Aveanna Healthcare Holdings Inc. AVAH used its second-quarter 2026 earnings call to raise growth expectations, citing reimbursement gains, preferred payer traction and improving caregiver capacity.
The key message was a higher 2026 outlook paired with stronger organic growth targets for Private Duty Services and Home Health & Hospice, while California emerged as a 2027 capacity opportunity.
AVAH Raises 2026 Outlook on Core Performance
CFO Matt Buckhalter said full-year revenues should exceed $2.68 billion, up from $2.63 billion-$2.65 billion. Adjusted EBITDA should exceed $365 million versus $338 million-$342 million previously.
CFO Buckhalter told a Stephens analyst that the increase reflects core operating performance. Family First’s contribution was already included in Aveanna’s prior guidance.
Second-quarter adjusted EPS of $0.22 beat the Zacks Consensus Estimate of $0.17, while revenues of $670.5 million topped the $647.1 million consensus. Revenues rose 13.7% year over year and adjusted EBITDA increased 8% to $95.4 million.
Aveanna Sees California Unlocking Capacity
CEO Jeff Shaner said California’s 2027 budget includes a significant pediatric private duty nursing rate investment effective Jan. 1, 2027. Aveanna expects Medi-Cal to publish updated rates by the end of September.
Buckhalter said Aveanna plans to begin passing higher wages to caregivers in the back half of the third quarter, before the reimbursement change takes effect.
Shaner told a UBS analyst that California fill rates have fallen almost 30% as reimbursement and wages lagged. Buckhalter added that the operating infrastructure needed to expand staffing is already in place.
AVAH Pushes Preferred Payer Mix Higher
Shaner said Private Duty Services ended the second quarter with 37 preferred payer agreements and 64% of managed-care volume tied to preferred payers, up from 60% at the end of the first quarter. He expects the mix to finish 2026 higher but below 70%.
In Home Health & Hospice, Shaner said Aveanna reached its 2026 target of 50 preferred payers. Episodic mix was about 81%, and total episodes grew 18.5% year over year.
Shaner told a BMO Capital Markets analyst that a high-70% to low-80% episodic mix is sustainable. Recent Private Duty Services admissions have been 90%-95% preferred payer.
Aveanna Keeps Margin Expansion in Check
Shaner told a Jefferies analyst that higher reimbursement is intended partly to fund caregiver wages, so management expects gross margin percentages to remain broadly consistent as revenue grows.
Buckhalter said Private Duty Services' gross margin of 28.9% was in line with expectations. He pointed to roughly 28%-29% for the rest of 2026 as rate gains continue to be passed through.
Responding to Deutsche Bank, Buckhalter said about 14% remains a reasonable adjusted EBITDA margin level, with room to approach 15% through SG&A leverage and automation. Shaner did not indicate a material change to the margin framework.
AVAH Turns to Home Health for M&A
Shaner said most future acquisition activity should shift toward adult care, particularly Home Health & Hospice, while Aveanna still sees several Private Duty Services state tuck-in opportunities.
Buckhalter told a Stephens analyst that the M&A pipeline remains robust, but valuation discipline and leverage remain priorities. Management continues to target leverage below 3 times, with CEO Shaner expressing confidence in reaching that level in 2027.
Shaner said the Family First integration is going as well as or better than expected. Back-office and electronic medical record transitions are the main remaining tasks, with completion expected by the end of 2026.
Aveanna Keeps Execution Focus Into 2027
Shaner raised the long-term organic growth target for Private Duty Services to 5%-6% from 3%-5% and for Home Health & Hospice to 8%-10% from 5%-7%. Medical Solutions remains at 8%-10%.
Shaner told a Raymond James analyst that Private Duty Services growth should be roughly three-quarters volume and one-quarter rate. Management’s focus remains on converting reimbursement gains into caregiver capacity and patient volumes.
Zacks Rank and Style Scores Signal
AVAH carries a Zacks Rank #3 (Hold), with a Value Score of B, Growth Score of A, Momentum Score of C and a VGM Score of A. Under the Zacks framework, A and B grades indicate stronger characteristics within each investment style.
The Rank and Style Scores are designed to complement one another, with the strongest combinations centered on Zacks Rank #1 (Strong Buy) and #2 (Buy) stocks paired with A or B Style Scores. AVAH’s current Rank is a Hold and can change as estimates are revised after the just-reported results. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Aveanna Healthcare Holdings Inc. (AVAH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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