price	$	472,265

9

The following unaudited pro forma consolidated results of operations assume the Sizewise and Northfield acquisitions had occurred on January 1, 2021. The unaudited pro forma consolidated financial information should not be relied upon as necessarily being indicative of the historical results that would have been obtained if the acquisitions had actually closed on that date, nor the results that may be obtained in the future:

	Three Months Ended June 30,				Six Months Ended June 30,
(unaudited, in thousands)	2022		2021		2022		2021
Revenue	$	273,984	$	291,436	$	568,428	$	592,966
Net income (loss) attributable to Agiliti, Inc. and Subsidiaries	4,998		(1,470)		24,890		20,049

Included in the determination of pro forma net income for the three and six months ended June 30, 2021 are pro forma charges for various purchase accounting adjustments. These pro forma adjustments included depreciation and amortization of assets acquired and interest expense on additional debt to finance the acquisition. Income taxes are provided at the estimated statutory rate. Revenue and net income for the three and six months ended June 30, 2022 are as reported.

5.    Fair Value Measurements

Financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 are summarized in the following tables by type of inputs applicable to the fair value measurements:

	Fair Value at June 30, 2022
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Deferred compensation assets	$	2,472	$	—	$	—	$	2,472
Interest rate swap	—		12,418		—		12,418
Total Assets	$	2,472	$	12,418	$	—	$	14,890
Liabilities:
Contingent consideration	$	—	$	—	$	3,630	$	3,630
Obligation under tax receivable agreement	—		—		40,403		40,403
Deferred compensation liabilities	2,472		—		—		2,472
Total Liabilities	$	2,472	$	—	$	44,033	$	46,505

	Fair Value at December 31, 2021
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Deferred compensation assets	$	2,452	$	—	$	—	$	2,452
Interest rate swap	—		2,093		—		2,093
Total Assets	$	2,452	$	2,093	$	—	$	4,545
Liabilities:
Contingent consideration	$	—	$	—	$	500	$	500
Obligation under tax receivable agreement	—		—		39,880		39,880
Deferred compensation liabilities	2,452		—		—		2,452
Total Liabilities	$	2,452	$	—	$	40,380	$	42,832

A description of the inputs used in the valuation of assets and liabilities is summarized as follows:

Level 1 — Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.

Level 2 — Inputs include directly or indirectly observable inputs other than Level 1 inputs such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that are considered in fair value determinations of the assets or liabilities, such as interest

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rates and yield curves that are observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 — Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities or related observable inputs that can be corroborated at the measurement date. Measurements of non-exchange traded derivative contract assets and liabilities are primarily based on valuation models, discounted cash flow models or other valuation techniques that are believed to be used by market participants. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in pricing assets or liabilities.

The deferred compensation assets are held in mutual funds. The fair value of the deferred compensation assets and liabilities is based on the quoted market prices for the mutual funds and thus represents a Level 1 fair value measurement.

On January 4, 2019, we entered into a tax receivable agreement (“TRA”) with our former owners. The fair value of the obligation under the TRA was estimated using company specific assumptions that are not observable in the market and thus represents a Level 3 fair value measurement. Management’s estimate of the valuation of the obligation under the TRA is based on a Monte Carlo model which involves the use of projected cash flows of the Company, a discount rate, and historical deferred tax assets subject to the agreement. There were no remeasurement adjustments or payments made under the TRA during the three and six months ended June 30, 2022. We made a remeasurement adjustment of $4.3 million and payment of $0.7 million during the three and six months ended June 30, 2021.

In May 2020, we entered into an interest rate swap agreement to manage our interest rate exposure. For additional information on the interest swap agreement, see Note 8, Long-Term Debt. The carrying value of interest rate swap contracts is at fair value, which is determined based on current interest rate and forward interest rates as of the balance sheet date and is classified within Level 2.

In January 2022, a $0.5 million earn-out payment was made to the previous owners of a surgical laser equipment solutions company, in which we acquired assets on December 11, 2020, based on achievement of certain revenue results. During the three months ended June 30, 2022, we completed the acquisition of several small surgical equipment repair companies and as a result, accrued $3.6 million for future earn-out payments contingent upon achievement of certain revenue results.

Fair Value of Other Financial Instruments

The Company considers that the carrying amount of financial instruments, including accounts receivable, accounts payable and accrued liabilities approximates fair value due to their short maturities. The fair value of our outstanding First Lien Term Loan (as defined in Note 8, Long-Term Debt) as of June 30, 2022 and December 31, 2021, is based on the quoted market price for the same or similar issues of debt, which represents a Level 2 fair value measurement, is approximately:

	June 30, 2022				December 31, 2021
(in thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
First Lien Term Loan (1)	$	1,046,980	$	1,013,105	$	1,167,649	$	1,174,871

________________________

(1) The carrying value of the First Lien Term Loan is net of unamortized deferred financing costs of $9.2 and $10.4 million and unamortized debt discount of $3.0 and $5.0 million as of June 30, 2022 and December 31, 2021, respectively.

6.    Selected Financial Statement Information

Property and Equipment

Our Property and Equipment is grouped into Medical Equipment and Property and Office Equipment. Depreciation of medical equipment is provided on the straight-line method over the equipment’s estimated useful life, generally four to seven years. The cost and accumulated depreciation of medical equipment retired or sold is eliminated from their respective accounts and the resulting gain or loss is recorded in cost of revenue in the period the asset is retired or sold. Property and office equipment includes property, leasehold improvements and office equipment. Depreciation and amortization of property and office equipment is provided on the straight-line method over the lesser of the remaining useful life or lease

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term for leasehold improvements and three to ten years for office equipment. The cost and accumulated depreciation or amortization of property and equipment retired or sold is eliminated from their respective accounts and the resulting gain or loss is recorded in selling, general and administrative expense in the period the asset is retired or sold.

(in thousands)	June 30, 2022		December 31, 2021
Medical equipment	$	372,639	$	359,284
Less: Accumulated depreciation	(233,142)		(209,516)
Medical equipment, net	139,497		149,768
Leasehold improvements	45,938		39,026
Office equipment and vehicles	148,187		135,643
	194,125		174,669
Less: Accumulated depreciation	(82,132)		(66,067)
Property and office equipment, net	111,993		108,602
Total property and equipment, net	$	251,490	$	258,370

Depreciation expense recognized during the three months ended June 30, 2022 and 2021 was $23.9 and $26.7 million, respectively. Depreciation expense recognized during the six months ended June 30, 2022 and 2021 was $46.4 and $52.9 million, respectively.

There were no impairment charges on property and equipment during the three and six months ended June 30, 2022 and 2021.

Goodwill and Other Intangible Assets

Our goodwill as of June 30, 2022 and December 31, 2021 consists of the following:

(in thousands)
Balance at December 31, 2021	$	1,213,121
Acquisitions	5,208
Balance at June 30, 2022	$	1,218,329

There were no impairment losses recorded on goodwill through June 30, 2022.

Our other intangible assets as of June 30, 2022 and December 31, 2021 consist of the following:

	June 30, 2022
(in thousands)	Gross		Accumulated Amortization		Net
Finite-life intangibles
Customer relationship	$	756,889	$	(235,101)	$	521,788
Non-compete agreements	5,235		(4,511)		724
Trade names	7,806		(1,665)		6,141
Developed technology	2,300		(479)		1,821
Total other intangible assets	$	772,230	$	(241,756)	$	530,474

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	December 31, 2021
(in thousands)	Gross		Accumulated Amortization		Net
Finite-life intangibles
Customer relationship	$	756,889	$	(194,312)	$	562,577
Non-compete agreements	14,613		(13,222)		1,391
Trade names	9,179		(2,230)		6,949
Developed technology	2,300		(58)		2,242
Total other intangible assets	$	782,981	$	(209,822)	$	573,159

Our other intangible assets are amortized over their estimated economic lives of three to fifteen years. The straight-line method of amortization generally reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained by the Company in each reporting period. However, for certain of our customer relationships, we use the sum-of-the-years-digits amortization method to more appropriately allocate the cost to earnings in proportion to the estimated amount of economic benefit obtained.

Total amortization expense related to intangible assets was $21.5 and $20.6 million for the three months ended June 30, 2022 and 2021, respectively, and $42.7 and $37.1 million for the six months ended June 30, 2022 and 2021, respectively. There were no impairment charges during the three and six months ended June 30, 2022 and 2021 with respect to other intangible assets.

The estimated future amortization expense for identifiable intangible assets during the remainder of 2022 and the next five years is as follows:

(in thousands)
Remainder of 2022	$	43,280
2023	79,108
2024	68,604
2025	62,242
2026	55,870
2027	49,516

Supplementary Cash Flow Information

Supplementary cash flow information is as follows:

	Six Months Ended June 30,
(in thousands)	2022		2021
Non-cash activities:
Property and equipment purchases included in accounts payable (at end of period)	$	4,976	$	2,672
Finance lease assets and liability additions	3,236		1,644
Operating lease right-of-use assets and operating lease liability additions	16,472		5,543
Issuance of common stock related to acquisition	—		11,300

7.    Share-Based Compensation

The 2018 Omnibus Incentive Plan (“2018 Plan”) provides for the issuance of 16.7 million nonqualified stock options, restricted stock units and performance restricted stock units to any of the Company’s executives, other key employees and certain non-employee directors. The stock options allow for the purchase of shares of common stock of the Company at prices equal to the stock’s fair market value at the date of grant. Options granted had a ten-year contractual term and vest over one to four years. The restricted stock units vest over one to four years. The performance restricted stock units vest over three years upon achievement of established performance targets as defined in the respective award agreements.

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The shares issued to a grantee upon the exercise of such grantee’s options will be subject to certain restrictions on transferability as provided in the 2018 Plan. Grantees are subject to non-competition, non-solicitation and confidentiality requirements as set forth in their respective stock option grant agreements. Forfeited options, restricted stock units and performance restricted stock units are available for future issue.

We determine the fair value of stock options using the Black-Scholes option pricing model. The estimated fair value of options, including the effect of estimated forfeitures, is recognized as an expense on a straight-line basis over the options’ expected vesting periods.

In connection with our IPO, we granted certain of our employees, including our named executive officers, restricted stock units, performance restricted stock units, and stock options under the 2018 Plan with respect to approximately 1.6 million shares of the Company’s common stock.

A total of 2.0 million shares of our common stock are reserved for issuance under our Employee Stock Purchase Plan ("ESPP"). Employees are permitted to purchase the Company’s common stock at 85% of market value at the end of the six-month offering period ending on April 30 and October 31 each year. 0.1 million shares were issued under the ESPP as of June 30, 2022. The Company recognizes share-based compensation expense for the discount received by participating employees. The Company recognized $0.1 and $0.4 million share-based compensation expense for the discount received by participating employees for the three and six months ended June 30, 2022.

Remaining authorized options, restricted stock units and performance restricted stock units available for future issuance were 7.4 million shares at June 30, 2022.

8.    Long-Term Debt

Long-term debt consists of the following:

(in thousands)	June 30, 2022		December 31, 2021
Revolving Loan	$	20,000	$	—
First Lien Term Loan	1,059,248		1,183,071
Finance lease liability	25,285		26,621
	1,104,533		1,209,692
Less: unamortized deferred financing costs and debt discount	(13,782)		(17,190)
	1,090,751		1,192,502
Less: Current portion of long-term debt	(17,735)		(17,534)
Total long-term debt	$	1,073,016	$	1,174,968

We are party to a seven-year senior secured delayed draw term loan facility due January 2026 which, as amended, provides an aggregate principal amount of $1.285 billion in borrowing capacity (the “First Lien Term Loan”). We also have access to a senior secured revolving credit facility due January 2026 in an aggregate principal amount of $250 million (the “Revolving Loan”).

During the second quarter of fiscal 2022, we borrowed $20.0 million under our Revolving Loan and utilized the proceeds to prepay borrowings under the First Lien Term Loan. For the six months ended June 30, 2022, we prepaid $119.1 million of the borrowings under the First Lien Term Loan which resulted in a loss on extinguishment of $1.4 million.

Additional information regarding our indebtedness arrangements can be found within the notes to our consolidated financial statements in our most recently filed Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Interest Rate Swap. In May 2020, we entered into an interest rate swap agreement for a total notional amount of $500.0 million, which has the effect of converting a portion of our First Lien Term Loan to fixed interest rates. The effective date for the interest rate swap agreement was June 2020 and the expiration date is June 2023.

The interest rate swap agreement qualifies for cash flow hedge accounting under ASC Topic 815, “Derivatives and Hedging.” Both at inception and on an on-going basis, we must perform an effectiveness test. The fair value of the interest rate swap agreement at June 30, 2022 was $12.4 million all of which is included in other current assets on our consolidated balance sheet. The change in fair value was recorded as a component of accumulated other comprehensive loss on our

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consolidated balance sheet, net of tax, since the instrument was determined to be an effective hedge at June 30, 2022. We have not recorded any amounts due to ineffectiveness for any periods presented.

As a result of our interest rate swap agreement, we expect the effective interest rate on $350.0 million and $150.0 million of our First Lien Term Loan to be 0.3396% and 0.3290%, respectively, plus the Applicable Margin through June 2023.

We were in compliance with all financial debt covenants for all periods presented.

9.    Leases

We lease facilities under operating lease agreements, which include both monthly and longer-term arrangements. Our finance leases consist primarily of leased vehicles.

The lease assets and liabilities are as follows:

(in thousands)		June 30, 2022		December 31, 2021
Lease Assets	Classification
Operating lease assets	Operating lease right-of-use assets	$	85,669	$	80,676
Finance lease assets	Property and equipment (1)	25,266		26,098
Total leased assets		$	110,935	$	106,774
Lease Liabilities
Current:
Operating	Current portion of operating lease liability	$	23,198	$	22,826
Finance	Current portion of long-term debt	8,337		8,136
Noncurrent:
Operating	Operating lease liability, less current portion	73,122		63,241
Finance	Long-term debt, less current portion	16,948		18,485
Total lease liabilities		$	121,605	$	112,688

____________________

(1) Finance lease assets are recorded net of accumulated depreciation of $25.3 and $20.4 million as of June 30, 2022 and December 31, 2021, respectively.

The lease cost for the three and six months ended June 30, 2022 and 2021 was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Lease Cost
Finance lease cost:
Amortization of right-of-use assets	$	2,198	$	2,186	$	4,344	$	4,378
Interest on lease liabilities	191		196		383		378
Operating lease cost	7,221		4,794		14,496		9,100
Short-term lease cost	286		156		530		312
Variable lease cost	1,604		1,314		3,110		2,775
Total lease cost	$	11,500	$	8,646	$	22,863	$	16,943

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The maturity of lease liabilities at June 30, 2022 was as follows:

(in thousands)	Operating Leases		Finance Leases		Total
2022 remaining	$	12,788	$	4,887	$	17,675
2023	23,749		4,069		27,818
2024	20,686		3,456		24,142
2025	16,825		2,884		19,709
2026	12,959		2,407		15,366
Thereafter	14,953		10,702		25,655
Total lease payments	$	101,960	$	28,405	$	130,365
Less: Interest	5,640		3,120		8,760
Present value of lease liabilities	$	96,320	$	25,285	$	121,605

The lease term and discount rate at June 30, 2022 were as follows:

	June 30, 2022
Lease Term and Discount Rate
Weighted-average remaining lease term (years)
Operating leases	5.1
Finance leases	2.2
Weighted-average discount rate
Operating leases	2.2	%
Finance leases	2.3	%

Other information related to cash paid related to lease liabilities and lease assets obtained for the six months ended June 30, 2022 and 2021 was as follows:

	Six Months Ended June 30,
(in thousands)	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for finance leases	$	383	$	378
Operating cash flows for operating leases	12,743		8,743
Financing cash flows for finance leases	4,484		4,270
Lease asset obtained in exchange for new finance lease liabilities	3,236		1,644
Lease asset obtained in exchange for new operating lease liabilities	16,472		5,543

10.    Dividend

In November 2019, the Company declared a $2.23 dividend per share that was paid to holders of common stock and is paid upon vesting to holders of restricted stock units and performance restricted stock units. An immaterial amount of dividends were paid during the three months ended June 30, 2022 and 2021. Dividends paid during both the six months ended June 30, 2022 and 2021 were $0.9 million.

