EX-99.1 2 agti-20221110x8kex991.htm EX-99.1 Document

Exhibit 99.1
AGILITI ANNOUNCES FINANCIAL RESULTS FOR THIRD QUARTER 2022
Minneapolis, Minn.--(BUSINESS WIRE)— November 10, 2022 – Agiliti Inc. (NYSE: AGTI) (“Agiliti”), a nationwide provider of healthcare technology management and service solutions to the United States healthcare industry, today announced its financial results for the quarter ended September 30, 2022, and revised its full-year financial guidance.
Third Quarter 2022 Highlights
•Revenue growth of 3 percent to $271 million
•Net income of $2.0 million, down $7.7 million from the prior year period; diluted income per share of $0.01, down $0.06 per share from the prior year period
•Adjusted EBITDA1 of $66.5 million, down $15.5 million compared to the prior year period; Adjusted Earnings Per Share1 of $0.19, down $0.04 compared to the prior year period
•Total debt of $1.07 billion; Net debt1 of $1.04 billion; and, Net Leverage ratio1 of 3.3x

“Our results for the third quarter met our expectations and reflect our continued, organic growth momentum,” said Tom Leonard, CEO of Agiliti. “Our team continues to power our progress by focusing on our customers’ evolving needs and delivering some of the most significant new business deals in the company’s history. While we are encouraged by these positive developments, we are taking a more conservative view on the balance of the year as we manage through short-term headwinds related to the delayed HHS contract and the onboarding of a higher proportion of larger-scale contracts. Our long-term growth strategy remains intact, and we remain well positioned to weather any macro uncertainty ahead of us.”
Third Quarter 2022 Financial Results
Total revenue for the three months ended September 30, 2022, was $271.2 million, representing a 3.3 percent increase from total revenue of $262.4 million for the same period of 2021. Total revenue for the nine months ended September 30, 2022, was $839.6 million, representing a 12.2 percent increase from total revenue of $748.2 million for the same period of 2021.
Net income for the three months ended September 30, 2022, was $2.0 million, a $7.7 million decrease from the same period of 2021. Net income for the nine months ended September 30, 2022, was $26.8 million, a $12.8 million increase from net income of $14.0 million for the same period of 2021.
Adjusted EBITDA1 for the three months ended September 30, 2022, was $66.5 million, a 18.9 percent decrease from Adjusted EBITDA1 of $81.9 million for the same period of 2021. Adjusted EBITDA1 for the nine months ended September 30, 2022, was $225.2 million, a 8.4 percent decrease from Adjusted EBITDA1 of $245.8 million for the same period of 2021.
2022 Financial Guidance
The company revises its guidance for 2022 as follows:
•Revenue of $1.11 - $1.12 billion
•Adjusted EBITDA of $290-300 million2
•Adjusted earnings per share of $0.83 – $0.88 per share2
•Capex investment expected in the range of $75 to $85 million
_________________________
1Non-GAAP Measures. See further discussion below.
2With regard to the non-GAAP Adjusted EBITDA guidance and adjusted earnings per share guidance provided above, a reconciliation to GAAP net income has not been provided as the quantification of certain items included in the calculation of GAAP net income cannot be calculated or predicted at this time without unreasonable efforts. For example, the non-GAAP adjustment for stock-based compensation expense requires additional inputs such as number of shares granted and market price that are not currently ascertainable, and the non-GAAP adjustment for certain reserves and expenses depends on the timing and magnitude of these expenses and cannot be accurately


