10-Q

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Non-accelerated filer

Smaller reporting company

Emerging growth company


AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
	As of
	July 4, 2026			January 3, 2026
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	97,196		$	193,260
Patient accounts receivable		337,233			313,358
Receivables under insured programs		3,754			2,758
Prepaid expenses		22,227			20,940
Other current assets		17,684			29,916
Total current assets		478,094			560,232
Property and equipment, net		18,442			16,653
Operating lease right of use assets		38,437			39,034
Goodwill		1,276,019			1,121,042
Intangible assets, net		99,820			92,559
Receivables under insured programs		38,343			28,806
Deferred income taxes		136,764			137,140
Other long-term assets		20,458			16,913
Total assets	$	2,106,377		$	2,012,379

LIABILITIES, DEFERRED RESTRICTED STOCK UNITS, AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other accrued liabilities	$	32,408		$	31,967
Accrued payroll and employee benefits		98,245			108,085
Current portion of insurance reserves - insured programs		3,754			2,758
Current portion of insurance reserves		19,912			17,154
Securitization obligations		165,000			165,000
Current portion of long-term obligations		13,250			13,250
Current portion of operating lease liabilities		16,443			16,012
Other current liabilities		62,312			70,230
Total current liabilities		411,324			424,456
Revolving credit facility		-			-
Long-term obligations, less current portion		1,284,631			1,286,652
Long-term insurance reserves - insured programs		38,343			28,806
Long-term insurance reserves		58,106			49,061
Operating lease liabilities, less current portion		25,966			27,413
Other long-term liabilities		-			800
Total liabilities		1,818,370			1,817,188
Commitments and contingencies (Note 11)
Deferred restricted stock units		730			730
Stockholders’ equity:
Preferred stock, $0.01 par value as of July 4, 2026 and January 3, 2026
5,000,000 shares authorized; none issued or outstanding		-			-
Common stock, $0.01 par value, 1,000,000,000 shares authorized;
218,152,927 and 210,996,359 issued and outstanding, respectively		2,182			2,110
Additional paid-in capital		1,360,278			1,349,480
Accumulated deficit		(1,075,183	)		(1,157,129	)
Total stockholders’ equity		287,277			194,461
Total liabilities, deferred restricted stock units, and stockholders’ equity	$	2,106,377		$	2,012,379

The accompanying notes are an integral part of these unaudited consolidated financial statements.


AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)

	For the three-month periods ended						For the six-month periods ended
	July 4, 2026			June 28, 2025			July 4, 2026			June 28, 2025
Revenue	$	670,483		$	589,553		$	1,318,398		$	1,148,777
Cost of revenue, excluding depreciation and amortization		451,958			378,753			894,445			754,419
Branch and regional administrative expenses		97,079			90,069			192,871			181,456
Corporate expenses		34,083			34,529			68,239			72,034
Depreciation and amortization		2,849			2,617			5,893			5,211
Acquisition-related costs		4,390			3,400			7,500			3,506
Other operating expense		144			151			144			316
Operating income		79,980			80,034			149,306			131,835
Interest income		1,259			129			2,917			261
Interest expense		(27,776	)		(36,003	)		(56,934	)		(72,338	)
Other income (expense)		3,010			(22	)		6,159			(5,472	)
Income before income taxes		56,473			44,138			101,448			54,286
Income tax expense		(16,180	)		(17,113	)		(19,502	)		(22,068	)
Net income	$	40,293		$	27,025		$	81,946		$	32,218
Net income per share:
Net income per share, basic	$	0.19		$	0.13		$	0.38		$	0.16
Weighted average shares of common stock outstanding, basic		217,799			200,968			216,197			197,819
Net income per share, diluted	$	0.18		$	0.13		$	0.37		$	0.16
Weighted average shares of common stock outstanding, diluted		224,864			210,442			223,482			206,763

The accompanying notes are an integral part of these unaudited consolidated financial statements.


AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Amounts in thousands, except share data)
(Unaudited)

	For the three-month period ended July 4, 2026
	Common Stock				Additional Paid-in			Accumulated			Total Stockholders’
	Shares		Amount		Capital			Deficit			Equity
Balance, April 4, 2026		217,510,046	$	2,175	$	1,353,353		$	(1,115,476	)		240,052
Issuance of vested restricted shares		219,532		2		(2	)		-			-
Employee stock purchase plan		354,260		4		2,457						2,461
Stock option exercise		69,089		1		336			-			337
Non-cash share-based compensation		-		-		4,134			-			4,134
Net income		-		-		-			40,293			40,293
Balance, July 4, 2026		218,152,927	$	2,182	$	1,360,278		$	(1,075,183	)	$	287,277


	For the three-month period ended June 28, 2025
	Common Stock				Additional Paid-in			Accumulated			Total Stockholders’
	Shares		Amount		Capital			Deficit			Deficit
Balance, March 29, 2025		195,093,866	$	1,951	$	1,274,889		$	(1,376,970	)	$	(100,130	)
Issuance of shares in connection with acquisition		11,184,588		112		59,726			-			59,838
Issuance of vested restricted shares		1,980,939		20		(3,904	)		-			(3,884	)
Non-cash share-based compensation		-		-		5,159			-			5,159
Net income		-		-		-			27,025			27,025
Balance, June 28, 2025		208,259,393	$	2,083	$	1,335,870		$	(1,349,945	)	$	(11,992	)


	For the six-month period ended July 4, 2026
	Common Stock				Additional Paid-in			Accumulated			Total Stockholders’
	Shares		Amount		Capital			Deficit			Equity
Balance, January 3, 2026		210,996,359	$	2,110	$	1,349,480		$	(1,157,129	)	$	194,461
Issuance of vested restricted shares		6,678,219		67		(545	)		-			(478	)
Employee stock purchase plan		354,260		4		2,457			-			2,461
Stock option exercise		124,089		1		604						605
Non-cash share-based compensation		-		-		8,282			-			8,282
Net income		-		-		-			81,946			81,946
Balance, July 4, 2026		218,152,927	$	2,182	$	1,360,278		$	(1,075,183	)	$	287,277


	For the six-month period ended June 28, 2025
	Common Stock				Additional Paid-in			Accumulated			Total Stockholders’
	Shares		Amount		Capital			Deficit			Deficit
Balance, December 28, 2024		193,225,177	$	1,932	$	1,256,680		$	(1,382,163	)	$	(123,551	)
Issuance of shares in connection with acquisition		11,184,588	$	112	$	59,726		$	-		$	59,838
Issuance of vested restricted shares		3,001,955		30		(5,591	)		-			(5,561	)
Employee stock purchase plan		847,673		9		1,782			-			1,791
Non-cash share-based compensation		-		-		23,273			-			23,273
Net income		-		-		-			32,218			32,218
Balance, June 28, 2025		208,259,393	$	2,083	$	1,335,870		$	(1,349,945	)	$	(11,992	)

The accompanying notes are an integral part of these unaudited consolidated financial statements.


AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)

	For the six-month periods ended
	July 4, 2026			June 28, 2025
Cash Flows From Operating Activities:
Net income	$	81,946		$	32,218
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		5,893			5,211
Amortization of deferred debt issuance costs		1,948			3,350
Reduction in carrying amount of operating lease right of use assets		9,295			8,704
Non-cash share-based compensation		8,282			16,155
Loss on disposal or impairment of licenses, property and equipment, and software		120			319
Fair value adjustments on interest rate derivatives		1,230			17,580
Deferred income taxes		-			607
Changes in operating assets and liabilities, net of impact of acquisitions:
Patient accounts receivable		(12,819	)		(31,033	)
Prepaid expenses		1,009			1,490
Other current and long-term assets		7,345			(3,813	)
Accounts payable and other accrued liabilities		94			8,191
Accrued payroll and employee benefits		(12,158	)		111
Insurance reserves		9,573			(4,929	)
Operating lease liabilities		(9,714	)		(9,479	)
Other current and long-term liabilities		(6,767	)		(1,745	)
Net cash provided by operating activities		85,277			42,937
Cash Flows From Investing Activities:
Acquisitions of businesses, net of cash acquired		(169,443	)		(14,853	)
Payment for interest rate cap premium		(4,634	)		-
Purchases of property and equipment, and software		(5,847	)		(3,477	)
Net cash used in investing activities		(179,924	)		(18,330	)
Cash Flows From Financing Activities:
Payment for shares withheld to cover employee taxes on vesting of restricted stock		(478	)		(6,292	)
Proceeds from exercise of options		605			-
Proceeds from employee stock purchase plan		2,461			1,791
Principal payments on term loans		(3,312	)		(4,600	)
Principal payments on notes payable		(4,961	)		(4,086	)
Payment of debt issuance costs		-			(1,114	)
Settlements with interest rate swap counterparties		4,268			6,144
Net cash used in financing activities		(1,417	)		(8,157	)
Net change in cash and cash equivalents		(96,064	)		16,450
Cash and cash equivalents at beginning of period		193,260			84,288
Cash and cash equivalents at end of period	$	97,196		$	100,738


Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	54,884	$	69,193
Cash paid for income taxes, net of refunds received	$	12,973	$	15,723
Financed insurance premiums	$	1,669	$	1,842

The accompanying notes are an integral part of these unaudited consolidated financial statements.

1. DESCRIPTION OF BUSINESS

Aveanna Healthcare Holdings Inc. (together with its consolidated subsidiaries, the “Company”) is headquartered in Atlanta, Georgia and has locations in 39 states with concentrations in Texas, Pennsylvania, and California. The Company provides a broad range of pediatric and adult healthcare services, primarily focused on care in the home, including nursing, hospice, rehabilitation, occupational nursing in schools, therapy, and day treatment center services for medically complex and chronically ill children and adults, as well as delivery of enteral nutrition and other products to patients. In addition, the Company provides respite healthcare services, which are temporary care provider services provided in relief of the patient’s normal caregiver. The Company’s services are designed to provide a high quality, lower cost alternative to prolonged hospitalization.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying interim unaudited consolidated financial statements include the accounts of Aveanna Healthcare Holdings Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in the interim unaudited consolidated financial statements, and business combinations accounted for as purchases have been included in the interim unaudited consolidated financial statements from their respective dates of acquisition.

Basis of Presentation

The accompanying interim consolidated financial statements are unaudited and have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these interim unaudited consolidated financial statements do not include all the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, these interim unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company’s financial position as of July 4, 2026 and the results of operations for the three and six-month periods ended July 4, 2026 and June 28, 2025, respectively. The results reported in these interim unaudited consolidated financial statements should not be regarded as indicative of results that may be expected for any future period or the year ending January 2, 2027. These interim unaudited consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements and related notes for the fiscal year ended January 3, 2026 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 19, 2026.

Our fiscal year ends on the Saturday that is closest to December 31 of a given year, resulting in either a 52 or 53-week fiscal year. The interim unaudited consolidated balance sheets reflect the accounts of the Company as of July 4, 2026 and January 3, 2026. For the three-month periods ended July 4, 2026 and June 28, 2025, the interim unaudited consolidated statements of operations and stockholders' equity (deficit) reflect the accounts of the Company from April 5, 2026 through July 4, 2026 and March 30, 2025 through June 28, 2025, respectively, each of which include 13 weeks. For the six-month periods ended July 4, 2026 and June 28, 2025, the interim unaudited consolidated statements of operations, stockholders' equity (deficit), and cash flows reflect the accounts of the Company from January 4, 2026, through July 4, 2026 and December 29, 2024 through June 28, 2025, respectively, each of which includes 26 weeks.

Use of Estimates

The Company’s accounting and reporting policies conform with U.S. GAAP. In preparing the interim unaudited consolidated financial statements, the Company is required to make estimates and assumptions that impact the amounts reported in these interim unaudited consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses ("ASU 2024-03"), which requires public entities to disclose additional information that disaggregates certain expense captions into specified categories in the Notes to the consolidated financial statements. In January 2025, the FASB issued ASU 2025-01, Expense Disaggregation Disclosures (Topic 220): Clarifying the Effective Date. The new standard clarifies that ASU 2024-03 is required to be adopted in the annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The disclosure updates are

required to be applied prospectively with the option for retrospective application. The Company is currently evaluating the impact the amended guidance will have on its disclosures.

3. REVENUE

The Company evaluates the nature, amount, timing and uncertainty of revenue and cash flows using the five-step process. The Company uses a portfolio approach to group contracts with similar characteristics and analyze historical cash collection trends.

Revenue is primarily derived from (i) pediatric healthcare services provided to patients, including private duty nursing and therapy services; (ii) adult home health and hospice services (collectively “patient revenue”); and (iii) the delivery of enteral nutrition and other products to patients (“product revenue”). The services provided by the Company have no fixed duration and can be terminated by the patient or the facility at any time; therefore, each service provided is its own stand-alone contract. Incremental costs of obtaining a contract are expensed as incurred due to the short-term nature of the contracts.

Services ordered by a healthcare provider in an episode of care are not separately identifiable and therefore have been combined into a single performance obligation for each contract. The Company recognizes revenue as its performance obligations are completed. For patient revenue, the performance obligation is satisfied over time as the customer simultaneously receives and consumes the benefits of the healthcare services provided. For product revenue, the performance obligation is satisfied at the point in time of delivery of the product to the patient. The Company recognizes patient revenue equally over the number of treatments provided in a single episode of care. Typically, patients and third-party payers are billed within several days of the service being performed, and payments are due based on contract terms.

The Company’s lines of business are generally classified into the following categories: private duty services; home health and hospice; and medical solutions.

Private Duty Services (“PDS”). The PDS business includes a broad range of pediatric and adult healthcare services, including private duty skilled nursing, non-clinical services, which include support services and personal care services, pediatric therapy services, rehabilitation services, and nursing services in schools and pediatric day healthcare centers.

Home Health & Hospice (“HHH”). The HHH business provides home health, hospice, and personal care services to predominately elderly patients.

Medical Solutions (“MS”). The MS business includes the delivery of enteral nutrition and other products to patients.

For the PDS, HHH, and MS businesses, the Company receives payments from the following sources for services rendered: (i) state governments under their respective Medicaid programs (“Medicaid”); (ii) Managed Care providers of state government Medicaid programs (“Medicaid MCO”); (iii) commercial insurers; (iv) other government programs including Medicare, Tricare and ChampVA (collectively, “Medicare”); and (v) individual patients. As the period between the time of service and time of payment is one year or less, the Company does not adjust for the effects of a significant financing component.

