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Table of Contents
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 June 30, 2022
or
oTransition 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)
Delaware83-1608463
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
11095 Viking Drive
Eden Prairie, Minnesota 55344
(Address of principal executive offices, including zip code)
(952) 893-3200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $0.0001
AGTIThe 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 fileroAccelerated filero
Non-accelerated filerxSmaller reporting companyo
Emerging growth companyo
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 August 1, 2022: 133,201,821
Agiliti, Inc. and Subsidiaries
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Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements — Unaudited
Agiliti, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share information)
(unaudited)
June 30,
2022
December 31,
2021
Assets
Current assets:
Cash and cash equivalents$16,524 $74,325 
Accounts receivable, less allowance for credit losses of $3,206 and $2,902
215,862 209,308 
Inventories59,137 55,307 
Prepaid expenses14,580 18,549 
Other current assets12,645 395 
Total current assets318,748 357,884 
Property and equipment, net251,490 258,370 
Goodwill1,218,329 1,213,121 
Operating lease right-of-use assets85,669 80,676 
Other intangibles, net530,474 573,159 
Other34,627 32,537 
Total assets$2,439,337 $2,515,747 
Liabilities and Equity
Current liabilities:
Current portion of long-term debt$17,735 $17,534 
Current portion of operating lease liability23,198 22,826 
Current portion of obligation under tax receivable agreement29,710 29,187 
Accounts payable56,513 53,851 
Accrued compensation23,309 47,951 
Accrued interest3,490 3,473 
Deferred revenue9,207 5,808 
Other accrued expenses26,767 27,900 
Total current liabilities189,929 208,530 
Long-term debt, less current portion1,073,016 1,174,968 
Obligation under tax receivable agreement, pension and other long-term liabilities31,179 29,629 
Operating lease liability, less current portion73,122 63,241 
Deferred income taxes, net143,381 143,307 
Commitments and contingencies (Note 11)
Equity:
Common stock, $0.0001 par value; 350,000,000 shares authorized; 133,188,231 and 130,950,061 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
13 13 
Additional paid-in capital938,906 938,888 
Accumulated deficit(19,596)(44,486)
Accumulated other comprehensive income9,221 1,537 
Total Agiliti, Inc. and Subsidiaries equity928,544 895,952 
Noncontrolling interest166 120 
Total equity928,710 896,072 
Total liabilities and equity$2,439,337 $2,515,747 
The accompanying notes are an integral part of the unaudited consolidated financial statements.
1

Table of Contents
Agiliti, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except share and per share information)
(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Revenue$273,984 $250,543 $568,428 $485,788 
Cost of revenue175,819 151,435 346,636 285,358 
Gross margin98,165 99,108 221,792 200,430 
Selling, general and administrative expense82,121 81,056 168,259 150,279 
Operating income16,044 18,052 53,533 50,151 
Loss on extinguishment of debt1,418 10,116 1,418 10,116 
Interest expense11,261 11,713 21,925 29,733 
Income (loss) before income taxes and noncontrolling interest3,365 (3,777)30,190 10,302 
Income tax (benefit) expense(1,698)1,394 5,207 5,890 
Consolidated net income (loss)5,063 (5,171)24,983 4,412 
Net income attributable to noncontrolling interest65 27 93 57 
Net income (loss) attributable to Agiliti, Inc. and Subsidiaries $4,998 $(5,198)$24,890 $4,355 
Basic income (loss) per share$0.04 $(0.04)$0.19 $0.04 
Diluted income (loss) per share$0.04 $(0.04)$0.18 $0.04 
Weighted-average common shares outstanding:
Basic132,556,645 122,908,065 131,856,267 111,071,756 
Diluted138,697,206 122,908,065 137,932,546 118,760,837 
The accompanying notes are an integral part of the unaudited consolidated financial statements.
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Table of Contents
Agiliti, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Consolidated net income (loss)$5,063$(5,171)$24,983$4,412
Other comprehensive income (loss):
Gain on minimum pension liability, net of tax of $0,$19,0, and $37
54109
Gain on cash flow hedge, net of tax of $774, $32, $2,641, and $303
2,255967,684892
Total other comprehensive income2,2551507,6841,001
Comprehensive income (loss)7,318(5,021)32,6675,413
Comprehensive income attributable to noncontrolling interest65279357
Comprehensive income (loss) attributable to Agiliti, Inc. and Subsidiaries $7,253$(5,048)$32,574$5,356
The accompanying notes are an integral part of the unaudited consolidated financial statements.
3

Table of Contents
Agiliti, Inc. and Subsidiaries
Consolidated Statements of Equity
(in thousands)
(unaudited)
Common
Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income
Total
Agiliti, Inc.
and
Subsidiaries
Noncontrolling
Interests
Total
Equity
(Deficit)
Balance as of March 31, 2022$13 $943,517 $(24,594)$6,966 $925,902 $116 $926,018 
Net income— — 4,998 — 4,998 65 5,063 
Other comprehensive income— — — 2,255 2,255 — 2,255 
Proceeds from issuance of common stock— 2,159 — — 2,159 — 2,159 
Share-based compensation expense— 5,810 — — 5,810 — 5,810 
Stock options exercised— 993 — — 993 — 993 
Shares forfeited for taxes— (13,575)— — (13,575)— (13,575)
Dividend forfeited, net of payable— 2 — — 2 — 2 
Cash distributions to noncontrolling interests— — — — — (15)(15)
Balance as of June 30, 2022$13 $938,906 $(19,596)$9,221 $928,544 $166 $928,710 
Common
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 March 31, 2021$10 $527,626 $(58,939)$(2,768)$465,929 $124 $466,053 
Net income (loss)— — (5,198)— (5,198)27 (5,171)
Other comprehensive income— — — 150 150 — 150 
Share-based compensation expense— 3,270 — — 3,270 — 3,270 
Stock options exercised— 373 — — 373 — 373 
Issuance of common stock3 401,438 — — 401,441 — 401,441 
Stock issuance costs— (4,084)— — (4,084)— (4,084)
Cash distributions to noncontrolling interests— — — — — (33)(33)
Balance as of June 30, 2021$13 $928,623 $(64,137)$(2,618)$861,881 $118 $861,999 
4

Table of Contents
Common
Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income
Total
Agiliti, Inc.
and
Subsidiaries
Noncontrolling
Interests
Total
Equity
(Deficit)
Balance as of December 31, 2021$13 $938,888 $(44,486)$1,537 $895,952 $120 $896,072 
Net income— — 24,890 — 24,890 93 24,983 
Other comprehensive income— — — 7,684 7,684 — 7,684 
Proceeds from issuance of common stock— 2,159 — — 2,159 — 2,159 
Share-based compensation expense— 10,235 — — 10,235 — 10,235 
Stock options exercised— 1,971 — — 1,971 — 1,971 
Shares forfeited for taxes— (14,367)— — (14,367)— (14,367)
Dividend forfeited, net of payable— 20 — — 20 — 20 
Cash distributions to noncontrolling interests— — — — — (47)(47)
Balance as of June 30, 2022$13 $938,906 $(19,596)$9,221 $928,544 $166 $928,710 
Common
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, 2020$10 $513,902 $(68,492)$(3,619)$441,801 $144 $441,945 
Net income— — 4,355 — 4,355 57 4,412 
Other comprehensive income— — — 1,001 1,001 — 1,001 
Share-based compensation expense— 5,682 — — 5,682 — 5,682 
Stock options exercised— 373 — — 373 — 373 
Issuance of common stock3 412,738 — — 412,741 — 412,741 
Stock issuance costs— (4,084)— — (4,084)— (4,084)
Dividend forfeited— 12 — — 12 — 12 
Cash distributions to noncontrolling interests— — — — — (83)(83)
Balance as of June 30, 2021$13 $928,623 $(64,137)$(2,618)$861,881 $118 $861,999 
The accompanying notes are an integral part of the unaudited consolidated financial statements.
