AdaptHealth(AHCO) - 2023 Q3 - Quarterly Report

PART I FINANCIAL INFORMATION This section presents AdaptHealth Corp.'s unaudited interim consolidated financial statements and management's analysis Item 1. Interim Consolidated Financial Statements (Unaudited) This section presents AdaptHealth Corp.'s unaudited interim consolidated financial statements and detailed notes for the reported periods Consolidated Balance Sheets This section provides a snapshot of the company's financial position at specific dates, detailing assets, liabilities, and equity | Metric | September 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :--------------------------------- | :-------------------------------- | :--------------------------------- | | Total Assets | $4,725,248 | $5,219,587 | | Total Liabilities | $2,985,476 | $3,061,829 | | Total Stockholders' Equity | $1,739,772 | $2,157,758 | Consolidated Statements of Operations This section details the company's financial performance over specific periods, including revenue, expenses, and net income or loss | Metric | Three Months Ended Sep 30, 2023 (in thousands) | Three Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2023 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | | :-------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net revenue | $804,031 | $756,495 | $2,341,943 | $2,190,312 | | Operating (loss) income | $(461,036) | $52,949 | $(380,597) | $163,679 | | Net (loss) income | $(452,921) | $17,227 | $(421,205) | $74,704 | | Net (loss) income attributable to AdaptHealth Corp. | $(454,076) | $16,122 | $(424,392) | $71,904 | | Basic net (loss) income per share | $(3.37) | $0.11 | $(3.15) | $0.49 | | Diluted net (loss) income per share | $(3.43) | $0.11 | $(3.37) | $0.35 | - The company recognized a non-cash goodwill impairment charge of $511.9 million during the three and nine months ended September 30, 2023, significantly impacting operating and net income[19][40][86] Consolidated Statements of Comprehensive (Loss) Income This section presents the company's comprehensive income or loss, including net income and other comprehensive income items | Metric | Three Months Ended Sep 30, 2023 (in thousands) | Three Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2023 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | | :--------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net (loss) income | $(452,921) | $17,227 | $(421,205) | $74,704 | | Gain (loss) on interest rate swap agreements, net of tax | $66 | $7,757 | $(285) | $15,348 | | Comprehensive (loss) income | $(452,855) | $24,984 | $(421,490) | $90,052 | | Comprehensive (loss) income attributable to AdaptHealth Corp. | $(454,010) | $23,879 | $(424,677) | $87,252 | Consolidated Statements of Changes in Stockholders' Equity This section outlines changes in the company's equity accounts, including net income, share repurchases, and other equity transactions - Total stockholders' equity attributable to AdaptHealth Corp. decreased from $2,151,158 thousand at December 31, 2022, to $1,732,485 thousand at September 30, 2023, primarily due to a net loss of $(454,076) thousand for the three months ended September 30, 2023[17][24] - The company repurchased 631,953 shares of Common Stock for $9.2 million during the nine months ended September 30, 2023, under its Share Repurchase Program[24][120] Consolidated Statements of Cash Flows This section reports the cash generated and used by the company across operating, investing, and financing activities | Metric | Nine Months Ended Sep 30, 2023 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | | :-------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided by operating activities | $325,400 | $276,947 | | Net cash used in investing activities | $(266,861) | $(265,376) | | Net cash used in financing activities | $(48,668) | $(50,460) | | Net increase (decrease) in cash | $9,871 | $(38,889) | | Cash at end of period | $56,143 | $110,738 | - Net cash provided by operating activities increased by $48.5 million YoY for the nine months ended September 30, 2023, primarily due to a net increase in non-cash charges, including a goodwill impairment charge[27][245] Notes to Interim Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the interim consolidated financial statements Note 1. General Information This note provides an overview of AdaptHealth Corp.'s business, operations, and significant accounting policy adoptions - AdaptHealth Corp. is a national leader in providing patient-centered, healthcare-at-home solutions, including sleep therapy, diabetes medical devices, HME, oxygen, and other medical supplies, serving approximately 4.0 million patients annually across 47 states[30][179] - Stephen Griggs resigned as CEO effective June 30, 2023, with Richard Barasch serving as Interim CEO[31] - The Company adopted ASU No. 2020-04, Reference Rate Reform, during the nine months ended September 30, 2023, which did not materially