Cool. Let's do it. All right, last one for the day. Good afte rnoon again, and welcome to the 2026 Jefferies Healthcare Services Conference. With us next for a fireside chat is Aveanna Healthcare, largest operator of pediatric home health services and also one of the bigger players in the home nursing space. Joining us this afternoon are Jeff Shaner, the company's CEO, and Matt Buckhalter, the company's CFO. Guys, thank you so much for doing this, really appreciate it. Jeff, state of the union, crushed the quarter in Q2, let's start with that, and how are you thinking about the back half of the year? Yeah. Thanks, Brian. By the way, we're going to crush this Tuesday afternoon session here, so we're bringing it home before the day ends. No, glad to be here, and like you said, coming off a strong first half of the year, definitely strong Q2. Not only the core business and how we think about the core growth rates in the businesses, but also, and I know we'll get into our long-term growth algorithm we updated, and really felt like we were at a place where we saw enough of the OBBA impact to our PDN business, as well as understood how states were thinking about their budgets. Company with, we'll talk about the home health final rule for 2025, the 2026 proposed rule, and then last but not least, I know we'll talk about California quite a good bit, but really getting the California rate increase effective 1/1/2027 was for us, the 32nd meaningful Medicaid state rate increase in 32 states. You take all of that just to say it was a good time to not only update guidance for the rest of the year, but also to really think about the long-term growth algorithm as we go into 2027 and beyond. Second half of the year, I know Matt will get into it in a little bit, but continue the same. Continue to execute on the preferred payer strategy, continue to execute on our state government affairs, be efficient, effective, generate free cash flow, and continue to deleverage is going to be our story for the rest of the year. Matt, since he called you out. We got to ask you the next question then. When I think about the decision to raise the LRP this early or mid-year, what went into that decision to say, "This is the right time to do this"? Yeah, that's a real good question, Brian, and I think a lot of it really came down to how we felt about the OBBA once that came through. This time last year when things started hitting, we were cautious. We were just saying, "Is there going to be friendly fire that happens in this one? Are we going to get clipped by something accidentally that comes through a state? Is there going to be pressure in these state Medicaid budgets and these programs that are put into place?" Even at the beginning of the year, we downplayed what we thought our state rate wins would end up being. We said, "Hey, guys, mid-single digits, historically be on the high single digits to double-digit state rate wins." We thought, "Hey, let's just be extra cautious and see how things end up progressing." Through the first half of the year, we had seven state rate wins. We've got a line of sight to a few more here in the back half of this year. We've signed seven additional preferred payers this year, and we've got some more lined up for H2 as well. It's really just business as usual. It's the multi-year strategy of our preferred payer model, our government affairs model. There's no difference to it, and we obviously support the idea of eliminating fraud, waste, and abuse. That's going to be great. That's a phenomenal thing. Keep going and get as much as you can, because those good providers who provide great clinical outcomes and have good care, they're going to end up winning at the end of the day here. We're feeling that, and that's the reason it gave us confidence to just move our long-range projections up. It's what we're experiencing right now. It's what we've also been producing the past few years. Let's stick with it and continue just the business as usual. I want to point out home health and hospice. It is one of our smaller segments, and it is about 12% of our total revenue and approaching $300 million in annualized revenue. Our home health and hospice, Matt always talks about how proud he is of our team. They have been outpacing the market in growth. We are in the 15%-16% organic revenue growth in that business, really driven by double-digit volume. It is all organic. The team has done a great job, and we just felt like, as you know, Brian, we have been waiting for stability with CMS related to home health. We thought we saw it in the final 2025 rule. We wanted to see the proposed rule play through, and I think many people in the home health industry are taking a deep breath of like, "Okay, things are going to be okay, and the future is going to be better." That tied together with just the growth rate that we are experiencing felt like, to us, the right time to update both PDS and home health and hospice. I will table that discussion for the next few minutes, but I will just go back to Matt really quickly. When I think about the building blocks of the LRP, if you can walk us through, Matt, how you think about that, so that when investors back test the growth algorithm, we have a better understanding of it. We updated the idea of our PDS segment from 3%-5%, to 5%-6%. Obviously, we have been doing that for the past couple of years as well. We have done a great job of rebalancing