forecasted. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could have a potentially unpredictable, and potentially significant, impact on its future GAAP financial results. See further discussion below regarding historical Adjusted EBITDA and historical adjusted earnings per share.
Conference Call Information
Agiliti will hold a conference call to discuss its third quarter 2022 results on Thursday, November 10, at 5 p.m. Eastern Time (4 p.m. Central Time).
The conference call can be accessed live over the phone by dialing 1-877-344-3030 or for international callers, 1-646-307-1984. A replay will be available two hours after the call and can be accessed by dialing 1-800-770-2030, or for international callers, 1-647-362-9199. The passcode for the live call and the replay is 8853057. The replay will be available until November 17, 2022.
Interested investors and other parties may also listen to a simultaneous webcast of the conference call by visiting the Agiliti Investor Relations site at https://investors.agilitihealth.com. The online replay will be available for a limited time shortly following the call.
About Agiliti
Agiliti is an essential service provider to the U.S. healthcare industry with solutions that help support a more efficient, safe and sustainable healthcare delivery system. Agiliti serves more than 9,000 national, regional and local acute care and alternate site providers across the U.S. For more than eight decades, Agiliti has delivered medical equipment management and service solutions that help healthcare providers reduce costs, increase operating efficiencies and support optimal patient outcomes.
CONTACT:
Kate Kaiser
Corporate Communication and Investor Relations
kate.kaiser@agilitihealth.com
Forward-Looking Statements
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release are forward-looking in time, including financial outlook and other preliminary results, and involve risks and uncertainties. The following factors, among others, could adversely affect our business, operations and financial condition causing our actual results to differ materially from those expressed in any forward-looking statements: our history of net losses and substantial interest expense; our need for substantial cash to operate and expand our business as planned; our substantial outstanding debt and debt service obligations; restrictions imposed by the terms of our debt; a decrease in the number of patients our customers are serving; our ability to effect change in the manner in which health care providers traditionally procure medical equipment; the absence of long-term commitments with customers including our agreement with HHS/ASPR; our ability to renew contracts with group purchasing organizations and integrated delivery networks; changes in reimbursement rates and policies by third-party payors; the impact of health care reform initiatives; the impact of significant regulation of the health care industry and the need to comply with those regulations; the effect of prolonged negative changes in domestic and global economic conditions; difficulties or delays in our continued expansion into certain of our businesses/geographic markets and developments of new businesses/geographic markets; additional credit risks in increasing business with home care providers and nursing homes, impacts of equipment product recalls or obsolescence; increases in vendor costs that cannot be passed through to our customers; and other Risk Factors as detailed in our annual report on Form 10-K.


Agiliti, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except share and per share information)
(unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Revenue$271,185 $262,424 $839,613 $748,212 
Cost of revenue169,582 158,990 516,218 444,346 
Gross margin101,603 103,434 323,395 303,866 
Selling, general and administrative expense86,044 75,052 254,303 225,334 
Operating income15,559 28,382 69,092 78,532 
Loss on extinguishment of debt— — 1,418 10,116 
Interest expense12,531 10,711 34,456 40,444 
Tax indemnification expense11,918 — 11,918 — 
Income (loss) before income taxes and noncontrolling interest(8,890)17,671 21,300 27,972 
Income tax (benefit) expense(10,879)7,943 (5,672)13,832 
Consolidated net income1,989 9,728 26,972 14,140 
Net income attributable to noncontrolling interest38 60 131 117 
Net income attributable to Agiliti, Inc. and Subsidiaries $1,951 $9,668 $26,841 $14,023 
Basic income per share$0.01 $0.07 $0.20 $0.12 
Diluted income per share$0.01 $0.07 $0.19 $0.11 
Weighted-average common shares outstanding:
Basic133,212,218 130,380,551 132,313,218 117,578,750 
Diluted139,062,813 138,490,526 138,242,880 125,515,000 


