Agiliti, Inc. (AGTI) is a nationwide provider of healthcare technology management and service solutions to the United States healthcare industry. The company has a long and storied history, tracing its roots back to 1939. Over the past 85 years, Agiliti has built an extensive nationwide operating footprint, with a network of more than 150 service centers and Centers of Excellence, the majority of which are certified to ISO 13485:2016.
Business Overview
Agiliti's diverse customer base includes more than 10,000 national, regional, and local acute care hospitals, health systems and integrated delivery networks (IDNs), and alternate site providers. The company also serves the federal government, as well as a number of city and state governments, providing management and maintenance of emergency equipment stockpiles. Additionally, Agiliti is an outsourced service provider to medical device manufacturers, supporting critical device remediation and repair services.
The company operates across three primary service lines:
On-Site Managed Services
,Clinical Engineering Services
, andEquipment Solutions
. On-Site Managed Services are comprehensive programs that assume full responsibility for the management, reprocessing, and logistics of medical equipment at individual facilities and IDNs. Clinical Engineering Services provides maintenance, repair, and remediation solutions for all types of medical equipment, including general biomedical equipment, diagnostic imaging equipment, and surgical equipment. Equipment Solutions primarily provides supplemental, peak need, and per-case rental of general biomedical, specialty, and surgical equipment to acute care hospitals and alternate site providers.Financials
In the fiscal year ended December 31, 2023, Agiliti generated annual revenue of $1,174,604,000, a decrease of 1.2% compared to the prior year. The company's annual net income was -$19,425,000, while annual operating cash flow and free cash flow were $169,816,000 and $83,379,000, respectively.
For the first quarter of 2024, Agiliti reported revenue of $302,751,000, an increase of 0.9% compared to the same period in 2023. Gross margin for the quarter was 32.8%, down from 36.5% in the prior year period, primarily due to a combination of price erosion, cost increases, and a mix shift within the business to lower margin solutions. The company reported a net loss of $6,516,000 for the quarter, compared to net income of $3,050,000 in the first quarter of 2023.
Liquidity
Agiliti's financial position faces challenges, with a current ratio of 1.68 and a quick ratio of 1.17 as of March 31, 2024. The company's debt ratio stands at 0.49, and its interest coverage ratio is 0.69, indicating potential difficulty in meeting interest obligations. Agiliti's liquidity position is bolstered by availability under its Revolving Credit Facility and Accounts Receivable Securitization Facility, which totaled $434.9 million as of the end of the first quarter.
Recent Developments
One of the key drivers of Agiliti's business is its ability to rapidly mobilize, track, repair, and redeploy equipment during times of peak need or emergent events. This has made the company a service provider of choice for city, state, and federal governments to manage emergency equipment stockpiles. In the first quarter of 2024, revenue attributable to various contracts with the U.S. Department of Health and Human Services (HHS) and the Assistant Secretary for Preparedness and Response (ASPR) represented 12.5% of the company's total revenue, up from 11.1% in the prior year period.
Agiliti's Equipment Solutions segment, which provides supplemental, peak need, and per-case rental of medical equipment, saw revenue decline 3.5% in the first quarter of 2024 compared to the same period in 2023. This was primarily driven by lower capital sales, partially offset by an increase in bed rentals. The company's Clinical Engineering Services segment, which provides maintenance, repair, and remediation solutions for medical equipment, experienced a 10.3% increase in revenue, driven by new customer growth, timing of certain time and materials work, and the scope of the renewed government contract. Finally, the Onsite Managed Services segment, which assumes full responsibility for the management, reprocessing, and logistics of medical equipment at individual facilities and IDNs, saw a 7.1% decrease in revenue, primarily due to renewal pricing and the scope of the government contract.
Outlook
Looking ahead, Agiliti has not provided specific financial guidance for the remainder of 2024. However, the company's management has highlighted the continued strong demand for its services, particularly in the areas of emergency equipment management and clinical engineering support. The successful renewal and expansion of the company's government contracts, as well as its ability to drive growth in its core commercial business, will be key factors in determining Agiliti's financial performance going forward.
Conclusion
Agiliti's investment thesis is underpinned by its position as a leading provider of mission-critical, regulated, reusable medical device management solutions. The company's nationwide network of service centers, specialized technicians, and proprietary technology platforms provide a significant competitive advantage, making Agiliti a trusted partner for healthcare providers and government entities alike. As the healthcare industry continues to evolve, with an increasing focus on cost optimization and patient safety, Agiliti is well-positioned to capitalize on these trends and drive long-term value for its shareholders.