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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 27, 2025

or

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

For the transition period from ___________ to ___________

Commission File Number: 001-40362

Aveanna Healthcare Holdings Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware | 81-4717209
( State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)

400 Interstate North Parkway SE, Atlanta, GA 30339

(Address of principal executive offices) (Zip code)

(770) 441-1580

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer |  | ☐ |  | Accelerated filer |  | ☒
Non-accelerated filer |  | ☐ |  | Smaller reporting company |  | ☒
|  |  |  | Emerging growth company |  | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 31, 2025, the registrant had 208,911,383 shares of common stock, $0.01 par value per share, outstanding.

Table of Contents

|  | Page
| Cautionary Note Regarding Forward-Looking Statements | 1
| PART I. FINANCIAL INFORMATION |
Item 1. | Financial Statements |
| Consolidated Balance Sheets as of September 27, 2025 (Unaudited) and December 28, 2024 | 2
| Consolidated Statements of Operations for the Three and Nine-Month Periods Ended September 27, 2025 and September 28, 2024 (Unaudited) | 3
| Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Nine-Month Periods Ended September 27, 2025 and September 28, 2024 (Unaudited) | 4
| Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 27, 2025 and September 28, 2024 (Unaudited) | 5
| Notes to Consolidated Financial Statements (Unaudited) | 6
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 41
Item 4. | Controls and Procedures | 41
| PART II. OTHER INFORMATION |
Item 1. | Legal Proceedings | 43
Item 1A. | Risk Factors | 43
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 43
Item 3. | Defaults Upon Senior Securities | 43
Item 4. | Mine Safety Disclosures | 43
Item 5. | Other Information | 43
Item 6. | Exhibits | 43
| SIGNATURES |
| Signatures | 45

CAUTIONARY NOTE REGARDING FORWARD-LOOKI NG STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial condition, business strategy, and plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “anticipate,” “believe,” “continue,” “could,” “design,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “project,” “should,” “will,” “would,” or the negative of these terms or other similar expressions.

These statements are based on certain assumptions that we have made considering our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate in these circumstances. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions. Many factors could affect our actual results and could cause actual results to differ materially from those expressed in the forward-looking statements. Forward-looking statements contained in this Quarterly Report on Form 10-Q are subject to risks that may cause actual results to differ materially from those expressed or implied in the forward-looking statements, including, but not limited to, the following risks:

▪
intense competition among home health, hospice and durable medical equipment companies;
▪
our ability to maintain relationships with existing patient referral sources;
▪
our ability to have services funded from third-party payers, including Medicare, Medicaid and private health insurance companies, including as a result of changes to Medicaid to be implemented under the One Big Beautiful Bill Act;
▪
changes to Medicare or Medicaid rates or methods governing Medicare or Medicaid payments, and the implementation of alternative payment models, including but not limited to Medicare Advantage, Managed Care Organization, managed Medicaid, and other forms of managed care;
▪
any downward pressure on reimbursement resulting from further proliferation of Medicare Advantage plans;
▪
our limited ability to control reimbursement rates received for our services;
▪
delays in collection or non-collection of our patient accounts receivable, particularly during the business integration process, or when transitioning between systems associated with clinical data collection and submission, as well as billing and collection systems;
▪
healthcare reform and other regulations, including risks related to the proposed rule issued for the home health prospective payment system by Centers for Medicare & Medicaid Services;
▪
changes in the case-mix of our patients, as well as payer mix and payment methodologies;
▪
any reduction in net reimbursement if we do not effectively implement value-based care programs;
▪
the possibility that our business, financial condition and results of operations may be materially adversely affected by public health emergencies, such as a pandemic or other infectious disease outbreak;
▪
shortages in qualified employees and management and competition for qualified personnel;
▪
any failure to maintain the security and functionality of our information systems or to defend against or otherwise prevent a cybersecurity attack or breach;
▪
our substantial indebtedness, which increases our vulnerability to general adverse economic and industry conditions and may limit our ability to pursue strategic alternatives and react to changes in our business and industry;
▪
our ability to identify, obtain financing for, acquire and integrate strategic and accretive businesses or assets;
▪
risks related to legal proceedings, claims and governmental inquiries given that the nature of our business exposes us to various liability claims, which may exceed the level of our insurance coverage; and
▪
the other risks described under Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q and under the heading “Risk Factors” contained in our Annual Report on Form 10-K filed on March 13, 2025.

Additionally, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time, and it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Considering these risks, uncertainties and assumptions, the forward-looking statements contained in this Quarterly Report on Form 10-Q might not prove to be accurate and you should not place undue reliance upon them or otherwise rely upon them as predictions of future events. All forward-looking statements made by us in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. We intend that all forward-looking statements be subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.

1

AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(Amounts in thousands, except share and per share data) |
| As of |
| September 27, 2025 |  | December 28, 2024 |
| (Unaudited) |  |  |
ASSETS |
Current assets: |  |  |  |
Cash and cash equivalents | $ | 145,866 |  | $ | 84,288 |
Patient accounts receivable |  | 312,826 |  |  | 265,193 |
Receivables under insured programs |  | 4,659 |  |  | 12,465 |
Prepaid expenses |  | 14,486 |  |  | 17,477 |
Other current assets |  | 24,761 |  |  | 13,247 |
Total current assets |  | 502,598 |  |  | 392,670 |
Property and equipment, net |  | 17,396 |  |  | 17,373 |
Operating lease right of use assets |  | 37,852 |  |  | 41,278 |
Goodwill |  | 1,116,373 |  |  | 1,054,552 |
Intangible assets, net |  | 93,866 |  |  | 89,566 |
Receivables under insured programs |  | 22,108 |  |  | 22,425 |
Other long-term assets |  | 20,264 |  |  | 45,530 |
Total assets | $ | 1,810,457 |  | $ | 1,663,394 |
LIABILITIES, DEFERRED RESTRICTED STOCK UNITS, AND STOCKHOLDERS’ DEFICIT |
Current liabilities: |  |  |  |
Accounts payable and other accrued liabilities | $ | 27,088 |  | $ | 36,435 |
Accrued payroll and employee benefits |  | 109,490 |  |  | 87,672 |
Current portion of insurance reserves - insured programs |  | 4,659 |  |  | 12,465 |
Current portion of insurance reserves |  | 17,852 |  |  | 18,444 |
Securitization obligations |  | 165,000 |  |  | 168,750 |
Current portion of long-term obligations |  | 13,250 |  |  | 9,200 |
Current portion of operating lease liabilities |  | 15,908 |  |  | 15,498 |
Other current liabilities |  | 56,440 |  |  | 53,703 |
Total current liabilities |  | 409,687 |  |  | 402,167 |
Revolving credit facility |  | - |  |  | - |
Long-term obligations, less current portion |  | 1,289,309 |  |  | 1,271,656 |
Long-term insurance reserves - insured programs |  | 22,108 |  |  | 22,425 |
Long-term insurance reserves |  | 45,548 |  |  | 44,506 |
Operating lease liabilities, less current portion |  | 26,590 |  |  | 31,718 |
Deferred income taxes |  | 6,501 |  |  | 5,894 |
Other long-term liabilities |  | 800 |  |  | 7,118 |
Total liabilities |  | 1,800,543 |  |  | 1,785,484 |
Commitments and contingencies (Note 11) |  |  |  |
Deferred restricted stock units |  | 730 |  |  | 1,461 |
Stockholders’ deficit: |  |  |  |
Preferred stock, $0.01 par value as of September 27, 2025 and December 28, 2024 |  |  |  |
5,000,000 shares authorized; none issued or outstanding |  | - |  |  | - |
Common stock, $0.01 par value, 1,000,000,000 shares authorized; |  |  |  |
208,911,373 and 193,225,177 issued and outstanding, respectively |  | 2,089 |  |  | 1,932 |
Additional paid-in capital |  | 1,342,976 |  |  | 1,256,680 |
Accumulated deficit |  | (1,335,881 | ) |  | (1,382,163 | )
Total stockholders’ equity (deficit) |  | 9,184 |  |  | (123,551 | )
Total liabilities, deferred restricted stock units, and stockholders’ equity (deficit) | $ | 1,810,457 |  | $ | 1,663,394 |

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

2

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 nine-month periods ended |
| September 27, 2025 |  | September 28, 2024 |  | September 27, 2025 |  | September 28, 2024 |
Revenue | $ | 621,942 |  | $ | 509,023 |  | $ | 1,770,719 |  | $ | 1,504,634 |
Cost of revenue, excluding depreciation and amortization |  | 419,118 |  |  | 349,324 |  |  | 1,173,537 |  |  | 1,040,814 |
Branch and regional administrative expenses |  | 95,399 |  |  | 88,184 |  |  | 276,855 |  |  | 264,070 |
Corporate expenses |  | 52,000 |  |  | 31,894 |  |  | 124,034 |  |  | 91,981 |
Depreciation and amortization |  | 2,599 |  |  | 2,587 |  |  | 7,810 |  |  | 8,332 |
Acquisition-related costs |  | (1,175 | ) |  | 150 |  |  | 2,331 |  |  | 150 |
Other operating expense |  | 418 |  |  | 2,860 |  |  | 734 |  |  | 5,271 |
Operating income |  | 53,583 |  |  | 34,024 |  |  | 185,418 |  |  | 94,016 |
Interest income |  | 826 |  |  | 100 |  |  | 1,087 |  |  | 297 |
Interest expense |  | (35,127 | ) |  | (39,245 | ) |  | (107,465 | ) |  | (118,505 | )
Loss on debt extinguishment |  | (5,862 | ) |  | - |  |  | (5,862 | ) |  | - |
Other (expense) income |  | (3 | ) |  | (22,211 | ) |  | (5,475 | ) |  | 2,329 |
Income (loss) before income taxes |  | 13,417 |  |  | (27,332 | ) |  | 67,703 |  |  | (21,863 | )
Income tax benefit (expense) |  | 647 |  |  | (15,511 | ) |  | (21,421 | ) |  | (18,246 | )
Net income (loss) | $ | 14,064 |  | $ | (42,843 | ) | $ | 46,282 |  | $ | (40,109 | )
Net income (loss) per share: |  |  |  |  |  |  |  |
Net income (loss) per share, basic | $ | 0.07 |  | $ | (0.22 | ) | $ | 0.23 |  | $ | (0.21 | )
Weighted average shares of common stock outstanding, basic |  | 208,948 |  |  | 193,361 |  |  | 201,529 |  |  | 192,734 |
Net income (loss) per share, diluted | $ | 0.06 |  | $ | (0.22 | ) | $ | 0.22 |  | $ | (0.21 | )
Weighted average shares of common stock outstanding, diluted |  | 222,234 |  |  | 193,361 |  |  | 211,920 |  |  | 192,734 |

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

3

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 September 27, 2025 |
| Common Stock |  | Additional Paid-in |  | Accumulated |  | Total Stockholders’ |
| Shares |  | Amount |  | Capital |  | Deficit |  | Equity (Deficit) |
Balance, June 28, 2025 |  | 208,259,393 |  | $ | 2,083 |  | $ | 1,335,870 |  | $ | (1,349,945 | ) | $ | (11,992 | )
Issuance of vested restricted shares |  | 90,362 |  |  | 1 |  |  | (1 | ) |  | - |  |  | - |
Employee stock purchase plan |  | 561,618 |  |  | 5 |  |  | 2,147 |  |  |  |  | 2,152 |
Non-cash share-based compensation |  | - |  |  | - |  |  | 4,960 |  |  | - |  |  | 4,960 |
Net income |  | - |  |  | - |  |  | - |  |  | 14,064 |  |  | 14,064 |
Balance, September 27, 2025 |  | 208,911,373 |  | $ | 2,089 |  | $ | 1,342,976 |  | $ | (1,335,881 | ) | $ | 9,184 |
| For the three-month period ended September 28, 2024 |
| Common Stock |  | Additional Paid-in |  | Accumulated |  | Total Stockholders’ |
| Shares |  | Amount |  | Capital |  | Deficit |  | Deficit |
Balance, June 29, 2024 |  | 192,483,903 |  | $ | 1,924 |  | $ | 1,247,608 |  | $ | (1,368,500 | ) | $ | (118,968 | )
Employee stock purchase plan |  | 741,274 |  |  | 7 |  |  | 1,732 |  |  |  |  | 1,739 |
Non-cash share-based compensation |  | - |  |  | - |  |  | 3,630 |  |  | - |  |  | 3,630 |
Net income |  | - |  |  | - |  |  | - |  |  | (42,843 | ) |  | (42,843 | )
Balance, September 28, 2024 |  | 193,225,177 |  | $ | 1,931 |  | $ | 1,252,970 |  | $ | (1,411,343 | ) | $ | (156,442 | )
| For the nine-month period ended September 27, 2025 |
| Common Stock |  | Additional Paid-in |  | Accumulated |  | Total Stockholders’ |
| Shares |  | Amount |  | Capital |  | Deficit |  | Equity (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 (Note 4) |  | 11,184,588 |  |  | 112 |  |  | 59,726 |  |  | - |  |  | 59,838 |
Issuance of vested restricted shares |  | 3,092,317 |  |  | 31 |  |  | (5,592 | ) |  | - |  |  | (5,561 | )
Employee stock purchase plan |  | 1,409,291 |  |  | 14 |  |  | 3,929 |  |  | - |  |  | 3,943 |
Non-cash share-based compensation |  | - |  |  | - |  |  | 28,233 |  |  | - |  |  | 28,233 |
Net income |  | - |  |  | - |  |  | - |  |  | 46,282 |  |  | 46,282 |
Balance, September 27, 2025 |  | 208,911,373 |  | $ | 2,089 |  | $ | 1,342,976 |  | $ | (1,335,881 | ) | $ | 9,184 |
| For the nine-month period ended September 28, 2024 |
| Common Stock |  | Additional Paid-in |  | Accumulated |  | Total Stockholders’ |
| Shares |  | Amount |  | Capital |  | Deficit |  | Deficit |
Balance, December 30, 2023 |  | 190,733,153 |  | $ | 1,907 |  | $ | 1,239,757 |  | $ | (1,371,234 | ) | $ | (129,570 | )
Employee stock purchase plan |  | 1,751,909 |  |  | 17 |  |  | 3,071 |  |  | - |  |  | 3,088 |
Issuance of vested restricted shares |  | 740,115 |  |  | 7 |  |  | 668 |  |  | - |  |  | 675 |
Non-cash share-based compensation |  | - |  |  | - |  |  | 9,474 |  |  | - |  |  | 9,474 |
Net income |  | - |  |  | - |  |  | - |  |  | (40,109 | ) |  | (40,109 | )
Balance, September 28, 2024 |  | 193,225,177 |  | $ | 1,931 |  | $ | 1,252,970 |  | $ | (1,411,343 | ) | $ | (156,442 | )

