http://fasb.org/us-gaap/2021-01-31#HealthCarePatientServiceMemberhttp://fasb.org/us-gaap/2021-01-31#HealthCarePatientServiceMemberhttp://fasb.org/us-gaap/2021-01-31#HealthCarePatientServiceMemberhttp://fasb.org/us-gaap/2021-01-31#HealthCarePatientServiceMemberhttp://fasb.org/us-gaap/2021-01-31#HealthCarePatientServiceMemberhttp://fasb.org/us-gaap/2021-01-31#HealthCarePatientServiceMember0001725255--12-312022Q2falsehttp://fasb.org/us-gaap/2021-01-31#PropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2021-01-31#OtherLiabilitiesNoncurrent133843732134245536124060124060http://fasb.org/us-gaap/2021-01-31#HealthCarePatientServiceMemberhttp://fasb.org/us-gaap/2021-01-31#HealthCarePatientServiceMemberP3YP4Yhttp://fasb.org/us-gaap/2021-01-31#PropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2021-01-31#OtherLiabilitiesNoncurrent0001725255us-gaap:TreasuryStockMember2022-04-012022-06-3000017252552022-05-090001725255us-gaap:SeriesCPreferredStockMemberus-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001725255us-gaap:CommonClassAMemberus-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001725255us-gaap:SeriesCPreferredStockMember2021-01-012021-03-310001725255us-gaap:CommonClassAMember2021-01-012021-03-310001725255ahco:AerocareHoldingsMemberus-gaap:CommonClassAMember2021-02-012021-02-010001725255us-gaap:SeriesCPreferredStockMemberus-gaap:PreferredStockMember2021-01-012021-03-310001725255us-gaap:RetainedEarningsMember2022-06-300001725255us-gaap:NoncontrollingInterestMember2022-06-300001725255us-gaap:AdditionalPaidInCapitalMember2022-06-300001725255us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001725255us-gaap:RetainedEarningsMember2022-03-310001725255us-gaap:NoncontrollingInterestMember2022-03-310001725255us-gaap:AdditionalPaidInCapitalMember2022-03-310001725255us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-3100017252552022-03-310001725255us-gaap:RetainedEarningsMember2021-12-310001725255us-gaap:NoncontrollingInterestMember2021-12-310001725255us-gaap:AdditionalPaidInCapitalMember2021-12-310001725255us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001725255us-gaap:RetainedEarningsMember2021-06-300001725255us-gaap:NoncontrollingInterestMember2021-06-300001725255us-gaap:AdditionalPaidInCapitalMember2021-06-300001725255us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001725255us-gaap:RetainedEarningsMember2021-03-310001725255us-gaap:NoncontrollingInterestMember2021-03-310001725255us-gaap:AdditionalPaidInCapitalMember2021-03-310001725255us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-3100017252552021-03-310001725255us-gaap:RetainedEarningsMember2020-12-310001725255us-gaap:NoncontrollingInterestMember2020-12-310001725255us-gaap:AdditionalPaidInCapitalMember2020-12-310001725255us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001725255us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001725255us-gaap:TreasuryStockMember2022-06-300001725255us-gaap:PreferredStockMember2022-06-300001725255us-gaap:CommonStockMember2022-06-300001725255us-gaap:PreferredStockMember2022-03-310001725255us-gaap:CommonStockMember2022-03-310001725255us-gaap:PreferredStockMember2021-12-310001725255us-gaap:CommonStockMember2021-12-310001725255us-gaap:CommonClassAMemberus-gaap:CommonStockMember2021-06-300001725255us-gaap:PreferredStockMember2021-06-300001725255us-gaap:CommonClassAMemberus-gaap:CommonStockMember2021-03-310001725255us-gaap:PreferredStockMember2021-03-310001725255us-gaap:CommonClassBMemberus-gaap:CommonStockMember2020-12-310001725255us-gaap:CommonClassAMemberus-gaap:CommonStockMember2020-12-310001725255us-gaap:PreferredStockMember2020-12-310001725255ahco:PublicOfferingMember2021-01-310001725255us-gaap:CommonStockMember2022-01-012022-03-310001725255us-gaap:CommonClassAMemberus-gaap:CommonStockMember2021-04-012021-06-300001725255us-gaap:RestrictedStockMember2022-06-300001725255us-gaap:RestrictedStockMember2021-12-310001725255us-gaap:RestrictedStockMember2022-01-012022-06-300001725255us-gaap:ShareBasedCompensationAwardTrancheTwoMember2021-01-012021-06-300001725255us-gaap:ShareBasedCompensationAwardTrancheOneMember2020-05-012020-05-310001725255srt:MinimumMemberahco:VariousEmployeesMemberus-gaap:RestrictedStockMember2022-01-012022-06-300001725255srt:MaximumMemberahco:VariousEmployeesMemberus-gaap:RestrictedStockMember2022-01-012022-06-300001725255us-gaap:ShareBasedCompensationAwardTrancheTwoMember2019-01-012019-12-310001725255us-gaap:ShareBasedCompensationAwardTrancheOneMember2019-01-012019-12-310001725255us-gaap:ShareBasedCompensationAwardTrancheOneMember2021-01-012021-06-300001725255ahco:StockIncentivePlan2019Member2022-01-012022-06-300001725255ahco:EarnOutConsiderationMember2022-01-012022-06-300001725255ahco:AcquisitionRelatedContingentConsiderationMember2022-01-012022-06-300001725255us-gaap:HealthCareOtherMemberus-gaap:TransferredOverTimeMember2022-04-012022-06-300001725255us-gaap:HealthCareOtherMemberus-gaap:TransferredAtPointInTimeMember2022-04-012022-06-300001725255ahco:SuppliesToHomeMemberus-gaap:TransferredAtPointInTimeMember2022-04-012022-06-300001725255ahco:HealthCareSleepTherapyEquipmentSuppliesAndRelatedServicesMemberus-gaap:TransferredOverTimeMember2022-04-012022-06-300001725255ahco:HealthCareSleepTherapyEquipmentSuppliesAndRelatedServicesMemberus-gaap:TransferredAtPointInTimeMember2022-04-012022-06-300001725255ahco:HealthCareRespiratoryServicesMemberus-gaap:TransferredOverTimeMember2022-04-012022-06-300001725255ahco:HealthCareRespiratoryServicesMemberus-gaap:TransferredAtPointInTimeMember2022-04-012022-06-300001725255ahco:HealthCareHomeMedicalEquipmentMemberus-gaap:TransferredOverTimeMember2022-04-012022-06-300001725255ahco:HealthCareHomeMedicalEquipmentMemberus-gaap:TransferredAtPointInTimeMember2022-04-012022-06-300001725255ahco:DiabetesMemberus-gaap:TransferredOverTimeMember2022-04-012022-06-300001725255ahco:DiabetesMemberus-gaap:TransferredAtPointInTimeMember2022-04-012022-06-300001725255us-gaap:TransferredOverTimeMember2022-04-012022-06-300001725255us-gaap:TransferredAtPointInTimeMember2022-04-012022-06-300001725255us-gaap:HealthCareOtherMember2022-04-012022-06-300001725255ahco:SuppliesToHomeMember2022-04-012022-06-300001725255ahco:PatientPayorMember2022-04-012022-06-300001725255ahco:InsurancePayorMember2022-04-012022-06-300001725255ahco:HealthCareSleepTherapyEquipmentSuppliesAndRelatedServicesMember2022-04-012022-06-300001725255ahco:HealthCareRespiratoryServicesMember2022-04-012022-06-300001725255ahco:HealthCareHomeMedicalEquipmentMember2022-04-012022-06-300001725255ahco:GovernmentPayorMember2022-04-012022-06-300001725255ahco:DiabetesMember2022-04-012022-06-300001725255us-gaap:HealthCareOtherMemberus-gaap:TransferredOverTimeMember2022-01-012022-06-300001725255us-gaap:HealthCareOtherMemberus-gaap:TransferredAtPointInTimeMember2022-01-012022-06-300001725255ahco:SuppliesToHomeMemberus-gaap:TransferredAtPointInTimeMember2022-01-012022-06-300001725255ahco:HealthCareSleepTherapyEquipmentSuppliesAndRelatedServicesMemberus-gaap:TransferredOverTimeMember2022-01-012022-06-300001725255ahco:HealthCareSleepTherapyEquipmentSuppliesAndRelatedServicesMemberus-gaap:TransferredAtPointInTimeMember2022-01-012022-06-300001725255ahco:HealthCareRespiratoryServicesMemberus-gaap:TransferredOverTimeMember