Business Wire | May 18, 2021 04:20PM EDT

Agiliti Announces Financial Results for First Quarter 2021 and Provides Full Year 2021 Outlook

May 18, 2021

MINNEAPOLIS--(BUSINESS WIRE)--May 18, 2021--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 March 31, 2021, and provided a preliminary outlook for the full year 2021.

Highlights

* Revenue growth of 31 percent to $235 million * Net income of $9.6 million, up $22.2 million from Q1 2020, and diluted earnings per share of $0.09, up $0.22 per share from the prior year period * Adjusted EBITDA growth of 77 percent to $86 million, and adjusted diluted earnings per share of $0.30, up $0.25 per share from the prior year period * Leverage ratio reduced to 3.3x following the close of its initial public offering * Full year 2021 guidance for revenue of $950-$975 million and Adjusted EBITDA of $275-$285 million

"Our strong first quarter results reflect the continued execution of our growth strategy and the extraordinary work of our entire team at Agiliti," said Tom Leonard, Chief Executive Officer. "The challenges of the past year helped raise awareness of the unique and essential nature of what we do, while also demonstrating the stable and predictable nature of our business model. Agiliti is a critical part of our national healthcare infrastructure, and as the events of 2020 highlight, the services we provide are always necessary and in high demand. This long term consistency gives us confidence in our 2021 outlook and beyond."

Total revenue for the three months ended March 31, 2021, was $235.2 million, representing a 31 percent increase from total revenue of $179.2 million for the same period of 2020.

Net income for the first quarter was $9.6 million, representing a $22.2 million increase compared to a net loss of $12.6 million for the same period of 2020.

Adjusted EBITDA for the three months ended March 31, 2021, was $86.2 million, a 77 percent increase from Adjusted EBITDA of $48.7 million for the same period of 2020.

Balance Sheet

Following the close of its initial public offering ("IPO") on April 27, 2021, the Company used net proceeds from the offering to repay outstanding borrowings and related fees and expenses under the Company's credit facilities. Post IPO proceeds and following its acquisition of Northfield Medical on March 19, 2021, it's pro-forma leverage ratio approximates 3.3x.

Financial Guidance

For the full year 2021, the Company expects revenue to be in the range of $950 million to $975 million and Adjusted EBITDA to be in the range of $275 million to $285 million. Additionally, the Company expects capital expenditures for 2021 to be in the range of $65 million to $70 million.

With regard to the non-GAAP Adjusted EBITDA 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.

Conference Call Information

Agiliti will hold a conference call to discuss its 2021 first quarter results on Tuesday, May 18, 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 13719551. The replay will be available until May 25, 2021.

Interested investors and other parties may view a simultaneous webcast of the conference call by visiting the Agiliti Investor Relations site at https://investors.agilitihealth.com. The webcast 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 7,000 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: Agiliti Inc., believes statements in this presentation looking forward in time, including preliminary results, 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; 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 final prospectus filed with the Securities and Exchange Commission ("SEC"), on April 26, 2021.

Agiliti, Inc. and SubsidiariesCondensed Consolidated Statements of Operations(in thousands, except share and per shareinformation)(unaudited) Three Months Ended March 31, 2021 2020

Revenue $ 235,245 $ 179,240

Cost of revenue 133,922 121,433

Gross margin 101,323 57,807

Selling, general and administrative 69,224 56,566

Operating income 32,099 1,241

Interest expense 18,021 17,817

Income (loss) before income taxes and 14,078 (16,576 )noncontrolling interestIncome tax expense (benefit) 4,495 (4,028 )

Consolidated net income (loss) 9,583 (12,548 )

Net income attributable to noncontrolling 30 74 interestNet income (loss) attributable to Agiliti, Inc. $ 9,553 $ (12,622 )and Subsidiaries Basic income (loss) per share $ 0.10 $ (0.13 )

Diluted income (loss) per share $ 0.09 $ (0.13 )

Weighted-average common shares outstanding:Basic 99,103,933 98,954,862

Diluted 106,090,703 98,954,862

Agiliti, Inc. and SubsidiariesCondensed Consolidated Balance Sheets(in thousands, except share and per share information)(unaudited)March 31,December 31,2021

