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,
2021.
Highlights of 2021
- AdaptHealth more than doubled its revenue in 2021, with
revenues increasing to $2.45 billion from $1.06 billion in 2020,
despite challenges resulting from shortages of CPAP equipment in
the second half of the year.
- The Company now provides needed medical equipment and supplies
to roughly 3.8 million patients annually with operations in 47
states.
- The Company has substantially completed its integration of
AeroCare and additionally acquired more than $500 million in
annualized revenue during 2021.
- Cash flow from operations was $275.7 million in 2021, up from
$195.6 million in 2020.
Fourth Quarter Results
- Net revenue was a record $702.1 million compared to $348.4
million in the fourth quarter of 2020, an increase of 102%.
- Net income attributable to AdaptHealth Corp. was $22.9 million,
or $0.15 per diluted share, compared to a net loss of $80.5
million, or $1.22 per diluted share, in the fourth quarter of
2020.
- Organic growth for the fourth quarter was 2.7% and non-acquired
growth was 2.4% despite continued pressure on supply of CPAP
devices largely due to the Philips Respironics recall.
- Adjusted EBITDA was $158.1 million, compared to $79.4 million
in the fourth quarter of 2020, an increase of 99%.
- Adjusted EBITDA less Patient Equipment Capex was $100.0
million, compared to $58.5 million in the fourth quarter of 2020,
an increase of 71%.
- During the quarter, the Company completed four previously
disclosed acquisitions in Florida, Texas, Washington, and
Wisconsin, as well as acquisitions of three additional HME
providers located in Iowa, New Jersey, and Wisconsin.
- Cash flow from operations improved to $100.9 million in the
fourth quarter of 2021 from $27.1 million in the third quarter of
2021.
Guidance Updated for Fiscal Year
2022
Based on current business, market trends, governmental
reimbursement updates, acquisitions to date, and an expected
continuation of shortages of PAP devices, the Company is updating
its previously issued financial guidance for fiscal year 2022 as
follows:
- Net revenue of $2.825 billion to $3.025 billion, vs. prior
guidance of $2.700 billion to $2.900 billion;
- Adjusted EBITDA of $610 million to $670 million, vs. prior
guidance of $635 million to $695 million; and
- Total capital expenditures representing 9-11% of net revenue,
unchanged vs. prior guidance.
Guidance for fiscal year 2022 does not include any contribution
from acquisitions that have not yet closed, or continuing Public
Health Emergency benefits beyond the currently scheduled expiration
date.
Management Commentary
Steve Griggs, Chief Executive Officer, commented, “2021 was a
remarkable year for AdaptHealth. Despite the worldwide pandemic,
the shortage of CPAP equipment, and higher costs from supply chain
challenges, AdaptHealth has continued to grow and prosper. Although
Adjusted EBITDA fell short of our full-year guidance due to product
mix shift from rental to sales, we were very pleased with our free
cash flow generation as we exited the year.
Our operating and financial performance continues to reflect the
increasingly strong positioning of AdaptHealth in a challenging
environment. We are especially proud of the efforts of our over
11,000 employees to fulfill our mission to provide important
medical equipment and supplies to the approximately 3.8 million
patients who rely on us to live healthier lives.”
Josh Parnes, President, commented, “In today’s environment, it
is even more important to focus on efficiency. We continue to
invest in technology to drive operational improvements and better
patient outcomes along with reductions in the cost of care,
advancing our value proposition.”