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

4

AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
| For the nine-month periods ended
| September 27, 2025 |  |  | September 28, 2024 |  |
Cash Flows From Operating Activities: |  |  |  |  |  |
Net income (loss) | $ | 46,282 |  |  | $ | (40,109 | ) |
Adjustments to reconcile net income (loss) to net cash from operating activities: |  |  |  |  |  |
Depreciation and amortization |  | 7,810 |  |  |  | 8,332 |  |
Amortization of deferred debt issuance costs |  | 4,843 |  |  |  | 3,797 |  |
Reduction in carrying amount of operating lease right of use assets |  | 13,231 |  |  |  | 15,628 |  |
Non-cash share-based compensation |  | 21,115 |  |  |  | 12,483 |  |
Loss on disposal or impairment of licenses, property and equipment, and software |  | 721 |  |  |  | 3,212 |  |
Fair value adjustments on interest rate derivatives |  | 23,734 |  |  |  | 26,869 |  |
Loss on debt extinguishment |  | 5,862 |  |  |  | - |  |
Deferred income taxes |  | 607 |  |  |  | 527 |  |
Changes in operating assets and liabilities, net of impact of acquisitions: |  |  |  |  |  |
Patient accounts receivable |  | (25,016 | ) |  |  | (28,891 | ) |
Prepaid expenses |  | 5,554 |  |  |  | 5,631 |  |
Other current and long-term assets |  | (15,324 | ) |  |  | (15,678 | ) |
Accounts payable and other accrued liabilities |  | (11,243 | ) |  |  | 11,919 |  |
Accrued payroll and employee benefits |  | 17,496 |  |  |  | 17,823 |  |
Insurance reserves |  | (644 | ) |  |  | 6,942 |  |
Operating lease liabilities |  | (14,523 | ) |  |  | (14,589 | ) |
Other current and long-term liabilities |  | (4,368 | ) |  |  | 5,335 |  |
Net cash provided by operating activities |  | 76,137 |  |  |  | 19,231 |  |
Cash Flows From Investing Activities: |  |  |  |  |  |
Acquisitions of businesses, net of cash acquired |  | (14,853 | ) |  |  | - |  |
Purchases of property and equipment, and software |  | (5,496 | ) |  |  | (4,790 | ) |
Net cash used in investing activities |  | (20,349 | ) |  |  | (4,790 | ) |
Cash Flows From Financing Activities: |  |  |  |  |  |
Payments for shares withheld to cover employee taxes on vesting of restricted stock |  | (6,292 | ) |  |  | - |  |
Proceeds from employee stock purchase plan |  | 3,943 |  |  |  | 3,088 |  |
Proceeds from securitization obligation |  | - |  |  |  | 25,000 |  |
Repayment of securitization obligation |  | (3,750 | ) |  |  | (10,000 | ) |
Proceeds from issuance of term loans, net of debt issuance costs |  | 1,317,743 |  |  |  | - |  |
Principal payments on term loans |  | (1,305,550 | ) |  |  | (4,600 | ) |
Principal payments on notes payable |  | (5,854 | ) |  |  | (4,604 | ) |
Principal payments on financing lease obligations |  | - |  |  |  | (198 | ) |
Payment of debt issuance costs |  | (3,620 | ) |  |  | (288 | ) |
Settlements with interest rate swap counterparties |  | 9,170 |  |  |  | 11,681 |  |
Net cash provided by financing activities |  | 5,790 |  |  |  | 20,079 |  |
Net change in cash and cash equivalents |  | 61,578 |  |  |  | 34,520 |  |
Cash and cash equivalents at beginning of period |  | 84,288 |  |  |  | 43,942 |  |
Cash and cash equivalents at end of period | $ | 145,866 |  |  | $ | 78,462 |  |

Supplemental Disclosures of Cash Flow Information: |  |  |  |  |  |
Cash paid for interest | $ | 113,207 |  |  | $ | 114,948 |  |
Cash paid for income taxes, net of refunds received | $ | 24,286 |  |  | $ | 5,646 |  |

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

5

AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. DESCRIPTION OF BUSINESS

Aveanna Healthcare Holdings Inc. (together with its consolidated subsidiaries, the “Company”) is headquartered in Atlanta, Georgia and has locations in 38 states with concentrations in Texas, Pennsylvania, and California, providing a broad range of pediatric and adult healthcare services, including nursing, hospice, rehabilitation services, occupational nursing in schools, therapy services, day treatment centers for medically fragile 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 September 27, 2025 and the results of operations for the three and nine-month periods ended September 27, 2025 and September 28, 2024, 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 3, 2026. 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 December 28, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 13, 2025.

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 September 27, 2025 and December 28, 2024. For the three-month periods ended September 27, 2025 and September 28, 2024, the interim unaudited consolidated statements of operations and stockholders' equity (deficit) reflect the accounts of the Company from June 29, 2025 through September 27, 2025 and June 30, 2024 through September 28, 2024, respectively, each of which includes 13 weeks. For the nine-month periods ended September 27, 2025 and September 28, 2024, the interim unaudited consolidated statements of operations, stockholders' equity (deficit), and cash flows reflect the accounts of the Company from December 29, 2024, through September 27, 2025 and December 31, 2023 through September 28, 2024, respectively, each of which includes 39 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 December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard enhances income tax disclosure requirements for all entities by requiring specified categories and greater disaggregation within the rate reconciliation table, disclosure of income taxes paid by jurisdiction, and providing clarification on uncertain tax positions and related financial statement impacts. The standard will be effective for the fiscal year 2025 annual financial statements with early adoption permitted. The Company plans to adopt the standard when it

6

AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

becomes effective beginning with the Company's fiscal year 2025 annual financial statements, and the Company expects the adoption of the standard will impact certain of its income tax disclosures.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. This standard update requires additional disclosures about certain expenses in commonly presented expense captions. The Company is required to adopt the guidance for its 2027 annual report filed on Form 10-K, though early adoption is permitted. The Company is currently evaluating the impact of these amendments on its disclosures, but this standard update will not impact the Company's results of operations or financial position.

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 typically 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 nine-month periods ended September 27, 2025 or September 28, 2024, respectively.

As of September 27, 2025 and December 28, 2024, estimated contractual adjustments and implicit price concessions of $108.0 million and $90.6 million, respectively, were recorded as reductions to patient accounts receivable balances to arrive at the

7

AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 no t record any bad debt expense for the three and nine-month periods ended September 27, 2025 or September 28, 2024, respectively.

The following table presents reve nue by payer type as a percentage of total revenue for the three and nine-month periods ended September 27, 2025 and September 28, 2024, respectively:

| For the three-month periods ended |  | For the nine-month periods ended |
| September 27, 2025 |  | September 28, 2024 |  | September 27, 2025 |  | September 28, 2024 |
Medicaid MCO |  | 59.4 | % |  | 56.7 | % |  | 58.8 | % |  | 56.3 | %
Medicaid |  | 23.3 | % |  | 25.0 | % |  | 22.8 | % |  | 23.4 | %
Commercial |  | 7.4 | % |  | 7.9 | % |  | 8.5 | % |  | 9.7 | %
Medicare |  | 9.7 | % |  | 10.3 | % |  | 9.7 | % |  | 10.5 | %
Self-pay |  | 0.2 | % |  | 0.1 | % |  | 0.2 | % |  | 0.1 | %
Total revenue |  | 100.0 | % |  | 100.0 | % |  | 100.0 | % |  | 100.0 | %

4. ACQUISITION

On April 1, 2025, the Company, Thrive Skilled Pediatric Care, LLC, a Delaware limited liability company (“Thrive”), and other parties thereto entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which, following a series of mergers, Thrive would become a wholly-owned subsidiary of the Company (collectively, the "Merger"). Thrive is an independent provider of pediatric home care with 23 locations in seven states including Arizona, Georgia, Kansas, New Mexico, North Carolina, Virginia, and Texas. Thrive primarily provides skilled Private Duty Nursing services, but also provides Pediatric Therapy, Licensed Health Aide Services, and Certified Nurse Assistant Services.

On June 2, 2025, the Company paid approximately $75.7 million as consideration upon consummation of the Merger, including the issuance of 11.2 million shares of common stock, equating to $59.8 million based on the opening market price of the Company’s common stock on the closing date. This issuance of the shares of common stock did not involve a public offering and was exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act, which exempts transactions by an issuer not involving any public offering.

The Merger Agreement provides for customary purchase price adjustments, and approximately 1.3 million shares of the Company’s common stock are being held in escrow for a period of up to 12 months following the closing to support obligations under the Merger 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):

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AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 |  | 22,617 |
Receivables under insured programs |  | 306 |
Prepaid expenses |  | 721 |
Other current assets |  | 308 |
Property and equipment |  | 131 |
Operating lease right of use assets |  | 1,835 |
Intangible assets - licenses |  | 5,000 |
Intangible assets - trade names |  | 540 |
Receivables under insured programs - long term |  | 1,439 |
Other long-term assets |  | 1,095 |
Accounts payable and other accrued liabilities |  | 1,754 |
Accrued payroll and employee benefits |  | 4,322 |
Current portion of insurance reserves |  | 679 |
Current portion of operating lease liabilities |  | 741 |
Other current liabilities |  | 10,372 |
Long-term insurance reserves |  | 2,160 |
Operating lease liabilities, less current portion |  | 1,094 |
Total identifiable net assets |  | 13,872 |
Goodwill |  | 61,821 |
Total | $ | 75,693 |

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. 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 and measurement adjustments from the Merger were allocated to segments as follows (amounts in thousands):

| PDS |  |  | HHH |  |  | MS |  |  | Total |
Balance at December 28, 2024, net (1) | $ | 897,728 |  |  | $ | 46,188 |  |  | $ | 110,636 |  |  | $ | 1,054,552 |
Addition |  | 64,178 |  |  |  | - |  |  |  | - |  |  |  | 64,178 |
Balance at June 28, 2025, net (1) | $ | 961,906 |  |  | $ | 46,188 |  |  | $ | 110,636 |  |  | $ | 1,118,730 |
Measurement adjustments |  | (2,357 | ) |  |  | - |  |  |  | - |  |  |  | (2,357 | )
Balance at September 27, 2025, net (1) | $ | 959,549 |  |  | $ | 46,188 |  |  | $ | 110,636 |  |  | $ | 1,116,373 |

(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 $(1.2) million and $2.3 million during the three and nine-month periods ended September 27, 2025, respectively. No such cost was recognized during either the three or nine-month period ended September 28, 2024. These costs are included in acquisition-related costs in the accompanying consolidated statement of operations.

Pro forma financial information related to the above acquisition has not been provided as the transaction was determined to not be significant to the Company in accordance with Regulation S-X. The results of operations following the acquisition date of June 2, 2025 are included in the Company’s consolidated results of operations for the three and nine-month periods ended September 27, 2025.

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AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

5. LONG-TERM OBLIGATIONS

Long-term obligations consisted of the following as of September 27, 2025 and December 28, 2024, respectively (dollar amounts in thousands):

Instrument | Stated Maturity Date | Contractual Interest Rate as of September 27, 2025 | Interest Rate as of September 27, 2025 | September 27, 2025 |  | December 28, 2024 |
2025 Term Loans (1) | 09/2032 | S + 3.75% | 7.89% | $ | 1,325,000 |  | $ | 890,550 |
Second Lien Term Loan | N/A (2) | N/A (2) | N/A (2) |  | - |  |  | 415,000 |
2025 Refinancing Revolving Credit Facility (1) | 09/2030 | S + 3.75% | 7.89% |  | - |  |  | - |
Total principal amount of long-term obligations |  |  |  |  | 1,325,000 |  |  | 1,305,550 |
Less: unamortized debt issuance costs |  |  |  |  | (22,441 | ) |  | (24,694 | )
Total amount of long-term obligations, net of unamortized debt issuance costs |  |  |  |  | 1,302,559 |  |  | 1,280,856 |
Less: current portion of long-term obligations |  |  |  |  | (13,250 | ) |  | (9,200 | )
Total amount of long-term obligations, net of unamortized debt issuance costs, less current portion |  |  |  | $ | 1,289,309 |  | $ | 1,271,656 |
(1) S = One-month SOFR |  |  |  |  |  |  |
(2) Second Lien Term Loan was paid in full as part of the Refinancing Amendment |  |  |  |  |  |  |

On September 17, 2025, Aveanna Healthcare LLC (the “Borrower”), a wholly owned subsidiary of the Company, entered into the fourth joinder and twelfth amendment (the "Refinancing 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"), among the Company, the borrowing subsidiaries party thereto, the lenders party thereto, Barclays Bank PLC as administrative agent and collateral agent (in such capacities, the "Administrative Agent"), and other agents party thereto (the Existing Credit Agreement, as amended by the Refinancing Amendment, the “Amended Credit Agreement”). The Existing Credit Agreement provided for among other things, a senior secured term loan facility (the "Existing Term Loan Facility") and a $170.3 million senior secured revolving credit facility (the "Existing Revolving Credit Facility").

The Refinancing Amendment provides for, among other things, the refinancing of the Existing Revolving Credit Facility under the Existing Credit Agreement and incremental revolving loan commitments in an aggregate principal amount of $79.7 million, resulting in total aggregate revolving loan commitments of $250.0 million (the "2025 Refinancing Revolving Credit Facility"), a portion of which may be used for the issuance of letters of credit and swingline loans. The Refinancing Amendment additionally provides for the refinancing of the term loans previously outstanding ("2025 Refinancing Term Loans") under the Existing Term Loan Facility (the "2025 Refinancing Term Facility") and an incremental senior secured term loan facility, with aggregate commitments increased by $439.0 million (the "2025 Incremental Term Loans"). Combined, the 2025 Refinancing Term Loans and 2025 Incremental Term Loans aggregate to a total principal balance of $1,325.0 million (the "2025 Term Loans"). The 2025 Refinancing Revolving Credit Facility and the 2025 Refinancing Term Facility replace the Existing Revolving Facility and the Existing Term Loan Facility, respectively. The maturity date for loans and commitments under the 2025 Refinancing Revolving Credit Facility is September 17, 2030. The maturity date for loans and commitments under the 2025 Refinancing Term Facility is September 17, 2032. Loans under the 2025 Refinancing Term Facility amortize at a rate equal to 1.00% per annum, payable in equal quarterly installments, and were issued with original issue discount at 99.75% of par.

