AdaptHealth Corp. (NASDAQ: AHCO) (“AdaptHealth” or the
“Company”), a leading provider of home healthcare equipment,
medical supplies to the home and related services in the United
States, announced today financial results for the three- and
nine-month periods ended September 30, 2020.
Highlights
- The Company closed the acquisitions of Solara Medical Supplies
and ActivStyle on July 1, 2020. Integration efforts are advancing
and both acquisitions were accretive to earnings in the third
quarter of 2020.
- In the third quarter, the Company acquired several additional
diabetes management and home medical equipment businesses in
high-growth areas.
- In addition, on October 1, 2020, the Company acquired Pinnacle
Medical Solutions, a leading distributor of medical devices and
supplies to patients for the treatment of diabetes (including
continuous glucose monitors and insulin pumps).
- To partially fund these acquisitions, the Company completed
$1.2 billion of financing transactions, consisting of $134 million
in net proceeds from a primary common equity issuance, $225 million
from PIPE issuances of common equity, $343 million in net proceeds
from an unsecured senior note issuance and a $450 million senior
bank facility refinancing.
Third Quarter Results
- Net revenue was $284.4 million, a 108% increase from the third
quarter of 2019 and 23% higher than the second quarter of
2020.
- Net loss attributable to AdaptHealth Corp. was $2.5 million, or
$0.04 per diluted share, compared to a net loss of $3.7 million, or
$0.17 per diluted share, in the third quarter of 2019.
- Adjusted EBITDA less Patient Equipment Capex was $35.9 million
compared to $18.7 million in the third quarter of 2019.
- Adjusted EBITDA was $53.2 million compared to $31.7 million in
the third quarter of 2019.
Nine Month Results
- Net revenue was $708.0 million, an 86% increase from the first
nine months of 2019.
- Net income attributable to AdaptHealth Corp. was $1.4 million,
or $0.02 per diluted share, compared to a net loss of $11.6
million, or $0.60 per diluted share, in the first nine months of
2019.
- Adjusted EBITDA less Patient Equipment Capex was $84.0 million
compared to $53.8 million in the first nine months of 2019.
- Adjusted EBITDA was $126.3 million compared to $89.4 million in
the first nine months of 2019.
Increased Guidance
While it is difficult to predict the duration of the COVID-19
crisis, based on current business and market trends, the Company is
increasing financial guidance for fiscal year 2020 for net revenue
to $1.00 billion to $1.04 billion, Adjusted EBITDA to $186 million
to $194 million, and Adjusted EBITDA less Patient Equipment Capex
to $124 million to $130 million.
For 2021, the Company is guiding net revenue of $1.30 billion to
$1.40 billion, Adjusted EBITDA of $260 million to $280 million and
Adjusted EBITDA less Patient Equipment Capex of $180 million to
$200 million.
CEO Commentary
Luke McGee, Chief Executive Officer of AdaptHealth, commented,
“Our strong year-to-date financial performance and improved outlook
for the remainder of 2020 reflects the tremendous efforts of our
employees and their dedication to our patients and healthcare
partners. We have remained opportunistic throughout the quarter,
acquiring several diabetes management and home medical equipment
businesses in high-growth areas. Additionally, on October 1, 2020,
we acquired Pinnacle Medical Solutions, a leading distributor of
medical devices and supplies to patients for the treatment of
diabetes, including continuous glucose monitors and insulin
pumps.
“I am very proud of the dedication, courage, and professionalism
of our employees as they continue to serve our patients and
referral partners throughout this crisis, while also continuing to
remain focused on delivering record financial results and
establishing a strong foundation for 2021.”
Conference Call
Management will host a conference at 8:30 am ET today to discuss
the results and business activities. Interested parties may
participate in the call by dialing:
- (877) 423-9820 (Domestic) or
- (201) 493-6749 (International)
Webcast registration: Click Here
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 leading provider of home healthcare equipment,
medical supplies to the home and related services in the United
States. AdaptHealth provides a full suite of medical products and
solutions designed to help patients manage chronic conditions in
the home, adapt to life and thrive. Product and services 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) home medical equipment
(HME) to patients discharged from acute care and other facilities,
(iv) oxygen and related chronic therapy services in the home, and
(v) other HME medical 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. AdaptHealth
services approximately 1.8 million patients annually in all 50
states through its network of 269 locations in 41 states. Learn
more at www.adapthealth.com.
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 clients’ preferences,
prospects and the competitive conditions prevailing in the
healthcare sector; and the impact of the recent coronavirus
(COVID-19) pandemic and the Company’s response to it. 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
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 Adjusted EBITDA
less Patient Equipment Capex, which are financial measures that are
not prepared 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 less
Patient Equipment Capex.
