# Aveanna Healthcare Holdings, Inc.: Form 10-Q for the period ended Jun 28, 2025

- Company: [Aveanna Healthcare Holdings, Inc.](/companies/avah.md) (CIK 1832332)
- Form: 10-Q
- Filed: 2025-08-07
- Accepted by EDGAR: Aug 7, 2025, 10:30 ET
- Period: 2025-06-28
- Accession: 0000950170-25-104528
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1832332/000095017025104528/avah-20250628.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1832332/000095017025104528/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-28.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-03-30 to 2025-06-28 | $589.6m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-12-29 to 2025-06-28 | $1.15bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Gross profit | 3 months, 2025-03-30 to 2025-06-28 | $210.8m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2024-12-29 to 2025-06-28 | $394.4m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2025-03-30 to 2025-06-28 | $90.1m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2024-12-29 to 2025-06-28 | $181.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2025-03-30 to 2025-06-28 | $80.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-12-29 to 2025-06-28 | $131.8m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-03-30 to 2025-06-28 | $36.0m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2024-12-29 to 2025-06-28 | $72.3m | us-gaap:InterestExpense |
| Income tax | 3 months, 2025-03-30 to 2025-06-28 | $17.1m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-12-29 to 2025-06-28 | $22.1m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-03-30 to 2025-06-28 | $27.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-12-29 to 2025-06-28 | $32.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-03-30 to 2025-06-28 | $0.13 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-12-29 to 2025-06-28 | $0.16 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-03-30 to 2025-06-28 | $0.13 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-12-29 to 2025-06-28 | $0.16 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-03-30 to 2025-06-28 | 210,442,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-12-29 to 2025-06-28 | 206,763,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-12-29 to 2025-06-28 | $42.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2025-06-28 | $100.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-28 | $449.9m | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-28 | $1.77bn | us-gaap:Assets |
| Current liabilities | at 2025-06-28 | $414.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-06-28 | $1.78bn | us-gaap:Liabilities |
| Long-term debt | at 2025-06-28 | $1.27bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2025-06-28 | $9.2m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2025-06-28 | −$12.0m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 80,418 characters.

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 June 28, 2025”, or “second quarter of 2025” refers to the 13-week fiscal quarter ended on June 28, 2025. The “three-month period ended June 29, 2024” or “second quarter of 2024” refers to the 13-week fiscal quarter ended on June 29, 2024. The "six-month period ended June 28, 2025", or "first six months of 2025", refers to the period from December 29, 2024 through June 28, 2025. The "six-month period ended June 29, 2024", or "first six months of 2024", refers to the period from December 31, 2023 through June 29, 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 June 28, 2025 and June 29, 2024, respectively:

*(dollars in thousands)*

|  | Consolidated | PDS | HHH | MS |
| --- | ---: | ---: | ---: | ---: |
| For the three-month period ended June 28, 2025 | $589,553 | $486,012 | $60,112 | $43,429 |
| Percentage of consolidated revenue |  | 83% | 10% | 7% |
| For the three-month period ended June 29, 2024 | $504,958 | $407,851 | $54,630 | $42,477 |
| Percentage of consolidated revenue |  | 81% | 11% | 8% |

The following table summarizes the revenues generated by each of our segments for the six-month periods ended June 28, 2025 and June 29, 2024, respectively:

*(dollars in thousands)*

|  | Consolidated | PDS | HHH | MS |
| --- | ---: | ---: | ---: | ---: |
| For the six-month period ended June 28, 2025 | $1,148,777 | $946,010 | $116,845 | $85,922 |
| Percentage of consolidated revenue |  | 82% | 10% | 8% |
| For the six-month period ended June 29, 2024 | $995,611 | $802,860 | $109,243 | $83,508 |
| Percentage of consolidated revenue |  | 81% | 11% | 8% |

19

### PDS Segment

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

Our PDN services involve the provision of clinical and non-clinical hourly care to patients in their homes, which is the preferred setting for patient care. PDN services typically last four to 24 hours a day, provided by our registered nurses, licensed practical nurses, home health aides, and other non-clinical caregivers who are focused on providing high-quality short-term and long-term clinical care to medically fragile children and adults with a wide variety of serious illnesses and conditions. Patients who typically qualify for our PDN services include those with the following conditions:

- Tracheotomies or ventilator dependence;
- Dependence on continuous nutritional feeding through a “G-tube” or “NG-tube”;
- Dependence on intravenous nutrition;
- Oxygen-dependence in conjunction with other medical needs; and
- Complex medical needs such as frequent seizures.

Our PDN services include:

- In-home skilled nursing services to medically fragile children and adults;
- Nursing services in school settings in which our caregivers accompany patients to school;
- Services to patients in our Pediatric Day Healthcare Centers (“PDHC”); and
- Non-clinical care, including programs such as support services and personal care services.

Through our pediatric therapy services, we provide a valuable multidisciplinary approach that we believe serves all of a child’s therapy needs. We provide both in-clinic and home-based therapy services to our patients. Our therapy services include physical, occupational and speech services. We regularly collaborate with physicians and other community healthcare providers, which allows us to provide more comprehensive care.

### HHH Segment

Our Home Health and Hospice segment predominantly includes home health services, as well as hospice and specialty program services. Our HHH patients typically enter our service as seniors, and our most significant referral sources for new patients are hospitals, physicians and long-term care facilities.

Our home health services involve the provision of in-home services to our patients by our clinicians which may include nurses, therapists, social workers and home health aides. Our caregivers work with our patients’ physicians to deliver a personalized plan of care to our patients in their homes. Home healthcare can help our patients recover after a hospitalization or surgery and assist patients in managing chronic illnesses. We also help our patients manage their medications. Through our care, we help our patients recover more fully in the comfort of their own homes, while remaining as independent as possible. Our home health services include: in-home skilled nursing services; physical, occupational and speech therapy; medical social services and aide services.

Our hospice services 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

### Acquisition-related Activities

On June 2, 2025, we acquired Thrive Skilled Pediatric Care, LLC ("Thrive"), which provides home care operating 23 locations across seven states Arizona, Georgia, Kansas, New Mexico, North Carolina, Virginia, and Texas. The Thrive acquisition expands our patient care delivery into two new states and provides added local market density in our existing geographic footprint. We report the results of Thrive from the date of acquisition in our PDS segment.

### Regulatory Developments

On June 30, 2025, the Centers for Medicare & Medicaid Services (“CMS”) issued its calendar year 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 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 proposed rule is subject to comment through August 29, 2025. The ultimate impact of any final rule would likely negatively affect reimbursement rates in our HHH segment.