Most contracts contain variable consideration; however, it is unlikely that a significant reversal of revenue will occur when the uncertainty is resolved, and therefore, the Company has included the variable consideration in the estimated transaction price. The Company determines the transaction price based on established billing rates reduced by contractual adjustments provided to third-party payers and by implicit price concessions which the Company estimates based on its historical collection experience. Management estimates the transaction price on a payer-specific basis given its interpretation of the applicable regulations or contract terms. Updated regulations and contract negotiations occur frequently, necessitating regular review and assessment by management. There were no material revenue adjustments recognized from performance obligations satisfied or partially satisfied in previous periods for the three and six-month periods ended July 4, 2026 or June 28, 2025, respectively.

As of July 4, 2026 and January 3, 2026, estimated contractual adjustments and implicit price concessions of $101.1 million and $106.5 million, respectively, were recorded as reductions to patient accounts receivable balances to arrive at the estimated collectible revenue and patient accounts receivable. Subsequent changes resulting from a patient’s ability to pay are recorded as bad debt expense, which is included as a component of operating expenses in the consolidated statements of operations. The Company did not record any bad debt expense for the three and six-month periods ended July 4, 2026 or June 28, 2025, respectively.

The following table presents revenue by payer type as a percentage of total revenue for the three and six-month periods ended July 4, 2026 and June 28, 2025, respectively:


	For the three-month periods ended						For the six-month periods ended
	July 4, 2026			June 28, 2025			July 4, 2026			June 28, 2025
Medicaid MCO		59.4	%		58.6	%		59.4	%		58.6	%
Medicaid		21.1	%		22.2	%		21.4	%		22.5	%
Commercial		9.3	%		9.4	%		9.1	%		9.1	%
Medicare		10.0	%		9.7	%		9.9	%		9.7	%
Self-pay		0.2	%		0.1	%		0.2	%		0.1	%
Total revenue		100.0	%		100.0	%		100.0	%		100.0	%

4. ACQUISITION

On March 9, 2026, Pediatric Services of America, LLC, a subsidiary of the Company, entered into an Equity Interest Purchase Agreement (the "Purchase Agreement") to acquire 100% of the equity interests in Family First Holding, LLC ("Family First") for a purchase price of $175.5 million, subject to customary adjustments for working capital and other items (the "Acquisition"). Family First provides pediatric home care across seven states including Florida and Texas.

On June 1, 2026, the Company paid approximately $173.7 million in cash as consideration, after customary adjustments for working capital and other items, upon the closing of the Acquisition. The Company funded the Acquisition with cash on hand.

The Purchase Agreement provides for customary purchase price adjustments, and $10.8 million of cash held in escrows for various periods up to 24 months following the closing to support obligations under the Purchase Agreement.

The preliminary purchase price allocation as of the acquisition date, reflecting measurement period adjustments made during the respective period, is as follows (amounts in thousands):


Entity	Family First
Acquisition Date	June 1, 2026
Cash consideration	$	173,734

Cash and cash equivalents	$	4,291
Patient accounts receivable		10,698
Other identifiable assets and liabilities, net		(5,869	)
Intangible assets - licenses		7,250
Intangible assets - trade names		1,150
Total identifiable net assets		17,520
Goodwill		156,214
Total	$	173,734

The purchase price allocation is preliminary pending a final analysis of the impact of income taxes and finalization of the fair value of intangible assets and net working capital. Acquired trade names are amortized over a 1-year useful life and licenses are classified as indefinite-lived intangible assets. The preliminary goodwill recognized is attributable to the excess of the particular purchase price of the Acquisition over the fair value of identifiable net assets acquired, including other identified intangible assets. Goodwill is primarily attributable to expected synergies resulting from the Acquisition. Preliminary goodwill of $156.2 million is expected to be deductible for income tax purposes.

On June 2, 2025, the Company, Thrive Skilled Pediatric Care, LLC, a Delaware limited liability company (“Thrive”), and other parties thereto completed a Plan of Merger (the “Merger Agreement”), in which Thrive became a wholly-owned subsidiary of the Company (collectively, the “Merger”). The Company paid approximately $75.7 million as consideration in cash and common stock. The final purchase price allocation, reflecting measurement period adjustments made during the subsequent periods are as follows (amounts in thousands):


Entity	Thrive
Acquisition Date	June 2, 2025
Cash consideration	$	15,855
Share-based consideration		59,838
Total	$	75,693

Cash and cash equivalents	$	1,002
Patient accounts receivable		18,306
Other identifiable assets and liabilities, net		(14,408	)
Intangible assets - licenses		5,000
Intangible assets - trade names		540
Total identifiable net assets		10,440
Goodwill		65,253
Total	$	75,693

Preliminary goodwill and measurement adjustments were allocated to segments as follows (amounts in thousands):


	PDS			HHH		MS		Total
Balance at January 3, 2026 , net (1)	$	964,218		$	46,188	$	110,636	$	1,121,042
Addition		156,214			-		-		156,214
Measurement period adjustments		(1,237	)		-		-		(1,237	)
Balance at July 4, 2026, net (1)	$	1,119,195		$	46,188	$	110,636	$	1,276,019

(1) Goodwill balance is net of accumulated impairment losses of $608.0 million for PDS, $119.8 million for MS, and $487.4 million for HHH.

The Company incurred transaction costs of $4.4 million and $7.5 million during the three and six-month periods ended July 4, 2026, respectively primarily related to the Acquisition. These costs are included in acquisition-related costs in the interim unaudited consolidated statement of operations. Acquisition-related costs during the three and six-month periods ended June 28, 2025 of $3.4 million and $3.5 million, respectively, primarily relate to the previous acquisition of Thrive, completed on June 2, 2025.

Pro forma financial information related to the above acquisitions has not been provided as the transactions were determined to not be significant to the Company in accordance with Regulation S-X. The results of operations following the acquisition of Family First on June 1, 2026 are included in the Company’s consolidated results of operations for the three and six-month periods ended July 4, 2026. The results of operations following the acquisition of Thrive on June 2, 2025 are included in the Company's consolidated results of operations for the three and six-month periods ended July 4, 2026 and June 28, 2025.

5. LONG-TERM OBLIGATIONS

Long-term obligations consisted of the following as of July 4, 2026 and January 3, 2026, respectively (dollar amounts in thousands):


Instrument	Stated Maturity Date	Contractual Interest Rate as of July 4, 2026	Interest Rate as of July 4, 2026	July 4, 2026			January 3, 2026
2026 Term Loans (1)	09/2032	S + 3.00%	6.64%	$	1,318,375		$	1,321,687
2026 Refinancing Revolving Credit Facility (1)	09/2030	S + 3.00%	6.64%		-			-
Total principal amount of long-term obligations					1,318,375			1,321,687
Less: unamortized debt issuance costs					(20,494	)		(21,785	)
Total amount of long-term obligations, net of unamortized debt issuance costs					1,297,881			1,299,902
Less: current portion of long-term obligations					(13,250	)		(13,250	)
Total amount of long-term obligations, net of unamortized debt issuance costs, less current portion				$	1,284,631		$	1,286,652
(1) S = One-month SOFR

On May 26, 2026, Aveanna Healthcare LLC (the “Borrower”), a wholly owned subsidiary of the Company, entered into the thirteenth amendment (the "Amendment") to its First Lien Credit Agreement, dated as of March 16, 2017 (as further amended, supplemented, or otherwise modified from time to time, the "Existing Credit Agreement"), which constituted a repricing of the facilities under the Existing Credit Agreement resulting in a 0.50% reduction to applicable interest rate margins (the Existing Credit Agreement, as amended by the Amendment, the "Credit Agreement"). Pursuant to the Amendment, the outstanding senior secured term loans under the Existing Credit Agreement were refinanced with new senior secured term loans in an aggregate principal amount of $1.3 billion (the “2026 Term Loans”) and the existing $250.0 million senior secured revolving credit facility was refinanced with a new $250.0 million senior secured revolving credit facility (the “2026 Refinancing Revolving Credit Facility” and, together with the 2026 Term Loans, the “2026 Facilities”). On May 28, 2026, based on certain terms of the Amendment, and as the result of a favorable credit agency rating improvement, the applicable interest rate margins were decreased by an additional 0.25%.

In accordance with ASC 470-50-40, Debt Modification and Extinguishments, the Amendment related to the 2026 Facilities was accounted for as a modification of debt, as lenders in the 2026 Facilities did not change. Third party fees were recorded as debt modification expense of $1.5 million and included in Corporate expenses on the consolidated statements of operations for both the three and six-month periods ended July 4, 2026.

As a result of the repricing above, as of July 4, 2026, the 2026 Term Loans under the Credit Agreement bear interest at a rate equal to, at the election of the Borrower, Term SOFR (as defined in the Credit Agreement) plus an applicable margin equal to 3.00% per annum or an alternative base rate ("ABR") plus an applicable margin equal to 2.00% per annum. Loans under the 2026 Refinancing Revolving Credit Facility bear interest at a rate equal to, at the election of the Borrower, Term SOFR, plus an applicable margin equal to 3.00% per annum or a base rate plus an applicable margin equal to 2.00% per annum, so long as the Consolidated First Lien Net Leverage Ratio (as defined in the Credit Agreement) is greater than 3.90 to 1.00 as of the last day of the preceding fiscal quarter, subject to (a) a decrease of 0.25% in the event that, and for so long as, the Consolidated First Lien Net Leverage Ratio is less than or equal to 3.90 to 1.00 and greater than 3.40 to 1.00 as of the last day of the preceding fiscal quarter and (b) a decrease of 0.50% in the event that, and for so long as, the Consolidated First Lien Net Leverage Ratio is less than or equal to 3.40 to 1.00 as of the last day of the preceding fiscal quarter. As of July 4, 2026, the principal amount of the 2026 Term Loans and borrowings under the 2026 Refinancing Revolving Credit Facility each accrued interest at a rate of 6.64%.

Debt issuance costs related to the term loans are recorded as a direct deduction from the carrying amount of the debt. The balances for debt issuance costs related to the term loans as of July 4, 2026 and January 3, 2026 were $20.5 million and $21.8 million, respectively. Debt issuance costs related to the 2026 Refinancing Revolving Credit Facility are recorded within other long-term assets. The balances for debt issuance costs related to the 2026 Refinancing Revolving Credit Facility as of July 4, 2026 and January 3, 2026 were $2.9 million and $3.2 million, respectively. The Company recognized interest expense related to the amortization of debt issuance costs of $0.8 million and $1.6 million for the three and six-month periods ended July 4, 2026, respectively, and $1.5 million and $3.1 million for the three and six-month periods ended June 28, 2025, respectively.

Issued letters of credit as of July 4, 2026 and January 3, 2026 were both $24.5 million. There were no swingline loans outstanding as of July 4, 2026 or January 3, 2026. Borrowing capacity under the Company's 2026 Refinancing Revolving Credit Facility was

approximately $225.5 million as of July 4, 2026. Available borrowing capacity under the 2026 Refinancing Revolving Credit Facility is subject to a maintenance leverage covenant that becomes effective if more than 40% of the total commitment is utilized.

The fair value of the Company's long-term obligations was estimated using market-observable inputs from the Company’s comparable peers with public debt, including quoted prices in active markets, which are considered Level 2 inputs. The aggregate fair value of the Company's long-term obligations was $1,323.3 million at July 4, 2026.

The Company was in compliance with all financial covenants and restrictions under the foregoing instruments at July 4, 2026.

6. SECURITIZATION FACILITY

On November 12, 2021, the Company (through a wholly owned special purpose entity, Aveanna SPV I, LLC) (the “special purpose entity”) and a lending institution entered into a Receivables Financing Agreement, which, as amended, has a scheduled termination date of June 25, 2028 (as amended, the “Securitization Facility”). On June 25, 2025, the Company amended the Securitization Facility to increase the maximum amount available thereunder from $225.0 million to $275.0 million, subject to certain borrowing base requirements. The Securitization Facility was further amended on June 25, 2026 to remove the previously disclosed additional credit spread adjustment ("CSA"). The balances for debt issuance costs related to the Securitization Facility as of July 4, 2026 and January 3, 2026 were $1.3 million and $1.6 million, respectively and included in other long-term assets. The Company recognized interest expense related to the amortization of debt issuance costs of $0.2 million and $0.3 million for the three and six-month periods ended July 4, 2026, respectively, and $0.2 million and $0.3 million for the three and six-month periods ended June 28, 2025, respectively.

Pursuant to two separate sale agreements, each of which is among Aveanna Healthcare, LLC, as initial servicer, certain of the Company's subsidiaries and the special purpose entity, the subsidiaries sold substantially all of their existing and future accounts receivable balances to the special purpose entity. The special purpose entity uses the accounts receivable balances to collateralize loans made under the Securitization Facility. The Company retains the responsibility of servicing the accounts receivable balances pledged as collateral under the Securitization Facility and provides a performance guaranty.

The outstanding balance under the Securitization Facility was $165.0 million at July 4, 2026 and $165.0 million at January 3, 2026. The balance accrues interest at a rate equal to the SOFR rate. The interest rate under the Securitization Facility was 6.17% at July 4, 2026. See Note 15 - Subsequent Event for additional disclosure regarding the Securitization Facility.

The Securitization Facility is accounted for as a collateralized financing activity, rather than a sale of assets; therefore: (i) accounts receivable balances pledged as collateral are presented as assets and the borrowings are presented as liabilities in the interim unaudited consolidated balance sheets; (ii) the consolidated statements of operations reflect the interest expense associated with the collateralized borrowings; and (iii) receipts from customers related to the underlying accounts receivable are reflected as operating cash flows and borrowings and repayments under the collateralized loans are reflected as financing cash flows within the consolidated statements of cash flows. The Securitization Facility is included within current liabilities on the interim unaudited consolidated balance sheets as it is collateralized by current patient accounts receivable and not because payments are due within one year of the balance sheet date.

7. FAIR VALUE MEASUREMENTS

The carrying amounts of cash and cash equivalents, patient accounts receivable, accounts payable, accrued expenses and other current liabilities approximate their fair values due to the short-term maturities of the instruments.

