Aveanna Healthcare Holdings Inc. (AVAH) Earnings Call Transcript

Good morning and welcome to Aveanna Healthcare Holdings' third quarter 2026 earnings conference call. Today's call is being recorded and we have allocated one hour for prepared remarks and Q&A. At this time, I'd like to turn the call over to Deborah Stewart, Aveanna's Chief Accounting Officer. Please go ahead.

Good morning, and welcome to Aveanna's third quarter 2026 earnings call. I am Deborah Stewart, the company's Chief Accounting Officer. With me today is Jeff Shaner, our Chief Executive Officer, and Matthew Buckhalter, our Chief Financial Officer. Jeff, thank you for joining us. During this call, we will make forward-looking statements. Risk factors that may impact those statements and could cause actual future results to differ materially from currently projected results are described in this morning's press release and the reports we file with the SEC. The company does not undertake any duty to update such forward-looking statements. Additionally, during today's call, we will discuss certain non-GAAP measures, which we believe can be useful in evaluating our performance. Presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP. A reconciliation of these measures can be found in this morning's press release, which is posted on our website, aveanna.com, in our most recent quarterly report on Form 10-Q when filed. With that, I will turn the call over to Aveanna's Chief Executive Officer, Jeff Shaner. Jeff?

Thank you, Deborah. Good morning, and thank you for joining us today. I appreciate each of you investing your time this morning to better understand our Q3 results and how we are finishing full year 2026 with solid momentum. My initial comments will briefly highlight our third quarter results, along with the steps we are taking to address the labor markets and our ongoing efforts with government and preferred payers to create additional capacity. I will then provide updates on the Family First integration, how we are progressing with our 2026 strategic initiatives, our enhanced guidance, and reconfirm our long-term growth outlook before turning the call over to Matt. Let's move to highlights for the third quarter. Revenue for the third quarter was $695.5 million, representing an 11.8% increase over the prior year period. Third quarter adjusted EBITDA was $100.1 million, representing a 25% increase over the prior year period, primarily due to the improved rate and volume environment and continued operational efficiencies. As we have previously discussed, the labor environment represented the primary challenge that we needed to address to see Aveanna resume the growth trajectory that we believed our company could achieve. It is important to note that our industry does not have a demand problem. The demand for home and community-based care continues to be burgeoning, with both state and federal governments and managed care organizations asking for solutions that create more capacity while reducing the total cost of care. Our Q3 results highlight that we continue to align our objectives with those of our preferred payers and government partners. By focusing our clinical capacity on our preferred payers, we achieved solid year-over-year growth in all three of our operating segments. We also experienced improvement in our caregiver hiring and retention trends by aligning our efforts with those payers willing to engage with us on enhanced reimbursement rates and value-added payment agreements. While we continue to operate in a challenging environment, our preferred payer strategy supports our ability to achieve accelerated growth rates in all three of our business segments. Since our second quarter earnings call, I am pleased with the continued progress we have made on several of our rate improvement initiatives with both government and preferred payer partners, as well as continued signs of improvement in the caregiver labor markets. Specifically, as it relates to our private duty services business, our 2026 government affairs strategy was twofold. First, to enhance our advocacy presence with both federal and state legislatures, and second, to achieve mid-single-digit state rate enhancements. As of Q3, we