5

Table of Contents
Agiliti, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended
June 30,
20222021
Cash flows from operating activities:
Consolidated net income$24,983 $4,412 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation46,412 52,884 
Amortization 47,119 40,955 
Loss on extinguishment of debt1,418 7,716 
Remeasurement of tax receivable agreement 4,345 
Provision for credit losses279 573 
Provision for inventory obsolescence568 2,226 
Non-cash share-based compensation expense10,206 5,766 
Gain on sales and disposals of equipment(256)(840)
Deferred income taxes(2,567)4,694 
Changes in operating assets and liabilities:
Accounts receivable(8,833)6,047 
Inventories(4,398)(1,414)
Other operating assets(579)(412)
Accounts payable8,702 5,352 
Other operating liabilities(21,916)(24,796)
Net cash provided by operating activities101,138 107,508 
Cash flows from investing activities:
Medical equipment purchases(22,823)(16,269)
Property and office equipment purchases(12,776)(10,612)
Proceeds from disposition of property and equipment1,763 2,013 
Acquisitions, net of cash acquired(3,125)(450,198)
Net cash used in investing activities(36,961)(475,066)
Cash flows from financing activities:
Proceeds under debt arrangements20,000 233,052 
Payments under debt arrangements(123,824)(359,805)
Payments of principal under finance lease liability(4,484)(4,270)
Payments of deferred financing costs (229)
Payments under tax receivable agreement (748)
Distributions to noncontrolling interests(47)(83)
Proceeds from exercise of stock options1,971 373 
Dividend and equity distribution payment(906)(924)
Proceeds from issuance of common stock 401,441 
Stock issuance costs (4,084)
Shares forfeited for taxes(14,367) 
Payments of contingent consideration(321) 
Net cash (used in) provided by financing activities(121,978)264,723 
Net change in cash and cash equivalents(57,801)(102,835)
Cash and cash equivalents at the beginning of period74,325 206,505 
Cash and cash equivalents at the end of period$16,524 $103,670 
Supplemental cash flow information:
Interest paid$19,164 $31,017 
Income taxes paid11,625 1,541 
The accompanying notes are an integral part of the unaudited consolidated financial statements.
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Agiliti, Inc. and Subsidiaries
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.    Basis of Presentation
Description of Business
Agiliti, Inc. and its consolidated subsidiaries (Federal Street Acquisition Corp (“FSAC”), Agiliti Holdco, Inc. and Agiliti Health, Inc. and subsidiaries (“we”, “our”, “us”, the “Company” or “Agiliti”)) is a nationwide provider of healthcare technology management and service solutions to the United States healthcare industry. Agiliti, Inc. owns 100% of FSAC. FSAC owns 100% of Agiliti Holdco, Inc. Agiliti Holdco, Inc. owns 100% of Agiliti Health, Inc. Agiliti Health, Inc. owns 100% of Agiliti Surgical, Inc., Agiliti Imaging, Inc., Agiliti Surgical Equipment Repair, Inc. and Sizewise Rentals, LLC. Agiliti Health, Inc. and its subsidiaries are the only entities with operations. All other entities have no material assets, liabilities, cash flows or operations other than their investment and ownership of Agiliti Health, Inc. and subsidiaries.
Initial Public Offering
On April 22, 2021, our registration statement on Form S-1 (File No. 333-253947) related to our initial public offering (“IPO”) was declared effective by the SEC, and our common stock began trading on the New York Stock Exchange (“NYSE”) on April 23, 2021. Our IPO closed on April 27, 2021.
Basis of Presentation
The interim consolidated financial statements have been prepared by the Company without audit. Certain disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the related notes thereto in the Company’s Annual report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (“SEC”) on March 8, 2022 (“2021 Form 10-K Report”).
The interim consolidated financial statements presented herein as of June 30, 2022, reflect, in the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations, comprehensive income, equity and cash flows for the periods presented. These adjustments are all of a normal, recurring nature. The results of operations for any interim period are not necessarily indicative of results for the full year.
We are required to make estimates and assumptions about future events in preparing consolidated financial statements in conformity with GAAP. These estimates and assumptions affect the amounts of assets, liabilities, revenue and expenses at the date of the unaudited consolidated financial statements. While we believe that our past estimates and assumptions have been materially accurate, our current estimates are subject to change if different assumptions as to the outcome of future events are made. We evaluate our estimates and judgments on an ongoing basis and predicate those estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances. We make adjustments to our assumptions and judgments when facts and circumstances dictate. Since future events and their effects cannot be determined with absolute certainty, actual results may differ from the estimates used in preparing the accompanying unaudited consolidated financial statements.
A description of our significant accounting policies is included in the audited consolidated financial statements. There have been no material changes to these policies for the quarter ended June 30, 2022.
2.    Recent Accounting Pronouncements
Standards Adopted
No recent accounting pronouncements have been issued or adopted since those discussed in the 2021 Form 10-K Report that are of material significance, or have potential material significance, to the Company.
Standards Not Yet Adopted
In October 2021, the FASB issued ASU No. 2021-08 Business Combinations (Topic 805)-Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 improves the accounting for
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acquired revenue contracts with customers in a business combination. The amendments in this ASU require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. To achieve this, an acquirer may assess how the acquiree applied Topic 606 to determine what to record for the acquired revenue contracts. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption of the amendments is permitted. We will continue to evaluate ASU 2021-08, but do not expect the adoption will have a material impact on our consolidated financial statements.
In June 2020, the FASB issued ASU No. 2020-04 Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The ASU may be applied through December 31, 2022. We will continue to evaluate the phase out of LIBOR but do not expect the adoption will have a material impact on our consolidated financial statements.
3.    Revenue Recognition
Customer arrangements typically have multiple performance obligations to provide equipment solutions, clinical engineering and/or onsite equipment managed services on a per use and/or over time basis. Contractual prices are established within our customer arrangements that are representative of stand-alone selling prices. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. The Company’s performance obligations that are satisfied at a point in time are recognized when the service is performed or equipment is delivered to the customer. For performance obligations satisfied over time, the Company uses a straight-line method to recognize revenue ratably over the contract period, as this coincides with the Company’s performance under the contract.
In the following table, revenue is disaggregated by service solution:
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2022202120222021
Equipment Solutions$106,852 $72,140 $228,707 $154,611 
Clinical Engineering104,412 101,141 207,211 176,247 
Onsite Managed Services62,720 77,262 132,510 154,930 
Total revenue$273,984 $250,543 $568,428 $485,788 
The Company capitalizes contract costs incurred in obtaining new contracts. The contract asset included in other long-term assets in the consolidated balance sheets as of June 30, 2022 and December 31, 2021 was $17.5 and $15.9 million, respectively. Capitalized costs are amortized over the expected life of the related contracts, which is estimated to be five years.
The Company had a balance of $9.2 and $5.8 million of deferred revenue as of June 30, 2022 and December 31, 2021, respectively. During the three and six months ended June 30, 2022, $0.5 and $1.5 million, respectively, of revenue was recognized that was included in deferred revenue at the beginning of the period.
4.    Acquisitions
During the three months ended June 30, 2022, we completed the acquisition of several small surgical equipment repair companies. These business combinations were immaterial in relation to our consolidated balance sheets and statements of operations and as a result, additional purchase accounting disclosures have been omitted.
On October 1, 2021, we completed a stock purchase agreement to purchase all of the outstanding capital stock of Sizewise Rentals, LLC (“Sizewise”), a privately held manufacturer and distributor of specialty patient handling equipment, for a total consideration of approximately $234.8 million (“Sizewise Acquisition”). The results of Sizewise’s operations have been included in the consolidated financial statements since October 1, 2021.
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The following summarizes the fair values of assets acquired and liabilities assumed at the date of the Sizewise Acquisition within our consolidated balance sheet as of December 31, 2021:
(in thousands)
Cash$9,977 
Accounts receivable31,005 
Inventories27,911 
Other current assets2,968 
Property and equipment59,042 
Goodwill87,867 
Operating lease right-of-use assets16,754 
Other intangibles67,700 
Other long-term assets10,368 
Accounts payable(3,362)
Accrued compensation(12,576)
Other accrued expenses(4,525)
Operating lease liability(16,953)
Other long-term liabilities(9,924)
Deferred income taxes(31,470)
Total purchase price$234,782 
On March 19, 2021, we completed a stock purchase agreement to purchase all of the outstanding capital stock of Northfield Medical, Inc. (“Northfield”), a company specializing in the service and repair of medical equipment and instruments for a total consideration of approximately $472.3 million (“Northfield Acquisition”). The consideration consisted of $461.0 million of cash paid and $11.3 million in issuance of 752,328 shares of common stock. The results of Northfield’s operations have been included in the consolidated financial statements since March 19, 2021. During the year ended December 31, 2021, adjustments affecting the fair values of assets acquired and liabilities assumed decreased accounts receivable $0.2 million, increased goodwill $1.3 million, increased accounts payable $0.1 million, and increased deferred income taxes $1.0 million. All adjustments net to zero.
