FALSE000172525500017252552024-02-272024-02-27

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

February 27, 2024
Date of Report (date of earliest event reported)

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

Delaware
001-38399
82-3677704
(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 February 27, 2024, AdaptHealth Corp. (the "Company") issued a press release (the “Press Release”) announcing financial results for the fourth quarter and fiscal year ended December 31, 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: February 27, 2024



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


Exhibit 99.1
ahco_img001.jpg
FOR IMMEDIATE RELEASE
 

ADAPTHEALTH CORP. ANNOUNCES FOURTH QUARTER AND FULL-YEAR 2023 RESULTS
AND PROVIDES INITIAL 2024 OUTLOOK
 
PLYMOUTH MEETING, Pa. – February 27, 2024 - 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 fourth quarter and fiscal year ended December 31, 2023.
 
Full Year 2023 Results and Highlights
All comparisons are to the year ended December 31, 2022 unless otherwise stated.
•Net revenue was $3,200.2 million compared to $2,970.6 million, an increase of 7.7% driven by non-acquired growth of 7.3%.
•Net loss attributable to AdaptHealth Corp. was $678.9 million compared to net income of $69.3 million, largely resulting from a $830.8 million pre-tax write down of goodwill.
•Adjusted EBITDA increased to $670.8 million from $593.8 million, an increase of 13.0%.
•Cash flow from operations increased to $480.7 million from $373.9 million, an increase of 28.6%.
•Free cash flow increased to $143.2 million from $(17.6) million.
Fourth Quarter 2023 Results and Highlights
All comparisons are to the quarter ended December 31, 2022 unless otherwise stated.
•Net revenue was $858.2 million compared to $780.3 million, an increase of 10.0% driven by non-acquired growth of 9.7%.
•Net loss attributable to AdaptHealth Corp. was $254.5 million compared to net loss attributable to AdaptHealth Corp. of $2.6 million, largely resulting from a $318.9 million pre-tax write down of goodwill.
•Adjusted EBITDA increased to $204.6 million from $146.0 million, an increase of 40.2%.
•Cash flow from operations increased to $155.3 million from $96.9 million, an increase of 60.2%.
•Free cash flow was $66.6 million, compared to $(46.0) million.
Guidance for Fiscal Year 2024
The Company is providing its initial financial guidance for fiscal year 2024, as follows:
•Net revenue of $3.25 billion to $3.35 billion;
•Adjusted EBITDA of $650 million to $710 million;
•Free cash flow of $150 million to $180 million
Guidance for fiscal year 2024 does not include any contributions from acquisitions that have not yet closed and assumes that the 75/25 blended Medicare reimbursement rate adjustment in non-rural, non-competitive bid areas is not extended.
Management Commentary

Richard Barasch, Chairman and Interim CEO of AdaptHealth, commented, “We closed out 2023 with strong performance across the board in the fourth quarter. Driven by continued strength in sleep and respiratory, we generated record revenue of $3.2 billion, up 7.7% year-over-year, nearly all from non-acquired sources. We are also quite pleased that Adjusted EBITDA for the year increased at an even faster rate, giving us confidence that the strategic initiatives we undertook to improve efficiency have started to produce results.”
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“Another highlight of the year was the material increase in cash flow from operations and free cash flow. We are particularly pleased that our leverage ratio declined from 3.69x to 3.16x as of the end of the year.”

Mr. Barasch continued, “AdaptHealth provides needed medical equipment and supplies to approximately 4.1 million patients annually. Our nearly 11,000 employees, including approximately 1,000 healthcare professionals, are committed to constant improvement in our service and value to these patients so they can live better and healthier lives.”

Conference Call
 
Management will host a teleconference today, Tuesday, February 27, 2024, 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:
 
•(800) 245-3047 (Domestic) or
•(203) 518-9765 (International)

When prompted, reference Conference ID: AHCO4Q23

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 4.1 million patients annually in all 50 states through its network of approximately 680 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,
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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.
 
Use of Non-GAAP Financial Information and Financial Guidance

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. In addition, the Company’s ability to incur additional indebtedness and make investments under its existing credit agreement is governed, in part, by its ability to satisfy tests based on a variation of Adjusted EBITDA.
 
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, which is a financial measure that is not in accordance with U.S. GAAP, 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.

Free cash flow should not be considered as a measure of financial performance under U.S. GAAP. Accordingly, this key business metric has limitations as an analytical tool. It should not be considered as an alternative to any performance measures derived in accordance with U.S. GAAP or as an alternative to cash flows from operating activities as a measure of AdaptHealth’s liquidity.

This release contains non-GAAP financial guidance. 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 that 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. As a result, reconciliation of the non-GAAP financial guidance 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.