2022-01-012022-06-300001725255ahco:HealthCareRespiratoryServicesMemberus-gaap:TransferredAtPointInTimeMember2022-01-012022-06-300001725255ahco:HealthCareHomeMedicalEquipmentMemberus-gaap:TransferredOverTimeMember2022-01-012022-06-300001725255ahco:HealthCareHomeMedicalEquipmentMemberus-gaap:TransferredAtPointInTimeMember2022-01-012022-06-300001725255ahco:DiabetesMemberus-gaap:TransferredOverTimeMember2022-01-012022-06-300001725255ahco:DiabetesMemberus-gaap:TransferredAtPointInTimeMember2022-01-012022-06-300001725255us-gaap:TransferredOverTimeMember2022-01-012022-06-300001725255us-gaap:TransferredAtPointInTimeMember2022-01-012022-06-300001725255us-gaap:HealthCareOtherMember2022-01-012022-06-300001725255ahco:SuppliesToHomeMember2022-01-012022-06-300001725255ahco:PatientPayorMember2022-01-012022-06-300001725255ahco:InsurancePayorMember2022-01-012022-06-300001725255ahco:HealthCareSleepTherapyEquipmentSuppliesAndRelatedServicesMember2022-01-012022-06-300001725255ahco:HealthCareRespiratoryServicesMember2022-01-012022-06-300001725255ahco:HealthCareHomeMedicalEquipmentMember2022-01-012022-06-300001725255ahco:GovernmentPayorMember2022-01-012022-06-300001725255ahco:DiabetesMember2022-01-012022-06-300001725255us-gaap:HealthCareOtherMemberus-gaap:TransferredOverTimeMember2021-04-012021-06-300001725255us-gaap:HealthCareOtherMemberus-gaap:TransferredAtPointInTimeMember2021-04-012021-06-300001725255ahco:SuppliesToHomeMemberus-gaap:TransferredAtPointInTimeMember2021-04-012021-06-300001725255ahco:HealthCareSleepTherapyEquipmentSuppliesAndRelatedServicesMemberus-gaap:TransferredOverTimeMember2021-04-012021-06-300001725255ahco:HealthCareSleepTherapyEquipmentSuppliesAndRelatedServicesMemberus-gaap:TransferredAtPointInTimeMember2021-04-012021-06-300001725255ahco:HealthCareRespiratoryServicesMemberus-gaap:TransferredOverTimeMember2021-04-012021-06-300001725255ahco:HealthCareRespiratoryServicesMemberus-gaap:TransferredAtPointInTimeMember2021-04-012021-06-300001725255ahco:HealthCareHomeMedicalEquipmentMemberus-gaap:TransferredOverTimeMember2021-04-012021-06-300001725255ahco:HealthCareHomeMedicalEquipmentMemberus-gaap:TransferredAtPointInTimeMember2021-04-012021-06-300001725255ahco:DiabetesMemberus-gaap:TransferredOverTimeMember2021-04-012021-06-300001725255ahco:DiabetesMemberus-gaap:TransferredAtPointInTimeMember2021-04-012021-06-300001725255us-gaap:TransferredOverTimeMember2021-04-012021-06-300001725255us-gaap:TransferredAtPointInTimeMember2021-04-012021-06-300001725255us-gaap:HealthCareOtherMember2021-04-012021-06-300001725255ahco:SuppliesToHomeMember2021-04-012021-06-300001725255ahco:PatientPayorMember2021-04-012021-06-300001725255ahco:InsurancePayorMember2021-04-012021-06-300001725255ahco:HealthCareSleepTherapyEquipmentSuppliesAndRelatedServicesMember2021-04-012021-06-300001725255ahco:HealthCareRespiratoryServicesMember2021-04-012021-06-300001725255ahco:HealthCareHomeMedicalEquipmentMember2021-04-012021-06-300001725255ahco:GovernmentPayorMember2021-04-012021-06-300001725255ahco:DiabetesMember2021-04-012021-06-300001725255us-gaap:HealthCareOtherMemberus-gaap:TransferredOverTimeMember2021-01-012021-06-300001725255us-gaap:HealthCareOtherMemberus-gaap:TransferredAtPointInTimeMember2021-01-012021-06-300001725255ahco:SuppliesToHomeMemberus-gaap:TransferredAtPointInTimeMember2021-01-012021-06-300001725255ahco:HealthCareSleepTherapyEquipmentSuppliesAndRelatedServicesMemberus-gaap:TransferredOverTimeMember2021-01-012021-06-300001725255ahco:HealthCareSleepTherapyEquipmentSuppliesAndRelatedServicesMemberus-gaap:TransferredAtPointInTimeMember2021-01-012021-06-300001725255ahco:HealthCareRespiratoryServicesMemberus-gaap:TransferredOverTimeMember2021-01-012021-06-300001725255ahco:HealthCareRespiratoryServicesMemberus-gaap:TransferredAtPointInTimeMember2021-01-012021-06-300001725255ahco:HealthCareHomeMedicalEquipmentMemberus-gaap:TransferredOverTimeMember2021-01-012021-06-300001725255ahco:HealthCareHomeMedicalEquipmentMemberus-gaap:TransferredAtPointInTimeMember2021-01-012021-06-300001725255ahco:DiabetesMemberus-gaap:TransferredOverTimeMember2021-01-012021-06-300001725255ahco:DiabetesMemberus-gaap:TransferredAtPointInTimeMember2021-01-012021-06-300001725255us-gaap:TransferredOverTimeMember2021-01-012021-06-300001725255us-gaap:TransferredAtPointInTimeMember2021-01-012021-06-300001725255us-gaap:HealthCareOtherMember2021-01-012021-06-300001725255ahco:SuppliesToHomeMember2021-01-012021-06-300001725255ahco:PatientPayorMember2021-01-012021-06-300001725255ahco:InsurancePayorMember2021-01-012021-06-300001725255ahco:HealthCareSleepTherapyEquipmentSuppliesAndRelatedServicesMember2021-01-012021-06-300001725255ahco:HealthCareRespiratoryServicesMember2021-01-012021-06-300001725255ahco:HealthCareHomeMedicalEquipmentMember2021-01-012021-06-300001725255ahco:GovernmentPayorMember2021-01-012021-06-300001725255ahco:DiabetesMember2021-01-012021-06-300001725255us-gaap:NotesPayableOtherPayablesMember2021-08-012021-08-310001725255ahco:CreditAgreement2021Member2021-04-012021-04-300001725255ahco:ExecutivePartialOwnerOfContractLaborServiceProviderMember2022-04-012022-06-300001725255ahco:ExecutivePartialOwnerOfContractLaborServiceProviderMember2022-01-012022-06-300001725255ahco:ExecutivePartialOwnerOfContractLaborServiceProviderMember2021-04-012021-06-300001725255ahco:ExecutivePartialOwnerOfContractLaborServiceProviderMember2021-01-012021-06-300001725255ahco:VendorTwoMember2022-04-012022-06-300001725255ahco:VendorThreeMember2022-04-012022-06-300001725255ahco:VendorTwoMember2021-04-012021-06-300001725255ahco:VendorTwoMember2021-01-012021-06-300001725255us-gaap:VehiclesMember2022-06-300001725255us-gaap:PropertyPlantAndEquipmentOtherTypesMember2022-06-300001725255ahco:PatientMedicalEquipmentMember2022-06-300001725255us-gaap:VehiclesMember2021-12-310001725255us-gaap:PropertyPlantAndEquipmentOtherTypesMember2021-12-310001725255ahco:PatientMedicalEquipmentMember2021-12-310001725255us-gaap:RetainedEarningsMember2022-04-012022-06-300001725255us-gaap:RetainedEarningsMember2022-01-012022-03-310001725255us-gaap:NoncontrollingInterestMember2022-01-012022-03-310001725255us-gaap:RetainedEarningsMember2021-04-012021-06-300001725255us-gaap:RetainedEarningsMember2021-01-012021-03-310001725255ahco:RevolvingCreditLoans2021Member2022-01-012022-06-300001725255ahco:RevolvingCreditLoans2021Member2021-01-012021-06-300001725255ahco:AerocareHoldingsMemberus-gaap:SeriesCPreferredStockMember2021-02-010001725255us-gaap:SeriesCPreferredStockMember2021-02-010001725255ahco:HealthyLivingMedicalSupplyLLCMember2021-06-012021-06-010001725255ahco:SpiroHealthServicesMember2021-04-302021-04-300001725255ahco:PublicOfferingMember2021-01-012021-03-310001725255ahco:PublicOfferingMember2021-01-012021-01-310001725255ahco:CreditAgreement2021Member2021-01-012021-06-300001725255ahco:AdaptHealthHoldingsLlcMember2019-11-080001725255ahco:ShareholderSOfAdaptHealthHoldingsLlcMemberahco:AdaptHealthHoldingsLlcMember2019-11-080001725255us-gaap:NoncontrollingInterestMember2022-04-012022-06-300001725255us-gaap:NoncontrollingInterestMember2021-04-012021-06-300001725255ahco:SecondSpecifiedRepaymentPeriodMemberahco:TermLoan2021Member2022-01-012022-06-300001725255ahco:FirstSpecifiedRepaymentPeriodMemberahco:TermLoan2021Member2022-01-012022-06