The Company’s other assets measured at fair value were as follows (amounts in thousands):


	Fair Value Measurements at July 4, 2026
	Level 1		Level 2		Level 3		Total
Assets:
Interest rate cap agreements	$	-	$	12,033	$	-	$	12,033
Total derivative assets	$	-	$	12,033	$	-	$	12,033

	Fair Value Measurements at January 3, 2026
	Level 1		Level 2		Level 3		Total
Assets:
Interest rate cap agreements	$	-	$	4,778	$	-	$	4,778
Interest rate swap agreements		-		3,851		-		3,851
Total derivative assets	$	-	$	8,629	$	-	$	8,629

The fair values of the interest rate swap and cap agreements are based on the estimated net proceeds or costs to settle the transactions as of the respective balance sheet dates. The valuations are based on commercially reasonable industry and market practices for valuing similar financial instruments. See Note 8 – Derivative Financial Instruments for further details on the Company’s interest rate swap and cap agreements.

8. DERIVATIVE FINANCIAL INSTRUMENTS

The Company’s earnings and cash flows are subject to fluctuations due to changes in interest rates, and the Company seeks to mitigate a portion of this risk by entering into derivative contracts. The derivatives the Company has used are interest rate swaps and interest rate caps. The Company recognizes derivatives as either assets or liabilities at fair value on the interim unaudited consolidated balance sheets and does not designate the derivatives as hedging instruments. Changes in the fair value of derivatives are therefore recorded in earnings throughout the terms of the respective derivatives.

The Company has multiple interest rate cap agreements. The cap agreements with an expiration date of February 28, 2027 (the "2027 Caps") have an aggregate notional amount of $880.0 million and a cap rate of 2.96%. The 2027 Caps provide that the counterparty pays the Company the amount by which SOFR exceeds 2.96%. On April 14, 2026, the Company entered into an additional interest rate cap agreement, effective June 30, 2026 with an expiration date of December 31, 2029 (the "2029 Cap"), for an aggregate notional amount of $520.0 million. The 2029 Cap provides that the counterparty pays the Company the amount by which SOFR exceeds 4.00%. The premium paid for the 2029 Cap was $4.6 million. The fair value of the interest rate cap agreements was $12.0 million at July 4, 2026 and $4.8 million at January 3, 2026. The 2027 Caps are included in other current assets in the interim unaudited consolidated balance sheet at July 4, 2026 and other long term assets in the consolidated balance sheet at January 3, 2026. The 2029 Cap is included in other long term assets in the interim unaudited consolidated balance sheet at July 4, 2026. The Company does not apply hedge accounting to interest rate cap agreements and records all mark-to-market adjustments directly to other income (expense) in the consolidated statements of operations, which are included within cash flows from operating activities in the consolidated statement of cash flows. The proceeds received from cap counterparties under the cap agreements are recognized through cash flows from operating activities in the consolidated statements of cash flows.

The Company had two interest rate swap agreements intended to limit its exposure to interest rate risk on its variable rate debt. These swaps expired on June 30, 2026. Since July 1, 2023, the interest rate swap agreements have paid a fixed rate of 2.03% and received the one-month SOFR rate, subject to a 0.50% floor. The aggregate notional amount of the interest rate swaps was $520.0 million at January 3, 2026. The fair value of the interest rate swaps was $3.9 million at January 3, 2026. The fair value of the interest rate swaps was included in other current assets in the consolidated balance sheet at January 3, 2026. The Company did not apply hedge accounting to these agreements and recorded all mark-to-market adjustments directly to other income (expense) in the consolidated statements of operations, which are included within cash flows from operating activities in the consolidated statements of cash flows. The net settlements incurred with swap counterparties under the swap agreements were recognized through cash flows from financing activities in the consolidated statements of cash flows due to an other-than-insignificant financing element on the interest rate swaps.

The following losses and gains from these derivatives not designated as hedging instruments were recognized in the Company’s consolidated statements of operations for the three and six-month periods ended July 4, 2026 and June 28, 2025, respectively (amounts in thousands):


	Statement of Operations	For the three-month periods ended
	Classification	July 4, 2026			June 28, 2025
Interest rate cap agreements	Other income (expense)	$	1,431		$	(3,656	)
Interest rate swap agreements	Other income (expense)	$	(2,014	)	$	(2,322	)

	Statement of Operations	For the six-month periods ended
	Classification	July 4, 2026			June 28, 2025
Interest rate cap agreements	Other income (expense)	$	2,621		$	(11,126	)
Interest rate swap agreements	Other income (expense)	$	(3,851	)	$	(6,454	)

The Company does not utilize financial instruments for trading or other speculative purposes.

9. INCOME TAXES

On July 4, 2025, H.R. 1., also known as the One Big Beautiful Bill Act ("OBBBA), was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. Among other changes, OBBBA provides full bonus depreciation for certain assets placed into service after January 19, 2025, an election to expense current U.S. incurred research or experimental expenditures, and a new calculation allowing companies to deduct additional interest expense.

The Company records its provision for income taxes on an interim basis based upon the estimate of the annual effective income tax rate for the full year applied to “ordinary” income or loss, adjusted each quarter for discrete items. The Company analyzes various factors to determine the estimated annual effective income tax rate, including projections of annual earnings, the impact of state and local income taxes, its ability to use tax credits and net operating loss carryforwards, and available tax planning alternatives.

The Company recorded income tax expense of $16.2 million and $19.5 million for the three and six-month periods ended July 4, 2026, respectively, and income tax expense of $17.1 million and $22.1 million for the three and six-month periods ended June 28, 2025, respectively.

The Company’s effective tax rate was 28.7% and 19.2% for the three and six-month periods ended July 4, 2026, respectively, and 38.8% and 40.7% for the three and six-month periods ended June 28, 2025, respectively. The effective tax rates for the three and six-month periods ended July 4, 2026 and June 28, 2025 differed from the statutory rate of 21% primarily due to certain non-deductible expenses, most notably interest expense and executive compensation, and the changes in the valuation allowance recorded against certain deferred tax assets. The three and six-month periods ended July 4, 2026 also included a discrete benefit that resulted in the effective rate differing from the statutory rate.

For the three and six-month periods ended July 4, 2026, there were no material changes to the Company's uncertain tax positions. There has been no change to the Company’s policy that recognizes potential interest and penalties related to uncertain tax positions in income tax expense in the accompanying consolidated statements of operations.

10. SHARE-BASED COMPENSATION

Director Restricted Stock Units

In February 2026, the Compensation Committee of the Company's Board of Directors (the "Compensation Committee") approved grants of 97,102 restricted stock units, with a grant date per share fair value of $7.93, to certain independent Directors ("Director RSUs") under the Company's 2021 Omnibus Stock Incentive Plan (the "2021 Omnibus Incentive Plan"). Director RSUs vest on the first anniversary of the grant date, and each RSU settles for one share of common stock upon vesting. The Company recorded compensation expense of $0.2 million and $0.4 million for the three and six-month periods ended July 4, 2026, respectively, and $0.3 million and $0.4 million for the three and six-month periods ended June 28, 2025, respectively, which is included in corporate expenses in the interim unaudited consolidated statements of operations. Unrecognized compensation expense as of July 4, 2026 associated with outstanding director restricted stock units was $0.5 million.

Long-Term Incentive Plan ("LTIP")

In February 2026, the Compensation Committee approved grants of restricted stock units ("RSUs") and performance stock units ("PSUs") under the Company's 2021 Omnibus Stock Incentive Plan. Annual grants of RSUs and PSUs have been awarded since fiscal year 2022. Upon vesting, each RSU and each PSU settles for one share of common stock.

The RSUs are subject to a three-year service-based cliff vesting schedule commencing on the date of grant. Compensation cost for the RSUs is measured based on the grant date fair value of each underlying share of common stock and the number of RSUs granted and is recognized over the applicable vesting period on a straight-line basis. In February 2026, the Company granted 1,046,377 RSUs with a grant date per share fair value of $7.93. The Company recorded compensation expense, net of forfeitures, of $1.7 million and $3.2 million for the three and six-month periods ended July 4, 2026, respectively, and $1.5 million and $3.1 million for the three and six-month periods ended June 28, 2025, respectively, which is included in corporate and branch and regional administrative expenses in the interim unaudited consolidated statements of operations. Unrecognized compensation expense was $12.5 million as of July 4, 2026.

The PSUs contain performance criterion based on adjusted EBITDA targets for each of the three years during the vesting period. Achievement of any annual target during the three years subsequent to the grant date results in a cumulative achievement event for the target year and any prior year award not previously achieved. Additionally, the PSUs are subject to a three-year service-based cliff vesting schedule commencing on the date of grant. The PSUs have service and performance conditions, and compensation cost is initially measured based on the grant date fair value of each underlying share of common stock. Cumulative compensation cost is subsequently adjusted at the end of each reporting period to reflect the current estimation of achieving the performance condition. In February 2026, the Company granted 1,044,791 PSUs with a weighted average grant date per share fair value of $7.93. The Company recorded compensation expense, net of forfeitures, of $1.7 million and $3.5 million for the three and six-month periods ended July 4, 2026, respectively, and $2.2 million and $2.7 million for the three and six-month periods ended June 28, 2025, respectively, which is included in corporate and branch and regional administrative expenses in the interim unaudited consolidated statements of operations. Unrecognized compensation expense was $12.2 million as of July 4, 2026.

Senior Management Retention Plan ("SMRP")

In the second quarter of 2023, the Compensation Committee approved SMRP awards to certain members of management to be paid in the form of RSUs under the 2021 Omnibus Stock Incentive Plan. The awards were granted based on a fixed dollar value for each member of senior management included in the plan. The performance condition related to the SMRP was achieved on March 29, 2025, resulting in the acceleration of the related compensation expense of the awards. The Company recorded no compensation expense during the three and six month periods ended July 4, 2026 or the three-month period ended June 28, 2025, and $7.6 million during the six-month period ended June 28, 2025, which is included in corporate expenses and branch and regional administrative expenses in the interim unaudited consolidated statements of operations. There was no unrecognized compensation expense as of July 4, 2026.

Total compensation expense, net of forfeitures, for all awards under the Company's 2021 Omnibus Incentive Plan was $3.6 million and $7.1 million for the three and six-month periods ended July 4, 2026 and $4.7 million and $15.2 million for the three and six-month periods ended June 28, 2025, respectively. Total unrecognized compensation expense for all awards under the 2021 Omnibus Incentive Plan was $25.2 million as of July 4, 2026.

Employee Stock Purchase Plan

During the three and six-month periods ended July 4, 2026, participants in the Company's Employee Stock Purchase Plan purchased a total of 354,260 shares of common stock at a weighted average price of approximately $6.94 per share. During the six-month period ended June 28, 2025, participants purchased 847,673 shares of common stock at a weighted average price of approximately $2.11 per share.

The Company recorded compensation expense of $0.6 million and $1.2 million for the three and six-month periods ended July 4, 2026, respectively, and $0.5 million and $0.9 million for the three and six-month periods ended June 28, 2025, respectively, which is included in corporate expenses, branch and regional administrative expenses and cost of revenue, excluding depreciation and amortization in the interim unaudited consolidated statements of operations.

11. COMMITMENTS AND CONTINGENCIES

Insurance Reserves

As is typical in the healthcare industry, the Company is subject to claims that its services have resulted in patient injury or other adverse effects.

The accrued professional liability insurance reserves included in the interim unaudited consolidated balance sheets include estimates of the ultimate costs, including third-party legal defense costs, in the event the Company was unable to receive funds from claims made under commercial insurance policies, for claims that have been reported but not paid and claims that have been incurred but not reported at the balance sheet dates. Although substantially all reported claims are paid directly by the Company’s commercial insurance carriers (after the Company satisfies the applicable policy deductible and/or retention), the Company is ultimately responsible for payment of these claims in the event its insurance carriers become insolvent or otherwise do not honor the contractual obligations under the liability policies. The Company is required under U.S. GAAP to recognize these estimated liabilities in its consolidated financial statements on a gross basis; with a corresponding receivable from the insurance carriers reflecting the contractual indemnity provided by the carriers under the related liability policies.

Since October 1, 2025, the Company has maintained primary commercial insurance coverage on a claims-made basis for professional liability claims with a $2.0 million per claim deductible, a $2.0 million aggregate buffer retention, and $5.0 million per claim and annual aggregate limits. Prior to October 1, 2025, the Company maintained primary commercial insurance coverage on a claims made basis for professional liability claims with varying deductibles by policy year from $0.5 million to $2.0 million on a per claim basis and $4.5 million to $6.0 million per claim and annual aggregate limits. Moreover, the Company maintains excess insurance coverage for professional liability claims to cover any claims over the aggregate limits. In addition, the Company maintains workers’ compensation insurance with $0.5 million per claim deductible and statutory limits. The Company reimburses insurance carriers for deductible losses under these policies. The Company’s insurance carriers require collateral to secure the Company’s obligation to reimburse insurance carriers for these deductible payments. Collateral as of July 4, 2026 was comprised of $24.5 million of issued letters of credit. Collateral as of January 3, 2026 was comprised of $24.5 million of issued letters of credit.

As of July 4, 2026, insurance reserves totaling $120.1 million were included on the interim unaudited consolidated balance sheets, representing $67.9 million and $52.2 million of reserves for professional liability claims and workers’ compensation claims, respectively. Estimated receivables under the insured programs totaled $42.1 million as of July 4, 2026. At January 3, 2026, insurance reserves totaling $97.8 million were included on the consolidated balance sheets, representing $50.4 million and $47.3 million of reserves for professional liability claims and workers’ compensation claims, respectively. Estimated receivables under the insured programs totaled $31.6 million as of January 3, 2026.

Litigation and Other Current Liabilities

The Company is currently a party to various routine litigation incidental to the business. While management currently believes that the ultimate outcome of such proceedings, individually and in the aggregate, will not have a material adverse effect on the Company’s financial position or overall trends in results of operations, litigation is subject to inherent uncertainties. Management has established provisions within other current liabilities in the accompanying consolidated balance sheets, which in the opinion of management represents the best estimate of exposure and adequately provides for such losses that may occur from asserted claims related to the provision of professional services and which may not be covered by the Company’s insurance policies. Management believes that any additional unfavorable provisions would not be material to the Company’s results of operations or financial position; however, if an unfavorable ruling on any asserted or unasserted claim were to occur, there exists the possibility of a material adverse impact on the Company’s net earnings or financial position. The estimate of the potential impact from legal proceedings on the Company’s financial position or overall results of operations could change in the future.

Healthcare Regulatory Matters

Starting on October 30, 2019 the Company has received grand jury subpoenas issued by the U.S. Department of Justice, Antitrust Division (the “Antitrust Division”), requiring the production of documents and information pertaining to nurse wages, reimbursement rates, and hiring activities in a few of its local markets. The Company is fully cooperating with the Antitrust Division with respect to this investigation. Based on the information currently available to the Company, management cannot predict the timing or outcome of this investigation, however, management does not believe the outcome of this investigation will be material to the Company's results of operations or financial position.

