Business Wire | Nov 9, 2021 04:10PM EST

Agiliti Announces Financial Results for Third Quarter 2021 and Raises Full Year 2021 Guidance

Nov. 09, 2021

MINNEAPOLIS--(BUSINESS WIRE)--Nov. 09, 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 September 30, 2021, and raised its full-year guidance for 2021.

Third Quarter 2021 Highlights

* Revenue growth of 35 percent year-over-year to $262 million * Net income of $9.7 million, up $19.9 million from the prior year period, and diluted income per share of $0.07, up $0.17 per share from the prior year period * Adjusted EBITDA1 growth of 46 percent year-over-year to $82 million, and adjusted diluted earnings per share of $0.23, up $0.10 per share from the prior year period * Total debt of $1,044.4 million; Net debt1 of $920.7 million; Net Leverage ratio1 further reduced to 2.9x * Raised full year 2021 guidance with expected revenue of $1,010-1,020 million and Adjusted EBITDA of $300-310 million2

"Our strong results from the quarter and our increased financial guidance for the year reflect the powerful fundamentals of our business" said Tom Leonard, Chief Executive Officer. "Agiliti's nationwide maintenance and logistics infrastructure places us within the local community of the healthcare providers we serve each day. This same operations network is now supporting our recent acquisitions, with a unique and differentiated value proposition for our customers, delivered though our local service teams."

Third Quarter and Year-to-Date 2021 Financial Results

Total revenue for the three months ended September 30, 2021, was $262.4 million, representing a 34.8 percent increase from total revenue of $194.7 million for the same period of 2020. Total revenue for the nine months ended September 30, 2021, was $748.2 million, representing a 33.8 percent increase from total revenue of $559.1 million for the same period of 2020.

Net income for the three months ended September 30, 2021, was $9.7 million compared to a net loss of $10.2 million for the same period of 2020. Net income for the nine months ended September 30, 2021, was $14.0 million, representing a $36.0 million increase compared to a net loss of $22.0 million for the same period of 2020.

Adjusted EBITDA for the three months ended September 30, 2021, was $81.9 million, a 46.2 percent increase from Adjusted EBITDA of $56.1 million for the same period of 2020. Adjusted EBITDA for the nine months ended September 30, 2021, was $245.8 million, a 51.6 percent increase from Adjusted EBITDA of $162.2 million for same period of 2020.

Subsequent Events

On October 1, 2021, Agiliti completed its acquisition of Sizewise Rentals, Inc., ("Sizewise"), a manufacturer and distributor of specialty hospital beds, surfaces and patient handling equipment. The transaction was financed with a combination of cash on hand as well as an incremental $150M Term Loan B (fungible with the existing 0% LIBOR floor tranche). The combination enables Agiliti to broaden its portfolio and clinical expertise within the growing specialty equipment services market, expand its total addressable market opportunity and target meaningful growth and cost reduction synergies.

2021 Financial Outlook

For the full year 2021, the Company now expects revenue to be in the range of $1,010 million to $1,020 million, an increase from the prior range of $965 million to $980 million, representing growth of 31 to 32 percent. In addition, the Company now expects Adjusted EBITDA to be in the range of $300 million to $310 million, an increase from the prior range of $280 million to $290 million, representing growth of 28 to 31 percent. Finally, the Company expects capital expenditures for 2021 to be in the range of $67 million to $72 million, an increase from the prior range of $65 million to $70 million. Capex as a percentage of revenue is expected to remain in the range of 6 to 7 percent.

Conference Call Information

Agiliti will hold a conference call to discuss its 2021 third quarter results on Tuesday, November 9, at 5 p.m. Eastern Time (4 p.m. Central Time).

The conference call can be accessed live over the phone by dialing 1-877-300-8521 or for international callers, 1-412-317-6026. 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 10160759. The replay will be available until November 16, 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 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: 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, and our quarterly reports on Form 10-Q.

1 Non-GAAP Measures. See further discussion below.

2 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.