impact its financial statements[55] Note 2. Revenue Recognition and Accounts Receivable This note details the company's revenue recognition policies and provides a breakdown of net revenue by payor type and product line - Net revenue increased by 6.3% to $804.0 million for the three months ended September 30, 2023, and by 6.9% to $2,341.9 million for the nine months ended September 30, 2023, compared to the prior year periods[196][210] Net Revenue by Payor Type (in thousands) | Payor Type | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :----------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Insurance | $486,136 | $465,625 | $1,397,748 | $1,322,694 | | Government | $220,351 | $198,841 | $618,860 | $576,829 | | Patient pay | $97,544 | $92,029 | $325,335 | $290,789 | | Total | $804,031 | $756,495 | $2,341,943 | $2,190,312 | Total Net Revenue by Core Product Line (in thousands) | Product Line | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Sleep | $315,392 | $270,629 | $912,403 | $781,256 | | Diabetes | $159,937 | $173,286 | $475,219 | $494,884 | | Respiratory | $151,083 | $140,352 | $447,815 | $417,833 | | HME | $52,182 | $54,945 | $154,297 | $166,582 | | Supplies to the home | $48,349 | $47,793 | $143,227 | $131,539 | | Other | $77,088 | $69,490 | $208,982 | $198,218 | | Total | $804,031 | $756,495 | $2,341,943 | $2,190,312 | Note 3. Acquisitions This note outlines the company's acquisition activities, including cash consideration, goodwill generated, and revenue contributions - During the nine months ended September 30, 2023, AdaptHealth completed three HME provider equity acquisitions and two asset acquisitions for a total cash consideration of $18.173 million[78] - Goodwill generated from 2023 acquisitions was $7.297 million, attributable to expected growth and cost synergies[78] - Acquisitions contributed $10.0 million to net revenue for the nine months ended September 30, 2023[210] Note 4. Equipment and Other Fixed Assets This note provides a breakdown of the company's equipment and other fixed assets, along with related depreciation expenses Equipment and Other Fixed Assets, Net (in thousands) | Asset Category | September 30, 2023 | December 31, 2022 | | :--------------- | :----------------- | :---------------- | | Patient medical equipment | $776,366 | $747,985 | | Computers and Software | $92,208 | $70,897 | | Delivery vehicles | $43,078 | $35,326 | | Other | $21,159 | $16,059 | | Gross carrying value | $932,811 | $870,267 | | Less accumulated depreciation | $(442,758) | $(383,188) | | Net | $490,053 | $487,079 | - Depreciation expense for the nine months ended September 30, 2023, was $263.4 million, an increase from $218.9 million in the prior year period[84] Note 5. Goodwill and Identifiable Intangible Assets This note details the company's goodwill and identifiable intangible assets, including impairment charges and amortization expenses - AdaptHealth recognized a non-cash goodwill impairment charge of $511.9 million during the three and nine months ended September 30, 2023, due to a decline in market capitalization and revised financial projections[86][203][217] Identifiable Intangible Assets, Net (in thousands) | Asset Category | September 30, 2023 | December 31, 2022 | | :--------------- | :----------------- | :---------------- | | Tradenames, net | $77,689 | $87,302 | | Payor contracts, net | $55,834 | $61,984 | | Developed technology, net | $2,205 | $3,150 | | Contractual rental agreements, net | — | $10,337 | | Total | $135,728 | $162,773 | - Amortization expense for identifiable intangible assets was $27.0 million for the nine months ended September 30, 2023, down from $30.0 million in the prior year period[89] Note 6. Fair Value of Assets and Liabilities This note presents the fair value measurements for certain financial assets and liabilities, including derivative instruments Financial Assets and Liabilities Measured at Fair Value (in thousands) | Category | September 30, 2023 | December 31, 2022 | | :------------------------------------ | :----------------- | :---------------- | | Interest rate swap agreements (assets) | $10,487 | $9,476 | | Acquisition-related contingent consideration (liabilities) | $7,850 | $7,500 | | Warrant liability (liabilities) | $6,617 | $38,503 | - The warrant liability decreased significantly from $38.503 million at December 31, 2022, to $6.617 million at September 30, 2023, reflecting a non-cash gain from the change in fair value[94][123] Note 7. Derivative Instruments and Hedging Activities This note describes the company's use of derivative instruments for hedging interest rate risk and related accounting impacts - AdaptHealth uses interest rate swap agreements to manage interest rate risk, converting variable rate borrowings to a fixed rate. The notional amount outstanding as of September 30, 2023, was $250 million[103][106] - The Company amended its interest rate swap agreements during the nine months