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 10 years. The OBBBA changes to Medicaid 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 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 June 28, 2025 Compared to the Three-Month Period Ended June 29, 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:

*(dollars in thousands)*

|  | For the three-month periods ended June 28, 2025 | % of Revenue | June 29, 2024 | % of Revenue | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | $589,553 | 100.0% | $504,958 | 100.0% | $84,595 | 16.8% |
| Cost of revenue, excluding depreciation and amortization | 378,753 | 64.2% | 346,691 | 68.7% | 32,062 | 9.2% |
| Gross margin | $210,800 | 35.8% | $158,267 | 31.3% | $52,533 | 33.2% |
| Branch and regional administrative expenses | 90,069 | 15.3% | 87,972 | 17.4% | 2,097 | 2.4% |
| Field contribution | $120,731 | 20.5% | $70,295 | 13.9% | $50,436 | 71.7% |
| Corporate expenses | 34,529 | 5.9% | 30,245 | 6.0% | 4,284 | 14.2% |
| Depreciation and amortization | 2,617 | 0.4% | 2,833 | 0.6% | (216) | -7.6% |
| Acquisition-related costs | 3,400 | 0.6% | - | 0.0% | 3,400 | 100.0% |
| Other operating expense | 151 | 0.0% | 91 | 0.0% | 60 | 65.9% |
| Operating income | $80,034 | 13.6% | $37,126 | 7.4% | $42,908 | 115.6% |
| Interest expense, net | (35,874) |  | (39,518) |  | 3,644 | -9.2% |
| Other (expense) income | (22) |  | 6,371 |  | (6,393) | -100.3% |
| Income tax (expense) benefit | (17,113) |  | 9,927 |  | (27,040) | -272.4% |
| Net income | $27,025 |  | $13,906 |  | $13,119 | 94.3% |

22

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:

*(dollars in thousands)*

|  | For the three-month periods ended June 28, 2025 | June 29, 2024 | Change | % Change |  |
| --- | ---: | ---: | ---: | ---: | ---: |
| Revenue | $589,553 | $504,958 | $84,595 | 16.8% |  |
| Cost of revenue, excluding depreciation and amortization | 378,753 | 346,691 | 32,062 | 9.2% |  |
| Gross margin | $210,800 | $158,267 | $52,533 | 33.2% |  |
| Gross margin percentage | 35.8% | 31.3% |  | 4.5% | (1) |
| Branch and regional administrative expenses | 90,069 | 87,972 | 2,097 | 2.4% |  |
| Field contribution | $120,731 | $70,295 | $50,436 | 71.7% |  |
| Field contribution margin | 20.5% | 13.9% |  |  |  |
| Corporate expenses | $34,529 | $30,245 | $4,284 | 14.2% |  |
| As a percentage of revenue | 5.9% | 6.0% |  |  |  |
| Operating income | $80,034 | $37,126 | $42,908 | 115.6% |  |
| As a percentage of revenue | 13.6% | 7.4% |  |  |  |

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

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

*(dollars and hours in thousands)*

|  | PDS For the three-month periods ended June 28, 2025 | June 29, 2024 | Change | % Change |  |
| --- | ---: | ---: | ---: | ---: | ---: |
| Revenue | $486,012 | $407,851 | $78,161 | 19.2% |  |
| Cost of revenue, excluding depreciation and amortization | 328,078 | 296,983 | 31,095 | 10.5% |  |
| Gross margin | $157,934 | $110,868 | $47,066 | 42.5% |  |
| Gross margin percentage | 32.5% | 27.2% |  | 5.3% | (4) |
| Hours | 11,053 | 10,336 | 717 | 6.9% |  |
| Revenue rate | $43.97 | $39.46 | $4.51 | 12.3% | (1) |
| Cost of revenue rate | $29.68 | $28.73 | $0.95 | 3.6% | (2) |
| Spread rate | $14.29 | $10.73 | $3.56 | 35.6% | (3) |
|  | **HHH** |  |  |  |  |
|  | **For the three-month periods ended** |  |  |  |  |
| (dollars and admissions/episodes in thousands) | **June 28, 2025** | **June 29, 2024** | **Change** | **% Change** |  |
| Revenue | $60,112 | $54,630 | $5,482 | 10.0% |  |
| Cost of revenue, excluding depreciation and amortization | 27,048 | 25,227 | 1,821 | 7.2% |  |
| Gross margin | $33,064 | $29,403 | $3,661 | 12.5% |  |
| Gross margin percentage | 55.0% | 53.8% |  | 1.2% | (4) |
| Home health total admissions (5) | 9.8 | 9.4 | 0.4 | 4.3% |  |
| Home health episodic admissions (6) | 7.3 | 7.1 | 0.2 | 2.8% |  |
| Home health total episodes (7) | 12.4 | 11.6 | 0.8 | 6.9% |  |
| Home health episodic mix (8) | 74.5% | 75.5% |  | -1.0% |  |
| Home health revenue per completed episode (9) | $3,231 | $3,093 | $138 | 4.5% |  |
|  | **MS** |  |  |  |  |
|  | **For the three-month periods ended** |  |  |  |  |
| (dollars and UPS in thousands) | **June 28, 2025** | **June 29, 2024** | **Change** | **% Change** |  |
| Revenue | $43,429 | $42,477 | $952 | 2.2% |  |
| Cost of revenue, excluding depreciation and amortization | 23,627 | 24,481 | (854) | -3.5% |  |
| Gross margin | $19,802 | $17,996 | $1,806 | 10.0% |  |
| Gross margin percentage | 45.6% | 42.4% |  | 3.2% | (4) |
| Unique patients served (“UPS”) | 91 | 94 | (3) | -3.2% |  |
| Revenue rate | $477.24 | $451.88 | $25.36 | 5.4% | (1) |
| Cost of revenue rate | $259.64 | $260.44 | $(0.80) | -0.3% | (2) |
| Spread rate | $217.60 | $191.45 | $26.16 | 13.2% | (3) |

(1) Represents the period over period change in revenue rate, plus the change in revenue rate attributable to the change in volume.

(2) Represents the period over period change in cost of patient services rate, plus the change in cost of patient services rate attributable to the change in volume.

(3) Represents the period over period change in spread rate, plus the change in spread rate attributable to the change in volume.

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

(5) Represents home health episodic and other admissions.

(6) Represents home health episodic admissions.

(7) Represents episodic admissions and recertifications.

(8) Represents the ratio of home health episodic admissions to home health total admissions.

(9) Represents Medicare revenue per completed episode.

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 $80.0 million, or 13.6% of revenue, for the three-month period ended June 28, 2025, as compared to operating income of $37.1 million, or 7.4% of revenue, for the three-month period ended June 29, 2024, an increase of $42.9 million.

