Aveanna Healthcare Holdings Inc. (AVAH): what the price requires

At today's price, Aveanna Healthcare Holdings Inc. (AVAH) is priced for +7.5% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/AVAH

Headline

FieldValue
TickerAVAH
CompanyAveanna Healthcare Holdings Inc.
Current price$9.65/sh
CompositionPrivate Duty Services 82% / Home Health & Hospice 10% / Medical Solutions 8%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed2.6%
Operating margin today10.5%
Margin compression implied-7.9pp
Implied growth7.5%
Multiple paid13x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 10.1% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5.6pp.

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
cohort percentile (of 113 peers)18
implied end-window share0%

Valuation X-Ray

The price is supported by asset-based and relative-multiple and growth-DCF value, while earnings-power lands below the price. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset0.76x5justifies
Earnings5.21x5expensive
Relative0.64x5justifies
Growth0.73x2justifies

Families that justify the price: Asset, Relative, Growth Families that call it expensive: Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.5%); the inversion above states its own rate.

Per-Model Detail (n=17)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
DCF Exit MultipleGrowth$16.620.58xyesExit EV/EBITDA: 9.6x / 11.6x / 13.6x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$15.010.64xyesP/E 14.08x (blended: static sector reference 18x + trailing (TTM) 8x), scenarios: 11.5x / 14.1x / 16.7x (bear / base = reference held flat / bull), EV/EBITDA 12x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$12.730.76xyesBV/sh $1.08, ROE (TTM) 108.9%, ke 9.3%
Two-Stage Excess ReturnAsset$102.350.09xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$11.010.88xyesRev $2.5B, growth 21% (input: historical growth; tapered), Terminal P/S: 0.7x / 0.8x / 1.0x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$14.520.66xyesEPS $1.21, growth 2% (input: historical EPS growth), PEG=4.09 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$1.855.21xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.11B × (1−7%) / WACC 6.4% → EPV (no growth)
Residual IncomeAsset$21.570.45xyesBV $1.08 + 5yr PV of (ROE (TTM) 108.9% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$5.421.78xyes√(22.5 × EPS $1.21 × BVPS $1.08) — Graham's conservative floor
EV/EBITDA RelativeRelative$10.170.95xyesEBITDA $0.28B × sector EV/EBITDA 12.0x
FCF YieldEarnings$1.536.30xyesFCF $138.8M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$0.6415.07xyesSBC-adj FCF $0.12B (FCF $0.14B − SBC $0.02B) capitalized at Kₑ
Ben Graham FormulaEarnings$39.040.25xyesEPS $1.21 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$0.7712.53xyesBV $1.08 × (ROIC 4.6% / WACC 6.4%)
P/Sales SectorRelative$28.390.34xyesRevenue $2.52B × sector P/S 2.5x
PEG Fair ValueRelative$45.380.21xyesEPS $1.21 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$13.080.74xyesEPS $1.21 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$1.1b
Net debt / NOPAT (after-tax)4.78x
Net debt / operating income (pre-tax)4.43x
Interest coverage1.9x
Share count CAGR (dilution)4.6%
Burning cashno

Bullet Takeaways

Bull Case

The single metric that flips the Aveanna verdict is the preferred-payer mix, and it is moving decisively in the company's favor. Private-duty nursing is a business where the rate paid per hour of care is everything, and for years Aveanna was a price-taker stuck with low Medicaid managed-care rates. The turnaround has been to negotiate preferred-payer agreements that pay better in exchange for steering volume. At the end of the first quarter of 2026, 34 preferred payers represented about 60% of managed-care volume, up from seven payers and roughly 15% at the end of 2022, and management believes it can reach 80% to 85%. That mix shift, plus state rate wins, lifted private-duty revenue per hour to $44.43, up nearly 6% year over year, which on a high-volume, low-margin business is the difference between losing money and making it.

The results show the operating leverage that mix shift creates. First-quarter revenue grew 15.9% to $647.9 million, with all three segments growing, and adjusted operating earnings rose 25.2% to $84.4 million, far faster than revenue, because the incremental revenue per hour drops through at a high rate. Net income jumped to $41.7 million from $5.2 million a year earlier. Demand is not the constraint, the need for in-home care of medically complex patients is large and growing, so when Aveanna improves the rate it earns per hour of care it already provides, the profit follows directly.

The balance sheet, long the bear's strongest point, just got more workable. Aveanna refinanced its debt in late 2025, extending its roughly $1.325 billion of first-lien term loans to 2032, repaying its more expensive second-lien debt, and cutting its interest margin, with room for a further reduction if its credit rating improves. That pushes out the maturity wall and lowers interest cost, exactly what a leveraged turnaround needs to let the operating improvements reach equity holders. On valuation, most of the standard methods land well above today's $7.78 (June 27, 2026), marking this as a value-supported name rather than a stock priced for optimism. The bull case is a leveraged but improving home-health operator whose preferred-payer strategy is structurally lifting its economics, with a refinanced balance sheet buying time and a price below where the methods say the earnings belong.

Bear Case

The disconnect to lead with is qualitative, not arithmetic: Aveanna is a thinly capitalized, heavily indebted company whose revenue depends on government payers it cannot control, and the recent improvement has been driven by a rate cycle that may be near its peak. The leverage is the structural fact. The company carries roughly $1.32 billion of gross debt against an interest-coverage ratio of only about two times, which leaves little room for error: a leveraged operator in a low-margin business is one bad rate cycle or one demand shock away from its interest burden swamping its operating profit. The refinancing helped the maturity profile, but it did not reduce the debt; it extended it.

