Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis provides information we believe is relevant to an assessment and understanding of our results of operations, financial condition, liquidity and cash flows for the periods presented below. This discussion should be read in conjunction with the interim unaudited consolidated financial statements and related notes contained elsewhere in this Quarterly Report on Form 10-Q and in conjunction with the audited consolidated financial statements and related notes, our "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in each case included in our Annual Report on Form 10-K for the fiscal year ended January 3, 2026 filed with the SEC. As discussed in the section above titled "Cautionary Note Regarding Forward-Looking Statements," the following discussion contains forward-looking statements that are based upon our current expectations, including with respect to our future revenues and operating results. Our actual results may differ materially from those anticipated in such forward-looking statements as a result of various factors. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended January 3, 2026.

Unless otherwise provided, "Aveanna," "we," "our" and the "Company" refer to Aveanna Healthcare Holdings Inc. and its consolidated subsidiaries.

Our fiscal year ends on the Saturday that is closest to December 31 of a given year, resulting in either a 52-week or 53-week fiscal year. "Fiscal year 2026" refers to the 52-week fiscal year ending on January 2, 2027. "Fiscal year 2025" refers to the 53-week fiscal year ended on January 3, 2026. The "three-month period ended April 4, 2026", or "first quarter of 2026" refers to the 13-week fiscal quarter ended on April 4, 2026. The "three-month period ended March 29, 2025" or "first quarter of 2025" refers to the 13-week fiscal quarter ended on March 29, 2025.

Overview

We are a leading, diversified home care platform focused on providing care to medically complex, high-cost patient populations. We directly address the most pressing challenges facing the U.S. healthcare system by providing safe, high-quality care in the home, the lower cost care setting preferred by patients. Our patient-centered care delivery platform is designed to improve the quality of care our patients receive, which allows them to remain in their homes and minimizes the overutilization of high-cost care settings such as hospitals. Our clinical model is led by our caregivers, primarily skilled nurses, who provide specialized care to address the complex needs of each patient we serve across the full range of patient populations: newborns, children, adults and seniors. We have invested significantly in our platform to bring together best-in-class talent at all levels of the organization and support such talent with industry leading training, clinical programs, infrastructure and technology-enabled systems, which are increasingly essential in an evolving healthcare industry. We believe our platform creates sustainable competitive advantages that support our ability to continue driving rapid growth, both organically and through acquisitions, and positions us as the partner of choice for the patients we serve.

Segments

We deliver our services to patients through three segments: Private Duty Services ("PDS"); Home Health & Hospice ("HHH"); and Medical Solutions ("MS").

The following table summarizes the revenues generated by each of our segments for the three-month periods ended April 4, 2026 and March 29, 2025, respectively:

PDS Segment

Private Duty Services predominantly includes private duty nursing services ("PDN Services"), as well as pediatric therapy services ("Therapy Services"). PDN Services patients typically enter our service as children, as our most significant referral sources for new patients are children's hospitals. It is common for PDN Services patients to continue to receive our services into adulthood, as approximately 30% of our PDN Services patients are over the age of 18.

PDN Services involve the provision of clinical and non-clinical hourly care to patients in their homes, which is the preferred setting for patient care. PDN Services typically last four to 24 hours a day, provided by our registered nurses, licensed practical nurses, home health aides, and other non-clinical caregivers who are focused on providing high-quality short-term and long-term clinical care to medically

complex children and adults with a wide variety of serious illnesses and conditions. Patients who typically qualify for PDN Services include those with the following conditions:

PDN Services include:

Therapy Services provide a valuable multidisciplinary approach that we believe serves all of a child's therapy needs. We provide both in-clinic and home-based therapy services to our patients. Therapy Services include physical, occupational and speech services. We regularly collaborate with physicians and other community healthcare providers, which allows us to provide more comprehensive care.

HHH Segment

Our Home Health and Hospice segment predominantly includes home health services ("HH Services"), as well as hospice and specialty program services. Our HHH patients typically enter our service as seniors, and our most significant referral sources for new patients are hospitals, physicians and long-term care facilities.