-300001725255ahco:TermLoan2021Member2021-04-300001725255ahco:RevolvingCreditLoans2021Member2021-04-300001725255ahco:LetterOfCredit2021Member2021-04-300001725255srt:MinimumMemberahco:CreditAgreement2021Member2021-01-012021-06-300001725255srt:MaximumMemberahco:CreditAgreement2021Member2021-01-012021-06-300001725255ahco:RevolvingCreditLoans2021Member2022-06-300001725255us-gaap:FairValueInputsLevel3Memberahco:WarrantLiabilityNoncurrentMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001725255us-gaap:FairValueInputsLevel3Memberahco:ContingentConsiderationNoncurrentMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001725255us-gaap:FairValueInputsLevel3Memberahco:ContingentConsiderationCurrentMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001725255us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001725255us-gaap:FairValueInputsLevel3Memberahco:WarrantLiabilityNoncurrentMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001725255us-gaap:FairValueInputsLevel3Memberahco:ContingentConsiderationNoncurrentMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001725255us-gaap:FairValueInputsLevel3Memberahco:ContingentConsiderationCurrentMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001725255us-gaap:FairValueInputsLevel2Memberahco:InterestRateSwapShortTermMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001725255us-gaap:FairValueInputsLevel2Memberahco:InterestRateSwapLongTermMemberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001725255us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001725255us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001725255us-gaap:EmployeeStockOptionMember2022-04-012022-06-300001725255us-gaap:EmployeeStockOptionMember2022-01-012022-06-300001725255us-gaap:EmployeeStockOptionMember2021-04-012021-06-300001725255us-gaap:EmployeeStockOptionMember2021-01-012021-06-300001725255us-gaap:RestrictedStockMember2021-04-012021-06-300001725255us-gaap:RestrictedStockMember2021-01-012021-06-300001725255ahco:CreditAgreement2021Member2021-01-012021-03-310001725255srt:MinimumMemberus-gaap:TradeNamesMember2022-01-012022-06-300001725255srt:MaximumMemberus-gaap:TradeNamesMember2022-01-012022-06-300001725255us-gaap:TradeNamesMember2022-01-012022-06-300001725255us-gaap:TechnologyBasedIntangibleAssetsMember2022-01-012022-06-300001725255us-gaap:LeaseAgreementsMember2022-01-012022-06-300001725255us-gaap:ContractBasedIntangibleAssetsMember2022-01-012022-06-300001725255us-gaap:TradeNamesMember2021-01-012021-12-310001725255us-gaap:TechnologyBasedIntangibleAssetsMember2021-01-012021-12-310001725255us-gaap:LeaseAgreementsMember2021-01-012021-12-310001725255us-gaap:ContractBasedIntangibleAssetsMember2021-01-012021-12-310001725255us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2022-06-300001725255us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsNonrecurringMember2021-12-310001725255us-gaap:TradeNamesMember2022-06-300001725255us-gaap:TechnologyBasedIntangibleAssetsMember2022-06-300001725255us-gaap:LeaseAgreementsMember2022-06-300001725255us-gaap:ContractBasedIntangibleAssetsMember2022-06-300001725255us-gaap:TradeNamesMember2021-12-310001725255us-gaap:TechnologyBasedIntangibleAssetsMember2021-12-310001725255us-gaap:LeaseAgreementsMember2021-12-310001725255us-gaap:ContractBasedIntangibleAssetsMember2021-12-310001725255ahco:VendorThreeMember2022-06-300001725255ahco:ExecutivePartialOwnerOfContractLaborServiceProviderMember2022-06-300001725255ahco:ForwardDatedInterestRateSwapAgreementsWithThirdPartiesMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-04-300001725255us-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-06-300001725255us-gaap:OtherCurrentLiabilitiesMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-06-300001725255us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-06-300001725255us-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-12-310001725255us-gaap:OtherCurrentLiabilitiesMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-12-310001725255us-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2021-12-310001725255us-gaap:CashFlowHedgingMember2022-04-012022-06-300001725255us-gaap:CashFlowHedgingMember2022-01-012022-06-300001725255us-gaap:CashFlowHedgingMember2021-04-012021-06-300001725255us-gaap:CashFlowHedgingMember2021-01-012021-06-300001725255us-gaap:OtherNoncurrentAssetsMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-06-300001725255us-gaap:OtherCurrentAssetsMemberus-gaap:InterestRateSwapMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-06-300001725255ahco:SeniorUnsecuredNotes5.125PerCentDue2030Member2021-08-192021-08-190001725255ahco:SeniorUnsecuredNotes5.125PerCentDue2030Memberus-gaap:DebtInstrumentRedemptionPeriodTwoMember2021-08-192021-08-190001725255ahco:SeniorUnsecuredNotes5.125PerCentDue2030Memberus-gaap:DebtInstrumentRedemptionPeriodThreeMember2021-08-192021-08-190001725255ahco:SeniorUnsecuredNotes5.125PerCentDue2030Memberus-gaap:DebtInstrumentRedemptionPeriodFourMember2021-08-192021-08-190001725255ahco:SeniorUnsecuredNotes4.625PerCentDue2029Memberus-gaap:DebtInstrumentRedemptionPeriodTwoMember2021-01-042021-01-040001725255ahco:SeniorUnsecuredNotes4.625PerCentDue2029Memberus-gaap:DebtInstrumentRedemptionPeriodThreeMember2021-01-042021-01-040001725255ahco:SeniorUnsecuredNotes4.625PerCentDue2029Memberus-gaap:DebtInstrumentRedemptionPeriodOneMember2021-01-042021-01-040001725255ahco:SeniorUnsecuredNotes4.625PerCentDue2029Memberus-gaap:DebtInstrumentRedemptionPeriodFourMember2021-01-042021-01-040001725255ahco:SeniorNotes6.125PercentDue2028Memberus-gaap:DebtInstrumentRedemptionPeriodTwoMember2020-07-282020-07-290001725255ahco:SeniorNotes6.125PercentDue2028Memberus-gaap:DebtInstrumentRedemptionPeriodThreeMember2020-07-282020-07-290001725255ahco:SeniorNotes6.125PercentDue2028Memberus-gaap:DebtInstrumentRedemptionPeriodOneMember2020-07-282020-07-290001725255ahco:SeniorNotes6.125PercentDue2028Memberus-gaap:DebtInstrumentRedemptionPeriodFourMember2020-07-282020-07-290001725255ahco:SeniorNotes6.125PercentDue2028Memberus-gaap:DebtInstrumentRedemptionPeriodFiveMember2020-07-282020-07-290001725255ahco:SeniorUnsecuredNotes5.125PerCentDue2030Member2021-08-160001725255ahco:PeriodStartingOnClosingDateAndEndingOnSeventhAnniversaryMemberahco:PromissoryNoteWithInvestorMember2021-06-300001725255ahco:SeniorUnsecuredNotes5.125PerCentDue2030Member2021-08-190001725255us-gaap:NotesPayableOtherPayablesMember2021-06-300001725255ahco:SeniorUnsecuredNotes4.625PerCentDue2029Member2021-01-040001725255ahco:SeniorNotes6.125PercentDue2028Member2020-07-290001725255ahco:PromissoryNoteWithInvestorMember2019-03-310001725255ahco:PromissoryNoteFromMembersInterestMember2019-03-310001725255ahco:TermLoan2021Member2022-06-300001725255ahco:SeniorUnsecuredNotes4.625PerCentDue2029Member2022-06-300001725255ahco:RevolverLetterOfCreditSublimitMaturingJuly2025.Member2022-06-300001725255ahco:TermLoanMaturingJuly2025Member2021-12-310001725255ahco:TermLoan2021Member2021-12-310001725255ahco:SeniorUnsecuredNotes4.625PerCentDue2029Member2021-12-310001725255srt:MinimumMemberahco:CreditAgreement2021Memberus-gaap:LondonInterbankOfferedRateLIBORMember2021-01-012021-06-300001725255srt:MaximumMemberahco:CreditAgreement2021Memberus-gaap:LondonInterbankOfferedRateLIBORMember2021-01-012021