Core Viewpoint - AdaptHealth Corp. (AHCO) is currently viewed as a more attractive investment option compared to Haleon PLC Sponsored ADR (HLN) for value investors, based on various financial metrics and rankings [1][3][7]. Valuation Metrics - AHCO has a forward P/E ratio of 10.18, significantly lower than HLN's forward P/E of 19.71, indicating that AHCO may be undervalued [5]. - The PEG ratio for AHCO is 1.25, while HLN's PEG ratio stands at 2.72, suggesting that AHCO has a better balance between its price and expected earnings growth [5]. - AHCO's P/B ratio is 0.97, compared to HLN's P/B of 2.07, further supporting the notion that AHCO is undervalued relative to its book value [6]. Earnings Estimates - AHCO holds a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions, while HLN has a Zacks Rank of 4 (Sell), suggesting a less favorable earnings outlook [3][7]. - The stronger estimate revision activity for AHCO compared to HLN implies that AHCO's earnings outlook is improving more significantly [7]. Value Grades - AHCO has received a Value grade of A, while HLN has a Value grade of C, reflecting the overall better valuation metrics and earnings outlook for AHCO [6][7].

Core Insights - AdaptHealth (AHCO) is currently attracting investor attention due to its strong Zacks Rank of 2 (Buy) and an A grade in the Value category, indicating it is a strong value stock [4][6] - The stock has a P/E ratio of 9.42, significantly lower than the industry average of 22.51, suggesting it may be undervalued [4] - AHCO's PEG ratio stands at 1.16, compared to the industry average of 2.23, further indicating potential undervaluation [5][6] Financial Metrics - AHCO's Forward P/E has fluctuated between a high of 12.84 and a low of 7.92 over the past 12 months, with a median of 9.63 [4] - The PEG ratio for AHCO has ranged from a high of 1.37 to a low of 0.45, with a median of 0.67 during the same period [5] - These metrics suggest that AHCO is likely undervalued and has a strong earnings outlook, making it an attractive investment opportunity [6]

Core Insights - AdaptHealth Corp. reported third-quarter sales of $805.86 million, missing the analyst consensus estimate of $809.30 million [1] - The company revised its FY24 net revenue guidance from a range of $3.255 billion - $3.315 billion to $3.220 billion - $3.260 billion [2] - Following the earnings announcement, AdaptHealth shares gained 8.4%, trading at $9.95 [2] Analyst Ratings and Price Targets - Baird analyst Eric Coldwell maintained an Outperform rating but lowered the price target from $16 to $14 [3] - Canaccord Genuity analyst Richard Close maintained a Buy rating and cut the price target from $14 to $13 [3] - UBS analyst Whit Mayo maintained a Buy rating and lowered the price target from $13 to $12 [3] - The consensus price target for AdaptHealth is $13.48 based on ratings from 10 analysts, with a high of $30 and a low of $6.5 [4] - The average price target from the most recent ratings implies a 31.58% upside for AdaptHealth Corp [4]

Core Viewpoint - AdaptHealth reported disappointing third-quarter results, missing analyst expectations for revenue, profitability, and guidance, leading to a nearly 10% drop in stock price [1][2][3] Financial Performance - Revenue for the third quarter was just under $806 million, showing marginal year-over-year growth [2] - Net income was approximately $23 million ($0.15 per share), a significant recovery from a loss of over $454 million in the same quarter last year [2] - The earnings per share fell short of the consensus estimate of $0.19 [3] Guidance Adjustments - The company revised its full-year revenue guidance down to $3.22 billion to $3.26 billion, from a previous range of nearly $3.26 billion to almost $3.32 billion [4] - Adjusted EBITDA guidance was also lowered to $655 million to $675 million, down from $660 million to $700 million [5] - Conversely, free cash flow guidance for 2024 was increased to $175 million to $195 million, up from the previous range of $160 million to $180 million [5]

