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Agiliti Announces Financial Results for Fourth Quarter and Full-Year 2021 and Provides 2022 Outlook

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MINNEAPOLIS, March 08, 2022--(BUSINESS WIRE)--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 fourth quarter and year ended December 31, 2021, and provides its financial outlook for 2022.

Fourth Quarter 2021 Highlights

  • Revenue growth of 36 percent to $290 million

  • Net income of $10.0 million, up $10.5 million from the prior year period, and diluted income per share of $0.07, up $0.07 per share from the prior year period

  • Adjusted EBITDA1 growth of 18 percent to $85 million, and adjusted earnings per share1 of $0.25, a 25 percent increase over the prior year period

  • Entered into a new one-year agreement with the U.S. Department of Health and Human Services’ Assistant Secretary for Preparedness and Response for the comprehensive maintenance and management services of medical ventilator equipment

  • Closed acquisition of Sizewise on October 1 and realized $10 million of Adjusted EBITDA1 contribution in the quarter

Full-Year 2021 Highlights

  • Revenue growth of 34 percent year-over-year to $1,039 million

  • Net income of $24.0 million, up $46.5 million from the prior year, and diluted income per share of $0.19, up $0.42 per share from the prior year

  • Adjusted EBITDA1 growth of 41 percent year-over-year to $331 million, and adjusted diluted earnings per share1 of $0.99, up $0.48 per share from the prior year

  • Total debt of $1,193 million; Net debt1 of $1,118 million; Net Leverage ratio1 at 3.4x

  • Successfully completed IPO in April 2021 to raise proceeds of approximately $390 million

  • Completed acquisitions of Northfield Medical and Sizewise

"Our results in 2021 reflect the extraordinary efforts of our teams to meet the needs of health systems across the country as we helped ensure the readiness and availability of critical medical devices, including supporting frontline response to the Covid-19 pandemic," said Tom Leonard, Chief Executive Officer. "As we turn the corner to 2022, we are even more excited about the momentum in our business and the opportunity ahead of us."

Fourth Quarter and Year-to-Date 2021 Financial Results

Total revenue for the three months ended December 31, 2021, was $290.5 million, representing a 35.6 percent increase from total revenue of $214.2 million for the same period of 2020. Total revenue for the year ended December 31, 2021, was $1,038.7 million, representing a 34.3 percent increase from total revenue of $773.3 million for the same period of 2020.

Net income for the three months ended December 31, 2021, was $10.0 million compared to a net loss of $0.5 million for the same period of 2020. Net income for the year ended December 31, 2021, was $24.0 million, representing a $46.5 million increase compared to a net loss of $22.5 million for the same period of 2020.

Adjusted EBITDA1 for the three months ended December 31, 2021, was $84.9 million, a 17.9 percent increase from Adjusted EBITDA1 of $72.0 million for the same period of 2020. Adjusted EBITDA1 for the year ended December 31, 2021, was $330.7 million, a 41.2 percent increase from Adjusted EBITDA1 of $234.2 million for same period of 2020.

2022 Financial Outlook

  • Revenue of $1,160 - $1,190 million

  • Adjusted EBITDA2 of $305-315 million

  • Adjusted earnings per share2 of $0.89 – 0.94 per share

  • Capex investment expected in the range of $80 to $90 million

____________________

1 Non-GAAP Measures. See further discussion below.

2 With 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.

Subsequent Event

On February 28, 2022, Agiliti entered into a new one-year agreement with the U.S. Department of Health and Human Services’ ("HHS") Assistant Secretary for Preparedness and Response ("ASPR") for the comprehensive maintenance and management services of medical ventilator equipment. This Agreement consolidates several prior agreements, and it is comprised of an initial 6-month base term, and a 6-month option term.

On March 1, 2022, Agiliti publicly released the details of this award. In summary, the term of this new Agreement, for up to 12 months, is intended to provide sufficient time for HHS/ASPR to run a competitive, multi-year contract award process while minimizing the risk of interruption to the critical services that Agiliti currently provides under the Agreement in support of our nation’s ongoing COVID-19 response. Agiliti fully intends to compete for any future contract award.

Conference Call Information

Agiliti will hold a conference call to discuss its fourth quarter and full year 2021 results on Tuesday, March 8, at 5 p.m. Eastern Time (4 p.m. Central Time).

The conference call can be accessed live over the phone by dialing 1-877-407-0792 or for international callers, 1-201-689-8263. A replay will be available two hours after the call and can be accessed by dialing 1-844-512-2921, or for international callers, 1-412-317-6671. The passcode for the live call and the replay is 13726349. The replay will be available until March 15, 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.