HH Services involve the provision of in-home services to our patients by our clinicians, which may include nurses, therapists, social workers and home health aides. Our caregivers work with our patients' physicians to deliver a personalized plan of care to our patients in their homes. Home healthcare can help our patients recover after a hospitalization or surgery and assist patients in managing chronic illnesses. We also help our patients manage their medications. Through our care, we help our patients recover more fully in the comfort of their own homes, while remaining as independent as possible. HH Services include: in-home skilled nursing services; physical, occupational and speech therapy; medical social services and aide services.

Our hospice services involve a supportive philosophy and concept of care for those nearing the end of life. Our hospice care is a positive, empowering form of care designed to provide comfort and support to our patients and their families when a life-limiting illness no longer responds to cure-oriented treatments. The goal of hospice is to neither prolong life nor hasten death, but to help our patients live as dignified and pain-free as possible. Our hospice care is provided by a team of specially trained professionals in a variety of living situations, including at home, at the hospital, a nursing home, or an assisted living facility.

MS Segment

Through our Medical Solutions segment, we offer a comprehensive line of enteral nutrition supplies and other products to adults and children, delivered on a periodic or as-needed basis. We provide our patients with access to one of the largest selections of enteral formulas, supplies and pumps in our industry, with more than 300 nutritional formulas available. Our registered nurses, registered dietitians and customer service technicians support our patients 24 hours per day, 365 days per year, in-hospital, at-home, or remotely to help ensure that our patients have the best nutrition assessments, change order reviews and formula selection expertise.

Recent Developments

Agreement to Acquire Family First Homecare

On March 12, 2026, the Company announced that it had entered into a definitive agreement to acquire Family First Holding, LLC, a scaled, multi-state provider of pediatric home care that primarily provides skilled Private Duty Nursing services with 27 locations in seven states including Florida, Illinois, Iowa, Pennsylvania, South Dakota, Texas, and North Carolina, where it is currently launching operations. The purchase price for the acquisition is $175.5 million in cash, subject to customary adjustments. The transaction is expected to close in the second fiscal quarter of 2026, subject to, among other things, customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. We intend to fund the acquisition with a combination of cash on hand and borrowings under our Securitization Facility.

Important Operating Metrics

We review the following important metrics on a segment basis and not on a consolidated basis:

PDS and MS Segment Operating Metrics

Volume

Volume represents PDS hours of care provided and MS unique patients served, which is how we measure the amount of our patient services provided. We review the number of hours of PDS care provided on a weekly basis and the number of MS unique patients served on a weekly basis. We believe volume is an important metric because it helps us understand how the Company is growing in each of these segments through strategic planning and acquisitions. We also use this metric to inform strategic decision making in determining opportunities for growth.

Revenue Rate

For our PDS and MS segments, revenue rate is calculated as revenue divided by PDS hours of care provided or the number of MS unique patients served, respectively. We believe revenue rate is an important metric because it represents the amount of revenue we receive per PDS hour of patient service or per individual MS patient transaction and helps management assess the amount of fees that we are able to bill for our services. Management uses this metric to assess how effectively we optimize reimbursement rates.

Cost of Revenue Rate

For our PDS and MS segments, cost of revenue rate is calculated as cost of revenue divided by PDS hours of care provided or the number of MS unique patients served, respectively. We believe cost of revenue rate is an important metric because it helps us understand the cost per PDS hour of patient service or per individual MS patient transaction. Management uses this metric to understand how effectively we manage labor and product costs.

Spread Rate

For our PDS and MS segments, spread rate represents the difference between the respective revenue rates and cost of revenue rates. Spread rate is an important metric because it helps us better understand the margins being recognized per PDS hour of patient service or per individual MS patient transaction. Management uses this metric to assess how successful we have been in optimizing reimbursement rates, managing labor and product costs, and assessing opportunities for growth.

HHH Segment Operating Metrics

Home Health Total Admissions and Home Health Episodic Admissions

Home health total admissions represents the number of new patients who have begun receiving services. We review the number of home health admissions on a daily basis as we believe it is a leading indicator of our growth. We measure home health admissions by reimbursement structure, separating them into home health episodic admissions, which are reimbursed for a fixed duration of care (typically 30 days), and other admissions, which primarily follow a per-visit reimbursement model. This allows us to better understand the payor mix of our home health business.