Proceeds from the 2025 Term Loans were used to immediately refinance in full the Existing Term Loans and the second lien term loan (the “Second Lien Term Loan”) provided by the Second Lien Credit Agreement, dated as of December 10, 2021, by and among the Company, the Borrower, a syndicate of lending institutions from time to time party thereto, and Barclays Bank PLC, as administrative agent and collateral agent, to pay accrued interest through the Closing Date, and to fund working capital and general corporate purposes.

In connection with refinancing the incremental revolving loan commitments for the 2025 Refinancing Revolving Credit Facility, the Company incurred debt issuance costs of $2.5 million and will be amortized straight-line through the maturity date of the September 17, 2030.

10

AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In accordance with ASC 470-50-40, Debt Modification and Extinguishments, the Refinancing Amendment related to the 2025 Term Loans was accounted for as a modification of debt for the lenders that remained in the syndicate, while the aggregate balance attributable to lenders of the Existing Term Loan Facility and Second Lien Term Loan who did not participate in the 2025 Term Loans was accounted for as an extinguishment of debt. As a result, unamortized debt issuance costs related to the Existing Term Loan Facility and Second Lien Term Loan were written off and recorded as a $5.9 million loss on debt extinguishment on the unaudited consolidated statements of operations for both the three-month and nine-month periods ended September 27, 2025. A balance of $15.3 million of existing debt issuance costs allocated to the lenders that continued in the syndicate remained deferred and will be amortized via the effective-interest method through the maturity date of the September 17, 2032. Third party fees allocated to lenders who remained in the syndicate were recorded as debt modification expense of $16.0 million and included in Corporate expenses on the unaudited consolidated statements of operations for both the three-month and nine-month periods ended September 27, 2025. The aggregate balance of the 2025 Term Loans attributable to new lenders was treated as new debt. $3.9 million of third party fees allocated to new borrowers and $3.3 million of lender fees were deferred and will be amortized via the effective-interest method through the maturity date of the September 17, 2032.

The 2025 Term Loans under the Amended Credit Agreement bear interest at a rate equal to, at the election of the Borrower, Term SOFR (as defined in the Amended Credit Agreement) plus an applicable margin equal to 3.75% per annum or an alternative base rate ("ABR") plus an applicable margin equal to 2.75% per annum. Loans under the 2025 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 3.75% per annum or a base rate plus an applicable margin equal to 2.75% per annum, so long as the Consolidated First Lien Net Leverage Ratio (as defined in the Amended 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 September 27, 2025, the principal amount of the 2025 Term Loans and borrowings under the 2025 Refinancing Revolving Credit Facility each accrued interest at a rate of 7.89%.

On September 17, 2025, substantially concurrently with the Refinancing Amendment, the Borrower terminated its Second Lien Credit Agreement. The Second Lien Credit Agreement provided for the Second Lien Term Loan in an aggregate principal amount of $415.0 million. The entirety of the Second Lien Term Loan was repaid with proceeds from the 2025 Incremental Term Loans.

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 September 27, 2025 and December 28, 2024 were $22.4 million and $24.7 million, respectively. Debt issuance costs related to the 2025 Refinancing Revolving Credit Facility and the Revolving Credit Facility are recorded within other long-term assets. The balances for debt issuance costs related to the 2025 Refinancing Revolving Credit Facility as of September 27, 2025 and December 28, 2024 were $3.4 million and $1.6 million, respectively. The Company recognized interest expense related to the amortization of debt issuance costs of $1.3 million and $4.3 million for the three and nine-month periods ended September 27, 2025, respectively, and $1.1 million and $3.3 million for the three and nine-month periods ended September 28, 2024, respectively.

Issued letters of credit as of September 27, 2025 and December 28, 2024 were $23.0 million and $32.3 million, respectively. There were no swingline loans outstanding as of September 27, 2025 or December 28, 2024. Borrowing capacity under the Company's 2025 Refinancing Revolving Credit Facility was approximately $227.0 million as of September 27, 2025. Available borrowing capacity under the 2025 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 $1,325.0 million at September 27, 2025.

The Company was in compliance with all financial covenants and restrictions under the foregoing instruments at September 27, 2025.

6. SECURITIZATION FACILITY

11

AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 balances for debt issuance costs related to the Securitization Facility as of September 27, 2025 and December 28, 2024 were $1.7 million and $1.1 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 $0.5 million for the three and nine-month periods ended September 27, 2025, respectively, and $0.2 million and $0.5 million for the three and nine-month periods ended September 28, 2024, 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 September 27, 2025 and $168.8 million at December 28, 2024. The balance accrues interest at a rate equal to the SOFR rate, plus a credit spread adjustment ("CSA"), plus an applicable margin. The interest rate under the Securitization Facility was 7.00% at September 27, 2025.

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 September 27, 2025 |
| Level 1 |  | Level 2 |  | Level 3 |  | Total |
Assets: |  |  |  |  |  |  |  |
Interest rate cap agreements | $ | - |  | $ | 7,962 |  | $ | - |  | $ | 7,962 |
Interest rate swap agreements |  | - |  |  | 6,584 |  |  | - |  |  | 6,584 |
Total derivative assets | $ | - |  | $ | 14,546 |  | $ | - |  | $ | 14,546 |
| Fair Value Measurements at December 28, 2024 |
| Level 1 |  | Level 2 |  | Level 3 |  | Total |
Assets: |  |  |  |  |  |  |  |
Interest rate cap agreements | $ | - |  | $ | 22,543 |  | $ | - |  | $ | 22,543 |
Interest rate swap agreements |  | - |  |  | 15,737 |  |  | - |  |  | 15,737 |
Total derivative assets | $ | - |  | $ | 38,280 |  | $ | - |  | $ | 38,280 |

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.

12

AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 currently uses 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 currently has two interest rate swap agreements intended to limit its exposure to interest rate risk on its variable rate debt. These swaps expire 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 remained unchanged at $520.0 million at September 27, 2025 and December 28, 2024, respectively. The fair value of the interest rate swaps was $6.6 million at September 27, 2025 and $15.7 million at December 28, 2024. The fair value of the interest rate swaps is included in other current assets in the interim unaudited consolidated balance sheet at September 27, 2025 and other long term assets in the consolidated balance sheet at December 28, 2024. The Company does not apply hedge accounting to these agreements and records all mark-to-market adjustments directly to other (expense) income 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 are 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 Company has interest rate cap agreements with an aggregate notional amount of $880.0 million and a cap rate of 2.96%. The cap agreements have an expiration date of February 28, 2027. The cap agreements provide that the counterparty pays the Company the amount by which SOFR exceeds 2.96%. The fair value of the interest rate cap agreements was $8.0 million at September 27, 2025 and $22.5 million at December 28, 2024 and is included in other long-term assets on the interim unaudited consolidated balance sheets. The Company does not apply hedge accounting to interest rate cap agreements and records all mark-to-market adjustments directly to other (expense) income 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 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 nine-month periods ended September 27, 2025 and September 28, 2024, respectively (amounts in thousands):

| Statement of Operations | For the three-month periods ended |
| Classification | September 27, 2025 |  | September 28, 2024 |
Interest rate cap agreements | Other (expense) income | $ | (3,455 | ) | $ | (19,399 | )
Interest rate swap agreements | Other (expense) income | $ | (2,699 | ) | $ | (12,600 | )
| Statement of Operations | For the nine-month periods ended |
| Classification | September 27, 2025 |  | September 28, 2024 |
Interest rate cap agreements | Other (expense) income | $ | (14,581 | ) | $ | (15,969 | )
Interest rate swap agreements | Other (expense) income | $ | (9,153 | ) | $ | (10,900 | )

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. The OBBBA provides full bonus depreciation for certain assets placed into service after January 19, 2025, an election to expense current and previously unamortized U.S. incurred research or experimental expenditures, and a new calculation allowing companies to deduct additional interest expense. While the Company is still evaluating the full extent of the impact of OBBBA, for fiscal year 2025, the Company expects a favorable impact to cash taxes paid.

13

AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 benefit of $0.6 million and income tax expense of $21.4 million for the three and nine-month periods ended September 27, 2025, respectively, and income tax expense of $15.5 million and income tax expense of $18.2 million for the three and nine-month periods ended September 28, 2024, respectively.

The Company’s effective tax rate was negative 4.8% and positive 31.6% for the three and nine-month periods ended September 27, 2025, respectively, and negative 56.8% and negative 83.5% for the three and nine-month periods ended September 28, 2024, respectively. The effective tax rates for the three and nine-month periods ended September 27, 2025 and September 28, 2024 differed from the statutory rate of 21% primarily due to certain non-deductible expenses, most notably interest expense, and the changes in the valuation allowance recorded against certain deferred tax assets. For the three and nine-month periods ended September 27, 2025, the effective rate was also impacted by certain provisions of the OBBBA.

For the three and nine-month periods ended September 27, 2025, 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

Pre-IPO Options and Management Restricted Units

The Company recorded compensation expense, net of forfeitures, of $0.7 million and $2.1 million for the three and nine-month periods ended September 27, 2025, respectively, and $0.8 million and $1.6 million for the three and nine-month periods ended September 28, 2024, respectively, which is included in corporate and branch and regional administrative expenses in the accompanying consolidated statements of operations. Unrecognized compensation expense as of September 27, 2025 associated with these outstanding awards was $0.7 million.

Director Restricted Stock Units

In February 2025, the Compensation Committee of the Company's Board of Directors (the "Compensation Committee") approved grants of 173,914 restricted stock units, with a grant date per share fair value of $4.26, 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 $0.6 million for the three and nine-month periods ended September 27, 2025, respectively, and $0.2 million and $0.7 million for the three and nine-month periods ended September 28, 2024, respectively, which is included in corporate expenses in the accompanying consolidated statements of operations. Unrecognized compensation expense as of September 27, 2025 associated with outstanding director restricted stock units was $0.2 million.

Long-Term Incentive Plan ("LTIP")

In February 2025, 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 2025, the Company granted 1,649,109 RSUs with a grant date per share fair value of $4.26. The Company recorded compensation expense, net of forfeitures, of $1.3 million and $4.4 million for the three and nine-month periods ended September 27, 2025, respectively, and $1.2 million and $3.3 million for the three and nine-month periods ended September 28, 2024, respectively, which is included in corporate and branch and regional administrative expenses in the accompanying consolidated statements of operations. Unrecognized compensation expense was $9.5 million as of September 27, 2025.

14

AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 2025, the Company granted 1,649,014 PSUs with a weighted average grant date per share fair value of $4.26. Further, during three-month period ended March 29, 2025, the Compensation Committee modified PSUs originally issued during the three-month period ended April 2, 2022. The previous performance criterion were replaced with an Adjusted EBITDA target for the fiscal year ending January 3, 2026. Effects of the modification are reflected in compensation expense, net of forfeitures, for the three and nine-month periods ended September 27, 2025. The Company recorded compensation expense, net of forfeitures, of $2.2 million and $4.9 million for the three and nine-month periods ended September 27, 2025, respectively, and $1.1 million and $2.7 million for the three and nine-month periods ended September 28, 2024, respectively, which is included in corporate and branch and regional administrative expenses in the accompanying consolidated statements of operations. Unrecognized compensation expense was $10.3 million as of September 27, 2025.

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-month period ended September 27, 2025 and compensation expense, net of forfeitures, of $7.6 million during the nine-month period ended September 27, 2025, and $1.3 million and $3.0 million during the three and nine-month periods ended September 28, 2024, respectively, which i s included in corporate expenses and branch and regional administrative expenses in the accompanying consolidated statements of operations. There was no unrecognized compensation expense as of September 27, 2025.

Total compensation expense, net of forfeitures, for all awards under the Company's previous stock incentive plan (the "Amended 2017 Plan") and 2021 Omnibus Incentive Plan was $4.4 million and $19.6 million for the three and nine-month periods ended September 27, 2025 and $4.6 million and $11.3 million for the three and nine-month periods ended September 28, 2024, respectively. Total unrecognized compensation expense for all awards under the Amended 2017 Plan and 2021 Omnibus Incentive Plan was $20.7 million as of September 27, 2025.

Employee Stock Purchase Plan

During the three-month period ended September 27, 2025, participants in the Company's Employee Stock Purchase Plan purchased a total of 561,618 shares of common stock at a weighted average price of approximately $3.83 per share. D uring the three-month period ended September 28, 2024, participants in the Company's Employee Stock Purchase Plan purchased a total of 741,274 shares of common stock at a weighted average price of approximately $2.35 per share. During the nine-month period ended September 27, 2025, participants purchased a total of 1,409,291 shares of common stock at an average price of $2.80 per share. During the nine-month period ended September 28, 2024, participants purchased 1,751,909 shares of common stock at a weighted average price of approximately $1.76 per share.

The Company recorded compensation expense of $0.6 million and $1.5 million for the three and nine-month periods ended September 27, 2025, respectively, and $0.4 million and $1.2 million for the three and nine-month periods ended September 28, 2024, respectively, which is included in corporate expenses, branch and regional administrative expenses and cost of revenue, excluding depreciation and amortization in the accompanying 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.

15

AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 September 27, 2025 was comprised of $23.0 million of issued letters of credit and $1.5 million in cash collateral. Collateral as of December 28, 2024 was comprised of $23.1 million of issued letters of credit and $0.7 million in cash collateral.

As of September 27, 2025, insurance reserves totaling $90.2 million were included on the interim unaudited consolidated balance sheets, representing $38.7 million and $51.5 million of reserves for professional liability claims and workers’ compensation claims, respectively. At December 28, 2024, insurance reserves totaling $97.8 million were included on the consolidated balance sheets, representing $42.7 million and $55.1 million of reserves for professional liability claims and workers’ compensation claims, respectively.

