AdaptHealth Corp. (AHCO) came out with quarterly earnings of $0.39 per share, beating the Zacks Consensus Estimate of $0.29 per share. This compares to earnings of $0.64 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 34.48%. A quarter ago, it was expected that this company would post earnings of $0.20 per share when it actually produced earnings of $0.21, delivering a surprise of 5%.Over the last four quarters, the company ha ...

Financial Performance - Net revenue for the full year 2024 was $3,261.0 million, an increase of 1.9% compared to $3,200.2 million in 2023[4] - Net income attributable to AdaptHealth Corp. for 2024 was $90.4 million, a significant recovery from a net loss of $678.9 million in 2023[4] - Adjusted EBITDA for the full year 2024 was $688.7 million, reflecting a 2.7% increase from $670.8 million in 2023[4] - For Q4 2024, net revenue was $856.6 million, a slight decrease of 0.2% compared to $858.2 million in Q4 2023[4] - Q4 2024 net income attributable to AdaptHealth Corp. was $50.3 million, recovering from a net loss of $254.5 million in Q4 2023[4] - Adjusted EBITDA for Q4 2024 was $200.6 million, down 2.0% from $204.6 million in Q4 2023[4] - Net revenue for the three months ended December 31, 2024, was $856,645, a slight decrease of 0.1% compared to $858,234 in the same period of 2023[21] - Net income attributable to AdaptHealth Corp. for the twelve months ended December 31, 2024, was $90,422, a significant improvement from a net loss of $678,895 in 2023[32] - Adjusted EBITDA for the twelve months ended December 31, 2024, was $688,657, representing an adjusted EBITDA margin of 21.1%, compared to $670,795 and 21.0% in 2023[32] - Operating income for the three months ended December 31, 2024, was $97,667, compared to an operating loss of $217,804 in the same period of 2023[21] - Total costs and expenses for the twelve months ended December 31, 2024, were $2,997,243, down from $3,798,578 in 2023[21] Cash Flow and Financial Position - Cash flow from operations increased to $541.8 million in 2024 from $480.7 million in 2023, while free cash flow rose to $235.8 million from $143.2 million[4] - Cash flows from operating activities for the twelve months ended December 31, 2024, increased to $541,839 from $480,666 in 2023[23] - The company had cash at the end of the period amounting to $109,747, an increase from $77,132 at the beginning of the period[27] - Free cash flow for Q4 2024 was $73.1 million, compared to $66.6 million in Q4 2023, representing an increase of 7.2%[34] - For the twelve months ended December 31, 2024, free cash flow totaled $143.2 million, a decrease from $235.8 million in 2023, reflecting a decline of 39.2%[34] - Net cash provided by operating activities for Q4 2024 was $150.4 million, down from $155.3 million in Q4 2023, indicating a decrease of 5.7%[34] Strategic Initiatives and Expenses - AdaptHealth reached a definitive agreement to sell certain incontinence assets in its Wellness at Home segment during Q4 2024[4] - The 2024 period included $2.4 million in charges related to the change in fair value of common stock issued following a court-approved securities class action lawsuit[35] - Consulting expenses in 2024 amounted to $13.9 million for systems implementation activities, while 2023 saw $5.6 million for similar expenses, reflecting a significant increase[35] - Severance charges in 2024 were $3.9 million, primarily related to the separation of the former President, compared to $7.1 million in 2023, which included $2.9 million for the former CEO's separation[35] - The company incurred $4.5 million in consulting expenses associated with asset dispositions in 2024, indicating a strategic focus on optimizing asset management[35] Impairments and Interest Expenses - The company reported a goodwill impairment of $13,078 for the twelve months ended December 31, 2024, significantly lower than the $830,787 recorded in 2023[32] - Interest expense for the twelve months ended December 31, 2024, was $126,668, a slight decrease from $130,299 in 2023[32] - Non-cash goodwill impairment charges were recorded in both years, with 2024 reflecting charges related to the disposition of certain immaterial custom rehab technology assets[35]

Core Viewpoint - AdaptHealth Corp. (AHCO) has experienced a significant downtrend with a 16.5% decline over the past four weeks, but it is now in oversold territory, suggesting a potential turnaround as analysts expect better earnings than previously predicted [1]. Group 1: Stock Performance and Indicators - AHCO's stock is currently showing signs of being oversold, with a Relative Strength Index (RSI) reading of 27.47, indicating that the heavy selling pressure may be exhausting itself [5]. - The RSI is a momentum oscillator that helps identify whether a stock is overbought or oversold, with values below 30 typically indicating an oversold condition [2][3]. Group 2: Earnings Estimates and Analyst Consensus - Over the last 30 days, the consensus earnings per share (EPS) estimate for AHCO has increased by 1.6%, reflecting a strong agreement among analysts regarding the company's potential for better earnings [6]. - AHCO holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the likelihood of a near-term turnaround [7].

Core Viewpoint - Investors in the Medical - Products sector may find AdaptHealth Corp. (AHCO) more attractive than Abbott (ABT) for value investing opportunities [1] Group 1: Zacks Rank and Earnings Outlook - AdaptHealth Corp. has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while Abbott has a Zacks Rank of 3 (Hold) [3] - The Zacks Rank focuses on companies with positive earnings estimate revisions, suggesting that AHCO's earnings outlook is improving more significantly than ABT's [3] Group 2: Valuation Metrics - AHCO has a forward P/E ratio of 8.26, significantly lower than ABT's forward P/E of 25.36 [5] - AHCO's PEG ratio is 1.02, while ABT's PEG ratio is 2.43, indicating that AHCO is expected to grow earnings at a more favorable rate relative to its price [5] - AHCO's P/B ratio is 0.79, compared to ABT's P/B of 5.65, further highlighting AHCO's undervaluation [6] Group 3: Overall Value Assessment - Based on various valuation metrics, AHCO holds a Value grade of A, while ABT has a Value grade of C, suggesting that AHCO is the superior value option at this time [6]

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]