AdaptHealth Corp. (NASDAQ: AHCO) (“AdaptHealth” or the
“Company”), a national leader in providing patient-centric and
technology-enabled chronic disease management solutions including
home healthcare equipment, medical supplies to the home and related
services in the United States, announced today financial results
for the fourth quarter and full year ended December 31, 2020.
Highlights
- The Company closed the acquisition of AeroCare Holdings Inc. on
February 1, 2021. Integration efforts are underway and progressing
well. The Company expects to generate previously announced pre-tax
annual run rate cost synergies of approximately $50 million.
- In the fourth quarter, the Company acquired several additional
diabetes management businesses including Pinnacle Medical Solutions
(October 1, 2020), New England Home Medical (November 30, 2020),
and Diabetes Management and Supply (December 31, 2020).
- The Company acquired several additional Home Medical Equipment
businesses in the fourth quarter of 2020 and the first quarter of
2021 including Allina Health Home Oxygen & Medical Equipment on
February 22, 2021.
- In January 2021, the Company completed approximately $1.7
billion of financing transactions, including its issuance of $500
million unsecured senior notes, its equity offering with gross
proceeds of approximately $280 million, and its refinancing of, and
increase to, its existing senior secured credit facilities
including a $700 million term loan A and a $250 million revolving
credit facility.
Fourth Quarter Results
- Net revenue was $348.4 million, a 133% increase from the fourth
quarter of 2019 and 23% higher than the third quarter of 2020.
- Net loss attributable to AdaptHealth Corp. was $31.0 million,
or $0.47 per diluted share, compared to a net loss of $3.4 million,
or $0.10 per diluted share, in the fourth quarter of 2019. The
fourth quarter of 2020 was impacted by a $56.9 million ($0.72 per
diluted share) pre-tax non-cash charge for the change in the
estimated fair value of contingent consideration common shares
issuable as part of the Business Combination (as described more
fully below).
- Adjusted EBITDA less Patient Equipment Capex was $58.5 million
compared to $21.8 million in the fourth quarter of 2019.
- Adjusted EBITDA was $79.4 million compared to $33.7 million in
the fourth quarter of 2019.
- The Company’s fourth quarter results included income of $14.3
million from the recognition of amounts received in connection with
the CARES Act provider relief fund.
Full Year Results
- Net revenue was $1.06 billion, a 99% increase from full year
2019.
- Net loss attributable to AdaptHealth Corp. was $64.5 million,
or $1.23 per diluted share, compared to a net loss of $15.0
million, or $0.66 per diluted share, in full year 2019. The full
year 2020 was impacted by a $98.7 million ($1.56 per diluted share)
pre-tax non-cash charge for the change in the estimated fair value
of contingent consideration common shares issuable as part of the
Business Combination (as described more fully below).
- Adjusted EBITDA less Patient Equipment Capex was $142.5 million
compared to $75.6 million in full year 2019.
- Adjusted EBITDA was $205.6 million compared to $123.0 million
in full year 2019.
- The Company’s full year results included income of $14.3
million from the recognition of amounts received in connection with
the CARES Act provider relief fund.
Increased Guidance
While it is difficult to predict the duration and impact of the
COVID-19 crisis, based on current business and market trends, the
Company is increasing its previously issued financial guidance for
fiscal year 2021 as follows:
- Net revenue of $2.18 billion to $2.35 billion, up from prior
guidance of $2.05 billion to $2.20 billion
- Adjusted EBITDA of $510 million to $550 million, up from prior
guidance of $480 million to $515 million; and
- Adjusted EBITDA less Patient Equipment Capex to $320 million to
$350 million, up from prior guidance of $300 million to $330
million.
CEO Commentary
Luke McGee, Co-CEO of AdaptHealth, commented, “We are very
pleased with our 2020 performance, which we believe is a testament
to our relentless focus on our patients and referral sources and
our ability to drive growth through process improvements and
technology solutions. In the fourth quarter, our diabetes business
drove substantial growth as the result of high ordering patterns in
December and our continued investment in accretive acquisitions. We
are increasing guidance for 2021 as a result of these acquisitions
as well as from our prospects for organic growth in 2021. We are
benefiting not only from the underlying growth in the diabetes
business in general, but also from our investments in our other
chronic disease businesses such as obstructive sleep apnea. The
enhanced scale of the combined AdaptHealth and AeroCare (serving
nearly 3 million patients annually) positions us as a national
leader in helping patients manage chronic diseases.”
Steve Griggs, Co-CEO of AdaptHealth, added, “Joining the
AdaptHealth team and witnessing the collaboration between
AdaptHealth and AeroCare employees has been incredibly rewarding.
