agti-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


x			Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2024


o			Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to

Commission File Number: 001-40361

AGILITI, INC.

(Exact name of registrant as specified in its charter)


Delaware	11095 Viking Drive	83-1608463
(State or other jurisdiction of	Eden Prairie, Minnesota 55344	(I.R.S. Employer
incorporation or organization)	(Address of principal executive offices, including zip code)	Identification No.)

(952) 893-3200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.0001	AGTI	The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Number of shares of common stock outstanding as of May 2, 2024: 136,293,374


		Page
PART I - FINANCIAL INFORMATION		1

ITEM 1.	Consolidated Financial Statements (unaudited)	1

	Consolidated Balance Sheets — March 31, 2024 and December 31, 2023	2

	Consolidated Statements of Operations — Three months ended March 31, 2024 and 2023	3

	Consolidated Statements of Comprehensive (Loss) Income — Three months ended March 31, 2024 and 2023	4

	Consolidated Statements of Equity — Three months ended March 31, 2024 and 2023	5

	Consolidated Statements of Cash Flows — Three months ended March 31, 2024 and 2023	6

	Condensed Notes to Consolidated Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	24

ITEM 4.	Controls and Procedures	24

PART II - OTHER INFORMATION		27

ITEM 1.	Legal Proceedings	27

ITEM 1A.	Risk Factors	27

ITEM 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	28

ITEM 5.	Other Information	28

ITEM 6.	Exhibits	29

Signatures		30


	March 31, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	5,373	$	20,037
Accounts receivable, less allowance for credit losses of $4,295 as of March 31, 2024 and $6,236 as of December 31, 2023	246,344		215,684
Inventories	86,006		74,484
Prepaid expenses	17,327		20,231
Other current assets	8,334		7,307
Total current assets	363,384		337,743
Property and equipment, net	295,693		292,684
Goodwill	1,239,432		1,239,432
Operating lease right-of-use assets	76,804		78,157
Other intangibles, net	411,810		430,002
Other	21,149		20,926
Total assets	$	2,408,272	$	2,398,944
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	26,281	$	18,468
Current portion of operating lease liability	25,362		25,603
Current portion of obligation under tax receivable agreement	1,862		12,796
Accounts payable	67,709		58,518
Accrued compensation	37,699		28,866
Accrued interest	21,363		21,451
Other current liabilities	35,902		30,906
Total current liabilities	216,178		196,608
Long-term debt, less current portion	1,059,377		1,061,062
Obligation under tax receivable agreement, pension and other long-term liabilities	9,723		10,467
Operating lease liability, less current portion	62,819		63,765
Deferred income taxes, net	120,142		126,219
Commitments and contingencies (Note 8)
Equity:
Common stock, $0.0001 par value; 500,000,000 shares authorized; 136,081,290 and 135,368,025 shares issued; 136,081,290 and 135,352,336 shares outstanding as of March 31, 2024 and December 31, 2023, respectively	14		14
Treasury stock, at cost; — and 54,256 shares as of March 31, 2024 and December 31, 2023, respectively	—		(419)
Additional paid-in capital	975,492		972,156
Accumulated deficit	(40,306)		(33,699)
Accumulated other comprehensive income	4,531		2,505
Total Agiliti, Inc. and Subsidiaries equity	939,731		940,557
Noncontrolling interest	302		266
Total equity	940,033		940,823
Total liabilities and equity	$	2,408,272	$	2,398,944


	Three Months Ended March 31,
	2024		2023
Revenue	$	302,751	$	299,904
Cost of revenue	203,542		190,530
Gross margin	99,209		109,374
Selling, general and administrative expense	84,025		88,837
Operating income	15,184		20,537
Interest expense	22,918		15,831
Income (loss) before income taxes and noncontrolling interest	(7,734)		4,706
Income tax (benefit) expense	(1,218)		1,656
Consolidated net income (loss)	(6,516)		3,050
Net income attributable to noncontrolling interest	91		37
Net income (loss) attributable to Agiliti, Inc. and Subsidiaries	$	(6,607)	$	3,013

Basic income (loss) per share	$	(0.05)	$	0.02
Diluted income (loss) per share	$	(0.05)	$	0.02

Weighted-average common shares outstanding:
Basic	135,664,208		133,850,124
Diluted	135,664,208		139,293,662


	Common Stock		Treasury Stock		Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Agiliti, Inc. and Subsidiaries		Noncontrolling Interests		Total Equity (Deficit)
Balance as of December 31, 2023	$	14	$	(419)	$	972,156	$	(33,699)	$	2,505	$	940,557	$	266	$	940,823
Net income (loss)	—		—		—		(6,607)		—		(6,607)		91		(6,516)
Other comprehensive income	—		—		—		—		2,026		2,026		—		2,026
Reissuance of treasury stock	—		419		(419)		—		—		—		—		—
Share-based compensation expense	—		—		4,513		—		—		4,513		—		4,513
Stock options exercised	—		—		1,150		—		—		1,150		—		1,150
Shares forfeited for taxes	—		—		(1,908)		—		—		(1,908)		—		(1,908)
Cash distributions to noncontrolling interests	—		—		—		—		—		—		(55)		(55)
Balance as of March 31, 2024	$	14	$	—	$	975,492	$	(40,306)	$	4,531	$	939,731	$	302	$	940,033