Agiliti, Inc. andSubsidiariesCondensedConsolidatedStatements ofOperations(in thousands,except share andper shareinformation)(unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020

Revenue $ 262,424 $ 194,721 $ 748,212 $ 559,121

Cost of revenue 158,990 120,115 444,346 359,239

Gross margin 103,434 74,606 303,866 199,882

Selling, general 75,052 71,732 225,334 180,838 and administrativeOperating income 28,382 2,874 78,532 19,044

Loss on - - 10,116 - extinguishment ofdebtInterest expense 10,711 13,560 40,444 46,532

Income (loss)before income 17,671 (10,686 ) 27,972 (27,488 )taxes andnoncontrollinginterestIncome tax expense 7,943 (573 ) 13,832 (5,678 )(benefit)Consolidated net 9,728 (10,113 ) 14,140 (21,810 )income (loss)Net incomeattributable to 60 95 117 198 noncontrollinginterestNet income (loss)attributable to $ 9,668 $ (10,208 ) $ 14,023 $ (22,008 )Agiliti, Inc. andSubsidiaries Basic income $ 0.07 $ (0.10 ) $ 0.12 $ (0.22 )(loss) per shareDiluted income $ 0.07 $ (0.10 ) $ 0.11 $ (0.22 )(loss) per share Weighted-averagecommon sharesoutstanding:Basic 130,380,551 98,983,296 117,578,750 98,973,853

Diluted 138,490,526 98,983,296 125,515,000 98,973,853

Agiliti, Inc. and SubsidiariesCondensed Consolidated Balance Sheets(in thousands, except share and per share information)(unaudited)September 30,

December 31,

2021

2020

AssetsCurrent assets:Cash and cash equivalents$123,713

$206,505

Accounts receivable, less allowance for doubtful accounts of $2,500 at June 30, 2021 and $1,993 at December 31, 2020200,779

154,625

Inventories29,092

27,062

Other current assets14,847

14,175

Total current assets368,431

402,367

Property and equipment:Medical equipment301,189

285,723

Property and office equipment140,138

112,646

Accumulated depreciation(251,530

)

(183,953

)

Total property and equipment, net189,797

214,416

Other long-term assets:Goodwill1,122,530

817,113

Operating lease right-of-use assets56,692

51,214

Other intangibles, net528,119

402,095

Other18,884

16,151

Total assets$2,284,453

$1,903,356

Liabilities and EquityCurrent liabilities:Current portion of long-term debt$15,849

$16,044

Current portion of operating lease liability15,607

14,155

Current portion of obligation under tax receivable agreement15,691

15,572

Accounts payable48,712

37,215

Accrued compensation37,658

38,671

Accrued interest2,784

6,347

Deferred revenue6,858

8,800

Other accrued expenses24,111

22,727

Total current liabilities167,270

159,531

Long-term debt, less current portion1,028,626

1,145,055

Obligation under tax receivable agreement, pension and other long-term liabilities57,216

53,794

Operating lease liability, less current portion45,919

40,283

Deferred income taxes, net109,469

62,748

Commitments and contingencies (Note 11)EquityCommon stock, $0.0001 par value; 350,000,000 shares authorized; 130,389,758 and 98,983,296 shares issued and outstanding at June 30, 2021 and December 31, 202013

10

Additional paid-in capital932,867

513,902

Accumulated deficit(54,469

)

(68,492

)

Accumulated other comprehensive loss(2,581

)

(3,619

)

Total Agiliti, Inc. and Subsidiaries equity875,830

441,801

Noncontrolling interest123

144

Total equity875,953

441,945

Total liabilities and equity$2,284,453

$1,903,356

Agiliti, Inc. and SubsidiariesCondensed Consolidated Balance Sheets(in thousands, except share and per shareinformation)(unaudited) September 30, December 31,

2021 2020

AssetsCurrent assets:Cash and cash equivalents $ 123,713 $ 206,505

Accounts receivable, less allowance for doubtful 200,779 154,625 accounts of $2,500 at June 30, 2021 and $1,993 atDecember 31, 2020Inventories 29,092 27,062

Other current assets 14,847 14,175

Total current assets 368,431 402,367

Property and equipment:Medical equipment 301,189 285,723

Property and office equipment 140,138 112,646

Accumulated depreciation (251,530 ) (183,953 )

Total property and equipment, net 189,797 214,416

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

Operating lease right-of-use assets 56,692 51,214

Other intangibles, net 528,119 402,095

Other 18,884 16,151

Total assets $ 2,284,453 $ 1,903,356

Liabilities and EquityCurrent liabilities:Current portion of long-term debt $ 15,849 $ 16,044

Current portion of operating lease liability 15,607 14,155

Current portion of obligation under tax 15,691 15,572 receivable agreementAccounts payable 48,712 37,215

Accrued compensation 37,658 38,671

Accrued interest 2,784 6,347

Deferred revenue 6,858 8,800

Other accrued expenses 24,111 22,727

Total current liabilities 167,270 159,531

Long-term debt, less current portion 1,028,626 1,145,055

Obligation under tax receivable agreement, 57,216 53,794 pension and other long-term liabilitiesOperating lease liability, less current portion 45,919 40,283