Operating income for the second quarter of 2025 was positively impacted by an increase of $50.4 million, or 71.7%, in Field contribution, as compared to the second quarter of 2024. The $50.4 million increase in Field contribution resulted from a $84.6 million, or 16.8%, increase in consolidated revenue and a 6.6% increase in our Field contribution margin to 20.5% for the second quarter of 2025 from 13.9% for the second quarter of 2024. The primary driver of our higher Field contribution margin over the comparable quarter was an increase in gross margin percentage of 4.5%, along with a 2.1% decrease in branch and regional administrative expenses as a percentage of revenue to 15.3% for the second quarter of 2025 from 17.4% for the second quarter of 2024.

The following items primarily contributed to the $42.9 million increase in operating income over the comparable second quarter period:

- the previously discussed $50.4 million increase in Field contribution; offset by
- a $4.3 million increase in corporate expenses, and
- $3.4 million of acquisition-related costs associated with the Thrive acquisition completed during the second quarter of 2025.

#### Net Income

Net income for the three-month period ended June 28, 2025 was $27.0 million, as compared to net income of $13.9 million for the three-month period ended June 29, 2024. The $13.1 million increase in net income was primarily driven by the following:

- the previously discussed $42.9 million increase in operating income;
- a $3.6 million decrease in interest expense, net; offset by
- a $27.0 million increase in tax expense; and
- an aggregate $6.4 million decrease in valuation gains on interest rate derivatives and net settlements received from interest rate derivative counterparties compared to the second quarter of 2024.

#### Revenue

Revenue was $589.6 million for the three-month period ended June 28, 2025, as compared to $505.0 million for the three-month period ended June 29, 2024, an increase of $84.6 million, or 16.8%. This increase resulted from the following segment activity:

- a $78.2 million, or 19.2%, increase in PDS revenue;
- a $5.5 million, or 10.0%, increase in HHH revenue; and
- a $1.0 million, or 2.2%, increase in MS revenue.

Our PDS segment revenue growth of $78.2 million, or 19.2%, for the three-month period ended June 28, 2025 was attributable to a 6.9% increase in volume and a 12.3% increase in revenue rate. The 6.9% increase in volume was primarily attributable to growth in demand for non-clinical services. Additionally, the PDS segment revenue benefited from volume attributed to the Thrive acquisition which was completed on June 2, 2025.

The 12.3% increase in PDS revenue rate for the three-month period ended June 28, 2025, as compared to the three-month period ended June 29, 2024, resulted primarily from the following: (i) reimbursement rate increases issued by various state Medicaid programs and Managed Medicaid payers, including payments received in the current period related to certain rate increases applied retroactively for services provided since January 1, 2025, for which there is currently 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 $5.5 million, or 10.0%, for the three-month period ended June 28, 2025, as compared to the three-month period ended June 29, 2024, resulted primarily from a 6.9% increase in total episodes and an increase in home health revenue per completed episode due to improvements in patient mix compared to the second quarter of 2024.

The $1.0 million, or 2.2%, increase in MS segment revenue for the three-month period ended June 28, 2025, as compared to the three-month period ended June 29, 2024, was attributable to a 5.4% increase in revenue rate, partially offset by a decline in volume of 3.2% compared to the second quarter of 2024.

#### Cost of Revenue, Excluding Depreciation and Amortization

Cost of revenue, excluding depreciation and amortization, was $378.8 million for the three-month period ended June 28, 2025, as compared to $346.7 million for the three-month period ended June 29, 2024, an increase of $32.1 million, or 9.2%. This increase resulted from the following segment activity:

- a $31.1 million, or 10.5%, increase in PDS cost of revenue;
- a $1.8 million, or 7.2%, increase in HHH cost of revenue; and
- a $0.9 million, or 3.5%, decrease in MS cost of revenue.

The 10.5% increase in PDS cost of revenue for the three-month period ended June 28, 2025 resulted from the previously described 6.9% increase in PDS volume combined with a 3.6% increase in PDS cost of revenue rate. The 3.6% 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 reserve associated with the release of certain accrued legal settlements.

The 7.2% increase in HHH cost of revenue for the three-month period ended June 28, 2025 was driven primarily by higher home health total episodes.

The 3.5% decrease in MS cost of revenue for the three-month period ended June 28, 2025 was driven primarily by the previously described 3.2% decline in MS volumes.

#### Gross Margin and Gross Margin Percentage

Gross margin was $210.8 million, or 35.8% of revenue, for the three-month period ended June 28, 2025, as compared to $158.3 million, or 31.3% of revenue, for the three-month period ended June 29, 2024. Gross margin increased $52.5 million, or 33.2%, from the comparable prior year quarter. The 4.5% increase in gross margin percentage for the three-month period ended June 28, 2025 resulted from the combined changes in our revenue rates and cost of revenue rates in each of our segments, which we refer to as the change in our spread rate, as follows:

- a 35.6% increase in PDS spread rate from $10.73 to $14.29 driven by the 12.3% increase in PDS revenue rate, net of the 3.6% increase in PDS cost of revenue rate;
- a 13.2% increase in MS spread rate from $191.45 to $217.60 driven by the 5.4% increase in MS revenue rate, and the 0.3% decrease in MS cost of revenue rate; and
- a 1.2% increase in gross margin percentage in our HHH segment.

#### Branch and Regional Administrative Expenses

Branch and regional administrative expenses were $90.1 million, or 15.3% of revenue, for the three-month period ended June 28, 2025, as compared to $88.0 million, or 17.4% of revenue, for the three-month period ended June 29, 2024, an increase of $2.1 million, or 2.4%.

The 2.4% increase in branch and regional administrative expenses for the three-month period ended June 28, 2025, as compared to the three-month period ended June 29, 2024, was primarily due to an increase in incentive compensation expense during the current three-month period due to improved forecasted performance compared to annual targets and the additional branch operations associated with the Thrive acquisition. The overall 2.1% decrease in branch and regional administrative expenses as a percentage of revenue for the three-month period ended June 28, 2025, as compared to the three-month period ended June 29, 2024, resulted from leveraging our branch and administrative expense structure as a result of our restructuring efforts.

#### Field Contribution and Field Contribution Margin

Field contribution was $120.7 million, or 20.5% of revenue, for the three-month period ended June 28, 2025, as compared to $70.3 million, or 13.9% of revenue, for the three-month period ended June 29, 2024. Field contribution increased $50.4 million, or 71.7%, for the three-month period ended June 28, 2025, as compared to the three-month period ended June 29, 2024. The 6.6% increase in Field contribution margin for the three-month period ended June 28, 2025 resulted from the following:

- a 4.5% increase in gross margin percentage for the three-month period ended June 28, 2025, as compared to the three-month period ended June 29, 2024; and
- a 1.9% decrease in branch and regional administrative expenses as a percentage of revenue for the three-month period ended June 28, 2025, as compared to the three-month period ended June 29, 2024.