Conference Call
Management will host a conference call at 8:30 am ET today to
discuss the results and business activities. Interested parties may
participate in the call by dialing:
- (877) 407-1877 (Domestic) or
- (201) 689-8451 (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-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 3.8 million patients annually in all 50 states
through its network of over 750 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; and the impact of the 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 often times 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 warrant liability, and other
non-recurring items of expense or income in full year 2022. 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, 2021
December 31, 2020 Assets Current assets:
Cash and cash equivalents $
149,627
$
99,962
Accounts receivable
359,896
171,065
Inventory
123,095
58,783
Prepaid and other current assets
37,440
33,441
Total current assets
670,058
363,251
Equipment and other fixed assets, net
398,577
110,468
Operating lease right-of-use assets
147,760
—
Goodwill
3,512,567
998,810
Identifiable intangible assets, net
202,231
116,061
Other assets
15,098
16,483
Deferred tax assets
304,193
208,399
Total Assets $
5,250,484
$
1,813,472
Liabilities and Stockholders' Equity Current liabilities:
Accounts payable and accrued expenses $
358,384
$
254,212
Current portion of finance lease obligations
15,446
22,282
Current portion of operating lease obligations
31,418
—
Current portion of long-term debt
20,000
8,146
Contract liabilities
31,370
11,043
Other liabilities
43,194
89,524
Current portion of contingent consideration common shares liability
—
36,846
Total current liabilities
499,812
422,053
Long-term debt, less current portion
2,183,552
776,568
Operating lease obligations, less current portion
120,180
—
Other long-term liabilities
322,487
186,470
Contingent consideration common shares liability, less current
portion
—
33,631
Warrant liability
57,764
113,905
Total Liabilities
3,183,795
1,532,627
Total Stockholders' Equity
2,066,689
280,845
Total Liabilities and Stockholders' Equity $
5,250,484
$
1,813,472
ADAPTHEALTH CORP. Consolidated Statements of Operations
(Unaudited)
Three Months Ended Twelve Months Ended
(in thousands, except per share data) December
31, December 31,
2021
2020
2021
2020
Net revenue $
702,106
$
348,429
$
2,454,535
$
1,056,389
Grant income
10,595
14,277
10,595
14,277
Costs and expenses: Cost of net revenue
591,620
291,833
2,008,925
898,601
General and administrative expenses
34,921
31,601
167,505
89,346
Depreciation and amortization, excluding patient equipment
depreciation
17,081
4,975
63,095
11,373
Total costs and expenses
643,622
328,409
2,239,525
999,320
Operating income
69,079
34,297
225,605
71,346
Interest expense, net
25,611
13,604
95,195
41,430
Loss on extinguishment of debt
—
—
20,189
5,316
Change in fair value of contingent consideration common shares
liability
4,661
56,867
(29,389)
98,717
Change in fair value of warrant liability
4,178
63,010
(53,181)
135,368
Other (income) loss, net
1,134
(1,453)
1,832
(3,444)
Income (loss) before income taxes
33,495
(97,731)
190,959
(206,041)
Income tax expense (benefit)
10,024
(7,219)
32,806
(11,955)
Net income (loss)
23,471
(90,512)
158,153
(194,086)
Income (loss) attributable to noncontrolling interests
529
(9,996)
1,978
(32,454)
Net income (loss) attributable to AdaptHealth Corp. $
22,942
$
(80,516)
$
156,175
$
(161,632)
Weighted average common shares outstanding - basic
132,470
65,897
126,306
52,488
Weighted average common shares outstanding - diluted
136,376
65,897
133,034
52,488
Basic net income (loss) per share $
0.16
$
(1.22)
$
1.12
$
(3.08)
Diluted net income (loss) per share $
0.15
$
(1.22)
$
0.67
$
(3.08)
ADAPTHEALTH CORP. Consolidated Statements of Cash Flows
(Unaudited)
(in thousands) Twelve Months Ended December
31,
2021
2020
Cash flows from operating activities: Net income (loss) $
158,153
$
(194,086)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: Depreciation and amortization, including
patient equipment depreciation
258,053
82,445
Equity-based compensation
25,323
18,670
Change in fair value of contingent consideration common shares
liability
(29,389)
98,717
Change in fair value of warrant liability
(53,181)
135,368
Reduction in the carrying amount of operating lease right-of-use
assets
28,624
—
Deferred income tax expense (benefit)
22,380
(21,101)
Change in fair value of interest rate swaps, net of
reclassification adjustment
(2,927)
(2,845)
Amortization of deferred financing costs
5,378
1,876
Write-off of deferred financing costs
4,054
5,316
Loss on extinguishment of debt from prepayment penalty
16,135
—
Other
(3,615)
(5,636)
Changes in operating assets and liabilities, net of effects from
acquisitions: Accounts receivable
(29,694)
(29,517)
Inventory
(14,920)
(19,434)
Prepaid and other assets
2,731
(10,767)
Operating lease obligations
(28,043)
—
Operating liabilities
(83,383)
136,628
Net cash provided by operating activities
275,679
195,634
Cash flows from investing activities: Payments for business
acquisitions, net of cash acquired
(1,620,320)
(769,337)
Purchases of equipment and other fixed assets
(203,308)
(39,755)
Payments for investments
(1,125)
(8,657)
Proceeds from sale of investment
—
2,046
Net cash used in investing activities
(1,824,753)
(815,703)
Cash flows from financing activities: Proceeds from borrowings on
long-term debt and lines of credit
1,165,000
591,275
Repayments on long-term debt and lines of credit
(827,271)
(547,480)
Proceeds from the issuance of senior unsecured notes
1,100,000
350,000
Proceeds from the issuance of Class A Common Stock
278,850
142,600
Proceeds from the sale of Class A Common Stock and Series A
Preferred Stock
—
225,000
Payments for equity issuance costs
(13,832)
(11,725)
Payments of deferred financing costs
(29,185)
(13,049)
Repayments of finance lease obligations
(42,164)
(39,051)
Proceeds from the exercise of stock options
12,320
—
Proceeds received in connection with employee stock purchase plan
1,016
101
Distributions to noncontrolling interests
(1,070)
(800)
Payments for tax withholdings from equity-based compensation and
stock option exercises
(3,557)
(59)
Payments of contingent consideration and deferred purchase price
from acquisitions
(25,233)
(3,954)
Payments for debt prepayment penalties
(16,135)
—
Proceeds from the exercise of warrants
—
24,495
Exchange of Class B Common Stock for cash
—
(44,273)
Payment for the exercise of call option relating to the Put/Call
Agreement
—
(29,927)
Net cash provided by financing activities
1,598,739
643,153
Net increase in cash and cash equivalents
49,665
23,084
Cash and cash equivalents at beginning of period
99,962
76,878
Cash and cash equivalents at end of period $
149,627
$
99,962
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, 2021 and 2020.