Financial Performance - Net revenue for Q3 2024 was $805,858, compared to $804,031 in Q3 2023, representing a slight increase of 0.2%[13] - Operating income for Q3 2024 was $63,487, a significant improvement from an operating loss of $461,036 in Q3 2023[13] - Net income attributable to AdaptHealth Corp. for Q3 2024 was $22,859, compared to a net loss of $454,076 in Q3 2023[13] - Total costs and expenses for Q3 2024 were $742,371, down from $1,265,067 in Q3 2023, indicating a reduction of approximately 41.4%[13] - Comprehensive income for Q3 2024 was $20,732, a recovery from a comprehensive loss of $452,855 in Q3 2023[15] - Total net income for the nine months ended September 30, 2024, was $43,377, compared to a net loss of $421,205 for the same period in 2023[15] - Net income for the nine months ended September 30, 2023, was $43.377 million, a significant improvement compared to a loss of $421.205 million in the same period of the previous year[21] Revenue Breakdown - For the nine months ended September 30, 2024, net revenue reached $2.40433 billion, up from $2.341943 billion in 2023, representing a growth of approximately 2.7%[57] - Insurance revenue for the three months ended September 30, 2024, was $490.072 million, a 0.2% increase from $486.136 million in 2023[57] - The Company reported a decrease in government payor revenue, which fell to $208.309 million in Q3 2024 from $220.351 million in Q3 2023, a decline of about 5.5%[57] - The Company’s revenue from capitated revenue arrangements totaled $32.850 million for the three months ended September 30, 2024, with a total of $96.113 million for the nine months[60] - Net revenue from fixed monthly equipment reimbursements totaled $262,315,000, representing 32.5% of total net revenue, down from 33.8% the previous year[175] - Net sales revenue from sleep therapy equipment was $237,537,000, accounting for 29.5% of total net sales revenue, up from 28.2% the previous year[175] - The diabetes product line generated $141,072,000 in revenue, which is 17.5% of total net revenue, a decrease from 19.9% in the prior year[175] Expenses and Costs - General and administrative expenses increased to $49,242 in Q3 2024 from $45,198 in Q3 2023, reflecting an increase of 4.5%[13] - Interest expense, net for the three months ended September 30, 2024, was $31.4 million, a decrease of $0.9 million from $32.3 million in 2023[189] - Total cost of net revenue for the three months ended September 30, 2024, was $681.9 million, a decrease of $11.6 million or 1.7% compared to $693.5 million in 2023[184] - The cost of products and supplies decreased by $12.3 million, primarily due to lower net sales revenue from AdaptHealth's diabetes product category[184] - General and administrative expenses increased to $154.6 million for the nine months ended September 30, 2024, up $11.8 million or 8.3% from $142.8 million in 2023[202] Cash Flow and Financing - Net cash provided by operating activities increased to $391.424 million from $325.400 million year-over-year, reflecting stronger operational performance[21] - Cash at the end of the period was $100.180 million, up from $56.143 million at the end of the previous year[21] - Proceeds from borrowings on long-term debt and lines of credit amounted to $253.477 million, compared to $50.000 million in the previous year, showing increased financing activity[21] - Net cash used in financing activities was $144.973 million, up from $48.668 million year-over-year, reflecting higher debt repayments[21] - The company entered into a 2024 Credit Agreement, which includes a $650 million term loan and $300 million in revolving credit commitments, maturing in September 2029[94] Asset Management - The gross carrying value of patient medical equipment increased to $815.523 million as of September 30, 2024, from $791.349 million at the end of 2023[70] - As of September 30, 2024, identifiable intangible assets totaled $113.452 million, with a weighted average remaining life of 6.0 years for tradenames and 5.8 years for payor contracts[76] - The company had outstanding interest rate derivatives with a notional amount of $250 million as of September 30, 2024, designated as effective cash flow hedges of interest rate risk[89] Market and Operational Insights - AdaptHealth continues to focus on expanding its healthcare-at-home solutions, including sleep therapy and diabetes management products[22] - The company has experienced inflationary pressures, impacting costs for materials, labor, and transportation, which may affect overall demand and margins[166] - AdaptHealth's business is subject to seasonality, with lower net revenue typically observed in the early part of the year due to patient cost-sharing dynamics[172] - The company reported a significant reliance on patient referrals and new patient starts for revenue growth, which may be impacted by inflationary pressures[167] Legal and Compliance - The Company is fully cooperating with investigations related to the False Claims Act concerning billing practices for ventilators and humidifiers[152][158] - The Consolidated Class Action complaint alleges violations of federal securities laws, with unspecified damages sought by the plaintiffs[144][153] - The Company intends to vigorously defend against the allegations in the Allegheny County Consolidated Complaint and the Wu Derivative Complaint[154][157]