The following summarizes the fair values of assets acquired and liabilities assumed at the date of acquisition within our consolidated balance sheet as of December 31, 2021:
(in thousands)
Cash$10,767 
Accounts receivable16,786 
Inventories5,810 
Other current assets502 
Property and equipment11,713 
Goodwill306,678 
Operating lease right-of-use assets4,815 
Other intangibles183,700 
Accounts payable(7,412)
Accrued compensation(7,948)
Other accrued expenses(9,620)
Finance lease liability(2,340)
Operating lease liability(5,025)
Other long-term liabilities(837)
Deferred income taxes(35,324)
Total purchase price$472,265 
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The following unaudited pro forma consolidated results of operations assume the Sizewise and Northfield acquisitions had occurred on January 1, 2021. The unaudited pro forma consolidated financial information should not be relied upon as necessarily being indicative of the historical results that would have been obtained if the acquisitions had actually closed on that date, nor the results that may be obtained in the future:
Three Months Ended
June 30,
Six Months Ended
June 30,
(unaudited, in thousands)2022202120222021
Revenue$273,984 $291,436 $568,428 $592,966 
Net income (loss) attributable to Agiliti, Inc. and Subsidiaries4,998 (1,470)24,890 20,049 
Included in the determination of pro forma net income for the three and six months ended June 30, 2021 are pro forma charges for various purchase accounting adjustments. These pro forma adjustments included depreciation and amortization of assets acquired and interest expense on additional debt to finance the acquisition. Income taxes are provided at the estimated statutory rate. Revenue and net income for the three and six months ended June 30, 2022 are as reported.
5.    Fair Value Measurements
Financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 are summarized in the following tables by type of inputs applicable to the fair value measurements:
Fair Value at June 30, 2022
(in thousands)Level 1Level 2Level 3Total
Assets:
Deferred compensation assets$2,472 $ $ $2,472 
Interest rate swap 12,418  12,418 
Total Assets$2,472 $12,418 $ $14,890 
Liabilities:
Contingent consideration$ $ $3,630 $3,630 
Obligation under tax receivable agreement  40,403 40,403 
Deferred compensation liabilities2,472   2,472 
Total Liabilities$2,472 $ $44,033 $46,505 
Fair Value at December 31, 2021
(in thousands)Level 1Level 2Level 3Total
Assets:
Deferred compensation assets$2,452 $ $ $2,452 
Interest rate swap 2,093  2,093 
Total Assets$2,452 $2,093 $ $4,545 
Liabilities:
Contingent consideration$ $ $500 $500 
Obligation under tax receivable agreement  39,880 39,880 
Deferred compensation liabilities2,452   2,452 
Total Liabilities$2,452 $ $40,380 $42,832 
A description of the inputs used in the valuation of assets and liabilities is summarized as follows:
Level 1 — Inputs represent unadjusted quoted prices for identical assets or liabilities exchanged in active markets.
Level 2 — Inputs include directly or indirectly observable inputs other than Level 1 inputs such as quoted prices for similar assets or liabilities exchanged in active or inactive markets; quoted prices for identical assets or liabilities exchanged in inactive markets; other inputs that are considered in fair value determinations of the assets or liabilities, such as interest
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rates and yield curves that are observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks and default rates; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 — Inputs include unobservable inputs used in the measurement of assets and liabilities. Management is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets or liabilities or related observable inputs that can be corroborated at the measurement date. Measurements of non-exchange traded derivative contract assets and liabilities are primarily based on valuation models, discounted cash flow models or other valuation techniques that are believed to be used by market participants. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in pricing assets or liabilities.
The deferred compensation assets are held in mutual funds. The fair value of the deferred compensation assets and liabilities is based on the quoted market prices for the mutual funds and thus represents a Level 1 fair value measurement.
On January 4, 2019, we entered into a tax receivable agreement (“TRA”) with our former owners. The fair value of the obligation under the TRA was estimated using company specific assumptions that are not observable in the market and thus represents a Level 3 fair value measurement. Management’s estimate of the valuation of the obligation under the TRA is based on a Monte Carlo model which involves the use of projected cash flows of the Company, a discount rate, and historical deferred tax assets subject to the agreement. There were no remeasurement adjustments or payments made under the TRA during the three and six months ended June 30, 2022. We made a remeasurement adjustment of $4.3 million and payment of $0.7 million during the three and six months ended June 30, 2021.
In May 2020, we entered into an interest rate swap agreement to manage our interest rate exposure. For additional information on the interest swap agreement, see Note 8, Long-Term Debt. The carrying value of interest rate swap contracts is at fair value, which is determined based on current interest rate and forward interest rates as of the balance sheet date and is classified within Level 2.
In January 2022, a $0.5 million earn-out payment was made to the previous owners of a surgical laser equipment solutions company, in which we acquired assets on December 11, 2020, based on achievement of certain revenue results. During the three months ended June 30, 2022, we completed the acquisition of several small surgical equipment repair companies and as a result, accrued $3.6 million for future earn-out payments contingent upon achievement of certain revenue results.
Fair Value of Other Financial Instruments
The Company considers that the carrying amount of financial instruments, including accounts receivable, accounts payable and accrued liabilities approximates fair value due to their short maturities. The fair value of our outstanding First Lien Term Loan (as defined in Note 8, Long-Term Debt) as of June 30, 2022 and December 31, 2021, is based on the quoted market price for the same or similar issues of debt, which represents a Level 2 fair value measurement, is approximately:
June 30, 2022December 31, 2021
(in thousands)Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
First Lien Term Loan (1)
$1,046,980 $1,013,105 $1,167,649 $1,174,871 
________________________
(1)
The carrying value of the First Lien Term Loan is net of unamortized deferred financing costs of $9.2 and $10.4 million and unamortized debt discount of $3.0 and $5.0 million as of June 30, 2022 and December 31, 2021, respectively.
6.    Selected Financial Statement Information
Property and Equipment
Our Property and Equipment is grouped into Medical Equipment and Property and Office Equipment. Depreciation of medical equipment is provided on the straight-line method over the equipment’s estimated useful life, generally four to seven years. The cost and accumulated depreciation of medical equipment retired or sold is eliminated from their respective accounts and the resulting gain or loss is recorded in cost of revenue in the period the asset is retired or sold. Property and office equipment includes property, leasehold improvements and office equipment. Depreciation and amortization of property and office equipment is provided on the straight-line method over the lesser of the remaining useful life or lease
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term for leasehold improvements and three to ten years for office equipment. The cost and accumulated depreciation or amortization of property and equipment retired or sold is eliminated from their respective accounts and the resulting gain or loss is recorded in selling, general and administrative expense in the period the asset is retired or sold.
(in thousands)June 30,
2022
December 31,
2021
Medical equipment$372,639 $359,284 
Less: Accumulated depreciation(233,142)(209,516)
Medical equipment, net139,497 149,768 
Leasehold improvements45,938 39,026 
Office equipment and vehicles148,187 135,643 
194,125 174,669 
Less: Accumulated depreciation(82,132)(66,067)
Property and office equipment, net111,993 108,602 
Total property and equipment, net$251,490 $258,370 
Depreciation expense recognized during the three months ended June 30, 2022 and 2021 was $23.9 and $26.7 million, respectively. Depreciation expense recognized during the six months ended June 30, 2022 and 2021 was $46.4 and $52.9 million, respectively.
There were no impairment charges on property and equipment during the three and six months ended June 30, 2022 and 2021.
Goodwill and Other Intangible Assets
Our goodwill as of June 30, 2022 and December 31, 2021 consists of the following:
(in thousands)
Balance at December 31, 2021$1,213,121 
Acquisitions5,208 
Balance at June 30, 2022$1,218,329 
There were no impairment losses recorded on goodwill through June 30, 2022.
Our other intangible assets as of June 30, 2022 and December 31, 2021 consist of the following:
June 30, 2022
(in thousands)GrossAccumulated
Amortization
Net
Finite-life intangibles
Customer relationship$756,889 $(235,101)$521,788 
Non-compete agreements5,235 (4,511)724 
Trade names7,806 (1,665)6,141 
Developed technology2,300 (479)1,821 
Total other intangible assets$772,230 $(241,756)$530,474 
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December 31, 2021
(in thousands)GrossAccumulated
Amortization
Net
Finite-life intangibles
Customer relationship$756,889 $(194,312)$562,577 
Non-compete agreements14,613 (13,222)1,391 
Trade names9,179 (2,230)6,949 
Developed technology2,300 (58)2,242 
Total other intangible assets$782,981 $(209,822)$573,159 
Our other intangible assets are amortized over their estimated economic lives of three to fifteen years. The straight-line method of amortization generally reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained by the Company in each reporting period. However, for certain of our customer relationships, we use the sum-of-the-years-digits amortization method to more appropriately allocate the cost to earnings in proportion to the estimated amount of economic benefit obtained.