-06-300001725255us-gaap:SeriesCPreferredStockMember2021-03-180001725255ahco:PreferredClassB1Member2020-06-3000017252552021-07-2800017252552021-07-2700017252552019-11-080001725255us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300001725255us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001725255us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001725255us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001725255ahco:SignificantAcquisitionsIn2022Member2022-06-300001725255ahco:OtherAcquisitionsIn2021Member2021-06-300001725255ahco:HealthyLivingMedicalSupplyLLCMember2021-06-300001725255ahco:AerocareHoldingsMember2021-06-300001725255ahco:SpiroHealthServicesMember2021-06-300001725255ahco:SignificantAcquisitionsIn2021Member2021-06-300001725255ahco:SolaraMedicalSuppliesLlcMember2022-01-012022-06-300001725255us-gaap:OtherNoncurrentLiabilitiesMember2022-06-300001725255us-gaap:OtherCurrentLiabilitiesMember2022-06-300001725255us-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:FairValueInputsLevel3Member2021-12-310001725255us-gaap:OtherCurrentLiabilitiesMemberus-gaap:FairValueInputsLevel3Member2021-12-310001725255ahco:OtherAcquisitionsIn2021Member2021-01-012021-06-300001725255ahco:HealthyLivingMedicalSupplyLLCMember2021-01-012021-06-300001725255ahco:AerocareHoldingsMember2021-01-012021-06-300001725255ahco:HomeMedicalEquipmentProviderAcquiredIn2022Member2022-06-300001725255ahco:HomeMedicalEquipmentProvidersEquityInterestsAndAssetsAcquisitionsMember2021-06-300001725255ahco:HealthyLivingMedicalSupplyLLCMember2021-06-010001725255ahco:SpiroHealthServicesMember2021-04-300001725255ahco:AerocareHoldingsMember2021-02-010001725255us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001725255us-gaap:FairValueInputsLevel2Memberahco:InterestRateSwapShortTermMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001725255us-gaap:FairValueInputsLevel2Memberahco:InterestRateSwapLongTermMemberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001725255us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001725255us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001725255us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001725255us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310001725255us-gaap:WarrantMember2022-04-012022-06-300001725255us-gaap:RestrictedStockMember2022-04-012022-06-300001725255us-gaap:PreferredStockMember2022-04-012022-06-300001725255us-gaap:RestrictedStockMember2022-01-012022-06-300001725255us-gaap:PreferredStockMember2022-01-012022-06-300001725255us-gaap:PreferredStockMember2021-04-012021-06-300001725255us-gaap:PreferredStockMember2021-01-012021-06-300001725255us-gaap:GeneralAndAdministrativeExpenseMember2022-04-012022-06-300001725255us-gaap:CostOfSalesMember2022-04-012022-06-300001725255us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-06-300001725255us-gaap:CostOfSalesMember2022-01-012022-06-300001725255us-gaap:GeneralAndAdministrativeExpenseMember2021-04-012021-06-300001725255us-gaap:CostOfSalesMember2021-04-012021-06-300001725255us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-06-300001725255us-gaap:CostOfSalesMember2021-01-012021-06-300001725255us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300001725255us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-3100017252552022-01-012022-03-3100017252552022-08-0500017252552019-11-082019-11-0800017252552022-01-012022-01-310001725255us-gaap:NoncontrollingInterestMember2021-01-012021-03-310001725255us-gaap:CommonClassBMemberus-gaap:CommonStockMember2021-01-012021-03-3100017252552021-01-012021-01-010001725255ahco:PreferredClassB1Member2022-01-012022-06-300001725255us-gaap:CommonClassAMember2021-01-012021-06-300001725255ahco:PreferredClassB1Member2021-01-012021-06-300001725255us-gaap:CommonClassAMember2020-06-012020-06-300001725255ahco:StockIncentivePlan2019Member2022-06-300001725255ahco:StockIncentivePlan2019Member2021-12-310001725255ahco:VariousEmployeesNonEmployeeDirectorsMemberus-gaap:RestrictedStockMember2022-04-012022-06-300001725255srt:ManagementMemberus-gaap:RestrictedStockMember2022-01-012022-06-300001725255srt:ManagementMemberahco:PerformanceBasedRestrictedStockUnitMember2022-01-012022-06-300001725255ahco:VariousEmployeesMemberus-gaap:RestrictedStockMember2022-01-012022-06-300001725255ahco:StockIncentivePlan2019Member2019-01-012019-12-310001725255ahco:PerformancePercentageLessThan25Member2022-01-012022-06-300001725255ahco:PerformancePercentageGreaterThanOrEqualTo75Member2022-01-012022-06-300001725255ahco:PerformancePercentageGreaterThanOrEqualTo25Member2022-01-012022-06-300001725255ahco:PerformancePercentageEqualTo50Member2022-01-012022-06-300001725255ahco:SignificantAcquisitionsIn2022Member2022-01-012022-06-300001725255ahco:SignificantAcquisitionsIn2021Member2022-01-012022-06-3000017252552021-12-310001725255ahco:CreditAgreement2021Member2021-04-012021-06-300001725255ahco:VendorThreeMember2022-01-012022-06-300001725255ahco:PreferredClassB1Member2020-06-012020-06-300001725255srt:MaximumMemberahco:ThirdPartyPayorWithSameBoardOfDirectorMember2022-04-012022-06-300001725255srt:MaximumMemberahco:ThirdPartyPayorWithSameBoardOfDirectorMember2022-01-012022-06-300001725255srt:MaximumMemberahco:ThirdPartyPayorWithSameBoardOfDirectorMember2021-04-012021-06-300001725255srt:MaximumMemberahco:ThirdPartyPayorWithSameBoardOfDirectorMember2021-01-012021-06-3000017252552021-07-282021-07-280001725255ahco:ShareholderSOfAdaptHealthHoldingsLlcMemberahco:AdaptHealthHoldingsLlcMember2019-11-082019-11-080001725255ahco:AerocareHoldingsMember2021-02-012021-02-010001725255ahco:VendorTwoMember2022-01-012022-06-300001725255ahco:HomeMedicalEquipmentProviderAcquiredIn2022Member2022-01-012022-06-300001725255ahco:HomeMedicalEquipmentProvidersEquityInterestsAndAssetsAcquisitionsMember2021-01-012021-06-300001725255us-gaap:OtherNoncurrentLiabilitiesMember2022-01-012022-06-300001725255us-gaap:OtherCurrentLiabilitiesMember2022-01-012022-06-3000017252552021-06-3000017252552020-12-310001725255ahco:SeniorUnsecuredNotes5.125PerCentDue2030Memberus-gaap:DebtInstrumentRedemptionPeriodOneMember2021-08-192021-08-190001725255ahco:SeniorUnsecuredNotes4.625PerCentDue2029Member2021-01-042021-01-040001725255ahco:SeniorNotes6.125PercentDue2028Member2020-07-282020-07-290001725255us-gaap:NotesPayableOtherPayablesMember2021-06-012021-06-3000017252552022-06-300001725255ahco:SignificantAcquisitionsIn2020Member2020-07-290001725255us-gaap:SeriesCPreferredStockMember2021-03-182021-03-180001725255us-gaap:CommonClassAMember2021-03-182021-03-180001725255us-gaap:PreferredStockMember2021-01-012021-03-310001725255us-gaap:CommonStockMember2022-04-012022-06-300001725255us-gaap:CommonClassAMemberus-gaap:CommonStockMember2021-01-012021-03-3100017252552021-04-012021-06-3000017252552020-04-012020-04-3000017252552022-12-012022-12-3100017252552021-01-012021-12-3100017252552020-01-012020-12-310001725255ahco:SpiroHealthServicesMember2021-01-012021-06-300001725255ahco:SignificantAcquisitionsIn2021Member2021-01-012021-06-3000017252552021-01-012021-06-3000017252552022-04-012022-06-3000017252552022-01-012022-06-300001725255us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-3100017252552021-01-012021-03-31iso4217:USDxbrli:sharesiso4217:USDxbrli:sharesxbrli:pureahco:itemahco:Vote