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In addition, the Company’s financial guidance in this release excludes the impact of any potential additional future strategic acquisitions and any 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) December 31, 2023December 31, 2022
Assets 
Current assets: 
Cash $77,132 $46,272 
Accounts receivable 388,910 359,146 
Inventory 113,642 127,754 
Prepaid and other current assets 69,338 52,136 
Total current assets 649,022 585,308 
Equipment and other fixed assets, net 495,101 487,079 
Operating lease right-of-use assets 110,465 129,506 
Finance lease right-of-use assets31,962 5,423 
Goodwill 2,724,958 3,545,297 
Identifiable intangible assets, net 130,160 162,773 
Other assets 21,128 22,415 
Deferred tax assets 345,854 281,786 
Total Assets $4,508,650 $5,219,587 
Liabilities and Stockholders' Equity 
Current liabilities: 
Accounts payable and accrued expenses $391,994 $337,498 
Current portion of long-term debt 53,368 35,000 
Current portion of operating lease obligations 29,270 30,001 
Current portion of finance lease obligations 9,122 2,211 
Contract liabilities 38,570 31,641 
Warrant liability4,021 — 
Other liabilities 10,654 19,863 
Total current liabilities 536,999 456,214 
Long-term debt, less current portion 2,094,614 2,153,267 
Operating lease obligations, less current portion 85,529 104,394 
Finance lease obligations, less current portion22,746 3,950 
Other long-term liabilities 302,093 305,501 
Warrant liability — 38,503 
Total Liabilities 3,041,981 3,061,829 
Total Stockholders' Equity 1,466,669 2,157,758 
Total Liabilities and Stockholders' Equity $4,508,650 $5,219,587 
 
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ADAPTHEALTH CORP.
  Consolidated Statements of Operations (Unaudited)
 
 Three Months EndedTwelve months ended
(in thousands, except per share data)December 31,December 31,
 2023202220232022
Net revenue$858,234  $780,283  $3,200,177 $2,970,595 
Costs and expenses:  
Cost of net revenue698,332  699,322  2,720,613 2,553,169 
General and administrative expenses47,294  37,452  190,091 162,125 
Depreciation and amortization, excluding patient equipment depreciation11,491  16,777  57,087 64,890 
Goodwill impairment318,921 — 830,787 — 
Total costs and expenses1,076,038  753,551  3,798,578 2,780,184 
Operating (loss) income(217,804) 26,732  (598,401)190,411 
Interest expense, net33,486  30,509  130,299 109,414 
Change in fair value of warrant liability(2,596) (13) (34,482)(17,158)
Other loss (income), net22,992  (6,926) 29,566 253 
(Loss) income before income taxes(271,686) 3,162  (723,784)97,902 
Income tax (benefit) expense(18,111) 4,733  (49,004)24,769 
Net (loss) income (253,575) (1,571) (674,780)73,133 
Income attributable to noncontrolling interests928  1,017  4,115 3,817 
Net (loss) income attributable to AdaptHealth Corp.$(254,503) $(2,588) $(678,895)$69,316 
  
Weighted average common shares outstanding - basic132,990 134,139  134,156 134,175 
Weighted average common shares outstanding - diluted132,990 134,139  134,418 138,988 
  
Basic net (loss) income per share$(1.91) $(0.02) $(5.06)$0.47 
Diluted net (loss) income per share$(1.91) $(0.02) $(5.31)$0.33 
 
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ADAPTHEALTH CORP.
 Consolidated Statements of Cash Flows (Unaudited)
(in thousands)Twelve Months Ended December 31,
20232022
Cash flows from operating activities:
Net (loss) income$(674,780)$73,133 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization, including patient equipment depreciation382,783 351,178 
Goodwill impairment830,787 — 
Equity-based compensation22,468 22,397 
Change in fair value of warrant liability(34,482)(17,158)
Reduction in the carrying amount of operating lease right-of-use assets31,873 32,264 
Reduction in the carrying amount of finance lease right-of-use assets5,938 — 
Deferred income tax (benefit) expense(62,595)18,036 
Change in fair value of interest rate swaps, net of reclassification adjustment(1,801)(2,936)
Amortization of deferred financing costs5,234 5,234 
Other350 (285)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable(28,862)(209)
Inventory15,531 (6,300)
Prepaid and other assets(20,305)(13,143)
Operating lease obligations(32,428)(31,213)
Operating liabilities40,955 (57,131)
Net cash provided by operating activities480,666 373,867 
Cash flows from investing activities:
Purchases of equipment and other fixed assets(337,463)(391,423)
Payments for business acquisitions, net of cash acquired(19,687)(19,017)
Payments for cost method investments(128)(731)
Net cash used in investing activities(357,278)(411,171)
Cash flows from financing activities:
Proceeds from borrowings on long-term debt and lines of credit50,000 — 
Repayments on long-term debt and lines of credit(95,000)(20,000)
Repayments of finance lease obligations(6,769)(16,176)
Payments for shares purchased under share repurchase program(29,275)(13,992)
Payments for tax withholdings from restricted stock vestings and stock option exercises(5,843)(3,516)
Payments of contingent consideration and deferred purchase price from acquisitions(2,535)(14,493)
Payments related to the Tax Receivable Agreement(3,224)— 
Distributions to noncontrolling interests(2,500)(2,000)
Proceeds from the exercise of stock options587 2,510 
Proceeds received in connection with employee stock purchase plan2,031 1,616 
Net cash used in financing activities(92,528)(66,051)
Net increase (decrease) in cash30,860 (103,355)
Cash at beginning of period46,272 149,627 
Cash at end of period$77,132 $46,272 
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Non-GAAP Financial Measures
 