ended September 30, 2023, to change the benchmark rate from LIBOR to Term SOFR, with no impact on accounting for these derivatives[103][106] - A gain of $1.1 million (net of tax) was recognized in other comprehensive income for the nine months ended September 30, 2023, from cash flow hedge accounting[107] Note 8. Accounts Payable and Accrued Expenses This note provides a detailed breakdown of the company's accounts payable and various accrued expenses Accounts Payable and Accrued Expenses (in thousands) | Category | September 30, 2023 | December 31, 2022 | | :---------------------- | :----------------- | :---------------- | | Accounts payable | $205,098 | $222,505 | | Employee-related accruals | $53,273 | $41,872 | | Accrued interest | $10,051 | $28,877 | | Other | $46,030 | $44,244 | | Total | $314,452 | $337,498 | Note 9. Debt This note details the company's long-term debt obligations, including secured term loans and senior unsecured notes Long-Term Debt (in thousands) | Debt Type | September 30, 2023 | December 31, 2022 | | :-------------------------- | :----------------- | :---------------- | | Secured term loans | $740,000 | $765,000 | | Senior unsecured notes | $1,450,000 | $1,450,000 | | Unamortized deferred financing fees | $(23,197) | $(26,733) | | Current portion | $(40,000) | $(35,000) | | Long-term portion | $2,126,803 | $2,153,267 | - The 2021 Term Loan had $740 million outstanding at September 30, 2023, with an interest rate of 7.43%. Quarterly principal repayments increased to $10 million starting June 30, 2023[112] - The Company was in compliance with all debt covenants as of September 30, 2023. Maximum borrowings available under the 2021 Revolver were $144.3 million[111][115] Note 10. Stockholders' Equity This note provides information on the company's stockholders' equity, including share repurchase programs and equity-based compensation - The Share Repurchase Program authorized up to $200.0 million of Common Stock through December 31, 2023. As of September 30, 2023, $176.8 million remained available[120] - The warrant liability decreased by $31.886 million during the nine months ended September 30, 2023, due to changes in fair value. No warrants were exercised in this period[123] - Equity-based compensation expense for the nine months ended September 30, 2023, was $17.3 million, with $25.2 million of unrecognized expense remaining[131] Note 11. Earnings Per Share This note presents the basic and diluted net income or loss per share, reflecting the impact of the goodwill impairment charge Basic and Diluted Net (Loss) Income Per Share | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Basic net (loss) income per share | $(3.37) | $0.11 | $(3.15) | $0.49 | | Diluted net (loss) income per share | $(3.43) | $0.11 | $(3.37) | $0.35 | - The Company reported a basic net loss per share of $(3.37) for the three months ended September 30, 2023, compared to a basic net income per share of $0.11 in the prior year, largely due to the goodwill impairment charge[136][19] Note 12. Leases This note provides details on the company's right-of-use assets, lease liabilities, and associated lease costs Right-of-Use (ROU) Assets and Lease Liabilities (in thousands) | Category | September 30, 2023 | December 31, 2022 | | :-------------------------- | :----------------- | :---------------- | | Total ROU assets | $131,535 | $135,032 | | Total operating lease liabilities | $114,436 | $134,395 | | Total finance lease liabilities | $21,528 | $6,161 | - Operating lease costs for the nine months ended September 30, 2023, were $32.186 million, an increase from $28.547 million in the prior year[147] - The weighted average remaining lease term for operating leases is 5.7 years, and for finance leases is 3.6 years as of September 30, 2023[148] Note 13. Income Taxes This note discusses the company's income tax provisions, including tax benefits and the Tax Receivable Agreement liability - The Company recorded an income tax benefit of $34.6 million for the three months ended September 30, 2023, and $30.9 million for the nine months ended September 30, 2023, primarily due to a $39.9 million discrete income tax benefit related to the goodwill impairment charge[151][207][223] - The liability relating to the Tax Receivable Agreement (TRA) was $294.2 million at September 30, 2023[156] Note 14. Commitments and Contingencies This note outlines the company's legal proceedings, investigations, and other commitments and contingent liabilities - AdaptHealth settled an investigation by the U.S. Attorney's Office (EDPA) regarding ventilator billing for $5.3 million in April 2023, with no determination of liability[158][255] - A class action complaint (Consolidated Class Action) alleging false and misleading statements regarding organic growth and a former Co-CEO's tax fraud is currently stayed pending private mediation[162][164][259] - A new class action complaint (Allegheny County Complaint) was filed on