Balance as of December 31, 2022	$	13	$	—	$	953,046	$	(14,274)	$	7,343	$	946,128	$	197	$	946,325
Net income	—		—		—		3,013		—		3,013		37		3,050
Other comprehensive (loss)	—		—		—		—		(4,002)		(4,002)		—		(4,002)
Share-based compensation expense	—		—		6,727		—		—		6,727		—		6,727
Stock options exercised	—		—		469		—		—		469		—		469
Shares forfeited for taxes	—		—		(5,314)		—		—		(5,314)		—		(5,314)
Cash distributions to noncontrolling interests	—		—		—		—		—		—		(57)		(57)
Balance as of March 31, 2023	$	13	$	—	$	954,928	$	(11,261)	$	3,341	$	947,021	$	177	$	947,198


	Three Months Ended March 31,
(in thousands)	2024		2023
Equipment Solutions	$	116,692	$	120,866
Clinical Engineering	125,164		113,475
Onsite Managed Services	60,895		65,563
Total revenue	$	302,751	$	299,904


	Fair Value as of March 31, 2024
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Deferred compensation assets	$	3,629	$	—	$	—	$	3,629
Interest rate swap	—		4,664		—		4,664
Liabilities:
Obligation under tax receivable agreement	$	—	$	—	$	4,896	$	4,896
Deferred compensation liabilities	3,629		—		—		3,629


	Fair Value as of December 31, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Deferred compensation assets	$	3,390	$	—	$	—	$	3,390
Interest rate swap	—		3,140		—		3,140
Liabilities:
Obligation under tax receivable agreement	$	—	$	—	$	15,549	$	15,549
Interest rate swap	—		1,212		—		1,212
Deferred compensation liabilities	3,390		—		—		3,390


	March 31, 2024				December 31, 2023
(in thousands)	Carrying Value		Fair Value		Carrying Value		Fair Value
First Lien Term Loan (1)	$	1,054,070	$	1,062,940	$	1,056,253	$	1,070,973
____________________


(1)			The carrying value of the First Lien Term Loan is net of unamortized deferred financing costs of $7.0 million and $7.3 million and unamortized debt discount of $8.5 million and $8.8 million as of March 31, 2024 and December 31, 2023, respectively.


	March 31, 2024
(in thousands)	Cost		Accumulated Amortization		Net
Finite-life intangibles
Customer relationship	$	780,806	$	(371,283)	$	409,523
Non-compete agreements	1,225		(402)		823
Trade names	2,406		(1,263)		1,143
Patents	337		(16)		$	321
Total other intangible assets	$	784,774	$	(372,964)	$	411,810


(in thousands)	March 31, 2024		December 31, 2023
Raw materials	$	12,461	$	13,376
Work-in-process	494		400
Finished goods	73,051		60,708
Total inventories	$	86,006	$	74,484


(in thousands)	March 31, 2024		December 31, 2023
Medical equipment	$	461,293	$	450,564
Less: Accumulated depreciation	(293,678)		(285,139)
Medical equipment, net	167,615		165,425
Leasehold improvements	61,784		59,422
Office equipment and vehicles	207,932		200,560
	269,716		259,982
Less: Accumulated depreciation	(141,638)		(132,723)
Property and office equipment, net	128,078		127,259
Total property and equipment, net	$	295,693	$	292,684


(in thousands)
Remainder of 2024	$	53,399
2025	65,056
2026	58,480
2027	51,915
2028	45,159
Thereafter	137,801
	$	411,810


	Three Months Ended March 31,
(in thousands)	2024		2023
Interest cost	$	284	$	293
Expected return on plan assets	(345)		(358)
Recognized net actuarial (gain)	(20)		(47)
Net periodic benefit (income)	$	(81)	$	(112)


	Three Months Ended March 31,								Change
(in thousands)	2024				2023				$		%
Consolidated Statement of Operations			% of Total Revenue				% of Total Revenue
Revenue	$	302,751	100.0	%	$	299,904	100.0	%	$	2,847	0.9	%
Cost of revenue	203,542		67.2		190,530		63.5		13,012		6.8
Gross margin	99,209		32.8		109,374		36.5		(10,165)		(9.3)
Selling, general and administrative expense	84,025		27.8		88,837		29.6		(4,812)		(5.4)
Operating income	15,184		5.0		20,537		6.9		(5,353)		(26.1)
Interest expense	22,918		7.6		15,831		5.3		7,087		44.8
Income (loss) before income taxes and noncontrolling interest	(7,734)		(2.6)		4,706		1.6		(12,440)		N/A
Income tax expense (benefit)	(1,218)		(0.4)		1,656		0.6		(2,874)		N/A
Consolidated net income (loss)	$	(6,516)	(2.2)	%	$	3,050	1.0	%	$	(9,566)	N/A

SEC Form 10-Q filed by Agiliti Inc.