March 31,

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-38399

AdaptHealth Corp.

(Exact name of registrant as specified in its charter)

Delaware

82-3677704

(State of Other Jurisdiction of incorporation or Organization)

(I.R.S. Employer Identification No.)

220 West Germantown Pike Suite 250, Plymouth Meeting, PA

19462

(Address of principal executive offices)

(Zip code)

Registrant’s telephone number, including area code: (610) 424-4515

Securities registered pursuant to Section 12(b) of the Act:

    

    

Name Of Each Exchange

Title of Each Class

Trading Symbol(s)

On Which Registered

Common Stock, par value $0.0001 per share

AHCO

The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.0405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer ☐

Smaller reporting company

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of August 5, 2022, there were 134,502,471 shares of the Registrant’s Common Stock issued and outstanding.

ADAPTHEALTH CORP.

FORM 10-Q

TABLE OF CONTENTS

Page Number

PART I FINANCIAL INFORMATION

Item 1. Interim Consolidated Financial Statements (Unaudited)

Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021

4

Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021

5

Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 and 2021

6

Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021

7

Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021

9

Notes to Interim Consolidated Financial Statements

10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

43

Item 3. Quantitative and Qualitative Disclosures About Market Risk

60

Item 4. Controls and Procedures

61

PART II OTHER INFORMATION

62

Item 1. Legal Proceedings

62

Item 1A. Risk Factors

62

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

62

Item 3. Defaults upon Senior Securities

63

Item 4. Mine Safety Disclosure

63

Item 5. Other Information

63

Item 6. Exhibits

63

Signatures

65

1

CERTAIN DEFINED TERMS

Throughout this Quarterly Report on Form 10-Q, unless otherwise specified or the context so requires:

AdaptHealth Holdings” means AdaptHealth Holdings LLC, a Delaware limited liability company;

Business Combination” means the transactions completed pursuant to the Agreement and Plan of Merger, dated as of July 8, 2019, by and among DFB Healthcare Acquisitions Corp. a Delaware corporation, DFB Merger Sub LLC, a Delaware limited liability company, our wholly owned subsidiary, AdaptHealth Holdings, AH Representative LLC, BM AH Holdings, LLC, Access Point Medical Inc. and, solely for the purposes described therein, Clifton Offshore Investments L.P., a British Virgin Islands limited partnership, BlueMountain Foinaven Master Fund L.P., a Cayman Islands exempted limited partnership, BMSB L.P. a Delaware limited partnership, BlueMountain Fursan Fund L.P. a Cayman Islands exempted limited partnership, which we completed on November 8, 2019;

“Charter” means our Third Amended and Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on July 28, 2021;

Class A Common Stock” means the Class A Common Stock, par value $0.0001 per share, created on the Closing of the Business Combination, which, following the filing of the Charter, has been renamed to “Common Stock” (as defined below);

Class B Common Stock” means the Class B Common Stock, par value $0.0001 per share, created on the Closing of the Business Combination, which following the filing of the Charter, no longer exists;

Closing of the Business Combination” means the closing of the Business Combination, which occurred on November 8, 2019;

Common Stock” means our Common Stock, par value $0.0001 per share;

Exchange Agreement” means the Exchange Agreement, dated as of November 8, 2019, by and among AdaptHealth, AdaptHealth Holdings, and holders of AdaptHealth Units;

New AdaptHealth Units” common units representing limited liability company interests in AdaptHealth Holdings from and after the Closing of the Business Combination;

Series B-1 Preferred Stock” means the series of preferred stock of the Company designated as “Series B-1 Convertible Preferred Stock,” par value $0.0001 per share;

Sponsor” means Deerfield/RAB Ventures LLC;

Tax Receivable Agreement” means the Tax Receivable Agreement, dated as of November 8, 2019, by and among AdaptHealth, AdaptHealth Holdings, and holders of AdaptHealth Units; and

“Warrants” means, collectively, the warrants that were issued in our initial public offering (our “IPO”) pursuant to the registration statement declared effective on February 15, 2018 and which were redeemed on September 2, 2020 (the “public warrants”) and the warrants initially issued to our Sponsor in a private placement that occurred simultaneously with our IPO (the “private placement warrants”), which private placement warrants have been distributed from the Sponsor to its members.

2

CAUTIONARY STATEMENT

In this Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I Item 2, and the documents incorporated by reference herein, we make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for our business. These statements may be preceded by, followed by or include the words “may,” “might,” “will,” “will likely result,” “should,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “continue,” “target” or similar expressions.

These forward-looking statements are based on information available to us as of the date they were made, and involve a number of risks and uncertainties which may cause them to turn out to be wrong. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward- looking statements. Some factors that could cause actual results to differ include:

competition and the ability of our business to grow and manage growth profitably;
changes in applicable laws or regulations;
fluctuations in the U.S. and/or global stock markets;
the possibility that we may be adversely affected by other economic, business, and/or competitive factors;
the impact of the coronavirus (COVID-19) pandemic and our response to it;
failure to consummate or realize the expected benefits of acquisitions, and
other risks and uncertainties set forth in this Form 10-Q, as well as the documents incorporated by reference herein.

3

PART I – FINANCIAL INFORMATION

Item 1. Interim Consolidated Financial Statements

ADAPTHEALTH CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)

June 30, 

December 31,

2022

2021

Assets

Current assets:

  

  

Cash and cash equivalents

$

118,809

$

149,627

Accounts receivable

 

355,345

 

359,896

Inventory

 

102,675

 

123,095

Prepaid and other current assets

 

28,387

 

37,440

Total current assets

 

605,216

 

670,058

Equipment and other fixed assets, net

 

454,773

 

398,577

Operating lease right-of-use assets

135,748

147,760

Goodwill

 

3,515,612

 

3,512,567

Identifiable intangible assets, net

182,771

202,231

Other assets

 

15,674

 

15,098

Deferred tax assets

 

292,218

 

304,193

Total Assets

$

5,202,012

$

5,250,484

Liabilities and Stockholders' Equity

 

 

Current liabilities:

 

 

Accounts payable and accrued expenses

$

314,973

$

358,384

Current portion of finance lease obligations

 

4,347

 

15,446

Current portion of operating lease obligations

29,597

31,418

Current portion of long-term debt

 

25,000

 

20,000

Contract liabilities

 

31,411

 

31,370

Other liabilities

 

30,128

 

43,194

Total current liabilities

 

435,456

 

499,812

Long-term debt, less current portion

 

2,170,909

 

2,183,552

Operating lease obligations, less current portion

110,093

120,180

Other long-term liabilities

 

309,101

 

322,487

Warrant liability

38,760

57,764

Total Liabilities

 

3,064,319

 

3,183,795

Commitments and contingencies (note 14)

 

 

Stockholders' Equity:

 

 

Common Stock, par value of $0.0001 per share, 300,000,000 shares authorized; 134,424,608 and 133,843,732 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

13

13

Preferred Stock, par value of $0.0001 per share, 5,000,000 shares authorized; 124,060 and 124,060 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

1

1

Treasury stock, at cost (199,418 shares)

(3,375)

Additional paid-in capital

2,118,578

2,107,267

Retained earnings (Accumulated deficit)

12,761

(43,021)

Accumulated other comprehensive income (loss)

 

5,237

 

(2,354)

Total stockholders' equity attributable to AdaptHealth Corp.

 

2,133,215

 

2,061,906

Noncontrolling interests in subsidiaries

 

4,478

 

4,783

Total Stockholders' Equity

 

2,137,693

 

2,066,689

Total Liabilities and Stockholders' Equity

$

5,202,012

$

5,250,484

See accompanying notes to unaudited interim consolidated financial statements.

