FALSE000172525500017252552023-11-072023-11-07

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 8-K
___________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

November 7, 2023
Date of Report (date of earliest event reported)

AdaptHealth Corp.
(Exact name of registrant as specified in its charter)

Delaware001-3839982-3677704
(State or other jurisdiction of
incorporation or organization)
(Commission File Number)
(I.R.S. Employer Identification Number)
220 West Germantown Pike, Suite 250, Plymouth Meeting, PA 19462
(Address of principal executive offices and zip code)
(610) 424-4515
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, par value $0.0001 per shareAHCOThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company    ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 2.02 - Results of Operations and Financial Condition.

The following information is furnished pursuant to Regulation FD.

On November 7, 2023, AdaptHealth Corp. (the "Company") issued a press release (the “Press Release”) announcing financial results for the quarter ended September 30, 2023. A copy of the Press Release is furnished herewith as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information in this Item 2.02 (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, regardless of any general incorporation language in such filing, unless expressly incorporated by reference in such filing.

Item 9.01 - Financial Statements and Exhibits
(d)    Exhibits

Exhibit No.Description
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

Dated: November 7, 2023



AdaptHealth Corp.
By:
/s/ Jason Clemens
Name:
Jason Clemens
Title:
Chief Financial Officer


Exhibit 99.1
adapthealthimg001.jpg
FOR IMMEDIATE RELEASE
ADAPTHEALTH CORP. ANNOUNCES THIRD QUARTER 2023 RESULTS
PLYMOUTH MEETING, Pa. – November 7, 2023 - AdaptHealth Corp. (NASDAQ: AHCO) (“AdaptHealth” or the “Company”), a national leader in providing patient-centered, healthcare-at-home solutions including home medical equipment, medical supplies, and related services, announced today financial results for the third quarter ended September 30, 2023.
Third Quarter Results and Highlights

All comparisons are to the quarter ended September 30, 2022 unless otherwise stated.
•Net revenue was $804.0 million compared to $756.5 million, an increase of 6.3%.
•Net loss attributable to AdaptHealth Corp. was $454.1 million compared to net income of $16.1 million, largely resulting from a $511.9 million pre-tax write down of goodwill.
•Adjusted EBITDA was $161.2 million, compared to $160.2 million, an increase of 0.6%.
•Cash flow from operations was $325.4 million year-to-date 2023, an increase from $276.9 million during the comparable period in 2022.
•Free cash flow was $76.6 million year-to-date 2023, increase from $28.4 million during the comparable period in 2022.
•Subsequent to September 30, 2023 and through the end of market close on November 6, 2023, the Company repurchased $19.4 million of its common stock in the open market, pursuant to the Company’s previously-announced share repurchase authorization.
Management Commentary

“We are pleased with the results of the third quarter,” said Richard Barasch, Chairman and Interim CEO of AdaptHealth. “Powered by our sleep products, we generated 6.3% growth over last year, leading to record revenues for the quarter. Equally important, we generated cash flow from operations of $98.8 million and free cash flow of $21.7 million. Adjusted EBITDA fell short of our expectations largely as a result of unplanned delays in the implementation of the Humana contract. Nevertheless, we believe that the contract will prove to be profitable for AdaptHealth.” Mr. Barasch continued, “We believe we are well-positioned to continue our historical trend of year over year growth in revenue and profitability.”

Financial Outlook

The Company is updating previous financial guidance for fiscal year 2023 as follows:

•Net revenue of $3.160 to $3.185 billion, from $3.16 to $3.20 billion
•Adjusted EBITDA of $630 to $650 million, from $650 to $680 million
•Total capital expenditures representing 10-12% of net revenue, unchanged
•Free cash flow representing 3-4% of net revenue, unchanged
Conference Call Details
Management will host a teleconference today, Tuesday, November 7, 2023, at 8:30 am ET to discuss the results and business activities with analysts and investors.

Interested parties may participate in the call by dialing: 
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•(800) 245-3047 (Domestic) or
•(203) 518-9765 (International)

When prompted, reference Conference ID: AHCO3Q23
To access the Webcast please go to the Company’s Investor Relations page at https://adapthealth.com/investorrelations/
Following the live call, a replay will be available for six months on the Company's website, www.adapthealth.com, under "Investor Relations."
About AdaptHealth Corp.