Home Health Total Episodes

Home health total episodes represents the number of episodic admissions and episodic recertifications to capture patients who have either started to receive services or have been recertified for another episode of care. Management reviews home health total episodes on a monthly basis as to understand the volume of patients who were authorized to receive care during the month.

Home Health Episodic Mix

Home health episodic mix is calculated by dividing the total home health episodic admissions by the home health total admissions. Management monitors home health episodic mix as a simplified metric representing our home health admissions by reimbursement structure, which allows us to better understand the payer mix of our home health business.

Home Health Revenue Per Completed Episode

Home health revenue per completed episode is calculated by dividing total payments received from completed episodes by the number of completed episodes during the period. Episodic payments are determined by multiple factors including type of referral source, patient

diagnoses, and utilization. Management tracks home health revenue per completed episode over time to evaluate both the clinical and financial profile of the business in a single metric.

Results of Operations

Three-Month Period Ended April 4, 2026 Compared to the Three-Month Period Ended March 29, 2025

The following table summarizes our consolidated results of operations, including Field contribution, which is a non-GAAP measure (see "Non-GAAP Financial Measures" below), for the three-month periods indicated:

NM = A percentage calculation that is not meaningful due to a percentage change greater than 1000%.

The following table summarizes our consolidated key performance measures, including Field contribution and Field contribution margin, which are non-GAAP measures (see "Non-GAAP Financial Measures" below), for the three-month periods indicated:

The following tables summarize our key performance measures by segment for the three-month periods indicated:

The following discussion of our results of operations should be read in conjunction with the foregoing tables summarizing our consolidated results of operations and key performance measures, as well as our audited consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended January 3, 2026.

Summary Operating Results

Operating Income

Operating income was $69.3 million for the three-month period ended April 4, 2026, as compared to operating income of $51.8 million for the three-month period ended March 29, 2025, an increase of $17.5 million, or 33.8%.

Operating income for the three-month period ended April 4, 2026 was positively impacted by an increase of $17.5 million, or 18.9%, in Field contribution as compared to the three-month period ended March 29, 2025. The $17.5 million increase in Field contribution resulted from an $88.7 million, or 15.9%, increase in consolidated revenue and a 0.4% increase in our Field contribution margin to 16.9% for the three-month period ended April 4, 2026 from 16.5% for the three-month period ended March 29, 2025. The primary driver of our higher Field contribution margin period over period was a 1.5% decrease in branch and regional administrative expenses as a percentage of revenue to 14.8% for the three-month period ended April 4, 2026 from 16.3% for the three-month period ended March 29, 2025, partially offset by a decrease in gross margin percentage from 32.8% for the three-month period ended March 29, 2025 to 31.7% for the three-month period ended April 4, 2026.

The following items primarily contributed to the $17.5 million increase in operating income for the three-month period ended April 4, 2026 compared to the three-month period ended March 29, 2025 primarily consists of:

Net Income

Net income for the three-month period ended April 4, 2026 was $41.7 million, as compared to net income of $5.2 million for the three-month period ended March 29, 2025. The $36.5 million increase in net income was primarily driven by the following:

Revenue

Revenue was $647.9 million for the three-month period ended April 4, 2026, as compared to $559.2 million for the three-month period ended March 29, 2025, an increase of $88.7 million, or 15.9%. This increase resulted from the following segment activity:

Our PDS segment revenue growth of $75.7 million, or 16.4%, for the three-month period ended April 4, 2026 was attributable to a 10.7% increase in volume and a 5.7% increase in revenue rate. The 10.7% increase in volume was primarily attributable to growth in demand for non-clinical services and new volumes attributable to the Thrive acquisition which was completed on June 2, 2025.

The 5.7% increase in PDS revenue rate for the three-month period ended April 4, 2026, as compared to the three-month period ended March 29, 2025, resulted primarily from reimbursement rate increases issued by various state Medicaid programs and Managed Medicaid payers and improved collections on fully reserved aged receivables.

