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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
OR
o 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)
Delaware82-3677704
(State of Other Jurisdiction of incorporation or Organization)(I.R.S. Employer Identification No.)
220 West Germantown Pike Suite 250, Plymouth Meeting, Pennsylvania
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:
Title of Each ClassTrading Symbol(s)Name Of Each Exchange
On Which Registered
Common Stock, par value $0.0001 per shareAHCOThe 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 x No o
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 x No o
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 x
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
Emerging growth company o
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of November 1, 2024, there were 134,554,889 shares of the Registrant’s Common Stock issued and outstanding.


ADAPTHEALTH CORP.
FORM 10-Q
TABLE OF CONTENTS
Page Number

1
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 profitable growth;
•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;
•changes in applicable laws or regulations; and
•other risks and uncertainties set forth in this Form 10-Q.
Investors should carefully consider the foregoing factors and the other risks and uncertainties that may affect our business including those outlined under Item 1A, Risk Factors, in our most recent annual report on Form 10-K and our quarterly reports on Form 10-Q.
2
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)
September 30,
2024		December 31,
2023
Assets
Current assets:
Cash$100,180 $77,132 
Accounts receivable401,215 388,910 
Inventory133,490 113,642 
Prepaid and other current assets48,906 69,338 
Total current assets683,791 649,022 
Equipment and other fixed assets, net474,922 495,101 
Operating lease right-of-use assets106,390 110,465 
Finance lease right-of-use assets38,769 31,962 
Goodwill2,707,282 2,724,958 
Identifiable intangible assets, net113,452 130,160 
Deferred tax assets328,106 345,854 
Other assets17,224 21,128 
Total Assets$4,469,936 $4,508,650 
Liabilities and Stockholders' Equity  
Current liabilities:  
Accounts payable and accrued expenses$430,371 $391,994 
Current portion of long-term debt16,250 53,368 
Current portion of operating lease obligations30,276 29,270 
Current portion of finance lease obligations12,307 9,122 
Contract liabilities35,842 38,570 
Warrant liability2,221 4,021 
Other liabilities25,758 10,654 
Total current liabilities553,025 536,999 
Long-term debt, less current portion2,013,644 2,094,614 
Operating lease obligations, less current portion80,135 85,529 
Finance lease obligations, less current portion26,098 22,746 
Other long-term liabilities272,846 302,093 
Total Liabilities2,945,748 3,041,981 
Commitments and contingencies (note 14)
Stockholders' Equity:  
Common Stock, par value of $0.0001 per share, 300,000,000 shares authorized; 134,538,730 and 132,634,850 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively
13 13 
Preferred Stock, par value of $0.0001 per share, 5,000,000 shares authorized; 124,060 shares issued and outstanding as of September 30, 2024 and December 31, 2023
1 1 
Treasury stock, at cost (2,935,035 and 3,935,035 shares at September 30, 2024 and December 31, 2023, respectively)
(25,548)(43,267)
Additional paid-in capital2,152,605 2,149,951 
Accumulated deficit(612,440)(652,600)
Accumulated other comprehensive income1,625 4,356 
Total stockholders' equity attributable to AdaptHealth Corp.1,516,256 1,458,454 
Noncontrolling interest in subsidiary7,932 8,215 
Total Stockholders' Equity1,524,188 1,466,669 
Total Liabilities and Stockholders' Equity$4,469,936 $4,508,650 
See accompanying notes to unaudited interim consolidated financial statements.