Litigation and Other Current Liabilities

On January 18, 2023, an arbitration award in the amount of $7.9 million was rendered against the Company related to a claim under the Company's Texas non-subscriber benefit plan. In September 2023, upon entry of the court’s final judgment, we promptly obtained a $9.1 million appellate bond with the trial court. The appellate bond was collateralized with letters of credit. In May 2025, a settlement agreement between all parties was reached. On June 9, 2025, the court entered an agreed final judgment in the matter and ordered the release of the bond. The letters of credit securing the bond were released on June 16, 2025. As a result, amounts previously reserved for under Insurance Reserves were reduced and resulted in a net reduction to Cost of Revenue, excluding depreciation and amortization, of $6.2 million for the nine-month period ended September 27, 2025.

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, and management believes that a loss event is not probable. 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.

16

AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 condition. 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 September 27, 2025, one of the Company’s significant shareholders owned 7.8% of the 2025 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. The HHH segment provides home health and hospice services to predominately elderly patients. Through the MS segment, the Company provides enteral nutrition and other products to adults and children, delivered on a periodic or as-needed basis.

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 nine-month periods ended September 27, 2025 and September 28, 2024 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 nine-month periods ended September 27, 2025 and September 28, 2024, respectively (amounts in thousands):

17

AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

| For the three-month period ended September 27, 2025 |
| PDS |  | HHH |  | MS |  | Total |
Revenue | $ | 514,431 |  | $ | 62,427 |  | $ | 45,084 |  | $ | 621,942 |
Cost of revenue, excluding depreciation and amortization |  | 365,159 |  |  | 29,146 |  |  | 24,813 |  |  | 419,118 |
Gross margin | $ | 149,272 |  | $ | 33,281 |  | $ | 20,271 |  | $ | 202,824 |
Gross margin percentage |  | 29.0 | % |  | 53.3 | % |  | 45.0 | % |  | 32.6 | %
| For the three-month period ended September 28, 2024 |
| PDS |  | HHH |  | MS |  | Total |
Revenue | $ | 409,558 |  | $ | 54,139 |  | $ | 45,326 |  | $ | 509,023 |
Cost of revenue, excluding depreciation and amortization |  | 299,731 |  |  | 24,948 |  | $ | 24,645 |  |  | 349,324 |
Gross margin | $ | 109,827 |  | $ | 29,191 |  | $ | 20,681 |  | $ | 159,699 |
Gross margin percentage |  | 26.8 | % |  | 53.9 | % |  | 45.6 | % |  | 31.4 | %

| For the nine-month period ended September 27, 2025 |
| PDS |  | HHH |  | MS |  | Total |
Revenue | $ | 1,460,441 |  | $ | 179,272 |  | $ | 131,006 |  | $ | 1,770,719 |
Cost of revenue, excluding depreciation and amortization |  | 1,018,550 |  |  | 82,187 |  |  | 72,800 |  |  | 1,173,537 |
Gross margin | $ | 441,891 |  | $ | 97,085 |  | $ | 58,206 |  | $ | 597,182 |
Gross margin percentage |  | 30.3 | % |  | 54.2 | % |  | 44.4 | % |  | 33.7 | %
| For the nine-month period ended September 28, 2024 |
| PDS |  | HHH |  | MS |  | Total |
Revenue | $ | 1,212,418 |  | $ | 163,382 |  | $ | 128,834 |  | $ | 1,504,634 |
Cost of revenue, excluding depreciation and amortization |  | 891,588 |  |  | 75,814 |  | $ | 73,412 |  |  | 1,040,814 |
Gross margin | $ | 320,830 |  | $ | 87,568 |  | $ | 55,422 |  | $ | 463,820 |
Gross margin percentage |  | 26.5 | % |  | 53.6 | % |  | 43.0 | % |  | 30.8 | %

| For the three-month periods ended |  | For the nine-month periods ended |
Segment Reconciliation: | September 27, 2025 |  | September 28, 2024 |  | September 27, 2025 |  | September 28, 2024 |
Total segment gross margin | $ | 202,824 |  | $ | 159,699 |  | $ | 597,182 |  | $ | 463,820 |
Branch and regional administrative expenses |  | 95,399 |  |  | 88,184 |  |  | 276,855 |  |  | 264,070 |
Corporate expenses |  | 52,000 |  |  | 31,894 |  |  | 124,034 |  |  | 91,981 |
Depreciation and amortization |  | 2,599 |  |  | 2,587 |  |  | 7,810 |  |  | 8,332 |
Acquisition-related costs |  | (1,175 | ) |  | 150 |  |  | 2,331 |  |  | 150 |
Other operating expense |  | 418 |  |  | 2,860 |  |  | 734 |  |  | 5,271 |
Operating income |  | 53,583 |  |  | 34,024 |  |  | 185,418 |  |  | 94,016 |
Interest income |  | 826 |  |  | 100 |  |  | 1,087 |  |  | 297 |
Interest expense |  | (35,127 | ) |  | (39,245 | ) |  | (107,465 | ) |  | (118,505 | )
Loss on debt extinguishment |  | (5,862 | ) |  | - |  |  | (5,862 | ) |  | - |
Other (expense) income |  | (3 | ) |  | (22,211 | ) |  | (5,475 | ) |  | 2,329 |
Income (loss) before income taxes | $ | 13,417 |  | $ | (27,332 | ) | $ | 67,703 |  | $ | (21,863 | )

18

AVEANNA HEALTHCARE HOLDINGS INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 nine-month periods ended |
| September 27, 2025 |  | September 28, 2024 |  | September 27, 2025 |  | September 28, 2024 |
Numerator: |  |  |  |  |  |  |  |
Net income (loss) | $ | 14,064 |  | $ | (42,843 | ) | $ | 46,282 |  | $ | (40,109 | )
Denominator: |  |  |  |  |  |  |  |
Weighted average shares of common stock outstanding (1), basic |  | 208,948 |  |  | 193,361 |  |  | 201,529 |  |  | 192,734 |
Net income (loss) per share, basic | $ | 0.07 |  | $ | (0.22 | ) | $ | 0.23 |  | $ | (0.21 | )
Weighted average shares of common stock outstanding (1), diluted |  | 222,234 |  |  | 193,361 |  |  | 211,920 |  |  | 192,734 |
Net income (loss) per share, diluted | $ | 0.06 |  | $ | (0.22 | ) | $ | 0.22 |  | $ | (0.21 | )
Dilutive securities outstanding not included in the computation of diluted net income (loss) per share, as their effect is antidilutive: |  |  |  |  |  |  |  |
RSUs |  | - |  |  | 9,316 |  |  | - |  |  | 9,316 |
PSUs |  | - |  |  | 6,113 |  |  | - |  |  | 6,113 |
Stock options |  | 3,206 |  |  | 13,039 |  |  | 3,206 |  |  | 13,039 |

(1)
The calculation of weighted average shares of common stock outstanding includes all vested deferred restricted stock units.

15. SUBSEQUENT EVENT

On October 21, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) by and among the Company, certain selling stockholders affiliated with J.H. Whitney Equity Partners VII, LLC (the “Selling Stockholders”) and Jefferies LLC and J.P. Morgan Securities LLC, as representatives of the several underwriters named therein (the “Underwriters”), providing for the offer and sale by the Selling Stockholders (the “Secondary Offering”) of 10,000,000 shares of the Company’s Common Stock at a public offering price of $9.00 per share. In addition, the Selling Stockholders granted the Underwriters a 30-day option to purchase up to an additional 1,500,000 shares of the Company’s Common Stock. The Secondary Offering closed on October 23, 2025. On October 24, 2025, the Underwriters gave notice of their intent to exercise in full their option to purchase the additional 1,500,000 of the Company's Common Stock. The over-allotment exercise closed on October 28, 2025. The Company did not issue or sell any Common Stock in the Secondary Offering and did not receive any proceeds from the Secondary Offering.

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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 December 28, 2024 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” included under Part II, Item 1A below as well as in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.

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 2025” refers to the 53-week fiscal year ending on January 3, 2026. “Fiscal year 2024” refers to the 52-week fiscal year ended on December 28, 2024. The “three-month period ended September 27, 2025”, or “third quarter of 2025” refers to the 13-week fiscal quarter ended on September 27, 2025. The “three-month period ended September 28, 2024” or “third quarter of 2024” refers to the 13-week fiscal quarter ended on September 28, 2024. The "nine-month period ended September 27, 2025", or "first nine months of 2025", refers to the period from December 29, 2024 through September 27, 2025. The "nine-month period ended September 28, 2024", or "first nine months of 2024", refers to the period from December 31, 2023 through September 28, 2024.

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 September 27, 2025 and September 28, 2024, respectively:

(dollars in thousands) | Consolidated |  | PDS |  | HHH |  | MS |
For the three-month period ended September 27, 2025 | $ | 621,942 |  | $ | 514,431 |  | $ | 62,427 |  | $ | 45,084 |
Percentage of consolidated revenue |  |  |  | 83 | % |  | 10 | % |  | 7 | %
For the three-month period ended September 28, 2024 | $ | 509,023 |  | $ | 409,558 |  | $ | 54,139 |  | $ | 45,326 |
Percentage of consolidated revenue |  |  |  | 80 | % |  | 11 | % |  | 9 | %

The following table summarizes the revenues generated by each of our segments for the nine-month periods ended September 27, 2025 and September 28, 2024, respectively:

(dollars in thousands) | Consolidated |  | PDS |  | HHH |  | MS |
For the nine-month period ended September 27, 2025 | $ | 1,770,719 |  | $ | 1,460,441 |  | $ | 179,272 |  | $ | 131,006 |
Percentage of consolidated revenue |  |  |  | 82 | % |  | 10 | % |  | 8 | %
For the nine-month period ended September 28, 2024 | $ | 1,504,634 |  | $ | 1,212,418 |  | $ | 163,382 |  | $ | 128,834 |
Percentage of consolidated revenue |  |  |  | 81 | % |  | 11 | % |  | 8 | %

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PDS Segment

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

Our 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 fragile children and adults with a wide variety of serious illnesses and conditions. Patients who typically qualify for our 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.

Our PDN services include:

•
In-home skilled nursing services to medically fragile 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.

Through our pediatric therapy services, we 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. Our 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, 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.

Our home health 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. Our home health services include: in-home skilled nursing services; physical, occupational and speech therapy; medical social services and aide services.

Our hospice services invo lve 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.

21

Recent Developments

Secondary Offering

On October 21, 2025, certain selling stockholders affiliated with J.H. Whitney Equity Partners VII, LLC (the “Selling Stockholders”) sold 10,000,000 shares of the Company’s common stock to the public (the “Secondary Offering”) pursuant an underwriting agreement (the “Underwriting Agreement”) by and among the Company, the Selling Stockholders and Jefferies LLC and J.P. Morgan Securities LLC, as representatives of the several underwriters named therein (the “Underwriters”). On October 28, 2025, the Underwriters exercised an additional 1,500,000 shares of the Company’s common stock to the public following the full exercise of an over-allotment option pursuant to the Underwriting Agreement. The Company did not issue or sell any common stock in the Secondary Offering and did not receive any proceeds from the Secondary Offering.

Regulatory Developments

On June 30, 2025, the Centers for Medicare & Medicaid Services (“CMS”) issued its calendar year 2026 ("CY 2026") proposed rule for the home health prospective payment system. CMS estimates the proposed rule would reduce home health payments by 6.4% in CY 2026 relative to 2025. This update includes a 3.2% market basket update, reduced by a 0.8% cut for productivity. The proposed rule also includes several reductions that CMS proposes as necessary to achieve budget neutral implementation of the Patient-driven Groupings Model (“PDGM”), which are a 4.1% permanent reduction to the standard payment rate to prevent future overpayments, as well as a temporary but indefinite 5.0% reduction to recoup past overpayments. CMS also proposes a 0.5% reduction related to high-cost outlier payments. The comment period on the proposed rule ended August 29, 2025. We have partnered with our industry advocates and others to share comments with CMS on the proposed rule. The ultimate impact of the final rule, if adopted as proposed, would negatively affect reimbursement rates in our HHH segment in line with the proposed 6.4% reduction.

On July 4, 2025, H.R. 1, also known as the One Big Beautiful Bill Act ("OBBBA"), was enacted into law. The Congressional Budget Office projects OBBBA will result in a reduction to federal Medicaid spending by an estimated $1.15 trillion over the next ten years. The changes to Medicaid made by OBBBA include provisions expected to reduce the population of Medicaid recipients through more stringent eligibility requirements, reductions in provider taxes, work (community engagement) requirements, limits on state-directed payments, and other changes. Most of the applicable provisions have implementation dates of December 31, 2026, or later. While there were no specific changes to the Medicaid waiver programs that a majority of our patient population qualifies for services under, and no provisions that we believe directly impact the reimbursement rates of the services we provide, the resulting reductions to state Medicaid budgets may indirectly impact future rate expansion for certain Medicaid-funded services.

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

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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.