Total amortization expense related to intangible assets was $21.5 and $20.6 million for the three months ended June 30, 2022 and 2021, respectively, and $42.7 and $37.1 million for the six months ended June 30, 2022 and 2021, respectively. There were no impairment charges during the three and six months ended June 30, 2022 and 2021 with respect to other intangible assets.
The estimated future amortization expense for identifiable intangible assets during the remainder of 2022 and the next five years is as follows:
(in thousands)
Remainder of 2022$43,280 
202379,108 
202468,604 
202562,242 
202655,870 
202749,516 
Supplementary Cash Flow Information
Supplementary cash flow information is as follows:
Six Months Ended
June 30,
(in thousands)20222021
Non-cash activities:
Property and equipment purchases included in accounts payable (at end of period)$4,976 $2,672 
Finance lease assets and liability additions3,236 1,644 
Operating lease right-of-use assets and operating lease liability additions16,472 5,543 
Issuance of common stock related to acquisition 11,300 
7.    Share-Based Compensation
The 2018 Omnibus Incentive Plan (“2018 Plan”) provides for the issuance of 16.7 million nonqualified stock options, restricted stock units and performance restricted stock units to any of the Company’s executives, other key employees and certain non-employee directors. The stock options allow for the purchase of shares of common stock of the Company at prices equal to the stock’s fair market value at the date of grant. Options granted had a ten-year contractual term and vest over one to four years. The restricted stock units vest over one to four years. The performance restricted stock units vest over three years upon achievement of established performance targets as defined in the respective award agreements.
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The shares issued to a grantee upon the exercise of such grantee’s options will be subject to certain restrictions on transferability as provided in the 2018 Plan. Grantees are subject to non-competition, non-solicitation and confidentiality requirements as set forth in their respective stock option grant agreements. Forfeited options, restricted stock units and performance restricted stock units are available for future issue.
We determine the fair value of stock options using the Black-Scholes option pricing model. The estimated fair value of options, including the effect of estimated forfeitures, is recognized as an expense on a straight-line basis over the options’ expected vesting periods.
In connection with our IPO, we granted certain of our employees, including our named executive officers, restricted stock units, performance restricted stock units, and stock options under the 2018 Plan with respect to approximately 1.6 million shares of the Company’s common stock.
A total of 2.0 million shares of our common stock are reserved for issuance under our Employee Stock Purchase Plan ("ESPP"). Employees are permitted to purchase the Company’s common stock at 85% of market value at the end of the six-month offering period ending on April 30 and October 31 each year. 0.1 million shares were issued under the ESPP as of June 30, 2022. The Company recognizes share-based compensation expense for the discount received by participating employees. The Company recognized $0.1 and $0.4 million share-based compensation expense for the discount received by participating employees for the three and six months ended June 30, 2022.
Remaining authorized options, restricted stock units and performance restricted stock units available for future issuance were 7.4 million shares at June 30, 2022.
8.    Long-Term Debt
Long-term debt consists of the following:
(in thousands)June 30,
2022
December 31,
2021
Revolving Loan$20,000 $ 
First Lien Term Loan1,059,248 1,183,071 
Finance lease liability25,285 26,621 
1,104,533 1,209,692 
Less: unamortized deferred financing costs and debt discount(13,782)(17,190)
1,090,751 1,192,502 
Less: Current portion of long-term debt(17,735)(17,534)
Total long-term debt$1,073,016 $1,174,968 

We are party to a seven-year senior secured delayed draw term loan facility due January 2026 which, as amended, provides an aggregate principal amount of $1.285 billion in borrowing capacity (the “First Lien Term Loan”). We also have access to a senior secured revolving credit facility due January 2026 in an aggregate principal amount of $250 million (the “Revolving Loan”).

During the second quarter of fiscal 2022, we borrowed $20.0 million under our Revolving Loan and utilized the proceeds to prepay borrowings under the First Lien Term Loan. For the six months ended June 30, 2022, we prepaid $119.1 million of the borrowings under the First Lien Term Loan which resulted in a loss on extinguishment of $1.4 million.
Additional information regarding our indebtedness arrangements can be found within the notes to our consolidated financial statements in our most recently filed Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Interest Rate Swap. In May 2020, we entered into an interest rate swap agreement for a total notional amount of $500.0 million, which has the effect of converting a portion of our First Lien Term Loan to fixed interest rates. The effective date for the interest rate swap agreement was June 2020 and the expiration date is June 2023.
The interest rate swap agreement qualifies for cash flow hedge accounting under ASC Topic 815, “Derivatives and Hedging.” Both at inception and on an on-going basis, we must perform an effectiveness test. The fair value of the interest rate swap agreement at June 30, 2022 was $12.4 million all of which is included in other current assets on our consolidated balance sheet. The change in fair value was recorded as a component of accumulated other comprehensive loss on our
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consolidated balance sheet, net of tax, since the instrument was determined to be an effective hedge at June 30, 2022. We have not recorded any amounts due to ineffectiveness for any periods presented.
As a result of our interest rate swap agreement, we expect the effective interest rate on $350.0 million and $150.0 million of our First Lien Term Loan to be 0.3396% and 0.3290%, respectively, plus the Applicable Margin through June 2023.
We were in compliance with all financial debt covenants for all periods presented.
9.    Leases
We lease facilities under operating lease agreements, which include both monthly and longer-term arrangements. Our finance leases consist primarily of leased vehicles.
The lease assets and liabilities are as follows:
(in thousands)June 30,
2022
December 31,
2021
Lease AssetsClassification
Operating lease assetsOperating lease right-of-use assets$85,669 $80,676 
Finance lease assetsProperty and equipment (1)25,266 26,098 
Total leased assets$110,935 $106,774 
Lease Liabilities
Current:
OperatingCurrent portion of operating lease liability$23,198 $22,826 
FinanceCurrent portion of long-term debt8,337 8,136 
Noncurrent:
OperatingOperating lease liability, less current portion73,122 63,241 
FinanceLong-term debt, less current portion16,948 18,485 
Total lease liabilities$121,605 $112,688 
____________________
(1)
Finance lease assets are recorded net of accumulated depreciation of $25.3 and $20.4 million as of June 30, 2022 and December 31, 2021, respectively.
The lease cost for the three and six months ended June 30, 2022 and 2021 was as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2022202120222021
Lease Cost
Finance lease cost:
Amortization of right-of-use assets$2,198 $2,186 $4,344 $4,378 
Interest on lease liabilities191 196 383 378 
Operating lease cost7,221 4,794 14,496 9,100 
Short-term lease cost286 156 530 312 
Variable lease cost1,604 1,314 3,110 2,775 
Total lease cost$11,500 $8,646 $22,863 $16,943 
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The maturity of lease liabilities at June 30, 2022 was as follows:
(in thousands)Operating
Leases
Finance
Leases
Total
2022 remaining$12,788 $4,887 $17,675 
202323,749 4,069 27,818 
202420,686 3,456 24,142 
202516,825 2,884 19,709 
202612,959 2,407 15,366 
Thereafter14,953 10,702 25,655 
Total lease payments$101,960 $28,405 $130,365 
Less: Interest5,640 3,120 8,760 
Present value of lease liabilities$96,320 $25,285 $121,605 
The lease term and discount rate at June 30, 2022 were as follows:
June 30,
2022
Lease Term and Discount Rate
Weighted-average remaining lease term (years)
Operating leases5.1
Finance leases2.2
Weighted-average discount rate
Operating leases2.2 %
Finance leases2.3 %
Other information related to cash paid related to lease liabilities and lease assets obtained for the six months ended June 30, 2022 and 2021 was as follows:
Six Months Ended
June 30,
(in thousands)20222021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for finance leases$383 $378 
Operating cash flows for operating leases12,743 8,743 
Financing cash flows for finance leases4,484 4,270 
Lease asset obtained in exchange for new finance lease liabilities3,236 1,644 
Lease asset obtained in exchange for new operating lease liabilities16,472 5,543 
10.    Dividend
In November 2019, the Company declared a $2.23 dividend per share that was paid to holders of common stock and is paid upon vesting to holders of restricted stock units and performance restricted stock units. An immaterial amount of dividends were paid during the three months ended June 30, 2022 and 2021. Dividends paid during both the six months ended June 30, 2022 and 2021 were $0.9 million.