Field contribution and Field contribution margin are non-GAAP financial measures. See “Non-GAAP Financial Measures” below.

#### Corporate Expenses

Corporate expenses as a percentage of revenue for the three-month periods ended June 28, 2025 and June 29, 2024 were as follows:

*(dollars in thousands)*

|  | For the three-month periods ended June 28, 2025 Amount | % of Revenue | June 29, 2024 Amount | % of Revenue |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $589,553 |  | $504,958 |  |
| Corporate expense components: |  |  |  |  |
| Compensation and benefits | $19,334 | 3.3% | $16,797 | 3.3% |
| Non-cash share-based compensation | 3,436 | 0.6% | 3,438 | 0.7% |
| Professional services | 6,231 | 1.1% | 4,565 | 0.9% |
| Rent and facilities expense | 2,933 | 0.5% | 3,203 | 0.6% |
| Office and administrative | 527 | 0.1% | 384 | 0.1% |
| Other | 2,068 | 0.4% | 1,858 | 0.4% |
| Total corporate expenses | $34,529 | 5.9% | $30,245 | 6.0% |

Corporate expenses were $34.5 million, or 5.9% of revenue, for the three-month period ended June 28, 2025, as compared to $30.2 million, or 6.0% of revenue, for the three-month period ended June 29, 2024. The $4.3 million, or 14.2%, increase in corporate expenses resulted primarily from severance and additional compensation and benefits costs necessary to support the integration of the Thrive acquisition and increased professional services expenses related to legal matters.

#### Depreciation and Amortization

Depreciation and amortization was $2.6 million for the three-month period ended June 28, 2025, as compared to $2.8 million for the three-month period ended June 29, 2024, a decrease of $0.2 million, or 7.6%. The $0.2 million decrease primarily resulted from improved capital asset management.

#### Acquisition-related costs

Acquisition related costs were $3.4 million for the three-month period ended June 28, 2025, associated with the acquisition of Thrive.

#### Other Operating Expense

Other operating expense was $0.2 million for the three-month period ended June 28, 2025, as compared to other operating expense of $0.1 million for the three-month period ended June 29, 2024, a decrease in other operating expense of $0.1 million. The $0.1 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 $35.9 million for the three-month period ended June 28, 2025, as compared to $39.5 million for the three-month period ended June 29, 2024, a decrease of $3.6 million, or 9.2%. The decrease was primarily driven by a lower principal balance on the 2021 Extended Term Loan (as described in Note 5 to our Quarterly Financial Statements) and decreases in the U.S. federal funds rate. See further analysis under *Liquidity and Capital Resources* below.

#### Other (Expense) Income

Other expense was $0.0 million for the three-month period ended June 28, 2025, as compared to other income of $6.4 million for the three-month period ended June 29, 2024, a decrease to other income of $6.4 million. We realized a $2.8 million increase 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, as well as a $3.5 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) income included the following:

*(dollars in thousands)*

|  | For the three-month periods ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| Valuation loss to state interest rate derivatives at fair value | $(5,978) | $(3,146) |
| Net settlements received from interest rate derivative counterparties | 6,050 | 9,587 |
| Other | (94) | (70) |
| Total other (expense) income | $(22) | $6,371 |

#### 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 $17.1 million for the three-month period ended June 28, 2025, as compared to income tax benefit of $9.9 million for the three-month period ended June 29, 2024. This increase in tax expense was primarily driven 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.

On July 4, 2025, the OBBBA was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. We are evaluating the full effects of the legislation on our estimated annual effective tax rate and cash tax position. As the legislation was signed into law after the close of our second quarter, the impacts are not included in our operating results for the three-month period ended June 28, 2025.

### Six-Month Period Ended June 28, 2025 Compared to the Six-Month Period Ended June 29, 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 six-month periods indicated:

*(dollars in thousands)*

|  | For the six-month periods ended June 28, 2025 | % of Revenue | June 29, 2024 | % of Revenue | Change | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | $1,148,777 | 100.0% | $995,611 | 100.0% | $153,166 | 15.4% |
| Cost of revenue, excluding depreciation and amortization | 754,419 | 65.7% | 691,490 | 69.5% | 62,929 | 9.1% |
| Gross margin | $394,358 | 34.3% | $304,121 | 30.5% | $90,237 | 29.7% |
| Branch and regional administrative expenses | 181,456 | 15.8% | 175,886 | 17.7% | 5,570 | 3.2% |
| Corporate expenses | 72,034 | 6.3% | 60,087 | 6.0% | 11,947 | 19.9% |
| Depreciation and amortization | 5,211 | 0.5% | 5,745 | 0.6% | (534) | -9.3% |
| Acquisition-related costs | 3,506 | 0.3% | - | 0.0% | 3,506 | 100.0% |
| Other operating expense | 316 | 0.0% | 2,411 | 0.2% | (2,095) | -86.9% |
| Operating income | $131,835 | 11.5% | $59,992 | 6.0% | $71,843 | 119.8% |
| Interest expense, net | (72,077) |  | (79,063) |  | 6,986 | -8.8% |
| Other (expense) income | (5,472) |  | 24,540 |  | (30,012) | -122.3% |
| Income tax expense | (22,068) |  | (2,735) |  | (19,333) | 706.9% |
| Net income | $32,218 |  | $2,734 |  | $29,484 | NM |

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 six-month periods indicated:

*(dollars in thousands)*

|  | For the six-month periods ended June 28, 2025 | June 29, 2024 | Change | % Change |  |
| --- | ---: | ---: | ---: | ---: | ---: |
| Revenue | $1,148,777 | $995,611 | $153,166 | 15.4% |  |
| Cost of revenue, excluding depreciation and amortization | 754,419 | 691,490 | 62,929 | 9.1% |  |
| Gross margin | $394,358 | $304,121 | $90,237 | 29.7% |  |
| Gross margin percentage | 34.3% | 30.5% |  | 3.8% | (1) |
| Branch and regional administrative expenses | 181,456 | 175,886 | 5,570 | 3.2% |  |
| Field contribution | $212,902 | $128,235 | $84,667 | 66.0% |  |
| Field contribution margin | 18.5% | 12.9% |  |  |  |
| Corporate expenses | $72,034 | $60,087 | $11,947 | 19.9% |  |
| As a percentage of revenue | 6.3% | 6.0% |  |  |  |
| Operating income | $131,835 | $59,992 | $71,843 | 119.8% |  |
| As a percentage of revenue | 11.5% | 6.0% |  |  |  |