On July 19, 2023, the Company received a Civil Investigation Demand issued by the U.S. Department of Justice, United States Attorney’s Office, Middle District of Alabama (the “AUSA”), requiring the production of documents and information pertaining to Comfort Care Hospice, LLC, an indirect wholly owned subsidiary of the Company, regarding issues of (1) improper submission of claims to Medicare and other federal healthcare programs for service to patients who were ineligible or not properly certified for said healthcare services and (2) improper remuneration to medical directors and skilled nursing facilities for patient referrals in violation of certain federal regulations. The Company is fully cooperating with the AUSA with respect to this investigation, and management believes that a loss event is not probable and that this matter will not materially impact the Company’s business, results of operations or financial position. However, based on the information currently available to the Company, management cannot predict the timing or outcome of this investigation or predict the possible loss or range of loss, if any, associated with the resolution of this matter.

Laws and regulations governing the government payer programs are complex and subject to interpretation. Compliance with such laws and regulations can be subject to future governmental review and interpretation as well as significant regulatory action. From time to time, governmental regulatory agencies conduct inquiries and audits of the Company’s practices. It is the Company’s practice to cooperate fully with such inquiries. In addition to laws and regulations governing the Medicaid, Medicaid Managed Care, and Tricare programs, there are a number of federal and state laws and regulations governing matters such as the corporate practice of medicine, fee splitting arrangements, anti-kickback statues, physician self-referral laws, false or fraudulent claims filing and patient privacy requirements. Failure to comply with any such laws or regulations could have an adverse impact on the Company’s operations and financial results. The Company believes that it is in material compliance with all applicable laws and regulations and is not aware of any pending or threatened investigations involving allegations of wrongdoing.

12. RELATED PARTY TRANSACTIONS

As of July 4, 2026, one of the Company’s significant shareholders owned 7.2% of the 2026 Term Loans.

13. SEGMENT INFORMATION

The Company’s operating segments have been identified based upon how management has organized the business by services provided to customers and how the chief operating decision maker ("CODM") manages the business and allocates resources. The CODM for the Company is the Chief Executive Officer. The Company has three operating segments and three reportable segments, Private Duty Services, Home Health & Hospice, and Medical Solutions. The PDS segment predominantly includes private duty skilled nursing services, non-clinical and personal care services, and pediatric therapy services and is primarily reimbursed by Medicaid and Medicaid MCO. The HHH segment provides home health and hospice services to predominately elderly patients and is primarily reimbursed by Medicare. Through the MS segment, the Company provides enteral nutrition and other products to adults and children, delivered on a periodic or as-needed basis and is primarily reimbursed by Medicaid and Medicaid MCO.

The CODM evaluates segment performance using gross margin (and gross margin percentage). Gross margin includes revenue less all costs of revenue, excluding depreciation and amortization, but excludes branch and regional administrative expenses, corporate expenses and other non-field expenses. Revenue and cost presented below for the PDS and HHH segments primarily relate to patient services, while the MS segment’s revenue and cost are primarily from products. The CODM does not evaluate a measure of assets when assessing performance. The CODM uses gross margin and gross margin percentage to assess the performance of each segment compared to historical trends, forecasted performance, and industry peers, as well as ensure that each segment has appropriate operational support to manage performance.

Results shown for the three and six-month periods ended July 4, 2026 and June 28, 2025 are not necessarily those which would be achieved if each segment was an unaffiliated business enterprise. There are no intersegment transactions.

The following tables summarize the Company’s segment information for the three and six-month periods ended July 4, 2026 and June 28, 2025, respectively (amounts in thousands):


	For the three-month period ended July 4, 2026
	PDS			HHH			MS			Total
Revenue	$	553,929		$	69,023		$	47,531		$	670,483
Cost of revenue, excluding depreciation and amortization		394,047			31,837			26,074			451,958
Gross margin	$	159,882		$	37,186		$	21,457		$	218,525
Gross margin percentage		28.9	%		53.9	%		45.1	%		32.6	%


	For the three-month period ended June 28, 2025
	PDS			HHH			MS			Total
Revenue	$	486,012		$	60,112		$	43,429		$	589,553
Cost of revenue, excluding depreciation and amortization		328,078			27,048		$	23,627			378,753
Gross margin	$	157,934		$	33,064		$	19,802		$	210,800
Gross margin percentage		32.5	%		55.0	%		45.6	%		35.8	%


	For the six-month period ended July 4, 2026
	PDS			HHH			MS			Total
Revenue	$	1,089,581		$	135,632		$	93,185		$	1,318,398
Cost of revenue, excluding depreciation and amortization		780,464			62,670			51,311			894,445
Gross margin	$	309,117		$	72,962		$	41,874		$	423,953
Gross margin percentage		28.4	%		53.8	%		44.9	%		32.2	%


	For the six-month period ended June 28, 2025
	PDS			HHH			MS			Total
Revenue	$	946,010		$	116,845		$	85,922		$	1,148,777
Cost of revenue, excluding depreciation and amortization		653,391			53,041		$	47,987			754,419
Gross margin	$	292,619		$	63,804		$	37,935		$	394,358
Gross margin percentage		30.9	%		54.6	%		44.2	%		34.3	%


	For the three-month periods ended						For the six-month periods ended
Segment Reconciliation:	July 4, 2026			June 28, 2025			July 4, 2026			June 28, 2025
Total segment gross margin	$	218,525		$	210,800		$	423,953		$	394,358
Branch and regional administrative expenses		97,079			90,069			192,871			181,456
Corporate expenses		34,083			34,529			68,239			72,034
Depreciation and amortization		2,849			2,617			5,893			5,211
Acquisition-related costs		4,390			3,400			7,500			3,506
Other operating expense		144			151			144			316
Operating income		79,980			80,034			149,306			131,835
Interest income		1,259			129			2,917			261
Interest expense		(27,776	)		(36,003	)		(56,934	)		(72,338	)
Other income (expense)		3,010			(22	)		6,159			(5,472	)
Income before income taxes	$	56,473		$	44,138		$	101,448		$	54,286

14. NET INCOME PER SHARE

Basic net income per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding for the period. Diluted net income per share is calculated by dividing net income by the diluted weighted average

number of shares of common stock outstanding for the period. For purposes of this calculation, outstanding stock options, RSUs and PSUs are considered potential dilutive shares of common stock. The following is a computation of basic and diluted net income per share (amounts in thousands, except per share amounts):


	For the three-month periods ended				For the six-month periods ended
	July 4, 2026		June 28, 2025		July 4, 2026		June 28, 2025
Numerator:
Net income	$	40,293	$	27,025	$	81,946	$	32,218
Denominator:
Weighted average shares of common stock outstanding (1), basic		217,799		200,968		216,197		197,819
Net income per share, basic	$	0.19	$	0.13	$	0.38	$	0.16

Weighted average shares of common stock outstanding (1), diluted		224,864		210,442		223,482		206,763
Net income per share, diluted	$	0.18	$	0.13	$	0.37	$	0.16
Dilutive securities outstanding not included in the computation of diluted net income per share, as their effect is antidilutive:
RSUs		1,011		70		1,011		70
PSUs		1,010		-		1,010		-
Stock options		3,206		3,206		3,206		3,206

(1)

The calculation of weighted average shares of common stock outstanding includes all vested deferred restricted stock units.

15. SUBSEQUENT EVENT

On July 6, 2026, in accordance with certain required minimum funding provisions in the Securitization Facility Agreement, as amended, the Company increased borrowings under the Securitization Facility by $41.3 million. The total outstanding borrowings under the Securitization Facility was $206.3 million subsequent to the additional required minimum borrowing.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis provides information we believe is relevant to an assessment and understanding of our results of operations, financial condition, liquidity and cash flows for the periods presented below. This discussion should be read in conjunction with the interim unaudited consolidated financial statements and related notes contained elsewhere in this Quarterly Report on Form 10-Q and in conjunction with the audited consolidated financial statements and related notes, our “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in each case included in our Annual Report on Form 10-K for the fiscal year ended January 3, 2026 filed with the SEC. As discussed in the section above titled “Cautionary Note Regarding Forward-Looking Statements,” the following discussion contains forward-looking statements that are based upon our current expectations, including with respect to our future revenues and operating results. Our actual results may differ materially from those anticipated in such forward-looking statements as a result of various factors. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 3, 2026.

Unless otherwise provided, “Aveanna,” “we,” “our” and the “Company” refer to Aveanna Healthcare Holdings Inc. and its consolidated subsidiaries.

Our fiscal year ends on the Saturday that is closest to December 31 of a given year, resulting in either a 52-week or 53-week fiscal year. “Fiscal year 2026” refers to the 52-week fiscal year ending on January 2, 2027. “Fiscal year 2025” refers to the 53-week fiscal year ended on January 3, 2026. The “three-month period ended July 4, 2026”, or “second quarter of 2026” refers to the 13-week fiscal quarter ended on July 4, 2026. The “three-month period ended June 28, 2025” or “second quarter of 2025” refers to the 13-week fiscal quarter ended on June 28, 2025. The "six-month period ended July 4, 2026", or "first six months of 2026", refers to the period from January 4, 2026 through July 4, 2026. The "six-month period ended June 28, 2025", or "first six months of 2025", refers to the period from December 29, 2024 through June 28, 2025.

Overview

We are a leading, diversified home care platform focused on providing care to medically complex, high-cost patient populations. We directly address the most pressing challenges facing the U.S. healthcare system by providing safe, high-quality care in the home, the lower cost care setting preferred by patients. Our patient-centered care delivery platform is designed to improve the quality of care our patients receive, which allows them to remain in their homes and minimizes the overutilization of high-cost care settings such as hospitals. Our clinical model is led by our caregivers, primarily skilled nurses, who provide specialized care to address the complex needs of each patient we serve across the full range of patient populations: newborns, children, adults and seniors. We have invested significantly in our platform to bring together best-in-class talent at all levels of the organization and support such talent with industry leading training, clinical programs, infrastructure and technology-enabled systems, which are increasingly essential in an evolving healthcare industry. We believe our platform creates sustainable competitive advantages that support our ability to continue driving rapid growth, both organically and through acquisitions, and positions us as the partner of choice for the patients we serve.

Segments

We deliver our services to patients through three segments: Private Duty Services (“PDS”); Home Health & Hospice (“HHH”); and Medical Solutions (“MS”).

The following table summarizes the revenues generated by each of our segments for the three-month periods ended July 4, 2026 and June 28, 2025, respectively:


(dollars in thousands)	Consolidated		PDS			HHH			MS
For the three-month period ended July 4, 2026	$	670,483	$	553,929		$	69,023		$	47,531
Percentage of consolidated revenue				83	%		10	%		7	%
For the three-month period ended June 28, 2025	$	589,553	$	486,012		$	60,112		$	43,429
Percentage of consolidated revenue				83	%		10	%		7	%

The following table summarizes the revenues generated by each of our segments for the six-month periods ended July 4, 2026 and June 28, 2025, respectively:


(dollars in thousands)	Consolidated		PDS			HHH			MS
For the six-month period ended July 4, 2026	$	1,318,398	$	1,089,581		$	135,632		$	93,185
Percentage of consolidated revenue				83	%		10	%		7	%
For the six-month period ended June 28, 2025	$	1,148,777	$	946,010		$	116,845		$	85,922
Percentage of consolidated revenue				82	%		10	%		8	%

PDS Segment

Private Duty Services predominantly includes private duty nursing services (“PDN Services”), as well as pediatric therapy services (“Therapy Services”). PDN Services patients typically enter our service as children, as our most significant referral sources for new patients are children’s hospitals. It is common for PDN Services patients to continue to receive our services into adulthood, as approximately 30% of our PDN Services patients are over the age of 18.

PDN Services involve the provision of clinical and non-clinical hourly care to patients in their homes, which is the preferred setting for patient care. PDN Services typically last four to 24 hours a day, provided by our registered nurses, licensed practical nurses, home health aides, and other non-clinical caregivers who are focused on providing high-quality short-term and long-term clinical care to medically complex children and adults with a wide variety of serious illnesses and conditions. Patients who typically qualify for PDN Services include those with the following conditions:

•

Tracheotomies or ventilator dependence;

•

Dependence on continuous nutritional feeding through a “G-tube” or “NG-tube”;

•

Dependence on intravenous nutrition;

•

Oxygen-dependence in conjunction with other medical needs; and

•

Complex medical needs such as frequent seizures.

PDN Services include:

•

In-home skilled nursing services to medically complex children and adults;

•

Nursing services in school settings in which our caregivers accompany patients to school;

•

Services to patients in our Pediatric Day Healthcare Centers (“PDHC”); and

•

Non-clinical care, including programs such as support services and personal care services.

Therapy Services provide a valuable multidisciplinary approach that we believe serves all of a child’s therapy needs. We provide both in-clinic and home-based therapy services to our patients. Therapy Services include physical, occupational and speech services. We regularly collaborate with physicians and other community healthcare providers, which allows us to provide more comprehensive care.

HHH Segment

Our Home Health and Hospice segment predominantly includes home health services (“HH Services”), as well as hospice and specialty program services. Our HHH patients typically enter our service as seniors, and our most significant referral sources for new patients are hospitals, physicians and long-term care facilities.

HH Services involve the provision of in-home services to our patients by our clinicians, which may include nurses, therapists, social workers and home health aides. Our caregivers work with our patients’ physicians to deliver a personalized plan of care to our patients in their homes. Home healthcare can help our patients recover after a hospitalization or surgery and assist patients in managing chronic illnesses. We also help our patients manage their medications. Through our care, we help our patients recover more fully in the comfort of their own homes, while remaining as independent as possible. HH Services include: in-home skilled nursing services; physical, occupational and speech therapy; medical social services and aide services.

Our hospice services involve a supportive philosophy and concept of care for those nearing the end of life. Our hospice care is a positive, empowering form of care designed to provide comfort and support to our patients and their families when a life-limiting illness no longer responds to cure-oriented treatments. The goal of hospice is to neither prolong life nor hasten death, but to help our patients live as dignified and pain-free as possible. Our hospice care is provided by a team of specially trained professionals in a variety of living situations, including at home, at the hospital, a nursing home, or an assisted living facility.