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

Condensed Consolidated Statements of Operations

(in thousands, except share and per share information)

Three Months Ended

Year Ended

December 31,

December 31,

2021

2020

2021

2020

Revenue

$

290,478

$

214,190

$

1,038,690

$

773,312

Cost of revenue

169,727

127,726

614,073

486,965

Gross margin

120,751

86,464

424,617

286,347

Selling, general and administrative

95,053

69,450

320,387

250,289

Operating income

25,698

17,014

104,230

36,058

Loss on extinguishment of debt

10,116

Interest expense

13,070

14,998

53,514

61,530

Income (loss) before income taxes and noncontrolling interest

12,628

2,016

40,600

(25,472

)

Income tax expense (benefit)

2,601

2,444

16,433

(3,234

)

Consolidated net income (loss)

10,027

(428

)

24,167

(22,238

)

Net income attributable to noncontrolling interest

44

42

161

240

Net income (loss) attributable to Agiliti, Inc. and Subsidiaries

$

9,983

$

(470

)

$

24,006

$

(22,478

)

Basic income (loss) per share

$

0.08

$

(0.00

)

$

0.20

$

(0.23

)

Diluted income (loss) per share

$

0.07

$

(0.00

)

$

0.19

$

(0.23

)

Weighted-average common shares outstanding:

Basic

130,666,105

98,983,296

120,877,480

98,976,226

Diluted

138,525,173

98,983,296

128,497,220

98,976,226

Agiliti, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share and per share information)

December 31,

December 31,

2021

2020

Assets

Current assets:

Cash and cash equivalents

$

74,325

$

206,505

Accounts receivable, less allowance for credit losses of $2,902 at December 31, 2021 and $1,993 at December 31, 2020

209,308

154,625

Inventories

55,307

27,062

Prepaid expenses

18,549

13,549

Other current assets

395

626

Total current assets

357,884

402,367

Property and equipment:

Medical equipment

359,284

285,723

Property and office equipment

174,669

112,646

Accumulated depreciation

(275,583

)

(183,953

)

Total property and equipment, net

258,370

214,416

Other long-term assets:

Goodwill

1,213,121

817,113

Operating lease right-of-use assets

80,676

51,214

Other intangibles, net

573,159

402,095

Other

32,537

16,151

Total assets

$

2,515,747

$

1,903,356

Liabilities and Equity

Current liabilities:

Current portion of long-term debt

$

17,534

$

16,044

Current portion of operating lease liability

22,826

14,155

Current portion of obligation under tax receivable agreement

29,187

15,572

Accounts payable

53,851

37,215

Accrued compensation

47,951

38,671

Accrued interest

3,473

6,347

Deferred revenue

5,808

8,800

Other accrued expenses

27,900

22,727

Total current liabilities

208,530

159,531

Long-term debt, less current portion

1,174,968

1,145,055

Obligation under tax receivable agreement, pension and other long-term liabilities

29,629

53,794

Operating lease liability, less current portion

63,241

40,283

Deferred income taxes, net

143,307

62,748

Commitments and contingencies (Note 11)

Equity

Common stock, $0.0001 par value; 350,000,000 shares authorized; 130,950,061 and 98,983,296 shares issued and outstanding at December 31, 2021 and December 31, 2020

13

10

Additional paid-in capital

938,888

513,902

Accumulated deficit

(44,486

)

(68,492

)

Accumulated other comprehensive loss

1,537

(3,619

)

Total Agiliti, Inc. and Subsidiaries equity

895,952

441,801

Noncontrolling interest

120

144

Total equity

896,072

441,945

Total liabilities and equity

$

2,515,747

$

1,903,356

Agiliti, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands, except share and per share information)

Year Ended

December 31,

2021

2020

Cash flows from operating activities:

Consolidated net income (loss)

$

24,167

$

(22,238

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation

103,805

99,638

Amortization

88,240

73,456

Remeasurement of tax receivable agreement and contingent consideration

4,542

12,931

Loss on extinguishment of debt

7,716

Provision for credit losses

2,023

1,959

Provision for inventory obsolescence

2,424

722

Non-cash share-based compensation expense

13,960

10,334

Gain on sales and disposals of equipment

(3,735

)

(1,191

)

Deferred income taxes

12,004

(4,944

)

Changes in operating assets and liabilities:

Accounts receivable

(8,915

)

(39,763

)

Inventories

3,052

(9,712

)

Other operating assets

(9,044

)

(13,597

)

Accounts payable

718

552

Other operating liabilities

(30,640

)

29,780

Net cash provided by operating activities

210,317

137,927

Cash flows from investing activities:

Medical equipment purchases

(37,377

)

(31,668

)

Property and office equipment purchases

(29,121

)

(27,597

)

Proceeds from disposition of property and equipment

9,242

3,486

Acquisitions, net of cash acquired

(676,878

)

(95,953

)