October 24, 2023, alleging violations of federal securities laws related to organic growth in the diabetes segment[170][263] Note 15. Related Party Transactions This note discloses transactions with related parties, including expenses for services and purchases from affiliated vendors - Expenses related to a vendor providing automated order intake software, in which an executive officer holds an equity interest, were $8.0 million for the nine months ended September 30, 2023[172] - Purchases from a medical equipment and supplies vendor, where a beneficial owner of the Company is a minority shareholder, decreased from $49.8 million in 2022 to $24.1 million in 2023 for the nine-month period[174] Note 16. Subsequent Events This note reports significant events that occurred after the reporting period, such as additional share repurchases - Subsequent to September 30, 2023, the Company purchased an additional 2,464,507 shares of its Common Stock for $19.4 million under the Share Repurchase Program[176] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of AdaptHealth's financial condition, operating results, key metrics, and critical accounting policies AdaptHealth Corp. Overview This section provides a general overview of AdaptHealth's business, its market position, and the services it offers - AdaptHealth is a national leader in healthcare-at-home solutions, serving approximately 4.0 million patients annually across all 50 states through a network of about 690 locations in 47 states[179] - The company's primary services include sleep therapy, diabetes medical devices, general HME, oxygen and chronic therapy, and other medical supplies for chronically ill patients[179] Impact of Inflation This section discusses the effects of inflationary pressures on the company's costs, demand, and margins, and mitigation efforts - AdaptHealth continues to experience inflationary pressure and higher costs for materials, labor, and transportation, which may impact demand, costs, and margins[180] - A cost management program, substantially complete by September 30, 2023, is expected to deliver $25 million in Adjusted EBITDA improvement in 2023 and $40 million annually in future years, through real estate rationalization, contract renegotiations, workforce reductions, and technology use[180] Key Components of Operating Results This section explains the primary drivers of the company's operating results, including revenue recognition and cost structures - Net revenue is recognized from sales of supplies and disposables (point-in-time), equipment rental (over service period), and at-risk capitation arrangements (monthly fee)[181][182] - Cost of net revenue includes non-capitalized medical equipment, distribution expenses, labor, facilities/vehicle rental, revenue cycle management, and patient equipment depreciation[183] - Goodwill is assessed for impairment annually and upon triggering events like declines in market capitalization or revised financial projections[186] Factors Affecting AdaptHealth's Operating Results This section identifies key external and internal factors influencing the company's financial performance, such as seasonality and impairment charges - The business experiences seasonality, with lower net revenue and cash flow in the early part of the year due to patient deductibles and insurance changes, and higher diabetes revenue in Q4[188] - A non-cash goodwill impairment charge of $511.9 million was recognized for the three and nine months ended September 30, 2023, due to a sustained decrease in stock price and revised financial projections[189] Key Business Metrics This section highlights the primary financial and operational metrics used by management to assess the company's performance - AdaptHealth focuses on Net revenue, EBITDA, Adjusted EBITDA, and Free Cash Flow to review performance[191] Total Net Revenue by Product Line (3 Months Ended Sep 30) | Product Line | 2023 Revenue (in thousands) | 2023 Percentage | 2022 Revenue (in thousands) | 2022 Percentage | | :------------- | :-------------------------- | :-------------- | :-------------------------- | :-------------- | | Sleep | $315,392 | 39.2% | $270,629 | 35.8% | | Diabetes | $159,937 | 19.9% | $173,286 | 22.9% | | Respiratory | $151,083 | 18.8% | $140,352 | 18.6% | | HME | $52,182 | 6.5% | $54,945 | 7.3% | | Supplies to the home | $48,349 | 6.0% | $47,793 | 6.3% | | Other | $77,088 | 9.6% | $69,490 | 9.1% | | Total | $804,031 | 100.0% | $756,495 | 100.0% | Total Net Revenue by Product Line (9 Months Ended Sep 30) | Product Line | 2023 Revenue (in thousands) | 2023 Percentage | 2022 Revenue (in thousands) | 2022 Percentage | | :------------- | :-------------------------- | :-------------- | :-------------------------- | :-------------- | | Sleep | $912,403 | 38.9% | $781,256 | 35.6% | | Diabetes | $475,219 | 20.4% | $494,884 | 22.6% | | Respiratory | $447,815 | 19.1% | $417,833 | 19.1% | | HME | $154,297 | 6.5% | $166,582 | 7.6% | | Supplies to the home | $143,227 | 6.1% | $131,539 | 6.0% | | Other | $208,982 | 9.0% | $198,218 | 9.1% | | Total | $2,341,943 | 100.0% | $2,190,312 | 100.0% | Results of Operations This section provides a detailed analysis of the company's financial performance, including revenue, cost, and expense trends - Net revenue for the three months ended September 30, 2023, increased by $47.5 million (6.3%) to $804.0 million, driven by $45.1 million in non-acquired growth and $2.5 million from acquisitions[196] - Sleep business net revenue increased by 16.5% ($44.8 million) for the three months ended September 30, 2023, due to strong patient demand, while diabetes business net revenue decreased by 7.7% ($13.3 million) due to shifts to pharmacy channels and manufacturers bringing distribution in-house[196][198] - Cost of net revenue increased by 7.2% to $693.5 million for the three months ended September 30, 2023, primarily due to increased product costs and patient equipment depreciation[200] - General and administrative expenses increased by 11.1% to $45.2 million for the three months ended September 30, 2023, mainly due to higher professional fees, partially offset by lower transaction costs and equity-based compensation[201] - Net revenue for the nine months ended September 30, 2023, increased by $151.6 million (6.9%) to $2,341.9 million, with non-acquired growth contributing $141.6 million[210] - For the nine months ended September 30, 2023, sleep business net revenue grew by 16.8% ($131.1 million), and respiratory business net revenue grew by 7.2% ($30.0 million). Diabetes net revenue decreased by 4.0% ($19.7 million) due to payor shifts and changes in insulin pump distribution[210][212] - Cost of net revenue for the nine months ended September 30, 2023, increased by 9.1% to $2,022.3 million, driven by higher product costs, salaries, and patient equipment depreciation[214] - General and administrative expenses for the nine months ended September 30, 2023, rose by 14.5% to $142.8 million, primarily due to higher professional fees and equity-based compensation, including $4.0 million related to the former CEO's separation[215][132] EBITDA and Adjusted EBITDA This section reconciles net income to EBITDA and Adjusted EBITDA, providing non-GAAP measures of operational performance - EBITDA for the nine months ended September 30, 2023, was $(64.866) million, a significant decrease from $422.480 million in the prior year, primarily due to the goodwill impairment charge[229] EBITDA and Adjusted EBITDA Reconciliation (in thousands) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Net (loss) income attributable to AdaptHealth Corp. | $(454,076) | $16,122 | $(424,392) | $71,904 | | EBITDA | $(357,883) | $143,659 | $(64,866) | $422,480 | | Equity-based compensation expense | $4,521 | $5,562 | $17,284 | $16,784 | | Transaction costs | $337 | $519 | $621 | $5,832 | | Change in fair value of warrant liability | $(9,160) | $1,364 | $(31,886) | $(17,145) | | Goodwill impairment | $511,866 | — | $511,866 | — | | Other non-recurring expenses, net | $11,486 | $9,059 | $33,157 | $19,863 | | Adjusted EBITDA | $161,167 | $160,163 | $466,176 | $447,814 | - Adjusted EBITDA increased to $466.176 million for the nine months ended September 30, 2023, from $447.814 million in the prior year, representing a 19.9% margin of net revenue[229] Free Cash Flow This section reconciles net cash from operating activities to Free Cash Flow, indicating cash available for discretionary use Free Cash Flow Reconciliation (in thousands) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Net cash provided by operating activities | $98,833 | $107,023 | $325,400 | $276,947 | | Purchases of equipment and other fixed assets | $(77,086) | $(94,171) | $(248,816) | $(248,511) | | Free cash flow | $21,747 | $12,852 | $76,584 | $28,436 | - Free cash flow increased to $76.6 million for the nine months ended September 30, 2023, from $28.4 million in the prior year, primarily due to higher net cash provided by operating activities and a decrease in cash used from operating assets and liabilities[250] Liquidity and Capital Resources This section discusses the company's sources and uses of liquidity, capital structure, and ability to fund operations and growth - AdaptHealth's primary liquidity sources are operating cash flows, credit agreements, and equity issuances, used for capital expenditures, operating costs, acquisitions, and debt service[234] - As of September 30, 2023, the Company had $56.1 million in cash and $144.3 million available under its 2021 Revolver credit facility[237][238] - The Company believes its current liquidity sources are sufficient to fund operations and growth strategies for at least the next twelve months[235] Critical Accounting Policies and Critical Estimates This section outlines the accounting policies and estimates that require significant judgment and can materially impact financial results - Critical accounting policies include revenue recognition, valuation of accounts receivable (implicit price concession), and valuation of goodwill and long-lived assets[252] - No material changes occurred in critical accounting policies or estimates compared to the 2022 Annual Report on Form 10-K[252] Commitments and Contingencies This section details the company's legal proceedings, claims, and other contingent liabilities, including government investigations - The Company is subject to various legal proceedings and claims, including a class action and derivative complaints, and an ongoing civil investigative demand from the U.S. Attorney's Office for the Southern District of New York regarding ventilator billing[253][257][260][262] - Management believes any liability from these contingencies will not have a material adverse effect on financial conditions or results of operations, but acknowledges inherent uncertainties[254] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses AdaptHealth's market risk exposure, primarily from interest rate fluctuations on its variable-rate debt - The Company's market risk exposure is primarily from variable interest rates on its 2021 Credit Agreement, which is tied to the Secured Overnight Financing Rate (Term SOFR)[265] - As of September 30, 2023, $740.0 million was outstanding under the 2021 Term Loan, with $144.3 million available under the 2021 Revolver[265] Item 4. Controls and Procedures This section addresses the effectiveness of AdaptHealth's disclosure controls and internal control over financial reporting, noting material weaknesses and ongoing remediation - Management concluded that disclosure controls and procedures were not effective as of September 30, 2023, due to material weaknesses in internal control over financial reporting[266] - Material weaknesses relate to an insufficient complement of resources for risk assessment, leading to ineffective process-level controls and general IT controls[267] - Remediation efforts include implementing a system for control remediation visibility, expanding expertise, completing an entity-wide risk assessment, identifying responsive controls, and continuing ERP system implementation[269] PART II OTHER INFORMATION This section provides additional information not included in the financial statements, covering legal, equity, and other disclosures Item 1. Legal Proceedings This item refers to the detailed discussion of legal proceedings and claims within Management's Discussion and Analysis - Refer to Item 2 for details on legal proceedings, including class action lawsuits and government investigations[271] Item 1A. Risk Factors This item refers to the comprehensive list of risk factors detailed in the Company's 2022 Annual Report on Form 10-K - Factors that could materially affect results are outlined in the 'Risk Factors' section of the 2022 Annual Report on Form 10-K[272] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section confirms no unregistered equity sales or common stock purchases by the company during the three months ended September 30, 2023 - No unregistered sales of equity securities were made during the period that were not previously reported[273] - No purchases of Common Stock were made by the Company or its affiliated purchasers during the three months ended September 30, 2023[273] Item 3. Defaults upon Senior Securities This item states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[274] Item 4. Mine Safety Disclosure This item indicates that mine safety disclosures are not applicable to the Company - Mine Safety Disclosure is not applicable to the Company[275] Item 5. Other Information This section reports no adoption, termination, or modification of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by directors or officers - No directors or officers adopted, terminated, or modified Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended September 30, 2023[276] Item 6. Exhibits This item provides a list of exhibits filed or furnished with the Form 10-Q, including organizational documents, agreements, and certifications - The exhibit index includes the Third Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, and various employment agreements[280] - Certifications from the CEO, CFO, and Chief Accounting Officer pursuant to the Sarbanes-Oxley Act are filed or furnished[280] - XBRL (eXtensible Business Reporting Language) information is furnished but not filed for certain purposes[281] Signatures This section contains the required certifications from the company's executive officers for the filed report Signatures This section contains the required signatures of AdaptHealth Corp.'s executive officers, certifying the filing of the report - The report is signed by Richard Barasch (Interim Chief Executive Officer and Chairman of the Board), Jason Clemens (Chief Financial Officer), and Christine Archbold (Chief Accounting Officer) on November 7, 2023[285]