where our reimbursement structure is. California was, I imagine we will talk about that here in a second, Tank was the 32nd out of 32nd state in the Medicaid side of it, that now we can compete. Now we can actually go to work every day. It is never going to be easy. To say that it is going to be easy, it is not. But now we can compete in every market and every state that we provide services in. That was a nice step for us. But going forward, it is not going to be the chunky 20% increase, 30% increase, but it is going to be a COLA type adjustment. It's going to be seven, 10 states a year that are 4%, 7%, 8%, 10%, and every once in a while, you have one that comes out of left field like we did with Wisconsin this year, a 38% increase that came out of nowhere. Those are great, but now we've gotten to a place where we can just compete consistently. So what that's going to equate to is a 1.5%, maybe up to 2% rate on the PDS side of it, with the majority of it going to be volume. So it's going to be a volume play for it. Demand for services, as Jeff always likes to say, will continue to outweigh the supply of caregivers. But these COLA type adjustment rates will allow us to continue to grow our volume pretty consistently. I would tell you that on the home health and hospice side as well, just with the proposed rule coming out, not having parentheses around it for the first time in a while is very refreshing. That 5% to 7%, taking it to 8% to 10%, we'll continue to most likely outperform that, but we felt very confident with 2% plus of that being rate or 1% to 2% of that being rate, and the majority of that continuing to be volume. Medical Solutions, I think we just felt at this point, just keep Medical Solutions consistent, 8% to 10%, smallest division we have. We've been very pleased with how the modernization efforts played out in 2025 and really 2026 in that business. It's just starting to hit its sweet spot again. I think you'll see us pushing double digit revenue growth in Medical Solutions sooner versus later, but we just felt like for now, 8% to 10% made sense in that business. Matt, maybe just to double click on the COLA comment that you made, right? When I think about the last five years, you've had success getting these one-off adjustments, although they all compounded, and there were 32 of them at the end of the day. Yeah. Are we now at that moment where it is like the expectation is an equal number of these are going to give you rate increases because now we are the four-year mark of whatever that was from 2022? Is that the right way to think about that? That is the exact way to think about it. Think about it just being, we are not going to go back to the well every single year and ask for it. You shouldn't, especially after somebody makes a significant investment into you. We go back, and we go back with numbers. The numbers we say is, "You invested X, we saved you Y. Look at the savings that we were able to provide you." That is really meaningful and impactful that you are not going out with your hand out every single time. It is pretty easy to get there with a 10x savings for every day that you have in the home as opposed to being in the hospital. That is significant. We will do that for a year, maybe two, but in that third one, we are coming back saying, "Hey, guys, it is probably time. It is probably time for that 6%, 8%, so we can keep up with caregiver wages and wage inflation." Previously, the industry wasn't driving this consistently. Now it is us and some of our peers in states as well that are doing this and driving it together so that we don't go through an eight to 10-year hiatus period, where the last four of that, you are kind of dying on the vine out there. As much noise, there is a lot of Medicaid noise. We all know that. It has been going on for almost 18 months. With as much noise out there, we tell most of our investors, "Just cut through the noise. Focus on what the actual results have been." The best indicator of future results is what is happening right now. Matt said it well. We are going to end this year somewhere around nine or 10 state rate increases. That does not include the California 2027. Most of them are 3%, 5%, some 7%, so they are all mostly single digit. Wisconsin was a pleasant surprise. That is cutting through the noise, and it is, I almost don't want to use the word easier. It is getting more efficient to tell the PDN story, even to state legislatures and governors. They really do understand the idea of the savings. They also understand nurse wages, that nurse wages need to be competitive in all healthcare settings, not just hospitals or health systems. We have found that conversation to be more and more efficient over time, and it gets less harder. You are pushing the rock uphill less harder, and the momentum of that is starting to roll in our direction. Jeff, is that just validation at this point of the value prop? I think so. I think it is the reality of the MCO leaders got there quicker, as you all expect. They understand the P&L impact of a $5,000-a-day patient versus a $500-a-day patient. They get it, and they want to solve that problem immediately. Our MCO partners, we just continue to push us for more and more capacity. The state legislatures and governors, they just take more time. They take a year or two. I will go on record, they are a lot faster than the federal government. I will say what takes 10 or 20 