MS Segment

Through our Medical Solutions segment, we offer a comprehensive line of enteral nutrition supplies and other products to adults and children, delivered on a periodic or as-needed basis. We provide our patients with access to one of the largest selections of enteral formulas, supplies and pumps in our industry, with more than 300 nutritional formulas available. Our registered nurses, registered dietitians and customer service technicians support our patients 24 hours per day, 365 days per year, in-hospital, at-home, or remotely to help ensure that our patients have the best nutrition assessments, change order reviews and formula selection expertise.

Recent Developments

Acquisition of Family First Homecare

On June 1, 2026, the Company completed the acquisition of Family First Holding, LLC, a scaled, multi-state provider of pediatric home care that primarily provides skilled Private Duty Nursing services with 27 locations in seven states including Florida, Illinois, Iowa, Pennsylvania, South Dakota, Texas, and North Carolina. The Company paid $173.7 million in cash as consideration, after customary adjustments for working capital and other items, funded with cash on hand. The operating results of Family First Holding, LLC subsequent to the acquisition date are included in our PDS operating segment.

Important Operating Metrics

We review the following important metrics on a segment basis and not on a consolidated basis:

PDS and MS Segment Operating Metrics

Volume

Volume represents PDS hours of care provided and MS unique patients served, which is how we measure the amount of our patient services provided. We review the number of hours of PDS care provided on a weekly basis and the number of MS unique patients served on a weekly basis. We believe volume is an important metric because it helps us understand how the Company is growing in each of these segments through strategic planning and acquisitions. We also use this metric to inform strategic decision making in determining opportunities for growth.

Revenue Rate

For our PDS and MS segments, revenue rate is calculated as revenue divided by PDS hours of care provided or the number of MS unique patients served, respectively. We believe revenue rate is an important metric because it represents the amount of revenue we receive per PDS hour of patient service or per individual MS patient transaction and helps management assess the amount of fees that we are able to bill for our services. Management uses this metric to assess how effectively we optimize reimbursement rates.

Cost of Revenue Rate

For our PDS and MS segments, cost of revenue rate is calculated as cost of revenue divided by PDS hours of care provided or the number of MS unique patients served, respectively. We believe cost of revenue rate is an important metric because it helps us understand the cost per PDS hour of patient service or per individual MS patient transaction. Management uses this metric to understand how effectively we manage labor and product costs.

Spread Rate

For our PDS and MS segments, spread rate represents the difference between the respective revenue rates and cost of revenue rates. Spread rate is an important metric because it helps us better understand the margins being recognized per PDS hour of patient service or per individual MS patient transaction. Management uses this metric to assess how successful we have been in optimizing reimbursement rates, managing labor and product costs, and assessing opportunities for growth.

HHH Segment Operating Metrics

Home Health Total Admissions and Home Health Episodic Admissions

Home health total admissions represents the number of new patients who have begun receiving services. We review the number of home health admissions on a daily basis as we believe it is a leading indicator of our growth. We measure home health admissions by reimbursement structure, separating them into home health episodic admissions, which are reimbursed for a fixed duration of care -

typically 30 days, and other admissions, which primarily follow a per-visit reimbursement model. This allows us to better understand the payor mix of our home health business.

Home Health Total Episodes

Home health total episodes represents the number of episodic admissions and episodic recertifications to capture patients who have either started to receive services or have been recertified for another episode of care. Management reviews home health total episodes on a monthly basis as to understand the volume of patients who were authorized to receive care during the month.

Home Health Episodic Mix

Home health episodic mix is calculated by dividing the total home health episodic admissions by the home health total admissions. Management monitors home health episodic mix as a simplified metric representing our home health admissions by reimbursement structure, which allows us to better understand the payer mix of our home health business.

Home Health Revenue Per Completed Episode

Home health revenue per completed episode is calculated by dividing total payments received from completed episodes by the number of completed episodes during the period. Episodic payments are determined by multiple factors including type of referral source, patient diagnoses, and utilization. Management tracks home health revenue per completed episode over time to evaluate both the clinical and financial profile of the business in a single metric.

Results of Operations

Three-Month Period Ended July 4, 2026 Compared to the Three-Month Period Ended June 28, 2025

The following table summarizes our consolidated results of operations, including Field contribution, which is a non-GAAP measure (see “Non-GAAP Financial Measures” below), for the three-month periods indicated:


	For the three-month periods ended
(dollars in thousands)	July 4, 2026			% of Revenue			June 28, 2025			% of Revenue			Change			% Change
Revenue	$	670,483			100.0	%	$	589,553			100.0	%	$	80,930			13.7	%
Cost of revenue, excluding depreciation and amortization		451,958			67.4	%		378,753			64.2	%		73,205			19.3	%
Gross margin	$	218,525			32.6	%	$	210,800			35.8	%	$	7,725			3.7	%
Branch and regional administrative expenses		97,079			14.5	%		90,069			15.3	%		7,010			7.8	%
Field contribution	$	121,446			18.1	%	$	120,731			20.5	%	$	715			0.6	%
Corporate expenses		34,083			5.1	%		34,529			5.9	%		(446	)		-1.3	%
Depreciation and amortization		2,849			0.4	%		2,617			0.4	%		232			8.9	%
Acquisition-related costs		4,390			0.7	%		3,400			0.6	%		990			29.1	%
Other operating expense		144			0.0	%		151			0.0	%		(7	)		-4.6	%
Operating income	$	79,980			11.9	%	$	80,034			13.6	%	$	(54	)		-0.1	%
Interest expense, net		(26,517	)					(35,874	)					9,357			-26.1	%
Other income (expense)		3,010						(22	)					3,032		NM
Income tax expense		(16,180	)					(17,113	)					933			-5.5	%
Net income	$	40,293					$	27,025					$	13,268			49.1	%

NM = A percentage calculation that is not meaningful due to a percentage change greater than 1000%.

The following table summarizes our consolidated key performance measures, including Field contribution and Field contribution margin, which are non-GAAP measures (see “Non-GAAP Financial Measures” below), for the three-month periods indicated:


	For the three-month periods ended
(dollars in thousands)	July 4, 2026			June 28, 2025			Change			% Change
Revenue	$	670,483		$	589,553		$	80,930			13.7	%
Cost of revenue, excluding depreciation and amortization		451,958			378,753			73,205			19.3	%
Gross margin	$	218,525		$	210,800		$	7,725			3.7	%
Gross margin percentage		32.6	%		35.8	%					-3.2	%	(1)
Branch and regional administrative expenses		97,079			90,069			7,010			7.8	%
Field contribution	$	121,446		$	120,731		$	715			0.6	%
Field contribution margin		18.1	%		20.5	%
Corporate expenses	$	34,083		$	34,529		$	(446	)		-1.3	%
As a percentage of revenue		5.1	%		5.9	%
Operating income	$	79,980		$	80,034		$	(54	)		-0.1	%
As a percentage of revenue		11.9	%		13.6	%

(1)

Represents the change in margin percentage quarter over quarter.

The following tables summarize our key performance measures by segment for the three-month periods indicated:


	PDS
	For the three-month periods ended
(dollars and hours in thousands)	July 4, 2026			June 28, 2025			Change			% Change
Revenue	$	553,929		$	486,012		$	67,917			14.0	%
Cost of revenue, excluding depreciation and amortization		394,047			328,078			65,969			20.1	%
Gross margin	$	159,882		$	157,934		$	1,948			1.2	%
Gross margin percentage		28.9	%		32.5	%					-3.6	%	(4)
Hours		12,413			11,053			1,360			12.3	%
Revenue rate	$	44.62		$	43.97		$	0.65			1.7	%	(1)
Cost of revenue rate	$	31.74		$	29.68		$	2.06			7.8	%	(2)
Spread rate	$	12.88		$	14.29		$	(1.41	)		-11.1	%	(3)

	HHH
	For the three-month periods ended
(dollars and admissions/episodes in thousands)	July 4, 2026			June 28, 2025			Change			% Change
Revenue	$	69,023		$	60,112		$	8,911			14.8	%
Cost of revenue, excluding depreciation and amortization		31,837			27,048			4,789			17.7	%
Gross margin	$	37,186		$	33,064		$	4,122			12.5	%
Gross margin percentage		53.9	%		55.0	%					-1.1	%	(4)
Home health total admissions (5)		10.5			9.8			0.7			7.1	%
Home health episodic admissions (6)		8.5			7.3			1.2			16.4	%
Home health total episodes (7)		14.7			12.4			2.3			18.5	%
Home health episodic mix (8)		81.0	%		74.5	%					6.5	%	(10)
Home health revenue per completed episode (9)	$	3,202		$	3,231		$	(29	)		-0.9	%

	MS
	For the three-month periods ended
(dollars and UPS in thousands)	July 4, 2026			June 28, 2025			Change			% Change
Revenue	$	47,531		$	43,429		$	4,102			9.4	%
Cost of revenue, excluding depreciation and amortization		26,074			23,627			2,447			10.4	%
Gross margin	$	21,457		$	19,802		$	1,655			8.4	%
Gross margin percentage		45.1	%		45.6	%					-0.5	%	(4)
Unique patients served (“UPS”)		95			91			4			4.4	%
Revenue rate	$	500.33		$	477.24		$	23.09			5.0	%	(1)
Cost of revenue rate	$	274.46		$	259.64		$	14.82			6.0	%	(2)
Spread rate	$	225.87		$	217.60		$	8.27			4.0	%	(3)

(1)

Represents the period over period change in revenue rate, plus the change in revenue rate attributable to the change in volume.

(2)

Represents the period over period change in cost of patient services rate, plus the change in cost of patient services rate attributable to the change in volume.

(3)

Represents the period over period change in spread rate, plus the change in spread rate attributable to the change in volume.

(4)

Represents the change in margin percentage quarter over quarter.

(5)

Represents home health episodic and other admissions.

(6)

Represents home health episodic admissions.

(7)

Represents episodic admissions and recertifications.

(8)

Represents the ratio of home health episodic admissions to home health total admissions.

(9)

Represents Medicare revenue per completed episode.

(10)

Represents the change in home health episodic mix quarter over quarter.

The following discussion of our results of operations should be read in conjunction with the foregoing tables summarizing our consolidated results of operations and key performance measures, as well as our audited consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended January 3, 2026.

Summary Operating Results

Operating Income

Operating income was $80.0 million, or 11.9% of revenue, for the three-month period ended July 4, 2026, as compared to operating income of $80.0 million, or 13.6% of revenue, for the three-month period ended June 28, 2025.

Operating income for the second quarter of 2026 was positively impacted by an increase of $0.7 million, or 0.6%, in Field contribution, as compared to the second quarter of 2025. The $0.7 million increase in Field contribution resulted from an $80.9 million, or 13.7%, increase in consolidated revenue, offset by a 2.4% decrease in our Field contribution margin to 18.1% for the second quarter of 2026 from 20.5% for the second quarter of 2025. The primary driver of our lower Field contribution margin over the comparable quarter was a 3.2% decrease in gross margin percentage, partially offset by a 0.8% decrease in branch and regional administrative expenses as a percentage of revenue to 14.5% for the second quarter of 2026 from 15.3% for the second quarter of 2025.

The following items primarily contributed to the comparable change in operating income over the comparable second quarter period:

•

the previously discussed $0.7 million increase in Field contribution, and

•

a $0.4 million decrease in corporate expenses; offset by

•

a $1.0 million increase in acquisition-related costs, and

•

a $0.2 million increase in depreciation and amortization.

Net Income

Net income for the three-month period ended July 4, 2026 was $40.3 million, as compared to net income of $27.0 million for the three-month period ended June 28, 2025. The $13.3 million increase in net income was primarily driven by the following:

•

the previously discussed $0.1 million decrease in operating income; offset by

•

a $9.4 million decrease in interest expense, net of interest income,

•

an aggregate $3.0 million decrease in valuation losses on interest rate derivatives and net settlements received from interest rate derivative counterparties included in other income (expense); and

•

a $0.9 million decrease in tax expense.

Revenue

Revenue was $670.5 million for the three-month period ended July 4, 2026, as compared to $589.6 million for the three-month period ended June 28, 2025, an increase of $80.9 million, or 13.7%. This increase resulted from the following segment activity:

•

a $67.9 million, or 14.0%, increase in PDS revenue;

•

a $8.9 million, or 14.8%, increase in HHH revenue; and

•

a $4.1 million, or 9.4%, increase in MS revenue.

Our PDS segment revenue growth of $67.9 million, or 14.0%, for the three-month period ended July 4, 2026 was attributable to a 12.3% increase in volume and a 1.7% increase in revenue rate. The 12.3% increase in volume was primarily attributable to growth in demand for non-clinical services and comparatively higher volumes attributable to the Family First and Thrive acquisitions which were completed on June 1, 2026 and June 2, 2025, respectively.

The 1.7% increase in PDS revenue rate for the three-month period ended July 4, 2026, as compared to the three-month period ended June 28, 2025, resulted primarily from reimbursement rate increases issued by various state Medicaid programs and Managed Medicaid payers and improved implicit price concessions. Reimbursement rate increases in the second quarter of 2026 exceeded the second quarter of 2025 which benefited from certain rate increases applied retroactively for services provided during the first quarter of 2025.

Our HHH segment revenue growth of $8.9 million, or 14.8%, for the three-month period ended July 4, 2026, as compared to the three-month period ended June 28, 2025, resulted primarily from a 18.5% increase in total episodes compared to the second quarter of 2025.

The $4.1 million, or 9.4%, increase in MS segment revenue for the three-month period ended July 4, 2026, as compared to the three-month period ended June 28, 2025, was attributable to a 4.4% increase in volume and a 5.0% increase in revenue rate compared to the second quarter of 2025.

Cost of Revenue, Excluding Depreciation and Amortization

Cost of revenue, excluding depreciation and amortization, was $452.0 million for the three-month period ended July 4, 2026, as compared to $378.8 million for the three-month period ended June 28, 2025, an increase of $73.2 million, or 19.3%. This increase resulted from the following segment activity:

•

a $66.0 million, or 20.1%, increase in PDS cost of revenue;

•

a $4.8 million, or 17.7%, increase in HHH cost of revenue; and

•

a $2.4 million, or 10.4%, increase in MS cost of revenue.