have achieved eight state rate enhancements year-to-date and have shifted our focus to the 2027 legislative agenda. Our messaging of lowering the total cost of care and keeping our medically fragile patients in the comfort of their home continues to resonate well with our state government partners. As we communicated in Q2, after four years of dedicated advocacy and focus on the state of California, we are expecting a significant investment in private duty nursing rates effective January 1, 2027. We have engaged extensively with the Department of Health Care Services, known as DHCS, on the adjudication of this rate investment in California. DHCS has validated that the 2027 California budget includes a hard dollar investment for private duty nursing rates of approximately $30 million, with the understanding that CMS will match it with their 50% FMAP matching or an additional $30 million for a total private duty nursing rate investment of $60 million. DHCS believes this $60 million investment is a supplemental payment for the 2027 budget period January 1, 2027 through June 30, 2027. The department has communicated that it will most likely apply this supplemental rate increase in addition to the private duty nursing base rates for effectively all private duty nursing patients covered by Medi-Cal. We are working with Governor Newsom and Governor-elect Becerra to ensure the supplemental payment continues to be included in the California budget as a permanent rate increase to the private duty nursing rate structure. We have every intention of passing material wage improvements onto our caregivers in concert with the permanent rate enhancement. We will continue to communicate and advocate with the Governor's Office, California Legislature, and the Department of Health Care Services until a permanent rate and wage solution is in place. Now, moving on to our private duty services preferred initiatives. As of Q3, we have achieved our goal of 38 private duty services preferred payers. We signed one additional preferred payer agreement in the quarter and now expect to land closer to 40 agreements by the end of 2026. Aveanna's preferred payer strategy continues to gain momentum and allows us to invest in caregiver wages and recruitment efforts to accelerate hiring and staffing of nurses for our payer partners. Additionally, our Q3 preferred payer agreements now account for 65% of our total private duty services managed care organization volumes, up from 57% at the end of 2025. This positive momentum in preferred payer volumes continues to highlight the shift in our carrier capacity and recruitment efforts towards our preferred payer partners. Moving to our preferred payer progress in home health. Our goal for 2026 was to maintain our episodic mix above 75% while returning to a more normalized growth rate. I'm pleased to report in Q3, our episodic mix was 80%, and our total episodic volume growth was 24% compared with the prior year period. Our growth was fueled by an impressive 19.6% episodic admission growth compared with the prior year period. Furthermore, we signed two additional episodic agreements in Q3 for a total of 52 agreements year-to-date. While we have exceeded our preferred payer and our organic growth goals in home health, we continue to lean into our payer partners. Our dedicated focus on aligning our home health care group capacity with those payers willing to reimburse us on an episodic basis has led to double-digit year-over-year growth in home health admissions and episodes as well as improvement in our clinical and financial outcomes. Lastly, we're pleased with CMS's final home health rule published on November 4, as well as the final hospice rule published on August 6. The 2027 final home health rate shows positive movement by CMS aligned with strong collaboration from the National Alliance for Care at Home. While there is still work to be done addressing the temporary adjustment and its impact on the annual home health rate, we have come a long way as an industry. We believe the stability of the home health and hospice rate structure is important as we continue to meet the increasing demand for America's aging population cared for in the comfort of their home. Finally, as