AdaptHealth(AHCO) - 2021 Q1 - Quarterly Report

Financial Performance - For the three months ended March 31, 2021, net revenue was $482.1 million, an increase of $290.7 million or 151.8% compared to $191.4 million for the same period in 2020[205]. - The company reported an increase in net revenue due to heightened demand for respiratory products and a suspension of Medicare sequestration, resulting in an approximate 2% increase in Medicare payments[183]. - Acquisitions completed during the three months ended March 31, 2021 contributed net revenue of $142.6 million[205]. - Cost of net revenue for the three months ended March 31, 2021 was $396.7 million, an increase of $229.1 million or 136.7% compared to $167.6 million for the same period in 2020[209]. - Adjusted EBITDA for Q1 2021 was $104.2 million, significantly up from $30.5 million in Q1 2020[224]. - Adjusted EBITDA less Patient Equipment Capex for Q1 2021 was $61.9 million, compared to $17.5 million in Q1 2020[224]. Cash and Liquidity - The company increased cash liquidity by seeking recoupable advance payments of $45.8 million under the CARES Act, received in April 2020[178]. - As of March 31, 2021, AdaptHealth had approximately $132.1 million in cash and cash equivalents, with additional deferred liabilities related to CMS recoupable advance payments totaling $49.5 million[231]. - Net cash provided by operating activities for the three months ended March 31, 2021 was $18.4 million, a decrease of $6.0 million compared to $24.4 million for the same period in 2020[245]. - Net cash used in investing activities for the three months ended March 31, 2021 was $1,213.8 million, primarily due to $1,178.2 million for business acquisitions, mainly from the AeroCare acquisition[246]. - Net cash provided by financing activities for the three months ended March 31, 2021 was $1,227.6 million, significantly higher than $58.2 million for the same period in 2020[247]. - The company had a working capital deficit of $9.6 million as of March 31, 2021, an improvement from $55.8 million as of December 31, 2020[242]. Expenses and Costs - Salaries, labor, and benefits increased by $64.0 million primarily due to acquisition growth and increased headcount[209]. - General and administrative expenses increased by $42.3 million, representing a 294.7% increase compared to the same period in 2020[205]. - General and administrative expenses as a percentage of net revenue increased to 11.7% in Q1 2021 from 7.5% in Q1 2020[211]. - Interest expense for Q1 2021 was $22.2 million, compared to $7.9 million in Q1 2020, reflecting higher long-term debt borrowings used for acquisitions[213]. - Depreciation and amortization, excluding patient equipment depreciation, rose to $13.4 million in Q1 2021 from $1.2 million in Q1 2020, driven by $10.3 million in amortization expense for identifiable intangible assets[213]. Acquisitions and Growth - AdaptHealth completed several acquisitions, including Healthline Medical Equipment and AeroCare, which impacted its operating results for the three months ended March 31, 2021[191]. - The company's CPAP resupply and other supplies business remains healthy, with increased demand for respiratory equipment including ventilators and oxygen concentrators[205]. - The increase in net revenue was partially due to the impact of reduced demand for certain products related to elective medical services during the 2020 period due to the coronavirus pandemic[205]. Debt and Financing - The 2021 Credit Agreement includes a $800 million term loan and $450 million in revolving credit loans, with maturities in January 2026[192]. - AdaptHealth issued $500 million in 4.625% senior unsecured notes due 2029, with interest payable starting August 1, 2021[195]. - The company experienced a net decrease of $39.2 million in cash due to changes in operating assets and liabilities, primarily from accounts payable and accrued expenses[245]. - The 2021 Credit Agreement includes a Consolidated Total Leverage Ratio and a Consolidated Interest Coverage Ratio, with AdaptHealth in compliance with all debt covenants as of March 31, 2021[236]. Legal and Accounting Matters - The Company is subject to loss contingencies from legal proceedings and claims, but management believes any resulting liability will not materially affect its financial conditions or results of operations[255]. - The Company records accruals for loss contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated[255]. - The Company's critical accounting policies include revenue recognition, accounts receivable, business combinations, and valuation of goodwill and long-lived assets[252]. - There have been no material changes in the Company's critical accounting policies compared to those described in the Annual Report for the year ended December 31, 2020[252]. - The assessment of potential liabilities from legal proceedings may change based on new information and developments[255].