2020

AssetsCurrent assets:Cash and cash equivalents$13,328

$206,505

Accounts receivable, less allowance for doubtful accounts of $2,020 at March 31, 2021 and $1,993 at December 31, 2020168,679

154,625

Inventories27,699

27,062

Other current assets13,129

14,175

Total current assets222,835

402,367

Property and equipment:Medical equipment295,398

285,723

Property and office equipment124,054

112,646

Accumulated depreciation(208,484

)

(183,953

)

Total property and equipment, net210,968

214,416

Other long-term assets:Goodwill1,122,530

817,113

Operating lease right-of-use assets53,447

51,214

Other intangibles, net569,343

402,095

Other16,713

16,151

Total assets$2,195,836

$1,903,356

Liabilities and EquityCurrent liabilities:Current portion of long-term debt$19,060

$16,044

Current portion of operating lease liability14,985

14,155

Current portion of obligation under tax receivable agreement15,650

15,572

Accounts payable47,523

37,215

Accrued compensation38,864

38,671

Accrued interest3,533

6,347

Deferred revenue11,356

8,800

Other accrued expenses29,394

22,727

Total current liabilities180,365

159,531

Long-term debt, less current portion1,350,035

1,145,055

Obligation under tax receivable agreement, pension and other long-term liabilities56,182

53,794

Operating lease liability, less current portion41,904

40,283

Deferred income taxes, net101,297

62,748

Commitments and contingencies (Note 11)EquityCommon stock, $0.0001 par value; 350,000,000 shares authorized; 99,843,335 and98,983,296 shares issued and outstanding at March 31, 2021 and December 31, 202010

10

Additional paid-in capital527,626

513,902

Accumulated deficit(58,939

)

(68,492

)

Accumulated other comprehensive loss(2,768

)

(3,619

)

Total Agiliti, Inc. and Subsidiaries equity465,929

441,801

Noncontrolling interest124

144

Total equity466,053

441,945

Total liabilities and equity$2,195,836

$1,903,356

Agiliti, Inc. and SubsidiariesCondensed Consolidated Balance Sheets(in thousands, except share and per shareinformation)(unaudited) March 31, December 31, 2021 2020

AssetsCurrent assets:Cash and cash equivalents $ 13,328 $ 206,505

Accounts receivable, less allowance for doubtful 168,679 154,625 accounts of $2,020 at March 31, 2021 and $1,993at December 31, 2020Inventories 27,699 27,062

Other current assets 13,129 14,175

Total current assets 222,835 402,367

Property and equipment:Medical equipment 295,398 285,723

Property and office equipment 124,054 112,646

Accumulated depreciation (208,484 ) (183,953 )

Total property and equipment, net 210,968 214,416

Other long-term assets:Goodwill 1,122,530 817,113

Operating lease right-of-use assets 53,447 51,214

Other intangibles, net 569,343 402,095

Other 16,713 16,151

Total assets $ 2,195,836 $ 1,903,356

Liabilities and EquityCurrent liabilities:Current portion of long-term debt $ 19,060 $ 16,044

Current portion of operating lease liability 14,985 14,155

Current portion of obligation under tax 15,650 15,572 receivable agreementAccounts payable 47,523 37,215

Accrued compensation 38,864 38,671

Accrued interest 3,533 6,347

Deferred revenue 11,356 8,800

Other accrued expenses 29,394 22,727

Total current liabilities 180,365 159,531

Long-term debt, less current portion 1,350,035 1,145,055

Obligation under tax receivable agreement, 56,182 53,794 pension and other long-term liabilitiesOperating lease liability, less current portion 41,904 40,283

Deferred income taxes, net 101,297 62,748

Commitments and contingencies (Note 11)EquityCommon stock, $0.0001 par value; 350,000,000shares authorized; 99,843,335 and 10 10 98,983,296 shares issued and outstanding at March31, 2021 and December 31, 2020Additional paid-in capital 527,626 513,902

Accumulated deficit (58,939 ) (68,492 )

Accumulated other comprehensive loss (2,768 ) (3,619 )