The 20.1% increase in PDS cost of revenue for the three-month period ended July 4, 2026 resulted from the previously described 12.3% increase in PDS volume combined with a 7.8% increase in PDS cost of revenue rate. The 7.8% increase in cost of revenue rate primarily resulted from higher caregiver labor costs, including the pass-through of reimbursement rate increases and higher general and professional liability reserves in the second quarter of 2026. The second quarter of 2025 also contained a $6.2 million reduction in professional liability reserves resulting from the release of certain accrued legal settlements which did not reoccur in the three-month period ended July 4, 2026.

The 17.7% increase in HHH cost of revenue for the three-month period ended July 4, 2026 was driven primarily by higher home health total episodes.

The 10.4% increase in MS cost of revenue for the three-month period ended July 4, 2026 was driven primarily by the previously noted increase in volume, and higher product costs.

Gross Margin and Gross Margin Percentage

Gross margin was $218.5 million, or 32.6% of revenue, for the three-month period ended July 4, 2026, as compared to $210.8 million, or 35.8% of revenue, for the three-month period ended June 28, 2025. Gross margin increased $7.7 million, or 3.7%, from the comparable prior year quarter. The 3.2% decrease in gross margin percentage for the three-month period ended July 4, 2026 resulted from the combined changes in our revenue rates and cost of revenue rates in each of our segments, which we refer to as the change in our spread rate, as follows:

•

a 11.1% decrease in PDS spread rate from $14.29 to $12.88 driven by the 1.7% increase in PDS revenue rate, net of the 7.8% increase in PDS cost of revenue rate;

•

a 4.0% increase in MS spread rate from $217.60 to $225.87 driven by the 5.0% increase in MS revenue rate, net of the 6.0% increase in MS cost of revenue rate; and

•

a 1.1% decrease in gross margin percentage in our HHH segment.

Branch and Regional Administrative Expenses

Branch and regional administrative expenses were $97.1 million, or 14.5% of revenue, for the three-month period ended July 4, 2026, as compared to $90.1 million, or 15.3% of revenue, for the three-month period ended June 28, 2025, an increase of $7.0 million, or 7.8%.

The 7.8% increase in branch and regional administrative expenses for the three-month period ended July 4, 2026, as compared to the three-month period ended June 28, 2025, was primarily due to the additional branch operations associated with the acquisition of Thrive and Family First, and costs associated with integrating the acquired operations into our operating footprint. The overall 0.8% decrease in branch and regional administrative expenses as a percentage of revenue for the three-month period ended July 4, 2026, as compared to the three-month period ended June 28, 2025 is the result of leveraging our operating support model to effectively incorporate increased volume from acquisitions and higher demand driven from our existing operating footprint.

Field Contribution and Field Contribution Margin

Field contribution was $121.4 million, or 18.1% of revenue, for the three-month period ended July 4, 2026, as compared to $120.7 million, or 20.5% of revenue, for the three-month period ended June 28, 2025. Field contribution increased $0.7 million, or 0.6%, for the three-month period ended July 4, 2026, as compared to the three-month period ended June 28, 2025. The 2.4% decrease in Field contribution margin for the three-month period ended July 4, 2026 resulted from the following:

•

a 3.2% decrease in gross margin percentage for the three-month period ended July 4, 2026, as compared to the three-month period ended June 28, 2025; offset by

•

a 0.8% decrease in branch and regional administrative expenses as a percentage of revenue for the three-month period ended July 4, 2026, as compared to the three-month period ended June 28, 2025.

Field contribution and Field contribution margin are non-GAAP financial measures. See “Non-GAAP Financial Measures” below.

Corporate Expenses

Corporate expenses as a percentage of revenue for the three-month periods ended July 4, 2026 and June 28, 2025 were as follows:


	For the three-month periods ended
	July 4, 2026					June 28, 2025
(dollars in thousands)	Amount		% of Revenue			Amount		% of Revenue
Revenue	$	670,483				$	589,553
Corporate expense components:
Compensation and benefits	$	19,052		2.8	%	$	19,334		3.3	%
Non-cash share-based compensation		2,523		0.4	%		3,436		0.6	%
Professional services		7,147		1.1	%		6,231		1.1	%
Rent and facilities expense		3,052		0.5	%		2,933		0.5	%
Office and administrative		400		0.1	%		527		0.1	%
Other		1,909		0.3	%		2,068		0.3	%
Total corporate expenses	$	34,083		5.1	%	$	34,529		5.9	%

Corporate expenses were $34.1 million, or 5.1% of revenue, for the three-month period ended July 4, 2026, as compared to $34.5 million, or 5.9% of revenue, for the three-month period ended June 28, 2025.

Depreciation and Amortization

Depreciation and amortization was $2.8 million for the three-month period ended July 4, 2026, as compared to $2.6 million for the three-month period ended June 28, 2025, an increase of $0.2 million, driven primarily from an increase in amortization expense related to acquired tradenames from Thrive.

Acquisition-related costs

Acquisition-related costs were $4.4 million for the three-month period ended July 4, 2026, as compared to $3.4 million for the three-month period ended June 28, 2025. Acquisition-related costs in the second quarter of 2026 primarily related to costs associated with the acquisition of Family First. Acquisition-related costs in the second quarter of 2025 primarily related to the costs associated with the acquisition of Thrive.

Other Operating Expense

Other operating expense was $0.1 million for the three-month period ended July 4, 2026, as compared to other operating expense of $0.2 million for the three-month period ended June 28, 2025. Other operating expense in the comparable periods primarily resulted from the value associated with the impairment of certain licenses.

Interest Expense, net of Interest Income

Interest expense, net of interest income was $26.5 million for the three-month period ended July 4, 2026, as compared to $35.9 million for the three-month period ended June 28, 2025, a decrease of $9.4 million, or 26.1%. The decrease was primarily driven by a lower U.S. federal funds rate over the comparable periods, the positive effect of the refinancing of our credit facility in the third quarter of 2025, and the successful repricing of our credit facility during the second quarter of 2026. The drivers above reduced our weighted average interest rate from 9.0% as of June 28, 2025 to 6.6% as of July 4, 2026, resulting in lower interest expense. See further analysis under Liquidity and Capital Resources below.

Other Income (Expense)

Other income was $3.0 million for the three-month period ended July 4, 2026, as compared to other expense of less than $0.1 million for the three-month period ended June 28, 2025. We realized a $5.4 million decrease in non-cash valuation losses associated with interest rate derivatives resulting from changes in market expectations of future interest rates as of the comparable quarter-end valuation date, partially offset by a $2.4 million decrease in net settlements with interest rate derivative counterparties as interest rates decreased compared to the prior year fiscal quarter due to lower market interest rates. Details of other expense included the following:


	For the three-month periods ended
(dollars in thousands)	July 4, 2026			June 28, 2025
Valuation loss, net to state interest rate derivatives at fair value	$	(583	)	$	(5,978	)
Net settlements received from interest rate derivative counterparties		3,650			6,050
Other		(57	)		(94	)
Total other income (expense)	$	3,010		$	(22	)

Income Taxes

We record income tax expense during interim periods based on our estimate of the annual effective income tax rate, adjusted each quarter for discrete items. We analyze various factors to determine the estimated annual effective income tax rate, including projections of our annual earnings, the impact of state and local income taxes, our ability to use tax credits and net operating loss carryforwards, and available tax planning alternatives. We incurred income tax expense of $16.2 million for the three-month period ended July 4, 2026, as compared to income tax expense of $17.1 million for the three-month period ended June 28, 2025. This decrease in tax expense was primarily driven by including the full estimated effect of the OBBBA which was enacted on July 4, 2025, partially offset by differences in our projections of annual earnings at the end of each comparable three-month period, as well as changes in federal and state valuation allowances, and changes to federal and state current tax expense due to certain non-deductible expenses, most notably interest expense and executive compensation.

Six-Month Period Ended July 4, 2026 Compared to the Six-Month Period Ended June 28, 2025


	For the six-month periods ended
(dollars in thousands)	July 4, 2026			% of Revenue			June 28, 2025			% of Revenue			Change			% Change
Revenue	$	1,318,398			100.0	%	$	1,148,777			100.0	%	$	169,621			14.8	%
Cost of revenue, excluding depreciation and amortization		894,445			67.8	%		754,419			65.7	%		140,026			18.6	%
Gross margin	$	423,953			32.2	%	$	394,358			34.3	%	$	29,595			7.5	%
Branch and regional administrative expenses		192,871			14.6	%		181,456			15.8	%		11,415			6.3	%
Field contribution	$	231,082			17.5	%	$	212,902			18.5	%	$	18,180			8.5	%
Corporate expenses		68,239			5.2	%		72,034			6.3	%		(3,795	)		-5.3	%
Depreciation and amortization		5,893			0.4	%		5,211			0.5	%		682			13.1	%
Acquisition-related costs		7,500			0.6	%		3,506			0.3	%		3,994			113.9	%
Other operating expense		144			0.0	%		316			0.0	%		(172	)		-54.4	%
Operating income	$	149,306			11.3	%	$	131,835			11.5	%	$	17,471			13.3	%
Interest expense, net		(54,017	)					(72,077	)					18,060			-25.1	%
Other income (expense)		6,159						(5,472	)					11,631			-212.6	%
Income tax expense		(19,502	)					(22,068	)					2,566			-11.6	%
Net income	$	81,946					$	32,218					$	49,728			154.3	%

NM = A percentage calculation that is not meaningful due to a percentage change greater than 1000%.


	For the six-month periods ended
(dollars in thousands)	July 4, 2026			June 28, 2025			Change			% Change
Revenue	$	1,318,398		$	1,148,777		$	169,621			14.8	%
Cost of revenue, excluding depreciation and amortization		894,445			754,419			140,026			18.6	%
Gross margin	$	423,953		$	394,358		$	29,595			7.5	%
Gross margin percentage		32.2	%		34.3	%					-2.1	%	(1)
Branch and regional administrative expenses		192,871			181,456			11,415			6.3	%
Field contribution	$	231,082		$	212,902		$	18,180			8.5	%
Field contribution margin		17.5	%		18.5	%
Corporate expenses	$	68,239		$	72,034		$	(3,795	)		-5.3	%
As a percentage of revenue		5.2	%		6.3	%
Operating income	$	149,306		$	131,835		$	17,471			13.3	%
As a percentage of revenue		11.3	%		11.5	%

(1)

Represents the change in margin percentage period over period.

The following tables summarize our key performance measures by segment for the six-month periods indicated:


	PDS
	For the six-month periods ended
(dollars and hours in thousands)	July 4, 2026			June 28, 2025			Change			% Change
Revenue	$	1,089,581		$	946,010		$	143,571			15.2	%
Cost of revenue, excluding depreciation and amortization		780,464			653,391			127,073			19.4	%
Gross margin	$	309,117		$	292,619		$	16,498			5.6	%
Gross margin percentage		28.4	%		30.9	%					-2.5	%	(4)
Hours		24,469			21,940			2,529			11.5	%
Revenue rate	$	44.53		$	43.12		$	1.41			3.7	%	(1)
Cost of revenue rate	$	31.90		$	29.78		$	2.12			7.9	%	(2)
Spread rate	$	12.63		$	13.34		$	(0.71	)		-5.9	%	(3)

	HHH
	For the six-month periods ended
(dollars and admissions/episodes in thousands)	July 4, 2026			June 28, 2025			Change			% Change
Revenue	$	135,632		$	116,845		$	18,787			16.1	%
Cost of revenue, excluding depreciation and amortization		62,670			53,041			9,629			18.2	%
Gross margin	$	72,962		$	63,804		$	9,158			14.4	%
Gross margin percentage		53.8	%		54.6	%					-0.8	%	(4)
Home health total admissions (5)		21.5			19.5			2.0			10.3	%
Home health episodic admissions (6)		17.4			14.8			2.6			17.6	%
Home health total episodes (7)		29.6			24.5			5.1			20.8	%
Home health episodic mix (8)		80.9	%		75.9	%					5.0	%	(10)
Home health revenue per completed episode (9)	$	3,185		$	3,193		$	(8	)		-0.3	%

	MS
	For the six-month periods ended
(dollars and UPS in thousands)	July 4, 2026			June 28, 2025			Change			% Change
Revenue	$	93,185		$	85,922		$	7,263			8.5	%
Cost of revenue, excluding depreciation and amortization		51,311			47,987			3,324			6.9	%
Gross margin	$	41,874		$	37,935		$	3,939			10.4	%
Gross margin percentage		44.9	%		44.2	%					0.7	%	(4)
Unique patients served (“UPS”)		188			180			8			4.4	%
Revenue rate	$	495.66		$	477.34		$	18.32			4.1	%	(1)
Cost of revenue rate	$	272.93		$	266.59		$	6.34			2.5	%	(2)
Spread rate	$	222.73		$	210.75		$	11.98			6.0	%	(3)

(1)

Represents the period over period change in revenue rate, plus the change in revenue rate attributable to the change in volume.

(2)

Represents the period over period change in cost of patient services rate, plus the change in cost of patient services rate attributable to the change in volume.

(3)

Represents the period over period change in spread rate, plus the change in spread rate attributable to the change in volume.

(4)

Represents the change in margin percentage period over period.

(5)

Represents home health episodic and other admissions.

(6)

Represents home health episodic admissions.

(7)

Represents episodic admissions and recertifications.

(8)

Represents the ratio of home health episodic admissions to home health total admissions.

(9)

Represents Medicare revenue per completed episode.

(10)

Represents the change in home health episodic mix period over period.

Summary Operating Results

Operating Income

Operating income was $149.3 million for the six-month period ended July 4, 2026, as compared to operating income of $131.8 million for the six-month period ended June 28, 2025, an increase of $17.5 million, or 13.3%.

Operating income for the six-month period of 2026 was positively impacted by an increase of $18.2 million, or 8.5%, in Field contribution as compared to the six-month period of 2025. The $18.2 million increase in Field contribution resulted from a $169.6 million, or 14.8%, increase in consolidated revenue partially offset by a 1.0% decrease in our Field contribution margin to 17.5% for the six-month period of 2026 from 18.5% for the six-month period of 2025. The primary driver of our lower Field contribution margin year over year was a decrease in gross margin percentage from 34.3% for the six-month period of 2025 to 32.2% for the six-month period of 2026, partially offset by a 1.2% decrease in branch and regional administrative expenses as a percentage of revenue to 14.6% for the six-month period of 2026 from 15.8% for the six-month period of 2025.

The following items primarily contributed to the $17.5 million increase in operating income compared to the first six months of 2025 primarily consists of:

•

the previously discussed $18.2 million increase in Field contribution;

•

a $3.8 million decrease in corporate expenses; and

•

a $0.2 million decrease in other operating expense; offset by

•

a $0.7 million increase in depreciation and amortization; and

•

a $4.0 million increase in acquisition-related costs associated with the acquisition of Family First.