4

ADAPTHEALTH CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

Three Months Ended June 30, 

Six Months Ended June 30, 

2022

    

2021

    

2022

    

2021

Net revenue

$

727,614

$

617,017

$

1,433,817

$

1,099,136

Costs and expenses:

 

  

 

 

 

Cost of net revenue

 

610,011

 

490,720

 

1,207,133

 

887,418

General and administrative expenses

 

42,548

 

42,946

 

83,992

 

99,578

Depreciation and amortization, excluding patient equipment depreciation

 

15,877

 

17,944

 

31,962

 

31,324

Total costs and expenses

 

668,436

 

551,610

 

1,323,087

 

1,018,320

Operating income

 

59,178

 

65,407

 

110,730

 

80,816

Interest expense, net

 

25,608

 

23,147

 

50,384

 

45,332

Change in fair value of warrant liability (note 10)

8,208

(37,454)

(18,509)

(40,622)

Change in fair value of contingent consideration common shares liability (note 10)

(22,079)

(24,044)

Loss on extinguishment of debt

 

 

7,736

 

 

11,949

Other loss, net

1,262

1,669

6,922

1,150

Income before income taxes

 

24,100

 

92,388

 

71,933

 

87,051

Income tax expense

 

8,853

 

12,330

 

14,456

 

10,635

Net income

15,247

80,058

57,477

76,416

Income attributable to noncontrolling interest

 

1,215

 

951

 

1,695

 

1,275

Net income attributable to AdaptHealth Corp.

$

14,032

$

79,107

$

55,782

$

75,141

Weighted average common shares outstanding - basic

134,332

129,664

134,178

120,438

Weighted average common shares outstanding - diluted

137,015

136,582

138,335

127,720

Basic net income per share (1)

$

0.10

$

0.56

$

0.38

$

0.56

Diluted net income per share (1)

$

0.09

$

0.12

$

0.24

$

0.06

(1) See Note 11, Earnings Per Share, to the unaudited interim consolidated financial statements for the calculations of basic and diluted net income per share.

See accompanying notes to unaudited interim consolidated financial statements.

5

ADAPTHEALTH CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN THOUSANDS)

(UNAUDITED)

Three Months Ended June 30, 

Six Months Ended June 30, 

2022

2021

    

2022

2021

Net income

$

15,247

$

80,058

$

57,477

$

76,416

Other comprehensive income:

 

  

 

  

 

 

Interest rate swap agreements, inclusive of reclassification adjustment

 

1,593

 

664

 

7,591

 

2,540

Comprehensive income

 

16,840

 

80,722

 

65,068

 

78,956

Income attributable to noncontrolling interest

 

1,215

 

951

 

1,695

 

1,275

Comprehensive income attributable to AdaptHealth Corp.

$

15,625

$

79,771

$

63,373

$

77,681

See accompanying notes to unaudited interim consolidated financial statements.

6

ADAPTHEALTH CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(IN THOUSANDS)

(UNAUDITED)

Accumulated

Additional

Retained Earnings

other

Noncontrolling

Common Stock

Preferred Stock

Treasury Stock

paid-in

(Accumulated

comprehensive

interests in

  

Shares

  

Amount

  

  

Shares

  

Amount

  

Shares

  

Amount

capital

deficit)

income (loss)

subsidiaries

  

Total

Balance, December 31, 2021

133,844

$

13

124

$

1

$

$

2,107,267

$

(43,021)

$

(2,354)

$

4,783

$

2,066,689

Equity-based compensation

187

5,502

5,502

Exercise of stock options

184

723

723

Payments for tax withholdings from restricted stock vesting and stock option exercises

(1,269)

(1,269)

Common Stock issued in connection with employee stock purchase plan

31

753

753

Net income

41,750

480

42,230

Change in fair value of interest rate swaps, inclusive of reclassification adjustment

5,998

5,998

Balance, March 31, 2022

134,246

$

13

124

$

1

$

$

2,112,976

$

(1,271)

$

3,644

$

5,263

$

2,120,626

Equity-based compensation

117

5,720

5,720

Cashless exercise of stock options

43

Payments for tax withholdings from restricted stock vesting and stock option exercises

(613)

(613)

Shares purchased under share repurchase program

199

(3,375)

(3,375)

Reclassification of warrant liability to equity for exercised warrants

19

495

495

Distribution to non-controlling interest

(2,000)

(2,000)

Net income

14,032

1,215

15,247

Change in fair value of interest rate swaps, inclusive of reclassification adjustment

1,593

1,593

Balance, June 30, 2022

134,425

$

13

124

$

1

199

$

(3,375)

$

2,118,578

$

12,761

$

5,237

$

4,478

$

2,137,693

7

ADAPTHEALTH CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Continued)

(IN THOUSANDS)

(UNAUDITED)

Accumulated

Additional

other

Noncontrolling

Class A Common Stock

Class B Common Stock

Preferred Stock

paid-in

Accumulated

comprehensive

interests in

  

Shares

  

Amount

  

  

Shares

  

Amount

  

  

Shares

  

Amount

  

capital

  

deficit

  

income (loss)

  

subsidiaries

  

Total

Balance, December 31, 2020

76,458

$

8

13,219

$

1

164

$

1

$

558,486

$

(199,196)

$

(4,411)

$

(74,044)

$

280,845

Issuance of Class A Common Stock for acquisitions

14,092

2

564,986

564,988

Issuance of Series C Preferred Stock for an acquisition

130

523,856

523,856

Issuance of stock options for an acquisition

134,683

134,683

Exchange of Class B Common Stock for Class A Common Stock

13,219

1

(13,219)

(1)

(77,919)

77,919

Equity-based compensation

172

8,582

8,582

Cashless exercise of stock options

9

Issuance of Class A Common Stock, net of offering costs of $13,832

8,450

1

265,017

265,018

Conversion of Series B-1 Preferred Stock to Class A Common Stock

3,950

(40)

Conversion of Series C-1 Preferred Stock to Class A Common Stock

13,047

1

(130)

(1)

Class A Common Stock issued in connection with employee stock purchase plan

8

314

314

Net income (loss)

(3,966)

324

(3,642)

Equity activity resulting from the Tax Receivable Agreement

16,768

16,768

Change in fair value of interest rate swaps, inclusive of reclassification adjustment

1,876

1,876

Other

(19)

(810)

(810)

Balance, March 31, 2021

129,386

$

13

$

124

$

1

$

1,993,962

$

(203,162)

$

(2,535)

$

4,199

$

1,792,478

Issuance of Class A Common Stock for acquisitions

441

12,166

12,166

Equity-based compensation

37

7,447

7,447

Exercise of stock options

200

2,300

2,300

Distribution to non-controlling interest

(1,070)

(1,070)

Net income

79,107

951

80,058

Change in fair value of interest rate swaps, inclusive of reclassification adjustment

664

664

Balance, June 30, 2021

130,064

$

13

$

124

$

1

$

2,015,875

$

(124,055)

$

(1,871)

$

4,080

$

1,894,043

See accompanying notes to unaudited interim consolidated financial statements.