Dividends payable was $0.3 million as of June 30, 2022, all of which was included in accounts payable, and $1.2 million as of December 31, 2021, of which $0.9 million was included in accounts payable and $0.3 million was included in other long-term liabilities.

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11.    Commitments and Contingencies

The Company, in the ordinary course of business, is subject to liability claims related to employees and the equipment that it rents and services. Asserted claims are subject to many uncertainties and the outcome of individual matters is not predictable. For certain claims where the loss is probable, a provision is recorded based on the Company’s best estimate. While the ultimate resolution of these actions may have an impact on the Company’s financial results for a particular reporting period, management believes that any such resolution would not have a material adverse effect on the financial position, results of operations or cash flows of the Company and the chance of a negative outcome on outstanding litigation is considered remote.

12.    Related Party Transaction

Since January 2019, we have been controlled by THL Agiliti LLC, an affiliate of Thomas H. Lee Partners, L.P., our principal stockholder. On January 4, 2019, the Company entered into an advisory services agreement (the “Advisory Services Agreement”) with Agiliti Holdco, Inc., Agiliti Health, Inc. and THL Managers VIII, LLC (the “Advisor”). Pursuant to the Advisory Services Agreement, the Advisor provided management, consulting and other advisory services to the Company. In consideration for these services, the Company paid to the Advisor (i) a non-refundable periodic retainer fee in an aggregate amount per fiscal quarter equal to the greater of (a) $375,000 or (b) 1% of the consolidated Adjusted EBITDA (as defined in the Advisory Services Agreement) for the immediately preceding fiscal quarter or such other amount as may be mutually agreed, with the first such payment to be made on April 15, 2019, (ii) fees in amounts to be mutually agreed upon in connection with any financing or refinancing, dividend, recapitalization, acquisition, disposition and spin-off or split-off transaction, (iii) in the case of an initial public offering (“IPO”), in addition to the fees under clauses (i) and (ii), an amount equal to the net present value of the higher periodic fee that would have been payable from the date of such IPO until the scheduled termination date of the Advisory Services Agreement, and (iv) fees for other management, consulting and other advisory services to be discussed in good faith among the parties. The companies also paid expenses incurred by the Advisor, its consultants and certain other parties affiliated with Advisor. Total professional services fees incurred to the Advisor were $0 and $0.6 million for the three and six months ended June 30, 2021. The Advisory Services Agreement was terminated upon the completion of the IPO. In connection with the termination of the Advisory Services Agreement, we were required to pay to the Advisor a buyout fee of approximately $7.0 million, which was expensed immediately in the second quarter of 2021.

13.    Employee Benefit Plans

Pension plan benefits are to be paid to eligible employees after retirement based primarily on years of credited service and participants’ compensation. The Company uses a December 31 measurement date. Effective December 31, 2002, the Company froze the benefits under the pension plan.

The components of net periodic benefit cost are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Interest cost	$	213	$	196	$	424	$	393
Expected return on plan assets	(284)		(276)		(569)		(553)
Recognized net actuarial loss	—		73		—		146
Net periodic benefit cost	$	(71)	$	(7)	$	(145)	$	(14)

The Company made $0.2 million of contributions to the pension plan during the six months ended June 30, 2022. The Company expects to make additional contributions of approximately $0.5 million for the remainder of 2022.

14.    Income Taxes

For the three and six months ended June 30, 2022, the Company recorded income tax benefit of $1.7 million and tax expense of $5.2 million, respectively. For the three and six months ended June 30, 2021, the Company recorded income tax expense of $1.4 and $5.9 million, respectively. The income tax benefit for the three months ended June 30, 2022 was primarily due to benefits received from exercised stock options and vested stock compensation. The income tax expense for the six months ended June 30, 2022 was primarily due to the tax-effect of pre-tax income from operations plus addbacks for non-deductible expenses related to executive compensation disallowed under Internal Revenue Code Section 162(m) and partially offset by a benefit from stock options and stock compensation. The income tax expense for the three and six

17

months ended June 30, 2021 is primarily due to the tax-effect of pre-tax income from operations plus addbacks for non-deductible transaction costs, nondeductible expenses related to executive compensation disallowed under Internal Revenue Code Section 162(m) and the remeasurement of the tax receivable agreement.

15.    Concentration

For the three and six months ended June 30, 2022, respectively, approximately 10.2% and 10.9% of total revenue related to various contracts with the U.S. Department of Health and Human Services (“HHS”) and the Assistant Secretary of Preparedness and Response (“ASPR”).

On February 28, 2022, the Company entered into a new 12-month sole source agreement (the “Agreement”) with HHS and ASPR to provide comprehensive ventilator and powered air purifying respirator (“PAPR”) systems management and maintenance services in connection with ongoing support and maintenance of the national stockpile. This Agreement replaces the Company’s prior agreements with HHS/ASPR that ran from July 21, 2020, to February 27, 2022, and is comprised of an initial 6-month base term, running from the period of February 28, 2022, to August 27, 2022, with a 6-month option term that will expire February 27, 2023.

16.    Earnings Per Share

The following is a reconciliation of the basic and diluted number of shares used in computing earnings per share:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Basic weighted average shares outstanding	132,556,645		122,908,065		131,856,267		111,071,756
Net effect of dilutive stock awards based upon the treasury stock method	6,140,561		—		6,076,279		7,689,081
Dilutive weighted average shares outstanding	138,697,206		122,908,065		137,932,546		118,760,837
Basic earnings (loss) per share	$	0.04	$	(0.04)	$	0.19	$	0.04
Diluted earnings (loss) per share	$	0.04	$	(0.04)	$	0.18	$	0.04
Anti-dilutive share-based awards excluded from the calculation of dilutive earnings per share	7,520		7,790,523		9,203		—

17. Subsequent Events

The term of the Company’s current Agreement with HHS/ASPR is intended to allow adequate time for the federal government to complete a longer-term agreement for comprehensive ventilator and PAPR systems management and maintenance services without a lapse in critical COVID-19 pandemic response needs. On August 5, 2022, the Company submitted its response to HHS/ASPR’s request for proposal in connection with this five-year agreement and is awaiting next steps in this regard.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and with the audited consolidated financial statements and the related notes thereto in the Company’s Annual report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (“SEC”) on March 8, 2022 (“2021 Form 10-K Report”). In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. You should review the sections titled “Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements as well as the section titled “Risk Factors” for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Quarterly Report on Form 10-Q and in our 2021 Form 10-K Report.

BUSINESS OVERVIEW

Our Company

Unless otherwise specified, the terms “we”, “our”, “us” and the “Company” refer to Agiliti, Inc. and, where appropriate, its consolidated subsidiaries.

We believe we are one of the leading experts in the manufacturing, management, maintenance and mobilization of mission-critical, regulated, reusable medical devices. We offer healthcare providers a comprehensive suite of medical equipment management and service solutions that help reduce capital and operating expenses, optimize medical equipment utilization, reduce waste, enhance staff productivity and bolster patient safety.

We commenced operations in 1939, originally incorporated in Minnesota in 1954 and reincorporated in Delaware in 2001.

In our more than 80 years of experience ensuring healthcare providers have high-quality, expertly maintained equipment to serve their patients, we’ve established a nationwide operating footprint that supports our offering. This at-scale, local market service and logistics infrastructure positions us to reach customers across the entire healthcare continuum—from individual facilities to the largest and most complex healthcare systems. Our ability to rapidly mobilize, track, repair and redeploy equipment during times of peak need or emergent events has made us a service provider of choice for city, state and the federal government in the management of emergency equipment stockpiles.

Our diverse customer base includes more than 9,000 national, regional and local acute care hospitals, health systems and integrated delivery networks and alternate site providers (such as surgery centers, specialty hospitals, home care providers, long-term acute care hospitals and skilled nursing facilities). We serve the federal government as well as a number of city and state governments providing management and maintenance of emergency equipment stockpiles, and we are an outsourced service provider to medical device manufacturers supporting critical device remediation and repair services. We deliver our solutions through our nationwide network of more than 150 service centers and 7 ISO 13485 Certified Centers of Excellence, among which we employ a team of more than 700 specialized biomed repair technicians, more than 4,000 field-based service operators who work onsite within customer facilities or in our local service centers, and over 200 field sales and account managers. Our fees are primarily paid directly by our customers rather than by direct reimbursement from third-party payors, such as private insurers, Medicare or Medicaid.

We deploy our solution offering across three primary service lines:

On-Site Managed Services: Onsite Managed Services are comprehensive programs that assume full responsibility for the management, reprocessing and logistics of medical equipment at individual facilities and integrated delivery networks (“IDNs”), with the added benefit of enhancing equipment utilization and freeing more clinician time for patient care. This solution monitors and adjusts equipment quantities and availability to address fluctuations in patient census and acuity. Our more than 1,600 onsite employees work 24/7 in customer facilities, augmenting clinical support by integrating proven equipment management processes, utilizing our proprietary management software and conducting daily rounds and unit-based training to ensure equipment is being used and managed properly, overall helping to optimize day-to-day operations and care outcomes. We assume full responsibility for ensuring equipment is available when and where it is needed, removing equipment when no longer in use, and decontaminating, testing and servicing equipment as needed between each patient use. Revenue attributable to such customers represented 22.9% and 30.8% of our total revenue for the three months ended June 30, 2022 and 2021, respectively, and 23.3% and 31.9% of our total revenue for the six months ended June 30, 2022 and 2021, respectively.

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Clinical Engineering Services: Clinical Engineering Services provides maintenance, repair and remediation solutions for all types of medical equipment, including general biomedical equipment, diagnostic imaging equipment and surgical equipment through supplemental and outsourced offerings. Our supplemental offering helps customers manage their equipment repair and maintenance backlog, assist with remediation and regulatory reporting and temporarily fill open biotechnical positions. With our outsourced offering, we assume full management, staffing and clinical engineering service responsibilities for individual or system-wide customer sites. The outsourced model deploys a dedicated, on-site team to coordinate the management of customer-owned equipment utilizing our proprietary information systems, third party vendors of services and parts, and a broad range of professional services for capital equipment planning and regulatory compliance. We leverage more than 700 technical resources from our over 150 local market service centers and 7 Centers of Excellence to flex staff in and out of customer facilities on an as-needed basis, ensuring customers pay only for time spent directly servicing their equipment by an appropriately qualified technician. We use flex staffing for our supplemental clinical engineering solution and to augment support when additional technicians are needed to supplement our outsourced services during peak workload. We contract our Clinical Engineering Services with acute care and alternate site facilities across the U.S., as well as with the federal government and any medical device manufacturers that require a broad logistical footprint to support their large-scale service needs. Revenue attributable to such customers represented 38.1% and 40.4% of our total revenue for the three months ended June 30, 2022 and 2021, respectively, and 36.5% and 36.3% of our total revenue for the six months ended June 30, 2022 and 2021, respectively.

Equipment Solutions: Equipment Solutions primarily provides supplemental, peak need and per-case rental of general biomedical, specialty, and surgical equipment to acute care hospitals and alternate site providers in the U.S., including some of the nation’s premier healthcare institutions and integrated delivery networks. We contract for Equipment Solutions services directly with customers or through our contractual arrangements with hospital systems and alternate site providers. We consistently achieve high customer satisfaction ratings by delivering patient-ready equipment within our contracted equipment delivery times and by providing technical support and educational in-servicing for equipment as-needed in clinical departments, including the emergency room, operating room, intensive care, rehabilitation and general patient care areas. We are committed to providing the highest quality of equipment to our customers, and we do so through the use of our comprehensive Quality Management System which is based on the quality standards recognized worldwide for medical devices: 21 CFR 820 and ISO 13485:2016. This commitment ensures that customers have access to patient-ready equipment with the confidence of knowing it has been prepared and maintained to the highest industry standard to deliver optimal patient safety and outcomes. Revenue attributable to such customers represented 39.0% and 28.8% of our total revenue for the three months ended June 30, 2022 and 2021, respectively, and 40.2% and 31.8% of our total revenue for the six months ended June 30, 2022 and 2021, respectively.

Many of our customers have multiple contracts and have revenue reported in multiple service lines. Our contracts vary based upon service offering, including with respect to term (with most being multi-year contracts), pricing (daily, monthly and fixed fee arrangements) and termination (termination for convenience to termination for cause only). Many of our contracts contain customer commitment guarantees and annual price increases tied to the consumer price index. Standard contract terms include payment terms, limitation of liability, force majeure provisions and choice of law/venue.

Further, the infrastructure and capabilities required to provide connected, responsive equipment lifecycle management is typically cost-prohibitive, even for large IDNs. Our nationwide network of clinical engineers, storage and repair facilities, vehicles and analytics tools gives us scale to provide cost-effective services for individual facilities, systems, regional IDNs, governments and device manufacturers.

Impact of COVID-19 on our Business

We have taken proactive action to protect the health and safety of our employees, customers, partners and suppliers. There continues to be uncertainty related to the full extent of the impact of the COVID-19 outbreak on our future results, but we believe our business model and our available borrowings under our Revolving Credit Facility position us well to continue to manage our business through this crisis.

We continue to monitor the evolving situation and guidance from federal, state and local public health authorities and may take additional actions based on their recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our operating plan. As such, given the nature of this situation, we cannot reasonably estimate the future impacts of COVID-19 on our financial condition, results of operations or cash flows.

20

Initial Public Offering

On April 22, 2021, our registration statement on Form S-1 (File No. 333-253947) related to our initial public offering (“IPO”) was declared effective by the SEC, and our common stock began trading on the New York Stock Exchange (“NYSE”) on April 23, 2021. Our IPO closed on April 27, 2021.

RESULTS OF OPERATIONS

The following discussion addresses:

•our financial condition as of June 30, 2022; and

•the results of operations for the three and six-month periods ended June 30, 2022 and 2021.

This discussion should be read in conjunction with the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and the Management’s Discussion and Analysis of Financial Condition and Results of Operations sections included in our 2021 Form 10-K Report.