we have achieved our desired preferred payer model in both private duty services and home health and hospice, we are executing a similar strategy in our medical solutions business. As of Q3, we have a total of 22 preferred payer agreements, having added two in the quarter. Gross margins have stabilized in our desired range as we align our clinical capacity with those payers that value our services and pay us in a timely fashion. I am very pleased with our Q3 volume growth of approximately 98,000 unique patients served, or positive 7.7% over the prior year period. As we think about medical solutions revenue growth, I expect us to remain in the high single digits consistent with our long-term growth projections. We are encouraged by our rate increases, preferred payer agreements, and subsequent growth in our business. Our company has demonstrated a stable return to organic growth as we achieve our rate goals previously discussed. Home and community-based care will continue to grow, and Aveanna is a comprehensive platform with a diverse payer base, providing a cost-effective, high-quality alternative to higher-cost care settings. Now, turning to our acquisition of Family First Home Care, which we closed in June of this year. We are progressing nicely with the integration and have completed essentially all the back-office functions in Q3. Our leadership teams continue to focus on exceptional clinical care and supporting our branches as we navigate the necessary in-market and electronic medical record integrations. I expect us to wrap up the majority of the Family First integration efforts by the end of Q4. I believe the Family First acquisition is a great example of how Aveanna will continue to grow inorganically and delever our balance sheet at the same time. I look forward to more Family First-type acquisitions in 2027. Additionally, let me comment on our strategic plan and enhanced outlook for 2026. We will continue to focus our efforts on five primary strategic initiatives. First, strengthening our partnerships with government partners and preferred payers to create additional capacity and growth. Second, improving clinical outcomes and customer engagement scores while lowering the total cost of care. Third, implementing high-priority artificial intelligence and automation efforts to improve operational efficiency and productivity gains. Fourth, growing through acquisitions while improving net leverage and free cash flow. And finally, continuing engagement with our leaders and employees in delivering our Aveanna mission. Based on the strength of our third quarter results and the continued execution of our key strategic initiatives, we are increasing our full-year revenue and adjusted EBITDA guidance to revenue greater than $2.695 billion and adjusted EBITDA greater than $374 million. As I reflect on the continued strength of our 2026 results and the improved visibility with state and federal reimbursement rates, we recently reconfirmed our long-term core organic growth rates in all three of our operating segments. As we communicated in Q2, we adjusted our long-term private services organic growth rate from 3% to 5% to 5% to 6%, primarily driven by the improved state government affairs and continued preferred payer execution. Also, we updated our long-term home health and hospice organic growth rates from 5% to 7% to 8% to 10%, primarily driven by the improved federal government affairs and preferred payer results, and we reconfirmed our medical solutions growth rate of 8% to 10%. With the durability of our organic growth rates and thoughtful M&A, we continue to believe Aveanna is well poised to achieve double-digit revenue growth on an annual basis. Aveanna has a strong value proposition to our federal and state government partners, as well as our managed care organization preferred payers, and these important relationships are underpinning our enhanced view on our future organic growth rates in our core business segments. We look forward to updating you on our continued execution of our business plans as we navigate the back half of 2026. With that said, let me turn the call over to Matt to provide further details on the quarter and our improved capital structure. Matt?

