Executive Summary

No Q1 2026 primary earnings materials are available in company filings or transcripts yet; we anchor this recap on the latest reported quarters (Q1–Q3 2025) and S&P Global consensus for Q1 2026, noting unavailability of actuals for the target period .
Aveanna’s momentum through 2025: revenue growth accelerated from $559.2M in Q1 to $621.9M in Q3; adjusted EBITDA expanded sharply, then normalized as wage pass-throughs continued .
Guidance was raised three times in 2025 (>$2.15B, >$2.3B, >$2.375B revenue; and >$207M, >$270M, >$300M adjusted EBITDA), reflecting sustained execution and preferred payer strategy; management characterized its approach as “beat and raise” .
The near-term stock narrative hinges on continued preferred payer expansion in Private Duty Services (PDS), >75% episodic mix in Home Health & Hospice (HHH), and modernization within Medical Solutions amid Medicaid/OBBBA headwinds and CMS’s proposed 2026 home health rule .

What Went Well and What Went Wrong

What Went Well

Preferred payer strategy and Thrive integration: PDS preferred payer agreements reached 30, covering ~56% of MCO volume; management expects mid-to-high-30s next year and ongoing momentum aided by Thrive’s New Mexico/Kansas foothold .
HHH episodic mix and margin: HHH admissions remained >75% episodic with Q3 episodic mix at 77%, supporting gross margin of 53.3% and improved clinical outcomes and star ratings .
Liquidity and deleveraging: Q3 cash ~$146M; year-to-date free cash flow ~$86M; net leverage down to ~4.62x with path to “three-handle” by 2026–2027, supported by debt refinancing and hedges (swaps/caps) .

What Went Wrong

Ongoing wage pass-through and margin normalization: Management highlighted continued caregiver wage investments through Q4 and into H1’26, normalizing PDS spread and constraining margin upside near term .
Regulatory/macroeconomic headwinds: States face Medicaid budget uncertainty tied to OBBBA; some temporary rate reductions (2–3%) emerged, implying smaller PDS rate wins in 2026 vs. prior two years .
Medical Solutions volume muted: MS revenue flat in Q3 with UPS ~91K (-1.1% YoY), as the segment undergoes preferred payer alignment and cash collection improvements before returning to growth .

Financial Results

Note: Q1 2026 actuals are not yet reported; S&P Global consensus shown for the target period with disclaimer.

Metric	Q1 2025	Q2 2025	Q3 2025	Q1 2026 (Consensus)
Revenue ($USD Millions)	$559.2	$589.6	$621.9	$612.0*
Diluted EPS ($USD)	$0.03	$0.13	$0.06	$0.134*
Adjusted EBITDA ($USD Millions)	$67.4	$88.4	$80.1	$74.5*
Adjusted EBITDA Margin %	12.0%	15.0%	12.9%	N/A

Values retrieved from S&P Global*.

Segment breakdown (latest reported quarter, Q3 2025):

Segment	Revenue ($USD Millions)	Gross Margin ($USD Millions)	Gross Margin %
Private Duty Services (PDS)	$514.4	$149.3	29.0%
Home Health & Hospice (HHH)	$62.4	$33.3	53.3%
Medical Solutions (MS)	$45.1	$20.3	45.0%

KPIs (Q3 2025):

KPI	PDS	HHH	MS
Volume	11,822K hours	9.7K total admissions	91K UPS
Rate	Rev/hr $43.51 ; Spread $12.62	Episodic mix 77.3% ; Rev/episode $3,215	Revenue rate $495.43 ; Spread $222.76

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Billions)	FY 2025	$2.10–$2.12	>$2.15	Raised
Revenue ($USD Billions)	FY 2025	>$2.15	>$2.30	Raised
Revenue ($USD Billions)	FY 2025	>$2.30	>$2.375	Raised
Adjusted EBITDA ($USD Millions)	FY 2025	$190–$194	>$207	Raised
Adjusted EBITDA ($USD Millions)	FY 2025	>$207	>$270	Raised
Adjusted EBITDA ($USD Millions)	FY 2025	>$270	>$300	Raised
Net Income Guidance	FY 2025	Not provided	Not provided	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025, Q2 2025)	Current Period (Q3 2025)	Trend
Preferred payer expansion (PDS)	Ongoing growth; raised FY’25 outlook	30 agreements; ~56% MCO volume; target mid/high-30s next year	Accelerating
HHH episodic focus	Episodic mix >75%; margin focus	77% episodic; margin ~53.3%; star ratings improving	Sustained strength
Medical Solutions modernization	Margin normalization targeted 42–44%; network narrowing	UPS ~91K; margin ~45%; preferred payers at 18; growth expected post-integration	Transitioning
Medicaid/OBBBA headwinds	Raised awareness of macro uncertainty	States installing temporary reductions; smaller rate wins expected in 2026	Headwinds intensifying
CY2026 CMS home health rule	Preparing for final rule; advocacy ongoing	Strong opposition to proposed cuts; expect final rule soon	Policy uncertainty
Capital structure/liquidity	Hedged variable debt; swaps/caps	Refinanced first lien; $479M liquidity; deleveraging path	Improved profile

