Uncertainty about the permanence of a California private-duty nursing reimbursement increase is holding up Aveanna Healthcare Holdings (Nasdaq: AVAH)’s plans for meaningful base-wage increases.
The company plans to direct more acquisition capital toward home health and some hospice, while pursuing smaller private duty deals to enter six additional states, Aveanna’s company leaders said during its Q3 earnings call on Thursday.
Aveanna aims to grow its home health arm in order to be more relevant to payers and increase density, said Matt Buckhalter, the company’s chief financial officer and principal financial officer.
“Right now, we’re a regional provider in the Midwest and in the Southeast,” Buckhalter said. “But being able to connect those businesses [and] give our team that’s operating at a very high level more responsibility and take it from a $300 million business higher is what our plans and our intention are.”
Atlanta-based Aveanna Healthcare provides pediatric and adult home health, private duty nursing and medical solutions services in 39 states.
To help expand its home health and hospice businesses, Aveanna currently has a robust M&A pipeline. Leadership said the company will pursue acquisitions that fit its culture and deliver significant value for the company and shareholders, Buckhalter said.
Aveanna plans to build out its presence in the Southeast, Southwest and middle America as well, according to CEO Jeff Shaner.
Aveanna’s home health and hospice segment brought in $72.15 million in revenue in Q3, up 15.6% year over year. The company’s overall third-quarter revenue came in at $695.5 million, increasing 11.8% from Q3 2025.
California uncertainty
In September, Shaner shared plans to raise caregiver wages following a hard-fought 40% Medicaid rate increase in California. Now, uncertainty about whether the reimbursement increase will continue beyond June 2027 has delayed Aveanna’s plans to raise nurses’ base wages.
California’s investment in private duty nursing includes approximately $30 million in state funding and an expected federal match of the same amount, for a total of $60 million covering January through June 2027, Shaner said.
However, California’s Department of Health Care Services intends to implement the funding as a supplemental hourly payment rather than a permanent increase to fee-for-service base reimbursement rates, Shaner said. He added that Aveanna is advocating for the funding to continue beyond that six-month period so it can support sustained wage increases.
“We understand how they get there,” Shaner said. “We just vehemently disagree with their position.”
Buckhalter noted that the company will be prepared on Jan. 1, 2027, when the rate increase goes into effect, to address retention and engagement payments for the company’s caregivers, including onboarding, new hiring or volume. He noted that California has become less relevant to Aveanna over the past five years, as the company has grown its presence in other states extensively.
Aveanna will continue advocating for a permanent reimbursement increase to support higher caregiver wages, citing its importance to patients and their families, Buckhalter said.
“The only way to fix the hiring trends and the growth trends in California is to fix the wage rate long-term,” Shaner said. “Growing in each state is really tied to [the] reimbursement rate and wage.”