AdaptHealth(AHCO) - 2025 Q2 - Quarterly Results

Company Announcement & Highlights AdaptHealth Corp. announced Q2 2025 results, management commentary, and updated financial outlook Second Quarter Results and Highlights AdaptHealth Corp. announced its second quarter 2025 financial results, reporting a slight decrease in net revenue and Adjusted EBITDA compared to the prior year, while cash flow from operations increased year-to-date. The company also completed the sale of certain assets in its Wellness at Home segment Second Quarter 2025 Financial Highlights (YoY Comparison) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Net revenue | $800.4 | $806.0 | -0.7% | | Net income attributable to AdaptHealth Corp. | $14.7 | $19.4 | -24.3% | | Adjusted EBITDA | $155.5 | $165.3 | -5.9% | | Cash flow from operations (YTD) | $257.5 | $247.0 | +4.2% | | Free cash flow (YTD) | $73.3 | $77.9 | -5.9% | - The Company closed on its previously disclosed sales of certain incontinence assets and certain infusion assets in its Wellness at Home segment[5] Management Commentary CEO Suzanne Foster highlighted continued momentum, solid Q2 results, and strategic advancements including a new capitated partnership, initiatives to boost operating efficiency, elevate patient experience, expand profit margins, and rapid progress in debt reduction - AdaptHealth is driving revenue growth, underscored by a new capitated partnership with a major national healthcare system[3] - The company is advancing multiple initiatives to boost operating efficiency, elevate the patient experience, and expand profit margins[3] - Rapid progress is being made in reducing debt and fortifying the financial position[3] Financial Outlook AdaptHealth updated its financial guidance for fiscal year 2025, adjusting net revenue and Adjusted EBITDA ranges while maintaining its free cash flow outlook Updated Fiscal Year 2025 Financial Guidance | Metric | Previous Guidance (Millions) | Updated Guidance (Millions) | Change | | :---------------- | :-------------------------- | :------------------------- | :----- | | Net revenue | $3.15 - $3.29 | $3.18 - $3.26 | Adjusted | | Adjusted EBITDA | $662 - $702 | $642 - $682 | Adjusted | | Free cash flow | $170 - $190 | $170 - $190 | Unchanged | About AdaptHealth Corp. AdaptHealth is a national leader in patient-centered healthcare-at-home solutions, serving millions of patients through a diverse referral network Company Description and Segments AdaptHealth is a national leader in providing patient-centered, healthcare-at-home solutions, operating through four reportable segments: Sleep Health, Respiratory Health, Diabetes Health, and Wellness at Home, each focusing on specific medical equipment, supplies, and related services - AdaptHealth is a national leader in providing patient-centered, healthcare-at-home solutions, including home medical equipment, medical supplies, and related services[7] - The company operates under four reportable segments: Sleep Health (CPAP, BiLevel services), Respiratory Health (oxygen, home mechanical ventilation), Diabetes Health (continuous glucose monitors, insulin pumps), and Wellness at Home (general home medical equipment and services)[7] Referral Network and Patient Reach The company partners with a diverse network of referral sources and serves approximately 4.2 million patients annually across all 50 states through its extensive network of locations - AdaptHealth partners with an extensive and highly diversified network of referral sources, including acute care hospitals, sleep labs, pulmonologists, skilled nursing facilities, and clinics[8] - The company services beneficiaries of Medicare, Medicaid, and commercial insurance payors, reaching approximately 4.2 million patients annually in all 50 states through approximately 630 locations in 47 states[8] Financial Statements (Unaudited) This section presents AdaptHealth's unaudited condensed consolidated balance sheets, statements of operations, and cash flows for recent periods Condensed Consolidated Balance Sheets As of June 30, 2025, AdaptHealth reported a decrease in total assets and liabilities compared to December 31, 2024, while total stockholders' equity saw a slight increase Condensed Consolidated Balance Sheet Highlights (June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | Change (Thousands) | | :-------------------------------- | :------------------------- | :--------------------------- | :----------------- | | Total