Net cash used in investing activities

(734,134

)

(151,732

)

Cash flows from financing activities:

Proceeds under revolver

35,000

199,500

Payments under revolver

(35,000

)

(233,000

)

Proceeds under term loan

346,927

273,344

Payments under term loan

(329,119

)

(7,860

)

Payments of principal under finance lease liability

(9,097

)

(8,024

)

Payments of deferred financing costs

(229

)

(199

)

Payments under tax receivable agreement

(15,577

)

Distributions to noncontrolling interests

(185

)

(397

)

Proceeds from exercise of stock options

1,409

Dividend and equity distribution payment

(928

)

(1,138

)

Proceeds from issuance of common stock

402,815

Stock issuance costs

(4,379

)

Shares forfeited for taxes

(145

)

Change in book overdrafts

(1,771

)

Net cash provided by financing activities

391,637

220,310

Net change in cash and cash equivalents

(132,180

)

206,505

Cash and cash equivalents at the beginning of period

206,505

Cash and cash equivalents at the end of period

$

74,325

$

206,505

Supplemental cash flow information:

Interest paid

$

52,341

$

55,161

Income taxes paid

3,214

1,260

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

Three Months Ended

Year Ended

December 31,

December 31,

(in thousands)

2021

2020

2021

2020

Net income (loss) attributable to Agiliti, Inc. and Subsidiaries

$

9,983

$

(470)

$

24,006

$

(22,478)

Interest expense

13,070

14,998

53,514

61,530

Income tax expense (benefit)

2,601

2,444

16,433

(3,234)

Depreciation and amortization

49,287

44,582

187,963

169,241

EBITDA

74,941

61,554

281,916

205,059

Non-cash share-based compensation expense

3,833

2,677

13,960

10,334

Management and other expenses (1)

286

927

7,926

671

Transaction costs (2)

5,797

2,138

12,222

3,837

Tax receivable agreement remeasurement

4,700

4,542

14,300

Loss on extinguishment of debt (3)

10,116

Adjusted EBITDA

$

84,857

$

71,996

$

330,682

$

234,201

____________________

(1) Management and other expenses represent (a) management fees and buyout termination fee under the Advisory Services Agreement, which was terminated in connection with the initial public offering and (b) employee related 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 for the year ended December 31, 2021.

(3) Loss on extinguishment of debt 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 costs related to the amendment of our Revolving Credit Facility.

Agiliti, Inc. and Subsidiaries

Non-GAAP Financial Measure: Adjusted Net Income and Adjusted EPS

Three months ended

Year ended

December 31,

December 31,

(in thousands)

2021

2020

2021

2020

Net income (loss) attributable to Agiliti, Inc.

$

9,983

$

(470

)

$

24,006

$

(22,478

)

and Subsidiaries

Amortization

23,731

17,900

84,158

69,602

Non-cash share-based compensation expense

3,833

2,677

13,960

10,334

Management and other expenses (1)

286

960

7,926

671

Transaction costs (2)

5,797

2,103

12,222

3,837

Tax receivable agreement remeasurement(3)

-

4,700

4,542

14,300

Loss on extinguishment of debt (4)

-

-

10,116

-

Income tax benefit associated with pre-tax adjustments (5)

(9,462

)

(6,258

)

(29,920

)

(21,785

)

Adjusted Net Income

$

34,168

$

21,612

$

127,010

$

54,481

Weighted average shares outstanding - diluted

138,525

106,091

128,497

106,084

Adjusted EPS

$

0.25

$

0.20

$

0.99

$

0.51

____________________

(1) Management and other expenses represent (a) management fees and buyout termination fee under the Advisory Services Agreement, which was terminated in connection with the initial public offering and (b) employee related 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 for the year ended December 31, 2021. (3) Tax receivable agreement remeasurement represents the change in the fair value of the tax receivable agreement. (4) Loss on extinguishment of debt 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 costs related to the amendment of our Revolving Credit Facility. (5) Income tax benefit associated with pre-tax adjustments represents the tax benefit or provision associated with the reconciling items between net income (loss) 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.

Agiliti, Inc. and Subsidiaries

Non-GAAP Financial Measure: Net Debt and Net Leverage Ratio

(unaudited)

December 31,

(in millions)

2021

Term Loan B (due 2026)

$

1,183.1

Consolidated Capital Leases

26.6

Less: Deferred Financing Fees

(17.2

)

Debt

$

1,192.5

Less: Cash

(74.3

)

Net Debt

$

1,118.2

LTM Adjusted EBITDA

$

330.7

Net Leverage

3.4x

View source version on businesswire.com: https://www.businesswire.com/news/home/20220308006023/en/

Contacts

Kate Kaiser
Corporate Communication and Investor Relations
kate.kaiser@agilitihealth.com