8

ADAPTHEALTH CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

Six Months Ended June 30, 

2022

2021

Cash flows from operating activities:

Net income

$

57,477

$

76,416

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

Depreciation and amortization, including patient equipment depreciation

 

156,504

 

110,999

Equity-based compensation

 

11,222

 

16,029

Change in fair value of warrant liability

(18,509)

(40,622)

Change in fair value of contingent consideration common shares liability

(24,044)

Reduction in the carrying amount of operating lease right-of-use assets

9,530

15,368

Deferred income tax expense

 

11,975

 

6,544

Change in fair value of interest rate swaps, net of reclassification adjustment

(1,460)

(1,443)

Amortization of deferred financing costs

 

2,617

 

2,306

Write-off of deferred financing costs

 

 

3,495

Loss on extinguishment of debt from prepayment penalty

8,454

Other

(2,262)

428

Changes in operating assets and liabilities, net of effects from acquisitions:

 

 

Accounts receivable

 

7,027

 

(4,608)

Inventory

 

18,807

 

15,841

Prepaid and other assets

 

10,406

 

8,678

Operating lease obligations

(9,452)

(15,016)

Operating liabilities

 

(83,958)

 

(31,201)

Net cash provided by operating activities

 

169,924

 

147,624

Cash flows from investing activities:

 

 

Payments for business acquisitions, net of cash acquired

 

(15,324)

 

(1,292,631)

Purchases of equipment and other fixed assets

 

(154,340)

 

(79,396)

Payments for cost method investments

(367)

Net cash used in investing activities

 

(170,031)

 

(1,372,027)

Cash flows from financing activities:

 

 

Proceeds from borrowings on long-term debt and lines of credit

 

 

1,070,000

Repayments on long-term debt and lines of credit

 

(10,000)

 

(470,521)

Repayments of finance lease obligations

 

(12,547)

 

(19,767)

Payments for shares purchased under share repurchase program

(3,375)

Proceeds from the exercise of stock options

723

2,300

Proceeds received in connection with employee stock purchase plan

753

314

Proceeds from the issuance of senior unsecured notes

500,000

Proceeds from the issuance of Class A Common Stock

278,850

Payments for equity issuance costs

 

 

(13,832)

Payments of deferred financing costs

 

 

(18,039)

Payments for tax withholdings from restricted stock vesting and stock option exercises

 

(1,882)

 

(810)

Payments of contingent consideration and deferred purchase price from acquisitions

 

(2,383)

 

(16,341)

Distributions to noncontrolling interests

(2,000)

(1,070)

Payments for debt prepayment penalties

(8,454)

Net cash (used in) provided by financing activities

 

(30,711)

 

1,302,630

Net (decrease) increase in cash and cash equivalents

 

(30,818)

 

78,227

Cash and cash equivalents at beginning of period

 

149,627

 

99,962

Cash and cash equivalents at end of period

$

118,809

$

178,189

Supplemental disclosures:

 

 

Cash paid for interest

$

50,503

$

30,382

Cash paid for income taxes

9,828

13,756

Noncash investing and financing activities:

Equipment acquired under finance lease obligations

$

1,335

$

18,644

Unpaid equipment and other fixed asset purchases at end of period

37,704

20,114

Assets subject to operating lease obligations

4,582

16,710

Operating lease obligations

(4,582)

(16,710)

Equity consideration issued in connection with acquisitions

1,235,693

Contingent purchase price in connection with acquisitions

1,000

Deferred purchase price in connection with acquisitions

422

983

See accompanying notes to unaudited interim consolidated financial statements.

9

Table of Contents

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited)

(1)          General Information

AdaptHealth Corp. and subsidiaries (AdaptHealth or the Company), a Delaware Corporation, is a national leader in providing patient-centered, healthcare-at-home solutions including home medical equipment (HME), medical supplies, and related services. AdaptHealth focuses primarily on providing (i) sleep therapy equipment, supplies and related services (including CPAP and bi PAP services) to individuals suffering from obstructive sleep apnea (OSA), (ii) medical devices and supplies to patients for the treatment of diabetes (including continuous glucose monitors (CGM) and insulin pumps), (iii) home medical equipment 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. AdaptHealth services beneficiaries of Medicare, Medicaid and commercial insurance payors.

The interim consolidated financial statements are unaudited, but reflect all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Interim results are not necessarily indicative of the results for a full year.

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

(a)          Basis of Presentation

The interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). In the opinion of management, the interim consolidated financial statements include all necessary adjustments for a fair presentation of the financial position and results of operations for the periods presented.

(b)         Basis of Consolidation

The accompanying interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

(c)          Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

(d)          Accounting Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and reported amounts of revenues and expenses during the reporting period. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, authoritative accounting pronouncements and other factors that management believes to be reasonable. Significant areas requiring the use of management estimates relate to revenue recognition and the valuation of accounts receivable (implicit price concession), income taxes, contingent consideration,

10

Table of Contents

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

equity-based compensation, interest rate swaps, warrant liability and long-lived assets, including goodwill and identifiable intangible assets. Actual results could differ from those estimates.

(e)          Valuation of Goodwill

The Company has a significant amount of goodwill on its balance sheet that resulted from the business acquisitions the Company has made in recent years. Goodwill is not amortized and is assessed for impairment annually and upon the occurrence of a triggering event or change in circumstances indicating a possible impairment. Such triggering events potentially warranting an interim goodwill impairment assessment include, among other factors, declines in historical or projected revenue, operating income or cash flows, and declines in the Company’s stock price or market capitalization. Such changes in circumstance can include, among others, changes in the legal environment, reimbursement environment, operating performance, and/or future prospects. The Company performs its annual impairment assessment of goodwill during the fourth quarter of each year. The impairment assessment can be performed on either a quantitative or qualitative basis. The Company first assesses qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment analysis. If determined necessary, the Company applies the quantitative impairment test to identify and measure the amount of impairment, if any. During the three months ended March 31, 2022, the Company experienced a decline in its market capitalization as a result of a decline in the Company’s stock price. The Company considered such decline to represent a triggering event requiring management to perform a quantitative goodwill impairment assessment as of March 31, 2022. No such decline in market capitalization occurred during the three months ended June 30, 2022 and no triggering events were identified in the qualitative assessment performed as of June 30, 2022. Refer to note 5, Goodwill and Identifiable Intangible Assets, for additional details.

(f) Long-Lived Assets

The Company’s long-lived assets, such as equipment and other fixed assets, operating lease right-of-use assets and definite-lived identifiable intangible assets, are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Definite-lived identifiable intangible assets consist of tradenames, payor contracts, contractual rental agreements and developed technology. These assets are amortized using the straight-line method over their estimated useful lives, which reflects the pattern in which the economic benefits of the assets are expected to be consumed. In addition to consideration of impairment upon the events or changes in circumstances described above, management regularly evaluates the remaining useful lives of its long-lived assets. The following table summarizes the useful lives of the Company’s identifiable intangible assets acquired:

Tradenames

5 to 10

years

Payor contracts

10

years

Contractual rental agreements

2

years

Developed technology

5

years

The Company did not incur any impairment charges on long-lived assets for the three and six months ended June 30, 2022 and 2021.

11

Table of Contents

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

(g)          Business Segment

The Company’s chief operating decision-makers are its Chief Executive Officer and President, who make resource allocation decisions and assess performance based on financial information presented on an aggregate basis. There are no segment managers who are held accountable by the chief operating decision-makers, or anyone else, for any planning, strategy and key decision-making regarding operations. The corporate office is responsible for contract negotiation with vendors and payors, corporate compliance with healthcare laws and regulations, and revenue cycle management, among other corporate supporting functions. Accordingly, the Company has a single reportable segment and operating segment structure.

(h)          Accounting for Leases

The Company adopted FASB Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) (ASC 842) with an effective date of January 1, 2021, using the modified retrospective approach, for leases that existed on January 1, 2021. ASC 842 requires the Company to recognize a lease liability, which represents the discounted obligation to make future minimum lease payments, and a corresponding right-of-use (ROU) asset on its consolidated balance sheet for most leases, and disclose key information about leasing arrangements. The Company elected to apply certain practical expedients permitted under the transition guidance within ASC 842 to leases that commenced before January 1, 2021, including the package of practical expedients, which, among other things, permits lease agreements that are twelve months or less to be excluded from the balance sheet, and permits the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. Due to the Company’s election of these practical expedients, the Company carried forward certain historical conclusions for existing contracts, including conclusions related to the existence and classification of leases and to initial direct costs. ASC 842 applies to a number of arrangements to which the Company is a party.

Whenever the Company enters into a new arrangement, it must determine, at the inception date, whether the arrangement is or contains a lease. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and obtain substantially all the economic benefits from the use of the underlying asset.

If a lease exists, the Company must then determine the separate lease and non-lease components of the arrangement. Each right to use an underlying asset conveyed by a lease arrangement should generally be considered a separate lease component if it both: (i) can benefit the Company without depending on other resources not readily available to the Company and (ii) does not significantly affect and is not significantly affected by other rights of use conveyed by the lease. Aspects of a lease arrangement that transfer other goods or services to the Company but do not meet the definition of lease components are considered non-lease components. The consideration owed by the Company pursuant to a lease arrangement is generally allocated to each lease and non-lease component for accounting purposes. However, the Company has elected, for all of its leases, to not separate lease and non-lease components. Each lease component is accounted for separately from other lease components, but together with the associated non-lease components.