The following tables provide our results of operations for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30,								Change
(in thousands)	2022				2021				$		%
Consolidated Statement of Operations Data:			% of total revenue				% of total revenue
Revenue	$	273,984	100.0	%	$	250,543	100.0	%	$	23,441	9.4	%
Cost of revenue	175,819		64.2		151,435		60.4		24,384		16.1
Gross margin	98,165		35.8		99,108		39.6		(943)		(1.0)
Selling, general and administrative expense	82,121		30.0		81,056		32.4		1,065		1.3
Operating income	16,044		5.8		18,052		7.2		(2,008)		(11.1)
Loss on extinguishment of debt	1,418		0.5		10,116		4.0		(8,698)		(86.0)
Interest expense	11,261		4.1		11,713		4.7		(452)		(3.9)
Income (loss) before income taxes and noncontrolling interest	3,365		1.2		(3,777)		(1.5)		7,142		189.1
Income tax (benefit) expense	(1,698)		(0.6)		1,394		0.6		(3,092)		(221.8)
Consolidated net income (loss)	$	5,063	1.8		$	(5,171)	(2.1)		$	10,234	197.9

	Six Months Ended June 30,								Change
(in thousands)	2022				2021				$		%
Consolidated Statement of Operations Data:			% of total revenue				% of total revenue
Revenue	$	568,428	100.0	%	$	485,788	100.0	%	$	82,640	17.0	%
Cost of revenue	346,636		61.0		285,358		58.7		61,278		21.5
Gross margin	221,792		39.0		200,430		41.3		21,362		10.7
Selling, general and administrative expense	168,259		29.6		150,279		30.9		17,980		12.0
Operating income	53,533		9.4		50,151		10.4		3,382		6.7
Loss on extinguishment of debt	1,418		0.2		10,116		2.1		(8,698)		(86.0)
Interest expense	21,925		3.9		29,733		6.1		(7,808)		(26.3)
Income before income taxes and noncontrolling interest	30,190		5.3		10,302		2.2		19,888		193.0
Income tax (benefit) expense	5,207		0.9		5,890		1.2		(683)		(11.6)
Consolidated net income	$	24,983	4.4		$	4,412	1.0		$	20,571	466.3

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Consolidated Results of Operations for the three months ended June 30, 2022 compared to the three months ended June 30, 2021

Total Revenue

The following table presents revenue by service solution for the three months ended June 30, 2022 and 2021:

	Three Months Ended June 30,				Change
(in thousands)	2022		2021		%
Equipment Solutions	$	106,852	$	72,140	48.1	%
Clinical Engineering	104,412		101,141		3.2
Onsite Managed Services	62,720		77,262		(18.8)
Total revenue	$	273,984	$	250,543	9.4	%

Total revenue for the three months ended June 30, 2022 was $274.0 million, compared to $250.5 million for the three months ended June 30, 2021, an increase of $23.5 million or 9.4%. Equipment Solutions revenue increased 48.1% primarily driven by the Sizewise acquisition completed on October 1, 2021 which was partially offset by lower utilization of our medical equipment post-COVID. Clinical Engineering revenue increased 3.2% primarily due to continued new business growth offset partially by lower federal government revenue. Finally, our Onsite Managed Services revenue decreased 18.8% primarily driven by lower revenue associated with the renewal of the federal government contract. See Note 15, Concentration, to the consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q for additional information on the renewed federal government contract.

Cost of Revenue

Total cost of revenue for the three months ended June 30, 2022 was $175.8 million compared to $151.4 million for the three months ended June 30, 2021, an increase of $24.4 million or 16.1%. On a percentage of revenue basis, cost of revenue increased from 60.4% of revenue in 2021 to 64.2% in 2022. The increase as a percentage of revenue was driven primarily from the federal government contract renewal and lower utilization of our medical equipment post-COVID.

Gross Margin

Total gross margin for the three months ended June 30, 2022 was $98.2 million, or 35.8% of total revenue, compared to $99.1 million, or 39.6% of total revenue, for the three months ended June 30, 2021, a decrease of $0.9 million or 1.0%. The decrease in gross margin as a percentage of revenue was primarily impacted by the federal government contract renewal and lower utilization of our medical equipment.

Selling, General and Administrative Expense

Selling, general and administrative expense increased $1.1 million, or 1.3%, to $82.1 million for the three months ended June 30, 2022 as compared to the same period of 2021. Selling, general and administrative expense as a percentage of total revenue was 30.0% and 32.4% for the three months ended June 30, 2022 and 2021, respectively. The increase of $1.1 million was primarily due to the increases in costs and amortization expense related to the acquisition of Sizewise in 2021, partially offset by the elimination of the management services agreement with our majority owner.

Loss on Extinguishment of Debt

Loss on extinguishment of debt for the three months ended June 30, 2022 was $1.4 million, compared to $10.1 million for the three months ended June 30, 2021, a decrease of $8.7 million or 86.0%. Loss on extinguishment of debt for the three months ended June 30, 2022 consisted of the write-off of unamortized debt discount related to the paydown of our term loan. The loss in 2021 was the result of the write-off of the unamortized deferred financing cost and debt discount along with an additional 1% redemption price related to the repayment of our Second Lien Term Loan.

Interest Expense

Interest expense decreased $0.5 million to $11.3 million for the three months ended June 30, 2022 as compared to the same period of 2021 primarily due to the repayment of our Second Lien Term Loan from the proceeds of the IPO in the second quarter of 2021 as well as the paydown of $71.5 million on our First Lien Term Loan in the first quarter of 2022.

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Income Taxes

Income taxes were a benefit of $1.7 million and an expense of $1.4 million for the three months ended June 30, 2022 and 2021, respectively. The income tax benefit for the three months ended June 30, 2022 was primarily due to benefits received from exercised stock options and vested stock compensation. The income tax expense for the three months ended June 30, 2021 was primarily related to nondeductible expenses related to executive compensation disallowed under Internal Revenue Code Section 162(m).

Consolidated Net Income

Consolidated net income increased $10.2 million to $5.1 million in the second quarter of 2022 as compared to the same period of 2021. The increase in net income was impacted by the 9.4% increase in revenue.

Consolidated Results of Operations for the six months ended June 30, 2022 compared to the six months ended June 30, 2021

Total Revenue

The following table presents revenue by service solution for the six months ended June 30, 2022 and 2021:

	Six Months Ended June 30,				Change
(in thousands)	2022		2021		%
Equipment Solutions	$	228,707	$	154,611	47.9	%
Clinical Engineering	207,211		176,247		17.6
Onsite Managed Services	132,510		154,930		(14.5)
Total revenue	$	568,428	$	485,788	17.0	%

Total revenue for the six months ended June 30, 2022 was $568.4 million, compared to $485.8 million for the six months ended June 30, 2021, an increase of $82.6 million or 17.0%. Equipment Solutions revenue increased 47.9% primarily driven by the Sizewise acquisition completed on October 1, 2021 which was partially offset by lower utilization of our medical equipment post-COVID. Clinical Engineering revenue increased 17.6% primarily due to new business growth offset partially by lower federal government revenue. Finally, our Onsite Managed Services revenue decreased 14.5% primarily driven by lower revenue associated with the renewal of the federal government contract.

Cost of Revenue

Total cost of revenue for the six months ended June 30, 2022 was $346.6 million compared to $285.4 million for the six months ended June 30, 2021, an increase of $61.2 million or 21.5%. On a percentage of revenue basis, cost of revenue increased from 58.7% of revenue in 2021 to 61.0% in 2022. The increase as a percentage of revenue was driven primarily by the federal government contract renewal and lower utilization of our medical equipment post-COVID.

Gross Margin

Total gross margin for the six months ended June 30, 2022 was $221.8 million, or 39.0% of total revenue, compared to $200.4 million, or 41.3% of total revenue, for the six months ended June 30, 2021, an increase of $21.4 million or 10.7%. The decrease in gross margin as a percentage of revenue was primarily impacted by the federal government contract renewal, lower utilization of our equipment, and the acquisitions completed in the prior year.

Selling, General and Administrative Expense

Selling, general and administrative expense increased $18.0 million, or 12.0%, to $168.3 million for the six months ended June 30, 2022 as compared to the same period of 2021. Selling, general and administrative expense as a percentage of total revenue was 29.6% and 30.9% for the six months ended June 30, 2022 and 2021, respectively. The increase of $18.0 million was primarily due to the increases in costs and amortization expense related to the acquisition of Northfield and Sizewise in 2021, partially offset by the elimination of the management services agreement with our majority owner.

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Loss on Extinguishment of Debt

Loss on extinguishment of debt for the six months ended June 30, 2022 was $1.4 million, compared to $10.1 million for the six months ended June 30, 2021, a decrease of $8.7 million or 86.0%. Loss on extinguishment of debt for the six months ended June 30, 2022 consisted of the write-off of unamortized debt discount related to the paydown of our term loan. The loss in 2021 was the result of the write-off of the unamortized deferred financing cost and debt discount along with an additional 1% redemption price related to the repayment of our Second Lien Term Loan.

Interest Expense

Interest expense decreased $7.8 million to $21.9 million for the six months ended June 30, 2022 as compared to the same period of 2021 primarily due to the repayment of our Second Lien Term Loan from the proceeds of the IPO in the second quarter of 2021 as well as the paydown of $123.8 million on our First Lien Term Loan during the first six months of 2022.

Income Taxes

Income taxes were an expense of $5.2 million and $5.9 million for the six months ended June 30, 2022 and 2021, respectively. The income tax expense for the six months ended June 30, 2022 was primarily due to the tax-effect of pre-tax income from operations plus addbacks for non-deductible expenses related to executive compensation disallowed under Internal Revenue Code Section 162(m) and benefits received from exercised stock options. The income tax expense for the six months ended June 30, 2021 was primarily related to operating income, addbacks for non-deductible transaction costs and the remeasurement of the tax receivable agreement.

Consolidated Net Income

Consolidated net income increased $20.6 million to $25.0 million in the six months ended June 30, 2022 as compared to the same period of 2021. The increase in net income was impacted by the 17.0% increase in revenue.

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Adjusted EBITDA

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) was $158.7 and $163.9 million for the six months ended June 30, 2022 and 2021, respectively. Adjusted EBITDA for the six months ended June 30, 2022 was lower than in 2021 primarily due to the reduction in gross margin.

EBITDA is defined as earnings attributable to Agiliti, Inc. before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding non-cash share-based compensation expense, management fees and other non-recurring gains, expenses or losses, transaction costs, remeasurement of tax receivable agreement and loss on extinguishment of debt. In addition to using EBITDA and Adjusted EBITDA internally as measures of operational performance, we disclose them externally to assist analysts, investors and lenders in their comparisons of operational performance, valuation and debt capacity across companies with differing capital, tax and legal structures. We believe the investment community frequently uses EBITDA and Adjusted EBITDA in the evaluation of similarly situated companies. Adjusted EBITDA is also used by the Company as a factor to determine the total amount of incentive compensation to be awarded to executive officers and other employees. EBITDA and Adjusted EBITDA, however, are not measures of financial performance under GAAP and should not be considered as alternatives to, or more meaningful than, net income as measures of operating performance or to cash flows from operating, investing or financing activities or as measures of liquidity. Since EBITDA and Adjusted EBITDA are not measures determined in accordance with GAAP and are thus susceptible to varying interpretations and calculations, EBITDA and Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. EBITDA and Adjusted EBITDA do not represent amounts of funds that are available for management’s discretionary use. EBITDA and Adjusted EBITDA presented below may not be the same as EBITDA and Adjusted EBITDA calculations as defined in the First Lien Credit Facilities. A reconciliation of net income (loss) attributable to Agiliti, Inc. to Adjusted EBITDA is included below:

	Six Months Ended June 30,
(in thousands)	2022		2021
Net income attributable to Agiliti, Inc. and Subsidiaries	$	24,890	$	4,355
Interest expense	21,925		29,733
Income tax expense	5,207		5,890
Depreciation and amortization	91,542		91,814
EBITDA	143,564		131,792
Non-cash share-based compensation expense	10,206		5,766
Management and other expenses	—		7,626
Transaction costs (1)	3,521		4,252
Tax receivable agreement remeasurement	—		4,345
Loss on extinguishment of debt (2)	1,418		10,116
Adjusted EBITDA	$	158,709	$	163,897
Other Financial Data:
Net cash provided by operating activities	$	101,138	$	107,508
Net cash provided by (used in) investing activities	(36,961)		(475,066)
Net cash provided by (used in) financing activities	(121,978)		264,723

____________________

(1) Transaction costs represent costs associated with potential and completed mergers and acquisitions and are primarily related to the Northfield and Sizewise acquisitions.

(2) Loss on extinguishment of debt for the six months ended June 30, 2022 consists of the write-off of the unamortized debt discount related to the partial prepayment of the First Lien Term Loan. Loss on extinguishment of debt for the six months ended June 30, 2021 consists of the write-off of the unamortized deferred financing costs and debt discount and an additional 1% redemption price related to the repayment of our Second Lien Term Loan and the write-off of the unamortized deferred financing cost related to the amendment of our Revolving Credit Facility.

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SEASONALITY

Quarterly operating results are typically affected by seasonal factors. Historically, our first and fourth quarters are the strongest, reflecting increased customer utilization during the fall and winter months. However, COVID-19 has impacted the seasonality of our business.

LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity are cash flows from operating activities and borrowings under our Revolving Credit Facility, which provides for loans in an amount of up to $250.0 million. Our principal uses of liquidity are to fund capital expenditures related to purchases of medical equipment, provide working capital, meet debt service requirements and finance our strategic plans.

We believe our existing balances of cash and cash equivalents, our currently anticipated operating cash flows and availability under our Revolving Credit Facility will be sufficient to meet our cash needs arising in the ordinary course of business for the next twelve months. If new financing is necessary, there can be no assurance that any such financing would be available on commercially acceptable terms, or at all. To date, we have not experienced difficulty accessing the credit market; however, future volatility in the credit market may increase costs associated with issuing debt instruments or affect our ability to access those markets. In addition, it is possible that our ability to access the credit market could be limited at a time when we would like, or need to do so, which could have an adverse impact on our ability to refinance debt and/or react to changing economic and business conditions.

Net cash provided by operating activities was $101.1 and $107.5 million for the six months ended June 30, 2022 and 2021, respectively. Net cash provided by operating activities during 2022 was unfavorably impacted by the timing of collections on accounts receivables.

Net cash used in investing activities was $37.0 and $475.1 million for the six months ended June 30, 2022 and 2021, respectively. The decrease in net cash used in investing activities was primarily due to the Northfield Acquisition completed on March 19, 2021.

Net cash used in financing activities was $122.0 million for the six months ended June 30, 2022 compared to net cash provided by financing activities of $264.7 million for the six months ended June 30, 2021. The change in net cash used in financing activities was primarily due to proceeds from the issuance of common stock from the IPO in 2021. In 2022, the change in net cash used in financing was driven by prepayment of the First Lien Term Loan of $119.1 million.

RECENT ACCOUNTING PRONOUNCEMENT

See Note 2, Recent Accounting Pronouncements, to the consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q.

OFF-BALANCE SHEET ARRANGEMENTS

As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (“SPEs”), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of June 30, 2022, we did not have any unconsolidated SPEs.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Form 10-Q are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate”, “estimate”, “expect”, “project”, “plan”, “intend”, “believe”, “may”, “will”, “should”, “can have”, “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:

•effects from political and policy changes that could limit our growth opportunities;

•effects from the continued COVID-19 pandemic on our business and the economy;

26

•our potential inability to maintain existing contracts or contract terms with, or enter into new contracts with, our customers;

•cancellations by or disputes with customers;

•our potential failure to maintain our reputation, including by protecting intellectual property;

•effects of a global economic downturn on our customers and suppliers;

•a decrease in our customers’ patient census or services;

•competitive practices by our competitors that could cause us to lose market share, reduce our prices or increase our expenditures;

•the bundling of products and services by our competitors, some of which we do not offer;

•consolidation in the healthcare industry, which may lead to a reduction in the prices we charge;

•adverse developments with supplier relationships;

•the potential inability to change the manner in which healthcare providers traditionally procure medical equipment;

•our potential inability to attract and retain key personnel;

•our potential inability to make attractive acquisitions or successfully integrate acquire businesses;

•an increase in expenses related to our pension plan;

•the fluctuation of our cash flow;

•credit risks relating to home care providers and nursing homes;

•potential claims related to the medical equipment that we outsource and service;

•the incurrence of costs that we cannot pass through to our customers;

•a failure of our management information systems;

•limitations inherent in all internal controls systems over financial reporting;

•social unrest;

•our failure to keep up with technological changes;

•our failure to coordinate the management of our equipment;

•challenges to our tax positions or changes in taxation laws;

•litigation that may be costly to defend;

•uncertainty surrounding healthcare reform initiatives;

•federal privacy laws that may subject us to more stringent penalties;

•our relationship with healthcare facilities and marketing practices that are subject to federal Anti-Kickback Statute and similar state laws;

•our contracts with the federal government that subject us to additional oversight;

•the impact of changes in third-party payor reimbursement for healthcare items and services on our customers’ ability to pay for our services;

•the highly regulated environment our customers operate in; and

•potential recall or obsolescence of our large fleet of medical equipment.