Total Agiliti, Inc. and Subsidiaries equity 465,929 441,801

Noncontrolling interest 124 144

Total equity 466,053 441,945

Total liabilities and equity $ 2,195,836 $ 1,903,356

Agiliti, Inc. and SubsidiariesCondensed Consolidated Statements of Cash Flows(in thousands)(unaudited)Three Months EndedMarch 31,2021

2020

Cash flows from operating activities:Consolidated net income (loss)$9,583

$(12,548

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation26,217

23,377

Amortization18,399

17,756

Remeasurement of tax receivable agreement4,148

-

Provision for doubtful accounts18

656

Provision for inventory obsolescence1,532

233

Non-cash share-based compensation expense2,412

2,383

Gain on sales and disposals of equipment(647

)

(165

)

Deferred income taxes3,932

(4,195

)

Changes in operating assets and liabilities:Accounts receivable2,898

(10,709

)

Inventories3,641

(1,539

)

Other operating assets226

565

Accounts payable1,361

4,378

Other operating liabilities(10,811

)

7,487

Net cash provided by operating activities62,909

27,679

Cash flows from investing activities:Medical equipment purchases(4,415

)

(9,165

)

Property and office equipment purchases(3,915

)

(3,003

)

Proceeds from disposition of property and equipment1,003

524

Acquisitions, net of cash acquired(450,198

)

(89,495

)

Net cash used in investing activities(457,525

)

(101,139

)

Cash flows from financing activities:Proceeds under new revolver10,000

178,000

Payments under new revolver-

(161,500

)

Proceeds under new term loan198,052

124,844

Payments under new term loan(2,840

)

(1,650

)

Payments of principal under finance lease liability(2,051

)

(1,857

)

Payments of deferred financing costs-

(199

)

Payments under tax receivable agreement(748

)

-

Distributions to noncontrolling interests(50

)

(124

)

Dividend and equity distribution payment(924

)

(1,115

)

Shares forfeited for taxes-

(145

)

Change in book overdrafts-

(1,771

)

Net cash provided by financing activities201,439

134,483

Net change in cash and cash equivalents(193,177

)

61,023

Cash and cash equivalents at the beginning of period206,505

-

Cash and cash equivalents at the end of period$13,328

$61,023

Supplemental cash flow information:Interest paid$19,746

$16,523

Income taxes (refund) paid(715

)

5

Agiliti, Inc. and SubsidiariesCondensed Consolidated Statements of Cash Flows(in thousands)(unaudited) Three Months Ended March 31, 2021 2020

Cash flows from operating activities:Consolidated net income (loss) $ 9,583 $ (12,548 )

Adjustments to reconcile net income (loss) to netcash provided by operating activities:Depreciation 26,217 23,377

Amortization 18,399 17,756

Remeasurement of tax receivable agreement 4,148 -

Provision for doubtful accounts 18 656

Provision for inventory obsolescence 1,532 233

Non-cash share-based compensation expense 2,412 2,383

Gain on sales and disposals of equipment (647 ) (165 )

Deferred income taxes 3,932 (4,195 )

Changes in operating assets and liabilities:Accounts receivable 2,898 (10,709 )

Inventories 3,641 (1,539 )

Other operating assets 226 565

Accounts payable 1,361 4,378

Other operating liabilities (10,811 ) 7,487

Net cash provided by operating activities 62,909 27,679

Cash flows from investing activities:Medical equipment purchases (4,415 ) (9,165 )

Property and office equipment purchases (3,915 ) (3,003 )

Proceeds from disposition of property and equipment 1,003 524

Acquisitions, net of cash acquired (450,198 ) (89,495 )

Net cash used in investing activities (457,525 ) (101,139 )

Cash flows from financing activities:Proceeds under new revolver 10,000 178,000

Payments under new revolver - (161,500 )

Proceeds under new term loan 198,052 124,844

Payments under new term loan (2,840 ) (1,650 )

Payments of principal under finance lease liability (2,051 ) (1,857 )

Payments of deferred financing costs - (199 )

Payments under tax receivable agreement (748 ) -

Distributions to noncontrolling interests (50 ) (124 )

Dividend and equity distribution payment (924 ) (1,115 )

Shares forfeited for taxes - (145 )