For each lease, the Company must then determine the lease term, the present value of lease payments and the classification of the lease as either an operating or finance lease.

The lease term is the period of the lease not cancellable by the Company, together with periods covered by: (i) renewal options the Company is reasonably certain to exercise, (ii) termination options the Company is reasonably certain not to exercise, and (iii) renewal or termination options that are controlled by the lessor.

12

Table of Contents

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

The present value of lease payments is calculated based on:

Lease payments – lease payments include fixed and certain variable payments, less lease incentives, together with amounts probable of being owed by the Company under residual value guarantees and, if reasonably certain of being paid, the cost of certain renewal options and early termination penalties set forth in the lease arrangement. Lease payments exclude consideration that is not related to the transfer of goods and services of the Company.
Discount rate – the discount rate must be determined based on information available to the Company upon the commencement of the lease. Lessees are required to use the rate implicit in the lease whenever such rate is readily available; however, as the implicit rate in the Company’s leases is generally not readily determinable, the Company generally uses the hypothetical incremental borrowing rate it would have to pay to borrow an amount equal to the lease payments, on a collateralized basis, over a timeframe similar to the lease term.

In making the determination of whether a lease is an operating lease or a finance lease, the Company considers the lease term in relation to the economic life of the leased asset, the present value of lease payments in relation to the fair value of the leased asset and certain other factors, including the lessee’s and lessor’s rights, obligations, and economic incentives over the term of the lease.

Generally, upon the commencement of a lease, the Company will record a lease liability and a ROU asset. However, the Company has elected, for all underlying leases with initial terms of twelve months or less (known as short-term leases), to not recognize a lease liability or ROU asset. Lease liabilities are initially recorded at lease commencement as the present value of future lease payments. ROU assets are initially recorded at lease commencement as the initial amount of the lease liability, together with the following, if applicable: (i) initial direct costs incurred by the lessee and (ii) lease payments made by the lessor net of lease incentives received, prior to lease commencement.

Over the lease term, the Company generally increases its lease liabilities using the effective interest method and decreases its lease liabilities for lease payments made. For finance leases, amortization and interest expense are recognized separately in the consolidated statements of operations, with amortization expense generally recorded on a straight-line basis over the lease term and interest expense recorded using the effective interest method. For operating leases, a single lease cost is generally recognized in the consolidated statements of operations on a straight-line basis over the lease term unless an impairment has been recorded with respect to a leased asset. Lease costs for short-term leases not recognized in the consolidated balance sheets are recognized in the consolidated statements of operations on a straight-line basis over the lease term. Variable lease costs not initially included in the lease liability and ROU asset impairment charges are expensed as incurred. ROU assets are assessed for impairment, similar to other long-lived assets.

(i)        Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), which provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. Specifically, the guidance permits an entity, when certain criteria are met, to consider amendments to contracts made to comply with reference rate reform to meet the definition of a modification under U.S. GAAP. It further allows hedge accounting to be maintained and a one-time transfer or sale of qualifying held-to-maturity securities. The expedients and exceptions provided by the amendments are permitted to be adopted any time through December 31, 2022 and do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for certain optional expedients elected for certain hedging relationships existing as of December 31, 2022. In April 2022, the FASB issued a proposed amendment to Topic 848 which, if approved, would defer the required adoption date of Topic 848 to December 31, 2024, with early adoption permitted. The Company is

13

Table of Contents

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

currently evaluating the effect that this standard will have on its consolidated financial statements and related disclosures.

(j)        Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (ASU 2020-06). The guidance in ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. In addition, ASU 2020-06 improves and amends the related earnings per share guidance. The Company adopted this standard on January 1, 2022 using the modified retrospective approach. The adoption of this standard did not have an impact on the Company’s consolidated financial position, results of operations, cash flows or earnings per share amounts.

(2)         Revenue Recognition and Accounts Receivable

Revenue Recognition

The Company generates revenues for services and related products that the Company provides to patients for home medical equipment, related supplies, and other items. The Company’s revenues are recognized in the period in which services and related products are provided to customers and are recorded either at a point in time for the sale of supplies and disposables, or over the fixed monthly service period for equipment.

Revenues are recognized when control of the promised good or service is transferred to customers, in an amount that reflects the consideration to which the Company expects to receive from patients or under reimbursement arrangements with Medicare, Medicaid and third-party payors, in exchange for those goods and services.

The Company determines the transaction price based on contractually agreed-upon amounts or rates, adjusted for estimates of variable consideration, such as implicit price concessions. The Company utilizes the expected value method to determine the amount of variable consideration that should be included to arrive at the transaction price, using contractual agreements and historical reimbursement experience within each payor type. The Company applies constraint to the transaction price, such that net revenue is recorded only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in the future. If actual amounts of consideration ultimately received differ from the Company’s estimates, the Company adjusts these estimates, which would affect net revenue in the period such adjustments become known.

Sales revenue is recognized upon transfer of control of products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. Revenues for the sale of sleep therapy equipment supplies (including CPAP resupply products), home medical equipment and related supplies (including wheelchairs, hospital beds and infusion pumps), diabetic medical devices and supplies (including continuous glucose monitors (CGM) and insulin pumps), and other HME products and supplies are recognized when control of the promised good or service is transferred to customers, which is generally upon shipment for direct to consumer medical devices and supplies and upon delivery to the home for home medical equipment.

The Company provides certain equipment to patients which is reimbursed periodically in fixed monthly payments for as long as the patient is using the equipment and medical necessity continues (in certain cases, the fixed monthly payments are capped at a certain amount). The equipment provided to the patient is based upon medical necessity as documented by prescriptions and other documentation received from the patient’s physician. The patient generally does not negotiate or select the manufacturer or model of the equipment prescribed by their physician and delivered by the Company. Once initial delivery of this equipment is made to the patient for initial setup, a monthly billing process is established based on the initial setup service date. The Company recognizes the fixed monthly revenue

14

Table of Contents

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

ratably over the service period as earned, less estimated adjustments, and defers revenue for the portion of the monthly bill that is unearned. No separate revenue is earned from the initial setup process. Included in fixed monthly revenue are unbilled amounts for which the revenue recognition criteria had been met as of period-end but were not yet billed to the payor. The estimate of net unbilled fixed monthly revenue recognized is based on historical trends and estimates of future collectability.

The Company’s billing system contains payor-specific price tables that reflect the fee schedule amounts in effect or contractually agreed upon by various government and commercial insurance payors for each item of equipment or supply provided to a customer. Revenues are recorded based on the applicable fee schedule. The Company has established a contractual allowance to account for adjustments that result from differences between the payment amount received and the expected realizable amount. If the payment amount received differs from the net realizable amount, an adjustment is recorded to revenues in the period that these payment differences are determined. The Company reports revenues in its consolidated financial statements net of such adjustments.

The Company recognizes revenue in the consolidated statements of operations and contract assets on the consolidated balance sheets only when services have been provided. Since the Company has performed its obligation under the contract, it has unconditional rights to the consideration recorded as contract assets and therefore classifies those billed and unbilled contract assets as accounts receivable.

Fixed monthly payments that the Company receives from customers in advance of providing services represent contract liabilities. Such payments primarily relate to patients who are billed monthly in advance and are recognized over the period as earned.

The Company disaggregates net revenue from contracts with customers by payor type and by core service lines. The Company believes that disaggregation of net revenue into these categories depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The payment terms and conditions within the Company’s revenue-generating contracts vary by payor type and payor source.

The composition of net revenue by payor type for the three and six months ended June 30, 2022 and 2021 are as follows (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

2022

    

2021

    

2022

2021

Insurance

$

436,179

$

371,869

$

857,069

$

661,879

Government

196,338

177,323

377,988

311,053

Patient pay

 

95,097

 

67,825

 

198,760

 

126,204

Net revenue

$

727,614

$

617,017

$

1,433,817

$

1,099,136

15

Table of Contents

ADAPTHEALTH CORP. AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)

The composition of net revenue by core service lines for the three and six months ended June 30, 2022 and 2021 are as follows (in thousands):

Three Months Ended June 30, 

Six Months Ended June 30, 

2022

    

2021

    

2022

2021

Net sales revenue:

Sleep

$

194,693

$

163,331

$

387,028

$

292,013

Diabetes

162,259

123,314

313,618

218,331