AdaptHealth(US:AHCO)2022-05-14 19:12Financial Data and Key Metrics Changes - AdaptHealth reported net revenue of $706.2 million for Q1 2022, representing a year-over-year growth of 46.5%, including a full quarter's contribution from the AeroCare acquisition [21][22] - Organic growth for the quarter was 3.7%, improving about 1 percentage point from Q4 2021 [21][22] - Adjusted EBITDA margins are expected to rebound in future quarters, with full-year guidance implying a 21.9% margin at the midpoint [23] Business Line Data and Key Metrics Changes - The diabetes business showed strong growth, benefiting from better-than-expected patient volumes, while home medical equipment (HME) and sleep categories also performed well despite supply chain challenges [21][22] - The company saw a significant increase in digital ordering, with over 55% of diabetes and 38% of CPAP resupply orders generated through proprietary digital portals [14][15] Market Data and Key Metrics Changes - AdaptHealth services approximately 3.9 million patients annually, many of whom are polychronic, driving high healthcare costs [18][19] - The company is positioned to capitalize on the demographic growth of the U.S. population living longer and more actively, which is favorable for healthcare providers [10] Company Strategy and Development Direction - AdaptHealth is focusing on expanding its presence in outpatient and at-home services, leveraging its broad home medical equipment offerings [11][16] - The company aims to establish partnerships and innovative programs to lower healthcare costs for chronic disease patients in their homes [19][20] - M&A activities remain a growth opportunity, with a selective approach to capital deployment [13][69] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the inflationary environment, including workforce wage pressure and increased operating costs, but expressed confidence in managing these challenges through technology improvements [8][9] - The backlog of patients waiting for CPAP setups is expected to grow until supply pressures are alleviated, with management focusing on reducing turnaround times for equipment delivery [28][29] Other Important Information - The Board of Directors authorized a share buyback program of up to $200 million, reflecting confidence in the company's outlook [29] - Cash flow from operations was $66.4 million, up from $18.4 million a year ago, with total capital expenditures at $77.2 million [25] Q&A Session Summary Question: Backlog build and market share shifting due to Respironics - Management noted that the backlog continues to grow due to supply constraints, and efforts are being made to minimize their portion of the backlog to be well-positioned when supply normalizes [32][34] Question: Acquisition strategy and market valuations - Management indicated a more selective approach to acquisitions, focusing on integrating previous acquisitions and assessing market valuations amid inflation and supply chain issues [35][36][37] Question: Monetizing care management and value-based contracts - The company is leveraging existing relationships with patients to drive better outcomes and aims to enter more value-based contracts without significant additional costs [39][41] Question: Impact of fuel prices and CapEx - Management confirmed that while fuel prices have increased, they are comfortable with their guidance and expect some relief later in the year [44][58] Question: Diabetes revenue projections - Management indicated that diabetes revenue is expected to be in the ballpark of $740 million for the year, based on first-quarter performance [59][60] Question: Sustainability of resupply revenue levels - Management expressed confidence that the strong resupply revenue levels are sustainable due to improvements in their resupply program [63][65] Question: Capital allocation strategy - Management emphasized a balanced approach to capital allocation, focusing on acquisitions, technology investments, and share repurchase programs [66][68]