Assets | $4,350,825 | $4,486,947 | -$136,122 | | Total Liabilities | $2,756,699 | $2,908,829 | -$152,130 | | Total Stockholders' Equity | $1,594,126 | $1,578,118 | +$16,008 | | Cash | $68,630 | $109,747 | -$41,117 | | Assets held for sale | — | $52,748 | -$52,748 | | Long-term debt, less current portion | $1,792,741 | $1,964,921 | -$172,180 | Consolidated Statements of Operations For the three months ended June 30, 2025, net revenue slightly decreased, while operating income significantly increased due to a gain on the sale of businesses. Net income attributable to AdaptHealth Corp. decreased both for the quarter and year-to-date Consolidated Statements of Operations Highlights (YoY Comparison) | Metric | Three Months Ended June 30, 2025 (Thousands) | Three Months Ended June 30, 2024 (Thousands) | Six Months Ended June 30, 2025 (Thousands) | Six Months Ended June 30, 2024 (Thousands) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Net revenue | $800,372 | $805,975 | $1,578,254 | $1,598,472 | | Operating income | $79,252 | $52,047 | $102,422 | $102,578 | | Gain on sale of businesses | ($32,225) | — | ($32,225) | — | | Net income attributable to AdaptHealth Corp. | $14,674 | $19,435 | $7,467 | $17,301 | | Basic net income per share | $0.10 | $0.13 | $0.05 | $0.12 | | Diluted net income per share | $0.10 | $0.13 | $0.05 | $0.12 | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities increased, while net cash used in investing activities decreased significantly due to proceeds from business sales. Net cash used in financing activities substantially increased, leading to a larger net decrease in cash Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, YoY Comparison) | Metric | 2025 (Thousands) | 2024 (Thousands) | Change (Thousands) | | :-------------------------------- | :---------------- | :---------------- | :----------------- | | Net cash provided by operating activities | $257,521 | $247,019 | +$10,502 | | Net cash used in investing activities | ($85,981) | ($169,163) | +$83,182 | | Net cash used in financing activities | ($212,657) | ($85,156) | -$127,501 | | Net decrease in cash | ($41,117) | ($7,300) | -$33,817 | | Cash at end of period | $68,630 | $69,832 | -$1,202 | - Proceeds from the sale of businesses, net of cash disposed, contributed $115.7 million to investing activities in 2025[26] - Repayments on long-term debt and lines of credit increased to $175.0 million in 2025 from $145.0 million in 2024[26] Non-GAAP Financial Measures This section details AdaptHealth's non-GAAP financial measures, including EBITDA, Adjusted EBITDA, and Free Cash Flow, with reconciliations and definitions EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin AdaptHealth uses non-GAAP financial measures like EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin to evaluate financial performance and for incentive compensation plans, providing a supplementary view to U.S. GAAP measures - EBITDA is defined as net income (loss) attributable to AdaptHealth Corp., plus net income (loss) attributable to noncontrolling interests, interest expense, net, income tax expense (benefit), and depreciation and amortization, including patient equipment depreciation[28] - Adjusted EBITDA is defined as EBITDA plus equity-based compensation expense, change in fair value of the warrant liability, goodwill impairment, litigation settlement expense (gain), gain on sale of businesses, and certain other non-recurring items of expense or income[29] - Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of net revenue[30] Three Months Ended June 30, 2025 and 2024 For the three months ended June 30, 2025, Adjusted EBITDA decreased by 5.9% year-over-year, and Adjusted EBITDA Margin also saw a decline, primarily impacted by a significant gain on the sale of businesses in 2025 Adjusted EBITDA and Margin (Three Months Ended June 30, YoY Comparison) | Metric | 2025 (Thousands) | Revenue Percentage (2025) | 2024 (Thousands) | Revenue Percentage (2024) | | :--------------- | :---------------- | :------------------------- | :---------------- | :------------------------- | | Adjusted EBITDA | $155,544 | 19.4% | $165,315 | 20.5% | | Adjusted EBITDA Margin | - | 19.4% | - | 20.5% | - A gain on sale of businesses of $32.2 million negatively impacted Adjusted EBITDA in Q2 2025, compared to no such gain in Q2 2024[30][31] - Other non-recurring expenses, net, were $10.0 