Quarterly Report for Quarter Ending September 27, 2025 (Form 10-Q)

Management's Discussion and Analysis ofFinancial 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	%

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:

Our PDN services include:

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

MS Segment

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

Recent Developments

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

the cost per PDS hour of patient service or per individual MS patient transaction. Management uses this metric to understand how effectively we manage labor and product costs.

Spread Rate

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

HHH Segment Operating Metrics

Home Health Total Admissions and Home Health Episodic Admissions

Home health total admissions represents the number of new patients who have begun receiving services. We review the number of home health admissions on a daily basis as we believe it is a leading indicator of our growth. We measure home health admissions by reimbursement structure, separating them into home health episodic admissions, which are reimbursed for a fixed duration of care - typically 30 days, and other admissions, which primarily follow a per-visit reimbursement model. This allows us to better understand the payor mix of our home health business.

Home Health Total Episodes

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

Home Health Episodic Mix

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

Home Health Revenue Per Completed Episode

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

Results of Operations

Three-Month Period Ended 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	%

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)

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

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:

Net Income (Loss)

Net income for the three-month period ended September 27, 2025was $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:

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:

Our PDS segment revenue growth of $104.9 million, or 25.6%, for the three-month periodended 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 periodended 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 periodended September 27, 2025, as compared to the three-month periodended 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.

The $0.2 million, or 0.5%,decrease in MS segment revenue for the three-month periodended September 27, 2025, as compared to the three-month periodended 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:

The 21.8%increase in PDS cost of revenue for the three-month periodended 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.

The16.8%increase in HHH cost of revenue for the three-month periodended 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 periodended 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, 2025resulted 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:

Branch and Regional Administrative Expenses

Branch and regional administrative expenses were $95.4 million, or 15.3% of revenue, for the three-month periodended September 27, 2025, as compared to $88.2 million, or 17.3% of revenue, for the three-month periodended 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 periodended September 27, 2025, as compared to the three-month periodended 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:

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, 2025and September 28, 2024were 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, 2025and 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 periodended September 27, 2025, as compared to other operating expense of $2.9 million for the three-month periodended 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 Resourcesbelow.

Loss on Debt Extinguishment

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 periodended September 27, 2025, as compared to income tax expense of $15.5 million for the three-month periodended 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.

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	%

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)

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:

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:

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:

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.

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:

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:

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,

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:

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 Resourcesbelow.

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

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

		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

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

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:

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:

	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%

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.

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.