Aveanna Healthcare Holdings Inc. (NASDAQ:AVAH) Q4 2022 Earnings Call Transcript

So bringing a child home one day faster in the state of California saves California Medicaid systems $6,000 a day, that value proposition is landing very well in the legislature as well as the Governor’s office and Medical itself, they understand investing in our services truly saves total health care costs for states like California. And although $6,000 sounds like a lot in California, it’s not materially different than any other state we operate in. We save the system between $4,000 and $6,000 a day by bringing a patient home one day faster. So I hope that addresses the guidance question, but we have a strong level of conviction on continuing to move both legislative rates and, at the same time, moving our managed care and commercial payers from being a payer to a preferred partner.

And as we define a preferred partner is both above market rate as well as value-based incentive payments.

Joanna Gajuk: Yes, thanks for the additional color, because I guess it’s an important part to understand what you include in the guidance now for the rates, I guess, is a little bit lower than maybe what you’re asking for, which is prudent. And my question is in your 10-K, you disclosed $12 million higher general professional liability expense associated with the accrued legal settlements? So can you tell us what does it relate to? And I guess it looks like that’s included in the cost of services in the PDS segment. So is it fair to adjust it because you also mentioned almost a similar amount when it comes to it sounds like lower COVID-related costs. So I just want to clarify how we should think about gross margin in the PDS segment for this quarter, adjusting for these items? Thank you.

David Afshar: Sure, Joanna. So yes, there’s a legal matter that we’ve been defending that originally rose back in 2019, and in connection with those with legal matters we accrued additional legal settlement costs in the end of Q4. Those matters are currently under appeal, and we intend to avail ourselves of all appellate options as we disclosed in the 10-K. And so, we continue to work through that matter. As we go, you’re right, that was an additional approximate $12 million in the current quarter. A year ago quarter, what you saw was just that we had we did not have the $12 million of incremental COVID-related costs from a year ago. But I think just – to answer what I think your question might be is that we see our PDS spread in the $10 to $10.50 range and I think that’s what you could probably expect in Q1.

Jeff Shaner: And Joanna, we felt it was prudent to kind of put that on the boat, put it behind us, at least from a GAAP accounting standpoint, we thought that, that was very prudent to do to kind of clean that up at the end of the year. Outside of that, our Q4 spread would have been in the $10.50, $10.60 range. I think as Dave said, we have a payroll tax in Q1. So, we think that will be in the $10.30 to $10.50 range for Q1.

Joanna Gajuk: Okay, thank you. And if I may sneak in on the home health segment, so you said that you’re seeing some improvement there, I guess, both in cost reduction Q3 and you’re still excited about that business. Can you talk about the reimbursement of 2023 the rates? And I guess we’re waiting for the ’24 proposal to come out, so – what do you expect to see in this proposed, do you expect a second half of the behavior adjustment will be included for ’24? And I guess, if you do, can you talk about how you trying to offset that the rates growing much less than your cost? Thank you.