years to get done in the federal government, you can get done in a year or two or three at the state-by-state basis. We have found the states, California was probably the hardest state for us to move. They have some big macro problems that they are dealing with. But 32 for 32, we would love to see ourself over the next couple of years in about 40 PDS states. We are in 32 Medicaid states today. We would like to fill in about another six to eight states. We think more states means more opportunity to continue to show that value proposition. Maybe I'll go back to one word that Matt used, or phrase. "We're now able to compete. Yeah. You and I had this conversation after the California rate was announced. Wow, what does that exactly mean? How does that translate to your business on a day-to-day basis? Yeah. Whether we use Georgia, Massachusetts, Oklahoma, there's a bunch of examples over the last three years where Medicaid was still the payer. So take Georgia, like California, where our PDN services are still paid by the Medicaid system, not through an MCO, and the rate had gotten stale over a 10-year period. Georgia hadn't done a rate increase in, I think, 11 years. So it's almost impossible to win at any level. There's no MCO partners in that state because the patient population's still with Medicaid, and you just find yourself being stale. You really cannot compete. As you try to help families that are in hospitals, you're honest with them. You're like, "We probably will not be able to find a nurse. If we can, it might take us months." So no one is winning, and that's what we have felt in California over the last four and a half years. The last rate increase in California was July 1st of 2018, almost eight and a half years ago. It worked for about three years, and then COVID hit, and then the California rate has been stale. Our business in California has suffered, like all PDN businesses, for almost five years. We can see the light at the end of tunnel now, and we've talked openly about our intent to pass wages through to our current nurses and caregivers who recently left us over, of course, last year between October and December to get the ramp moving. The very first thing we want to do is to get the fill rate that we currently provide in the state up to a higher percentage. We've dropped almost down to about roughly 50% of our hours are actually being staffed that were authorized. That's very low for us. So the opportunity to get those Nurses that are currently working paid a higher wage, even before the rate increase goes into play, is our goal and our focus for Q4. We'll then start applying new wage rates and recruiting and starting in January to really try to pull through new patients, because there are a tremendous amount of. Unlike Georgia that has one children's hospital in Atlanta, California has almost 10 children's hospitals. So there's a lot of work to be done between us and our peers to pull these patients through. Seven, eight, nine months from now, we will be talking about hundreds of families that have been pulled through the hospital in a great way to the home, new nurses being hired. We'll be focused on Aveanna, but our peers will be doing the same thing, which is really cool. So, in a good way, we'll hear a sucking sound in these children's hospitals with these kids going home, which is going to be pretty cool. Then you're going to have families that mom and dad have been filling basically 18, 20 hours a day of around-the-clock care for these children. Having nurses in the home for eight, 10, 12 hours a day, allowing them to sleep, go to work, get out of the home. So everyone wins when something like California happens, and we're excited to be a part of it. That's amazing. Preferred payer agreements. That's obviously been a driver the last few years. How are we thinking about the remaining runway for that? Yeah. You used to ask me what inning we're in. You're always good about baseball analogies. What inning we're. By the way, go Braves. We're high on the Braves in the final few weeks of the season here. We think we're mid-innings, sixth, seventh inning, I'll call it. We're in a level of maturity at this point, so we're no longer introducing the preferred payer conversations. We're now into, like, "Hey, we worked together in four states, and we have payers pulling us across to new states." "Hey, can you help me in Ohio? Can you help me in Tennessee?" To other areas. Which is really a pretty cool part of the maturation of these relationships. We're starting to hit census levels of 40%, 50%, 60% of the census of our partners in certain states. Where we started at 10%, 15%, 20%. We report 37 preferred payers in PDS division. Almost 65% of our volumes are now aligned with those preferred payers. That started in the high 20s, low 30s. We've effectively doubled the opportunity, and we think that runway has years in front of us to move 60s into the 70s and 80s percent. We're also excited about filling in some of those key states we talked about, like Tennessee and Kentucky and Michigan and Ohio. We think that's an important part of our geography that opens up all new opportunities for us with our preferred payers. Matt would be disappointed if I didn't talk about value-based for a second. Even though it's a small percentage part of our total reimbursement, it's less than 1%, we've been pushing $20 million a year in value-based payments. It's just an