Deferred income taxes, net 109,469 62,748

Commitments and contingencies (Note 11)EquityCommon stock, $0.0001 par value; 350,000,000shares authorized; 130,389,758 and 98,983,296 13 10 shares issued and outstanding at June 30, 2021and December 31, 2020Additional paid-in capital 932,867 513,902

Accumulated deficit (54,469 ) (68,492 )

Accumulated other comprehensive loss (2,581 ) (3,619 )

Total Agiliti, Inc. and Subsidiaries equity 875,830 441,801

Noncontrolling interest 123 144

Total equity 875,953 441,945

Total liabilities and equity $ 2,284,453 $ 1,903,356

Agiliti, Inc. and SubsidiariesCondensed Consolidated Statements of Cash Flows(in thousands, except share and per share information)(unaudited)Nine Months EndedSeptember 30,2021

2020

Cash flows from operating activities:Consolidated net income (loss)$14,140

$(21,810

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation78,249

72,955

Amortization63,482

54,536

Remeasurement of tax receivable agreement and contingent consideration4,542

8,231

Loss on extinguishment of debt7,716

-

Provision for doubtful accounts1,121

1,336

Provision for inventory obsolescence2,539

458

Non-cash share-based compensation expense10,127

7,657

Gain on sales and disposals of equipment(3,939

)

(852

)

Deferred income taxes12,040

(5,967

)

Changes in operating assets and liabilities:Accounts receivable(30,305

)

(37,618

)

Inventories1,241

(5,534

)

Other operating assets(5,392

)

(6,431

)

Accounts payable4,701

(1,138

)

Other operating liabilities(21,849

)

33,903

Net cash provided by operating activities138,413

99,726

Cash flows from investing activities:Medical equipment purchases(23,912

)

(22,806

)

Property and office equipment purchases(15,539

)

(15,465

)

Proceeds from disposition of property and equipment8,187

2,157

Acquisitions, net of cash acquired(450,198

)

(89,706

)

Net cash used in investing activities(481,462

)

(125,820

)

Cash flows from financing activities:Proceeds under revolver35,000

249,500

Payments under revolver(35,000

)

(283,000

)

Proceeds under term loan198,052

124,844

Payments under term loan(326,770

)

(5,895

)

Payments of principal under finance lease liability(6,721

)

(6,312

)

Payments of deferred financing costs(229

)

(199

)

Payments under tax receivable agreement(748

)

-

Distributions to noncontrolling interests(138

)

(322

)

Proceeds from exercise of stock options380

-

Dividend and equity distribution payment(926

)

(1,138

)

Proceeds from issuance of common stock401,441

-

Stock issuance costs(4,084

)

-

Shares forfeited for taxes-

(145

)

Change in book overdrafts-

(1,771

)

Net cash provided by financing activities260,257

75,562

Net change in cash and cash equivalents(82,792

)

49,468

Cash and cash equivalents at the beginning of period206,505

-

Cash and cash equivalents at the end of period$123,713

$49,468

Supplemental cash flow information:Interest paid$40,991

$41,279

Income taxes paid2,647

1,007

Use of non-GAAP information

This press release contains non-GAAP measures, including EBITDA, Adjusted EBITDA, Adjusted EPS and Net Leverage Ratio. We use these internally as measures of operational performance 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 EPS 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 as measures of liquidity. Since EBITDA, Adjusted EBITDA, Adjusted EPS 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 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 SubsidiariesCondensed Consolidated Statements of Cash Flows(in thousands, except share and per shareinformation)(unaudited) Nine Months Ended September 30, 2021 2020

Cash flows from operating activities:Consolidated net income (loss) $ 14,140 $ (21,810 )

Adjustments to reconcile net income (loss) to netcash provided by operating activities:Depreciation 78,249 72,955

Amortization 63,482 54,536

Remeasurement of tax receivable agreement and 4,542 8,231 contingent considerationLoss on extinguishment of debt 7,716 -

Provision for doubtful accounts 1,121 1,336

Provision for inventory obsolescence 2,539 458

Non-cash share-based compensation expense 10,127 7,657

Gain on sales and disposals of equipment (3,939 ) (852 )

Deferred income taxes 12,040 (5,967 )

Changes in operating assets and liabilities:Accounts receivable (30,305 ) (37,618 )

Inventories 1,241 (5,534 )

Other operating assets (5,392 ) (6,431 )

Accounts payable 4,701 (1,138 )