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.
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 the contingent consideration common shares liability,
change in fair value of the warrant liability, and other
non-recurring 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, 2021 and 2020:
Three Months Ended Twelve Months Ended (in
thousands) December 31, December 31,
2021
2020
2021
2020
Net income (loss) attributable to AdaptHealth Corp. $
22,942
$
(80,516)
$
156,175
$
(161,632)
Income (loss) attributable to noncontrolling interests
529
(9,996)
1,978
(32,454)
Interest expense, net
25,611
13,604
95,195
41,430
Income tax expense (benefit)
10,024
(7,219)
32,806
(11,955)
Depreciation and amortization, including patient equipment
depreciation
77,226
24,584
258,053
82,445
EBITDA
136,332
(59,543)
544,207
(82,166)
Loss on extinguishment of debt (a)
—
—
20,189
5,316
Equity-based compensation expense (b)
3,929
7,701
25,323
18,670
Transaction costs (c)
4,511
9,961
49,081
26,573
Severance (d)
2,415
2,351
4,417
5,596
Change in fair value of contingent consideration common shares
liability (e)
4,661
56,867
(29,389)
98,717
Change in fair value of warrant liability (f)
4,178
63,010
(53,181)
135,368
Other non-recurring expense (income) (g)
2,052
(982)
5,271
(2,455)
Adjusted EBITDA
158,078
79,365
565,918
205,619
Less: Patient equipment capex (h)
(58,056)
(20,853)
(198,992)
(63,136)
Adjusted EBITDA less Patient Equipment Capex $
100,022
$
58,512
$
366,926
$
142,483
(a)
Represents write offs of unamortized
deferred financing costs related to refinancing of debt and
pre-payment penalties for early debt payoff.
(b)
Represents equity-based compensation
expense for awards granted to employees and non-employee directors.
The higher expense in the 2021 year-to-date period is due to
overall increased equity compensation grant activity in that
period, as well as expense resulting from accelerated vesting of
certain awards, including accelerated vesting of certain awards in
connection with the separation of the Company’s former Co-CEO.
(c)
Represents transaction costs related to
acquisitions.
(d)
Represents severance costs related to
acquisition integration and internal AdaptHealth restructuring and
workforce reduction activities.
(e)
Represents a non-cash charge or gain for
the change in the estimated fair value of the contingent
consideration common shares liability.
(f)
Represents a non-cash charge or gain for
the change in the estimated fair value of the warrant
liability.
(g)
The 2021 year-to-date period includes $2.1
million of expenses related to legal and other costs associated
with the separation of the Company’s former Co-CEO, $3.9 million of
expenses associated with legal settlements, $1.9 million of
expenses associated with lease terminations, and $0.2 million of
net other non-recurring expenses, offset by a $1.9 million gain in
connection with the consolidation of an equity method investment,
and $0.9 million of net reductions in the fair value of contingent
consideration liabilities related to acquisitions. The 2020
year-to-date period includes $4.2 million of net reductions in the
fair value of contingent consideration liabilities related to
acquisitions, offset by a $1.5 million expense related to a
transition services agreement executed in connection with an
acquisition completed in 2020, and $0.2 million of net other
non-recurring expenses.
(h)
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/20220223006444/en/
AdaptHealth Corp. Jason Clemens, CFA Chief Financial
Officer Anton Hie Vice President, Investor Relations (615) 887-4012
IR@adapthealth.com
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