important part of the relationship with the payer to validate that we're bending the cost curve. Most of our value-based agreements are tied to the health benefit ratio percentage of our patients. If we're being paid a bonus, we're being paid a bonus because we've saved the system money in totality, even with our economic spend. I think we've learned a lot over the last four years. We still have a lot of runway left in this, and I'm incredibly excited. I'm as excited today as I was three and a half years ago when we signed our first agreement. Since you flagged value-based care, just really quickly on that, why is that not gaining more steam within the payer community? I think we're being thoughtful around the idea of value-based care in there, and data's only- You're the limiter, and it's not them. I wouldn't say that. I think both sides are being Okay thoughtful in the idea of what this actually means and what you can actually prove and how you can actually prove those savings themselves. I think we're also educating each other throughout this process. It's not just one side saying, "Hey, here's the data," and it's not the other side saying, "Hey, here's what we expect to get paid." It's sitting across the table from each other once a quarter and saying, "All right, guys. Here's where our census is sitting. What do you guys have? What is the fill rate looking like? Here's what our total cost of care is looking like. How can we get this down? By the way, I've got a couple problem patients in here." Because you're talking about the most expensive of the most expensive patients in America right now. Hey, here are some ones that are really being an issue for us. How do we actually fill those or fix these problems to actually stop this bleed that happens?" I think everybody's learning together, and there's been some times in the conversation being like, "Hey, guys, let's dive into this a little bit deeper." We're like, "We're a little bit farther away from that than we think." And vice versa on the other side. I think as we're learning together, it'll continue to evolve and to continue to be more and more. And it gives us an opportunity to win and for them to win. When we go back to them, it has been two and a half years or three years with a preferred payer agreement, and it is just an enhanced rate that we have. The next conversation can always be, "Let us talk about value-based care in here." Instead of us saying, "Can we get another $1.50 an hour or $2 an hour?" "If we save you more money, can we share in those savings?" That is such an easy conversation to have. It always lags two-ish years. Part of that is we want to learn. Part of it is we want to get better in that process and take those dollars you invested into us and invest them into caregiver wages. By doing so, that is when you see that bend actually start to happen, and that is when we can go back and have that little bit of a softer ask to start this conversation. Some of our payers we work with, Brian, also have been burned on value-based. At the end of the day, we are a small ecosystem in total in dollars, and they have been burned on some physician value-based or pharmacy. We find as much as they want, we both want to talk value based. At the end of the day, they have got scar tissue. Again, because it is upside only for us, we do not take the downside risk. We are also thoughtful that they are not going to put tens and tens of millions of dollars into a single contract. Also, the last part Matt said, and I agree with, so much of the reimbursement is eaten up in wage. We generate less than a 30% gross margin in our PDS, our largest business. There is not a lot of room left there on the reimbursement wage metric. That is the biggest driver of how we hire. At the end of the day, I think that is where we start every relationship is still around reimbursement and wage. Makes sense. I'll shift gears here a little bit. Capital deployment. I think the first time I met you were in the home nursing business way back. Curious, how are you thinking about, as you said earlier, the reimbursement outlook is very different today, or it feels different today. Is that changing your mindset in terms of how aggressive you want to get in the home nursing side? Yeah. I think when we met, we were in the 80s, so I don't know how old we were, but it was a long time ago. Too long ago. We've been a big proponent of home health for a long time, to your point. We were big on home health even in the last six years as the rate was declining. We do believe that the trough is there. We think we've turned the trough. We wish we had acquired more while we were still trading down because we see multiples starting to move up. But we're big on home health. We are not a hospice acquirer of size and scale because the multiples in hospice, we've said that many, many times. We believe in hospice, we believe in the hospice benefit, but we are an aggregator of home health. Matt talks about it all the time. Our home health and hospice team is doing phenomenal, producing mid-double digit growth, great clinical outcomes, great financial outcomes, collecting our cash, all the things you want. Accelerating that growth means a lot to us. We tell people we're in 15 states in home health and hospice, but we're really relevant in six of those 15 states. We are a regional provider of home health and hospice, filling in the Southeast and filling in what