agti-20230930

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 September 30, 2023


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 October 31, 2023: 134,844,437

Table of Contents

Agiliti, Inc. and Subsidiaries

Table of Contents


		Page
PART I - FINANCIAL INFORMATION		1

ITEM 1.	Consolidated Financial Statements (unaudited)	1

	Consolidated Balance Sheets — September 30, 2023 and December 31, 2022	2

	Consolidated Statements of Operations—Three and nine months ended Sept ember 30, 2023 and 2022	3

	Consolidated Statements of Comprehensive Income (Loss) —Three and nine months ended Se ptember 30, 2023 and 2022	4

	Consolidated Statements of Equity — Three and nine months ended September 30, 2023 and 2022	5

	Consolidated Statements of Cash Flows — Nine months ended September , 2023 and 2022	7

	Condensed Notes to Consolidated Financial Statements	8

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	28

ITEM 4.	Controls and Procedures	29

PART II - OTHER INFORMATION		30

ITEM 1.	Legal Proceedings	30

ITEM 1A.	Risk Factors	30

ITEM 5.	Other Information	31

ITEM 6.	Exhibits	32

Signatures		33

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements — Unaudited

Agiliti, Inc. and Subsidiaries

Table of Contents

Consolidated Balance Sheets

(in thousands, except share and per share information)

(unaudited)


	September 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	30,386	$	5,577
Accounts receivable, less allowance for credit losses of $6,565 as of September 30, 2023 and $4,182 as of December 31, 2022	212,991		207,753
Inventories	79,195		70,132
Prepaid expenses	16,328		23,458
Other current assets	5,296		9,393
Total current assets	344,196		316,313
Property and equipment, net	284,035		273,958
Goodwill	1,239,432		1,239,106
Operating lease right-of-use assets	76,987		79,975
Other intangibles, net	449,826		512,020
Other	24,646		22,735
Total assets	$	2,419,122	$	2,444,107
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	18,883	$	17,752
Current portion of operating lease liability	25,106		23,607
Current portion of obligation under tax receivable agreement	11,144		34,694
Accounts payable	70,995		59,163
Accrued compensation	33,782		25,928
Accrued interest	21,185		5,039
Other current liabilities	30,605		31,198
Total current liabilities	211,700		197,381
Long-term debt, less current portion	1,059,347		1,077,293
Obligation under tax receivable agreement, pension and other long-term liabilities	9,468		9,161
Operating lease liability, less current portion	63,160		67,332
Deferred income taxes, net	130,964		146,615
Commitments and contingencies (Note 10)
Equity:
Common stock, $0.0001 par value; 500,000,000 shares authorized; 135,193,414 and 133,608,495 shares issued; 134,787,318 and 133,608,495 shares outstanding as of September 30, 2023 and December 31, 2022, respectively	14		13
Treasury stock, at cost; 406,096 and — shares as of September 30, 2023 and December 31, 2022, respectively	(3,761)		—
Additional paid-in capital	969,617		953,046
Accumulated deficit	(27,988)		(14,274)
Accumulated other comprehensive income	6,361		7,343
Total Agiliti, Inc. and Subsidiaries equity	944,243		946,128
Noncontrolling interest	240		197
Total equity	944,483		946,325
Total liabilities and equity	$	2,419,122	$	2,444,107

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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Agiliti, Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands, except share and per share information)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue	$	291,633	$	271,185	$	882,618	$	839,613
Cost of revenue	194,875		169,582		577,071		516,218
Gross margin	96,758		101,603		305,547		323,395
Selling, general and administrative expense	87,295		86,044		257,373		254,303
Operating income	9,463		15,559		48,174		69,092
Loss on extinguishment / modification of debt	82		—		4,527		1,418
Interest expense	24,274		12,531		60,654		34,456
Tax indemnification expense	—		11,918		—		11,918
Income (loss) before income taxes and noncontrolling interest	(14,893)		(8,890)		(17,007)		21,300
Income tax (benefit)	(2,271)		(10,879)		(3,507)		(5,672)
Consolidated net income (loss)	(12,622)		1,989		(13,500)		26,972
Net income attributable to noncontrolling interest	79		38		214		131
Net income (loss) attributable to Agiliti, Inc. and Subsidiaries	$	(12,701)	$	1,951	$	(13,714)	$	26,841

Basic earnings (loss) per share	$	(0.09)	$	0.01	$	(0.10)	$	0.20
Diluted earnings (loss) per share	$	(0.09)	$	0.01	$	(0.10)	$	0.19