million in Q2 2025, including consulting expenses associated with asset dispositions and transaction costs for acquisitions[30][31] Six Months Ended June 30, 2025 and 2024 For the six months ended June 30, 2025, Adjusted EBITDA decreased by 12.4% year-over-year, and Adjusted EBITDA Margin also declined, influenced by the gain on sale of businesses in 2025 and goodwill impairment in 2024 Adjusted EBITDA and Margin (Six Months Ended June 30, YoY Comparison) | Metric | 2025 (Thousands) | Revenue Percentage (2025) | 2024 (Thousands) | Revenue Percentage (2024) | | :--------------- | :---------------- | :------------------------- | :---------------- | :------------------------- | | Adjusted EBITDA | $283,482 | 18.0% | $323,800 | 20.3% | | Adjusted EBITDA Margin | - | 18.0% | - | 20.3% | - A gain on sale of businesses of $32.2 million was recognized in the first six months of 2025, compared to none in 2024[32][34] - Goodwill impairment of $13.1 million was recorded in the first six months of 2024, with no such charge in 2025[32][33] - Other non-recurring expenses, net, were $15.2 million in 2025, including consulting expenses for asset dispositions and systems implementation[32][34] Free Cash Flow AdaptHealth defines free cash flow as net cash provided by operating activities less cash paid for purchases of equipment and other fixed assets. For the six months ended June 30, 2025, free cash flow slightly decreased compared to the prior year - Free cash flow is defined as net cash provided by operating activities less cash paid for purchases of equipment and other fixed assets[35] Free Cash Flow (YoY Comparison) | Metric | Three Months Ended June 30, 2025 (Thousands) | Three Months Ended June 30, 2024 (Thousands) | Six Months Ended June 30, 2025 (Thousands) | Six Months Ended June 30, 2024 (Thousands) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Net cash provided by operating activities | $161,994 | $197,984 | $257,521 | $247,019 | | Purchases of equipment and other fixed assets | ($88,665) | ($81,272) | ($184,250) | ($169,163) | | Free cash flow | $73,329 | $116,712 | $73,271 | $77,856 | Forward-Looking Statements This section provides a standard disclaimer regarding forward-looking statements, emphasizing that they are not historical facts but predictions based on current expectations, subject to various risks and uncertainties that could cause actual results to differ materially. The company disclaims any obligation to update these statements - Forward-looking statements are not historical facts but predictions of future events, often identified by words like 'believe,' 'may,' 'will,' 'expect,' and 'plan'[9] - These statements are based on current management expectations and assumptions, but actual events and circumstances are difficult to predict and subject to numerous risks and uncertainties, including judicial proceedings, governmental investigations, and changes in competitive conditions[9][10] - The company specifically disclaims any obligation to update these forward-looking statements, and undue reliance should not be placed upon them as representing assessments as of any date subsequent to the press release[12] Use of Non-GAAP Financial Information and Financial Guidance This section explains AdaptHealth's use of non-GAAP financial measures such as EBITDA, Adjusted EBITDA, and free cash flow, highlighting their utility for analyzing financial results and evaluating performance, while also acknowledging their limitations as analytical tools and the difficulty in reconciling non-GAAP guidance to GAAP measures - The Company uses non-GAAP measures (EBITDA, Adjusted EBITDA, free cash flow) to analyze financial results and believes they are useful to investors as a supplement to U.S. GAAP measures[13] - These non-GAAP measures have limitations as analytical tools and should not be considered alternatives to net income, other GAAP performance measures, or cash flows from operating activities[15][17] - Reconciliation of non-GAAP financial guidance to the most directly comparable GAAP measure is not available without unreasonable effort due to the variability and unpredictable impact of certain items[18] Contacts This section provides the contact information for AdaptHealth Corp.'s investor relations - Investor Relations contact: Luke Montgomery, Senior Vice President, Investor Relations, IR@adapthealth.com[36] - Chief Financial Officer: Jason Clemens, CFA[36]