Dividends payable was $0.3 million as of June 30, 2022, all of which was included in accounts payable, and $1.2 million as of December 31, 2021, of which $0.9 million was included in accounts payable and $0.3 million was included in other long-term liabilities.
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11.    Commitments and Contingencies
The Company, in the ordinary course of business, is subject to liability claims related to employees and the equipment that it rents and services. Asserted claims are subject to many uncertainties and the outcome of individual matters is not predictable. For certain claims where the loss is probable, a provision is recorded based on the Company’s best estimate. While the ultimate resolution of these actions may have an impact on the Company’s financial results for a particular reporting period, management believes that any such resolution would not have a material adverse effect on the financial position, results of operations or cash flows of the Company and the chance of a negative outcome on outstanding litigation is considered remote.
12.    Related Party Transaction
Since January 2019, we have been controlled by THL Agiliti LLC, an affiliate of Thomas H. Lee Partners, L.P., our principal stockholder. On January 4, 2019, the Company entered into an advisory services agreement (the “Advisory Services Agreement”) with Agiliti Holdco, Inc., Agiliti Health, Inc. and THL Managers VIII, LLC (the “Advisor”). Pursuant to the Advisory Services Agreement, the Advisor provided management, consulting and other advisory services to the Company. In consideration for these services, the Company paid to the Advisor (i) a non-refundable periodic retainer fee in an aggregate amount per fiscal quarter equal to the greater of (a) $375,000 or (b) 1% of the consolidated Adjusted EBITDA (as defined in the Advisory Services Agreement) for the immediately preceding fiscal quarter or such other amount as may be mutually agreed, with the first such payment to be made on April 15, 2019, (ii) fees in amounts to be mutually agreed upon in connection with any financing or refinancing, dividend, recapitalization, acquisition, disposition and spin-off or split-off transaction, (iii) in the case of an initial public offering (“IPO”), in addition to the fees under clauses (i) and (ii), an amount equal to the net present value of the higher periodic fee that would have been payable from the date of such IPO until the scheduled termination date of the Advisory Services Agreement, and (iv) fees for other management, consulting and other advisory services to be discussed in good faith among the parties. The companies also paid expenses incurred by the Advisor, its consultants and certain other parties affiliated with Advisor. Total professional services fees incurred to the Advisor were $0 and $0.6 million for the three and six months ended June 30, 2021. The Advisory Services Agreement was terminated upon the completion of the IPO. In connection with the termination of the Advisory Services Agreement, we were required to pay to the Advisor a buyout fee of approximately $7.0 million, which was expensed immediately in the second quarter of 2021.
13.    Employee Benefit Plans
Pension plan benefits are to be paid to eligible employees after retirement based primarily on years of credited service and participants’ compensation. The Company uses a December 31 measurement date. Effective December 31, 2002, the Company froze the benefits under the pension plan.
The components of net periodic benefit cost are as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
(in thousands)2022202120222021
Interest cost$213 $196 $424 $393 
Expected return on plan assets(284)(276)(569)(553)
Recognized net actuarial loss 73  146 
Net periodic benefit cost$(71)$(7)$(145)$(14)
The Company made $0.2 million of contributions to the pension plan during the six months ended June 30, 2022. The Company expects to make additional contributions of approximately $0.5 million for the remainder of 2022.
14.    Income Taxes
For the three and six months ended June 30, 2022, the Company recorded income tax benefit of $1.7 million and tax expense of $5.2 million, respectively. For the three and six months ended June 30, 2021, the Company recorded income tax expense of $1.4 and $5.9 million, respectively. The income tax benefit for the three months ended June 30, 2022 was primarily due to benefits received from exercised stock options and vested stock compensation. The income tax expense for the six months ended June 30, 2022 was primarily due to the tax-effect of pre-tax income from operations plus addbacks for non-deductible expenses related to executive compensation disallowed under Internal Revenue Code Section 162(m) and partially offset by a benefit from stock options and stock compensation. The income tax expense for the three and six
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months ended June 30, 2021 is primarily due to the tax-effect of pre-tax income from operations plus addbacks for non-deductible transaction costs, nondeductible expenses related to executive compensation disallowed under Internal Revenue Code Section 162(m) and the remeasurement of the tax receivable agreement.
15.    Concentration
For the three and six months ended June 30, 2022, respectively, approximately 10.2% and 10.9% of total revenue related to various contracts with the U.S. Department of Health and Human Services (HHS) and the Assistant Secretary of Preparedness and Response (ASPR).
On February 28, 2022, the Company entered into a new 12-month sole source agreement (the “Agreement”) with HHS and ASPR to provide comprehensive ventilator and powered air purifying respirator (“PAPR”) systems management and maintenance services in connection with ongoing support and maintenance of the national stockpile. This Agreement replaces the Company’s prior agreements with HHS/ASPR that ran from July 21, 2020, to February 27, 2022, and is comprised of an initial 6-month base term, running from the period of February 28, 2022, to August 27, 2022, with a 6-month option term that will expire February 27, 2023.
16.    Earnings Per Share
The following is a reconciliation of the basic and diluted number of shares used in computing earnings per share:
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Basic weighted average shares outstanding132,556,645 122,908,065 131,856,267 111,071,756 
Net effect of dilutive stock awards based upon the treasury stock method6,140,561  6,076,279 7,689,081 
Dilutive weighted average shares outstanding138,697,206 122,908,065 137,932,546 118,760,837 
Basic earnings (loss) per share$0.04 $(0.04)$0.19 $0.04 
Diluted earnings (loss) per share$0.04 $(0.04)$0.18 $0.04 
Anti-dilutive share-based awards excluded from the calculation of dilutive earnings per share7,520 7,790,523 9,203  
17. Subsequent Events
The term of the Company’s current Agreement with HHS/ASPR is intended to allow adequate time for the federal government to complete a longer-term agreement for comprehensive ventilator and PAPR systems management and maintenance services without a lapse in critical COVID-19 pandemic response needs. On August 5, 2022, the Company submitted its response to HHS/ASPR’s request for proposal in connection with this five-year agreement and is awaiting next steps in this regard.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and with the audited consolidated financial statements and the related notes thereto in the Company’s Annual report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (“SEC”) on March 8, 2022 (“2021 Form 10-K Report”). In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. You should review the sections titled “Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements as well as the section titled “Risk Factors” for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Quarterly Report on Form 10-Q and in our 2021 Form 10-K Report.
BUSINESS OVERVIEW
Our Company
Unless otherwise specified, the terms “we”, “our”, “us” and the “Company” refer to Agiliti, Inc. and, where appropriate, its consolidated subsidiaries.
We believe we are one of the leading experts in the manufacturing, management, maintenance and mobilization of mission-critical, regulated, reusable medical devices. We offer healthcare providers a comprehensive suite of medical equipment management and service solutions that help reduce capital and operating expenses, optimize medical equipment utilization, reduce waste, enhance staff productivity and bolster patient safety.
We commenced operations in 1939, originally incorporated in Minnesota in 1954 and reincorporated in Delaware in 2001.
In our more than 80 years of experience ensuring healthcare providers have high-quality, expertly maintained equipment to serve their patients, we’ve established a nationwide operating footprint that supports our offering. This at-scale, local market service and logistics infrastructure positions us to reach customers across the entire healthcare continuum—from individual facilities to the largest and most complex healthcare systems. Our ability to rapidly mobilize, track, repair and redeploy equipment during times of peak need or emergent events has made us a service provider of choice for city, state and the federal government in the management of emergency equipment stockpiles.
Our diverse customer base includes more than 9,000 national, regional and local acute care hospitals, health systems and integrated delivery networks and alternate site providers (such as surgery centers, specialty hospitals, home care providers, long-term acute care hospitals and skilled nursing facilities). We serve the federal government as well as a number of city and state governments providing management and maintenance of emergency equipment stockpiles, and we are an outsourced service provider to medical device manufacturers supporting critical device remediation and repair services. We deliver our solutions through our nationwide network of more than 150 service centers and 7 ISO 13485 Certified Centers of Excellence, among which we employ a team of more than 700 specialized biomed repair technicians, more than 4,000 field-based service operators who work onsite within customer facilities or in our local service centers, and over 200 field sales and account managers. Our fees are primarily paid directly by our customers rather than by direct reimbursement from third-party payors, such as private insurers, Medicare or Medicaid.
