Aveanna’s Labor Pains Easing as Hospice Revenue Grows

High labor costs have whittled into Aveanna Healthcare Holdings, Inc. (NASDAQ: AVAH)’s growth potential. But the company may be gaining ground on recruitment, retention and revenue.

Similar to many hospice providers, Atlanta, Georgia-headquartered Aveanna has been focused on recovering from staffing punches that knocked down patient volumes throughout last year.

Recruitment and retention were among the areas in which the company “invested significant dollars” in 2022, according to CEO Jeff Shaner. However, labor pressures remain an obstacle in Aveanna’s pathway to growth, he said in an earnings call.


“The labor market represents the primary challenge that we need to address in 2023 to see Aveanna begin to resume the growth trajectory that we believe our company can achieve,” Shaner said. “While [patient] volumes improved over the prior year, we continue to be constrained in our top line growth due to the shortage of available caregivers. Like many of our peers, we experienced positive recruitment applications and hiring trends right out of the new year.”

Aveanna offers home health, hospice and private duty services to more than 40,000 adults and children annually. The company operates nearly 300 locations in 33 states and also provides medical solutions and durable medical equipment.

Aveanna saw growth across each of its service lines as 2022 came to a close. The company’s home health and hospice segment brought in roughly $54.7 million during Q4, a 12.4% jump over the same period last year and a $4.9 million sequential increase.


Private duty services’ revenue reached $361.2 million during the fourth quarter, a $30.8 million spike year over year. Aveanna’s overall revenue of $451.1 million in Q4 was a 9.% rise from $414.1 million in the fourth quarter of 2021.

But workforce headwinds continue to take a toll. Aveanna’s adjusted EBITDA was $29.7 million in Q4, down 35% from Q4 201, with labor pressures at the root of this dip, Shaner said.

The company attributed the margin compression to costs associated with the current labor environment such as rising wages in some of its markets.

“I think that we can achieve and stay in that 45%, 46%, 47% gross margin range in 2023, and truly continue to grow the home health and hospice segment,” Shaner said. “We continue to focus on additional direct labor cost initiatives necessary to achieve our targeted gross margins. We’re focused on engaging and retaining the core caregiving staff we have in the home health and hospice side.”

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