Management Commentary

“This is our 11th quarter of beat and raise... we continue to be a conservative group. We love the beat-and-raise mentality.” — CEO Jeff Shaner .
“Our goal... was to increase the number of private duty services preferred payer agreements from 22 to 30... currently positioned at 30 agreements in total.” — CEO Jeff Shaner .
“We expect gross margins [Medical Solutions] to normalize in the 42%–44% range... and UPS to accelerate its growth as we implement our targeted operating model.” — CFO Matt Buckhalter .
“Our episodic mix was 77%... this episodic focus has accelerated our margin expansion and improved our clinical outcomes.” — CFO Matt Buckhalter .
“We... raised guidance after three quarters $100 million of EBITDA...” — CEO Jeff Shaner .

Q&A Highlights

Seasonality and outlook: Q4 expected similar to Q3 excluding 53rd week; prudent guide amid holiday effects .
PDS spread and wages: Continued caregiver wage pass-throughs expected into H1’26; PDS gross margin normalized around 29% with spread to settle lower as wages flow through .
Deleveraging and capital deployment: Cash collections strong; net leverage ~4.62x; dry powder for tuck-ins, disciplined use between M&A and debt paydown .
Value-based care: Nine VBC agreements, upside-only bonuses linked to fill rates (80–90% targets) and acute spend reduction; tailored per payer .
Medicaid/OBBBA: States evaluating budgets; a few temporary 2–3% reductions; diversified footprint across 29 states mitigates risk .

Estimates Context

Actual vs S&P Global consensus (last three reported quarters):

Metric	Q1 2025 Estimate	Q1 2025 Actual	Q2 2025 Estimate	Q2 2025 Actual	Q3 2025 Estimate	Q3 2025 Actual
Revenue ($USD Millions)	513.0*	559.2	535.3*	589.6	591.2*	621.9
Primary EPS ($USD)	-0.004*	0.03	0.036*	0.13	0.143*	0.06

Values retrieved from S&P Global*.
Q1 2026 S&P Global consensus: Revenue ~$612.0M*, Primary EPS ~$0.134*, EBITDA ~$74.5M*.

Implication: Street has progressively revised higher through 2025 on revenue/EPS, aligned with Aveanna’s raised FY’25 guidance; for Q1 2026, consensus implies slight sequential revenue downtick vs Q3 but continued YoY growth, consistent with seasonality and wage pass-through normalization.

Key Takeaways for Investors

Preferred payer flywheel: Continued expansion in PDS (and MS next) is the key driver of rate integrity, volume growth, and cash collections; monitor agreement count and percent of MCO volume aligned .
HHH resilience: Episodic mix >75% supports >50% gross margins and improved clinical outcomes; watch CMS’s final 2026 rule for sector-wide read-through .
Margin trajectory: Expect near-term margin normalization from wage pass-throughs into H1’26; spread per hour to settle lower as rate wins are allocated to caregiver compensation .
Balance sheet optionality: Liquidity robust; path to lower leverage with flexibility for tuck-in M&A vs. debt reduction—both could be catalysts depending on pipeline .
Policy risk management: Diversified state footprint helps offset Medicaid budget variability; rate wins likely smaller in 2026 than past two years—position sizing should reflect headline risk .
Near-term trading: Street Q1 2026 expectations embed seasonality; surprises likely tied to faster preferred payer mix-shift, Thrive synergy realization, or regulatory clarity (CMS final rule).
Medium-term thesis: Execution on MS modernization and further PDS/HHH preferred payer penetration can sustain revenue growth and cash generation, supporting deleveraging and strategic tuck-ins .

References:

Q3 2025 press release and tables: revenue/margins, segment KPIs, liquidity, guidance .
Q2 2025 press release and tables: revenue, adjusted EBITDA, segment metrics .
Q1 2025 press release and tables: revenue, EPS, adjusted EBITDA, segment metrics .
Q3 2025 earnings call transcript: strategic themes, guidance tone, regulatory commentary, payer mix .

Note on Q1 2026: No 8-K 2.02 or earnings call transcript was available in filings or company IR materials to date. Values retrieved from S&P Global*.

Aveanna Healthcare Holdings, Inc. (AVAH)·Q1 2026 Earnings Summary