AdaptHealth is a national leader in providing patient-centered, healthcare-at-home solutions including home medical equipment (HME), medical supplies, and related services. The Company provides a full suite of medical products and solutions designed to help patients manage chronic conditions in the home, adapt to challenges in their activities of daily living, and thrive. Product and service offerings include (i) sleep therapy equipment, supplies, and related services (including CPAP and bi PAP services) to individuals suffering from obstructive sleep apnea, (ii) medical devices and supplies to patients for the treatment of diabetes (including continuous glucose monitors and insulin pumps), (iii) HME to patients discharged from acute care and other facilities, (iv) oxygen and related chronic therapy services in the home, and (v) other HME devices and supplies on behalf of chronically ill patients with wound care, urological, incontinence, ostomy and nutritional supply needs. The Company is proud to partner with an extensive and highly diversified network of referral sources, including acute care hospitals, sleep labs, pulmonologists, skilled nursing facilities, and clinics. AdaptHealth services beneficiaries of Medicare, Medicaid, and commercial insurance payors, reaching approximately 4.0 million patients annually in all 50 states through its network of approximately 690 locations in 47 states.
Forward-Looking Statements
This press release includes certain statements that are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding projections, estimates and forecasts of revenue and other financial and performance metrics and projections of market opportunity and expectations and the Company’s acquisition pipeline. These statements are based on various assumptions and on the current expectations of AdaptHealth management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on, by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of the Company.
These forward-looking statements are subject to a number of risks and uncertainties, including the outcome of judicial and administrative proceedings to which the Company may become a party or governmental investigations to which the Company may become subject that could interrupt or limit the Company’s operations, result in adverse judgments, settlements or fines and create negative publicity; changes in the Company’s customers’ preferences, prospects and the competitive conditions prevailing in the healthcare sector. A further description of such risks and uncertainties can be found in the Company’s filings with the Securities and Exchange Commission. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that the Company presently knows or that the Company currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect the Company’s expectations, plans or forecasts of future events and views as of the date of this press release. The Company anticipates that subsequent events and developments will cause the Company’s assessments to change. However, while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company’s assessments as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.
-2 -

Use of Non-GAAP Financial Information and Financial Guidance
This release contains non-GAAP financial guidance, which is adjusted to exclude certain costs, expenses, gains and losses and other specified items that are evaluated on an individual basis. These non-GAAP items are adjusted after considering their quantitative and qualitative aspects and typically have one or more of the following characteristics, such as being highly variable, difficult to project, unusual in nature, significant to the results of a particular period or not indicative of future operating results. Similar charges or gains were recognized in prior periods and will likely reoccur in future periods.
The Company uses EBITDA, Adjusted EBITDA and Free Cash Flow, which are financial measures that are not in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, to analyze its financial results and believes that they are useful to investors, as a supplement to U.S. GAAP measures.
The Company believes Adjusted EBITDA is useful to investors in evaluating the Company’s financial performance. The Company uses this metric as the profitability measure in its incentive compensation plans that have a profitability component and to evaluate acquisition opportunities, where it is most often used for purposes of contingent consideration arrangements.

EBITDA and Adjusted EBITDA should not be considered as measures of financial performance under U.S. GAAP, and the items excluded from EBITDA and Adjusted EBITDA are significant components in understanding and assessing financial performance. Accordingly, these key business metrics have limitations as an analytical tool. They should not be considered as an alternative to net income or any other performance measures derived in accordance with U.S. GAAP or as an alternative to cash flows from operating activities as a measure of the Company’s liquidity.
The Company uses free cash flow in its operational and financial decision-making and believes free cash flow is useful to investors because similar measures are frequently used by securities analysts, investors, ratings agencies and other interested parties to evaluate the Company's competitors and to measure the ability of companies to service their debt. The Company's presentation of free cash flow should not be construed as a measure of liquidity or discretionary cash available to the Company to fund its cash needs, including investing in the growth of its business and meeting its obligations.
There is no reliable or reasonably estimable comparable GAAP measure for the Company’s non-GAAP financial guidance because the Company is not able to reliably predict the impact of certain items, including equity-based compensation expense, transaction costs, changes in fair value of the warrant liability, and other non-recurring items of expense or income in full year 2023. As a result, reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is not available without unreasonable effort. In addition, the Company believes such a reconciliation would imply a degree of precision and certainty that could be confusing to investors. The variability of the specified items may have a significant and unpredictable impact on the Company’s future GAAP results.
In addition, the Company’s non-GAAP financial guidance in this release excludes the impact of any potential additional future strategic acquisitions and any specified items that have not yet been identified and quantified. The financial guidance is subject to risks and uncertainties applicable to all forward-looking statements as described elsewhere in this press release.
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ADAPTHEALTH CORP.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)September 30, 2023December 31, 2022
Assets
Current assets:
Cash $56,143 $46,272 
Accounts receivable370,740 359,146 
Inventory116,332 127,754 
Prepaid and other current assets41,852 52,136 
Total current assets585,067 585,308 
Equipment and other fixed assets, net490,053 487,079 
Operating lease right-of-use assets110,007 129,506 
Finance lease right-of-use assets21,528 5,423 
Goodwill3,041,446 3,545,297 
Identifiable intangible assets, net135,728 162,773 
Other assets22,504 22,415 
Deferred tax assets318,915 281,786 
Total Assets$4,725,248 $5,219,587 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses$314,452 $337,498 
Current portion of long-term debt40,000 35,000 
Current portion of operating lease obligations28,736 30,001 
Current portion of finance lease obligations5,947 2,211 
Contract liabilities47,981 31,641 
Other liabilities11,069 19,863 
Total current liabilities448,185 456,214 
Long-term debt, less current portion2,126,803 2,153,267 
Operating lease obligations, less current portion85,700 104,394 
Finance lease obligations, less current portion15,581 3,950 
Other long-term liabilities302,590 305,501 
Warrant liability6,617 38,503 
Total Liabilities2,985,476 3,061,829 
Total Stockholders' Equity1,739,772 2,157,758 
Total Liabilities and Stockholders' Equity$4,725,248 $5,219,587 
-4 -
ADAPTHEALTH CORP.
  Consolidated Statements of Operations (Unaudited)
 
 Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands, except per share data)20232022 20232022
Net revenue$804,031 $756,495  $2,341,943 $2,190,312 
Costs and expenses: 
Cost of net revenue693,488 646,714  2,022,281 1,853,847 
General and administrative expenses45,198 40,681  142,797 124,673 
Depreciation and amortization, excluding patient equipment depreciation14,515 16,151  45,596 48,113 
Goodwill impairment511,866 — 511,866 — 
Total costs and expenses1,265,067 703,546  2,722,540 2,026,633 
Operating (loss) income(461,036)52,949  (380,597)163,679 
Interest expense, net32,306 28,521  96,813 78,905 
Change in fair value of warrant liability (9,160)1,364  (31,886)(17,145)
Other loss, net3,317 257  6,574 7,179 
(Loss) income before income taxes(487,499)22,807  (452,098)94,740 
Income tax (benefit) expense(34,578)5,580  (30,893)20,036 
Net (loss) income(452,921)17,227  (421,205)74,704 
Income attributable to noncontrolling interest1,155 1,105  3,187 2,800 
Net (loss) income attributable to AdaptHealth Corp.$(454,076)$16,122  $(424,392)$71,904 
 
Weighted average common shares outstanding - basic134,825134,227 134,549 134,186 
Weighted average common shares outstanding - diluted134,982137,583 135,202 138,599 
 
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 
 
-5 -
ADAPTHEALTH CORP.
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended
September 30,
(in thousands)20232022
Cash flows from operating activities:
Net (loss) income$(421,205)$74,704 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including patient equipment depreciation290,419 248,835 
Goodwill impairment511,866 — 
Equity-based compensation17,284 16,784 
Change in fair value of warrant liability(31,886)(17,145)
Reduction in the carrying amount of operating lease right-of-use assets26,309 16,924 
Reduction in the carrying amount of finance lease right-of-use assets3,821 — 
Deferred income tax (benefit) expense (37,033)18,058 
Change in fair value of interest rate swaps, net of reclassification adjustment(1,394)(2,202)
Amortization of deferred financing costs3,926 3,926 
Other350 (2,023)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable(10,043)2,357 
Inventory12,769 (3,992)
Prepaid and other assets10,956 4,211 
Operating lease obligations(26,959)(16,794)
Operating liabilities(23,780)(66,696)
Net cash provided by operating activities325,400 276,947 
Cash flows from investing activities:
Purchases of equipment and other fixed assets(248,816)(248,511)
Payments for business acquisitions, net of cash acquired(17,917)(16,134)
Payments for cost method investments(128)(731)
Net cash used in investing activities(266,861)(265,376)
Cash flows from financing activities:
Proceeds from borrowings on long-term debt50,000 — 
Repayments on long-term debt(75,000)(15,000)
Repayments of finance lease liabilities(4,558)(14,219)
Payments for shares purchased under share repurchase program(9,224)(13,992)
Proceeds from the exercise of stock options538 1,388 
Proceeds received in connection with employee stock purchase plan2,031 1,616 
Payments relating to the Tax Receivable Agreement(3,202)— 
Distributions to noncontrolling interest(2,500)(2,000)
Payments for tax withholdings from restricted stock vesting and stock option exercises(5,253)(2,690)
Payments of contingent consideration and deferred purchase price from acquisitions(1,500)(5,563)
Net cash used in financing activities(48,668)(50,460)
Net increase (decrease) in cash9,871 (38,889)
Cash at beginning of period46,272 149,627 
Cash at end of period$56,143 $110,738 
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ADAPTHEALTH CORP.
Non-GAAP Financial Measures
 
EBITDA and Adjusted EBITDA

This press release presents AdaptHealth’s EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022.
 