As a result of the strong cultural fit between both organizations,
we feel we have already become one company. The AeroCare team has
been welcomed with open arms and recognized for the complementary
skills we’re able to bring to AdaptHealth. The transition has thus
far been incredibly smooth and we are already hard at work to
deliver the $50 million cost synergy target and enhance the organic
growth of the combined company.”
Luke and Steve together commented, “One of the most exciting
aspects of our integration is bringing together the proprietary
patient care technology both organizations have been developing
independently. We are combining the best features of each
technology solution as part of our integration plans. Our
technology enables interactive patient engagement, advances
compliance and monitoring capabilities, lowers operating costs, and
provides patients with greater care.”
Accounting for Contingent Consideration
Common Shares Liability
Together with our independent auditors, we have reevaluated the
accounting treatment of the previously disclosed contingent
consideration common shares to which the former owners of
AdaptHealth Holdings are entitled (the “Contingent Common Shares”)
in connection with the Business Combination. Due to the fact that
the issuance of the Contingent Common Shares would be accelerated
on a change of control regardless of the transaction value, we have
determined, consistent with recent SEC comments to other SPAC
registrants, to present the Contingent Common Shares as
liability-classified, not equity-classified as previously
presented. Accordingly, the fair value of the Contingent Common
Shares is reflected as a liability on the Company’s consolidated
balance sheets at December 31, 2020 and 2019, and the non-cash
change in the fair value each period is recognized in the Company’s
consolidated statements of operations. In our 2020 Form 10-K we
will recast our December 31, 2019 consolidated balance sheet and
adjust our unaudited 2020 quarterly consolidated statements of
operations to reflect such accounting. We will also update our
unaudited pro forma financial information recently filed on Form
8-K with respect to the AeroCare acquisition, consistent with this
treatment. When presenting diluted earnings (loss) per share for
2020 and 2019 periods in prior SEC filings, the Contingent Common
Shares were included in the diluted share count in accordance with
U.S. GAAP. The change in fair value each period is a non-cash
charge and has no impact on historical reported revenues, operating
income and adjusted EBITDA of the Company for any period.
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 national leader in providing patient-centric
and technology enabled chronic disease management solutions
including 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
nearly 3 million patients annually in all 50 states through its
network of over 500 locations in 46 states. Learn more at
www.adapthealth.com.
On July 8, 2019, AdaptHealth Holdings LLC (“AdaptHealth
Holdings”) entered into an Agreement and Plan of Merger (the
“Merger Agreement”), as amended on October 15, 2019, with DFB
Healthcare Acquisitions Corp. (“DFB”), pursuant to which
AdaptHealth Holdings combined with DFB (the “Business
Combination”). The merger was approved by DFB’s stockholders, and
the Business Combination closed on November 8, 2019. AdaptHealth
Holdings was the accounting acquirer in the merger, which was
treated as a reverse recapitalization. Accordingly, for accounting
purposes, the merger was treated as the equivalent of AdaptHealth
Holdings issuing stock for the net assets of DFB, accompanied by a
recapitalization. In connection with the Business Combination, the
name of the combined company was changed to AdaptHealth Corp.
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, changes in fair value of the contingent consideration common
shares liability, and other non-recurring (income) expense in 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)
December 31, 2020
December 31, 2019
Assets Current assets: Cash and cash equivalents $
99,962
$
76,878
Accounts receivable
176,641
78,619
Inventory
58,783
13,239
Prepaid and other current assets
37,441
12,679
Total current assets
372,827
181,415
Equipment and other fixed assets, net
110,468
63,559
Goodwill
1,002,024
266,791
Identifiable intangible assets, net
116,061
—
Other assets
16,483
6,851
Deferred tax asset
208,400
27,922
Total assets $
1,826,263
$
546,538
Liabilities and Stockholders' Equity (Deficit) Current
liabilities: Accounts payable and accrued expenses
267,003
102,728
Current portion of capital lease obligations
22,282
19,750
Current portion of long-term debt
8,146
1,721
Contract liabilities
11,043
9,556
Other liabilities
89,524
17,139
Contingent consideration common shares liability
36,846
3,158
Total current liabilities
434,844
154,052
Long-term debt, less current portion
776,568
395,112
Other long-term liabilities
186,470
29,364
Long-term portion of contingent consideration common shares
liability
33,631
6,158
Total liabilities
1,431,513
584,686
Total Stockholders' Equity (Deficit)
394,750
(38,148
)
Total Liabilities and Stockholders' Equity (Deficit) $
1,826,263
$
546,538
ADAPTHEALTH CORP.