We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q and elsewhere in our filings with the SEC. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this Form 10-Q in the context of these risks and uncertainties.

We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this Form 10-Q are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk arising from adverse changes in interest rates, fuel costs and pension valuation. We do not enter into derivatives or other financial instruments for speculative purposes.

27

Interest Rates

We use both fixed and variable rate debt as sources of financing. As of June 30, 2022, we had approximately $1,104.5 million of total debt outstanding before netting with deferred financing costs and unamortized debt discount, of which $559.2 million was bearing interest at variable rates. Based on variable debt levels at June 30, 2022, a 1.0 percentage point change in interest rates on variable rate debt would have resulted in annual interest expense increasing by approximately $5.6 million.

Fuel Costs

We are exposed to market risks related to changes in the price of gasoline used to fuel our fleet of delivery and sales vehicles. A hypothetical 10% increase in the first six months of 2022 average price of unleaded gasoline, assuming gasoline usage levels for the six months ended June 30, 2022, would lead to an increase in fuel costs of approximately $0.5 million.

Pension

Our pension plan assets, which were approximately $26.4 million at December 31, 2021, are subject to volatility that can be caused by fluctuations in general economic conditions. Continued market volatility and disruption could cause declines in asset values, and if this occurs, we may need to make additional pension plan contributions and our pension expense in future years may increase. A hypothetical 10% decrease in the fair value of plan assets at December 31, 2021 would lead to a decrease in the funded status of the plan of approximately $2.6 million.

Other Market Risk

As of June 30, 2022, we have no other material exposure to market risk.

Item 4. Controls and Procedures

i.Evaluation of disclosure controls and procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2022.

ii.Changes in internal control over financial reporting

There was no change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company, in the ordinary course of business, is subject to liability claims related to employees and the equipment that it rents and services. Asserted claims are subject to many uncertainties and the outcome of individual matters is not predictable. While the ultimate resolution of these actions may have an impact on the Company’s financial results for a particular reporting period, management believes that any such resolution would not have a material adverse effect on the financial position, results of operations or cash flows of the Company and the chance of a negative outcome on outstanding litigation is considered remote. See the additional information in Note 11, Commitments and Contingencies, to the consolidated financial statements included in Part I, Item 1 of the Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed under the heading “Risk Factors” in our 2021 Form 10-K Report under Part I, Item 1A for the quarter ended June 30, 2022.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

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Item 6. Exhibits

Exhibit Number	Description
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	The cover page for the Company’s Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101.

____________________

*    Furnished, not filed.

30

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 9, 2022

Agiliti, Inc.
By	/s/ Thomas J. Leonard
Thomas J. Leonard
Chief Executive Officer
(Principal Executive Officer and Duly Authorized Officer)
By	/s/ James B. Pekarek
James B. Pekarek
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

31

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Thomas J. Leonard, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Agiliti, Inc. (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2022	/s/	Thomas J. Leonard
		Thomas J. Leonard
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, James B. Pekarek, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Agiliti, Inc. (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2022	/s/	James B. Pekarek
		James B. Pekarek
		Executive Vice President and
		Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Agiliti, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2022, as filed with the Securities and Exchange Commission (the “Report”), I, Thomas J. Leonard, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 9, 2022	/s/	Thomas J. Leonard
		Thomas J. Leonard
		Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Agiliti, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2022, as filed with the Securities and Exchange Commission (the “Report”), I, James B. Pekarek, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 9, 2022	/s/	James B. Pekarek
		James B. Pekarek
		Executive Vice President and
		Chief Financial Officer

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2022	Aug. 01, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	001-40361
Entity Registrant Name	AGILITI, INC. \DE
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	83-1608463
Entity Address, Address Line One	11095 Viking Drive
Entity Address, City or Town	Eden Prairie
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	55344
City Area Code	952
Local Phone Number	893-3200
Title of 12(b) Security	Common Stock, par value $0.0001
Trading Symbol	AGTI
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		133,201,821
Entity Central Index Key	0001749704
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 16,524	$ 74,325
#REF!	215,862	209,308
Inventories	59,137	55,307
Prepaid expenses	14,580	18,549
Other current assets	12,645	395
Total current assets	318,748	357,884
Property and equipment, net	251,490	258,370
Goodwill	1,218,329	1,213,121
Operating lease right-of-use assets	85,669	80,676
Other intangibles, net	530,474	573,159
Other	34,627	32,537
Total assets	2,439,337	2,515,747
Current liabilities:
Current portion of long-term debt	17,735	17,534
Current portion of operating lease liability	23,198	22,826
Current portion of obligation under tax receivable agreement	29,710	29,187
Accounts payable	56,513	53,851
Accrued compensation	23,309	47,951
Accrued interest	3,490	3,473
Deferred revenue	9,207	5,808
Other accrued expenses	26,767	27,900
Total current liabilities	189,929	208,530
Long-term debt, less current portion	1,073,016	1,174,968
Obligation under tax receivable agreement, pension and other long-term liabilities	31,179	29,629
Operating lease liability, less current portion	73,122	63,241
Deferred income taxes, net	143,381	143,307
Commitments and contingencies (Note 11)
Equity:
Common stock, $0.0001 par value; 350,000,000 shares authorized; 133,188,231 and 130,950,061 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	13	13
Additional paid-in capital	938,906	938,888
Accumulated deficit	(19,596)	(44,486)
Accumulated other comprehensive income	9,221	1,537
Total Agiliti, Inc. and Subsidiaries equity	928,544	895,952
Noncontrolling interest	166	120
Total equity	928,710	896,072
Total liabilities and equity	$ 2,439,337	$ 2,515,747

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 3,206	$ 2,902
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	350,000,000	350,000,000
Common stock, shares issued (in shares)	133,188,231	130,950,061
Common stock, shares outstanding (in shares)	133,188,231	130,950,061

XML

Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Statement [Abstract]
Revenue	$ 273,984	$ 250,543	$ 568,428	$ 485,788
Cost of revenue	175,819	151,435	346,636	285,358
Gross margin	98,165	99,108	221,792	200,430
Selling, general and administrative expense	82,121	81,056	168,259	150,279
Operating income	16,044	18,052	53,533	50,151
Loss on extinguishment of debt	1,418	10,116	1,418	10,116
Interest expense	11,261	11,713	21,925	29,733
Income (loss) before income taxes and noncontrolling interest	3,365	(3,777)	30,190	10,302
Income tax (benefit) expense	(1,698)	1,394	5,207	5,890
Consolidated net income (loss)	5,063	(5,171)	24,983	4,412
Net income attributable to noncontrolling interest	65	27	93	57
Net income (loss) attributable to Agiliti, Inc. and Subsidiaries	$ 4,998	$ (5,198)	$ 24,890	$ 4,355
Basic income (loss) per share (in dollars per share)	$ 40,000.00	$ (0.04)	$ 190,000	$ 0.04
Diluted income (loss) per share (in dollars per share)	$ 40,000.00	$ (0.04)	$ 180,000	$ 0.04
Weighted-average common shares outstanding:
Basic (in shares)	132,556,645	122,908,065	131,856,267	111,071,756
Diluted (in shares)	138,697,206	122,908,065	137,932,546	118,760,837

XML

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Comprehensive Income [Abstract]
Consolidated net income (loss)	$ 5,063	$ (5,171)	$ 24,983	$ 4,412
Other comprehensive income (loss):
Gain on minimum pension liability, net of tax of $0,$19,0, and $37	0	54	0	109
Gain on cash flow hedge, net of tax of $774, $32, $2,641, and $303	2,255	96	7,684	892
Total other comprehensive income	2,255	150	7,684	1,001
Comprehensive income (loss)	7,318	(5,021)	32,667	5,413
Comprehensive income attributable to noncontrolling interest	65	27	93	57
Comprehensive income (loss) attributable to Agiliti, Inc. and Subsidiaries	$ 7,253	$ (5,048)	$ 32,574	$ 5,356

XML

Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Comprehensive Income [Abstract]
Gain on minimum pension liability, tax	$ 0	$ 19	$ 0	$ 37
Gain on cash flow hedge, tax	$ 774	$ 32	$ 2,641	$ 303

XML

Consolidated Statements of Equity - USD ($) $ in Thousands	Total	Total Agiliti, Inc. and Subsidiaries	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income	Noncontrolling Interests
Beginning balance at Dec. 31, 2020	$ 441,945	$ 441,801	$ 10	$ 513,902	$ (68,492)	$ (3,619)	$ 144
Increase (Decrease) in Equity
Net income (loss)	4,412	4,355			4,355		57
Other comprehensive income	1,001	1,001				1,001
Share-based compensation expense	5,682	5,682		5,682
Stock options exercised	373	373		373
Issuance of common stock	412,741	412,741	3	412,738
Stock issuance costs	(4,084)	(4,084)		(4,084)
Dividend forfeited, net of payable	12	12		12
Cash distributions to noncontrolling interests	(83)						(83)
Ending balance at Jun. 30, 2021	861,999	861,881	13	928,623	(64,137)	(2,618)	118
Beginning balance at Mar. 31, 2021	466,053	465,929	10	527,626	(58,939)	(2,768)	124
Increase (Decrease) in Equity
Net income (loss)	(5,171)	(5,198)			(5,198)		27
Other comprehensive income	150	150				150
Share-based compensation expense	3,270	3,270		3,270
Stock options exercised	373	373		373
Issuance of common stock	401,441	401,441	3	401,438
Stock issuance costs	(4,084)	(4,084)		(4,084)
Cash distributions to noncontrolling interests	(33)						(33)
Ending balance at Jun. 30, 2021	861,999	861,881	13	928,623	(64,137)	(2,618)	118
Beginning balance at Dec. 31, 2021	896,072	895,952	13	938,888	(44,486)	1,537	120
Increase (Decrease) in Equity
Net income (loss)	24,983	24,890			24,890		93
Other comprehensive income	7,684	7,684				7,684
Proceeds from issuance of common stock	2,159	2,159		2,159
Share-based compensation expense	10,235	10,235		10,235
Stock options exercised	1,971	1,971		1,971
Shares forfeited for taxes	(14,367)	(14,367)		(14,367)
Dividend forfeited, net of payable	20	20		20
Cash distributions to noncontrolling interests	(47)						(47)
Ending balance at Jun. 30, 2022	928,710	928,544	13	938,906	(19,596)	9,221	166
Beginning balance at Mar. 31, 2022	926,018	925,902	13	943,517	(24,594)	6,966	116
Increase (Decrease) in Equity
Net income (loss)	5,063	4,998			4,998		65
Other comprehensive income	2,255	2,255				2,255
Share-based compensation expense	5,810	5,810		5,810
Stock options exercised	993	993		993
Shares forfeited for taxes	(13,575)	(13,575)		(13,575)
Dividend forfeited, net of payable	2	2		2
Cash distributions to noncontrolling interests	(15)						(15)
Ending balance at Jun. 30, 2022	$ 928,710	$ 928,544	$ 13	$ 938,906	$ (19,596)	$ 9,221	$ 166

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities:
Consolidated net income (loss)	$ 24,983	$ 4,412
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	46,412	52,884
Amortization	47,119	40,955
Loss on extinguishment of debt	1,418	7,716
Remeasurement of tax receivable agreement	0	4,345
Provision for credit losses	279	573
Provision for inventory obsolescence	568	2,226
Non-cash share-based compensation expense	10,206	5,766
Gain on sales and disposals of equipment	(256)	(840)
Deferred income taxes	(2,567)	4,694
Changes in operating assets and liabilities:
Accounts receivable	(8,833)	6,047
Inventories	(4,398)	(1,414)
Other operating assets	(579)	(412)
Accounts payable	8,702	5,352
Other operating liabilities	(21,916)	(24,796)
Net cash provided by operating activities	101,138	107,508
Cash flows from investing activities:
Medical equipment purchases	(22,823)	(16,269)
Property and office equipment purchases	(12,776)	(10,612)
Proceeds from disposition of property and equipment	1,763	2,013
Acquisitions, net of cash acquired	(3,125)	(450,198)
Net cash used in investing activities	(36,961)	(475,066)
Cash flows from financing activities:
Proceeds under debt arrangements	20,000	233,052
Payments under debt arrangements	(123,824)	(359,805)
Payments of principal under finance lease liability	(4,484)	(4,270)
Payments of deferred financing costs	0	(229)
Payments under tax receivable agreement	0	(748)
Distributions to noncontrolling interests	(47)	(83)
Proceeds from exercise of stock options	1,971	373
Dividend and equity distribution payment	(906)	(924)
Proceeds from issuance of common stock	0	401,441
Stock issuance costs	0	(4,084)
Shares forfeited for taxes	(14,367)	0
Payments of contingent consideration	(321)	0
Net cash (used in) provided by financing activities	(121,978)	264,723
Net change in cash and cash equivalents	(57,801)	(102,835)
Cash and cash equivalents at the beginning of period	74,325	206,505
Cash and cash equivalents at the end of period	16,524	103,670
Supplemental cash flow information:
Interest paid	19,164	31,017
Income taxes paid	$ 11,625	$ 1,541

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

Description of Business

Agiliti, Inc. and its consolidated subsidiaries (Federal Street Acquisition Corp (“FSAC”), Agiliti Holdco, Inc. and Agiliti Health, Inc. and subsidiaries (“we”, “our”, “us”, the “Company” or “Agiliti”)) is a nationwide provider of healthcare technology management and service solutions to the United States healthcare industry. Agiliti, Inc. owns 100% of FSAC. FSAC owns 100% of Agiliti Holdco, Inc. Agiliti Holdco, Inc. owns 100% of Agiliti Health, Inc. Agiliti Health, Inc. owns 100% of Agiliti Surgical, Inc., Agiliti Imaging, Inc., Agiliti Surgical Equipment Repair, Inc. and Sizewise Rentals, LLC. Agiliti Health, Inc. and its subsidiaries are the only entities with operations. All other entities have no material assets, liabilities, cash flows or operations other than their investment and ownership of Agiliti Health, Inc. and subsidiaries.

Initial Public Offering

On April 22, 2021, our registration statement on Form S-1 (File No. 333-253947) related to our initial public offering (“IPO”) was declared effective by the SEC, and our common stock began trading on the New York Stock Exchange (“NYSE”) on April 23, 2021. Our IPO closed on April 27, 2021.

Basis of Presentation

The interim consolidated financial statements have been prepared by the Company without audit. Certain disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the related notes thereto in the Company’s Annual report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (“SEC”) on March 8, 2022 (“2021 Form 10-K Report”).

The interim consolidated financial statements presented herein as of June 30, 2022, reflect, in the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations, comprehensive income, equity and cash flows for the periods presented. These adjustments are all of a normal, recurring nature. The results of operations for any interim period are not necessarily indicative of results for the full year.