Agiliti, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share information)
(unaudited)
September 30,
2022		December 31,
2021
Assets
Current assets:
Cash and cash equivalents$32,211 $74,325 
Accounts receivable, less allowance for credit losses of $3,496 and $2,902
203,087 209,308 
Inventories60,987 55,307 
Prepaid expenses21,503 18,549 
Other current assets13,003 395 
Total current assets330,791 357,884 
Property and equipment, net253,639 258,370 
Goodwill1,218,329 1,213,121 
Operating lease right-of-use assets82,838 80,676 
Other intangibles, net508,769 573,159 
Other23,295 32,537 
Total assets$2,417,661 $2,515,747 
Liabilities and Equity
Current liabilities:
Current portion of long-term debt$17,642 $17,534 
Current portion of operating lease liability23,438 22,826 
Current portion of obligation under tax receivable agreement29,824 29,187 
Accounts payable59,094 53,851 
Accrued compensation31,867 47,951 
Accrued interest3,889 3,473 
Deferred revenue9,279 5,808 
Other accrued expenses25,883 27,900 
Total current liabilities200,916 208,530 
Long-term debt, less current portion1,050,288 1,174,968 
Obligation under tax receivable agreement, pension and other long-term liabilities17,036 29,629 
Operating lease liability, less current portion70,259 63,241 
Deferred income taxes, net142,676 143,307 
Commitments and contingencies
Equity:
Common stock, $0.0001 par value; 500,000,000 shares authorized; 133,330,184 and 130,950,061 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
13 13 
Additional paid-in capital944,477 938,888 
Accumulated deficit(17,645)(44,486)
Accumulated other comprehensive income9,490 1,537 
Total Agiliti, Inc. and Subsidiaries equity936,335 895,952 
Noncontrolling interest151 120 
Total equity936,486 896,072 
Total liabilities and equity$2,417,661 $2,515,747 


Agiliti, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended
September 30,
20222021
Cash flows from operating activities:
Consolidated net income$26,972 $14,140 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation65,502 78,249 
Amortization 71,254 63,482 
Remeasurement of tax receivable agreement— 4,542 
Loss on extinguishment of debt1,418 7,716 
Provision for credit losses801 1,121 
Provision for inventory obsolescence859 2,539 
Non-cash share-based compensation expense15,066 10,127 
Gain on sales and disposals of equipment(793)(3,939)
Deferred income taxes(3,365)12,040 
Changes in operating assets and liabilities:
Accounts receivable3,420 (30,305)
Inventories(6,539)1,241 
Other operating assets(7,566)(5,392)
Accounts payable13,123 4,701 
Other operating liabilities(18,251)(21,849)
Net cash provided by operating activities161,901 138,413 
Cash flows from investing activities:
Medical equipment purchases(37,494)(23,912)
Property and office equipment purchases(20,374)(15,539)
Proceeds from disposition of property and equipment2,695 8,187 
Acquisitions, net of cash acquired(3,125)(450,198)
Net cash used in investing activities(58,298)(481,462)
Cash flows from financing activities:
Proceeds under debt arrangements20,000 233,052 
Payments under debt arrangements(146,173)(361,770)
Payments of principal under finance lease liability(6,676)(6,721)
Payments of deferred financing costs— (229)
Payments under tax receivable agreement— (748)
Distributions to noncontrolling interests(100)(138)
Proceeds from exercise of stock options2,949 380 
Dividend and equity distribution payment(908)(926)
Proceeds from issuance of common stock— 401,441 
Stock issuance costs— (4,084)
Shares forfeited for taxes(14,488)— 
Payments of contingent consideration(321)— 
Net cash (used in) provided by financing activities(145,717)260,257 
Net change in cash and cash equivalents(42,114)(82,792)
Cash and cash equivalents at the beginning of period74,325 206,505 
Cash and cash equivalents at the end of period$32,211 $123,713 