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Results of Operations

Three-Month Period Ended September 27, 2025 Compared to the Three-Month Period Ended September 28, 2024

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) | September 27, 2025 |  | % of Revenue |  | September 28, 2024 |  | % of Revenue |  | Change |  | % Change |
Revenue | $ | 621,942 |  |  | 100.0 | % | $ | 509,023 |  |  | 100.0 | % | $ | 112,919 |  |  | 22.2 | %
Cost of revenue, excluding depreciation and amortization |  | 419,118 |  |  | 67.4 | % |  | 349,324 |  |  | 68.6 | % |  | 69,794 |  |  | 20.0 | %
Gross margin | $ | 202,824 |  |  | 32.6 | % | $ | 159,699 |  |  | 31.4 | % | $ | 43,125 |  |  | 27.0 | %
Branch and regional administrative expenses |  | 95,399 |  |  | 15.3 | % |  | 88,184 |  |  | 17.3 | % |  | 7,215 |  |  | 8.2 | %
Field contribution | $ | 107,425 |  |  | 17.3 | % | $ | 71,515 |  |  | 14.0 | % | $ | 35,910 |  |  | 50.2 | %
Corporate expenses |  | 52,000 |  |  | 8.4 | % |  | 31,894 |  |  | 6.3 | % |  | 20,106 |  |  | 63.0 | %
Depreciation and amortization |  | 2,599 |  |  | 0.4 | % |  | 2,587 |  |  | 0.5 | % |  | 12 |  |  | 0.5 | %
Acquisition-related costs |  | (1,175 | ) |  | -0.2 | % |  | 150 |  |  | 0.0 | % |  | (1,325 | ) |  | -883.3 | %
Other operating expense |  | 418 |  |  | 0.1 | % |  | 2,860 |  |  | 0.6 | % |  | (2,442 | ) |  | -85.4 | %
Operating income | $ | 53,583 |  |  | 8.6 | % | $ | 34,024 |  |  | 6.7 | % | $ | 19,559 |  |  | 57.5 | %
Interest expense, net |  | (34,301 | ) |  |  |  | (39,145 | ) |  |  |  | 4,844 |  |  | -12.4 | %
Loss on debt extinguishment |  | (5,862 | ) |  |  |  | - |  |  |  |  | (5,862 | ) |  | -100.0 | %
Other expense |  | (3 | ) |  |  |  | (22,211 | ) |  |  |  | 22,208 |  |  | -100.0 | %
Income tax benefit (expense) |  | 647 |  |  |  |  | (15,511 | ) |  |  |  | 16,158 |  |  | 104.2 | %
Net income (loss) | $ | 14,064 |  |  |  | $ | (42,843 | ) |  |  | $ | 56,907 |  |  | 132.8 | %

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) | September 27, 2025 |  | September 28, 2024 |  | Change |  | % Change |  |
Revenue | $ | 621,942 |  | $ | 509,023 |  | $ | 112,919 |  |  | 22.2 | % |
Cost of revenue, excluding depreciation and amortization |  | 419,118 |  |  | 349,324 |  |  | 69,794 |  |  | 20.0 | % |
Gross margin | $ | 202,824 |  | $ | 159,699 |  | $ | 43,125 |  |  | 27.0 | % |
Gross margin percentage |  | 32.6 | % |  | 31.4 | % |  |  |  | 1.2 | % | (1)
Branch and regional administrative expenses |  | 95,399 |  |  | 88,184 |  |  | 7,215 |  |  | 8.2 | % |
Field contribution | $ | 107,425 |  | $ | 71,515 |  | $ | 35,910 |  |  | 50.2 | % |
Field contribution margin |  | 17.3 | % |  | 14.0 | % |  |  |  |  |
Corporate expenses | $ | 52,000 |  | $ | 31,894 |  | $ | 20,106 |  |  | 63.0 | % |
As a percentage of revenue |  | 8.4 | % |  | 6.3 | % |  |  |  |  |
Operating income | $ | 53,583 |  | $ | 34,024 |  | $ | 19,559 |  |  | 57.5 | % |
As a percentage of revenue |  | 8.6 | % |  | 6.7 | % |  |  |  |  |

(1)
Represents the change in margin percentage quarter over quarter.

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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) | September 27, 2025 |  | September 28, 2024 |  | Change |  | % Change |  |
Revenue | $ | 514,431 |  | $ | 409,558 |  | $ | 104,873 |  |  | 25.6 | % |
Cost of revenue, excluding depreciation and amortization |  | 365,159 |  |  | 299,731 |  |  | 65,428 |  |  | 21.8 | % |
Gross margin | $ | 149,272 |  | $ | 109,827 |  | $ | 39,445 |  |  | 35.9 | % |
Gross margin percentage |  | 29.0 | % |  | 26.8 | % |  |  |  | 2.2 | % | (4)
Hours |  | 11,822 |  |  | 10,474 |  |  | 1,348 |  |  | 12.9 | % |
Revenue rate | $ | 43.51 |  | $ | 39.10 |  | $ | 4.41 |  |  | 12.7 | % | (1)
Cost of revenue rate | $ | 30.89 |  | $ | 28.62 |  | $ | 2.27 |  |  | 8.9 | % | (2)
Spread rate | $ | 12.62 |  | $ | 10.48 |  | $ | 2.14 |  |  | 23.0 | % | (3)
| HHH |  |
| For the three-month periods ended |  |
(dollars and admissions/episodes in thousands) | September 27, 2025 |  | September 28, 2024 |  | Change |  | % Change |  |
Revenue | $ | 62,427 |  | $ | 54,139 |  | $ | 8,288 |  |  | 15.3 | % |
Cost of revenue, excluding depreciation and amortization |  | 29,146 |  |  | 24,948 |  |  | 4,198 |  |  | 16.8 | % |
Gross margin | $ | 33,281 |  | $ | 29,191 |  | $ | 4,090 |  |  | 14.0 | % |
Gross margin percentage |  | 53.3 | % |  | 53.9 | % |  |  |  | -0.6 | % | (4)
Home health total admissions (5) |  | 9.7 |  |  | 8.9 |  |  | 0.8 |  |  | 9.0 | % |
Home health episodic admissions (6) |  | 7.5 |  |  | 6.8 |  |  | 0.7 |  |  | 10.3 | % |
Home health total episodes (7) |  | 12.9 |  |  | 11.3 |  |  | 1.6 |  |  | 14.2 | % |
Home health episodic mix (8) |  | 77.3 | % |  | 76.4 | % |  |  |  | 0.9 | % | (10)
Home health revenue per completed episode (9) | $ | 3,215 |  | $ | 3,104 |  | $ | 111 |  |  | 3.6 | % |
| MS |  |
| For the three-month periods ended |  |
(dollars and UPS in thousands) | September 27, 2025 |  | September 28, 2024 |  | Change |  | % Change |  |
Revenue | $ | 45,084 |  | $ | 45,326 |  | $ | (242 | ) |  | -0.5 | % |
Cost of revenue, excluding depreciation and amortization |  | 24,813 |  |  | 24,645 |  |  | 168 |  |  | 0.7 | % |
Gross margin | $ | 20,271 |  | $ | 20,681 |  | $ | (410 | ) |  | -2.0 | % |
Gross margin percentage |  | 45.0 | % |  | 45.6 | % |  |  |  | -0.6 | % | (4)
Unique patients served (“UPS”) |  | 91 |  |  | 92 |  |  | (1 | ) |  | -1.1 | % |
Revenue rate | $ | 495.43 |  | $ | 492.67 |  | $ | 2.76 |  |  | 0.6 | % | (1)
Cost of revenue rate | $ | 272.67 |  | $ | 267.88 |  | $ | 4.79 |  |  | 1.8 | % | (2)
Spread rate | $ | 222.76 |  | $ | 224.79 |  | $ | (2.03 | ) |  | -0.9 | % | (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 interim unaudited consolidated financial statements of

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operations contained in this Quarterly Report on Form 10-Q (our "Quarterly Financial Statements") and our audited consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.

Summary Operating Results

Operating Income

Operating income was $53.6 million, or 8.6% of revenue, for the three-month period ended September 27, 2025, as compared to operating income of $34.0 million, or 6.7% of revenue, for the three-month period ended September 28, 2024, an increase of $19.6 million.

Operating income for the third quarter of 2025 was positively impacted by an increase of $35.9 million, or 50.2%, in Field contribution, as compared to the third quarter of 2024. The $35.9 million increase in Field contribution resulted from a $112.9 million, or 22.2%, increase in consolidated revenue and a 3.3% increase in our Field contribution margin to 17.3% for the third quarter of 2025 from 14.0% for the third quarter of 2024. The primary driver of our higher Field contribution margin over the comparable quarter was an increase in gross margin percentage of 1.2%, along with a 2.0% decrease in branch and regional administrative expenses as a percentage of revenue to 15.3% for the third quarter of 2025 from 17.3% for the third quarter of 2024.

The following items primarily contributed to the $19.6 million increase in operating income over the comparable third quarter period:

•
the previously discussed $35.9 million increase in Field contribution,
•
a $1.3 million decrease in acquisition-related costs, and
•
a $2.4 million decrease in other operating expense; offset by
•
a $20.1 million increase in corporate expenses.

Net Income (Loss)

Net income for the three-month period ended September 27, 2025 was $14.1 million, as compared to net loss of $42.8 million for the three-month period ended September 28, 2024. The $56.9 million increase in net income was primarily driven by the following:

•
the previously discussed $19.6 million increase in operating income;
•
a $4.8 million decrease in interest expense, net,
•
a $16.1 million decrease in tax expense; and
•
an aggregate $22.2 million decrease in valuation losses on interest rate derivatives and net settlements received from interest rate derivative counterparties included in other expense compared to the third quarter of 2024; offset by
•
a $5.9 million loss on debt extinguishment recorded during the three-month period ended September 27, 2025.

Revenue

Revenue was $621.9 million for the three-month period ended September 27, 2025, as compared to $509.0 million for the three-month period ended September 28, 2024, an increase of $112.9 million, or 22.2%. This increase resulted from the following segment activity:

•
a $104.9 million, or 25.6%, increase in PDS revenue; and
•
a $8.3 million, or 15.3%, increase in HHH revenue; offset by
•
a $0.2 million, or 0.5%, decrease in MS revenue.

Our PDS segment revenue growth of $104.9 million, or 25.6%, for the three-month period ended September 27, 2025 was attributable to a 12.9% increase in volume and a 12.7% increase in revenue rate. The 12.9% increase in volume was primarily attributable to volume from the Thrive acquisition which was completed on June 2, 2025, and growth in demand for non-clinical services.

The 12.7% increase in PDS revenue rate for the three-month period ended September 27, 2025, as compared to the three-month period ended September 28, 2024, resulted primarily from the following: (i) reimbursement rate increases issued by various state Medicaid programs and Managed Medicaid payers; (ii) higher reimbursement rates associated with volumes attributed to the Thrive acquisition; (iii) increases in value-based payments; and (iv) improved collections on fully reserved aged receivables.

Our HHH segment revenue increase of $8.3 million, or 15.3%, for the three-month period ended September 27, 2025, as compared to the three-month period ended September 28, 2024, resulted primarily from a 14.2% increase in total episodes and an increase in home health revenue per completed episode due to improvements in patient mix compared to the third quarter of 2024.

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The $0.2 million, or 0.5%, decrease in MS segment revenue for the three-month period ended September 27, 2025, as compared to the three-month period ended September 28, 2024, was attributable to a 1.1% decline in volume, partially offset by a 0.6% increase in revenue rate compared to the third quarter of 2024.

Cost of Revenue, Excluding Depreciation and Amortization

Cost of revenue, excluding depreciation and amortization, was $419.1 million for the three-month period ended September 27, 2025, as compared to $349.3 million for the three-month period ended September 28, 2024, an increase of $69.8 million, or 20.0%. This increase resulted from the following segment activity:

•
a $65.4 million, or 21.8%, increase in PDS cost of revenue;
•
a $4.2 million, or 16.8%, increase in HHH cost of revenue; and
•
a $0.2 million, or 0.7%, in crease in MS cost of revenue.

The 21.8% increase in PDS cost of revenue for the three-month period ended September 27, 2025 resulted from the previously described 12.9% increase in PDS volume combined with a 8.9% increase in PDS cost of revenue rate. The 8.9% increase in cost of revenue rate primarily resulted from higher caregiver labor costs, including the pass-through of reimbursement rate increases and higher labor rates associated with volumes attributed to the Thrive acquisition.

The 16.8% increase in HHH cost of revenue for the three-month period ended September 27, 2025 was driven primarily by higher home health total episodes.

The 0.7% increase in MS cost of revenue for the three-month period ended September 27, 2025 was driven primarily by higher enteral product costs.

Gross Margin and Gross Margin Percentage

Gross margin was $202.8 million, or 32.6% of revenue, for the three-month period ended September 27, 2025, as compared to $159.7 million, or 31.4% of revenue, for the three-month period ended September 28, 2024. Gross margin increased $43.1 million, or 27.0%, from the comparable prior year quarter. The 1.2% increase in gross margin percentage for the three-month period ended September 27, 2025 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 23.0% increase in PDS spread rate from $10.48 to $12.62 driven by the 12.7% increase in PDS revenue rate, net of the 8.9% increase in PDS cost of revenue rate;
•
a 0.9% decrease in MS spread rate from $224.79 to $222.76 driven by the 0.6% in crease in MS revenue rate, and the 1.8% increase in MS cost of revenue rate; and
•
a 0.6% decrease in gross margin percentage in our HHH segment.

Branch and Regional Administrative Expenses

Branch and regional administrative expenses were $95.4 million, or 15.3% of revenue, for the three-month period ended September 27, 2025, as compared to $88.2 million, or 17.3% of revenue, for the three-month period ended September 28, 2024, an increase of $7.2 million, or 8.2%.

The 8.2% increase in branch and regional administrative expenses for the three-month period ended September 27, 2025, as compared to the three-month period ended September 28, 2024, was primarily due to the additional branch operations associated with the Thrive acquisition and costs associated with integrating the acquired operations into our operating structure. The overall 2.0% decrease in branch and regional administrative expenses as a percentage of revenue for the three-month period ended September 27, 2025, as compared to the three-month period ended September 28, 2024, resulted from leveraging our branch and regional administrative structure as we grew volumes across our segments.

Field Contribution and Field Contribution Margin

Field contribution was $107.4 million, or 17.3% of revenue, for the three-month period ended September 27, 2025, as compared to $71.5 million, or 14.0% of revenue, for the three-month period ended September 28, 2024. Field contribution increased $35.9 million, or 50.2%, for the three-month period ended September 27, 2025, as compared to the three-month period ended September 28, 2024. The 3.3% increase in Field contribution margin for the three-month period ended September 27, 2025 resulted from the following:

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•
a 1.2% increase in gross margin percentage for the three-month period ended September 27, 2025, as compared to the three-month period ended September 28, 2024; and
•
a 2.0% decrease in branch and regional administrative expenses as a percentage of revenue for the three-month period ended September 27, 2025, as compared to the three-month period ended September 28, 2024.

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 September 27, 2025 and September 28, 2024 were as follows:

| For the three-month periods ended |
| September 27, 2025 |  | September 28, 2024 |
(dollars in thousands) | Amount |  | % of Revenue |  | Amount |  | % of Revenue |
Revenue | $ | 621,942 |  |  |  | $ | 509,023 |  |  |
Corporate expense components: |  |  |  |  |  |  |  |
Compensation and benefits | $ | 20,084 |  |  | 3.2 | % | $ | 16,943 |  |  | 3.3 | %
Non-cash share-based compensation |  | 3,522 |  |  | 0.6 | % |  | 3,373 |  |  | 0.7 | %
Professional services |  | 23,554 |  |  | 3.8 | % |  | 5,959 |  |  | 1.2 | %
Rent and facilities expense |  | 3,224 |  |  | 0.5 | % |  | 3,220 |  |  | 0.6 | %
Office and administrative |  | (510 | ) |  | -0.1 | % |  | 396 |  |  | 0.1 | %
Other |  | 2,126 |  |  | 0.4 | % |  | 2,003 |  |  | 0.4 | %
Total corporate expenses | $ | 52,000 |  |  | 8.4 | % | $ | 31,894 |  |  | 6.3 | %

Corporate expenses were $52.0 million, or 8.4% of revenue, for the three-month period ended September 27, 2025, as compared to $31.9 million, or 6.3% of revenue, for the three-month period ended September 28, 2024. The $20.1 million, or 63.0%, increase in corporate expenses resulted primarily from $16.0 million of professional services associated with refinancing our credit facilities and increased compensation and benefits costs related primarily to additional compensation and benefits costs necessary to support the integration of the Thrive acquisition.