The payer dependency is the exposure that no operating improvement can fully offset. A large share of Aveanna's revenue comes from Medicaid and Medicare, and the 10-K is direct about the risks, including "a reduction of funding for states choosing to expand the state's Medicaid program, and updated eligibility requirements for Medicaid beneficiaries, which include more onerous" conditions. State and federal budgets are under pressure, and a home-health company is a soft target when legislators look for savings. The preferred-payer wins and state rate increases that powered the recent results came after several years of favorable rate actions, and management itself has signaled the rate environment is now more stable, shifting focus to wage adjustments, which is a polite way of saying the easy rate gains may be behind. If rates flatten while wages keep rising, the spread that drives the turnaround compresses.

Labor is the other ceiling. The entire business is delivered by nurses and caregivers, and the industry faces a persistent shortage of them; Aveanna can only grow as fast as it can hire and retain qualified staff, and wage inflation for those workers eats directly into margin. The 10-K names "intense competition among home health, hospice" and durable-medical-equipment providers for both patients and staff. On valuation, the methods are mixed in a telling way: the relative-multiple and asset-based methods say the stock is cheap, but the earnings-power methods say it is expensive, because the company's normalized through-cycle operating profit is far lower than its recent peak. That split is the warning, the stock looks cheap on current earnings and the rate cycle that produced them, but if those earnings are a cyclical high rather than a durable base, the cheapness is illusory. The bear case is that you are buying a leveraged, government-dependent, labor-constrained operator at what may be a rate-cycle peak, with the debt magnifying any disappointment.

Valuation

Aveanna screens cheap, and the methods mostly agree, but the disagreement among them is the whole story. At $7.78 the stock trades at roughly 11 times company-wide operating income, and the price embeds only about 2.5% annual operating growth, an undemanding bar that the framework reads as broadly within range. The relative-multiple methods, applying a healthcare-services sector multiple, land in the mid-teens, well above the price, and the asset-based methods land above it too. On those lenses Aveanna is inexpensive.

The earnings-power methods tell the cautionary half. They land below the price, because the company's normalized through-cycle operating profit, averaged over recent years that included far weaker results, is much lower than its current peak earnings. That is the crux of the valuation: the relative and asset methods credit the recent, rate-cycle-boosted earnings, while the earnings-power methods anchor on a longer-run normalized figure and conclude the stock is expensive against that. The reconciliation is a judgment about whether the preferred-payer mix shift and the rate gains represent a permanent step-up in the company's earning power or a cyclical high. If the higher revenue per hour proves durable, the relative methods are right and the stock is cheap; if it is a peak that flattens or reverses, the earnings-power view is the honest one. The high return on equity, over 100%, is not a sign of exceptional quality here; it is the arithmetic of a thin equity base under a large debt load, and it should be read as leverage, not as franchise strength.

Solvency is where the bet carries the most risk and deserves the most attention. Aveanna carries roughly $1.32 billion of gross debt against about $189 million of liquid assets, with interest coverage of only about two times on current, peak-cycle operating income. The late-2025 refinancing extended maturities to 2032 and lowered interest cost, which materially reduces near-term refinancing risk, but the absolute debt load remains high and the coverage thin. The share count is also growing about 5% a year. The buyer at today's price is making a leveraged bet that the preferred-payer and rate improvements are a durable step-up rather than a cyclical peak; if they are durable, the debt amplifies the equity upside, and if they are not, the same debt amplifies the downside. Published analyst targets sit modestly above the current price, in the $10 to $11 range, crediting continued execution on the payer mix.

Catalysts

The first quarter of 2026 drove a guidance raise. Revenue grew 15.9% to $647.9 million, net income jumped to $41.7 million from $5.2 million, and adjusted operating earnings rose 25.2% to $84.4 million, with growth across all three segments led by private-duty services up 16.4%. The engine was the rate-and-mix improvement: private-duty revenue per hour reached $44.43, up nearly 6%, on a rising share of preferred-payer volume, now about 60% of managed-care volume, and three new state rate wins, with management expecting mid-single-digit state rate enhancements for the year. On the strength of it, Aveanna raised full-year 2026 guidance to revenue of $2.56 to $2.58 billion and adjusted operating earnings of $328 to $332 million. Each quarter's progress on the preferred-payer percentage and the state rate calendar is the catalyst that matters.

Two structural developments frame the longer arc. The company completed the acquisition of Family First Homecare and updated its outlook, continuing a tuck-in growth strategy, and it executed a major debt refinancing in late 2025 that extended its term-loan maturities to 2032, repaid its second-lien debt, and cut its interest margin, easing the balance-sheet pressure that has long shadowed the stock. The persistent risks to monitor are the Medicaid funding environment and the caregiver labor shortage, which together cap both the rate and the volume the company can capture. Analyst sentiment is constructive, with a consensus that skews to buy and price targets modestly above the current level, reflecting confidence in the payer-mix execution tempered by the leverage and payer-dependency risks. The next earnings report and the pace of preferred-payer conversion are the events that will confirm or challenge the turnaround the price is paying for.

Peer Cohorts (Per Segment, With Filing Citations)

Private Duty Services (reported)

Home Health & Hospice (reported)

Medical Solutions (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 FY2026 results, May 2026 · company refinancing disclosure, 2025 · analyst consensus, Zacks / TipRanks, 2026 · company disclosures, 2025 and 2026

View the full interactive AVAH report on boothcheck