Use of non-GAAP information
This press release contains non-GAAP measures, including EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Net Debt and Net Leverage Ratio. We use these internally as measures of operational performance, or liquidity, as applicable, and 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 these measures 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, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Net Debt and Net Leverage Ratio, however, are not measures of financial performance under accounting principles generally accepted in the United States of America (“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 to total debt as measures of liquidity or debt capacity. Since EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Net Debt and Net Leverage Ratio are not measures determined in accordance with GAAP and are thus susceptible to varying interpretations and calculations, these measures, as presented, may not be comparable to other similarly titled measures of other companies. EBITDA, Adjusted EBITDA, and Adjusted Net Income do not represent amounts of funds that are available for management’s discretionary use. EBITDA and Adjusted EBITDA presented may not be the same as EBITDA and Adjusted EBITDA calculations as defined in the First Lien Credit Facilities. 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 the tax receivable agreement and loss on extinguishment of debt. LTM Adjusted EBITDA represents the last twelve months (“LTM”) of Adjusted EBITDA.
Agiliti, Inc. and Subsidiaries
Non-GAAP Financial Measure: Adjusted EBITDA
(in thousands)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Net income attributable to Agiliti, Inc. and Subsidiaries$1,951 $9,668 $26,841 $14,023 
Interest expense12,531 10,711 34,456 40,444 
Income tax (benefit) expense (1)(10,879)7,943 (5,672)13,832 
Depreciation and amortization42,170 46,861 133,711 138,676 
EBITDA45,773 75,183 189,336 206,975 
Non-cash share-based compensation expense4,859 4,360 15,066 10,127 
Management and other expenses (2)13,877 — 13,877 7,626 
Transaction costs (3)1,944 2,189 5,465 6,440 
Tax receivable agreement remeasurement— 197 — 4,542 
Loss on extinguishment of debt (4)— — 1,418 10,116 
Adjusted EBITDA$66,453 $81,929 $225,162 $245,826 
_____________________________
(1) Income tax (benefit) expense includes the $11.9 million tax benefit due to the release of the reserve and associated interest and penalties related to the Sizewise Acquisition.
(2) Management and other expenses represent (a) tax indemnification expense related to the Sizewise Acquisition;(b) management fees and buyout termination fee under the Advisory Services Agreement, which was terminated in connection with the initial public offering in 2021; and (c) non-recurring expenses.
(3) Transaction costs represent costs associated with potential and completed mergers and acquisitions and are primarily related to the Northfield and Sizewise acquisitions.
(4) Loss on extinguishment of debt for the nine months ended September 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 nine months ended September 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.


Agiliti, Inc. and Subsidiaries
Non-GAAP Financial Measure: Adjusted Net Income and Adjusted EPS
(in thousands, except share and per share information)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Net income attributable to Agiliti, Inc. and Subsidiaries $1,951 $9,668 $26,841 $14,023 
Amortization23,080 21,497 68,209 60,427 
Non-cash share-based compensation expense4,859 4,360 15,066 10,127 
Management and other expenses (1)13,877 — 13,877 7,626 
Transaction costs (2)1,944 2,189 5,465 6,440 
Tax receivable agreement remeasurement— 197 — 4,542 
Loss on extinguishment of debt (3)— — 1,418 10,116 
Income tax benefit associated with pre-tax adjustments (4)(19,663)(6,724)(37,908)(20,452)
Adjusted net income$26,048 $31,187 $92,968 $92,849 
Weighted average shares outstanding - diluted139,063 138,491 138,243 125,515 
Adjusted EPS$0.19 $0.23 $0.67 $0.74 
_____________________________
(1) Management and other expenses include (a) tax indemnification expense related to the Sizewise Acquisition; (b) management fees and buyout termination fee under the Advisory Services Agreement, which was terminated in connection with the initial public offering in 2021; and (c) non-recurring expenses.
(2) Transaction costs represent costs associated with potential and completed mergers and acquisitions and are primarily related to the Northfield and Sizewise acquisitions.
(3) Loss on extinguishment of debt for the nine months ended September 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 September 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.
(4) Income tax benefit associated with pre-tax adjustments represents the tax benefit or provision associated with the reconciling items between net income and adjusted net income and includes both the current and deferred income tax impact of the adjustments. To determine the aggregate tax effect of the reconciling items, we utilized statutory income tax rates ranging from 0% to 26%, depending upon the applicable jurisdictions of each adjustment. For the three and nine months ended September 30, 2022, the benefit includes $11.9 million due to the release of the reserve and associated interest and penalties related to the Sizewise Acquisition.


Agiliti, Inc. and Subsidiaries
Non-GAAP Financial Measure: Net Debt and Net Leverage Ratio
(in millions)
September 30,
2022
Revolving Loan, due 2026$— 
First Lien Term Loan, due 20261,056.9 
Finance lease liability23.9 
Less: Unamortized Deferred Financing Costs and Debt Discount(12.8)
Total Debt$1,068.0 
Less: Cash(32.2)
Net Debt$1,035.8 
LTM Adjusted EBITDA$310.0 
Net Leverage
3.3x