Depreciation and Amortization

Depreciation and amortization was $2.6 million for both the three-month period ended September 27, 2025 and the three-month period ended September 28, 2024.

Acquisition-related costs

Acquisition-related costs were $(1.2) million for the three-month period ended September 27, 2025, associated with the release of previously accrued costs related to the acquisition of Thrive as compared to $0.2 million for the three-month period ended September 28, 2024.

Other Operating Expense

Other operating expense was $0.4 million for the three-month period ended September 27, 2025, as compared to other operating expense of $2.9 million for the three-month period ended September 28, 2024, a decrease of $2.4 million. The $2.4 million decrease primarily resulted from the value associated with certain licenses impaired in the comparative periods.

Interest Expense, net of Interest Income

Interest expense, net of interest income was $34.3 million for the three-month period ended September 27, 2025, as compared to $39.1 million for the three-month period ended September 28, 2024, a decrease of $4.8 million, or 12.4%. The decrease was primarily driven by decreases in the U.S. federal funds rate over the comparable periods. During September 2025 we restructured our Existing Credit Agreement, as well as terminated our Second Lien Term Loan Credit Agreement as part of an overall debt refinancing (as described in Note 5 to our Quarterly Financial Statements) which led to a lower weighted average interest rate. See further analysis under Liquidity and Capital Resources below.

Loss on Debt Extinguishment

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During the three-month period ended September 27, 2025, we restructured our Existing Credit Agreement, as well as terminated our Second Lien Term Loan Credit Agreement (as described in Note 5 to our Quarterly Financial Statements). As a result of the overall debt refinancing, we recognized a $5.9 million loss on debt extinguishment for the three-month period ended September 27, 2025.

Other Expense

Other expense was less than $0.1 million for the three-month period ended September 27, 2025, as compared to other expense of $22.2 million for the three-month period ended September 28, 2024, a decrease of $22.2 million. We realized a $25.8 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 $3.8 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) | September 27, 2025 |  | September 28, 2024 |
Valuation loss to state interest rate derivatives at fair value | $ | (6,154 | ) | $ | (31,999 | )
Net settlements received from interest rate derivative counterparties |  | 6,144 |  |  | 9,858 |
Other |  | 7 |  |  | (70 | )
Total other expense | $ | (3 | ) | $ | (22,211 | )

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 benefit of $0.6 million for the three-month period ended September 27, 2025, as compared to income tax expense of $15.5 million for the three-month period ended September 28, 2024. 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.

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Nine-Month Period Ended September 27, 2025 Compared to the Nine-Month Period Ended September 28, 2024

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 nine-month periods indicated:

| For the nine-month periods ended |
(dollars in thousands) | September 27, 2025 |  | % of Revenue |  | September 28, 2024 |  | % of Revenue |  | Change |  | % Change |
Revenue | $ | 1,770,719 |  |  | 100.0 | % | $ | 1,504,634 |  |  | 100.0 | % | $ | 266,085 |  |  | 17.7 | %
Cost of revenue, excluding depreciation and amortization |  | 1,173,537 |  |  | 66.3 | % |  | 1,040,814 |  |  | 69.2 | % |  | 132,723 |  |  | 12.8 | %
Gross margin | $ | 597,182 |  |  | 33.7 | % | $ | 463,820 |  |  | 30.8 | % | $ | 133,362 |  |  | 28.8 | %
Branch and regional administrative expenses |  | 276,855 |  |  | 15.6 | % |  | 264,070 |  |  | 17.6 | % |  | 12,785 |  |  | 4.8 | %
Field contribution | $ | 320,327 |  |  | 18.1 | % | $ | 199,750 |  |  | 13.3 | % | $ | 120,577 |  |  | 60.4 | %
Corporate expenses |  | 124,034 |  |  | 7.0 | % |  | 91,981 |  |  | 6.1 | % |  | 32,053 |  |  | 34.8 | %
Depreciation and amortization |  | 7,810 |  |  | 0.4 | % |  | 8,332 |  |  | 0.6 | % |  | (522 | ) |  | -6.3 | %
Acquisition-related costs |  | 2,331 |  |  | 0.1 | % |  | 150 |  |  | 0.0 | % |  | 2,181 |  | NM |
Other operating expense |  | 734 |  |  | 0.0 | % |  | 5,271 |  |  | 0.4 | % |  | (4,537 | ) |  | -86.1 | %
Operating income | $ | 185,418 |  |  | 10.5 | % | $ | 94,016 |  |  | 6.2 | % | $ | 91,402 |  |  | 97.2 | %
Interest expense, net |  | (106,378 | ) |  |  |  | (118,208 | ) |  |  |  | 11,830 |  |  | -10.0 | %
Loss on debt extinguishment |  | (5,862 | ) |  |  |  | - |  |  |  |  | (5,862 | ) |  | -100.0 | %
Other (expense) income |  | (5,475 | ) |  |  |  | 2,329 |  |  |  |  | (7,804 | ) |  | -335.1 | %
Income tax expense |  | (21,421 | ) |  |  |  | (18,246 | ) |  |  |  | (3,175 | ) |  | 17.4 | %
Net income (loss) | $ | 46,282 |  |  |  | $ | (40,109 | ) |  |  | $ | 86,391 |  |  | 215.4 | %

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 nine-month periods indicated:

| For the nine-month periods ended |  |
(dollars in thousands) | September 27, 2025 |  | September 28, 2024 |  | Change |  | % Change |  |
Revenue | $ | 1,770,719 |  | $ | 1,504,634 |  | $ | 266,085 |  |  | 17.7 | % |
Cost of revenue, excluding depreciation and amortization |  | 1,173,537 |  |  | 1,040,814 |  |  | 132,723 |  |  | 12.8 | % |
Gross margin | $ | 597,182 |  | $ | 463,820 |  | $ | 133,362 |  |  | 28.8 | % |
Gross margin percentage |  | 33.7 | % |  | 30.8 | % |  |  |  | 2.9 | % | (1)
Branch and regional administrative expenses |  | 276,855 |  |  | 264,070 |  |  | 12,785 |  |  | 4.8 | % |
Field contribution | $ | 320,327 |  | $ | 199,750 |  | $ | 120,577 |  |  | 60.4 | % |
Field contribution margin |  | 18.1 | % |  | 13.3 | % |  |  |  |  |
Corporate expenses | $ | 124,034 |  | $ | 91,981 |  | $ | 32,053 |  |  | 34.8 | % |
As a percentage of revenue |  | 7.0 | % |  | 6.1 | % |  |  |  |  |
Operating income | $ | 185,418 |  | $ | 94,016 |  | $ | 91,402 |  |  | 97.2 | % |
As a percentage of revenue |  | 10.5 | % |  | 6.2 | % |  |  |  |  |

(1)
Represents the change in margin percentage year over year.

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

| PDS |  |
| For the nine-month periods ended |  |
(dollars and hours in thousands) | September 27, 2025 |  | September 28, 2024 |  | Change |  | % Change |  |
Revenue | $ | 1,460,441 |  | $ | 1,212,418 |  | $ | 248,023 |  |  | 20.5 | % |
Cost of revenue, excluding depreciation and amortization |  | 1,018,550 |  |  | 891,588 |  |  | 126,962 |  |  | 14.2 | % |
Gross margin | $ | 441,891 |  | $ | 320,830 |  | $ | 121,061 |  |  | 37.7 | % |
Gross margin percentage |  | 30.3 | % |  | 26.5 | % |  |  |  | 3.8 | % | (4)
Hours |  | 33,762 |  |  | 31,074 |  |  | 2,688 |  |  | 8.7 | % |
Revenue rate | $ | 43.26 |  | $ | 39.02 |  | $ | 4.24 |  |  | 11.8 | % | (1)
Cost of revenue rate | $ | 30.17 |  | $ | 28.69 |  | $ | 1.48 |  |  | 5.5 | % | (2)
Spread rate | $ | 13.09 |  | $ | 10.33 |  | $ | 2.76 |  |  | 29.0 | % | (3)
| HHH |  |
| For the nine-month periods ended |  |
(dollars and admissions/episodes in thousands) | September 27, 2025 |  | September 28, 2024 |  | Change |  | % Change |  |
Revenue | $ | 179,272 |  | $ | 163,382 |  | $ | 15,890 |  |  | 9.7 | % |
Cost of revenue, excluding depreciation and amortization |  | 82,187 |  |  | 75,814 |  |  | 6,373 |  |  | 8.4 | % |
Gross margin | $ | 97,085 |  | $ | 87,568 |  | $ | 9,517 |  |  | 10.9 | % |
Gross margin percentage |  | 54.2 | % |  | 53.6 | % |  |  |  | 0.6 | % | (4)
Home health total admissions (5) |  | 29.2 |  |  | 28.4 |  |  | 0.8 |  |  | 2.8 | % |
Home health episodic admissions (6) |  | 22.3 |  |  | 21.5 |  |  | 0.8 |  |  | 3.7 | % |
Home health total episodes (7) |  | 37.4 |  |  | 35.0 |  |  | 2.4 |  |  | 6.9 | % |
Home health episodic mix (8) |  | 76.4 | % |  | 75.7 | % |  |  |  | 0.7 | % | (10)
Home health revenue per completed episode (9) | $ | 3,200 |  | $ | 3,089 |  | $ | 111 |  |  | 3.6 | % |
| MS |  |
| For the nine-month periods ended |  |
(dollars and UPS in thousands) | September 27, 2025 |  | September 28, 2024 |  | Change |  | % Change |  |
Revenue | $ | 131,006 |  | $ | 128,834 |  | $ | 2,172 |  |  | 1.7 | % |
Cost of revenue, excluding depreciation and amortization |  | 72,800 |  |  | 73,412 |  |  | (612 | ) |  | -0.8 | % |
Gross margin | $ | 58,206 |  | $ | 55,422 |  | $ | 2,784 |  |  | 5.0 | % |
Gross margin percentage |  | 44.4 | % |  | 43.0 | % |  |  |  | 1.4 | % | (4)
Unique patients served (“UPS”) |  | 271 |  |  | 278 |  |  | (7 | ) |  | -2.5 | % |
Revenue rate | $ | 483.42 |  | $ | 463.43 |  | $ | 19.99 |  |  | 4.2 | % | (1)
Cost of revenue rate | $ | 268.63 |  | $ | 264.07 |  | $ | 4.56 |  |  | 1.7 | % | (2)
Spread rate | $ | 214.79 |  | $ | 199.36 |  | $ | 15.43 |  |  | 7.5 | % | (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 year over year.
(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 year over year.

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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 December 28, 2024.

Summary Operating Results

Operating Income

Operating income was $185.4 million for the nine-month period ended September 27, 2025, as compared to operating income of $94.0 million for the nine-month period ended September 28, 2024, an increase of $91.4 million, or 97.2%.

Operating income for the nine-month period of 2025 was positively impacted by an increase of $120.6 million, or 60.4%, in Field contribution as compared to the nine-month period of 2024. The $120.6 million increase in Field contribution resulted from a $266.1 million, or 17.7%, increase in consolidated revenue and a 4.8% increase in our Field contribution margin to 18.1% for the nine-month period of 2025 from 13.3% for the nine-month period of 2024. The primary driver of our higher Field contribution margin year over year was an increase in gross margin percentage of 2.9% compared to the first nine months of 2024 and a 2.0% decrease in branch and regional administrative expenses as a percentage of revenue to 15.6% for the nine-month period of 2025 from 17.6% for the nine-month period of 2024.

The overall $91.4 million increase in operating income compared to the first nine months of 2024 primarily consists of:

•
the previously discussed $120.6 million increase in Field contribution;
•
a $4.5 million decrease in other operating expense; and
•
a $0.5 million decrease in depreciation and amortization; offset by
•
a $32.1 million increase in corporate expenses; and
•
$2.2 million of acquisition-related costs associated with the Thrive acquisition.

Net Income (Loss)

Net income for the nine-month period ended September 27, 2025 was $46.3 million, as compared to net loss of $40.1 million for the nine-month period ended September 28, 2024. The $86.4 million increase in net income was primarily driven by the following:

•
the previously discussed $91.4 million increase in operating income; and
•
an $11.8 million decrease in interest expense, net of interest income; offset by
•
an aggregate $7.8 million decrease in valuation losses on interest rate derivatives and net settlements received from interest rate derivative counterparties included in other expense (income) compared to the first nine months of 2024;
•
a $5.9 million loss on debt extinguishment recorded during the nine-month period ended September 27, 2025; and
•
a $3.2 million increase in income tax expense.

Revenue

Revenue was $1,770.7 million for the nine-month period ended September 27, 2025, as compared to $1,504.6 million for the nine-month period ended September 28, 2024, an increase of $266.1 million, or 17.7%. This increase resulted from the following segment activity:

•
a $248.0 million, or 20.5%, increase in PDS revenue;
•
a $15.9 million, or 9.7%, increase in HHH revenue; and
•
a $2.2 million, or 1.7%, increase in MS revenue.

Our PDS segment revenue growth of $248.0 million, or 20.5%, for the nine-month period ended September 27, 2025 was attributable to a 8.7% increase in volume and an 11.8% increase in revenue rate. The 8.7% increase in volume was primarily attributable to growth in demand for non-clinical services and new volumes attributable to the Thrive acquisition which was completed on June 2, 2025.

The 11.8% increase in PDS revenue rate for the nine-month period ended September 27, 2025, as compared to the nine-month period ended September 28, 2024, resulted primarily from the following: (i) reimbursement rate increases issued by various state Medicaid programs and Managed Medicaid payers, including payments received related to certain rate increases applied retroactively for services provided since July 1, 2024 and January 1, 2025 during the first six-months of 2025, for which there was no associated wage pass-through reflected in segment cost of revenue, excluding depreciation and amortization; (ii) increases in value-based payments from certain payors; and (iii) improved collections on fully reserved aged receivables.