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

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

*(dollars and hours in thousands)*

|  | PDS For the six-month periods ended June 28, 2025 | June 29, 2024 | Change | % Change |  |
| --- | ---: | ---: | ---: | ---: | ---: |
| Revenue | $946,010 | $802,860 | $143,150 | 17.8% |  |
| Cost of revenue, excluding depreciation and amortization | 653,391 | 591,857 | 61,534 | 10.4% |  |
| Gross margin | $292,619 | $211,003 | $81,616 | 38.7% |  |
| Gross margin percentage | 30.9% | 26.3% |  | 4.6% | (4) |
| Hours | 21,940 | 20,600 | 1,340 | 6.5% |  |
| Revenue rate | $43.12 | $38.97 | $4.15 | 11.3% | (1) |
| Cost of revenue rate | $29.78 | $28.73 | $1.05 | 3.9% | (2) |
| Spread rate | $13.34 | $10.24 | $3.10 | 32.2% | (3) |
|  | **HHH** |  |  |  |  |
|  | **For the six-month periods ended** |  |  |  |  |
| (dollars and admissions/episodes in thousands) | **June 28, 2025** | **June 29, 2024** | **Change** | **% Change** |  |
| Revenue | $116,845 | $109,243 | $7,602 | 7.0% |  |
| Cost of revenue, excluding depreciation and amortization | 53,041 | 50,866 | 2,175 | 4.3% |  |
| Gross margin | $63,804 | $58,377 | $5,427 | 9.3% |  |
| Gross margin percentage | 54.6% | 53.4% |  | 1.2% | (4) |
| Home health total admissions (5) | 19.5 | 19.5 | - | 0.0% |  |
| Home health episodic admissions (6) | 14.8 | 14.7 | 0.1 | 0.7% |  |
| Home health total episodes (7) | 24.5 | 23.7 | 0.8 | 3.4% |  |
| Home health episodic mix (8) | 75.9% | 75.4% |  | 0.5% |  |
| Home health revenue per completed episode (9) | $3,193 | $3,082 | $111 | 3.6% |  |
|  | **MS** |  |  |  |  |
|  | **For the six-month periods ended** |  |  |  |  |
| (dollars and UPS in thousands) | **June 28, 2025** | **June 29, 2024** | **Change** | **% Change** |  |
| Revenue | $85,922 | $83,508 | $2,414 | 2.9% |  |
| Cost of revenue, excluding depreciation and amortization | 47,987 | 48,767 | (780) | -1.6% |  |
| Gross margin | $37,935 | $34,741 | $3,194 | 9.2% |  |
| Gross margin percentage | 44.2% | 41.6% |  | 2.6% | (4) |
| Unique patients served (“UPS”) | 180 | 186 | (6) | -3.2% |  |
| Revenue rate | $477.34 | $448.97 | $28.37 | 6.1% | (1) |
| Cost of revenue rate | $266.59 | $262.19 | $4.40 | 1.6% | (2) |
| Spread rate | $210.75 | $186.78 | $23.97 | 12.4% | (3) |

(1) Represents the period over period change in revenue rate, plus the change in revenue rate attributable to the change in volume.

(2) Represents the period over period change in cost of patient services rate, plus the change in cost of patient services rate attributable to the change in volume.

(3) Represents the period over period change in spread rate, plus the change in spread rate attributable to the change in volume.

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

(5) Represents home health episodic and other admissions.

(6) Represents home health episodic admissions.

(7) Represents episodic admissions and recertifications.

(8) Represents the ratio of home health episodic admissions to home health total admissions.

(9) Represents Medicare revenue per completed episode.

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 $131.8 million for the six-month period ended June 28, 2025, as compared to operating income of $60.0 million for the six-month period ended June 29, 2024, an increase of $71.8 million, or 119.8%.

Operating income for the six-month period of 2025 was positively impacted by an increase of $84.7 million, or 66.0%, in Field contribution as compared to the six-month period of 2024. The $84.7 million increase in Field contribution resulted from a $153.2 million, or 15.4%, increase in consolidated revenue and a 5.6% increase in our Field contribution margin to 18.5% for the six-month period of 2025 from 12.9% for the six-month period of 2024. The primary driver of our higher Field contribution margin year over year was an increase in gross margin percentage of 3.8% compared to the first six months of 2024 and a 1.9% decrease in branch and regional administrative expenses as a percentage of revenue to 15.8% for the six-month period of 2025 from 17.7% for the six-month period of 2024.

The overall $71.8 million increase in operating income compared to the first six months of 2024 primarily consists of:

- the previously discussed $84.7 million increase in Field contribution;
- a $2.1 million decrease in other operating expense; and
- a $0.5 million decrease in depreciation and amortization; offset by
- an $11.9 million increase in corporate expenses; and
- $3.5 million of acquisition-related costs associated with the Thrive acquisition completed during the second quarter of 2025.

#### Net Income

Net income for the six-month period ended June 28, 2025 was $32.2 million, as compared to net income of $2.7 million for the six-month period ended June 29, 2024. The $29.5 million increase in net income was primarily driven by the following:

- the previously discussed $71.8 million increase in operating income; and
- a $7.0 million increase in interest expense, net of interest income; offset by
- an aggregate $30.0 million decrease in valuation gains on interest rate derivatives, and increases in net settlements received from interest rate derivative counterparties compared to the first six months of 2024; and
- a $19.4 million increase in income tax expense.

#### Revenue

Revenue was $1,148.8 million for the six-month period ended June 28, 2025, as compared to $995.6 million for the six-month period ended June 29, 2024, an increase of $153.2 million, or 15.4%. This increase resulted from the following segment activity:

- a $143.2 million, or 17.8%, increase in PDS revenue;
- a $7.6 million, or 7.0%, increase in HHH revenue; and
- a $2.4 million, or 2.9%, increase in MS revenue.

Our PDS segment revenue growth of $143.2 million, or 17.8%, for the six-month period ended June 28, 2025 was attributable to a 6.5% increase in volume and a 11.3% increase in revenue rate. The 6.5% increase in volume was primarily attributable to growth in demand for non-clinical services.

The 11.3% increase in PDS revenue rate for the six-month period ended June 28, 2025, as compared to the six-month period ended June 29, 2024, resulted primarily from the following: (i) reimbursement rate increases issued by various state Medicaid programs and Managed Medicaid payers, including payments received in the current period related to certain rate increases applied retroactively for services provided since July 1, 2024 and January 1, 2025, for which there is currently 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 $7.6 million, or 7.0%, for the six-month period ended June 28, 2025 resulted primarily from a 3.4% 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 six months of 2024.

