Market reaction
Aveanna Healthcare Holdings Inc. (NASDAQ: AVAH) shares declined 9.2% in after-hours trading on Thursday after certain selling stockholders announced a secondary offering of 15 million shares of the company's common stock.
Structure of the sale
The announced offering will be conducted by selling stockholders, who include affiliates of J.H. Whitney Equity Partners VII, LLC and certain current and former directors and officers of Aveanna. Under the terms disclosed, the underwriter has a 30-day option to buy up to an additional 2.25 million shares from certain J.H. Whitney affiliates.
Proceeds and company involvement
Aveanna will not be offering any shares as part of this transaction and will not receive any proceeds from the sale. All net proceeds from the offering are designated to go to the selling stockholders.
Underwriting and management
RBC Capital Markets is serving as the sole book-running manager for the offering.
Company profile
Aveanna Healthcare is a home care platform that focuses on delivering services to medically complex, high-cost patient populations. The Atlanta-based company operates across 39 states and provides pediatric and adult healthcare services, including nursing, hospice, rehabilitation, occupational nursing in schools, therapy, and day treatment center services.
Context for investors
The disclosure that large blocks of existing shares will be sold by shareholders rather than issued by the company coincided with the sharp after-hours price move. The underwriter's option for additional shares creates the potential for further supply to hit the market, depending on whether that option is exercised.
What this means for stakeholders
Because Aveanna will not receive sale proceeds, the company’s capital position will not be directly affected by this transaction. The move is instead a liquidity event for the selling shareholders identified in the filing.