Consolidated Statements of
Operations (Unaudited)
Three Months Ended
Twelve Months Ended
(in thousands, except per share data)
December 31,
December 31,
2020
2019
2020
2019
Net revenue $
348,429
$
149,541
$
1,056,389
$
529,644
Grant income
14,277
—
14,277
—
Costs and expenses: Cost of net revenue
290,380
123,212
895,157
440,386
General and administrative expenses
31,601
24,985
89,346
56,493
Depreciation and amortization, excluding patient equipment
depreciation
4,975
630
11,373
3,069
Total costs and expenses
326,956
148,827
995,876
499,948
Operating income
35,750
714
74,790
29,696
Interest expense
13,604
7,653
41,430
39,304
Loss on extinguishment of debt, net
—
—
5,316
2,121
Change in fair value of contingent consideration common shares
liability
56,867
—
98,717
—
Loss before income taxes
(34,721
)
(6,939
)
(70,673
)
(11,729
)
Income tax expense (benefit)
(7,219
)
(4,288
)
(11,955
)
1,156
Net loss
(27,502
)
(2,651
)
(58,718
)
(12,885
)
Income attributable to noncontrolling interests
3,541
775
5,763
2,111
Net loss attributable to AdaptHealth Corp. $
(31,043
)
$
(3,426
)
$
(64,481
)
$
(14,996
)
Weighted average common shares outstanding - basic and
diluted
65,897
32,726
52,488
22,557
Basic and diluted loss per share $
(0.47
)
$
(0.10
)
$
(1.23
)
$
(0.66
)
ADAPTHEALTH CORP. Condensed Consolidated Statements of
Cash Flows (Unaudited) Twelve Months Ended (in
thousands) December 31,
2020
2019
Net cash provided by operating activities $
195,634
$
60,418
Net cash used in investing activities
(815,703
)
(84,870
)
Net cash provided by financing activities
643,153
76,144
Net increase in cash and cash equivalents
23,084
51,692
Cash and cash equivalents at beginning of period
76,878
25,186
Cash and cash equivalents at end of period $
99,962
$
76,878
Non-GAAP Financial
Measures
This press release presents AdaptHealth’s EBITDA, Adjusted
EBITDA and Adjusted EBITDA less Patient Equipment Capex for the
three and twelve months ended December 31, 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, change in fair
value of contingent consideration common shares liability, 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 twelve months ended December 31, 2020 and
2019:
Three Months Ended
Twelve Months Ended
(in thousands)
December 31,
December 31,
2020
2019
2020
2019
Net income (loss) attributable to AdaptHealth Corp. $
(31,043
)
$
(3,426
)
$
(64,481
)
$
(14,996
)
Income attributable to noncontrolling interests
3,541
775
5,763
2,111
Interest expense excluding change in fair value of interest rate
swaps
13,604
8,586
41,430
27,878
Interest expense (income) - change in fair value of interest rate
swaps
—
(933
)
—
11,426
Income tax (benefit) expense
(7,219
)
(4,288
)
(11,955
)
1,156
Depreciation and amortization
24,584
17,490
82,445
62,567
EBITDA
3,467
18,204
53,202
90,142
Loss on extinguishment of debt, net (a)
—
—
5,316
2,121
Equity-based compensation expense (b)
7,701
5,264
18,670
11,070
Transaction costs (c)
9,961
7,752
26,573
15,984
Severance (d)
2,351
1,580
5,596
2,301
Change in fair value of contingent consideration common shares
liability (e)
56,867
—
98,717
—
Other non-recurring (income) expense (f)
(982
)
869
(2,455
)
1,403
Adjusted EBITDA
79,365
33,669
205,619
123,021
Less: Patient equipment capex (g)
(20,853
)
(11,832
)
(63,136
)
(47,421
)
Adjusted EBITDA less Patient Equipment Capex $
58,512
$
21,837
$
142,483
$
75,600
(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 2020 is due to a full year of expense for awards granted
in late 2019, and overall increased equity-compensation grant
activity in 2020. The 2019 period includes expense resulting from
accelerated vesting and modification of certain awards in that
period.
(c)
Represents transaction costs related to
acquisitions. The 2019 period also includes costs associated with
the 2019 Recapitalization and the Business Combination.
(d)
Represents severance costs related to
acquisition integration and internal AdaptHealth restructuring and
workforce reduction activities.
(e)
Represents non-cash charges for the change
in the estimated fair value of contingent consideration common
shares issuable as part of the Business Combination.
(f)
The 2020 period includes $4.2 million of
net 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 $0.8 million of other non-recurring expenses.
(g)
Represents the value of 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/20210304005493/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 Feb 2024 to Mar 2024
AdaptHealth (NASDAQ:AHCO)
Historical Stock Chart
From Mar 2023 to Mar 2024