Our HHH segment revenue increase of $9.9 million, or 17.4%, for the three-month period ended April 4, 2026 resulted primarily from a 23.1% increase in total episodes compared to the first three months of 2025. Home health episodic mix increased from 77.3% for the first three months of 2025 to 80.9% for the first three months of 2026.

Our MS segment revenue growth of $3.2 million, or 7.4%, for the three-month period ended April 4, 2026, as compared to the three-month period ended March 29, 2025, was attributable to an increase in volume of 4.5% and a 2.9% increase in revenue rate, each compared to the first quarter of 2025.

Cost of Revenue, Excluding Depreciation and Amortization

Cost of revenue, excluding depreciation and amortization, was $442.5 million for the three-month period ended April 4, 2026, as compared to $375.7 million for the three-month period ended March 29, 2025, an increase of $66.8 million, or 17.8%. This increase resulted from the following segment activity:

The 18.8% increase in PDS cost of revenue for the three-month period ended April 4, 2026 resulted from the previously described 10.7% increase in PDS volume combined with an 8.1% increase in PDS cost of revenue rate. The 8.1% increase in cost of revenue rate primarily resulted from higher caregiver labor costs, including the pass-through of reimbursement rate increases and slightly higher general and professional liability expense over the comparable period.

The 18.6% increase in HHH cost of revenue for the three-month period ended April 4, 2026 was driven primarily by higher home health total episodes over the comparable period.

The 3.6% increase in MS cost of revenue for the three-month period ended April 4, 2026 was driven by the previously described 4.5% increase in MS volumes, partially offset by a 0.9% decrease in cost of revenue rate.

Gross Margin and Gross Margin Percentage

Gross margin was $205.4 million, or 31.7% of revenue, for the three-month period ended April 4, 2026, as compared to $183.6 million, or 32.8% of revenue, for the three-month period ended March 29, 2025. Gross margin increased $21.9 million, or 11.9%, from the comparable prior year quarter. The 1.1% decrease in gross margin percentage for the three-month period ended April 4, 2026 resulted from the combined changes in our revenue rates and cost of revenue rates in each of our segments, which we refer to as the change in our spread rate in our PDS and MS segments, and the change in gross margin percentage in our HHH segment, as follows:

Branch and Regional Administrative Expenses

Branch and regional administrative expenses were $95.8 million, or 14.8% of revenue, for the three-month period ended April 4, 2026, as compared to $91.4 million, or 16.3% of revenue, for the three-month period ended March 29, 2025, an increase of $4.4 million, or 4.8%.

The 4.8% increase in branch and regional administrative expenses for the three-month period ended April 4, 2026, as compared to the three-month period ended March 29, 2025, was primarily due to increased costs related to the acquisition of Thrive, which was completed on June 2, 2025 and increased our operating footprint, including adding new locations and support personnel. The overall 1.5% decrease in branch and regional administrative expenses as a percentage of revenue for the three-month period ended April 4, 2026, as compared to the three-month period ended March 29, 2025, is the result of leveraging our operating support model to effectively incorporate increased volume from acquisitions and higher demand driven from our existing operating footprint.

Field Contribution and Field Contribution Margin

Field contribution was $109.6 million, or 16.9% of revenue, for the three-month period ended April 4, 2026, as compared to $92.2 million, or 16.5% of revenue, for the three-month period ended March 29, 2025. Field contribution increased $17.5 million, or 18.9%, for the three-month period ended April 4, 2026, as compared to the three-month period ended March 29, 2025. The 0.4% increase in Field contribution margin for the three-month period ended April 4, 2026 resulted from the following:

Field contribution and Field contribution margin are non-GAAP financial measures. See "Non-GAAP Financial Measures" below.

Corporate Expenses

Corporate expenses as a percentage of revenue for the three-month periods ended April 4, 2026 and March 29, 2025 were as follows:

Corporate expenses were $34.2 million, or 5.3% of revenue, for the three-month period ended April 4, 2026, as compared to $37.5 million, or 6.7% of revenue, for the three-month period ended March 29, 2025. The $3.3 million, or 8.9%, decrease in corporate expenses resulted primarily from lower non-cash share-based compensation costs, primarily due to the acceleration of the expense associated with SMRP awards in the first quarter of 2025.