We deploy our solution offering across three primary service lines:
On-Site Managed Services: Onsite Managed Services are comprehensive programs that assume full responsibility for the management, reprocessing and logistics of medical equipment at individual facilities and integrated delivery networks (“IDNs”), with the added benefit of enhancing equipment utilization and freeing more clinician time for patient care. This solution monitors and adjusts equipment quantities and availability to address fluctuations in patient census and acuity. Our more than 1,600 onsite employees work 24/7 in customer facilities, augmenting clinical support by integrating proven equipment management processes, utilizing our proprietary management software and conducting daily rounds and unit-based training to ensure equipment is being used and managed properly, overall helping to optimize day-to-day operations and care outcomes. We assume full responsibility for ensuring equipment is available when and where it is needed, removing equipment when no longer in use, and decontaminating, testing and servicing equipment as needed between each patient use. Revenue attributable to such customers represented 22.9% and 30.8% of our total revenue for the three months ended June 30, 2022 and 2021, respectively, and 23.3% and 31.9% of our total revenue for the six months ended June 30, 2022 and 2021, respectively.
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Clinical Engineering Services: Clinical Engineering Services provides maintenance, repair and remediation solutions for all types of medical equipment, including general biomedical equipment, diagnostic imaging equipment and surgical equipment through supplemental and outsourced offerings. Our supplemental offering helps customers manage their equipment repair and maintenance backlog, assist with remediation and regulatory reporting and temporarily fill open biotechnical positions. With our outsourced offering, we assume full management, staffing and clinical engineering service responsibilities for individual or system-wide customer sites. The outsourced model deploys a dedicated, on-site team to coordinate the management of customer-owned equipment utilizing our proprietary information systems, third party vendors of services and parts, and a broad range of professional services for capital equipment planning and regulatory compliance. We leverage more than 700 technical resources from our over 150 local market service centers and 7 Centers of Excellence to flex staff in and out of customer facilities on an as-needed basis, ensuring customers pay only for time spent directly servicing their equipment by an appropriately qualified technician. We use flex staffing for our supplemental clinical engineering solution and to augment support when additional technicians are needed to supplement our outsourced services during peak workload. We contract our Clinical Engineering Services with acute care and alternate site facilities across the U.S., as well as with the federal government and any medical device manufacturers that require a broad logistical footprint to support their large-scale service needs. Revenue attributable to such customers represented 38.1% and 40.4% of our total revenue for the three months ended June 30, 2022 and 2021, respectively, and 36.5% and 36.3% of our total revenue for the six months ended June 30, 2022 and 2021, respectively.
Equipment Solutions: Equipment Solutions primarily provides supplemental, peak need and per-case rental of general biomedical, specialty, and surgical equipment to acute care hospitals and alternate site providers in the U.S., including some of the nation’s premier healthcare institutions and integrated delivery networks. We contract for Equipment Solutions services directly with customers or through our contractual arrangements with hospital systems and alternate site providers. We consistently achieve high customer satisfaction ratings by delivering patient-ready equipment within our contracted equipment delivery times and by providing technical support and educational in-servicing for equipment as-needed in clinical departments, including the emergency room, operating room, intensive care, rehabilitation and general patient care areas. We are committed to providing the highest quality of equipment to our customers, and we do so through the use of our comprehensive Quality Management System which is based on the quality standards recognized worldwide for medical devices: 21 CFR 820 and ISO 13485:2016. This commitment ensures that customers have access to patient-ready equipment with the confidence of knowing it has been prepared and maintained to the highest industry standard to deliver optimal patient safety and outcomes. Revenue attributable to such customers represented 39.0% and 28.8% of our total revenue for the three months ended June 30, 2022 and 2021, respectively, and 40.2% and 31.8% of our total revenue for the six months ended June 30, 2022 and 2021, respectively.
Many of our customers have multiple contracts and have revenue reported in multiple service lines. Our contracts vary based upon service offering, including with respect to term (with most being multi-year contracts), pricing (daily, monthly and fixed fee arrangements) and termination (termination for convenience to termination for cause only). Many of our contracts contain customer commitment guarantees and annual price increases tied to the consumer price index. Standard contract terms include payment terms, limitation of liability, force majeure provisions and choice of law/venue.
Further, the infrastructure and capabilities required to provide connected, responsive equipment lifecycle management is typically cost-prohibitive, even for large IDNs. Our nationwide network of clinical engineers, storage and repair facilities, vehicles and analytics tools gives us scale to provide cost-effective services for individual facilities, systems, regional IDNs, governments and device manufacturers.
Impact of COVID-19 on our Business
We have taken proactive action to protect the health and safety of our employees, customers, partners and suppliers. There continues to be uncertainty related to the full extent of the impact of the COVID-19 outbreak on our future results, but we believe our business model and our available borrowings under our Revolving Credit Facility position us well to continue to manage our business through this crisis.
We continue to monitor the evolving situation and guidance from federal, state and local public health authorities and may take additional actions based on their recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our operating plan. As such, given the nature of this situation, we cannot reasonably estimate the future impacts of COVID-19 on our financial condition, results of operations or cash flows.
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Initial Public Offering
On April 22, 2021, our registration statement on Form S-1 (File No. 333-253947) related to our initial public offering (“IPO”) was declared effective by the SEC, and our common stock began trading on the New York Stock Exchange (“NYSE”) on April 23, 2021. Our IPO closed on April 27, 2021.
RESULTS OF OPERATIONS
The following discussion addresses:
our financial condition as of June 30, 2022; and
the results of operations for the three and six-month periods ended June 30, 2022 and 2021.
This discussion should be read in conjunction with the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and the Management’s Discussion and Analysis of Financial Condition and Results of Operations sections included in our 2021 Form 10-K Report.
The following tables provide our results of operations for the three and six months ended June 30, 2022 and 2021:
Three Months Ended
June 30,
Change
(in thousands)2022 2021$%
Consolidated Statement of Operations Data:% of total revenue% of total revenue
Revenue$273,984 100.0 %$250,543 100.0 %$23,441 9.4 %
Cost of revenue175,819 64.2 151,435 60.4 24,384 16.1 
Gross margin98,165 35.8 99,108 39.6 (943)(1.0)
Selling, general and administrative expense82,121 30.0 81,056 32.4 1,065 1.3 
Operating income16,044 5.8 18,052 7.2 (2,008)(11.1)
Loss on extinguishment of debt1,418 0.5 10,116 4.0 (8,698)(86.0)
Interest expense11,261 4.1 11,713 4.7 (452)(3.9)
Income (loss) before income taxes and noncontrolling interest3,365 1.2 (3,777)(1.5)7,142 189.1 
Income tax (benefit) expense(1,698)(0.6)1,394 0.6 (3,092)(221.8)
Consolidated net income (loss)$5,063 1.8 $(5,171)(2.1)$10,234 197.9 
Six Months Ended
June 30,
Change
(in thousands)2022 2021$%
Consolidated Statement of Operations Data:% of total revenue% of total revenue
Revenue$568,428 100.0 %$485,788 100.0 %$82,640 17.0 %
Cost of revenue346,636 61.0 285,358 58.7 61,278 21.5 
Gross margin221,792 39.0 200,430 41.3 21,362 10.7 
Selling, general and administrative expense168,259 29.6 150,279 30.9 17,980 12.0 
Operating income53,533 9.4 50,151 10.4 3,382 6.7 
Loss on extinguishment of debt1,418 0.2 10,116 2.1 (8,698)(86.0)
Interest expense21,925 3.9 29,733 6.1 (7,808)(26.3)
Income before income taxes and noncontrolling interest30,190 5.3 10,302 2.2 19,888 193.0 
Income tax (benefit) expense5,207 0.9 5,890 1.2 (683)(11.6)
Consolidated net income$24,983 4.4 $4,412 1.0 $20,571 466.3 
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Consolidated Results of Operations for the three months ended June 30, 2022 compared to the three months ended June 30, 2021
Total Revenue
The following table presents revenue by service solution for the three months ended June 30, 2022 and 2021:
Three Months Ended
June 30,
Change
(in thousands)20222021%
Equipment Solutions$106,852 $72,140 48.1 %
Clinical Engineering104,412 101,141 3.2 
Onsite Managed Services62,720 77,262 (18.8)
Total revenue$273,984 $250,543 9.4 %
Total revenue for the three months ended June 30, 2022 was $274.0 million, compared to $250.5 million for the three months ended June 30, 2021, an increase of $23.5 million or 9.4%. Equipment Solutions revenue increased 48.1% primarily driven by the Sizewise acquisition completed on October 1, 2021 which was partially offset by lower utilization of our medical equipment post-COVID. Clinical Engineering revenue increased 3.2% primarily due to continued new business growth offset partially by lower federal government revenue. Finally, our Onsite Managed Services revenue decreased 18.8% primarily driven by lower revenue associated with the renewal of the federal government contract. See Note 15, Concentration, to the consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q for additional information on the renewed federal government contract.