Thank you, Jeff, and good morning. I will first discuss our third quarter financial results and liquidity before providing additional details on our refreshed outlook for 2026. Starting with the top line, we saw revenues rise 11.8% over the prior year period to $695.5 million. We achieved year-over-year revenue growth in all three of our operating divisions, led by our home health and hospice, private duty services, and medical solutions divisions, which grew by 15.6%, 11.6%, and 9.1% compared to the prior year period. Consolidated gross margin was $226.8 million, or 32.6%. Consolidated adjusted EBITDA was $100.1 million, a 25% increase as compared to the prior year period. These results reflect strong execution across all three business segments and our continued focus on advancing our strategic initiatives that position us for long-term growth. Now, taking a deeper look into each of our segments. Starting with private duty services, revenue for the quarter was approximately $574 million, an 11.6% increase, and was driven by approximately 13 million hours of care, a volume increase of 10.2% over the prior year. Q3 revenue per hour of $44.09 was up 1.4% compared to the prior year quarter, driven by growth in our preferred payer volume. We remain optimistic about our ability to attract caregivers and address market demands for our services when we obtain acceptable reimbursement rates. Turning to our cost of labor and gross margin metrics, we achieved $166 million of gross margin, or 28.9%. The cost of revenue rate of $31.34 in Q3 was up 45 cents, or 1.6% from the prior year period. Our Q3 spread per hour was $12.75, reflecting continued normalization driven in part by ongoing caregiver wage adjustments, supporting higher volumes, and improving clinical outcomes. Moving on to our home health and hospice segment. Revenue for the quarter was approximately $72.1 million, a 15.6% increase over the prior year. Revenue was driven by 11,600 total admissions, up 19.6%, with approximately 80% being episodic, and 16,000 total episodes of care, up 24% from the prior year quarter. Medicare revenue per episode was $3,199 for the quarter. Our episodic focus has accelerated our margin expansion and improved our clinical outcomes. With episodic admissions well over 75%, we have achieved our goal of right-sizing our margin profile and enhancing our clinical offerings. We're pleased with our Q3 gross margin of 53.3%, reflecting the team's continued focus on strong operational execution and delivering consistent results. Our home health and hospice platform is dedicated to creating value through effective operational management and the delivery of exceptional patient care. Now, to our medical solutions segment results for Q3. During the quarter, we produced revenue of $49.2 million, up 9.1% over the prior year period. Revenue was driven by approximately 98,000 unique patients served and revenue per unique patient served of approximately $502, up 1.4% over the prior year period. Gross margin was approximately $22.3 million, or 45.2% for the quarter. We're excited to see continued growth in both revenue and unique patients served as we begin to realize the full benefits of our modernization efforts. In summary, we remain focused on keeping our patients' care at the center of everything we do. It is clear that aligning caregiver capacity with preferred payers who value our partnership is the right path forward at Aveanna. With strong momentum through Q3, we are optimistic these trends will continue throughout 2026. We will pass through wage improvements and other benefits to our caregivers in the ongoing effort to better improve volumes. Now, turning to our balance sheet and liquidity, at the end of the third quarter, we had liquidity of $492 million, representing cash on hand of $198 million, $69 million of availability under our securitization facility, and $226 million of availability on a revolver, which was undrawn as of the end of the quarter. We had $24.4 million in outstanding letters of credit at the end of Q3. On the debt service front, we had approximately $1.52 billion of variable rate debt at the end of Q3. Of this amount, $1.4 billion is hedged with interest rate caps, which limits exposure to increases in Secured Overnight Financing Rate. Accordingly, substantially all of our variable rate debt is hedged. Shortly after quarter end, we executed an additional interest rate cap agreement with a notional amount of $880 million that will become effective upon the expiration of our existing caps in February 2027. This new cap has a strike rate of 5.25% and extends through December 2029, aligning with our existing $520 million cap that expires at the same time. Again, effectively all of our variable rate debt is hedged through December 2029. Looking at year-to-date cash flow, cash generated by operating activities was $157.5 million, and free cash flow was positive $141.2 million. We are encouraged by our strong cash collections and cost efficiency efforts, which have driven solid operating and free cash flow in 2026. We expect to generate additional operating and free cash flow throughout the remainder of the year. Before I hand the call over to the operator for Q&A, let me take a moment to address our enhanced outlook for 2026. As Jeff mentioned, we expect full-year 2026 revenue to be greater than $2.695 billion and adjusted EBITDA greater than $374 million. This improved guidance reflects continued strength in our underlying business, supported by strong organic growth and sustained demand for our services. As we reflect on Q3 results, I'd like to take a moment to express my sincere gratitude to our Aveanna teammates. These strong results would not have been possible without your hard work and dedication. Looking ahead, I'm excited for the continued execution of our 2026 Strategic Plan and look forward to providing you with further updates at the end of Q4. With that, let me turn the call over to the operator.