3
ADAPTHEALTH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Net revenue$805,858$804,031$2,404,330$2,341,943
Costs and expenses:  
Cost of net revenue681,866693,4882,036,5322,022,281
General and administrative expenses49,24245,198154,632142,797
Depreciation and amortization, excluding patient equipment depreciation11,26314,51534,02345,596
Goodwill impairment (note 5)— 511,86613,078511,866
Total costs and expenses742,3711,265,0672,238,2652,722,540
Operating income (loss)63,487(461,036)166,065(380,597)
Interest expense, net31,42932,30696,93996,813
Loss on extinguishment of debt2,273—2,273—
Change in fair value of warrant liability (note 10)(2,243)(9,160)(1,800)(31,886)
Other loss, net—3,3173,3456,574
Income (loss) before income taxes32,028(487,499)65,308(452,098)
Income tax expense (benefit)8,073(34,578)21,931(30,893)
Net income (loss)23,955(452,921)43,377(421,205)
Income attributable to noncontrolling interest1,0961,1553,2173,187
Net income (loss) attributable to AdaptHealth Corp.$22,859$(454,076)$40,160$(424,392)
Weighted average common shares outstanding - basic134,303134,825133,481134,549
Weighted average common shares outstanding - diluted136,530134,982135,441135,202
Basic net income (loss) per share (note 11)$0.16$(3.37)$0.28$(3.15)
Diluted net income (loss) per share (note 11)$0.15$(3.43)$0.27$(3.37)

See accompanying notes to unaudited interim consolidated financial statements.
4
ADAPTHEALTH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Net income (loss)$23,955$(452,921)$43,377$(421,205)
Other comprehensive income (loss):    
(Loss) gain on interest rate swap agreements, inclusive of reclassification adjustment, net of tax(3,223)66(2,731)(285)
Comprehensive income (loss)20,732(452,855)40,646(421,490)
Income attributable to noncontrolling interest1,0961,1553,2173,187
Comprehensive income (loss) attributable to AdaptHealth Corp.$19,636$(454,010)$37,429$(424,677)
See accompanying notes to unaudited interim consolidated financial statements.
5
ADAPTHEALTH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(IN THOUSANDS)
(UNAUDITED)
Common StockPreferred StockTreasury StockAdditional
paid-in
capital		Accumulated deficitAccumulated other comprehensive incomeNoncontrolling
interest in
subsidiary		Total
SharesAmountSharesAmountSharesAmount
Balance, December 31, 2023132,635$13 124$1 3,935$(43,267)$2,149,951 $(652,600)$4,356 $8,215 $1,466,669 
Equity-based compensation300— —— —— 4,533 — — — 4,533 
Exercise of stock options177— —— —— 545 — — — 545 
Payments for tax withholdings from restricted stock vesting— — —— —— (1,072)— — — (1,072)
Common Stock issued in connection with employee stock purchase plan83— —— —— 607 — — — 607 
Net (loss) income—— —— —— — (2,134)— 1,025 (1,109)
Change in fair value of interest rate swaps, inclusive of reclassification adjustment—— —— —— — — 856 — 856 
Balance, March 31, 2024133,195$13 124$1 3,935$(43,267)$2,154,564 $(654,734)$5,212 $9,240 $1,471,029 
Equity-based compensation182— —— —— 5,218 — — — 5,218 
Payments for tax withholdings from restricted stock vesting—— —— —— (261)— — — (261)
Distribution to non-controlling interest—— —— —— — — — (3,500)(3,500)
Net income—— —— —— — 19,435 — 1,096 20,531 
Change in fair value of interest rate swaps, inclusive of reclassification adjustment—— —— —— — — (364)— (364)
Balance, June 30, 2024133,377$13 124$1 3,935$(43,267)$2,159,521 $(635,299)$4,848 $6,836 $1,492,653 
Equity-based compensation79— —— —— 863 — — — 863 
Exercise of stock options44— —— —— 198 — — — 198 
Payments for tax withholdings from restricted stock vesting and stock option exercises—— —— —— (400)— — — (400)
Common Stock issued in connection with employee stock purchase plan39— —— —— 392 — — — 392 
Issuance of Settlement Shares1,000— —— (1,000)17,719 (7,969)— — — 9,750 
Net income—— —— —— — 22,859 — 1,096 23,955 
Change in fair value of interest rate swaps, inclusive of reclassification adjustment—— —— —— — — (3,223)— (3,223)
Balance, September 30, 2024134,539$13 124$1 2,935$(25,548)$2,152,605 $(612,440)$1,625 $7,932 $1,524,188 
6
Common StockPreferred StockTreasury StockAdditional
paid-in
capital		Retained earningsAccumulated
other
comprehensive
income		Noncontrolling
interest in
subsidiary		Total
SharesAmountSharesAmountSharesAmount
Balance, December 31, 2022134,435$13 124$1 751$(13,992)$2,130,148 $26,295 $8,693 $6,600 $2,157,758 
Equity-based compensation292 — —— —— 5,916 — — — 5,916 
Payments for tax withholdings from restricted stock vesting— — —— —— (1,883)— — — (1,883)
Common Stock issued in connection with employee stock purchase plan53 — —— —— 1,021 — — — 1,021 