Cost of Revenue
Total cost of revenue for the three months ended June 30, 2022 was $175.8 million compared to $151.4 million for the three months ended June 30, 2021, an increase of $24.4 million or 16.1%. On a percentage of revenue basis, cost of revenue increased from 60.4% of revenue in 2021 to 64.2% in 2022. The increase as a percentage of revenue was driven primarily from the federal government contract renewal and lower utilization of our medical equipment post-COVID.
Gross Margin
Total gross margin for the three months ended June 30, 2022 was $98.2 million, or 35.8% of total revenue, compared to $99.1 million, or 39.6% of total revenue, for the three months ended June 30, 2021, a decrease of $0.9 million or 1.0%. The decrease in gross margin as a percentage of revenue was primarily impacted by the federal government contract renewal and lower utilization of our medical equipment.
Selling, General and Administrative Expense
Selling, general and administrative expense increased $1.1 million, or 1.3%, to $82.1 million for the three months ended June 30, 2022 as compared to the same period of 2021. Selling, general and administrative expense as a percentage of total revenue was 30.0% and 32.4% for the three months ended June 30, 2022 and 2021, respectively. The increase of $1.1 million was primarily due to the increases in costs and amortization expense related to the acquisition of Sizewise in 2021, partially offset by the elimination of the management services agreement with our majority owner.
Loss on Extinguishment of Debt

Loss on extinguishment of debt for the three months ended June 30, 2022 was $1.4 million, compared to $10.1 million for the three months ended June 30, 2021, a decrease of $8.7 million or 86.0%. Loss on extinguishment of debt for the three months ended June 30, 2022 consisted of the write-off of unamortized debt discount related to the paydown of our term loan. The loss in 2021 was the result of the write-off of the unamortized deferred financing cost and debt discount along with an additional 1% redemption price related to the repayment of our Second Lien Term Loan.
Interest Expense
Interest expense decreased $0.5 million to $11.3 million for the three months ended June 30, 2022 as compared to the same period of 2021 primarily due to the repayment of our Second Lien Term Loan from the proceeds of the IPO in the second quarter of 2021 as well as the paydown of $71.5 million on our First Lien Term Loan in the first quarter of 2022.
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Income Taxes
Income taxes were a benefit of $1.7 million and an expense of $1.4 million for the three months ended June 30, 2022 and 2021, respectively. The income tax benefit for the three months ended June 30, 2022 was primarily due to benefits received from exercised stock options and vested stock compensation. The income tax expense for the three months ended June 30, 2021 was primarily related to nondeductible expenses related to executive compensation disallowed under Internal Revenue Code Section 162(m).
Consolidated Net Income
Consolidated net income increased $10.2 million to $5.1 million in the second quarter of 2022 as compared to the same period of 2021. The increase in net income was impacted by the 9.4% increase in revenue.
Consolidated Results of Operations for the six months ended June 30, 2022 compared to the six months ended June 30, 2021
Total Revenue
The following table presents revenue by service solution for the six months ended June 30, 2022 and 2021:
Six Months Ended
June 30,
Change
(in thousands)20222021%
Equipment Solutions$228,707 $154,611 47.9 %
Clinical Engineering207,211 176,247 17.6 
Onsite Managed Services132,510 154,930 (14.5)
Total revenue$568,428 $485,788 17.0 %
Total revenue for the six months ended June 30, 2022 was $568.4 million, compared to $485.8 million for the six months ended June 30, 2021, an increase of $82.6 million or 17.0%. Equipment Solutions revenue increased 47.9% primarily driven by the Sizewise acquisition completed on October 1, 2021 which was partially offset by lower utilization of our medical equipment post-COVID. Clinical Engineering revenue increased 17.6% primarily due to new business growth offset partially by lower federal government revenue. Finally, our Onsite Managed Services revenue decreased 14.5% primarily driven by lower revenue associated with the renewal of the federal government contract.
Cost of Revenue
Total cost of revenue for the six months ended June 30, 2022 was $346.6 million compared to $285.4 million for the six months ended June 30, 2021, an increase of $61.2 million or 21.5%. On a percentage of revenue basis, cost of revenue increased from 58.7% of revenue in 2021 to 61.0% in 2022. The increase as a percentage of revenue was driven primarily by the federal government contract renewal and lower utilization of our medical equipment post-COVID.
Gross Margin
Total gross margin for the six months ended June 30, 2022 was $221.8 million, or 39.0% of total revenue, compared to $200.4 million, or 41.3% of total revenue, for the six months ended June 30, 2021, an increase of $21.4 million or 10.7%. The decrease in gross margin as a percentage of revenue was primarily impacted by the federal government contract renewal, lower utilization of our equipment, and the acquisitions completed in the prior year.
Selling, General and Administrative Expense
Selling, general and administrative expense increased $18.0 million, or 12.0%, to $168.3 million for the six months ended June 30, 2022 as compared to the same period of 2021. Selling, general and administrative expense as a percentage of total revenue was 29.6% and 30.9% for the six months ended June 30, 2022 and 2021, respectively. The increase of $18.0 million was primarily due to the increases in costs and amortization expense related to the acquisition of Northfield and Sizewise in 2021, partially offset by the elimination of the management services agreement with our majority owner.
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Loss on Extinguishment of Debt
Loss on extinguishment of debt for the six months ended June 30, 2022 was $1.4 million, compared to $10.1 million for the six months ended June 30, 2021, a decrease of $8.7 million or 86.0%. Loss on extinguishment of debt for the six months ended June 30, 2022 consisted of the write-off of unamortized debt discount related to the paydown of our term loan. The loss in 2021 was the result of the write-off of the unamortized deferred financing cost and debt discount along with an additional 1% redemption price related to the repayment of our Second Lien Term Loan.
Interest Expense
Interest expense decreased $7.8 million to $21.9 million for the six months ended June 30, 2022 as compared to the same period of 2021 primarily due to the repayment of our Second Lien Term Loan from the proceeds of the IPO in the second quarter of 2021 as well as the paydown of $123.8 million on our First Lien Term Loan during the first six months of 2022.
Income Taxes
Income taxes were an expense of $5.2 million and $5.9 million for the six months ended June 30, 2022 and 2021, respectively. The income tax expense for the six months ended June 30, 2022 was primarily due to the tax-effect of pre-tax income from operations plus addbacks for non-deductible expenses related to executive compensation disallowed under Internal Revenue Code Section 162(m) and benefits received from exercised stock options. The income tax expense for the six months ended June 30, 2021 was primarily related to operating income, addbacks for non-deductible transaction costs and the remeasurement of the tax receivable agreement.
Consolidated Net Income
Consolidated net income increased $20.6 million to $25.0 million in the six months ended June 30, 2022 as compared to the same period of 2021. The increase in net income was impacted by the 17.0% increase in revenue.
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Adjusted EBITDA
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) was $158.7 and $163.9 million for the six months ended June 30, 2022 and 2021, respectively. Adjusted EBITDA for the six months ended June 30, 2022 was lower than in 2021 primarily due to the reduction in gross margin.
EBITDA is defined as earnings attributable to Agiliti, Inc. before interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding non-cash share-based compensation expense, management fees and other non-recurring gains, expenses or losses, transaction costs, remeasurement of tax receivable agreement and loss on extinguishment of debt. In addition to using EBITDA and Adjusted EBITDA internally as measures of operational performance, we disclose them externally to assist analysts, investors and lenders in their comparisons of operational performance, valuation and debt capacity across companies with differing capital, tax and legal structures. We believe the investment community frequently uses EBITDA and Adjusted EBITDA in the evaluation of similarly situated companies. Adjusted EBITDA is also used by the Company as a factor to determine the total amount of incentive compensation to be awarded to executive officers and other employees. EBITDA and Adjusted EBITDA, however, are not measures of financial performance under GAAP and should not be considered as alternatives to, or more meaningful than, net income as measures of operating performance or to cash flows from operating, investing or financing activities or as measures of liquidity. Since EBITDA and Adjusted EBITDA are not measures determined in accordance with GAAP and are thus susceptible to varying interpretations and calculations, EBITDA and Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. EBITDA and Adjusted EBITDA do not represent amounts of funds that are available for management’s discretionary use. EBITDA and Adjusted EBITDA presented below may not be the same as EBITDA and Adjusted EBITDA calculations as defined in the First Lien Credit Facilities. A reconciliation of net income (loss) attributable to Agiliti, Inc. to Adjusted EBITDA is included below:
Six Months Ended
June 30,
(in thousands)20222021
Net income attributable to Agiliti, Inc. and Subsidiaries$24,890 $4,355 
Interest expense21,925 29,733 
Income tax expense5,207 5,890 
Depreciation and amortization91,542 91,814 
EBITDA143,564 131,792 
Non-cash share-based compensation expense10,206 5,766 
Management and other expenses— 7,626 
Transaction costs (1)3,521 4,252 
Tax receivable agreement remeasurement— 4,345 
Loss on extinguishment of debt (2)1,418 10,116 
Adjusted EBITDA$158,709 $163,897 
Other Financial Data:
Net cash provided by operating activities$101,138 $107,508 
Net cash provided by (used in) investing activities(36,961)(475,066)
Net cash provided by (used in) financing activities(121,978)264,723 
____________________
(1) Transaction costs represent costs associated with potential and completed mergers and acquisitions and are primarily related to the Northfield and Sizewise acquisitions.