Weighted-average common shares outstanding:
Basic	134,971,632		133,212,218		134,498,671		132,313,218
Diluted	134,971,632		139,062,813		134,498,671		138,242,880

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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Agiliti, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Consolidated net income (loss)	$	(12,622)	$	1,989	$	(13,500)	$	26,972
Other comprehensive income (loss):
(Loss) on minimum pension liability, net of tax of $10, $0, $29, and $0	(28)		—		(85)		—
Gain (loss) on cash flow hedge, net of tax of $(308), $(93), $312, and $(2,734)	892		269		(897)		7,953
Total other comprehensive income (loss)	864		269		(982)		7,953
Comprehensive income (loss)	(11,758)		2,258		(14,482)		34,925
Comprehensive income attributable to noncontrolling interest	79		38		214		131
Comprehensive income (loss) attributable to Agiliti, Inc. and Subsidiaries	$	(11,837)	$	2,220	$	(14,696)	$	34,794

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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Agiliti, Inc. and Subsidiaries

Consolidated Statements of Equity

(in thousands)

(unaudited)


	Common Stock		Additional Paid-in Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income		Total Agiliti, Inc. and Subsidiaries		Noncontrolling Interests		Total Equity (Deficit)
Balance as of June 30, 2023	$	13	$	963,965	$	(15,287)	$	—	$	5,497	$	954,188	$	225	$	954,413
Net income (loss)	—		—		(12,701)		—		—		(12,701)		79		(12,622)
Other comprehensive income	—		—		—		—		864		864		—		864
Purchases of treasury stock	—		—		—		(3,761)		—		(3,761)		—		(3,761)
Share-based compensation expense	1		5,130		—		—		—		5,131		—		5,131
Stock options exercised	—		568		—		—		—		568		—		568
Shares forfeited for taxes	—		(46)		—		—		—		(46)		—		(46)
Cash distributions to noncontrolling interests	—		—		—		—		—		—		(64)		(64)
Balance as of September 30, 2023	$	14	$	969,617	$	(27,988)	$	(3,761)	$	6,361	$	944,243	$	240	$	944,483

Balance as of June 30, 2022	$	13	$	938,906	$	(19,596)	$	—	$	9,221	$	928,544	$	166	$	928,710
Net income	—		—		1,951		—		—		1,951		38		1,989
Other comprehensive income	—		—		—		—		269		269		—		269
Share-based compensation expense	—		4,712		—		—		—		4,712		—		4,712
Stock options exercised	—		978		—		—		—		978		—		978
Shares forfeited for taxes	—		(121)		—		—		—		(121)		—		(121)
Dividend forfeited, net of payable	—		2		—		—		—		2		—		2
Cash distributions to noncontrolling interests	—		—		—		—		—		—		(53)		(53)
Balance as of September 30, 2022	$	13	$	944,477	$	(17,645)	$	—	$	9,490	$	936,335	$	151	$	936,486

The accompanying notes are an integral part of the unaudited consolidated financial statements.

Table of Contents


	Common Stock		Additional Paid-in Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Agiliti, Inc. and Subsidiaries		Noncontrolling Interests		Total Equity (Deficit)
Balance as of December 31, 2022	$	13	$	953,046	$	(14,274)	$	—	$	7,343	$	946,128	$	197	$	946,325
Net income (loss)	—		—		(13,714)		—		—		(13,714)		214		(13,500)
Other comprehensive (loss)	—		—		—		—		(982)		(982)		—		(982)
Purchases of treasury stock	—		—		—		(3,761)		—		(3,761)		—		(3,761)
Proceeds from issuance of common stock	—		1,856		—		—		—		1,856		—		1,856
Acquisition consideration paid in equity	—		2,753		—		—		—		2,753		—		2,753
Share-based compensation expense	1		15,584		—		—		—		15,585		—		15,585
Stock options exercised	—		2,670		—		—		—		2,670		—		2,670
Shares forfeited for taxes	—		(6,292)		—		—		—		(6,292)		—		(6,292)
Cash distributions to noncontrolling interests	—		—		—		—		—		—		(171)		(171)
Balance as of September 30, 2023	$	14	$	969,617	$	(27,988)	$	(3,761)	$	6,361	$	944,243	$	240	$	944,483

Balance as of December 31, 2021	$	13	$	938,888	$	(44,486)	$	—	$	1,537	$	895,952	$