Thank you. We will now be conducting a question and answer session. [Operator Instructions] And our first question will come from Brian Tanquilut with Jefferies.

Good morning, guys. This is Megan Holtan for Brian Tanquilut. Congrats on another good quarter. I know it's a little bit early and you guys reconfirmed your updated long-range plan, but any additional color you can provide on 2027, maybe how you're thinking about preferred payer agreements, state rate increases, or a California benefit?

Megan, good morning. Thank you so much. Yes, I think to our comments that we had in our prepared remarks, we feel very confident in how we're ending 2026. Just another solid year, continued beat and raise mentality, ending the year strong, really pleased with the Family First integration. That has been a great integration. It's helped continue to fuel our preferred payer strategy in some of the core states like Florida, just like Thrive did. So I think finishing off strong in our segments, we are very proud of how all three business segments met. Matt mentioned the revenue growth rates of all three. I'm going to give a shout-out to our Medical Solutions business. That business has just come out of its modernization and is just hitting the sweet spot right now in that kind of 7.5%, 8% growth rate. So really doing a nice job, you know, all three businesses. So finishing strong. Obviously, we've kind of moved out of 2026 into our 2027 legislative agenda. I know we'll talk a lot about California here this morning, but really focused on just having another great year in our preferred payer execution.

You want to add comments, '27? Yes, we're still working through the 2027 budget and strategic priorities, Megan. So it's a little early for us to necessarily get into the specifics. What I can tell you is we feel really great about the momentum we're carrying into next year, obviously coming off a really strong quarter here in Q3, and we'll continue that momentum into Q4. But overall, our strategies that got us here like our preferred payer strategy, our government affairs strategies, and, of course, just focusing on great clinical outcomes—those aren't going to change, and we really don't plan on slowing down. So we're excited about the opportunities ahead, excited about carrying this momentum into 2027, but we'll update you on 2027 after Q4 results come out.

Okay, thanks. And then a quick follow-up. I know you guys were going to start hiring for California ahead of getting the rate increase. I guess, can you give us any color on how that hiring process is going and then just how we should be thinking about margins in Q4 because of that?

Yeah, I think it's important, Megan, as we've spent the last two months working with the California legislature, Governor Newsom's office, and the department. In our prepared remarks we talked about, the department is viewing this rate investment as a supplemental payment. And by supplemental payment, they think of it as an add-on to the base fee-for-service reimbursement rates. They agree that it belongs in the second half of 2027, the fiscal year 2027 for California, which is January 1 through June 30, but at the moment they're viewing it as a supplemental payment. We disagree with this philosophy. We feel like the legislative intent and Governor Newsom's intent through Senate Bill 111, which is what funded this in the '27 budget, was, in our minds, crystal clear that these rates intended to address longstanding and long-term workforce shortages. But we're working with the legislature as we speak,

Governor Newsom, we're also working now with Governor-elect Becerra just to ensure that the department puts this through in the appropriate way that includes it in the 2028 budget and ongoing as a permanent rate. Matt, with that in mind, you want to talk about how we're thinking about the wage pass-through? Yes, Megan, no impact to 2026 and Q3 or Q4, you know, overall with the nurse wages in California, we've communicated clearly with DHCS, Governor Newsom, and the legislature that we're just unable to invest meaningful dollars in base wage rates until we have certainty around the private duty nursing rate investment. We still expect that full impact of the supplemental payment to be recognized in the first half of 2027. We're working on retention and engagement payments for California nurses. This is temporary, however, and this will temporarily help the current workforce, but it's not addressing the longstanding workforce shortages. In the meantime, obviously, we're just going to continue to advocate and fight for our patients and our caregivers until we have more certainty around that reimbursement, which gives us more certainty around the wage rate as well.

Thank you, Megan. And our next question will come from Benjamin Hendrix with RBC Capital Markets.

Great, thank you very much. Just want to get a little color on the updated long-range plan for private duty. When we think about the state budgets and the government affairs processes, would you consider this mid-single-digit rate and eight-state enhancements that we've seen year-to-date as kind of outperformance to your typical what's baked into your long-range plan? What do we really need on a state-by-state or on a year-by-year basis from the states overall to achieve that range? Thanks.

I think 2026 in our mind, both on the government affairs side and on the preferred payer side, is right down the middle of the fairway for us. So not overly aggressive and not certainly conservative, kind of right where we need to be. That high mid-single digits for us is the perfect place to be in our private duty services in our 38 states, it's a perfect place to be. We felt like 10 was probably a little bit of a stretch this year and it played out to be eight, so I think right in our wheelhouse. If it was six to eight next year, Ben, I think we would be pleased and it would tie to our long-range plans. And if I flip over to the preferred payer execution, you know, we talked on this call, we achieved 38 preferred payers at the end of Q3. That was our goal for the year. We're going to sign a few more here in Q4, already in progress. So we think that number kind of easily gets to 40. So it'll be a great year for private duty services preferred payers. The payers continue to want more from us, both on the Medicaid side of the business, but also on the Medicare side of the business. So I think 2026 set up incredibly well. We think 2027 will be very similar as we focus both on the government affairs execution as well as the preferred payer execution.