I'll call Mid-America is important to us, and one day, bringing those geographies together. Matt's done an incredible job with our team of cleaning up our balance sheet, getting our balance sheet in great shape. We're producing meaningful cash flow. We are preparing ourselves for tuck-ins, medium-sized platforms, and larger size, home health driven geriatric care. I do think after two great years of Thrive Skilled Pediatric Care and then Family First Pediatric, it's the right time for us to generally pivot into the geriatric M&A growth. Yeah, and I'd just add on top of that, free cash flow generation's been so great for us. Our de-leveraging story's been phenomenal over the last three years and being a sub 4x leverage and with a goal of being sub 3x leverage, sooner than later. We have a clear line of sight to get there, which is phenomenal, but $75 million free cash flow generation front half of the year. Expect pretty similar things in the back half of the year out there as well. So to be pretty consistent with that at the end of the day. But keeping that free cash flow, putting that to use, growing our business organically, but also inorganically, while just being conscious of our leverage at any given time and having that ultimate goal to get to sub 3x. You stole my line because I was going to give you credit for the- Thank you. The de-leveraging of the balance sheet. Thank you. No, but maybe just to double click on this. When you think of the opportunity set, Southeast, Middle America, valuation sensitivity, if you can walk me through how you're thinking about the markets. Yeah. We're open to everything from true tuck-ins, one, two locations, which actually there's a tremendous amount of activity in incoming CIMs and opportunities. We're also open to platform changing, things that will meaningfully change us, from a platform standpoint. We think of post synergy, right? We think less of what is pre-synergy multiples. We think of post synergy. We'd like to be in the, I'll call it sub 8x post synergy. Anywhere between 6x and 8x post synergy to us makes a ton of sense. We would buy up to buy the right platform changing, so the right geography, the right asset. I was recently at a panel at the HHCN Future Conference and talked about what's the single greatest driver of M&A strategy. It still is just a well-run business. It's not about how much money they make, what their EBITDA margin is. It's just like, do they run a great business? Do they have a great culture? Are they clinically sophisticated? That's really what we're looking for, and it's what you're paying for. No one likes paying 10x or 11x pre-synergy and then end up getting a business that was not clinically sound. You want to buy a great business. So we're really focused on great quality businesses, but we realize the multiples in this business are going up. Again, I focus on hospice. We've seen hospice deals trade in the 12x-15x. That's not where we are. We're not a buyer at those places. We don't trade for that, unfortunately, as a company. We appreciate your help in covering us, but we don't trade there. We are very disciplined on making sure that on a post synergy basis, we end up in that 7.5x, and certainly with operational efficiencies, get below seven. We are excited to be in the home health acquisition business, and we think the next three-five years, we will acquire a significant amount of home health and hospice. Jeff, one of the successes you have had is maintaining payer mix in that business, which a lot of your previously public peers struggled with. Is that a filter, and how do you strategize around that? Yeah. I would say I like companies who do not have what we have. We like to fix those things once we acquire. To your point, we are just above 80% episodic. That is a great mix of both traditional Medicare, but also, Matt reminds people- 50 we have 50 preferred payers in that business, and 49 of them are not Medicare, right? They are Medicare Advantage. We have a tremendous amount of Medicare Advantage partners. We have found the last three years it is getting, I hate to use the word easy, but it is getting more efficient to negotiate episodic contracts with Medicare Advantage. They are coming around. Their systems can adjudicate to that. We stay focused on that to your point. But I like companies that are in the mid-40s gross margin or have sub 70% episodic because that is what we get to fix. That is what we get to improve. As you know, we have an incredibly disciplined approach to growth. That is just two of the levers that we pull. Ultimately, we are trying to drive a great clinical outcome with a great financial outcome. Yeah. I would just say it just works at the end of the day. The episodic agreements just work. Our caregivers are not having to run around after four PT visits and saying like, "They really needed 16 over here," and a mix of OT and PT that is in there. You are not chasing authorizations at that point in time. You are getting paid $3,000 for 16 visits over a 60-day period and getting great clinical outcomes. You are preventing hospitalizations. Star ratings are getting up there. Not only do we get a good financial outcome, they get better clinical outcomes. That is saving them dollars at the end of the day, too. With 50 episodic agreements in place, to Jeff's point, 49 of them which are not Medicare, we are doing what is right for our patients. We go back, we are