Financial Data and Key Metrics Changes - For Q3 2024, net revenue was $805.9 million, up 0.2% compared to Q3 2023 [29] - Adjusted EBITDA was $164.3 million, reflecting an adjusted EBITDA margin of 20.4%, a slight improvement over the same period last year [36] - Free cash flow was $84.8 million, outperforming the target of $30 million [38] - The net leverage ratio improved to 2.87 times compared to 3.51 times in Q3 2023 [41] Business Line Data and Key Metrics Changes - Sleep revenue was $326.4 million, increasing 3.5% year-over-year, with over 1.63 million patients in the sleep resupply census [29][31] - Respiratory revenue reached $164 million, up 8.6% year-over-year, with oxygen patient census surpassing 325,000 [33][34] - Diabetes revenue decreased 11.8% to $141.1 million, primarily due to lower continuous glucose monitoring (CGM) revenue [32] Market Data and Key Metrics Changes - The diabetes market is growing, with over 38 million Americans diagnosed and nearly 100 million pre-diabetic [20] - The company serves 4.2 million patients annually, indicating significant market potential [20] - The CGM market is experiencing pressure from reimbursement changes, impacting new sales orders [32][46] Company Strategy and Development Direction - The company is focusing on a "One Adapt" approach to streamline operations and identify growth opportunities [10] - A shift to a four-segment reporting structure will enhance transparency and focus on growth in sleep health, respiratory health, diabetes health, and wellness at home [25] - The company aims to improve diabetes performance through leadership changes and operational integration with sleep resupply [18][92] Management's Comments on Operating Environment and Future Outlook - Management acknowledged operational challenges in diabetes and emphasized the need for improvement [19][50] - The company is optimistic about growth opportunities in sleep and respiratory segments, while addressing diabetes issues [26][114] - Future guidance for 2024 was adjusted downwards due to recent trends in diabetes, with a focus on stabilizing operations [42][43] Other Important Information - The company completed a non-core asset sale, refinancing of its senior secured credit facility, and paid down $50 million of debt [8][27] - AI and automation initiatives are being rapidly deployed to improve operational efficiency [21][22] - The company is exploring acquisition opportunities but plans to focus on debt reduction in the near term [42] Q&A Session Summary Question: Can you elaborate on the diabetes issues? - Management indicated that the revenue compression is not linked to specific manufacturer issues but rather operational challenges and reimbursement pressures [45][50] Question: How will the diabetes issues impact 2025? - Management anticipates some pressures in 2025 but will provide updated guidance at the end of February [51][53] Question: What are the long-term prospects for diabetes growth? - Management remains bullish on the long-term prospects, indicating that the market is growing, but the company needs to address operational challenges [55][60] Question: How is the Humana contract performing? - The Humana partnership is performing well, and the company is looking to expand similar relationships with other payers [84] Question: Can you discuss the changes in the diabetes team? - The company has appointed a new General Manager and sales leader for diabetes, focusing on leveraging strengths from the sleep and respiratory segments [88][90]

Core Viewpoint - AdaptHealth Corp. reported quarterly earnings of $0.21 per share, exceeding the Zacks Consensus Estimate of $0.20 per share, and showing an increase from $0.19 per share a year ago, indicating a 5% earnings surprise [1] - The company posted revenues of $805.86 million for the quarter ended September 2024, slightly missing the Zacks Consensus Estimate by 0.35%, but showing a year-over-year increase from $804.03 million [2] Financial Performance - Over the last four quarters, AdaptHealth has surpassed consensus EPS estimates three times, demonstrating a consistent performance trend [2] - The company has also topped consensus revenue estimates three times in the last four quarters, indicating strong revenue management [2] Stock Performance - Since the beginning of the year, AdaptHealth shares have increased by approximately 39.2%, significantly outperforming the S&P 500's gain of 19.8% [3] - The current consensus EPS estimate for the upcoming quarter is $0.38 on revenues of $866.36 million, and for the current fiscal year, it is $1 on revenues of $3.27 billion [7] Industry Outlook - The Medical - Products industry, to which AdaptHealth belongs, is currently ranked in the top 33% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact AdaptHealth's stock performance [5]

Exhibit 99.1 FOR IMMEDIATE RELEASE ADAPTHEALTH CORP. ANNOUNCES THIRD QUARTER 2024 RESULTS PLYMOUTH MEETING, Pa. – November 5, 2024 - AdaptHealth Corp. (NASDAQ: AHCO) ("AdaptHealth" or the "Company"), a national leader in providing patient-centered, healthcare-at-home solutions including home medical equipment, medical supplies, and related services, announced today financial results for the third quarter ended September 30, 2024. Third Quarter Results and Highlights All comparisons are to the quarter ended ...

Investors interested in Medical - Products stocks are likely familiar with AdaptHealth Corp. (AHCO) and Lonza Group Ag (LZAGY) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revisio ...

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