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Our HHH segment revenue increase of $15.9 million, or 9.7%, for the nine-month period ended September 27, 2025 resulted primarily from a 6.9% increase in total episodes and a 3.6% increase in home health revenue per completed episode due to improvements in patient mix compared to the first nine months of 2024.

The $2.2 million, or 1.7%, increase in MS segment revenue for the nine-month period ended September 27, 2025, as compared to the nine-month period ended September 28, 2024, was attributable to a 4.2% increase in revenue rate offset by a decline in volume of 2.5% compared to the first nine months of 2024.

Cost of Revenue, Excluding Depreciation and Amortization

Cost of revenue, excluding depreciation and amortization, was $1,173.5 million for the nine-month period ended September 27, 2025, as compared to $1,040.8 million for the nine-month period ended September 28, 2024, an increase of $132.7 million, or 12.8%. This increase resulted from the following segment activity:

•
a $127.0 million, or 14.2%, increase in PDS cost of revenue; and
•
a $6.4 million, or 8.4%, increase in HHH cost of revenue; offset by
•
a $0.6 million, or 0.8%, decrease in MS cost of revenue.

The 14.2% increase in PDS cost of revenue for the nine-month period ended September 27, 2025 resulted from the previously described 8.7% increase in PDS volume combined with a 5.5% increase in PDS cost of revenue rate. The 5.5% increase in cost of revenue rate primarily resulted from higher caregiver labor costs, including the pass-through of reimbursement rate increases net of $6.2 million lower general and professional liability expense associated with certain accrued legal settlements.

The 8.4% increase in HHH cost of revenue for the nine-month period ended September 27, 2025 was driven primarily by higher home health total episodes.

The 0.8% decrease in MS cost of revenue for the nine-month period ended September 27, 2025 was driven by the previously described 2.5% decline in MS volumes partially offset by a 1.7% increase in cost of revenue rate.

Gross Margin and Gross Margin Percentage

Gross margin was $597.2 million, or 33.7% of revenue, for the nine-month period ended September 27, 2025, as compared to $463.8 million, or 30.8% of revenue, for the nine-month period ended September 28, 2024. Gross margin increased $133.4 million, or 28.8%, from the comparable prior year quarter. The 2.9% increase in gross margin percentage for the nine-month period ended September 27, 2025 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 29.0% increase in PDS spread rate from $10.33 to $13.09 driven by the 11.8% increase in PDS revenue rate, net of the 5.5% increase in PDS cost of revenue rate;
•
a 7.5% increase in MS spread rate from $199.36 to $214.79 driven by the 4.2% increase in MS revenue rate, net of the 1.7% increase in MS cost of revenue rate; and
•
our HHH segment, in which gross margin percentage increased by 0.6%.

Branch and Regional Administrative Expenses

Branch and regional administrative expenses were $276.9 million, or 15.6% of revenue, for the nine-month period ended September 27, 2025, as compared to $264.1 million, or 17.6% of revenue, for the nine-month period ended September 28, 2024, an increase of $12.8 million, or 4.8%.

The 4.8% increase in branch and regional administrative expenses for the nine-month period ended September 27, 2025, as compared to the nine-month period ended September 28, 2024, was primarily due to an increase in incentive compensation expense during the nine-month period due to improved forecasted performance compared to annual targets and acceleration of certain non-cash share-based compensation awards during the first nine months of 2025. The overall 2.0% decrease in branch and regional administrative expenses as a percentage of revenue for the nine-month period ended September 27, 2025, as compared to the nine-month period ended September 28, 2024 resulted from leveraging our branch and regional administrative structure as we grew volumes across our segments.

Field Contribution and Field Contribution Margin

Field contribution was $320.3 million, or 18.1% of revenue, for the nine-month period ended September 27, 2025, as compared to $199.8 million, or 13.3% of revenue, for the nine-month period ended September 28, 2024. Field contribution increased $120.6 million,

33

or 60.4%, for the nine-month period ended September 27, 2025, as compared to the nine-month period ended September 28, 2024. The 4.8% increase in Field contribution margin for the nine-month period ended September 27, 2025 resulted from the following:

•
a 2.0% decrease in branch and regional administrative expenses as a percentage of revenue in the nine-month period ended September 27, 2025, as compared to the nine-month period ended September 28, 2024; and
•
a 2.9% increase in gross margin percentage in the nine-month period ended September 27, 2025, as compared to the nine-month period ended September 28, 2024.

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 nine-month periods ended September 27, 2025 and September 28, 2024 were as follows:

| For the nine-month periods ended |
| September 27, 2025 |  | September 28, 2024 |
(dollars in thousands) | Amount |  | % of Revenue |  | Amount |  | % of Revenue |
Revenue | $ | 1,770,719 |  |  |  | $ | 1,504,634 |  |  |
Corporate expense components: |  |  |  |  |  |  |  |
Compensation and benefits | $ | 58,550 |  |  | 3.3 | % | $ | 49,618 |  |  | 3.3 | %
Non-cash share-based compensation |  | 14,401 |  |  | 0.8 | % |  | 9,233 |  |  | 0.6 | %
Professional services |  | 35,227 |  |  | 2.0 | % |  | 16,837 |  |  | 1.1 | %
Rent and facilities expense |  | 9,237 |  |  | 0.5 | % |  | 9,436 |  |  | 0.6 | %
Office and administrative |  | 407 |  |  | 0.0 | % |  | 1,356 |  |  | 0.1 | %
Other |  | 6,212 |  |  | 0.4 | % |  | 5,501 |  |  | 0.4 | %
Total corporate expenses | $ | 124,034 |  |  | 7.0 | % | $ | 91,981 |  |  | 6.1 | %

Corporate expenses were $124.0 million, or 7.0% of revenue, for the nine-month period ended September 27, 2025, as compared to $92.0 million, or 6.1% of revenue, for the nine-month period ended September 28, 2024. The $32.1 million, or 34.8%, increase in corporate expenses resulted primarily from $16.0 million of professional services associated with refinancing our credit facilities, higher compensation and benefits to support operations and Thrive integration activities, and higher non-cash share-based compensation costs, primarily due to the acceleration of the SMRP in the first quarter of 2025.

Depreciation and Amortization

Depreciation and amortization was $7.8 million for the nine-month period ended September 27, 2025, as compared to $8.3 million for the nine-month period ended September 28, 2024, a decrease of $0.5 million, or 6.3%. The $0.5 million decrease primarily resulted from improved capital asset management.

Acquisition-related costs

Acquisition related costs were $2.3 million for the nine-month period ended September 27, 2025, primarily associated with the acquisition of Thrive as compared to $0.2 million for the nine-month period ended September 28, 2024.

Other Operating Expense

Other operating expense was $0.7 million for the nine-month period ended September 27, 2025, as compared to other operating expense of $5.3 million for the nine-month period ended September 28, 2024, a decrease in other operating expense of $4.5 million. The $4.5 million decrease primarily resulted from impairment of a certain facility lease asset recorded in the prior year nine-month period and the value associated with certain licenses impaired in the comparative periods.

Interest Expense, net of Interest Income

Interest expense, net of interest income was $106.4 million for the nine-month period ended September 27, 2025, as compared to $118.2 million for the nine-month period ended September 28, 2024, a decrease of $11.8 million, or 10.0%. The decrease was primarily driven by a lower U.S. federal funds rate during the nine-month period ended September 27, 2025 compared to the nine-month period ended September 28, 2024. See further analysis under Liquidity and Capital Resources below.

34

Loss on Debt Extinguishment

During the nine-month period ended September 27, 2025, we restructured our Existing Credit Agreement, as well as terminated our Second Lien Term Loan Credit Agreement (as described in Note 5 to our Quarterly Financial Statements). As a result of the overall debt refinancing, we recognized a $5.9 million loss on debt extinguishment for the nine-month period ended September 27, 2025.

Other (Expense) Income

Other expense was $5.5 million for the nine-month period ended September 27, 2025, as compared to other income of $2.3 million for the nine-month period ended September 28, 2024. We realized a $3.1 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 $10.9 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 (expense) income included the following:

| For the nine-month periods ended |
(dollars in thousands) | September 27, 2025 |  | September 28, 2024 |
Valuation loss to state interest rate derivatives at fair value | $ | (23,734 | ) | $ | (26,869 | )
Net settlements received from interest rate derivative counterparties |  | 18,202 |  |  | 29,086 |
Other |  | 57 |  |  | 112 |
Total other (expense) income | $ | (5,475 | ) | $ | 2,329 |

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 $21.4 million for the nine-month period ended September 27, 2025, as compared to income tax expense of $18.2 million for the nine-month period ended September 28, 2024. This increase in tax expense was primarily driven by differences in our projections of annual earnings at the end of each comparable nine-month period, 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, while also including the full estimated 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

35

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 nine-month periods ended |
(dollars in thousands) |  | September 27, 2025 |  | September 28, 2024 |  | September 27, 2025 |  | September 28, 2024 |
Net income (loss) |  | $ | 14,064 |  | $ | (42,843 | ) | $ | 46,282 |  | $ | (40,109 | )
Interest expense, net |  |  | 34,301 |  |  | 39,145 |  |  | 106,378 |  |  | 118,208 |
Income tax (benefit) expense |  |  | (647 | ) |  | 15,511 |  |  | 21,421 |  |  | 18,246 |
Depreciation and amortization |  |  | 2,599 |  |  | 2,587 |  |  | 7,810 |  |  | 8,332 |
EBITDA |  |  | 50,317 |  |  | 14,400 |  |  | 181,891 |  |  | 104,677 |
Goodwill, intangible and other long-lived asset impairment |  |  | 418 |  |  | 2,904 |  |  | 738 |  |  | 5,304 |
Non-cash share-based compensation |  |  | 4,960 |  |  | 4,902 |  |  | 21,115 |  |  | 12,483 |
Loss on extinguishment of debt |  |  | 5,862 |  |  | - |  |  | 5,862 |  |  | - |
Fees related to debt modifications |  |  | 15,964 |  |  | - |  |  | 15,964 |  |  | - |
Interest rate derivatives (1) |  |  | 9 |  |  | 22,141 |  |  | 5,532 |  |  | (2,218 | )
Acquisition-related costs (2) |  |  | (1,175 | ) |  | 150 |  |  | 2,332 |  |  | 150 |
Integration costs (3) |  |  | 2,250 |  |  | 262 |  |  | 4,793 |  |  | 949 |
Legal costs and settlements associated with acquisition matters (4) |  |  | 1,550 |  |  | 848 |  |  | 3,228 |  |  | 1,423 |
Restructuring (5) |  |  | 52 |  |  | 1,599 |  |  | 468 |  |  | 4,787 |
Other legal matters (6) |  |  | 12 |  |  | 214 |  |  | (5,926 | ) |  | 1,112 |
Other adjustments (7) |  |  | (91 | ) |  | 421 |  |  | (141 | ) |  | (296 | )
Total adjustments (8) |  | $ | 29,811 |  | $ | 33,441 |  | $ | 53,965 |  | $ | 23,694 |
Adjusted EBITDA |  | $ | 80,128 |  | $ | 47,841 |  | $ | 235,856 |  | $ | 128,371 |

(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 (expense) income.
(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 $1.2 million for the three and nine-month periods ended September 27, 2025, respectively, and $0.3 million and $0.8 million for the three and nine-month periods ended September 28, 2024, respectively; and (ii) transitionary costs incurred to integrate acquired companies into our field and corporate operations of $1.8 million and $3.6 million for the three and nine-month periods ended September 27, 2025, respectively, and $0.1 million for the nine-month period ended September 28, 2024. No such cost was recorded during the three-month period ended September 28, 2024. 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.

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(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 $1.3 million and $2.6 million for the three and nine-month periods ended September 27, 2025, respectively, and $0.4 million and $1.0 million for the three and nine-month periods ended September 28, 2024, 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 nine-month period ended September 27, 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 $(0.1) million for the three and nine-month periods ended September 27, 2025, respectively, and $0.4 million and $(0.3) million for the three and nine-month periods ended September 28, 2024, 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 nine-month periods ended |
(dollars in thousands) |  | September 27, 2025 |  | September 28, 2024 |  | September 27, 2025 |  | September 28, 2024 |
Cost of revenue, excluding depreciation and amortization |  | $ | 353 |  | $ | 281 |  | $ | (5,225 | ) | $ | 457 |
Branch and regional administrative expenses |  |  | 2,003 |  |  | 2,515 |  |  | 6,841 |  |  | 5,389 |
Corporate expenses |  |  | 22,346 |  |  | 5,421 |  |  | 37,945 |  |  | 14,756 |
Acquisition-related costs |  |  | (1,175 | ) |  | 150 |  |  | 2,331 |  |  | 150 |
Other operating expense |  |  | (12 | ) |  | (8 | ) |  | 34 |  |  | 2,112 |
Loss on debt extinguishment |  |  | 5,862 |  |  | - |  |  | 5,862 |  |  | - |
Other expense (income) |  |  | 434 |  |  | 25,082 |  |  | 6,177 |  |  | 830 |
Total adjustments |  | $ | 29,811 |  | $ | 33,441 |  | $ | 53,965 |  | $ | 23,694 |

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, gross margin, or gross margin percentage 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

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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 nine-month periods ended |
(dollars in thousands) | September 27, 2025 |  | September 28, 2024 |  | September 27, 2025 |  | September 28, 2024 |
Gross margin | $ | 202,824 |  | $ | 159,699 |  | $ | 597,182 |  | $ | 463,820 |
Gross margin percentage |  | 32.6 | % |  | 31.4 | % |  | 33.7 | % |  | 30.8 | %
Branch and regional administrative expenses |  | 95,399 |  |  | 88,184 |  |  | 276,855 |  |  | 264,070 |
Field contribution | $ | 107,425 |  | $ | 71,515 |  | $ | 320,327 |  | $ | 199,750 |
Field contribution margin |  | 17.3 | % |  | 14.0 | % |  | 18.1 | % |  | 13.3 | %
Revenue | $ | 621,942 |  | $ | 509,023 |  | $ | 1,770,719 |  | $ | 1,504,634 |

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. Payment of interest and related fees under our credit facilities is currently the most significant use of our operating cash flow. Our goal is to use cashflow provided by operations primarily as a source of cash to supplement the purchase price for acquisitions.