Great, thanks. And then just to follow up on an earlier point, is there kind of a deadline date we need to be on the lookout for for interpretation of Senate Bill 111 in California?

No, I think as it sits today, you know, the department is still working. We expected to have a fee-for-service schedule at the department about a month ago. They have struggled to work through this. It's taken longer than normal. They've held, I guess now, probably four or five different phone calls with the provider community and the California Home Care Association. We've been on all of those. We understand their stance today, Ben. And their stance really is, instead of changing the fee-for-service schedule by the approximate 40% increase, they're intending to add a supplemental hourly payment on top of the current rate. We understand how they get there. We just violently disagree with their position as a department. We actually just had our legislative partners, our California legislative partners, write a letter to them. It was dated November 3. I believe it's public at this point; certainly, we can post and share it. But it really goes into the intent of Senate Bill 111 and what the intent of those legislators who drove it and passed it as well as Governor Newsom was. And the letter reads very well that it was meant to address the longstanding workforce shortages and it was intended to address wage rate over a long period of time. Matt said it and we've been crystal clear with the department, and not just us, but our peers as well, we cannot pass through base wage rate improvements to nurses in California until we know the wage rate is permanent in theory forever. In the 2028 budget, the department understands that. We met with Governor Newsom again. He understands that. Our legislative partners understand that, all in an understanding that we're going to receive this supplemental payment in the first half of 2027, which is great. That is wonderful. As Matt said in his remarks, it just doesn't address the real issue, which is meaningful wage pass-through. So we're set to meet with Governor-elect Becerra here in a few weeks. He is in charge, he and his team are in charge of the 2028 budget, so it really moves from Governor Newsom to Governor Becerra at this point. I'm very optimistic that Governor Becerra, one of his leading theses for California is workforce enhancement and enhancing the worker in California. This is a perfect landing place. We just need both the governor and the legislature to help direct the department that this was not a supplemental six-month investment. This is on an ongoing basis to the California budget, Medi-Cal budget from 2027 forward. So, the rate is going to come through on January 1. There's no drama about that, but we've been clear we cannot pass through meaningful wage base rate changes until such point that it is permanent not only in 2027 but 2028 as well. Thank you, Ben.

We'll go next to Andrew Cooper with Stevens.

Hey, good morning. Maybe kind of speak more broadly on the government affairs and kind of the outcomes of the midterm election. I guess kind of any level setting there in terms of any particular states that you think you guys stand to benefit or the provider community stands to benefit from a seat change and kind of just speaking maybe more broadly, what are some of the early conversations that you're seeing around that for 2027?

Thanks, Raj. Good morning. Yes, you know, generally, we would say over a period of decades that the Democrats have been maybe deeper investors in the Medicaid system. I think that is generally widely known throughout America. But I will say many of our private duty nursing rate wins in the states have been with Republican states, Republican governors, and Republican legislators. So we've had great success on both sides of the aisle. We often point out Georgia, and we often point out Massachusetts and Oklahoma and Pennsylvania. So those, the blue states, red states, we've been very successful in. Generally, the shift to Democrats is normally known as a good thing for Medicaid globally. I think we were clear the last couple of quarters, the One Big Beautiful Bill Act really did not directly impact private duty nursing patient population positively or negatively. So we don't see a change from that. We don't see this new legislative agenda to unravel the One Big Beautiful Bill Act. And we can be wrong on that, but we just don't see a material change from what the One Big Beautiful Bill Act was intended to do in 2027-2028. So without, Raj, we generally think that it's going to be a steady state, continue to lean in. A couple of our states, big states, did flip. Obviously, Georgia was a big change. We'll point out Texas. Texas has maxed their rainy day fund for the last eight years, I think eight years, so the last four legislative cycles, and hasn't had meaningful investment in the Medicaid program over the last three or four legislative cycles. Now, we're paid by the managed care organizations in Texas, but getting investment, getting further investment in Texas would be good for the managed care organizations and would ultimately be good for us as Texas goes into its 2027 legislative cycle. So generally positive, but I don't think anything that we would point out that says drastic change positively or negatively on last Tuesday's outcome.