AdaptHealth defines EBITDA 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 depreciation.
 
AdaptHealth defines Adjusted EBITDA as EBITDA (as defined above), plus equity-based compensation expense, transaction costs, change in fair value of the warrant liability, goodwill impairment and certain other non-recurring items of expense or income.
 
The following unaudited table presents the reconciliation of net income attributable to AdaptHealth Corp. to EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022:
 
Three Months EndedNine Months Ended
(in thousands)September 30,September 30,
2023202220232022
Net (loss) income attributable to AdaptHealth Corp.$(454,076)$16,122 $(424,392)$71,904 
Income attributable to noncontrolling interest1,155 1,105 3,187 2,800 
Interest expense, net32,306 28,521 96,813 78,905 
Income tax (benefit) expense(34,578)5,580 (30,893)20,036 
Depreciation and amortization, including patient equipment depreciation97,310 92,331 290,419 248,835 
EBITDA(357,883)143,659 (64,866)422,480 
Equity-based compensation expense (a)4,521 5,562 17,284 16,784 
Transaction costs (b)337 519 621 5,832 
Change in fair value of warrant liability (c)(9,160)1,364 (31,886)(17,145)
Goodwill impairment (d)511,866 — 511,866 — 
Other non-recurring expenses, net (e)11,486 9,059 33,157 19,863 
Adjusted EBITDA$161,167 $160,163 $466,176 $447,814 
Net (loss) income attributable to AdaptHealth Corp. as a percentage of net revenue(56.5)%2.1%(18.1)%3.3%
Adjusted EBITDA as a percentage of net revenue20.0%21.2%19.9%20.4%
 
(a)
Represents equity-based compensation expense for awards granted to employees and non-employee directors.
(b)
Represents transaction costs and expenses related to integration efforts related to acquisitions.
(c)
Represents a non-cash charge or gain for the change in the estimated fair value of the warrant liability.
(d)
Represents a non-cash goodwill impairment charge as a result of the fair value of the Company’s reporting unit being less than its carrying value.
(e)
The 2023 year-to-date period consists of $12.5 million of expenses associated with litigation, $6.3 million of severance charges (of which $2.9 million relates to the separation of the Company's former CEO), $4.1 million of lease termination costs associated with a cost management program, $3.9 million of consulting expenses associated with systems implementation activities, $0.9 million of net impairments of operating lease right-of-use assets, and $5.5 million of other non-recurring expenses. The 2022 year-to-date period consists of a $9.0 million of consulting expenses associated with systems implementation activities and post-implementation support services, a $4.5 million expense related to changes in AdaptHealth's estimated liability related to its Tax Receivable Agreement, $3.8 million of expenses associated with litigation, claims and settlements, $0.7 million of lease termination costs, a $0.8 million loss related to the write-off of an investment, and $1.1 million of net other non-recurring expenses.
  
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ADAPTHEALTH CORP.
Free Cash Flow

This press release presents AdaptHealth’s Free Cash Flow for the three and nine months ended September 30, 2023 and 2022.

AdaptHealth defines Free Cash Flow as net cash provided by operating activities less cash paid for purchases of equipment and other fixed assets.
 
The following unaudited table reconciles net cash provided by operating activities to the free cash flow measure for the three and nine months ended September 30, 2023 and 2022:


Three Months EndedNine Months Ended
(in thousands)September 30,September 30,
2023202220232022
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 



Contacts
AdaptHealth Corp.
Jason Clemens, CFA
Chief Financial Officer
IR@adapthealth.com
-8 -
v3.23.3
Cover
Nov. 07, 2023
Cover [Abstract]  
Document Type 8-K
Document Period End Date Nov. 07, 2023
Entity Registrant Name AdaptHealth Corp.
Entity Incorporation, State or Country Code DE
Entity File Number 001-38399
Entity Tax Identification Number 82-3677704
Entity Address, State or Province PA
Entity Address, Postal Zip Code 19462
Entity Address, Address Line Two Suite 250
Entity Address, Address Line One 220 West Germantown Pike
Entity Address, City or Town Plymouth Meeting
City Area Code 610
Local Phone Number 424-4515
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.0001 per share
Trading Symbol AHCO
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Amendment Flag false
Entity Central Index Key 0001725255
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