Shares purchased under share repurchase program(632)— —— 632(9,224)— — — — (9,224)
Net income— — —— —— — 15,707 — 968 16,675 
Change in fair value of interest rate swaps, inclusive of reclassification adjustment— — —— —— — — (2,805)— (2,805)
Balance, March 31, 2023134,148$13 124$1 1,383$(23,216)$2,135,202 $42,002 $5,888 $7,568 $2,167,458 
Equity-based compensation156— —— —— 6,847 — — — 6,847 
Exercise of stock options214 — —— —— — — — — — 
Payments for tax withholdings from restricted stock vesting and stock option exercises— — —— —— (2,229)— — — (2,229)
Distribution to non-controlling interest— — —— —— — — — (2,500)(2,500)
Net income— — —— —— — 13,977 — 1,064 15,041 
Change in fair value of interest rate swaps, inclusive of reclassification adjustment— — —— —— — — 2,454 — 2,454 
Balance, June 30, 2023134,518$13 124$1 1,383$(23,216)$2,139,820 $55,979 $8,342 $6,132 $2,187,071 
Equity-based compensation176 — —— —— 4,521 — — — 4,521 
Exercise of stock options215— —— —— 538 — — — 538 
Payments for tax withholdings from restricted stock vesting and stock option exercises— — —— —— (513)— — — (513)
Common Stock issued in connection with employee stock purchase plan82 — —— —— 1,010 — — — 1,010 
Net income— — —— —— — (454,076)— 1,155 (452,921)
Change in fair value of interest rate swaps, inclusive of reclassification adjustment— — —— —— — — 66 — 66 
Balance, September 30, 2023134,991$13 124$1 1,383$(23,216)$2,145,376 $(398,097)$8,408 $7,287 $1,739,772 

See accompanying notes to unaudited interim consolidated financial statements.
7
ADAPTHEALTH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)
Nine Months Ended September 30,
20242023
Cash flows from operating activities:
Net income (loss)$43,377 $(421,205)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:  
Depreciation and amortization, including patient equipment depreciation274,797 290,419 
Goodwill impairment13,078 511,866 
Equity-based compensation10,614 17,284 
Change in fair value of warrant liability(1,800)(31,886)
Reduction in the carrying amount of operating lease right-of-use assets24,902 26,309 
Reduction in the carrying amount of finance lease right-of-use assets7,927 3,821 
Deferred income tax expense (benefit)18,664 (37,033)
Change in fair value of interest rate swaps, net of reclassification adjustment(367)(1,394)
Amortization of deferred financing costs4,247 3,926 
Loss on extinguishment of debt2,273 — 
Payment of contingent consideration from an acquisition(1,850)— 
Other569 350 
Changes in operating assets and liabilities, net of effects from acquisitions:  
Accounts receivable(12,305)(10,043)
Inventory(21,474)12,769 
Prepaid and other assets23,656 10,956 
Operating lease obligations(25,212)(26,959)
Operating liabilities30,328 (23,780)
Net cash provided by operating activities391,424 325,400 
Cash flows from investing activities:  
Purchases of equipment and other fixed assets(228,719)(248,816)
Proceeds from the sale of assets5,316 — 
Payments for business acquisitions, net of cash acquired— (17,917)
Payments for cost method investments— (128)
Net cash used in investing activities(223,403)(266,861)
Cash flows from financing activities:  
Proceeds from borrowings on long-term debt and lines of credit253,477 50,000 
Repayments on long-term debt and lines of credit(373,477)(75,000)
Repayments of finance lease obligations(8,261)(4,558)
Payments for shares purchased under share repurchase program— (9,224)
Proceeds from the exercise of stock options742 538 
Proceeds received in connection with employee stock purchase plan999 2,031 
Payments relating to the Tax Receivable Agreement(1,432)(3,202)
Payments of debt financing costs(6,429)— 
Distributions to noncontrolling interest(3,500)(2,500)
Payments for tax withholdings from restricted stock vesting and stock option exercises(1,794)(5,253)
Payments of contingent consideration and deferred purchase price from acquisitions(5,298)(1,500)
Net cash used in financing activities(144,973)(48,668)
Net increase in cash23,048 9,871 
Cash at beginning of period77,132 46,272 
Cash at end of period$100,180 $56,143 
Supplemental disclosures:  
Cash paid for interest$112,519 $113,083 
Cash paid for income taxes, net of refunds13,015 5,727 
Noncash investing and financing activities:
Unpaid equipment and other fixed asset purchases at end of period46,720 32,481 
Assets subject to operating lease obligations24,604 8,179 
Operating lease obligations(24,604)(8,179)
Write-off of assets subject to operating lease obligations(3,631)— 
Write-off of operating lease obligations3,631 — 
Assets subject to finance lease obligations15,665 19,726 
Finance lease obligations(15,665)(19,726)