Net Income

Net income for the six-month period ended July 4, 2026 was $81.9 million, as compared to net income of $32.2 million for the six-month period ended June 28, 2025. The $49.7 million increase in net income was primarily driven by the following:

•

the previously discussed $17.5 million increase in operating income;

•

an $18.1 million decrease in interest expense, net of interest income;

•

an aggregate $11.6 million decrease in valuation losses on interest rate derivatives and net settlements received from interest rate derivative counterparties included in other income (expense); and

•

a $2.6 million decrease in income tax expense.

Revenue

Revenue was $1,318.4 million for the six-month period ended July 4, 2026, as compared to $1,148.8 million for the six-month period ended June 28, 2025, an increase of $169.6 million, or 14.8%. This increase resulted from the following segment activity:

•

a $143.6 million, or 15.2%, increase in PDS revenue;

•

an $18.8 million, or 16.1%, increase in HHH revenue; and

•

a $7.3 million, or 8.5%, increase in MS revenue.

Our PDS segment revenue growth of $143.6 million, or 15.2%, for the six-month period ended July 4, 2026 was attributable to a 11.5% increase in volume and a 3.7% increase in revenue rate. The 11.5% increase in volume was primarily attributable to growth in demand for non-clinical services and new volumes attributable to the Thrive and Family First acquisitions which were completed on June 2, 2025 and June 1, 2026, respectively.

The 3.7% increase in PDS revenue rate for the six-month period ended July 4, 2026, as compared to the six-month period ended June 28, 2025, resulted primarily from reimbursement rate increases issued by various state Medicaid programs and Managed Medicaid payers and improved implicit price concessions. Reimbursement rate increases in the six-month period ended July 4, 2026 exceeded the six-month period ended June 28, 2025, which benefited from certain rate increases applied retroactively for services provided since July 1, 2024, and January 1, 2025.

Our HHH segment revenue increase of $18.8 million, or 16.1%, for the six-month period ended July 4, 2026 resulted primarily from a 20.8% increase in total episodes compared to the first six months of 2025. The increase in HHH segment revenue was also driven by home health episodic mix, which increased from 75.9% for the first six months of 2025 to 80.9% for the first six months of 2026.

Our MS segment revenue growth of $7.3 million, or 8.5%, for the six-month period ended July 4, 2026, as compared to the six-month period ended June 28, 2025, was attributable to an increase in volume of 4.4% compared to the first six months of 2025 and an increase in revenue rate of 4.1%.

Cost of Revenue, Excluding Depreciation and Amortization

Cost of revenue, excluding depreciation and amortization, was $894.4 million for the six-month period ended July 4, 2026, as compared to $754.4 million for the six-month period ended June 28, 2025, an increase of $140.0 million, or 18.6%. This increase resulted from the following segment activity:

•

a $127.1 million, or 19.4%, increase in PDS cost of revenue;

•

a $9.6 million, or 18.2%, increase in HHH cost of revenue; and

•

a $3.3 million, or 6.9%, increase in MS cost of revenue.

The 19.4% increase in PDS cost of revenue for the six-month period ended July 4, 2026 resulted from the previously described 11.5% increase in PDS volume combined with a 7.9% increase in PDS cost of revenue rate. The 7.9% increase in cost of revenue rate primarily resulted from higher caregiver labor costs, including the pass-through of reimbursement rate increases and higher general and professional liability expense over the comparable periods. The six-month period ended June 28, 2025 also included a $6.2 million release of certain accrued legal settlements which did not reoccur in the six-month period ended July 4, 2026.

The 18.2% increase in HHH cost of revenue for the six-month period ended July 4, 2026 was driven primarily by higher home health total episodes over the comparable periods.

The 6.9% increase in MS cost of revenue for the six-month period ended July 4, 2026 was driven by the previously described 4.4% increase in MS volumes and a 2.5% increase in cost of revenue rate.

Gross Margin and Gross Margin Percentage

Gross margin was $424.0 million, or 32.2% of revenue, for the six-month period ended July 4, 2026, as compared to $394.4 million, or 34.3% of revenue, for the six-month period ended June 28, 2025. Gross margin increased $29.6 million, or 7.5%, from the comparable prior year quarter. The 2.1% decrease in gross margin percentage for the six-month period ended July 4, 2026 resulted from the combined changes in our revenue rates and cost of revenue rates in each of our segments, which we refer to as the change in our spread rate in our PDS and MS segments, and the change in gross margin percentage in our HHH segment, as follows:

•

a 5.9% decrease in PDS spread rate from $13.34 to $12.63 driven by the 3.7% increase in PDS revenue rate, net of the 7.9% increase in PDS cost of revenue rate;

•

a 6.0% increase in MS spread rate from $210.75 to $222.73 driven by the 4.1% increase in MS revenue rate, net of the 2.5% increase in MS cost of revenue rate; and

•

our HHH segment, in which gross margin percentage decreased by 0.8%.

Branch and Regional Administrative Expenses

Branch and regional administrative expenses were $192.9 million, or 14.6% of revenue, for the six-month period ended July 4, 2026, as compared to $181.5 million, or 15.8% of revenue, for the six-month period ended June 28, 2025, an increase of $11.4 million, or 6.3%.

The 6.3% increase in branch and regional administrative expenses for the six-month period ended July 4, 2026, as compared to the six-month period ended June 28, 2025, was primarily due to increased costs related to the acquisitions of Thrive and Family First, which were completed on June 2, 2025 and June 1, 2026, respectively, and increased our operating footprint, including adding new locations and support personnel. The overall 1.2% decrease in branch and regional administrative expenses as a percentage of revenue for the six-month period ended July 4, 2026, as compared to the six-month period ended June 28, 2025 is the result of leveraging our operating support model to effectively incorporate increased volume from acquisitions and higher demand driven from our existing operating footprint.

Field Contribution and Field Contribution Margin

Field contribution was $231.1 million, or 17.5% of revenue, for the six-month period ended July 4, 2026, as compared to $212.9 million, or 18.5% of revenue, for the six-month period ended June 28, 2025. Field contribution increased $18.2 million, or 8.5%, for the six-month period ended July 4, 2026, as compared to the six-month period ended June 28, 2025. The 1.0% decrease in Field contribution margin for the six-month period ended July 4, 2026 resulted from the following:

•

a 2.1% decrease in gross margin percentage in the six-month period ended July 4, 2026, as compared to the six-month period ended June 28, 2025; offset by

•

a 1.2% decrease in branch and regional administrative expenses as a percentage of revenue in the six-month period ended July 4, 2026, as compared to the six-month period ended June 28, 2025.

Field contribution and Field contribution margin are non-GAAP financial measures. See “Non-GAAP Financial Measures” below.

Corporate Expenses

Corporate expenses as a percentage of revenue for the six-month periods ended July 4, 2026 and June 28, 2025 were as follows:


	For the six-month periods ended
	July 4, 2026					June 28, 2025
(dollars in thousands)	Amount		% of Revenue			Amount		% of Revenue
Revenue	$	1,318,398				$	1,148,777
Corporate expense components:
Compensation and benefits	$	37,894		2.9	%	$	38,466		3.3	%
Non-cash share-based compensation		5,075		0.4	%		10,879		0.9	%
Professional services		14,039		1.1	%		11,672		1.0	%
Rent and facilities expense		6,436		0.5	%		6,012		0.5	%
Office and administrative		793		0.1	%		917		0.1	%
Other		4,002		0.3	%		4,088		0.4	%
Total corporate expenses	$	68,239		5.2	%	$	72,034		6.3	%

Corporate expenses were $68.2 million, or 5.2% of revenue, for the six-month period ended July 4, 2026, as compared to $72.0 million, or 6.3% of revenue, for the six-month period ended June 28, 2025. The $3.8 million, or 5.3%, decrease in corporate expenses resulted primarily from lower non-cash share-based compensation costs, primarily due to the acceleration of the SMRP in the first quarter of 2025, partially offset by higher professional services expense in the six-month period ended July 4, 2026 related to modification costs associated with the repricing of the applicable interest rate margins of our Existing Credit Facility.

Depreciation and Amortization

Depreciation and amortization was $5.9 million for the six-month period ended July 4, 2026, as compared to $5.2 million for the six-month period ended June 28, 2025, an increase of $0.7 million, or 13.1%. The $0.7 million increase primarily resulted from an increase in amortization expense related to acquired tradenames from Thrive.

Acquisition-related costs

Acquisition related costs were $7.5 million for the six-month period ended July 4, 2026, as compared to $3.5 million for the six-month period ended June 28, 2025, an increase of $4.0 million. Acquisition-related costs during the comparable periods were primarily related to the completed acquisitions of Thrive and Family First, which were completed on June 2, 2025 and June 1, 2026, respectively.

Other Operating Expense

Other operating expenses were $0.1 million for the six-month period ended July 4, 2026, as compared to $0.3 million for the six-month period ended June 28, 2025. Other operating expense in the comparable periods primarily resulted from the value associated with the impairment of certain licenses.

Interest Expense, net of Interest Income

Interest expense, net of interest income was $54.0 million for the six-month period ended July 4, 2026, as compared to $72.1 million for the six-month period ended June 28, 2025, a decrease of $18.1 million, or 25.1%. The decrease was primarily driven by a lower U.S. federal funds rate during the six-month period ended July 4, 2026 compared to the six-month period ended June 28, 2025, the positive effect of the refinancing of our credit facility in the third quarter of 2025, and the successful repricing of our credit facility during the second quarter of 2026. The drivers above reduced our weighted average interest rate from 9.0% as of June 28, 2025 to 6.6% as of July

4, 2026, resulting in lower interest expense. Further, our interest income increased $2.7 million over the comparable periods due to improved liquidity. See further analysis under Liquidity and Capital Resources below.

Other Income (Expense)

Other income was $6.2 million for the six-month period ended July 4, 2026, as compared to other expense of $5.5 million for the six-month period ended June 28, 2025. We realized a $16.4 million decrease in non-cash valuation losses on interest rate derivatives resulting from changes in market expectations of future interest rates as of the comparable valuation dates, offset by a $4.7 million decline in net settlements with interest rate derivative counterparties as interest rates decreased compared to the prior year period due to lower market interest rates. Details of other income (expense) included the following:


	For the six-month periods ended
(dollars in thousands)	July 4, 2026			June 28, 2025
Valuation loss, net to state interest rate derivatives at fair value	$	(1,230	)	$	(17,580	)
Net settlements received from interest rate derivative counterparties		7,401			12,057
Other		(12	)		51
Total other income (expense)	$	6,159		$	(5,472	)

Income Taxes

We record income tax expense during interim periods based on our estimate of the annual effective income tax rate, adjusted each quarter for discrete items. We analyze various factors to determine the estimated annual effective income tax rate, including projections of our annual earnings, the impact of state and local income taxes, our ability to use tax credits and net operating loss carryforwards, and available tax planning alternatives. We incurred income tax expense of $19.5 million for the six-month period ended July 4, 2026, as compared to income tax expense of $22.1 million for the six-month period ended June 28, 2025. This decrease in tax expense was primarily driven by a discrete benefit that was partially offset by differences in our projections of annual earnings at the end of each comparable six-month periods, as well as the changes to federal and state current tax expense and the changes in federal and state valuation allowances due to certain non-deductible expenses, most notably interest expense and executive compensation, while also including the effect of the OBBBA, which was enacted on July 4, 2025.

Non-GAAP Financial Measures

In addition to our results of operations prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), which we have discussed above, we also evaluate our financial performance using EBITDA, Adjusted EBITDA, Field contribution and Field contribution margin.

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA are non-GAAP financial measures and are not intended to replace financial performance measures determined in accordance with U.S. GAAP, such as net income or loss. Rather, we present EBITDA and Adjusted EBITDA as supplemental measures of our performance. We define EBITDA as net income or loss before interest expense, net; income tax expense or benefit; and depreciation and amortization. We define Adjusted EBITDA as EBITDA, adjusted for the impact of certain other items that are either non-recurring, infrequent, non-cash, unusual, or items deemed by management to not be indicative of the performance of our core operations, including impairments of goodwill, intangible assets, and other long-lived assets; non-cash, share-based compensation, and associated employer payroll taxes; loss on extinguishment of debt; fees related to debt modifications; the effect of interest rate derivatives; acquisition-related and integration costs; legal costs and settlements associated with acquisition matters; restructuring costs; other legal matters; other system transition costs, professional fees; and other costs including gains and losses on acquisitions and dispositions of certain businesses. As non-GAAP financial measures, our computations of EBITDA and Adjusted EBITDA may vary from similarly termed non-GAAP financial measures used by other companies, making comparisons with other companies on the basis of this measure impracticable.

Management believes our computations of EBITDA and Adjusted EBITDA are helpful in highlighting trends in our core operating performance. In determining which adjustments are made to arrive at EBITDA and Adjusted EBITDA, management considers both (1) certain non-recurring, infrequent, non-cash or unusual items, which can vary significantly from year to year, as well as (2) certain other items that may be recurring, frequent, or settled in cash but which management does not believe are indicative of our core operating performance. We use EBITDA and Adjusted EBITDA to assess operating performance and make business decisions.

We have incurred substantial acquisition-related costs and integration costs. The underlying acquisition activities take place over a defined timeframe, have distinct project timelines and are incremental to activities and costs that arise in the ordinary course of our

business. Therefore, we believe it is important to exclude these costs from our Adjusted EBITDA because it provides management a normalized view of our core, ongoing operations after integrating our acquired companies, which is an important measure in assessing our performance.

Given our determination of adjustments in arriving at our computations of EBITDA and Adjusted EBITDA, these non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as substitutes or alternatives to net income or loss, revenue, operating income or loss, cash flows from operating activities, total indebtedness or any other financial measures calculated in accordance with U.S. GAAP.