comfortable if the 80% of episodic slip back to 77%, 78%, 76%. Anything above 75% is our goal. We do not think we will see a materially uplift from this 80%, 81% we are at today. We could stay in the low 80s, but do not necessarily see that growing to 85% or 90%. I think that is probably a little bit high. We see our peers today. We do think other home health predominant companies are also doing what we are doing because we do not think we are alone anymore in this strategy, which we appreciate. Actually, the more people doing it, the easier it gets in this space. We love the opportunity to fix businesses, both operationally and from a growth standpoint, and have no problem acquiring a business that is materially different than that. Matt, I have gone off script this whole time, so now I need to go back to the script. One of the questions that we had for you was, as we think about the guidance for the back half of the year, or the implied back half of the year guidance, where are the "conservatism points" or assumptions in that guide? Well, thank you for the conservatism statements out there, Tank. 14 out of 14 quarters in a row of beating and raising guidance, or 14 straight, is something we are proud of, and was a significant step up in Q2. I would tell you the back half of the year is going to look a lot like the front half of the year. We are going to have additional state rate wins. We are going to have additional preferred payer contracts. We are going to have great cash collections that is helping to drive our gross margins and drive our EBITDA percentages. Automation is going to continue to play out in our organization, whether it be on the RCM side or some of our staffing sides to continue to leverage overhead out there. I think it is just part of the same that you currently are seeing. A well-run organization that is still hungry, that still wants to win, but looks for areas to get better every day. All I have got to add to that is just putting Family First to bed. Meaning, we are in the meat of the field integration as we speak today, what we call overlap markets. We would like to put that to bed here in the next 100 days and end the year with the field-facing integration, clinical integration being done. Matt always reminds me, our AR runs off over the course of the next year. That is normal. He forgets about that. He just gives it to us and says- I love forgetting about that. Hey, you guys just go deal with that. But getting the integration done so we can move on to the next opportunity, I think it is important. All right. Just one last off the script. Free cash flow guidance. So $150 million. So there is a little bit of acceleration in the back half implied. Not a lot, but just curious how you are thinking about that. Pretty consistent from where we are. Q1 is a little bit of our seasonality period, just with, we have to get some of our authorizations put in, bill for denial. So it just extends your DSO by a little bit up in Q1. You get a lot of those collections in Q2. Q3, split that in half and say, hey, it is going to look consistent. A little stronger in Q4, just with some seven-one timing from some states and things that occur. But pretty clean that we expected. We are doing a phenomenal job through automation in our RCM department. We have been able to leverage that significantly. All three of our divisions have never had lower DSO. All three of our divisions have never had this low reserve rates as well. So top to bottom on our cash collections or RCM cycle, we are doing a phenomenal job. I'll add, as you said about conservative, I know this. If Matt tells you $150 million, it's definitely a beat coming to that number. So the conservative nature of the CFO is a great thing. We've learned to love it. As Matt said, for us, it's consistency of the story. We did try to bleed out as much of the upside in Q2 as we thought was appropriate. So we tried to be more aggressive when we did the guide update, both in revenue and EBITDA. As you said, we've gotten comfortable with this beat and raise mentality, and I think as you think about Q3 and Q4, it will be similar results. That's awesome. All right. We've got 50 seconds left, Jeff. I know you've got a flight to catch, but any parting words for the audience in terms of what is underappreciated about the Aveanna story or things that they need to focus on? I think sitting here last year, I would've been a lot more bullish on, "Hey, you're missing this, you're missing that." I think the investment community's caught up to Aveanna. We don't have to tell our story anymore. People are hearing the story, and we still appreciate the opportunity to go out and do this every day. I'd say this, we love what we do. We love caring for people in their home. We love making a difference. We appreciate our peers. We know we can't do this by ourselves. We appreciate our peers. We come to work every day. Matt said it, I agree. We come to work every day hungry. We're never satisfied at Aveanna. We're always striving to be better. We stay disciplined on the five or six things that we think drive our business, and at forefront, the preferred payer strategy and government fair strategy has led us over the last four years. It will continue to lead us for the next three to four years, and we think the best days are still in front of Aveanna, so we're excited about our future. Awesome. Thank you, guys. Thanks, Brian. Appreciate it.