Aveanna Healthcare (NASDAQ:AVAH) reported fourth-quarter and full-year 2025 results that management said reflected continued progress in its preferred payer strategy, improving labor trends, and rate initiatives across its home- and community-based care platform. Executives also provided initial commentary on a newly announced acquisition and issued 2026 guidance that excludes any contribution from the pending deal.
Fourth-quarter and full-year 2025 results
Chief Executive Officer Jeff Shaner said fourth-quarter revenue was approximately $662 million, up 27.4% year over year, while adjusted EBITDA was $85 million, a 54% increase. For full-year 2025, revenue was approximately $2.433 billion, a 20.2% increase, and adjusted EBITDA was $320.8 million, up 74.8% from the prior year.
On profitability, Buckhalter said consolidated gross margin in the fourth quarter was $213.3 million, or 32.2%.
Segment performance and operating metrics
Aveanna reported year-over-year revenue growth in all three operating divisions in the fourth quarter, led by Private Duty Services, Home Health and Hospice, and Medical Solutions.
- Private Duty Services (PDS): Fourth-quarter revenue was approximately $541 million, up 28.1%, driven by roughly 12.4 million hours of care, an increase of 17.9%. Revenue per hour was $43.74, up 10.2% year over year. Gross margin was $149.9 million, or 27.7%. Buckhalter said cost of revenue per hour rose to $31.62, up $3.15, or 13%, and the spread per hour was $12.12 as the company continued to adjust caregiver wages to support volumes and clinical outcomes.
- Home Health and Hospice: Fourth-quarter revenue was approximately $69.3 million, up 27.3%. The quarter included 10,400 total admissions, representing 22.4% growth, and 14,000 total episodes of care, up 25%. Management said 78% of admissions were episodic, and Medicare revenue per episode was $3,223, up 3%. Gross margin in the segment was 53.7%.
- Medical Solutions: Fourth-quarter revenue was $52.5 million, up 21.3%, driven by approximately 92,000 unique patients served (UPS). Revenue per UPS was about $570, up 17.9%. Segment gross margin was approximately $26.2 million, or 50%.
Management emphasized that Medical Solutions results in the quarter were boosted by a reserve release tied to stronger-than-expected cash collections on claims previously estimated as uncollectible. Buckhalter said the benefit was about $2.5 million to $3 million of additional revenue and EBITDA in the quarter, and the company expects Medical Solutions gross margins to normalize in the first quarter of 2026 to the 43% to 45% range.
Preferred payer strategy, rate initiatives, and labor trends
Shaner framed the labor market as the primary constraint on growth, arguing demand remains strong and that capacity expands when reimbursement supports competitive caregiver wages. He said Aveanna has aligned clinical capacity with preferred payers and government partners “willing to engage with us on enhanced reimbursement rates and value-based agreements,” which management said has supported hiring and retention trends.
In Private Duty Services, Shaner said Aveanna advanced a legislative agenda aimed at improving reimbursement rates in at least 10 states in 2025 and achieved 10 rate enhancements during the year. Looking ahead, he said the company expects “high single-digit” state rate enhancements in 2026 and described the environment as moving toward cost-of-living and wage-adjustment type increases after three years of meaningful rate movement.
On preferred payer agreements in PDS, Shaner said Aveanna met its 2025 goal by expanding from 22 to 30 agreements, adding eight during the year. The company’s goal for 2026 is to add eight more agreements, targeting 38 preferred payers by year-end 2026. Shaner also said preferred payer agreements represented about 57% of total PDS managed care organization volumes in the fourth quarter and that the company expects that metric to rise to the low 60% range in 2026.
In Home Health, Shaner said Aveanna’s goal for 2025 was to keep episodic payer mix above 70% while returning to more normalized growth. He highlighted a fourth-quarter episodic mix of 78% and total episodic volume growth of 25%. Aveanna ended 2025 with 45 preferred payer agreements in Home Health and is targeting more than 50 by the end of 2026. Shaner said the company expects episodic payer mix to remain above 75% in 2026 with organic growth rates “approaching double digits.”
In Medical Solutions, Shaner said Aveanna is in the late stages of implementing a preferred payer model and believes it will be “fully realized in 2026.” The company ended 2025 with 18 preferred payers in the segment and is targeting 25 in 2026. Shaner said he expects mid-single-digit revenue growth for the next few quarters before returning to double-digit growth by the end of 2026, while Buckhalter said the company expects to complete much of the segment’s modernization efforts in the first half of 2026.
Family First Homecare acquisition and 2026 outlook
Aveanna also discussed its plan to acquire Family First Homecare, a Florida-based pediatric in-home care provider. Shaner said the transaction is expected to close sometime in the second quarter, pending regulatory approvals. Buckhalter said the company is paying $175.5 million in consideration, valued at about 7.5 times post-synergy EBITDA, and plans to fund the transaction and related fees with cash on hand and its securitization facility. Management said 2026 guidance does not include any impact from the acquisition.
In Q&A, executives described Family First as a Florida-focused deal that expands Aveanna’s geographic coverage in the state, with Shaner saying it would allow the combined platform to service “effectively every county” in Florida. Management indicated Family First has operations in seven states, with revenue described as “in the ballpark” of $120 million and roughly two-thirds of the revenue base in Florida and one-third outside the state. Shaner and Buckhalter said the deal should have a minimal near-term impact on leverage and that the company expects to continue deleveraging in 2026, though not at the pace of the prior two years. Shaner said leverage is “just right at 4x” and suggested it should end 2026 “in that range” with the Family First addition.
For 2026, Shaner provided guidance for revenue of $2.54 billion to $2.56 billion and adjusted EBITDA of $318 million to $322 million. Buckhalter reiterated that the first quarter is typically the company’s seasonal low point for operating and free cash flow and noted that payroll taxes make the first quarter a seasonal low for margins as well.
On liquidity, Buckhalter said Aveanna ended the fourth quarter with approximately $529 million, including about $193 million of cash, $110 million of availability under its securitization facility, and about $226 million of availability under its revolver, which was undrawn. He said the company had $24.5 million in outstanding letters of credit and approximately $1.49 billion of variable-rate debt, with $520 million hedged with fixed-rate swaps and $880 million subject to an interest rate cap limiting exposure to SOFR above 3%. He also reported 2025 cash generated by operating activities of $125.9 million and free cash flow of $131 million, with expectations for similar cash flow performance in 2026.
About Aveanna Healthcare (NASDAQ:AVAH)
Aveanna Healthcare, Inc (NASDAQ: AVAH) is a national provider of in-home health care services, specializing in pediatric skilled nursing, therapy, and related support for medically complex and chronically ill children. The company delivers a range of clinical and therapeutic solutions designed to enable patients to receive care in the comfort of their own homes, reducing the need for hospital stays and long-term institutional care. Aveanna’s offerings include registered nursing, physical, occupational and speech therapy, behavioral health counseling, and durable medical equipment coordination.
In addition to pediatric home health services, Aveanna operates adult home health and personal care support programs, assisting elderly and disabled adults with daily living activities, medication management, and rehabilitation therapies.