We are required to make estimates and assumptions about future events in preparing consolidated financial statements in conformity with GAAP. These estimates and assumptions affect the amounts of assets, liabilities, revenue and expenses at the date of the unaudited consolidated financial statements. While we believe that our past estimates and assumptions have been materially accurate, our current estimates are subject to change if different assumptions as to the outcome of future events are made. We evaluate our estimates and judgments on an ongoing basis and predicate those estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances. We make adjustments to our assumptions and judgments when facts and circumstances dictate. Since future events and their effects cannot be determined with absolute certainty, actual results may differ from the estimates used in preparing the accompanying unaudited consolidated financial statements.

A description of our significant accounting policies is included in the audited consolidated financial statements. There have been no material changes to these policies for the quarter ended June 30, 2022.

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Standards Adopted

No recent accounting pronouncements have been issued or adopted since those discussed in the 2021 Form 10-K Report that are of material significance, or have potential material significance, to the Company.

Standards Not Yet Adopted

In October 2021, the FASB issued ASU No. 2021-08 Business Combinations (Topic 805)-Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 improves the accounting for

acquired revenue contracts with customers in a business combination. The amendments in this ASU require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. To achieve this, an acquirer may assess how the acquiree applied Topic 606 to determine what to record for the acquired revenue contracts. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption of the amendments is permitted. We will continue to evaluate ASU 2021-08, but do not expect the adoption will have a material impact on our consolidated financial statements.In June 2020, the FASB issued ASU No. 2020-04 Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The ASU may be applied through December 31, 2022. We will continue to evaluate the phase out of LIBOR but do not expect the adoption will have a material impact on our consolidated financial statements.

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Revenue Recognition

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

Customer arrangements typically have multiple performance obligations to provide equipment solutions, clinical engineering and/or onsite equipment managed services on a per use and/or over time basis. Contractual prices are established within our customer arrangements that are representative of stand-alone selling prices. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. The Company’s performance obligations that are satisfied at a point in time are recognized when the service is performed or equipment is delivered to the customer. For performance obligations satisfied over time, the Company uses a straight-line method to recognize revenue ratably over the contract period, as this coincides with the Company’s performance under the contract.

In the following table, revenue is disaggregated by service solution:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Equipment Solutions	$	106,852	$	72,140	$	228,707	$	154,611
Clinical Engineering	104,412		101,141		207,211		176,247
Onsite Managed Services	62,720		77,262		132,510		154,930
Total revenue	$	273,984	$	250,543	$	568,428	$	485,788

The Company capitalizes contract costs incurred in obtaining new contracts. The contract asset included in other long-term assets in the consolidated balance sheets as of June 30, 2022 and December 31, 2021 was $17.5 and $15.9 million, respectively. Capitalized costs are amortized over the expected life of the related contracts, which is estimated to be five years.

The Company had a balance of $9.2 and $5.8 million of deferred revenue as of June 30, 2022 and December 31, 2021, respectively. During the three and six months ended June 30, 2022, $0.5 and $1.5 million, respectively, of revenue was recognized that was included in deferred revenue at the beginning of the period.

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Acquisitions

6 Months Ended

Jun. 30, 2022

Business Combination and Asset Acquisition [Abstract]

Acquisitions

Acquisitions

During the three months ended June 30, 2022, we completed the acquisition of several small surgical equipment repair companies. These business combinations were immaterial in relation to our consolidated balance sheets and statements of operations and as a result, additional purchase accounting disclosures have been omitted.

On October 1, 2021, we completed a stock purchase agreement to purchase all of the outstanding capital stock of Sizewise Rentals, LLC (“Sizewise”), a privately held manufacturer and distributor of specialty patient handling equipment, for a total consideration of approximately $234.8 million (“Sizewise Acquisition”). The results of Sizewise’s operations have been included in the consolidated financial statements since October 1, 2021.

The following summarizes the fair values of assets acquired and liabilities assumed at the date of the Sizewise Acquisition within our consolidated balance sheet as of December 31, 2021:

(in thousands)
Cash	$	9,977
Accounts receivable	31,005
Inventories	27,911
Other current assets	2,968
Property and equipment	59,042
Goodwill	87,867
Operating lease right-of-use assets	16,754
Other intangibles	67,700
Other long-term assets	10,368
Accounts payable	(3,362)
Accrued compensation	(12,576)
Other accrued expenses	(4,525)
Operating lease liability	(16,953)
Other long-term liabilities	(9,924)
Deferred income taxes	(31,470)
Total purchase price	$	234,782

On March 19, 2021, we completed a stock purchase agreement to purchase all of the outstanding capital stock of Northfield Medical, Inc. (“Northfield”), a company specializing in the service and repair of medical equipment and instruments for a total consideration of approximately $472.3 million (“Northfield Acquisition”). The consideration consisted of $461.0 million of cash paid and $11.3 million in issuance of 752,328 shares of common stock. The results of Northfield’s operations have been included in the consolidated financial statements since March 19, 2021. During the year ended December 31, 2021, adjustments affecting the fair values of assets acquired and liabilities assumed decreased accounts receivable $0.2 million, increased goodwill $1.3 million, increased accounts payable $0.1 million, and increased deferred income taxes $1.0 million. All adjustments net to zero.

The following summarizes the fair values of assets acquired and liabilities assumed at the date of acquisition within our consolidated balance sheet as of December 31, 2021:

(in thousands)
Cash	$	10,767
Accounts receivable	16,786
Inventories	5,810
Other current assets	502
Property and equipment	11,713
Goodwill	306,678
Operating lease right-of-use assets	4,815
Other intangibles	183,700
Accounts payable	(7,412)
Accrued compensation	(7,948)
Other accrued expenses	(9,620)
Finance lease liability	(2,340)
Operating lease liability	(5,025)
Other long-term liabilities	(837)
Deferred income taxes	(35,324)
Total purchase price	$	472,265

The following unaudited pro forma consolidated results of operations assume the Sizewise and Northfield acquisitions had occurred on January 1, 2021. The unaudited pro forma consolidated financial information should not be relied upon as necessarily being indicative of the historical results that would have been obtained if the acquisitions had actually closed on that date, nor the results that may be obtained in the future:

	Three Months Ended June 30,				Six Months Ended June 30,
(unaudited, in thousands)	2022		2021		2022		2021
Revenue	$	273,984	$	291,436	$	568,428	$	592,966
Net income (loss) attributable to Agiliti, Inc. and Subsidiaries	4,998		(1,470)		24,890		20,049

Included in the determination of pro forma net income for the three and six months ended June 30, 2021 are pro forma charges for various purchase accounting adjustments. These pro forma adjustments included depreciation and amortization of assets acquired and interest expense on additional debt to finance the acquisition. Income taxes are provided at the estimated statutory rate. Revenue and net income for the three and six months ended June 30, 2022 are as reported.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 are summarized in the following tables by type of inputs applicable to the fair value measurements:

	Fair Value at June 30, 2022
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Deferred compensation assets	$	2,472	$	—	$	—	$	2,472
Interest rate swap	—		12,418		—		12,418
Total Assets	$	2,472	$	12,418	$	—	$	14,890
Liabilities:
Contingent consideration	$	—	$	—	$	3,630	$	3,630
Obligation under tax receivable agreement	—		—		40,403		40,403
Deferred compensation liabilities	2,472		—		—		2,472
Total Liabilities	$	2,472	$	—	$	44,033	$	46,505

	Fair Value at December 31, 2021
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Deferred compensation assets	$	2,452	$	—	$	—	$	2,452
Interest rate swap	—		2,093		—		2,093
Total Assets	$	2,452	$	2,093	$	—	$	4,545
Liabilities:
Contingent consideration	$	—	$	—	$	500	$	500
Obligation under tax receivable agreement	—		—		39,880		39,880
Deferred compensation liabilities	2,452		—		—		2,452
Total Liabilities	$	2,452	$	—	$	40,380	$	42,832

A description of the inputs used in the valuation of assets and liabilities is summarized as follows:

Level 1 — Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.

Level 2 — Inputs include directly or indirectly observable inputs other than Level 1 inputs such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that are considered in fair value determinations of the assets or liabilities, such as interest

rates and yield curves that are observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 — Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities or related observable inputs that can be corroborated at the measurement date. Measurements of non-exchange traded derivative contract assets and liabilities are primarily based on valuation models, discounted cash flow models or other valuation techniques that are believed to be used by market participants. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in pricing assets or liabilities.

The deferred compensation assets are held in mutual funds. The fair value of the deferred compensation assets and liabilities is based on the quoted market prices for the mutual funds and thus represents a Level 1 fair value measurement.

On January 4, 2019, we entered into a tax receivable agreement (“TRA”) with our former owners. The fair value of the obligation under the TRA was estimated using company specific assumptions that are not observable in the market and thus represents a Level 3 fair value measurement. Management’s estimate of the valuation of the obligation under the TRA is based on a Monte Carlo model which involves the use of projected cash flows of the Company, a discount rate, and historical deferred tax assets subject to the agreement. There were no remeasurement adjustments or payments made under the TRA during the three and six months ended June 30, 2022. We made a remeasurement adjustment of $4.3 million and payment of $0.7 million during the three and six months ended June 30, 2021.

In May 2020, we entered into an interest rate swap agreement to manage our interest rate exposure. For additional information on the interest swap agreement, see Note 8, Long-Term Debt. The carrying value of interest rate swap contracts is at fair value, which is determined based on current interest rate and forward interest rates as of the balance sheet date and is classified within Level 2.

In January 2022, a $0.5 million earn-out payment was made to the previous owners of a surgical laser equipment solutions company, in which we acquired assets on December 11, 2020, based on achievement of certain revenue results. During the three months ended June 30, 2022, we completed the acquisition of several small surgical equipment repair companies and as a result, accrued $3.6 million for future earn-out payments contingent upon achievement of certain revenue results.

Fair Value of Other Financial Instruments

The Company considers that the carrying amount of financial instruments, including accounts receivable, accounts payable and accrued liabilities approximates fair value due to their short maturities. The fair value of our outstanding First Lien Term Loan (as defined in Note 8, Long-Term Debt) as of June 30, 2022 and December 31, 2021, is based on the quoted market price for the same or similar issues of debt, which represents a Level 2 fair value measurement, is approximately:

	June 30, 2022				December 31, 2021
(in thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
First Lien Term Loan (1)	$	1,046,980	$	1,013,105	$	1,167,649	$	1,174,871

________________________

(1) The carrying value of the First Lien Term Loan is net of unamortized deferred financing costs of $9.2 and $10.4 million and unamortized debt discount of $3.0 and $5.0 million as of June 30, 2022 and December 31, 2021, respectively.

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Selected Financial Statement Information

6 Months Ended

Jun. 30, 2022

Selected Financial Statement Information

Selected Financial Statement Information

Selected Financial Statement Information

Property and Equipment

Our Property and Equipment is grouped into Medical Equipment and Property and Office Equipment. Depreciation of medical equipment is provided on the straight-line method over the equipment’s estimated useful life, generally four to seven years. The cost and accumulated depreciation of medical equipment retired or sold is eliminated from their respective accounts and the resulting gain or loss is recorded in cost of revenue in the period the asset is retired or sold. Property and office equipment includes property, leasehold improvements and office equipment. Depreciation and amortization of property and office equipment is provided on the straight-line method over the lesser of the remaining useful life or lease

term for leasehold improvements and three to ten years for office equipment. The cost and accumulated depreciation or amortization of property and equipment retired or sold is eliminated from their respective accounts and the resulting gain or loss is recorded in selling, general and administrative expense in the period the asset is retired or sold.

(in thousands)	June 30, 2022		December 31, 2021
Medical equipment	$	372,639	$	359,284
Less: Accumulated depreciation	(233,142)		(209,516)
Medical equipment, net	139,497		149,768
Leasehold improvements	45,938		39,026
Office equipment and vehicles	148,187		135,643
	194,125		174,669
Less: Accumulated depreciation	(82,132)		(66,067)
Property and office equipment, net	111,993		108,602
Total property and equipment, net	$	251,490	$	258,370

Depreciation expense recognized during the three months ended June 30, 2022 and 2021 was $23.9 and $26.7 million, respectively. Depreciation expense recognized during the six months ended June 30, 2022 and 2021 was $46.4 and $52.9 million, respectively.

There were no impairment charges on property and equipment during the three and six months ended June 30, 2022 and 2021.

Goodwill and Other Intangible Assets

Our goodwill as of June 30, 2022 and December 31, 2021 consists of the following:

(in thousands)
Balance at December 31, 2021	$	1,213,121
Acquisitions	5,208
Balance at June 30, 2022	$	1,218,329

There were no impairment losses recorded on goodwill through June 30, 2022.

Our other intangible assets as of June 30, 2022 and December 31, 2021 consist of the following:

	June 30, 2022
(in thousands)	Gross		Accumulated Amortization		Net
Finite-life intangibles
Customer relationship	$	756,889	$	(235,101)	$	521,788
Non-compete agreements	5,235		(4,511)		724
Trade names	7,806		(1,665)		6,141
Developed technology	2,300		(479)		1,821
Total other intangible assets	$	772,230	$	(241,756)	$	530,474

	December 31, 2021
(in thousands)	Gross		Accumulated Amortization		Net
Finite-life intangibles
Customer relationship	$	756,889	$	(194,312)	$	562,577
Non-compete agreements	14,613		(13,222)		1,391
Trade names	9,179		(2,230)		6,949
Developed technology	2,300		(58)		2,242
Total other intangible assets	$	782,981	$	(209,822)	$	573,159

Our other intangible assets are amortized over their estimated economic lives of three to fifteen years. The straight-line method of amortization generally reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained by the Company in each reporting period. However, for certain of our customer relationships, we use the sum-of-the-years-digits amortization method to more appropriately allocate the cost to earnings in proportion to the estimated amount of economic benefit obtained.

Total amortization expense related to intangible assets was $21.5 and $20.6 million for the three months ended June 30, 2022 and 2021, respectively, and $42.7 and $37.1 million for the six months ended June 30, 2022 and 2021, respectively. There were no impairment charges during the three and six months ended June 30, 2022 and 2021 with respect to other intangible assets.

The estimated future amortization expense for identifiable intangible assets during the remainder of 2022 and the next five years is as follows:

(in thousands)
Remainder of 2022	$	43,280
2023	79,108
2024	68,604
2025	62,242
2026	55,870
2027	49,516

Supplementary Cash Flow Information

Supplementary cash flow information is as follows:

	Six Months Ended June 30,
(in thousands)	2022		2021
Non-cash activities:
Property and equipment purchases included in accounts payable (at end of period)	$	4,976	$	2,672
Finance lease assets and liability additions	3,236		1,644
Operating lease right-of-use assets and operating lease liability additions	16,472		5,543
Issuance of common stock related to acquisition	—		11,300

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Share-Based Compensation

6 Months Ended

Jun. 30, 2022

Share-based Payment Arrangement [Abstract]

Share-Based Compensation

Share-Based CompensationThe 2018 Omnibus Incentive Plan (“2018 Plan”) provides for the issuance of 16.7 million nonqualified stock options, restricted stock units and performance restricted stock units to any of the Company’s executives, other key employees and certain non-employee directors. The stock options allow for the purchase of shares of common stock of the Company at prices equal to the stock’s fair market value at the date of grant. Options granted had a ten-year contractual term and vest over one to four years. The restricted stock units vest over one to four years. The performance restricted stock units vest over three years upon achievement of established performance targets as defined in the respective award agreements.

The shares issued to a grantee upon the exercise of such grantee’s options will be subject to certain restrictions on transferability as provided in the 2018 Plan. Grantees are subject to non-competition, non-solicitation and confidentiality requirements as set forth in their respective stock option grant agreements. Forfeited options, restricted stock units and performance restricted stock units are available for future issue.