The Company believes Adjusted EBITDA less Patient Equipment
Capex is useful to investors in evaluating the Company’s financial
performance. The Company’s business requires significant investment
in equipment purchases to maintain its patient equipment inventory.
Some equipment title transfers to patients’ ownership after a
prescribed number of fixed monthly payments. Equipment that does
not transfer wears out or oftentimes is not recovered after a
patient’s use of the equipment terminates. 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. In addition, the
Company’s debt agreements contain covenants that use a variation of
Adjusted EBITDA less Patient Equipment Capex for purposes of
determining debt covenant compliance. For purposes of this metric,
patient equipment capital expenditure is measured as the value of
the patient equipment received during the accounting period without
regard to whether the equipment is purchased or financed through
lease transactions.
EBITDA, Adjusted EBITDA and Adjusted EBITDA less Patient
Equipment Capex should not be considered as measures of financial
performance under U.S. GAAP, and the items excluded from EBITDA,
Adjusted EBITDA and Adjusted EBITDA less Patient Equipment Capex
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.
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 and other non-recurring (income) expense, in the fourth
quarter of 2020 and full year 2021. 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 guidance also excludes
macro-economic effects due to the COVID-19 pandemic that are not
yet quantifiable. The financial guidance is subject to risks and
uncertainties applicable to all forward-looking statements as
described elsewhere in this press release.
ADAPTHEALTH CORP.
Condensed Consolidated Balance Sheets
(Unaudited) (in thousands) September
30, 2020 December 31, 2019 Assets Current assets:
Cash and cash equivalents $
272,318
$
76,878
Accounts receivable, net
147,335
78,619
Inventory
46,477
13,239
Prepaid and other current assets
18,255
12,679
Total current assets
484,385
181,415
Equipment and other fixed assets, net
101,656
63,559
Goodwill
810,480
266,791
Identifiable intangible assets, net
94,725
—
Other assets
6,466
6,851
Deferred tax asset
51,114
27,505
Total assets $
1,548,826
$
546,121
Liabilities and Stockholders' Equity (Deficit) Current
liabilities: Accounts payable and accrued expenses
192,337
102,728
Current portion of capital lease obligations
19,699
19,750
Current portion of long-term debt
8,479
1,721
Contract liabilities
13,231
9,556
Other liabilities
81,059
17,139
Total current liabilities
314,805
150,894
Long-term debt, less current portion
722,730
395,112
Other long-term liabilities
71,576
29,364
Total liabilities
1,109,111
575,370
Total Stockholders' Equity (Deficit)
439,715
(29,249
)
Total Liabilities and Stockholders' Equity (Deficit) $
1,548,826
$
546,121
ADAPTHEALTH CORP.
Consolidated Statements of Operations
(Unaudited) Three Months Ended Nine
Months Ended (in thousands, except per share data)
September 30, September 30,
2020
2019
2020
2019
Net revenue $
284,405
$
136,451
$
707,960
$
380,103
Costs and expenses: Cost of net revenue
240,720
114,797
604,777
317,174
General and administrative expenses
26,306
12,090
57,745
31,508
Depreciation and amortization, excluding patient equipment
depreciation
4,120
840
6,398
2,439
Total costs and expenses
271,146
127,727
668,920
351,121
Operating income
13,259
8,724
39,040
28,982
Interest expense
12,406
10,756
27,826
31,651
Loss on extinguishment of debt, net
5,316
—
5,316
2,121
Income (loss) before income taxes
(4,463
)
(2,032
)
5,898
(4,790
)
Income tax expense (benefit)
(636
)
1,027
2,290
5,444
Net income (loss)
(3,827
)
(3,059
)
3,608
(10,234
)
Income (loss) attributable to noncontrolling interests
(1,338
)
627
2,222
1,336
Net income (loss) attributable to AdaptHealth Corp. $
(2,489
)
$
(3,686
)
$
1,386
$
(11,570
)
Weighted average common shares outstanding - basic
57,372
21,721
47,986
19,130
Weighted average common shares outstanding - diluted
57,372
21,721
50,848
19,130
Basic earnings (loss) per share (1) $
(0.04
)
$
(0.17
)
$
0.03
$
(0.60
)
Diluted earnings (loss) per share (1) $
(0.04
)
$
(0.17
)
$
0.02
$
(0.60
)
(1) The Company's preferred stock are considered participating
securities and are therefore excluded from the earnings per share
calculation under the two-class method.