The $2.4 million, or 2.9%, increase in MS segment revenue for the six-month period ended June 28, 2025, as compared to the six-month period ended June 29, 2024, was attributable to a 6.1% increase in revenue rate offset by a decline in volume of 3.2% compared to the first six months of 2024.

#### Cost of Revenue, Excluding Depreciation and Amortization

Cost of revenue, excluding depreciation and amortization, was $754.4 million for the six-month period ended June 28, 2025, as compared to $691.5 million for the six-month period ended June 29, 2024, an increase of $62.9 million, or 9.1%. This increase resulted from the following segment activity:

- a $61.5 million, or 10.4%, increase in PDS cost of revenue;
- a $2.2 million, or 4.3%, increase in HHH cost of revenue; and
- a $0.8 million, or 1.6%, decrease in MS cost of revenue.

The 10.4% increase in PDS cost of revenue for the six-month period ended June 28, 2025 resulted from the previously described 6.5% increase in PDS volume combined with a 3.9% increase in PDS cost of revenue rate. The 3.9% 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 4.3% increase in HHH cost of revenue for the six-month period ended June 28, 2025 was driven primarily by higher home health total episodes.

The 1.6% decrease in MS cost of revenue for the six-month period ended June 28, 2025 was driven by the previously described 3.2% decline in MS volumes offset by a 1.6% increase in cost of revenue rate.

#### Gross Margin and Gross Margin Percentage

Gross margin was $394.4 million, or 34.3% of revenue, for the six-month period ended June 28, 2025, as compared to $304.1 million, or 30.5% of revenue, for the six-month period ended June 29, 2024. Gross margin increased $90.2 million, or 29.7%, from the comparable prior year quarter. The 3.8% increase in gross margin percentage for the six-month period ended June 28, 2025 resulted from the combined changes in our revenue rates and cost of revenue rates in each of our segments, which we refer to as the change in our spread rate, as follows:

- a 32.2% increase in PDS spread rate from $10.24 to $13.34 driven by the 11.3% increase in PDS revenue rate, net of the 3.9% increase in PDS cost of revenue rate;
- a 12.4% increase in MS spread rate from $186.78 to $210.75 driven by the 6.1% increase in MS revenue rate, net of the 1.6% increase in MS cost of revenue rate; and
- our HHH segment, in which gross margin percentage increased by 1.2%.

#### Branch and Regional Administrative Expenses

Branch and regional administrative expenses were $181.5 million, or 15.8% of revenue, for the six-month period ended June 28, 2025, as compared to $175.9 million, or 17.7% of revenue, for the six-month period ended June 29, 2024, an increase of $5.6 million, or 3.2%.

The 3.2% increase in branch and regional administrative expenses for the six-month period ended June 28, 2025, as compared to the six-month period ended June 29, 2024, was primarily due to an increase in incentive compensation expense during the six-month period due to improved forecasted performance compared to annual targets and acceleration of certain non-cash share-based compensation awards during the first six months of 2025. The overall 1.9% decrease in branch and regional administrative expenses as a percentage of revenue for the six-month period ended June 28, 2025, as compared to the six-month period ended June 29, 2024 resulted from leveraging our branch and regional administrative expense structure as a result of our restructuring efforts.

#### Field Contribution and Field Contribution Margin

Field contribution was $212.9 million, or 18.5% of revenue, for the six-month period ended June 28, 2025, as compared to $128.2 million, or 12.9% of revenue, for the six-month period ended June 29, 2024. Field contribution increased $84.7 million, or 66.0%, for the six-month period ended June 28, 2025, as compared to the six-month period ended June 29, 2024. The 5.6% increase in Field contribution margin for the six-month period ended June 28, 2025 resulted from the following:

- a 1.9% decrease in branch and regional administrative expenses as a percentage of revenue in the six-month period ended June 28, 2025, as compared to the six-month period ended June 29, 2024; and
- a 3.8% increase in gross margin percentage in the six-month period ended June 28, 2025, as compared to the six-month period ended June 29, 2024.

Field contribution and Field contribution margin are non-GAAP financial measures. See “Non-GAAP Financial Measures” below.

#### Corporate Expenses

Corporate expenses as a percentage of revenue for the six-month periods ended June 28, 2025 and June 29, 2024 were as follows:

*(dollars in thousands)*

|  | For the six-month periods ended June 28, 2025 Amount | % of Revenue | June 29, 2024 Amount | % of Revenue |
| --- | ---: | ---: | ---: | ---: |
| Revenue | $1,148,777 |  | $995,611 |  |
| Corporate expense components: |  |  |  |  |
| Compensation and benefits | $38,466 | 3.3% | $32,675 | 3.3% |
| Non-cash share-based compensation | 10,879 | 0.9% | 5,860 | 0.6% |
| Professional services | 11,672 | 1.0% | 10,878 | 1.1% |
| Rent and facilities expense | 6,012 | 0.5% | 6,216 | 0.6% |
| Office and administrative | 917 | 0.1% | 961 | 0.1% |
| Other | 4,088 | 0.4% | 3,497 | 0.4% |
| Total corporate expenses | $72,034 | 6.3% | $60,087 | 6.0% |

Corporate expenses were $72.0 million, or 6.3% of revenue, for the six-month period ended June 28, 2025, as compared to $60.1 million, or 6.0% of revenue, for the six-month period ended June 29, 2024. The $11.9 million, or 19.9%, increase in corporate expenses resulted primarily from higher compensation and benefits 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 $5.2 million for the six-month period ended June 28, 2025, as compared to $5.7 million for the six-month period ended June 29, 2024, a decrease of $0.5 million, or 9.3%. The $0.5 million decrease primarily resulted from improved capital asset management.

#### Acquisition-related costs

Acquisition related costs were $3.5 million for the six-month period ended June 28, 2025, primarily associated with the acquisition of Thrive.

#### Other Operating Expense

Other operating expense was $0.3 million for the six-month period ended June 28, 2025, as compared to other operating expense of $2.4 million for the six-month period ended June 29, 2024, a decrease in other operating expense of $2.1 million. The $2.1 million decrease primarily resulted from impairment of a certain facility lease asset recorded in the prior year six-month period.

#### Interest Expense, net of Interest Income

Interest expense, net of interest income was $72.1 million for the six-month period ended June 28, 2025, as compared to $79.1 million for the six-month period ended June 29, 2024, a decrease of $7.0 million, or 8.8%. The decrease was primarily driven by a lower U.S. federal funds rate during the six-month period ended June 28, 2025 compared to the six-month period ended June 29, 2024. See further analysis under *Liquidity and Capital Resources* below.