We determine the fair value of stock options using the Black-Scholes option pricing model. The estimated fair value of options, including the effect of estimated forfeitures, is recognized as an expense on a straight-line basis over the options’ expected vesting periods.

In connection with our IPO, we granted certain of our employees, including our named executive officers, restricted stock units, performance restricted stock units, and stock options under the 2018 Plan with respect to approximately 1.6 million shares of the Company’s common stock.

A total of 2.0 million shares of our common stock are reserved for issuance under our Employee Stock Purchase Plan ("ESPP"). Employees are permitted to purchase the Company’s common stock at 85% of market value at the end of the six-month offering period ending on April 30 and October 31 each year. 0.1 million shares were issued under the ESPP as of June 30, 2022. The Company recognizes share-based compensation expense for the discount received by participating employees. The Company recognized $0.1 and $0.4 million share-based compensation expense for the discount received by participating employees for the three and six months ended June 30, 2022.

Remaining authorized options, restricted stock units and performance restricted stock units available for future issuance were 7.4 million shares at June 30, 2022.

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Long-Term Debt

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

Long-term debt consists of the following:

(in thousands)	June 30, 2022		December 31, 2021
Revolving Loan	$	20,000	$	—
First Lien Term Loan	1,059,248		1,183,071
Finance lease liability	25,285		26,621
	1,104,533		1,209,692
Less: unamortized deferred financing costs and debt discount	(13,782)		(17,190)
	1,090,751		1,192,502
Less: Current portion of long-term debt	(17,735)		(17,534)
Total long-term debt	$	1,073,016	$	1,174,968

We are party to a seven-year senior secured delayed draw term loan facility due January 2026 which, as amended, provides an aggregate principal amount of $1.285 billion in borrowing capacity (the “First Lien Term Loan”). We also have access to a senior secured revolving credit facility due January 2026 in an aggregate principal amount of $250 million (the “Revolving Loan”).

During the second quarter of fiscal 2022, we borrowed $20.0 million under our Revolving Loan and utilized the proceeds to prepay borrowings under the First Lien Term Loan. For the six months ended June 30, 2022, we prepaid $119.1 million of the borrowings under the First Lien Term Loan which resulted in a loss on extinguishment of $1.4 million.

Additional information regarding our indebtedness arrangements can be found within the notes to our consolidated financial statements in our most recently filed Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Interest Rate Swap. In May 2020, we entered into an interest rate swap agreement for a total notional amount of $500.0 million, which has the effect of converting a portion of our First Lien Term Loan to fixed interest rates. The effective date for the interest rate swap agreement was June 2020 and the expiration date is June 2023.

The interest rate swap agreement qualifies for cash flow hedge accounting under ASC Topic 815, “Derivatives and Hedging.” Both at inception and on an on-going basis, we must perform an effectiveness test. The fair value of the interest rate swap agreement at June 30, 2022 was $12.4 million all of which is included in other current assets on our consolidated balance sheet. The change in fair value was recorded as a component of accumulated other comprehensive loss on our

consolidated balance sheet, net of tax, since the instrument was determined to be an effective hedge at June 30, 2022. We have not recorded any amounts due to ineffectiveness for any periods presented.

As a result of our interest rate swap agreement, we expect the effective interest rate on $350.0 million and $150.0 million of our First Lien Term Loan to be 0.3396% and 0.3290%, respectively, plus the Applicable Margin through June 2023.

We were in compliance with all financial debt covenants for all periods presented.

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Leases

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Leases

Leases

We lease facilities under operating lease agreements, which include both monthly and longer-term arrangements. Our finance leases consist primarily of leased vehicles.

The lease assets and liabilities are as follows:

(in thousands)		June 30, 2022		December 31, 2021
Lease Assets	Classification
Operating lease assets	Operating lease right-of-use assets	$	85,669	$	80,676
Finance lease assets	Property and equipment (1)	25,266		26,098
Total leased assets		$	110,935	$	106,774
Lease Liabilities
Current:
Operating	Current portion of operating lease liability	$	23,198	$	22,826
Finance	Current portion of long-term debt	8,337		8,136
Noncurrent:
Operating	Operating lease liability, less current portion	73,122		63,241
Finance	Long-term debt, less current portion	16,948		18,485
Total lease liabilities		$	121,605	$	112,688

____________________

(1) Finance lease assets are recorded net of accumulated depreciation of $25.3 and $20.4 million as of June 30, 2022 and December 31, 2021, respectively.

The lease cost for the three and six months ended June 30, 2022 and 2021 was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Lease Cost
Finance lease cost:
Amortization of right-of-use assets	$	2,198	$	2,186	$	4,344	$	4,378
Interest on lease liabilities	191		196		383		378
Operating lease cost	7,221		4,794		14,496		9,100
Short-term lease cost	286		156		530		312
Variable lease cost	1,604		1,314		3,110		2,775
Total lease cost	$	11,500	$	8,646	$	22,863	$	16,943

The maturity of lease liabilities at June 30, 2022 was as follows:

(in thousands)	Operating Leases		Finance Leases		Total
2022 remaining	$	12,788	$	4,887	$	17,675
2023	23,749		4,069		27,818
2024	20,686		3,456		24,142
2025	16,825		2,884		19,709
2026	12,959		2,407		15,366
Thereafter	14,953		10,702		25,655
Total lease payments	$	101,960	$	28,405	$	130,365
Less: Interest	5,640		3,120		8,760
Present value of lease liabilities	$	96,320	$	25,285	$	121,605

The lease term and discount rate at June 30, 2022 were as follows:

	June 30, 2022
Lease Term and Discount Rate
Weighted-average remaining lease term (years)
Operating leases	5.1
Finance leases	2.2
Weighted-average discount rate
Operating leases	2.2	%
Finance leases	2.3	%

Other information related to cash paid related to lease liabilities and lease assets obtained for the six months ended June 30, 2022 and 2021 was as follows:

	Six Months Ended June 30,
(in thousands)	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for finance leases	$	383	$	378
Operating cash flows for operating leases	12,743		8,743
Financing cash flows for finance leases	4,484		4,270
Lease asset obtained in exchange for new finance lease liabilities	3,236		1,644
Lease asset obtained in exchange for new operating lease liabilities	16,472		5,543

Leases

Leases

We lease facilities under operating lease agreements, which include both monthly and longer-term arrangements. Our finance leases consist primarily of leased vehicles.

The lease assets and liabilities are as follows:

(in thousands)		June 30, 2022		December 31, 2021
Lease Assets	Classification
Operating lease assets	Operating lease right-of-use assets	$	85,669	$	80,676
Finance lease assets	Property and equipment (1)	25,266		26,098
Total leased assets		$	110,935	$	106,774
Lease Liabilities
Current:
Operating	Current portion of operating lease liability	$	23,198	$	22,826
Finance	Current portion of long-term debt	8,337		8,136
Noncurrent:
Operating	Operating lease liability, less current portion	73,122		63,241
Finance	Long-term debt, less current portion	16,948		18,485
Total lease liabilities		$	121,605	$	112,688

____________________

(1) Finance lease assets are recorded net of accumulated depreciation of $25.3 and $20.4 million as of June 30, 2022 and December 31, 2021, respectively.

The lease cost for the three and six months ended June 30, 2022 and 2021 was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Lease Cost
Finance lease cost:
Amortization of right-of-use assets	$	2,198	$	2,186	$	4,344	$	4,378
Interest on lease liabilities	191		196		383		378
Operating lease cost	7,221		4,794		14,496		9,100
Short-term lease cost	286		156		530		312
Variable lease cost	1,604		1,314		3,110		2,775
Total lease cost	$	11,500	$	8,646	$	22,863	$	16,943

The maturity of lease liabilities at June 30, 2022 was as follows:

(in thousands)	Operating Leases		Finance Leases		Total
2022 remaining	$	12,788	$	4,887	$	17,675
2023	23,749		4,069		27,818
2024	20,686		3,456		24,142
2025	16,825		2,884		19,709
2026	12,959		2,407		15,366
Thereafter	14,953		10,702		25,655
Total lease payments	$	101,960	$	28,405	$	130,365
Less: Interest	5,640		3,120		8,760
Present value of lease liabilities	$	96,320	$	25,285	$	121,605

The lease term and discount rate at June 30, 2022 were as follows:

	June 30, 2022
Lease Term and Discount Rate
Weighted-average remaining lease term (years)
Operating leases	5.1
Finance leases	2.2
Weighted-average discount rate
Operating leases	2.2	%
Finance leases	2.3	%

Other information related to cash paid related to lease liabilities and lease assets obtained for the six months ended June 30, 2022 and 2021 was as follows:

	Six Months Ended June 30,
(in thousands)	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for finance leases	$	383	$	378
Operating cash flows for operating leases	12,743		8,743
Financing cash flows for finance leases	4,484		4,270
Lease asset obtained in exchange for new finance lease liabilities	3,236		1,644
Lease asset obtained in exchange for new operating lease liabilities	16,472		5,543

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Dividend

6 Months Ended

Jun. 30, 2022

Dividends [Abstract]

Dividend

Dividend

In November 2019, the Company declared a $2.23 dividend per share that was paid to holders of common stock and is paid upon vesting to holders of restricted stock units and performance restricted stock units. An immaterial amount of dividends were paid during the three months ended June 30, 2022 and 2021. Dividends paid during both the six months ended June 30, 2022 and 2021 were $0.9 million.

Dividends payable was $0.3 million as of June 30, 2022, all of which was included in accounts payable, and $1.2 million as of December 31, 2021, of which $0.9 million was included in accounts payable and $0.3 million was included in other long-term liabilities.

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Commitments and Contingencies	6 Months Ended
	Jun. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and ContingenciesThe Company, in the ordinary course of business, is subject to liability claims related to employees and the equipment that it rents and services. Asserted claims are subject to many uncertainties and the outcome of individual matters is not predictable. For certain claims where the loss is probable, a provision is recorded based on the Company’s best estimate. While the ultimate resolution of these actions may have an impact on the Company’s financial results for a particular reporting period, management believes that any such resolution would not have a material adverse effect on the financial position, results of operations or cash flows of the Company and the chance of a negative outcome on outstanding litigation is considered remote.

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Related Party Transaction	6 Months Ended
	Jun. 30, 2022
Related Party Transactions [Abstract]
Related Party Transaction	Related Party TransactionSince January 2019, we have been controlled by THL Agiliti LLC, an affiliate of Thomas H. Lee Partners, L.P., our principal stockholder. On January 4, 2019, the Company entered into an advisory services agreement (the “Advisory Services Agreement”) with Agiliti Holdco, Inc., Agiliti Health, Inc. and THL Managers VIII, LLC (the “Advisor”). Pursuant to the Advisory Services Agreement, the Advisor provided management, consulting and other advisory services to the Company. In consideration for these services, the Company paid to the Advisor (i) a non-refundable periodic retainer fee in an aggregate amount per fiscal quarter equal to the greater of (a) $375,000 or (b) 1% of the consolidated Adjusted EBITDA (as defined in the Advisory Services Agreement) for the immediately preceding fiscal quarter or such other amount as may be mutually agreed, with the first such payment to be made on April 15, 2019, (ii) fees in amounts to be mutually agreed upon in connection with any financing or refinancing, dividend, recapitalization, acquisition, disposition and spin-off or split-off transaction, (iii) in the case of an initial public offering (“IPO”), in addition to the fees under clauses (i) and (ii), an amount equal to the net present value of the higher periodic fee that would have been payable from the date of such IPO until the scheduled termination date of the Advisory Services Agreement, and (iv) fees for other management, consulting and other advisory services to be discussed in good faith among the parties. The companies also paid expenses incurred by the Advisor, its consultants and certain other parties affiliated with Advisor. Total professional services fees incurred to the Advisor were $0 and $0.6 million for the three and six months ended June 30, 2021. The Advisory Services Agreement was terminated upon the completion of the IPO. In connection with the termination of the Advisory Services Agreement, we were required to pay to the Advisor a buyout fee of approximately $7.0 million, which was expensed immediately in the second quarter of 2021.

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Employee Benefit Plans

6 Months Ended

Jun. 30, 2022

Retirement Benefits [Abstract]

Employee Benefit Plans

Employee Benefit Plans

Pension plan benefits are to be paid to eligible employees after retirement based primarily on years of credited service and participants’ compensation. The Company uses a December 31 measurement date. Effective December 31, 2002, the Company froze the benefits under the pension plan.

The components of net periodic benefit cost are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Interest cost	$	213	$	196	$	424	$	393
Expected return on plan assets	(284)		(276)		(569)		(553)
Recognized net actuarial loss	—		73		—		146
Net periodic benefit cost	$	(71)	$	(7)	$	(145)	$	(14)

The Company made $0.2 million of contributions to the pension plan during the six months ended June 30, 2022. The Company expects to make additional contributions of approximately $0.5 million for the remainder of 2022.

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Income Taxes	6 Months Ended
	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesFor the three and six months ended June 30, 2022, the Company recorded income tax benefit of $1.7 million and tax expense of $5.2 million, respectively. For the three and six months ended June 30, 2021, the Company recorded income tax expense of $1.4 and $5.9 million, respectively. The income tax benefit for the three months ended June 30, 2022 was primarily due to benefits received from exercised stock options and vested stock compensation. The income tax expense for the six months ended June 30, 2022 was primarily due to the tax-effect of pre-tax income from operations plus addbacks for non-deductible expenses related to executive compensation disallowed under Internal Revenue Code Section 162(m) and partially offset by a benefit from stock options and stock compensation. The income tax expense for the three and six months ended June 30, 2021 is primarily due to the tax-effect of pre-tax income from operations plus addbacks for non-deductible transaction costs, nondeductible expenses related to executive compensation disallowed under Internal Revenue Code Section 162(m) and the remeasurement of the tax receivable agreement.

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Concentration	6 Months Ended
	Jun. 30, 2022
Risks and Uncertainties [Abstract]
Concentration	ConcentrationFor the three and six months ended June 30, 2022, respectively, approximately 10.2% and 10.9% of total revenue related to various contracts with the U.S. Department of Health and Human Services (“HHS”) and the Assistant Secretary of Preparedness and Response (“ASPR”).On February 28, 2022, the Company entered into a new 12-month sole source agreement (the “Agreement”) with HHS and ASPR to provide comprehensive ventilator and powered air purifying respirator (“PAPR”) systems management and maintenance services in connection with ongoing support and maintenance of the national stockpile. This Agreement replaces the Company’s prior agreements with HHS/ASPR that ran from July 21, 2020, to February 27, 2022, and is comprised of an initial 6-month base term, running from the period of February 28, 2022, to August 27, 2022, with a 6-month option term that will expire February 27, 2023.

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Earnings Per Share

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

The following is a reconciliation of the basic and diluted number of shares used in computing earnings per share:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Basic weighted average shares outstanding	132,556,645		122,908,065		131,856,267		111,071,756
Net effect of dilutive stock awards based upon the treasury stock method	6,140,561		—		6,076,279		7,689,081
Dilutive weighted average shares outstanding	138,697,206		122,908,065		137,932,546		118,760,837
Basic earnings (loss) per share	$	0.04	$	(0.04)	$	0.19	$	0.04
Diluted earnings (loss) per share	$	0.04	$	(0.04)	$	0.18	$	0.04
Anti-dilutive share-based awards excluded from the calculation of dilutive earnings per share	7,520		7,790,523		9,203		—

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Subsequent Events	6 Months Ended
	Jun. 30, 2022
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsThe term of the Company’s current Agreement with HHS/ASPR is intended to allow adequate time for the federal government to complete a longer-term agreement for comprehensive ventilator and PAPR systems management and maintenance services without a lapse in critical COVID-19 pandemic response needs. On August 5, 2022, the Company submitted its response to HHS/ASPR’s request for proposal in connection with this five-year agreement and is awaiting next steps in this regard.