EBITDA and Adjusted EBITDA
This press release presents AdaptHealth’s EBITDA and Adjusted EBITDA for the three and twelve months ended December 31, 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, litigation settlement expense, and certain other non-recurring items of expense or income.
The following unaudited table presents the reconciliation of net (loss) income attributable to AdaptHealth Corp. to EBITDA and Adjusted EBITDA for the three and twelve months ended December 31, 2023 and 2022:
 
Three Months EndedTwelve Months Ended
(in thousands)December 31,December 31,
2023202220232022
Net (loss) income attributable to AdaptHealth Corp.$(254,503)$(2,588)$(678,895)$69,316 
Income attributable to noncontrolling interest928 1,017 4,115 3,817 
Interest expense, net33,486 30,509 130,299 109,414 
Income tax (benefit) expense(18,111)4,733 (49,004)24,769 
Depreciation and amortization, including patient equipment depreciation92,364 102,343 382,783 351,178 
EBITDA(145,836)136,014 (210,702)558,494 
Equity-based compensation expense (a)5,184 5,613 22,468 22,397 
Transaction costs (b)339 171 960 6,003 
Change in fair value of warrant liability (c)(2,596)(13)(34,482)(17,158)
Goodwill impairment (d)318,921 — 830,787 — 
Litigation settlement expense (e)25,140 — 25,140 — 
Other non-recurring expense, net (f)3,467 4,171 36,624 24,034 
Adjusted EBITDA$204,619 $145,956 $670,795 $593,770 
Net (loss) income attributable to AdaptHealth Corp. as a percentage of net revenue(29.7)%(0.3)%(21.2)%2.3%
Adjusted EBITDA as a percentage of net revenue23.8%18.7%21.0%20.0%
(a)Represents non-cash 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 non-cash gains for the changes in the estimated fair value of the warrant liability.
(d)Represents non-cash goodwill impairment charges as a result of the fair value of the Company’s reporting unit being less than its carrying value.
(e)
Represents an expense relating to an agreement to settle a previously disclosed securities class action lawsuit, net of expected contributions from the Company’s insurers.
(f)
The 2023 year-to-date period consists of $13.9 million of expenses associated with litigation, $7.1 million of severance charges (of which $2.9 million relates to the separation of the Company's former CEO), $5.6 million of consulting expenses associated with systems implementations activities, $5.2 million of consulting expenses associated with cost savings initiatives, $4.8 million of lease termination costs associated with a cost management program, $0.9 million of net impairments of operating lease right-of-use assets as a result of vacating the leased facilities, and $1.6 million of other non-recurring expenses, offset by income of $2.5 million related to changes in AdaptHealth's estimated TRA liability. The 2022 period consists of $11.7 million of consulting expenses associated with systems implementation activities and post-implementation support services, $10.5 million of expenses associated with litigation, a $0.8 million loss related to the write-off of an investment, and $3.9 million of net other non-recurring expenses, offset by income of $2.9 million related to changes in AdaptHealth’s estimated TRA liability.
  
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Free Cash Flow
This press release presents AdaptHealth’s Free Cash Flow for the three and twelve months ended December 31, 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 twelve months ended December 31, 2023 and 2022:

Three Months EndedTwelve Months Ended
(in thousands)December 31,December 31,
2023202220232022
Net cash provided by operating activities$155,266 $96,920 $480,666 $373,867 
Purchases of equipment and other fixed assets(88,647)(142,912)(337,463)(391,423)
Free cash flow$66,619 $(45,992)$143,203 $(17,556)






Contacts
 
AdaptHealth Corp.
Jason Clemens, CFA
Chief Financial Officer
IR@adapthealth.com
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v3.24.0.1
Cover
Feb. 27, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Feb. 27, 2024
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, Address Line One 220 West Germantown Pike
Entity Address, Address Line Two Suite 250
Entity Address, City or Town Plymouth Meeting
Entity Address, State or Province PA
Entity Address, Postal Zip Code 19462
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
Entity Central Index Key 0001725255
Amendment Flag false
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