ADAPTHEALTH CORP. Condensed Consolidated Statements of Cash Flows
(Unaudited) Nine Months Ended (in
thousands) September 30,
2020
2019
Net cash provided by operating activities $
145,287
$
43,174
Net cash used in investing activities
(627,097
)
(62,399
)
Net cash provided by financing activities
677,250
2,862
Net increase (decrease) in cash and cash equivalents
195,440
(16,363
)
Cash and cash equivalents at beginning of period
76,878
25,186
Cash and cash equivalents at end of period $
272,318
$
8,823
Non-GAAP Financial
Measures
This press release presents AdaptHealth’s EBITDA, Adjusted
EBITDA and Adjusted EBITDA less Patient Equipment Capex for the
three and nine months ended September 30, 2020 and 2019.
AdaptHealth defines EBITDA as net income (loss) attributable to
AdaptHealth Corp., plus net income (loss) attributable to
noncontrolling interests, interest expense (income), income tax
expense (benefit), and depreciation and amortization.
AdaptHealth defines Adjusted EBITDA as EBITDA (as defined
above), plus loss on extinguishment of debt, equity‑based
compensation expense, transaction costs, severance, and similar
items of expense (income).
AdaptHealth defines Adjusted EBITDA less Patient Equipment Capex
as Adjusted EBITDA (as defined above) less patient equipment
acquired during the period without regard to whether the equipment
was purchased or financed through lease transactions.
The following unaudited table presents the reconciliation of net
income (loss) attributable to AdaptHealth Corp., to EBITDA,
Adjusted EBITDA and Adjusted EBITDA less Patient Equipment Capex
for the three and nine months ended September 30, 2020 and
2019:
Three Months Ended Nine Months Ended (in
thousands) September 30, September 30,
2020
2019
2020
2019
Net income (loss) attributable to AdaptHealth Corp. $
(2,489
)
$
(3,686
)
$
1,386
$
(11,570
)
Income (loss) attributable to noncontrolling interests
(1,338
)
627
2,222
1,336
Interest expense excluding change in fair value of interest rate
swaps
12,406
7,834
27,826
19,292
Interest expense - change in fair value of interest rate swaps
—
2,922
—
12,359
Income tax expense (benefit)
(636
)
1,027
2,290
5,444
Depreciation and amortization
22,747
16,871
57,861
45,077
EBITDA
30,690
25,595
91,585
71,938
Loss on extinguishment of debt, net (a)
5,316
-
5,316
2,121
Equity-based compensation expense (b)
5,502
400
10,969
5,806
Transaction costs (c)
10,213
5,282
16,612
8,232
Severance (d)
921
33
3,245
721
Other non-recurring (income) expense (e)
518
346
(1,473
)
534
Adjusted EBITDA
53,160
31,656
126,254
89,352
Less: Patient equipment capex (f)
(17,248
)
(12,941
)
(42,283
)
(35,589
)
Adjusted EBITDA less Patient Equipment Capex $
35,912
$
18,715
$
83,971
$
53,763
(a)
Represents write offs of deferred
financing costs related to refinancing of debt.
(b)
Represents amortization of equity-based
compensation to employees and non-employee directors. The higher
expense in the 2020 periods is due to a full quarter and
year-to-date expense for awards granted in late 2019, and overall
increased equity-compensation grant activity in 2020. The 2019
year-to-date period includes expense resulting from accelerated
vesting and modification of certain awards in that period.
(c)
Represents transaction costs related to
acquisitions and the 2019 Recapitalization.
(d)
Represents severance costs related to
acquisition integration and internal AdaptHealth restructuring and
workforce reduction activities.
(e)
The nine months ended September 30, 2020
includes $2.9 million of reductions in the fair value of contingent
consideration liabilities related to acquisitions, a $0.6 million
gain in connection with the sale of a cost method investment,
offset by a $1.5 million expense associated with the PCS Transition
Services Agreement and $0.5 million of other non-recurring
expenses.
(f)
Represents the value of the patient
equipment obtained during the respective period without regard to
whether the equipment is purchased or financed through lease
transactions.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201104005141/en/
AdaptHealth Corp. Jason Clemens, CFA Chief Financial
Officer (484) 301-6599 jclemens@adapthealth.com
Brittany Lett Vice President, Marketing (909) 915-4983
blett@adapthealth.com
The Equity Group Inc. Devin Sullivan Senior Vice
President (212) 836-9608 dsullivan@equityny.com
Kalle Ahl, CFA Vice President (212) 836-9614
kahl@equityny.com
AdaptHealth (NASDAQ:AHCO)
Historical Stock Chart
From Mar 2024 to Apr 2024
AdaptHealth (NASDAQ:AHCO)
Historical Stock Chart
From Apr 2023 to Apr 2024