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Recent Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Standard Adopted and Standards Not Yet Adopted

Standards Adopted

No recent accounting pronouncements have been issued or adopted since those discussed in the 2021 Form 10-K Report that are of material significance, or have potential material significance, to the Company.

Standards Not Yet Adopted

In October 2021, the FASB issued ASU No. 2021-08 Business Combinations (Topic 805)-Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 improves the accounting for

acquired revenue contracts with customers in a business combination. The amendments in this ASU require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. To achieve this, an acquirer may assess how the acquiree applied Topic 606 to determine what to record for the acquired revenue contracts. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption of the amendments is permitted. We will continue to evaluate ASU 2021-08, but do not expect the adoption will have a material impact on our consolidated financial statements.In June 2020, the FASB issued ASU No. 2020-04 Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The ASU may be applied through December 31, 2022. We will continue to evaluate the phase out of LIBOR but do not expect the adoption will have a material impact on our consolidated financial statements.

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Revenue Recognition (Tables)

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Summary of revenue disaggregated

In the following table, revenue is disaggregated by service solution:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Equipment Solutions	$	106,852	$	72,140	$	228,707	$	154,611
Clinical Engineering	104,412		101,141		207,211		176,247
Onsite Managed Services	62,720		77,262		132,510		154,930
Total revenue	$	273,984	$	250,543	$	568,428	$	485,788

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Acquisitions (Tables)

6 Months Ended

Jun. 30, 2022

Acquisitions

Summary of pro forma information

The following unaudited pro forma consolidated results of operations assume the Sizewise and Northfield acquisitions had occurred on January 1, 2021. The unaudited pro forma consolidated financial information should not be relied upon as necessarily being indicative of the historical results that would have been obtained if the acquisitions had actually closed on that date, nor the results that may be obtained in the future:

	Three Months Ended June 30,				Six Months Ended June 30,
(unaudited, in thousands)	2022		2021		2022		2021
Revenue	$	273,984	$	291,436	$	568,428	$	592,966
Net income (loss) attributable to Agiliti, Inc. and Subsidiaries	4,998		(1,470)		24,890		20,049

Sizewise Acquisition

Acquisitions

Schedule of the fair values of the assets acquired and liabilities assumed at the acquisition date

The following summarizes the fair values of assets acquired and liabilities assumed at the date of the Sizewise Acquisition within our consolidated balance sheet as of December 31, 2021:

(in thousands)
Cash	$	9,977
Accounts receivable	31,005
Inventories	27,911
Other current assets	2,968
Property and equipment	59,042
Goodwill	87,867
Operating lease right-of-use assets	16,754
Other intangibles	67,700
Other long-term assets	10,368
Accounts payable	(3,362)
Accrued compensation	(12,576)
Other accrued expenses	(4,525)
Operating lease liability	(16,953)
Other long-term liabilities	(9,924)
Deferred income taxes	(31,470)
Total purchase price	$	234,782

Northfield Acquisition

Acquisitions

Schedule of the fair values of the assets acquired and liabilities assumed at the acquisition date

The following summarizes the fair values of assets acquired and liabilities assumed at the date of acquisition within our consolidated balance sheet as of December 31, 2021:

(in thousands)
Cash	$	10,767
Accounts receivable	16,786
Inventories	5,810
Other current assets	502
Property and equipment	11,713
Goodwill	306,678
Operating lease right-of-use assets	4,815
Other intangibles	183,700
Accounts payable	(7,412)
Accrued compensation	(7,948)
Other accrued expenses	(9,620)
Finance lease liability	(2,340)
Operating lease liability	(5,025)
Other long-term liabilities	(837)
Deferred income taxes	(35,324)
Total purchase price	$	472,265

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of fair value of assets and liabilities measured on a recurring basis

Financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 are summarized in the following tables by type of inputs applicable to the fair value measurements:

	Fair Value at June 30, 2022
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Deferred compensation assets	$	2,472	$	—	$	—	$	2,472
Interest rate swap	—		12,418		—		12,418
Total Assets	$	2,472	$	12,418	$	—	$	14,890
Liabilities:
Contingent consideration	$	—	$	—	$	3,630	$	3,630
Obligation under tax receivable agreement	—		—		40,403		40,403
Deferred compensation liabilities	2,472		—		—		2,472
Total Liabilities	$	2,472	$	—	$	44,033	$	46,505

	Fair Value at December 31, 2021
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Deferred compensation assets	$	2,452	$	—	$	—	$	2,452
Interest rate swap	—		2,093		—		2,093
Total Assets	$	2,452	$	2,093	$	—	$	4,545
Liabilities:
Contingent consideration	$	—	$	—	$	500	$	500
Obligation under tax receivable agreement	—		—		39,880		39,880
Deferred compensation liabilities	2,452		—		—		2,452
Total Liabilities	$	2,452	$	—	$	40,380	$	42,832

Schedule of carrying value and fair value of long term debt

The fair value of our outstanding First Lien Term Loan (as defined in Note 8, Long-Term Debt) as of June 30, 2022 and December 31, 2021, is based on the quoted market price for the same or similar issues of debt, which represents a Level 2 fair value measurement, is approximately:

	June 30, 2022				December 31, 2021
(in thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
First Lien Term Loan (1)	$	1,046,980	$	1,013,105	$	1,167,649	$	1,174,871

________________________

(1) The carrying value of the First Lien Term Loan is net of unamortized deferred financing costs of $9.2 and $10.4 million and unamortized debt discount of $3.0 and $5.0 million as of June 30, 2022 and December 31, 2021, respectively.

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Selected Financial Statement Information (Tables)

6 Months Ended

Jun. 30, 2022

Selected Financial Statement Information

Schedule of property and equipment

(in thousands)	June 30, 2022		December 31, 2021
Medical equipment	$	372,639	$	359,284
Less: Accumulated depreciation	(233,142)		(209,516)
Medical equipment, net	139,497		149,768
Leasehold improvements	45,938		39,026
Office equipment and vehicles	148,187		135,643
	194,125		174,669
Less: Accumulated depreciation	(82,132)		(66,067)
Property and office equipment, net	111,993		108,602
Total property and equipment, net	$	251,490	$	258,370

Schedule of goodwill

Our goodwill as of June 30, 2022 and December 31, 2021 consists of the following:

(in thousands)
Balance at December 31, 2021	$	1,213,121
Acquisitions	5,208
Balance at June 30, 2022	$	1,218,329

Schedule of other intangible assets

Our other intangible assets as of June 30, 2022 and December 31, 2021 consist of the following:

	June 30, 2022
(in thousands)	Gross		Accumulated Amortization		Net
Finite-life intangibles
Customer relationship	$	756,889	$	(235,101)	$	521,788
Non-compete agreements	5,235		(4,511)		724
Trade names	7,806		(1,665)		6,141
Developed technology	2,300		(479)		1,821
Total other intangible assets	$	772,230	$	(241,756)	$	530,474

	December 31, 2021
(in thousands)	Gross		Accumulated Amortization		Net
Finite-life intangibles
Customer relationship	$	756,889	$	(194,312)	$	562,577
Non-compete agreements	14,613		(13,222)		1,391
Trade names	9,179		(2,230)		6,949
Developed technology	2,300		(58)		2,242
Total other intangible assets	$	782,981	$	(209,822)	$	573,159

Schedule of estimated future amortization expense for identifiable intangible assets

The estimated future amortization expense for identifiable intangible assets during the remainder of 2022 and the next five years is as follows:

(in thousands)
Remainder of 2022	$	43,280
2023	79,108
2024	68,604
2025	62,242
2026	55,870
2027	49,516

Summary of supplementary cash flow information

Supplementary cash flow information is as follows:

	Six Months Ended June 30,
(in thousands)	2022		2021
Non-cash activities:
Property and equipment purchases included in accounts payable (at end of period)	$	4,976	$	2,672
Finance lease assets and liability additions	3,236		1,644
Operating lease right-of-use assets and operating lease liability additions	16,472		5,543
Issuance of common stock related to acquisition	—		11,300

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Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Schedule of long-term debt

Long-term debt consists of the following:

(in thousands)	June 30, 2022		December 31, 2021
Revolving Loan	$	20,000	$	—
First Lien Term Loan	1,059,248		1,183,071
Finance lease liability	25,285		26,621
	1,104,533		1,209,692
Less: unamortized deferred financing costs and debt discount	(13,782)		(17,190)
	1,090,751		1,192,502
Less: Current portion of long-term debt	(17,735)		(17,534)
Total long-term debt	$	1,073,016	$	1,174,968

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Leases (Tables)

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Summary of lease assets and liabilities

The lease assets and liabilities are as follows:

(in thousands)		June 30, 2022		December 31, 2021
Lease Assets	Classification
Operating lease assets	Operating lease right-of-use assets	$	85,669	$	80,676
Finance lease assets	Property and equipment (1)	25,266		26,098
Total leased assets		$	110,935	$	106,774
Lease Liabilities
Current:
Operating	Current portion of operating lease liability	$	23,198	$	22,826
Finance	Current portion of long-term debt	8,337		8,136
Noncurrent:
Operating	Operating lease liability, less current portion	73,122		63,241
Finance	Long-term debt, less current portion	16,948		18,485
Total lease liabilities		$	121,605	$	112,688

____________________

(1) Finance lease assets are recorded net of accumulated depreciation of $25.3 and $20.4 million as of June 30, 2022 and December 31, 2021, respectively.

Summary of lease cost

The lease cost for the three and six months ended June 30, 2022 and 2021 was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Lease Cost
Finance lease cost:
Amortization of right-of-use assets	$	2,198	$	2,186	$	4,344	$	4,378
Interest on lease liabilities	191		196		383		378
Operating lease cost	7,221		4,794		14,496		9,100
Short-term lease cost	286		156		530		312
Variable lease cost	1,604		1,314		3,110		2,775
Total lease cost	$	11,500	$	8,646	$	22,863	$	16,943

Summary of maturity of lease liabilities

The maturity of lease liabilities at June 30, 2022 was as follows:

(in thousands)	Operating Leases		Finance Leases		Total
2022 remaining	$	12,788	$	4,887	$	17,675
2023	23,749		4,069		27,818
2024	20,686		3,456		24,142
2025	16,825		2,884		19,709
2026	12,959		2,407		15,366
Thereafter	14,953		10,702		25,655
Total lease payments	$	101,960	$	28,405	$	130,365
Less: Interest	5,640		3,120		8,760
Present value of lease liabilities	$	96,320	$	25,285	$	121,605

Summary of lease term and discount rate

The lease term and discount rate at June 30, 2022 were as follows:

	June 30, 2022
Lease Term and Discount Rate
Weighted-average remaining lease term (years)
Operating leases	5.1
Finance leases	2.2
Weighted-average discount rate
Operating leases	2.2	%
Finance leases	2.3	%

Summary of additional information of leases

Other information related to cash paid related to lease liabilities and lease assets obtained for the six months ended June 30, 2022 and 2021 was as follows:

	Six Months Ended June 30,
(in thousands)	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for finance leases	$	383	$	378
Operating cash flows for operating leases	12,743		8,743
Financing cash flows for finance leases	4,484		4,270
Lease asset obtained in exchange for new finance lease liabilities	3,236		1,644
Lease asset obtained in exchange for new operating lease liabilities	16,472		5,543

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Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2022

Retirement Benefits [Abstract]

Schedule of components of net periodic pension costs

The components of net periodic benefit cost are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Interest cost	$	213	$	196	$	424	$	393
Expected return on plan assets	(284)		(276)		(569)		(553)
Recognized net actuarial loss	—		73		—		146
Net periodic benefit cost	$	(71)	$	(7)	$	(145)	$	(14)

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Summary of earnings per share, basic and diluted

The following is a reconciliation of the basic and diluted number of shares used in computing earnings per share:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Basic weighted average shares outstanding	132,556,645		122,908,065		131,856,267		111,071,756
Net effect of dilutive stock awards based upon the treasury stock method	6,140,561		—		6,076,279		7,689,081
Dilutive weighted average shares outstanding	138,697,206		122,908,065		137,932,546		118,760,837
Basic earnings (loss) per share	$	0.04	$	(0.04)	$	0.19	$	0.04
Diluted earnings (loss) per share	$	0.04	$	(0.04)	$	0.18	$	0.04
Anti-dilutive share-based awards excluded from the calculation of dilutive earnings per share	7,520		7,790,523		9,203		—

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Basis of Presentation (Details)	Jun. 30, 2022
Federal Street Acquisition Corp | Agiliti, Inc.
Schedule of Equity Method Investments [Line Items]
Equity method investment, ownership percentage	100.00%
Agiliti Holdco Inc | Federal Street Acquisition Corp
Schedule of Equity Method Investments [Line Items]
Equity method investment, ownership percentage	100.00%
Agiliti Health Inc | Agiliti Holdco Inc
Schedule of Equity Method Investments [Line Items]
Equity method investment, ownership percentage	100.00%
Agiliti Surgical Inc., Agiliti Imaging, Inc. Northfield Medical, Inc. and Sizewise Rentals, LLC | Agiliti Health Inc
Schedule of Equity Method Investments [Line Items]
Equity method investment, ownership percentage	100.00%

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Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Revenues by service solution
Total revenue	$ 273,984	$ 250,543	$ 568,428	$ 485,788
Contract asset	$ 17,500		$ 17,500		$ 15,900
Capitalized costs amortization period	5 years		5 years		5 years
Deferred revenue	$ 9,207		$ 9,207		$ 5,808
Deferred revenue recognized	500		1,500
Equipment Solutions
Revenues by service solution
Total revenue	106,852	72,140	228,707	154,611
Clinical Engineering
Revenues by service solution
Total revenue	104,412	101,141	207,211	176,247
Onsite Managed Services
Revenues by service solution
Total revenue	$ 62,720	$ 77,262	$ 132,510	$ 154,930

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Acquisitions - Narrative (Details) - USD ($) $ in Millions			12 Months Ended
	Oct. 01, 2021	Mar. 19, 2021	Dec. 31, 2021
Sizewise Acquisition
Acquisitions
Total purchase price	$ 234.8
Northfield Acquisition
Acquisitions
Total purchase price		$ 472.3
Cash paid		461.0
Business combination, consideration through equity, value		$ 11.3
Business combination, consideration through equity, shares issued (in shares)		752,328
Decrease to accounts receivable			$ 0.2
Increase to goodwill			1.3
Increase to accounts payable			0.1
Increase to deferred income taxes			$ 1.0

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Acquisitions - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Acquisitions
Goodwill	$ 1,218,329	$ 1,213,121
Sizewise Acquisition
Acquisitions
Cash		9,977
Accounts receivable		31,005
Inventories		27,911
Other current assets		2,968
Property and equipment		59,042
Goodwill		87,867
Operating lease right-of-use assets		16,754
Other intangibles		67,700
Other long-term assets		10,368
Accounts payable		(3,362)
Accrued compensation		(12,576)
Other accrued expenses		(4,525)
Operating lease liability		(16,953)
Other long-term liabilities		(9,924)
Deferred income taxes		(31,470)
Total purchase price		234,782
Northfield Acquisition
Acquisitions
Cash		10,767
Accounts receivable		16,786
Inventories		5,810
Other current assets		502
Property and equipment		11,713
Goodwill		306,678
Operating lease right-of-use assets		4,815
Other intangibles		183,700
Accounts payable		(7,412)
Accrued compensation		(7,948)
Other accrued expenses		(9,620)
Finance lease liability		(2,340)
Operating lease liability		(5,025)
Other long-term liabilities		(837)
Deferred income taxes		(35,324)
Total purchase price		$ 472,265