Got it. And then as my follow-up, just kind of on the medical solutions business and the preferred payer arrangements there, are you guys kind of seeing any explicit cross-selling opportunities as part of those arrangements, given that you have a plethora of them across home health and private duty? So I guess kind of curious on that, or is that something that's just kind of beyond the contract and where you kind of do that separate from any kind of payer preferences on also being the provider of choice for the same patient?

Yes, Raj, what I would tell you, with the preferred payer contract in medical solutions, similar to our other two divisions, the demand for services still outweighs the supply that we're able to provide them. And in this case, it's enteral nutrition and the demand for the services in there. At any given time, we have thousands of referrals that are needing to be used and to be pulled through the pipeline. And so what we're focused on are providing care to those who at the end of the day value us and value our services the most. And that can be through reimbursement rate, that can be through our collection cycle, that could be through our authorization process as well. And so working with the specific payers to make sure that there aren't hiccups in the process of providing these services is what makes somebody a preferred payer. So we were able to add two within the quarter, get ourselves up to 22. You know, that's a big step up from where we started two years ago at zero. And so we've done a really, really nice job of pulling those preferred payers through. We expect to expand upon that over the next couple of quarters as well. And as you can see with 9.1% revenue growth this quarter, I think it was 9.1% revenue growth last quarter, they are now through their modernization efforts, and those relationships are also working very well for that division.

Moving on to Sean Dodge with BMO Capital Markets.

Yeah, thanks. Morning. Maybe in home health, you called out your growth in admissions, both episodic and total, accelerated a lot in the quarter. Just any more detail you can share on how you're driving that? I don't think there was anything in there from Family First that I'm aware of. So was that all, I guess, organic?

It was, Sean. This is not new. I mean, the intensity of this team has been building over the last, I'll call it, six quarters. They've honed their model and they just continue to excel at a high level. If you walk around the halls in our corporate office here, we're high-fiving this team daily, if you will. A lot of energy, a lot of passion. And they're just executing the business plan that their leader, Shane, set forth a couple of years ago and doing so at a high level. When sales, operations, and clinical all work together, a beautiful thing happens. And I think what you're seeing in our home health and our hospice businesses, great clinical outcomes, great cash collections, I'll add that as well, solid margins, solid margin profile, and unbelievable growth. Do I think we can keep 20% to 25% organic growth going forever? No, I don't think that's sustainable forever, but every quarter these guys and gals continue to defy logic in how fast they're growing. And the fact now, Sean, we've kind of settled in around that 80% episodic mix. So we're now in kind of quarter five, six, and seven of episodic mix being in the high 70s, low 80s, and the team has just done a really good job of executing that business plan. Yes, couldn't be more proud. Echo Jeff's statements here of what that team's been able to accomplish. 19.6% admission growth, 24% episodic admission growth, 24% total episode growth. Q3 historically has been a little bit of a softer quarter for us because of our geographical density and where we are at in the Southeast, specifically Florida and some of the snowbirds kind of going back up north. The team has actually turned that into a positive and turned that into a growth quarter for us as well. And so going from being one of our softest to one of our strongest is really impressive what they've been able to achieve. Q4, I wouldn't expect to continue to see 24% to 25% growth, but still our long-range plans are up in the high single digits, double digits, and that team is overachieving those. They probably will for the next few quarters as well. They also, Sean, came close to winning our Halloween contest. So we'll see next year if they can come in first in the Halloween contest. So, kudos to them.

That's great. And then maybe just on the revised guidance, if we take—I guess the low ends for both revenue and EBITDA, the $2.695 billion and the $374 million—that would imply Q4 would be down sequentially. Just any context, Matt, you can kind of share. Is there anything seasonality-wise one-time in Q3 that would point to why that would be the case?