Change in book overdrafts - (1,771 )

Net cash provided by financing activities 201,439 134,483

Net change in cash and cash equivalents (193,177 ) 61,023

Cash and cash equivalents at the beginning of 206,505 - periodCash and cash equivalents at the end of period $ 13,328 $ 61,023

Supplemental cash flow information:Interest paid $ 19,746 $ 16,523

Income taxes (refund) paid (715 ) 5

Agiliti, Inc. and SubsidiariesAdjusted EBITDA(unaudited)Three Months EndedMarch 31,(in thousands)2021

2020

Net income (loss) attributable to Agiliti, Inc. and Subsidiaries$9,553

$(12,622

)

Interest expense18,021

17,817

Income tax expense (benefit)4,495

(4,028

)

Depreciation and amortization43,563

40,166

EBITDA75,632

41,333

Non-cash share-based compensation expense2,412

2,383

Management and other expenses (1)563

4,111

Transaction costs (2)3,451

889

Tax receivable agreement remeasurement4,148

-

Adjusted EBITDA$86,206

$48,716

_________________________ (1) Management and other expenses represent (a) the Advisory Services Fees, which were subsequently terminated in connection with the initial public offering and (b) employee related non-recurring expenses. (2) Transaction costs represent costs associated with potential mergers and acquisitions and are primarily related to the Northfield acquisition.

EBITDA is defined as earnings attributable to Agiliti before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding non-cash shared-based compensation expense, management fees and other non-recurring gains, expenses or losses, transaction costs and remeasurement of the tax receivable agreement. 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 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 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 may not be the same as EBITDA and Adjusted EBITDA calculations as defined in the First Lien Credit Facilities.

Agiliti, Inc. and SubsidiariesAdjusted EBITDA(unaudited) Three Months Ended March 31,(in thousands) 2021 2020

Net income (loss) attributable to Agiliti, Inc. and $ 9,553 $ (12,622 )SubsidiariesInterest expense 18,021 17,817

Income tax expense (benefit) 4,495 (4,028 )

Depreciation and amortization 43,563 40,166

EBITDA 75,632 41,333

Non-cash share-based compensation expense 2,412 2,383

Management and other expenses (1) 563 4,111

Transaction costs (2) 3,451 889

Tax receivable agreement remeasurement 4,148 -

Adjusted EBITDA $ 86,206 $ 48,716

_________________________ (1) Management and other expenses represent (a) the Advisory Services Fees, which were subsequently terminated in connection with the initial public offering and (b) employee related non-recurring expenses. (2) Transaction costs represent costs associated with potential mergers and acquisitions and are primarily related to the Northfield acquisition.

EBITDA is defined as earnings attributable to Agiliti before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding non-cash shared-based compensation expense, management fees and other non-recurring gains, expenses or losses, transaction costs and remeasurement of the tax receivable agreement. 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 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 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 may not be the same as EBITDA and Adjusted EBITDA calculations as defined in the First Lien Credit Facilities.

Agiliti, Inc. and SubsidiariesNon-GAAP Financial Measure: Adjusted EPS(unaudited) Three months ended March 31,(in thousands) 2021 2020

Net income (loss) attributable to Agiliti, Inc. and $ 9,553 $ (12,622 )SubsidiariesAmortization 17,348 16,788

Non-cash share-based compensation expense 2,412 2,383

Management & other expenses (1) 563 4,111

Transaction costs (2) 3,451 889

Tax receivable agreement remeasurement(3) 4,148 -

Income tax benefit associated with pre-tax adjustments (5,463 ) (6,223 )(4) Adjusted Net Income $ 32,012 $ 5,326

Weighted average shares outstanding - diluted 106,091 103,695

Adjusted EPS $ 0.30 $ 0.05

____________________________ (1) Represents management and advisory fees, which were subsequently terminated in connection with the initial public offering and employee related non-recurring expenses. (2) Represents costs associated with potential mergers and acquisitions and are primarily related to the Northfield acquisition. (3) Represents the change in the fair value of the tax receivable agreement. (4) Represents the tax benefit or provision associated with the reconciling items between net income (loss) and Adjusted Net Income. 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.

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