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Acquisitions - Pro Forma Consolidated Results of Operations (Details) - Northfield Acquisition - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Acquisitions
Revenue	$ 273,984	$ 291,436	$ 568,428	$ 592,966
Net income (loss) attributable to Agiliti, Inc. and Subsidiaries	$ 4,998	$ (1,470)	$ 24,890	$ 20,049

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Fair Value Measurements - Schedule of fair value of assets and liabilities measured on a recurring basis (Details) - Fair Value, Recurring - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Assets:
Deferred compensation assets	$ 2,472	$ 2,452
Interest rate swap	12,418	2,093
Total Assets	14,890	4,545
Liabilities:
Contingent consideration	3,630	500
Obligation under tax receivable agreement	40,403	39,880
Deferred compensation liabilities	2,472	2,452
Total Liabilities	46,505	42,832
Level 1
Assets:
Deferred compensation assets	2,472	2,452
Interest rate swap	0	0
Total Assets	2,472	2,452
Liabilities:
Contingent consideration	0	0
Obligation under tax receivable agreement	0	0
Deferred compensation liabilities	2,472	2,452
Total Liabilities	2,472	2,452
Level 2
Assets:
Deferred compensation assets	0	0
Interest rate swap	12,418	2,093
Total Assets	12,418	2,093
Liabilities:
Contingent consideration	0	0
Obligation under tax receivable agreement	0	0
Deferred compensation liabilities	0	0
Total Liabilities	0	0
Level 3
Assets:
Deferred compensation assets	0	0
Interest rate swap	0	0
Total Assets	0	0
Liabilities:
Contingent consideration	3,630	500
Obligation under tax receivable agreement	40,403	39,880
Deferred compensation liabilities	0	0
Total Liabilities	$ 44,033	$ 40,380

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Fair Value Measurements - Additional Information (Details) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	Jan. 31, 2022	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Fair value measurements
Increase in liability due to remeasurement adjustment		$ 0	$ 4,300,000	$ 0	$ 4,300,000
Payments under tax receivable agreement		$ 0	$ 700,000	$ 0	$ 700,000
Surgical laser equipment service provider
Fair value measurements
Earn out payment	$ 500,000

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Fair Value Measurements - Schedule of carrying value and fair value of long term debt (Details) - First Lien Term Loan - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Long-Term Debt
Carrying Value	$ 1,046,980	$ 1,167,649
Fair Value	1,013,105	1,174,871
Unamortized deferred financing costs	9,200	10,400
Unamortized debt discount	$ 3,000	$ 5,000

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Selected Financial Statement Information - Property and equipment (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Property and Equipment
Medical equipment	$ 372,639,000		$ 372,639,000		$ 359,284,000
Less: Accumulated depreciation	(233,142,000)		(233,142,000)		(209,516,000)
Medical equipment, net	139,497,000		139,497,000		149,768,000
Property and office equipment	194,125,000		194,125,000		174,669,000
Less: Accumulated depreciation	(82,132,000)		(82,132,000)		(66,067,000)
Property and office equipment, net	111,993,000		111,993,000		108,602,000
Total property and equipment, net	251,490,000		251,490,000		258,370,000
Depreciation	23,900,000	$ 26,700,000	46,412,000	$ 52,884,000
Impairment charges on property and equipment	0	$ 0	$ 0	$ 0
Medical Equipment | Maximum
Property and Equipment
Estimated useful life			7 years
Medical Equipment | Minimum
Property and Equipment
Estimated useful life			4 years
Office Equipment | Maximum
Property and Equipment
Estimated useful life			10 years
Office Equipment | Minimum
Property and Equipment
Estimated useful life			3 years
Leasehold improvements
Property and Equipment
Property and office equipment	45,938,000		$ 45,938,000		39,026,000
Office equipment and vehicles
Property and Equipment
Property and office equipment	$ 148,187,000		$ 148,187,000		$ 135,643,000

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Selected Financial Statement Information - Goodwill and Other Intangible Assets (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Goodwill
Balance at the beginning of the period			$ 1,213,121,000
Acquisitions			5,208,000
Balance at the end of the period	$ 1,218,329,000		1,218,329,000
Impairment, goodwill			0
Other intangible assets
Gross	772,230,000		772,230,000		$ 782,981,000
Accumulated Amortization	(241,756,000)		(241,756,000)		(209,822,000)
Net	530,474,000		530,474,000		573,159,000
Total amortization expense	21,500,000	$ 20,600,000	42,700,000	$ 37,100,000
Intangible asset impairment charge	0	$ 0	$ 0	$ 0
Maximum
Other intangible assets
Estimated remaining useful life			15 years
Minimum
Other intangible assets
Estimated remaining useful life			3 years
Customer relationship
Other intangible assets
Gross	756,889,000		$ 756,889,000		756,889,000
Accumulated Amortization	(235,101,000)		(235,101,000)		(194,312,000)
Net	521,788,000		521,788,000		562,577,000
Non-compete agreements
Other intangible assets
Gross	5,235,000		5,235,000		14,613,000
Accumulated Amortization	(4,511,000)		(4,511,000)		(13,222,000)
Net	724,000		724,000		1,391,000
Trade names
Other intangible assets
Gross	7,806,000		7,806,000		9,179,000
Accumulated Amortization	(1,665,000)		(1,665,000)		(2,230,000)
Net	6,141,000		6,141,000		6,949,000
Developed technology
Other intangible assets
Gross	2,300,000		2,300,000		2,300,000
Accumulated Amortization	(479,000)		(479,000)		(58,000)
Net	$ 1,821,000		$ 1,821,000		$ 2,242,000

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Selected Financial Statement Information - Future Estimated Amortization Expense (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Future estimation amortization expense
Remainder of 2022	$ 43,280
2023	79,108
2024	68,604
2025	62,242
2026	55,870
2027	$ 49,516

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Selected Financial Statement Information - Summary of Supplementary Cash Flow Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Selected Financial Statement Information
Property and equipment purchases included in accounts payable (at end of period)	$ 4,976	$ 2,672
Finance lease assets and liability additions	3,236	1,644
Operating lease right-of-use assets and operating lease liability additions	16,472	5,543
Issuance of common stock related to acquisition	$ 0	$ 11,300

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Share-Based Compensation - Narrative (Details) - USD ($) $ in Millions		3 Months Ended	6 Months Ended
	Apr. 27, 2021	Jun. 30, 2022	Jun. 30, 2022
Stock-based compensation
Number of stock, granted (in shares)	1,600,000
2018 Omnibus Incentive Plan
Stock-based compensation
Shares authorized under the plan (in shares)		16,700,000	16,700,000
Share-based compensation arrangement by share-based payment award, options, granted contractual term			10 years
Common shares reserved for future issuance (in shares)		7,400,000	7,400,000
Employee Stock Purchase Plan ("ESPP")
Stock-based compensation
Common shares reserved for future issuance (in shares)	2,000,000
Shares issued under ESPP (in shares)			100,000
Non-cash share-based compensation expense		$ 0.1	$ 0.4
Share-based Payment Arrangement, Option
Stock-based compensation
Percentage of shares to be purchased at market value	85.00%
Share-based Payment Arrangement, Option | 2018 Omnibus Incentive Plan | Maximum
Stock-based compensation
Award vesting period			4 years
Share-based Payment Arrangement, Option | 2018 Omnibus Incentive Plan | Minimum
Stock-based compensation
Award vesting period			1 year
Restricted Stock Units (RSUs) | 2018 Omnibus Incentive Plan | Maximum
Stock-based compensation
Award vesting period			4 years
Restricted Stock Units (RSUs) | 2018 Omnibus Incentive Plan | Minimum
Stock-based compensation
Award vesting period			1 year
Performance Restricted Stock Units | 2018 Omnibus Incentive Plan
Stock-based compensation
Award vesting period			3 years

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Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Long-Term Debt
Long-term debt, gross	$ 1,104,533	$ 1,209,692
Less: unamortized deferred financing costs and debt discount	(13,782)	(17,190)
Long-term debt	1,090,751	1,192,502
Less: Current portion of long-term debt	(17,735)	(17,534)
Total long-term debt	1,073,016	1,174,968
Revolving Loan
Long-Term Debt
Long-term debt, gross	20,000	0
First Lien Term Loan
Long-Term Debt
Long-term debt, gross	1,059,248	1,183,071
Finance Lease Liability
Long-Term Debt
Long-term debt, gross	$ 25,285	$ 26,621

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Long-Term Debt (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	May 31, 2020
Long-Term Debt
Proceeds under debt arrangements			$ 20,000	$ 233,052
Payments under debt arrangements			123,824	359,805
Loss on extinguishment of debt	$ 1,418	$ 10,116	1,418	$ 10,116
Interest Rate Swap
Long-Term Debt
Aggregate outstanding principal amount					$ 500,000
Interest Rate Swap | Other accrued expenses
Long-Term Debt
Interest rate swap	12,400		$ 12,400
First Lien Term Loan
Long-Term Debt
Debt instrument, term			7 years
Aggregate outstanding principal amount	1,285,000		$ 1,285,000
Payments under debt arrangements			119,100
Loss on extinguishment of debt			1,400
First Lien Term Loan | Interest Rate Swap | Debt One
Long-Term Debt
Aggregate outstanding principal amount	$ 350,000		$ 350,000
Interest rate at period end	0.3396%		0.3396%
First Lien Term Loan | Interest Rate Swap | Debt Two
Long-Term Debt
Aggregate outstanding principal amount	$ 150,000		$ 150,000
Interest rate at period end	0.329%		0.329%
Revolving Credit Facility | Revolving Loan
Long-Term Debt
Line of credit facility, maximum borrowing capacity	$ 250,000		$ 250,000
Proceeds under debt arrangements	$ 20,000

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Leases - Summary of lease assets and liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Lease Assets
Operating lease right-of-use assets	$ 85,669	$ 80,676
Finance lease assets	$ 25,266	$ 26,098
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Property and equipment, net	Property and equipment, net
Total leased assets	$ 110,935	$ 106,774
Current:
Operating	23,198	22,826
Finance	$ 8,337	$ 8,136
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Current portion of long-term debt	Current portion of long-term debt
Noncurrent:
Operating	$ 73,122	$ 63,241
Finance	$ 16,948	$ 18,485
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Long-term debt, less current portion	Long-term debt, less current portion
Total lease liabilities	$ 121,605	$ 112,688

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Leases - Accumulated depreciation (Details) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Leases [Abstract]
Finance lease assets, accumulated depreciation	$ 25.3	$ 20.4

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Leases - Summary of lease cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Leases [Abstract]
Amortization of right-of-use assets	$ 2,198	$ 2,186	$ 4,344	$ 4,378
Interest on lease liabilities	191	196	383	378
Operating lease cost	7,221	4,794	14,496	9,100
Short-term lease cost	286	156	530	312
Variable lease cost	1,604	1,314	3,110	2,775
Total lease cost	$ 11,500	$ 8,646	$ 22,863	$ 16,943

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Leases - Summary of maturity of lease liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Operating Leases
2022 remaining	$ 12,788
2023	23,749
2024	20,686
2025	16,825
2026	12,959
Thereafter	14,953
Total lease payments	101,960
Less: Interest	5,640
Present value of lease liabilities	96,320
Finance Leases
2022 remaining	4,887
2023	4,069
2024	3,456
2025	2,884
2026	2,407
Thereafter	10,702
Total lease payments	28,405
Less: Interest	3,120
Present value of lease liabilities	25,285
2022 remaining	17,675
2023	27,818
2024	24,142
2025	19,709
2026	15,366
Thereafter	25,655
Total lease payments	130,365
Less: Interest	8,760
Total lease liabilities	$ 121,605	$ 112,688

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Leases - Summary of lease term and discount rate (Details)	Jun. 30, 2022
Weighted-average remaining lease term (years)
Operating leases	5 years 1 month 6 days
Finance leases	2 years 2 months 12 days
Weighted-average discount rate
Operating leases	2.20%
Finance leases	2.30%

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Leases - Summary of additional information of leases (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Leases [Abstract]
Operating cash flows for finance leases	$ 383	$ 378
Operating cash flows for operating leases	12,743	8,743
Financing cash flows for finance leases	4,484	4,270
Lease asset obtained in exchange for new finance lease liabilities	3,236	1,644
Lease asset obtained in exchange for new operating lease liabilities	$ 16,472	$ 5,543

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Dividend (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021	Nov. 30, 2019
Dividends Payable [Line Items]
Dividends payable, current	$ 300,000		$ 300,000
Dividend payable, current and noncurrent					$ 1,200,000
Accounts Payable
Dividends Payable [Line Items]
Dividend payable, current and noncurrent					900,000
Other Noncurrent Liabilities
Dividends Payable [Line Items]
Dividend payable, current and noncurrent					$ 300,000
Dividend Paid
Dividends Payable [Line Items]
Dividend amount	$ 0	$ 0	$ 900,000	$ 900,000
Restricted stock unit and Performance Restricted Stock Unit Holders
Dividends Payable [Line Items]
Dividend payable amount (in dollars per share)						$ 2.23

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Related Party Transaction (Details) - USD ($) $ in Thousands		3 Months Ended	6 Months Ended
	Jan. 04, 2019	Jun. 30, 2021	Jun. 30, 2021
Related Party Transaction
Buyout fee		$ 7,000
Advisory Services Agreement | Professional Service Fee
Related Party Transaction
Professional fees incurred		$ 0	$ 600
Minimum | Advisory Services Agreement
Related Party Transaction
Related party transaction retainer fees for services specified amount	$ 375
Related party transaction retainer fees for services as percentage of adjusted EBITDA	1.00%

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Employee Benefit Plans (Details) - Pension Plan - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Net Periodic Benefit Cost
Interest cost	$ 213	$ 196	$ 424	$ 393
Expected return on plan assets	(284)	(276)	(569)	(553)
Recognized net actuarial loss	0	73	0	146
Net periodic benefit cost	(71)	$ (7)	(145)	$ (14)
Contributions
Employer contribution	200		200
Expected contribution for the remaining of 2022	$ 500		$ 500

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ (1,698)	$ 1,394	$ 5,207	$ 5,890

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Concentration (Details)		3 Months Ended	6 Months Ended
	Feb. 28, 2022	Jun. 30, 2022	Jun. 30, 2022
Sole Source Agreement | Health and Human Services And Assistant Secretary of Preparedness and Response
Concentration
Term of agreement	12 months
Initial base term	6 months
Option term	6 months
Sales | US Department Of Health and Human Services | Geographic Concentration Risk
Concentration
Concentration risk (as a percent)		10.20%	10.90%

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Earnings Per Share - Summary of Earnings Per Share, Basic and Diluted (Details) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Earnings Per Share [Abstract]
Basic weighted average shares outstanding (in shares)	132,556,645	122,908,065	131,856,267	111,071,756
Net effect of dilutive stock awards based upon the treasury stock method (in shares)	6,140,561	0	6,076,279	7,689,081
Dilutive weighted average shares outstanding (in shares)	138,697,206	122,908,065	137,932,546	118,760,837
Basic earnings (loss) per share (in dollars per share)	$ 40,000.00	$ (0.04)	$ 190,000	$ 0.04
Diluted earnings (loss) per share (in dollars per share)	$ 40,000.00	$ (0.04)	$ 180,000	$ 0.04
Anti-dilutive share-based awards excluded from the calculation of dilutive earnings per share (in shares)	7,520	7,790,523	9,203	0

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Subsequent Events (Details)	Aug. 05, 2022
Subsequent Event
Subsequent Event [Line Items]
Duration of contract	5 years