#### Other Expense (Income)

Other expense was $5.5 million for the six-month period ended June 28, 2025, as compared to other income of $24.5 million for the six-month period ended June 29, 2024. We realized a $22.7 million decrease in non-cash valuation gains on interest rate derivatives resulting from changes in market expectations of future interest rates as of the comparable valuation dates, and a $7.2 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:

*(dollars in thousands)*

|  | For the six-month periods ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| Valuation (loss) gain to state interest rate derivatives at fair value | $(17,580) | $5,130 |
| Net settlements received from interest rate derivative counterparties | 12,057 | 19,228 |
| Other | 51 | 182 |
| Total other (expense) income | $(5,472) | $24,540 |

#### 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 $22.1 million for the six-month period ended June 28, 2025, as compared to income tax expense of $2.7 million for the six-month period ended June 29, 2024. This increase in tax expense was primarily driven by differences in our projections of annual earnings at the end of each comparable six-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.

On July 4, 2025, the OBBBA was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. We are evaluating the full effects of the legislation on our estimated annual effective tax rate and cash tax position. As the legislation was signed into law after the close of our second quarter, the impacts are not included in our operating results for the six-month period ended June 28, 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:

*(dollars in thousands)*

|  | For the three-month periods ended June 28, 2025 | June 29, 2024 | For the six-month periods ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: | ---: | ---: |
| Net income | $27,025 | $13,906 | $32,218 | $2,734 |
| Interest expense, net | 35,874 | 39,518 | 72,077 | 79,063 |
| Income tax expense (benefit) | 17,113 | (9,927) | 22,068 | 2,735 |
| Depreciation and amortization | 2,617 | 2,833 | 5,211 | 5,745 |
| EBITDA | 82,629 | 46,330 | 131,574 | 90,277 |
| Goodwill, intangible and other long-lived asset impairment | 153 | 80 | 319 | 2,400 |
| Non-cash share-based compensation | 5,159 | 3,500 | 16,155 | 7,581 |
| Interest rate derivatives (1) | (72) | (6,441) | 5,523 | (24,359) |
| Acquisition-related costs (2) | 3,400 | - | 3,507 | - |
| Integration costs (3) | 2,269 | 388 | 2,543 | 687 |
| Legal costs and settlements associated with acquisition matters (4) | 639 | 173 | 1,678 | 575 |
| Restructuring (5) | 80 | 1,718 | 416 | 3,188 |
| Other legal matters (6) | (6,014) | (197) | (5,938) | 898 |
| Other adjustments (7) | 131 | 96 | (50) | (717) |
| Total adjustments (8) | $5,745 | $(683) | $24,153 | $(9,747) |
| Adjusted EBITDA | $88,374 | $45,647 | $155,727 | $80,530 |

(1) Represents valuation adjustments and settlements associated with interest rate derivatives that are not included in interest expense, net. Such items are included in other (expense) income.

(2) Represents transaction costs incurred in connection with planned, completed, or terminated acquisitions, which include investment banking fees, legal diligence and related documentation costs, and finance and accounting diligence and documentation, as presented on the Company’s consolidated statements of operations.

(3) Represents (i) costs associated with our Integration Management Office, which focuses on our integration efforts and transformational projects such as systems conversions and implementations, material cost reduction and restructuring projects, among other things, of $0.5 million and $0.7 million for the three and six-month periods ended June 28, 2025, respectively, and $0.3 million and $0.6 million for the three and six-month periods ended June 29, 2024, respectively; and (ii) transitionary costs incurred to integrate acquired companies into our field and corporate operations of $1.8 million for both the three and six-month periods ended June 28, 2025, and $0.1 million for both the three and six-month periods ended June 29, 2024, respectively. Transitionary costs incurred to integrate acquired companies include IT consulting costs and related integration support costs; salary, severance and retention costs associated with duplicative acquired company personnel until such personnel are exited from the Company; accounting, legal and consulting costs; expenses and impairments related to the closure and consolidation of overlapping markets of acquired companies, including lease termination and relocation costs; costs associated with terminating legacy acquired company contracts and systems; and one-time costs associated with rebranding our acquired companies and locations to the Aveanna brand.

(4) Represents legal and forensic costs, as well as settlements associated with resolving legal matters arising during or as a result of our acquisition-related activities. This primarily includes (i) costs of $0.4 million and $1.3 million for the three and six-month periods ended June 28, 2025, respectively, and $0.2 million and $0.6 million for the three and six-month periods ended June 29, 2024, respectively, to comply with the U.S. Department of Justice, Antitrust Division’s grand jury subpoena related to nurse wages and hiring activities in certain of our markets, in connection with a terminated transaction.

(5) Represents costs associated with restructuring our branch and regional administrative footprint as well as our corporate overhead infrastructure costs in order to appropriately size our resources to current volumes, including: (i) branch and regional salary and severance costs; (ii) corporate salary and severance costs; and (iii) rent and lease termination costs associated with the closure of certain office locations. Restructuring costs also include compensation, severance and related benefits costs associated with an executive transition plan initiated in the first quarter of 2024.

(6) Represents activity related to accrued legal settlements and the related costs and expenses associated with certain judgments and arbitration awards rendered against the Company where certain insurance coverage is in dispute. The Company released a legal reserve related to a certain accrued legal settlement during the three and six-month periods ended June 28, 2025.

(7) Represents: (i) other costs or (income) that are either non-cash or non-core to the Company’s ongoing operations of $0.1 million and $(0.1) million for the three and six-month periods ended June 28, 2025, respectively, and $0.1 million and $(0.7) million for the three and six-month periods ended June 29, 2024, respectively.

(8) The table below reflects the increase or decrease, and aggregate impact, to the line items included in our consolidated statements of operations based upon the adjustments used in arriving at Adjusted EBITDA from EBITDA for the periods indicated:

*(dollars in thousands)*

|  | Impact to Adjusted EBITDA For the three-month periods ended June 28, 2025 | June 29, 2024 | For the six-month periods ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: | ---: | ---: |
| Cost of revenue, excluding depreciation and amortization | $(5,878) | $81 | $(5,578) | $176 |
| Branch and regional administrative expenses | 1,599 | 1,561 | 4,837 | 2,874 |
| Corporate expenses | 6,451 | 3,958 | 15,599 | 9,335 |
| Acquisition-related costs | 3,400 | - | 3,506 | - |
| Other operating expense | 109 | 168 | 47 | 2,120 |
| Other expense (income) | 64 | (6,451) | 5,742 | (24,252) |
| Total adjustments | $5,745 | $(683) | $24,153 | $(9,747) |