Depreciation and Amortization

Depreciation and amortization was $3.0 million for the three-month period ended April 4, 2026, as compared to $2.6 million for the three-month period ended March 29, 2025, an increase of $0.5 million, or 17.3%. The $0.5 million increase primarily resulted from an increase in amortization expense related to acquired tradenames from Thrive.

Acquisition-related Costs

Acquisition-related costs were $3.1 million for the three-month period ended April 4, 2026, primarily associated with the pending acquisition of Family First, as compared to $0.1 million for the three-month period ended March 29, 2025.

Other Operating Expense

There was no other operating expense for the three-month period ended April 4, 2026. Other operating expense was $0.2 million for the three-month period ended March 29, 2025.

Interest Expense, net of Interest Income

Interest expense, net of interest income was $27.5 million for the three-month period ended April 4, 2026, as compared to $36.2 million for the three-month period ended March 29, 2025, a decrease of $8.7 million, or 24.0%. The decrease was primarily driven by a lower U.S. federal funds rate during the three-month period ended April 4, 2026 compared to the three-month period ended March 29, 2025, and the positive effect of the refinancing of our credit facility in the third quarter of 2025. The drivers above reduced our weighted average interest rate from 9.0% as of March 29, 2025 to 7.3% as of April 4, 2026, resulting in lower interest expense. Further, our interest income increased $1.5 million over the comparable periods due to improved liquidity. See further analysis under Liquidity and Capital Resources below.

Other Income (Expense)

Other income was $3.1 million for the three-month period ended April 4, 2026, as compared to other expense of $5.5 million for the three-month period ended March 29, 2025. We realized an $11.0 million decrease in non-cash valuation losses on interest rate derivatives resulting from changes in market expectations of future interest rates as of the comparable valuation dates, offset by a $2.3 million decrease in net settlements with interest rate derivative counterparties as interest rates decreased compared to the prior year period due to lower market interest rates. Details of other income (expense) included the following:

Income Taxes

We record income tax expense during interim periods based on our estimate of the annual effective income tax rate, adjusted each quarter for discrete items. We analyze various factors to determine the estimated annual effective income tax rate, including projections of our annual earnings, the impact of state and local income taxes, our ability to use tax credits and net operating loss carryforwards, and available tax planning alternatives. We incurred income tax expense of $3.3 million for the three-month period ended April 4, 2026, as compared to income tax expense of $5.0 million for the three-month period ended March 29, 2025. This decrease in tax expense was primarily driven by a discrete benefit that was partially offset by differences in our projections of annual earnings at the end of each comparable three-month period, as well as the changes to federal and state current tax expense and the changes in federal and state valuation allowances due to certain non-deductible expenses, most notably interest expense and executive compensation, while also including the effect of the OBBBA, which was enacted on July 4, 2025.

Non-GAAP Financial Measures

In addition to our results of operations prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP", or "GAAP"), which we have discussed above, we also evaluate our financial performance using EBITDA, Adjusted EBITDA, Field contribution and Field contribution margin.

EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA are non-GAAP financial measures and are not intended to replace financial performance measures determined in accordance with U.S. GAAP, such as net income or loss. Rather, we present EBITDA and Adjusted EBITDA as supplemental measures of our performance. We define EBITDA as net income or loss before interest expense, net; income tax expense or benefit; and depreciation and amortization. We define Adjusted EBITDA as EBITDA, adjusted for the impact of certain other items that are either non-recurring, infrequent, non-cash, unusual, or items deemed by management to not be indicative of the performance of our core operations, including impairments of goodwill, intangible assets, and other long-lived assets; non-cash, share-based compensation, and associated employer payroll taxes; loss on extinguishment of debt; fees related to debt modifications; the effect of interest rate derivatives; acquisition-related and integration costs; legal costs and settlements associated with acquisition matters; restructuring costs; other legal matters; and other costs including gains and losses on acquisitions and dispositions of certain businesses. As non-GAAP financial measures, our computations of EBITDA and Adjusted EBITDA may vary from similarly termed non-GAAP financial measures used by other companies, making comparisons with other companies on the basis of this measure impracticable.