Other operating liabilities (21,849 ) 33,903

Net cash provided by operating activities 138,413 99,726

Cash flows from investing activities:Medical equipment purchases (23,912 ) (22,806 )

Property and office equipment purchases (15,539 ) (15,465 )

Proceeds from disposition of property and equipment 8,187 2,157

Acquisitions, net of cash acquired (450,198 ) (89,706 )

Net cash used in investing activities (481,462 ) (125,820 )

Cash flows from financing activities:Proceeds under revolver 35,000 249,500

Payments under revolver (35,000 ) (283,000 )

Proceeds under term loan 198,052 124,844

Payments under term loan (326,770 ) (5,895 )

Payments of principal under finance lease liability (6,721 ) (6,312 )

Payments of deferred financing costs (229 ) (199 )

Payments under tax receivable agreement (748 ) -

Distributions to noncontrolling interests (138 ) (322 )

Proceeds from exercise of stock options 380 -

Dividend and equity distribution payment (926 ) (1,138 )

Proceeds from issuance of common stock 401,441 -

Stock issuance costs (4,084 ) -

Shares forfeited for taxes - (145 )

Change in book overdrafts - (1,771 )

Net cash provided by financing activities 260,257 75,562

Net change in cash and cash equivalents (82,792 ) 49,468

Cash and cash equivalents at the beginning of 206,505 - periodCash and cash equivalents at the end of period $ 123,713 $ 49,468

Supplemental cash flow information:Interest paid $ 40,991 $ 41,279

Income taxes paid 2,647 1,007

Use of non-GAAP information

This press release contains non-GAAP measures, including EBITDA, Adjusted EBITDA, Adjusted EPS and Net Leverage Ratio. We use these internally as measures of operational performance 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 EPS 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 as measures of liquidity. Since EBITDA, Adjusted EBITDA, Adjusted EPS 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 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 Nine Months Ended

September 30, September 30,

(in thousands) 2021 2020 2021 2020

Net income (loss) attributable 9,668 (10,208 ) 14,023 (22,008 )to Agiliti, Inc. and $ $ $ $SubsidiariesInterest expense 10,711 13,560 40,444 46,532

Income tax expense (benefit) 7,943 (573 ) 13,832 (5,678 )

Depreciation and amortization 46,860 42,597 138,676 124,659

EBITDA 75,183 45,376 206,975 143,505

Non-cash share-based 4,360 3,206 10,127 7,657 compensation expenseManagement and other expenses - (3,266 ) 7,626 (256 )(1)Transaction costs (2) 2,189 1,137 6,440 1,699

Tax receivable agreement 197 9,600 4,542 9,600 remeasurementLoss on extinguishment of debt - - 10,116 - (3)Adjusted EBITDA $ 81,929 $ 56,053 $ 245,826 $ 162,205

(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 acquisition for the nine months ended September 30, 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. andSubsidiariesNon-GAAP Financial Measure:Adjusted EPS(unaudited) Three months ended Nine months ended September 30, September 30,(in thousands) 2021 2020 2021 2020

Net income (loss) $ 9,668 $ (10,208 ) $ 14,023 $ (22,008 )attributable to Agiliti,Inc.and SubsidiariesAmortization 21,497 17,558 60,427 51,702

Non-cash share-based 4,360 3,206 10,127 7,657 compensation expenseManagement and other - (3,266 ) 7,626 (256 )expenses (1)Transaction costs (2) 2,189 1,137 6,440 1,699

Tax receivable agreement 197 9,600 4,542 9,600 remeasurement(3)Loss on extinguishment of - - 10,116 - debt (4)Income tax benefit (6,724 ) (4,733 ) (20,452 ) (15,527 )associated with pre-taxadjustments (5) Adjusted Net Income $ 31,187 $ 13,294 $ 92,849 $ 32,867

Weighted average shares 138,491 103,706 125,515 103,680 outstanding - dilutedAdjusted EPS $ 0.23 $ 0.13 $ 0.74 $ 0.32

(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 acquisition for the nine months ended September 30, 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. 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 SubsidiariesNon-GAAP Financial Measure: Net Leverage Ratio(unaudited) September 30,

(in millions) 2021

Term Loan B (due 2026) $ 1,035.4

Consolidated Capital Leases 26.1

Less: Deferred Financing Fees (17.1 )

Debt $ 1,044.4

Less: Cash (123.7 )

Net Debt $ 920.7

LTM Adjusted EBITDA $ 317.8

Net Leverage 2.9x View source version on businesswire.com: https://www.businesswire.com/news/home/20211109006341/en/

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