(2) Loss on extinguishment of debt for the six months ended June 30, 2022 consists of the write-off of the unamortized debt discount related to the partial prepayment of the First Lien Term Loan. Loss on extinguishment of debt for the six months ended June 30, 2021 consists of the write-off of the unamortized deferred financing costs and debt discount and an additional 1% redemption price related to the repayment of our Second Lien Term Loan and the write-off of the unamortized deferred financing cost related to the amendment of our Revolving Credit Facility.
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SEASONALITY
Quarterly operating results are typically affected by seasonal factors. Historically, our first and fourth quarters are the strongest, reflecting increased customer utilization during the fall and winter months. However, COVID-19 has impacted the seasonality of our business.
LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of liquidity are cash flows from operating activities and borrowings under our Revolving Credit Facility, which provides for loans in an amount of up to $250.0 million. Our principal uses of liquidity are to fund capital expenditures related to purchases of medical equipment, provide working capital, meet debt service requirements and finance our strategic plans.
We believe our existing balances of cash and cash equivalents, our currently anticipated operating cash flows and availability under our Revolving Credit Facility will be sufficient to meet our cash needs arising in the ordinary course of business for the next twelve months. If new financing is necessary, there can be no assurance that any such financing would be available on commercially acceptable terms, or at all. To date, we have not experienced difficulty accessing the credit market; however, future volatility in the credit market may increase costs associated with issuing debt instruments or affect our ability to access those markets. In addition, it is possible that our ability to access the credit market could be limited at a time when we would like, or need to do so, which could have an adverse impact on our ability to refinance debt and/or react to changing economic and business conditions.
Net cash provided by operating activities was $101.1 and $107.5 million for the six months ended June 30, 2022 and 2021, respectively. Net cash provided by operating activities during 2022 was unfavorably impacted by the timing of collections on accounts receivables.
Net cash used in investing activities was $37.0 and $475.1 million for the six months ended June 30, 2022 and 2021, respectively. The decrease in net cash used in investing activities was primarily due to the Northfield Acquisition completed on March 19, 2021.
Net cash used in financing activities was $122.0 million for the six months ended June 30, 2022 compared to net cash provided by financing activities of $264.7 million for the six months ended June 30, 2021. The change in net cash used in financing activities was primarily due to proceeds from the issuance of common stock from the IPO in 2021. In 2022, the change in net cash used in financing was driven by prepayment of the First Lien Term Loan of $119.1 million.
RECENT ACCOUNTING PRONOUNCEMENT
See Note 2, Recent Accounting Pronouncements, to the consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q.
OFF-BALANCE SHEET ARRANGEMENTS
As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (“SPEs”), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of June 30, 2022, we did not have any unconsolidated SPEs.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Form 10-Q are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate”, “estimate”, “expect”, “project”, “plan”, “intend”, “believe”, “may”, “will”, “should”, “can have”, “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:
effects from political and policy changes that could limit our growth opportunities;
effects from the continued COVID-19 pandemic on our business and the economy;
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our potential inability to maintain existing contracts or contract terms with, or enter into new contracts with, our customers;
cancellations by or disputes with customers;
our potential failure to maintain our reputation, including by protecting intellectual property;
effects of a global economic downturn on our customers and suppliers;
a decrease in our customers’ patient census or services;
competitive practices by our competitors that could cause us to lose market share, reduce our prices or increase our expenditures;
the bundling of products and services by our competitors, some of which we do not offer;
consolidation in the healthcare industry, which may lead to a reduction in the prices we charge;
adverse developments with supplier relationships;
the potential inability to change the manner in which healthcare providers traditionally procure medical equipment;
our potential inability to attract and retain key personnel;
our potential inability to make attractive acquisitions or successfully integrate acquire businesses;
an increase in expenses related to our pension plan;
the fluctuation of our cash flow;
credit risks relating to home care providers and nursing homes;
potential claims related to the medical equipment that we outsource and service;
the incurrence of costs that we cannot pass through to our customers;
a failure of our management information systems;
limitations inherent in all internal controls systems over financial reporting;
social unrest;
our failure to keep up with technological changes;
our failure to coordinate the management of our equipment;
challenges to our tax positions or changes in taxation laws;
litigation that may be costly to defend;
uncertainty surrounding healthcare reform initiatives;
federal privacy laws that may subject us to more stringent penalties;
our relationship with healthcare facilities and marketing practices that are subject to federal Anti-Kickback Statute and similar state laws;
our contracts with the federal government that subject us to additional oversight;
the impact of changes in third-party payor reimbursement for healthcare items and services on our customers’ ability to pay for our services;
the highly regulated environment our customers operate in; and
potential recall or obsolescence of our large fleet of medical equipment.
We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q and elsewhere in our filings with the SEC. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this Form 10-Q in the context of these risks and uncertainties.
We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this Form 10-Q are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risk arising from adverse changes in interest rates, fuel costs and pension valuation. We do not enter into derivatives or other financial instruments for speculative purposes.
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Interest Rates
We use both fixed and variable rate debt as sources of financing. As of June 30, 2022, we had approximately $1,104.5 million of total debt outstanding before netting with deferred financing costs and unamortized debt discount, of which $559.2 million was bearing interest at variable rates. Based on variable debt levels at June 30, 2022, a 1.0 percentage point change in interest rates on variable rate debt would have resulted in annual interest expense increasing by approximately $5.6 million.
Fuel Costs
We are exposed to market risks related to changes in the price of gasoline used to fuel our fleet of delivery and sales vehicles. A hypothetical 10% increase in the first six months of 2022 average price of unleaded gasoline, assuming gasoline usage levels for the six months ended June 30, 2022, would lead to an increase in fuel costs of approximately $0.5 million.
Pension
Our pension plan assets, which were approximately $26.4 million at December 31, 2021, are subject to volatility that can be caused by fluctuations in general economic conditions. Continued market volatility and disruption could cause declines in asset values, and if this occurs, we may need to make additional pension plan contributions and our pension expense in future years may increase. A hypothetical 10% decrease in the fair value of plan assets at December 31, 2021 would lead to a decrease in the funded status of the plan of approximately $2.6 million.
Other Market Risk
As of June 30, 2022, we have no other material exposure to market risk.
Item 4. Controls and Procedures
i.Evaluation of disclosure controls and procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2022.
ii.Changes in internal control over financial reporting
There was no change in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company, in the ordinary course of business, is subject to liability claims related to employees and the equipment that it rents and services. Asserted claims are subject to many uncertainties and the outcome of individual matters is not predictable. While the ultimate resolution of these actions may have an impact on the Company’s financial results for a particular reporting period, management believes that any such resolution would not have a material adverse effect on the financial position, results of operations or cash flows of the Company and the chance of a negative outcome on outstanding litigation is considered remote. See the additional information in Note 11, Commitments and Contingencies, to the consolidated financial statements included in Part I, Item 1 of the Quarterly Report on Form 10-Q.
Item 1A. Risk Factors
There have been no material changes to the risk factors disclosed under the heading “Risk Factors” in our 2021 Form 10-K Report under Part I, Item 1A for the quarter ended June 30, 2022.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
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Item 6. Exhibits
Exhibit
Number
Description
31.1
31.2
32.1*
32.2*
101.INSInline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
104The cover page for the Company’s Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101.
____________________
*    Furnished, not filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 9, 2022
Agiliti, Inc.
By/s/ Thomas J. Leonard
Thomas J. Leonard
Chief Executive Officer
(Principal Executive Officer and Duly Authorized Officer)
By/s/ James B. Pekarek
James B. Pekarek
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
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