The following table reconciles net income to EBITDA and Adjusted EBITDA for the periods indicated:


	For the three-month periods ended						For the six-month periods ended
(dollars in thousands)	July 4, 2026			June 28, 2025			July 4, 2026			June 28, 2025
Net income	$	40,293		$	27,025		$	81,946		$	32,218
Interest expense, net		26,517			35,874			54,017			72,077
Income tax expense		16,180			17,113			19,502			22,068
Depreciation and amortization		2,849			2,617			5,893			5,211
EBITDA		85,839			82,629			161,358			131,574
Goodwill, intangible and other long-lived asset impairment		145			153			121			319
Non-cash share-based compensation		4,135			5,159			8,282			16,155
Fees related to debt modifications		1,504			-			1,504			-
Interest rate derivatives (1)		(3,067	)		(72	)		(6,171	)		5,523
Acquisition-related costs (2)		4,390			3,400			7,500			3,507
Integration costs (3)		1,246			2,269			2,669			2,543
Legal costs and settlements associated with acquisition matters (4)		1,362			639			3,418			1,678
Restructuring (5)		-			80			-			416
Other legal matters (6)		3			(6,014	)		28			(5,938	)
Other adjustments (7)		(122	)		131			1,077			(50	)
Total adjustments (8)	$	9,596		$	5,745		$	18,428		$	24,153
Adjusted EBITDA	$	95,435		$	88,374		$	179,786		$	155,727

(1)

Represents valuation adjustments and settlements associated with interest rate derivatives that are not included in interest expense, net. Such items are included in other income (expense).

(2)

Represents transaction costs incurred in connection with planned, completed, or terminated acquisitions, which include investment banking fees, legal diligence and related documentation costs, and finance and accounting diligence and documentation, as presented on the Company’s consolidated statements of operations.

(3)

Represents (i) costs associated with our Integration Management Office, which focuses on our integration efforts and transformational projects such as systems conversions and implementations, material cost reduction and restructuring projects, among other things, of $0.5 million and $0.9 million for the three and six-month periods ended July 4, 2026, respectively, and $0.5 million and $0.7 million for the three and six-month periods ended June 28, 2025, respectively; and (ii) transitionary costs incurred to integrate acquired companies into our field and corporate operations of $0.7 million and $1.8 million for the three and six-month periods ended July 4, 2026, respectively, and $1.8 million for both the three and six-month periods ended June 28, 2025, respectively. Transitionary costs incurred to integrate acquired companies include IT consulting costs and related integration support costs; salary, severance and retention costs associated with duplicative acquired company personnel until such personnel are exited from the Company; accounting, legal and consulting costs; expenses and impairments related to the closure and consolidation of overlapping markets of acquired companies, including lease termination and relocation costs; costs associated with terminating legacy acquired company contracts and systems; and one-time costs associated with rebranding our acquired companies and locations to the Aveanna brand.

(4)

Represents legal and forensic costs, as well as settlements associated with resolving legal matters arising during or as a result of our acquisition-related activities. This primarily includes (i) costs of $1.1 million and $2.6 million for the three and six-month periods ended July 4, 2026, respectively, and $0.4 million and $1.3 million for the three and six-month periods ended June 28, 2025, respectively, to comply with the U.S. Department of Justice, Antitrust Division’s grand jury subpoena related to nurse wages and hiring activities in certain of our markets, in connection with a terminated transaction.

(5)

Represents costs associated with restructuring our branch and regional administrative footprint as well as our corporate overhead infrastructure costs in order to appropriately size our resources to current volumes, including: (i) branch and regional

salary and severance costs; (ii) corporate salary and severance costs; and (iii) rent and lease termination costs associated with the closure of certain office locations.

(6)

Represents activity related to accrued legal settlements and the related costs and expenses associated with certain judgments and arbitration awards rendered against the Company where certain insurance coverage is in dispute. The Company released a legal reserve related to a certain accrued legal settlement during the three and six-month period ended June 28, 2025.

(7)

Represents: (i) other costs or (income) that are either non-cash or non-core to the Company’s ongoing operations of $(0.1) million and $1.1 million for the three and six-month periods ended July 4, 2026, respectively, and $0.1 million and $(0.1) million for the three and six-month periods ended June 28, 2025, respectively.

(8)

The table below reflects the increase or decrease, and aggregate impact, to the line items included in our consolidated statements of operations based upon the adjustments used in arriving at Adjusted EBITDA from EBITDA for the periods indicated:


	Impact to Adjusted EBITDA
	For the three-month periods ended						For the six-month periods ended
(dollars in thousands)	July 4, 2026			June 28, 2025			July 4, 2026			June 28, 2025
Cost of revenue, excluding depreciation and amortization	$	345		$	(5,878	)	$	(13	)	$	(5,578	)
Branch and regional administrative expenses		1,485			1,599			3,504			4,837
Corporate expenses		6,243			6,451			13,453			15,599
Acquisition-related costs		4,390			3,400			7,500			3,506
Other operating expense		-			109			-			47
Other income (expense)		(2,867	)		64			(6,016	)		5,742
Total adjustments	$	9,596		$	5,745		$	18,428		$	24,153

Field Contribution and Field Contribution Margin

Field contribution and Field contribution margin are non-GAAP financial measures and are not intended to replace financial performance measures determined in accordance with U.S. GAAP, such as gross margin and gross margin percentage. Rather, we present Field contribution and Field contribution margin as supplemental measures of our performance. We define Field contribution as gross margin less branch and regional administrative expenses. Field contribution margin is Field contribution as a percentage of revenue. As non-GAAP financial measures, our computations of Field contribution and Field contribution margin may vary from similarly termed non-GAAP financial measures used by other companies, making comparisons with other companies on the basis of these measures impracticable.

Field contribution and Field contribution margin have limitations as analytical tools and should not be considered in isolation or as substitutes or alternatives to gross margin, gross margin percentage, net income or loss, revenue, operating income or loss, cash flows from operating activities, total indebtedness, or any other financial measures calculated in accordance with U.S. GAAP.

Management believes Field contribution and Field contribution margin are helpful in highlighting trends in our core operating performance and evaluating trends in our branch and regional results, which can vary from year to year. We use Field contribution and Field contribution margin to make business decisions and assess the operating performance and results delivered by our core field operations, prior to corporate and other costs not directly related to our field operations. These metrics are also important because they guide us in determining whether or not our branch and regional administrative expenses are appropriately sized to support our caregivers and direct patient care operations. Additionally, Field contribution and Field contribution margin determine how effective we are in managing our field supervisory and administrative costs associated with supporting our provision of services and sale of products.

The following table reconciles gross margin to Field contribution and Field contribution margin for the periods indicated:


	For the three-month periods ended						For the six-month periods ended
(dollars in thousands)	July 4, 2026			June 28, 2025			July 4, 2026			June 28, 2025
Gross margin	$	218,525		$	210,800		$	423,953		$	394,358
Gross margin percentage		32.6	%		35.8	%		32.2	%		34.3	%
Branch and regional administrative expenses		97,079			90,069			192,871			181,456
Field contribution	$	121,446		$	120,731		$	231,082		$	212,902
Field contribution margin		18.1	%		20.5	%		17.5	%		18.5	%
Revenue	$	670,483		$	589,553		$	1,318,398		$	1,148,777

Liquidity and Capital Resources

Overview

Our principal sources of cash have historically been from cash provided by operating activities. Our principal source of liquidity in addition to cash provided by operating activities, or when we have used net cash in our operating activities, has historically been from proceeds from our credit facilities and issuances of common stock.

Our principal uses of cash and liquidity have historically been for acquisitions, interest and principal payments under our credit facilities, payments under our interest rate derivatives, and financing of working capital. Acquisitions and payment of interest and related fees under our credit facilities is currently the most significant use of our operating cash flow. Our continued goal is to use cash flow provided by operations primarily as a source of cash to supplement the purchase price for acquisitions.

At July 4, 2026 we had $97.2 million in cash on hand, $110.0 million available to us under our Securitization Facility and approximately $225.5 million of borrowing capacity under the 2026 Refinancing Revolving Credit Facility. Available borrowing capacity under the 2026 Refinancing Revolving Credit Facility is subject to a maintenance leverage covenant that becomes effective if more than 40% of the total commitment is utilized. We believe that our operating cash flows, available cash on hand, and availability under our Securitization Facility and 2026 Refinancing Revolving Credit Facility will be sufficient to meet our cash requirements for at least the next twelve months. Our future capital requirements will depend on many factors that are difficult to predict, including the size, timing and structure of any future acquisitions, future capital investments and future results of operations. We cannot assure you that cash provided by operating activities or cash and cash equivalents on hand will be sufficient to meet our future needs. If we are unable to generate sufficient cash flows from operations in the future, we may have to obtain additional financing. If we obtain additional capital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness, that indebtedness may contain significant financial and other covenants that may significantly restrict our operations. We cannot assure you that we could obtain refinancing or additional financing on favorable terms or at all.

Cash Flow Activity

The following table sets forth a summary of our cash flows from operating, investing, and financing activities for the six-month periods presented:


	For the six-month periods ended
(dollars in thousands)	July 4, 2026			June 28, 2025
Net cash provided by operating activities	$	85,277		$	42,937
Net cash used in investing activities	$	(179,924	)	$	(18,330	)
Net cash used in financing activities	$	(1,417	)	$	(8,157	)

Operating Activities

The primary sources or uses of our operating cash flow are operating income or operating losses, as well as any other significant non-cash items such as depreciation, amortization and share-based compensation, and cash paid for interest. The timing of collections of accounts receivable and the payment of accounts payable, other accrued liabilities and accrued payroll can also impact and cause fluctuations in our operating cash flow. Cash provided by operating activities increased by $42.3 million for the six-month period ended July 4, 2026 compared to the six-month period ended June 28, 2025, primarily due to:

•

improvements in operating income over the prior year period;

•

decreases in interest expense over the prior year period; and

•

the provision of cash associated with operating assets and liabilities during the first six months of 2026, including the timing of collections of accounts receivable and payments of certain accrued payroll and employee benefits.

Days Sales Outstanding (“DSO”)

DSO provides us with a gauge to measure the timing of cash collections against accounts receivable and related revenue. DSO is derived by dividing our average patient accounts receivable for the fiscal period by our average daily revenue for the fiscal period. The collection cycle for our HHH segment is generally longer than that of our PDS segment, primarily due to longer billing cycles for HHH, which is generally billed in thirty-day increments. The following table presents our trailing five quarter DSO for the periods presented below:


	June 28, 2025		September 27, 2025		January 3, 2026		April 4, 2026		July 4, 2026
Days Sales Outstanding		47.2		46.0		46.3		45.4		45.5

Investing Activities

Net cash used in investing activities was $179.9 million for the six-month period ended July 4, 2026, as compared to $18.3 million for the six-month period ended June 28, 2025. The primary driver of the $161.6 million increase in cash used in the current period was the acquisition of Family First and cash paid for the interest rate cap of $4.6 million.

Financing Activities

Net cash used in financing activities decreased by $6.7 million, from $8.2 million net cash used in financing activities for the six-month period ended June 28, 2025 to $1.4 million net cash used in financing activities for the six-month period ended July 4, 2026. The $6.7 million decrease in net cash used in financing activities was primarily attributable to less cash used to cover employee taxes on vesting of restricted stock and lower principal payments on term loans net of issuances from term loans during the six-month period ended July 4, 2026.

Indebtedness

We typically incur term loan indebtedness to finance our acquisitions, and we borrow under our Securitization Facility and Revolving Credit Facility from time to time for working capital purposes, as well as to finance acquisitions, as needed. The following table presents our current and long-term obligations under our credit facilities as of July 4, 2026 and January 3, 2026, as well as related interest expense for the six-month periods ended July 4, 2026 and June 28, 2025, respectively:


	Current and Long-term									Interest Expense
(dollars in thousands)	Obligations									For the six-month periods ended
Instrument	July 4, 2026				January 3, 2026				Interest Rate as of July 4, 2026	July 4, 2026		June 28, 2025
2026 Term Loans (1)	$	1,318,375			$	1,321,687			S + 3.00%	$	48,397	$	37,029
Second Lien Term Loan (2)		-				-			N/A		-		24,201
2026 Refinancing Revolving Credit Facility (1)		-				-			S + 3.00%		488		349
Securitization Facility		165,000		(1)		165,000		(3)	S + 2.50%		5,492		6,599
Amortization of debt issuance costs		-				-					1,948		3,350
Other		-				-					609		810
Total Indebtedness	$	1,483,375			$	1,486,687				$	56,934	$	72,338
Less: unamortized debt issuance costs		(20,494	)			(21,785	)
Total current and long-term obligations, net of unamortized debt issuance costs	$	1,462,881			$	1,464,902

Weighted Average Interest Rate (4)		6.6	%			7.3	%

(1)

Variable rate debt instrument which accrues interest at a rate equal to the SOFR rate, plus an applicable margin.

(2)

The Second Lien Term Loan was paid in full as part of the Refinancing Amendment in the third quarter of 2025.

(3)

Variable rate debt instrument which accrues interest at a rate equal to the SOFR rate, plus a credit spread adjustment ("CSA"), plus an applicable margin.

(4)

Represents the weighted average annualized interest rate based upon the outstanding balances at July 4, 2026 and January 3, 2026, respectively, and the applicable interest rates at that date.


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	AVAH	The Nasdaq Stock Market LLC



		Page

	Cautionary Note Regarding Forward-Looking Statements	1

	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of July 4, 2026 (Unaudited) and January 3, 2026	2
	Consolidated Statements of Operations for the Three and Six-Month Periods Ended July 4, 2026 and June 28, 2025 (Unaudited)	3
	Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Six-Month Periods Ended July 4, 2026 and June 28, 2025 (Unaudited)	4
	Consolidated Statements of Cash Flows for the Six-Month Periods Ended July 4, 2026 and June 28, 2025 (Unaudited)	5
	Notes to Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39

	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	41
	SIGNATURES
	Signatures	43


Name	Title	Adoption Date (1)	Expiration Date	Aggregate # of securities to be sold (2)
Patrick A. Cunningham	Chief Compliance Officer	May 28, 2026	(3)		28,373


10.2**		Eighth Amendment to the Receivables Financing Agreement, dated June 25, 2026, by and among, Aveanna SPV I, LLC as borrower, Aveanna Healthcare LLC, and a bank.
31.1		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.3		Certification of Principal Accounting Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.3*		Certification of Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Aveanna Healthcare Holdings Inc.

Date: August 13, 2026	By:	/s/ Jeff Shaner
		Jeff Shaner Chief Executive Officer
		(Principal Executive Officer)

Date: August 13, 2026	By:	/s/ Matthew Buckhalter
		Matthew Buckhalter Chief Financial Officer
		(Principal Financial Officer)

Date: August 13, 2026	By:	/s/ Deborah Stewart
		Deborah Stewart
		Chief Accounting Officer (Principal Accounting Officer)