In September 2023, in response to a $7.9 million arbitration award rendered against us in connection with a civil litigation matter, we promptly obtained a $9.1 million appellate bond with the trial court. The $9.1 million appellate bond was collateralized with letters of credit. During the second fiscal quarter of 2025, a settlement agreement between all parties was reached. On June 9, 2025, the court entered an agreed final judgment in the matter and ordered release of the bond. The letters of credit securing the bond were released on June 16, 2025.

For additional information with respect to the foregoing litigation matters, please see "Litigation and Other Current Liabilities" set forth in Note 11 to our Quarterly Financial Statements.

At September 27, 2025 we had $145.9 million in cash on hand, $105.8 million available to us under our Securitization Facility and approximately $227.0 million of borrowing capacity under the 2025 Refinancing Revolving Credit Facility. Available borrowing capacity under the 2025 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 2025 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 nine-month periods presented:

| For the nine-month periods ended |
(dollars in thousands) | September 27, 2025 |  | September 28, 2024 |
Net cash provided by operating activities | $ | 76,137 |  | $ | 19,231 |
Net cash used in investing activities | $ | (20,349 | ) | $ | (4,790 | )
Net cash provided by financing activities | $ | 5,790 |  | $ | 20,079 |

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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 $56.9 million for the nine-month period ended September 27, 2025 compared to the nine-month period ended September 28, 2024, primarily due to:

•
improvements in operating income over the prior year period; partially offset by
•
the provision of cash associated with operating assets and liabilities during the first nine months of 2025, including the timing of payments of certain accounts payable and other accrued liabilities.

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:

| September 28, 2024 |  | December 28, 2024 |  | March 29, 2025 |  | June 28, 2025 |  | September 27, 2025 |
Days Sales Outstanding |  | 48.1 |  |  | 46.4 |  |  | 45.6 |  |  | 47.2 |  |  | 46.0 |

Investing Activities

Net cash used in investing activities was $20.3 million for the nine-month period ended September 27, 2025, as compared to $4.8 million for the nine-month period ended September 28, 2024. The primary driver of the $15.6 million increase in cash used in the current period was the purchase of Thrive.

Financing Activities

Net cash provided by financing activities decreased by $14.3 million, from $20.1 million net cash provided by financing activities for the nine-month period ended September 28, 2024 to $5.8 million net cash provided by financing activities for the nine-month period ended September 27, 2025. The $14.3 million decrease in net cash provided by financing activities was primarily attributable to a decrease in net borrowings under the Securitization Facility during the prior year period, partially offset by a net increase in cash proceeds associated with our Amended Credit Agreement. There were no borrowings made under our Securitization Facility during the nine-month period ended September 27, 2025.

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 September 27, 2025 and December 28, 2024, as well as related interest expense for the nine-month periods ended September 27, 2025 and September 28, 2024, respectively:

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| Current and Long-term |  |  |  | Interest Expense |
(dollars in thousands) | Obligations |  |  |  | For the nine-month periods ended |
Instrument | September 27, 2025 |  |  | December 28, 2024 |  |  | Interest Rate as of September 27, 2025 | September 27, 2025 |  | September 28, 2024 |
2025 Term Loans | $ | 1,325,000 |  | (1) | $ | 890,550 |  | (2) | S + 3.75% | $ | 56,274 |  | $ | 62,436 |
Second Lien Term Loan |  | - |  |  |  | 415,000 |  | (2) | N/A |  | 34,922 |  |  | 39,258 |
2025 Refinancing Revolving Credit Facility |  | - |  | (1) |  | - |  | (2) | S + 3.75% |  | 546 |  |  | 638 |
Securitization Facility (3) |  | 165,000 |  |  |  | 168,750 |  |  | S + 2.50% |  | 9,819 |  |  | 11,225 |
Amortization of debt issuance costs |  | - |  |  |  | - |  |  |  |  | 4,843 |  |  | 3,797 |
Other |  | - |  |  |  | - |  |  |  |  | 1,061 |  |  | 1,151 |
Total Indebtedness | $ | 1,490,000 |  |  | $ | 1,474,300 |  |  |  | $ | 107,465 |  | $ | 118,505 |
Less: unamortized debt issuance costs |  | (22,441 | ) |  |  | (24,694 | ) |  |  |  |  |  |
Total current and long-term obligations, net of unamortized debt issuance costs | $ | 1,467,559 |  |  | $ | 1,449,606 |  |  |  |  |  |  |

Weighted Average Interest Rate (4) | 7.8% |  | 9.0% |  |  |  |

(1)
Variable rate debt instrument which accrues interest at a rate equal to the SOFR rate, plus an applicable margin.
(2)
Variable rate debt instrument which accrues interest at a rate equal to the SOFR rate, plus a credit spread adjustment ("CSA"), (subject to a minimum of 0.50%), plus an applicable margin.
(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 September 27, 2025 and December 28, 2024, respectively, and the applicable interest rates at that date.

We were in compliance with all financial covenants and restrictions related to existing credit facilities at September 27, 2025.

On June 25, 2025, we amended the Securitization Facility (the "Seventh Amendment") to increase the maximum amount available thereunder from $225.0 million to $275.0 million, subject to certain borrowing base requirements. The amendment also, among other things, provided for an extension to the scheduled termination date of the Securitization Facility to three years from the effective date of the Seventh Amendment. As a result of the Seventh Amendment to the Securitization Facility the Existing Revolving Credit Facility's maturity date was effectively extended to April 15, 2028.

On September 17, 2025, Aveanna Healthcare LLC (the "Borrower"), a wholly owned subsidiary of the Company, entered into the fourth joinder and twelfth amendment (the "Refinancing 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"), among the Company, the borrowing subsidiaries party thereto, the lenders party thereto, Barclays Bank PLC as administrative agent and collateral agent (in such capacities, the "Administrative Agent"), and other agents party thereto (the Existing Credit Agreement, as amended by the Refinancing Amendment, the "Amended Credit Agreement"). The Existing Credit Agreement provided for among other things, a senior secured term loan facility (the "Existing Term Loan Facility") with an outstanding balance as of the Closing Date of $886.0 million (the "Existing Term Loans") and availability of $170.3 million via the Existing Revolving Credit Facility.

The Refinancing Amendment provides for, among other things, the refinancing of the Existing Revolving Credit Facility under the Existing Credit Agreement and incremental revolving loan commitments in an aggregate principal amount of $79.7 million, resulting in total aggregate revolving loan commitments of $250.0 million (the "2025 Refinancing Revolving Credit Facility"), a portion of which may be used for the issuance of letters of credit and swingline loans. The Refinancing Amendment additionally provides for the refinancing of the term loans previously outstanding ("2025 Refinancing Term Loans") under the Existing Term Loan Facility (the "2025 Refinancing Term Facility") and an incremental senior secured term loan facility, with aggregate commitments increased by $439.1 million (the "2025 Incremental Term Loans"). Combined, the 2025 Refinancing Term Loans and 2025 Incremental Term Loans aggregate to a total principal balance of $1,325.0 million (the "2025 Term Loans"). The 2025 Refinancing Revolving Credit Facility and the 2025 Refinancing Term Facility replace the Existing Revolving Facility and the Existing Term Loan Facility, respectively. The maturity date for loans and commitments under the 2025 Refinancing Revolving Credit Facility is September 17, 2030. The maturity date for loans and commitments under the 2025 Refinancing Term Facility is September 17, 2032. Loans under the 2025 Refinancing Term Facility amortize at a rate equal to 1.00% per annum, payable in equal quarterly installments, and were issued with original issue discount at 99.75% of par.

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Proceeds from the 2025 Term Loans were used to immediately refinance in full the Existing Term Loans and the second lien term loan (the "Second Lien Term Loan") provided by the Second Lien Credit Agreement, dated as of December 10, 2021, by and among the Company, the Borrower, a syndicate of lending institutions, from time to time party thereto, and Barclays Bank PLC, as administrative agent and collateral agent, to pay accrued interest and to fund working capital and general corporate purposes.

The 2025 Term Loans under the Amended Credit Agreement bear interest at a rate equal to, at the election of the Borrower, Term SOFR (as defined in the Amended Credit Agreement) plus an applicable margin equal to 3.75% per annum or an alternative base rate ("ABR") plus an applicable margin equal to 2.75% per annum. Loans under the 2025 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 3.75% per annum or a base rate plus an applicable margin equal to 2.75% per annum, so long as the Consolidated First Lien Net Leverage Ratio (as defined in the Amended 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 September 27, 2025, the principal amount of the 2025 Term Loan and borrowings under the 2025 Refinancing Revolving Credit Facility each accrued interest at a rate of 7.89%.

On September 17, 2025, substantially concurrently with the Refinancing Amendment, the Company terminated its Second Lien Credit Agreement, dated as of December, 10, 2021, by and among the Company, a syndicate of lending institutions from time to time party thereto, and Barclays Bank PLC, as administrative agent and collateral agent (the "Second Lien Credit Agreement"). The Second Lien Credit Agreement provided for a second lien term loan in an aggregate principal amount of $415.0 million (the "Second Lien Term Loan"), which was secured by a second lien on certain collateral specified therein. The entirety of the Second Lien Term Loan was repaid with proceeds from the 2025 Incremental Term Loans.

Contractual Obligations

Our contractual obligations consist primarily of long-term debt obligations, interest payments, and operating leases. These contractual obligations impact our short-term and long-term liquidity and capital needs. As of September 27, 2025, there were no material changes to our contractual obligations from those described in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.

Critical Accounting Estimates

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024 for accounting policies and related estimates we believe are the most critical to understanding our consolidated financial statements, financial condition and results of operations and which require complex management judgment and assumptions, or involve uncertainties. These critical accounting estimates include patient services and product revenue; business combinations; goodwill; and insurance reserves. There have been no changes to our critical accounting estimates or their application since the date of our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.

Item 3. Quantitative and Qualitat ive Disclosures About Market Risk

Not required for a smaller reporting company.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we conducted an evaluation, under the supervision and with the participation of our principal executive officer, principal financial officer, and principal accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"). Based on this evaluation, our principal executive officer, principal financial officer and principal accounting officer concluded that our disclosure controls and procedures were effective as of September 27, 2025.

On June 2, 2025, we completed the Merger. As permitted by the Securities and Exchange Commission staff interpretive guidance that an assessment of a recently acquired business may be omitted from the scope of evaluation in the year of acquisition, management excluded Thrive from its interim evaluation of internal control over financial reporting.

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Changes in Internal Control over Financial Reporting

On June 2, 2025, we completed the Merger. As part of the ongoing integration, we are in the process of incorporating the controls and related procedures of Thrive. Other than incorporating Thrive's controls, there were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) that have occurred during the three-month period ended September 27, 2025, that have materially impacted, or are reasonably likely to materially impact, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our principal executive officer, principal financial officer, and principal accounting officer, does not expect that our disclosure controls or our internal controls over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls’ effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies and procedures.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

Information in response to this Item is included in “Part I – Item 1 - Note 11 – Commitments and Contingencies” and is incorporated by reference into this Part II, Item 1 of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

There have been no material changes to the risk factors described in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 28, 2024.

Item 2. Unregistered Sales of Equi ty Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safe ty Disclosures

Not applicable.

Item 5. Other Information

During the quarter ended September 27, 2025, none of the directors or officers of the Company adopted, modified, or terminated any contract, instruction or written plan for the purchase or sale of the Company's securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1 (c) under the Exchange Act or any "non-Rule 10b5-1 trading arrangement", as defined in Item 408 of Regulation S-K, except as follows:

On September 11, 2025, the officer of the Company listed in the chart below adopted Rule 10b5-1 trading arrangements intended to provide solely for "eligible sell-to-cover transactions" (as described in Rule 10b5-1(c)(1) under the Exchange Act) to satisfy the applicable tax withholding obligations in connection with the vesting of certain restricted stock unit awards. The number of shares to be sold pursuant to the officer's Rule 10b5-1 trading arrangements are dependent on the applicable tax obligations incurred in connection with the vesting of the officer's restricted stock unit awards and, therefore, is indeterminable at this time, but in no event will it exceed the aggregate number of shares of our common stock listed below.

Name | Title | Adoption Date | Expiration Date | Aggregate # of securities to be sold (2) |
Patrick A. Cunningham | Chief Compliance Officer | September 11, 2025 | January 9, 2026 (1) |  | 75,000 |
Patrick A. Cunningham | Chief Compliance Officer | September 11, 2025 | February 28, 2026 (1) |  | 136,204 |

(1)
Each trading arrangement permits transactions through the date of completion of all sales necessary to withhold minimum tax obligations required by applicable law.
(2)
The volume and timing of sales is determined based upon sell-to-cover events occurring upon the vesting of certain outstanding equity awards.

Each of the 10b5-1 plans in the above table included a representation from the officer to the Company, in accordance with the Company's securities trading policy, that such individual was not in possession of any material nonpublic information regarding the Company or the securities subject to the plan on the date of adoption.

Item 6. E xhibits

The following exhibits are filed or furnished herewith:

Exhibit Number |  | Description

43

10.1** |  | Fourth Joinder and Twelfth Amendment to First Lien Credit Agreement dated as of September 17, 2025, among Aveanna Healthcare LLC, Aveanna Healthcare Intermediate Holdings LLC, the other credit parties thereto, the lenders party thereto, the L/C issuers party thereto, and Barclays Bank PLC, as administrative agent and swingline lender.
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)

* Furnished herewith.

** Pursuant to item 601(a)(5) of Regulation S-K, certain exhibits and schedules to this agreement have been omitted. The registrant agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibits or schedule upon request by the Securities and Exchange Commission.

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SIGNA TURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  | Aveanna Healthcare Holdings Inc.
Date: November 6, 2025 |  | By: | /s/ Jeff Shaner
|  |  | Jeff Shaner Chief Executive Officer
|  |  | (Principal Executive Officer)
Date: November 6, 2025 |  | By: | /s/ Matthew Buckhalter
|  |  | Matthew Buckhalter Chief Financial Officer
|  |  | (Principal Financial Officer)
Date: November 6, 2025 |  | By: | /s/ Deborah Stewart
|  |  | Deborah Stewart
|  |  | Chief Accounting Officer (Principal Accounting Officer)

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