Management believes our computations of EBITDA and Adjusted EBITDA are helpful in highlighting trends in our core operating performance. In determining which adjustments are made to arrive at EBITDA and Adjusted EBITDA, management considers both (1) certain non-recurring, infrequent, non-cash or unusual items, which can vary significantly from year to year, as well as (2) certain other items that may be recurring, frequent, or settled in cash but which management does not believe are indicative of our core operating performance. We use EBITDA and Adjusted EBITDA to assess operating performance and make business decisions.

We have incurred substantial acquisition-related costs and integration costs. The underlying acquisition activities take place over a defined timeframe, have distinct project timelines and are incremental to activities and costs that arise in the ordinary course of our business. Therefore, we believe it is important to exclude these costs from our Adjusted EBITDA because it provides management a normalized view of our core, ongoing operations after integrating our acquired companies, which is an important measure in assessing our performance.

Given our determination of adjustments in arriving at our computations of EBITDA and Adjusted EBITDA, these non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as substitutes or alternatives to net income or loss,

revenue, operating income or loss, cash flows from operating activities, total indebtedness or any other financial measures calculated in accordance with U.S. GAAP.

The following table reconciles net income to EBITDA and Adjusted EBITDA for the periods indicated:

Field Contribution and Field Contribution Margin

Field contribution and Field contribution margin are non-GAAP financial measures and are not intended to replace financial performance measures determined in accordance with U.S. GAAP, such as gross margin and gross margin percentage. Rather, we present Field contribution and Field contribution margin as supplemental measures of our performance. We define Field contribution as gross margin less branch and regional administrative expenses. Field contribution margin is Field contribution as a percentage of revenue. As non-GAAP financial measures, our computations of Field contribution and Field contribution margin may vary from similarly termed non-GAAP financial measures used by other companies, making comparisons with other companies on the basis of these measures impracticable.

Field contribution and Field contribution margin have limitations as analytical tools and should not be considered in isolation or as substitutes or alternatives to gross margin, gross margin percentage, net income or loss, revenue, operating income or loss, cash flows from operating activities, total indebtedness, or any other financial measures calculated in accordance with U.S. GAAP.

Management believes Field contribution and Field contribution margin are helpful in highlighting trends in our core operating performance and evaluating trends in our branch and regional results, which can vary from year to year. We use Field contribution and Field contribution margin to make business decisions and assess the operating performance and results delivered by our core field operations, prior to corporate and other costs not directly related to our field operations. These metrics are also important because they guide us in determining whether or not our branch and regional administrative expenses are appropriately sized to support our caregivers and direct patient care operations. Additionally, Field contribution and Field contribution margin determine how effective we are in managing our field supervisory and administrative costs associated with supporting our provision of services and sale of products.

The following table reconciles gross margin to Field contribution and Field contribution margin for the periods indicated:

Liquidity and Capital Resources

Overview

Our principal sources of cash have historically been from cash provided by operating activities. Our principal source of liquidity in addition to cash provided by operating activities, or when we have used net cash in our operating activities, has historically been from proceeds from our credit facilities and issuances of common stock.

Our principal uses of cash and liquidity have historically been for acquisitions, interest and principal payments under our credit facilities, and financing of working capital. Payment of interest and related fees under our credit facilities is currently the most significant use of our operating cash flow. Our goal is to use cashflow provided by operations primarily as a source of cash to supplement the purchase price for acquisitions and reduce our net leverage.

For additional information with respect to the foregoing litigation matters, please see "Litigation and Other Current Liabilities" set forth in Note 11 to our interim unaudited consolidated financial statements contained in this Quarterly Report on Form 10-Q.

As noted in Recent Developments, we entered into an agreement to acquire Family First Holding, LLC for a purchase price of $175.5 million, subject to customary adjustments. The transaction is expected to close in the second fiscal quarter of 2026, and the acquisition is intended to be funded with a combination of cash on hand and borrowings under our Securitization Facility.