### 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:

*(dollars in thousands)*

|  | For the three-month periods ended June 28, 2025 | June 29, 2024 | For the six-month periods ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: | ---: | ---: |
| Gross margin | $210,800 | $158,267 | $394,358 | $304,121 |
| Gross margin percentage | 35.8% | 31.3% | 34.3% | 30.5% |
| Branch and regional administrative expenses | 90,069 | 87,972 | 181,456 | 175,886 |
| Field contribution | $120,731 | $70,295 | $212,902 | $128,235 |
| Field contribution margin | 20.5% | 13.9% | 18.5% | 12.9% |
| Revenue | $589,553 | $504,958 | $1,148,777 | $995,611 |

### 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, 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 June 28, 2025 we had $100.7 million in cash on hand, $106.3 million available to us under our Securitization Facility and approximately $147.0 million of borrowing capacity under the Revolving Credit Facility. Available borrowing capacity under the Revolving Credit Facility is subject to a maintenance leverage covenant that becomes effective if more than 30% of the total commitment is utilized, subject to a $15.0 million carve-out for letters of credit. We believe that our operating cash flows, available cash on hand, and availability under our Securitization Facility and 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 six-month periods presented:

*(dollars in thousands)*

|  | For the six-month periods ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: |
| Net cash provided by (used in) operating activities | $42,937 | $(10,163) |
| Net cash used in investing activities | $(18,330) | $(2,577) |
| Net cash (used in) provided by financing activities | $(8,157) | $16,459 |

36

#### 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 $53.1 million for the six-month period ended June 28, 2025 compared to the six-month period ended June 29, 2024, primarily due to:

- improvements in operating income over the prior year period; partially offset by
- the provision of cash associated with operating assets and liabilities during the first six months of 2025, including the timing of collections of accounts receivable, as well as payroll and incentive settlements.

#### 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:

|  | June 29, 2024 | September 28, 2024 | December 28, 2024 | March 29, 2025 | June 28, 2025 |
| --- | ---: | ---: | ---: | ---: | ---: |
| Days Sales Outstanding | 47.8 | 48.1 | 46.4 | 45.6 | 47.2 |

#### Investing Activities

Net cash used in investing activities was $18.3 million for the six-month period ended June 28, 2025, as compared to $2.6 million for the six-month period ended June 29, 2024. The primary driver of the $15.8 million increase in cash used in the current period was the purchase of Thrive.

#### Financing Activities

Net cash (used in) provided by financing activities increased by $24.6 million, from $16.5 million net cash provided by financing activities for the six-month period ended June 29, 2024 to $8.2 million net cash used in financing activities for the six-month period ended June 28, 2025. The $24.6 million increase in net cash used was primarily attributable to payments for shares withheld to cover employee taxes on vesting of restricted stock during the current year period and borrowings under the Securitization Facility during the prior year period. There were no borrowings made under our Securitization Facility during the six-month period ended June 28, 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 June 28, 2025 and December 28, 2024, as well as related interest expense for the six-month periods ended June 28, 2025 and June 29, 2024, respectively:

*(dollars in thousands)*

| Instrument | Current and Long-term Obligations June 28, 2025 | December 28, 2024 | Interest Rate | Interest Expense For the six-month periods ended June 28, 2025 | June 29, 2024 |
| --- | ---: | ---: | --- | ---: | ---: |
| 2021 Extended Term Loan (1) | $885,950 | $890,550 | S + 3.75% | $37,029 | $41,834 |
| Term Loan - Second Lien Term Loan (1) | 415,000 | 415,000 | S + 7.00% | 24,201 | 26,241 |
| Revolving Credit Facility (1) | - | - | S + 3.75% | 349 | 425 |
| Securitization Facility (2) | 168,750 | 168,750 | S + 2.75% | 6,599 | 7,467 |
| Amortization of debt issuance costs | - | - |  | 3,350 | 2,484 |
| Other | - | - |  | 810 | 809 |
| Total Indebtedness | $1,469,700 | $1,474,300 |  | $72,338 | $79,260 |
| Weighted Average Interest Rate (3) | 9.0% | 9.2% |  |  |  |

(1) Variable rate debt instrument which accrues interest at a rate equal to the SOFR rate, plus a credit spread adjustment ("CSA"), (subject to a minimum of 0.50%), plus an applicable margin.

(2) Variable rate debt instrument which accrues interest at a rate equal to the SOFR rate, plus a CSA, plus an applicable margin.

(3) Represents the weighted average annualized interest rate based upon the outstanding balances at June 28, 2025 and June 29, 2024, respectively, and the applicable interest rates at that date.

We were in compliance with all financial covenants and restrictions related to existing credit facilities at June 28, 2025.

On September 30, 2024 and further on April 16, 2025, we amended the terms of our revolving credit facility (the "Revolving Credit Facility") under our first lien credit agreement to extend the Revolving Credit Facility’s maturity date from April 29, 2026 to the earlier of (i) April 15, 2028 and (ii) May 1, 2026 if by such date the Securitization Facility has not been renewed or replaced or paid-off, in each case, in full, with a maturity date that is January 14, 2028, or later. Additionally, the maximum borrowing availability under the Revolving Credit Facility was reduced from $200.0 million to $170.3 million through April 29, 2026, and then subsequently reduces availability to $148.9 million from April 29, 2026 through the amended maturity date.

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 Revolving Credit Facility's maturity date was effectively extended to April 15, 2028.

### Contractual Obligations

Our contractual obligations consist primarily of long-term debt obligations, interest payments, operating and financing leases. These contractual obligations impact our short-term and long-term liquidity and capital needs. As of June 28, 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.

## Controls and procedures

As filed, 3,385 characters.

### Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we conducted an evaluation, under the supervision and with the participation of our principal executive officer, principal financial officer, and principal accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"). Based on this evaluation, our principal executive officer, principal financial officer and principal accounting officer concluded that our disclosure controls and procedures were effective as of June 28, 2025.

During the three-month period ended June 28, 2025, we completed the Mergers. As permitted by the Securities and Exchange Commission staff interpretive guidance that an assessment of a recently acquired business may be omitted from the scope of evaluation in the year of acquisition, management excluded Thrive from its interim evaluation of internal control over financial reporting.

### Changes in Internal Control over Financial Reporting

On June 2, 2025, we completed the Mergers. As part of the ongoing integration, we are in the process of incorporating the controls and related procedures of Thrive. Other than incorporating Thrive's controls, there were no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) that have occurred during the three-month period ended June 28, 2025, that have materially impacted, or are reasonably likely to materially impact, our internal control over financial reporting.

### Inherent Limitations on Effectiveness of Controls

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

## Risk factors

As filed, 163 characters.

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

Filed Aug 7, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-104528. Last ingested by Listed: Oct 24, 2026, 15:15 ET. No prices; not investment advice.