At April 4, 2026 we had $189.3 million in cash on hand, $110.0 million available to us under our Securitization Facility and approximately $225.5 million of borrowing capacity under the 2025 Refinancing Revolving Credit Facility. Available borrowing capacity under the 2025 Refinancing Revolving Credit Facility is subject to a maintenance leverage covenant that becomes effective if more than 40% of the total commitment is utilized. We believe that our operating cash flows, available cash on hand, and availability under our Securitization Facility and 2025 Refinancing Revolving Credit Facility will be sufficient to meet our cash requirements for at least the next twelve months. Our future capital requirements will depend on many factors that are difficult to predict, including the size, timing and structure of any future acquisitions, future capital investments and future results of operations. We cannot assure you that cash provided by operating activities or cash and cash equivalents on hand will be sufficient to meet our future needs. If we are unable to generate sufficient cash flows from operations in the future, we may have to obtain additional financing. If we obtain additional capital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness, that indebtedness may contain significant financial and other covenants that may significantly restrict our operations. We cannot assure you that we could obtain refinancing or additional financing on favorable terms or at all.

Cash Flow Activity

The following table sets forth a summary of our cash flows from operating, investing, and financing activities for the three-month periods presented:

Operating Activities

The primary sources or uses of our operating cash flow are operating income or operating losses, as well as any other significant non-cash items such as depreciation, amortization and share-based compensation, and cash paid for interest. The timing of collections of accounts receivable and the payment of accounts payable, other accrued liabilities and accrued payroll can also impact and cause fluctuations in our operating cash flow. Cash provided by operating activities was $4.3 million for the three-month period ended April 4, 2026, compared to cash used in operating activities of $8.6 million for the three-month period ended March 29, 2025, an increase of $13.0 million, primarily due to:

Days Sales Outstanding ("DSO")

DSO provides us with a gauge to measure the timing of cash collections against accounts receivable and related revenue. DSO is derived by dividing our average patient accounts receivable for the fiscal period by our average daily revenue for the fiscal period. The collection cycle for our HHH segment is generally longer than that of our PDS segment, primarily due to longer billing cycles for HHH, which is generally billed in thirty-day increments. The following table presents our trailing five quarter DSO for the periods presented below:

Investing Activities

Net cash used in investing activities was $4.6 million for the three-month period ended April 4, 2026, as compared to $2.3 million for the three-month period ended March 29, 2025. The primary driver of the $2.2 million increase in cash used in the current period was increased purchases of property and equipment.

Financing Activities

Net cash used in financing activities increased by $2.0 million, from $1.8 million net cash used in financing activities for the three-month period ended March 29, 2025 to $3.8 million net cash used in financing activities for the three-month period ended April 4, 2026. The $2.0 million increase in net cash used in financing activities was primarily attributable to the absence of an ESPP purchase event in the three-month period ended April 4, 2026, due to the timing of our fiscal calendar and ESPP purchase events.

Indebtedness

We typically incur term loan indebtedness to finance our acquisitions, and we borrow under our Securitization Facility and 2025 Refinancing Revolving Credit Facility from time to time for working capital purposes, as well as to finance acquisitions, as needed. The following table presents our current and long-term obligations under our credit facilities as of April 4, 2026 and January 3, 2026, as well as related interest expense for the three-month periods ended April 4, 2026 and March 29, 2025, respectively:

We were in compliance with all financial covenants and restrictions related to existing credit facilities at April 4, 2026.

Contractual Obligations

Our contractual obligations consist primarily of long-term debt obligations, interest payments, and operating leases. These contractual obligations impact our short-term and long-term liquidity and capital needs. As of April 4, 2026, there were no material changes to our contractual obligations from those described in our Annual Report on Form 10-K for the fiscal year ended January 3, 2026.

Critical Accounting Estimates

See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates" and our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended January 3, 2026 for accounting policies and related estimates we believe are the most critical to understanding our consolidated financial statements, financial condition and results of operations and which require complex management judgment and assumptions, or involve uncertainties. These critical accounting estimates include patient services and product revenue; business combinations; goodwill; and insurance reserves. There have been no changes to our critical accounting estimates or their application since the date of our Annual Report on Form 10-K for the fiscal year ended January 3, 2026.