Deferred purchase price in connection with acquisitions— 50 
See accompanying notes to unaudited interim consolidated financial statements.



8
ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements (Unaudited)

(1)    General Information
AdaptHealth Corp. and subsidiaries ("AdaptHealth" or the "Company") 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, 2023. 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, 2023.
(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 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.
(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 and the tax receivable agreement, equity-based compensation, warrant liability, long-lived assets, including goodwill and identifiable intangible assets, and contingencies. Actual results could differ from those estimates.
9
ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)
(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. Goodwill is not amortized, rather, it is assessed for impairment annually and also upon the occurrence of a triggering event or change in circumstances indicating a possible impairment. Such triggering events potentially warranting an annual or interim goodwill impairment assessment include, among other factors, declines in historical or projected revenue, operating income or cash flows, and sustained decreases 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. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors, such as estimates of a reporting unit's fair value, including the revenue growth rates, discount rate, and control premium used to estimate the reporting unit's fair value, and judgment about impairment triggering events. As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual or interim goodwill impairment test will prove to be accurate predictions of the future.
(f)    Long-Lived Assets
The Company’s long-lived assets, such as equipment and other fixed assets, operating lease right-of-use assets, finance 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:
Tradenames
5 to 10 years
Payor contracts10 years
Developed technology5 years
The Company did not recognize any impairment charges on long-lived assets for the nine months ended September 30, 2024 and 2023.
(g)    Equity-based Compensation
The Company accounts for its equity-based compensation in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718, Compensation - Stock Compensation, which establishes accounting for share-based awards exchanged for employee services and requires companies to expense the estimated fair value of these awards over the requisite employee service period. Equity-based compensation expense related to these grants is included within general and administrative expenses and cost of net revenue in the accompanying consolidated statements of operations. The Company measures and recognizes equity-based compensation expense for such awards based on their estimated fair values on the date of grant. For share-based awards with service only or service and performance conditions, the value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period in the Company’s consolidated financial statements. For share-based awards with only a service condition, equity-based compensation expense is recognized on a straight-line basis over the requisite service period. For awards with performance conditions, equity-based compensation expense is recognized straight-line on a tranche-by-tranche basis over
10
ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)
the employees’ requisite service period subject to management’s estimation of the probability of vesting of such awards. If management determines that the performance conditions are no longer probable of achievement, the Company will reverse the previously recognized equity-based compensation expense in the period of determination. For awards with market conditions, the grant-date fair value is estimated using a monte-carlo simulation analysis, which is recognized straight-line on a tranche-by-tranche basis over the employees’ requisite service period regardless of whether or the extent to which the awards ultimately vest. The Company does not estimate forfeitures in connection with its accounting for equity-based compensation, and instead accounts for forfeitures as they occur. See Note 10, Stockholders’ Equity, for additional information regarding the Company’s equity-based compensation expense.
(h)    Business Segment
Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) for the purposes of allocating resources and evaluating financial performance. The Company’s CODM is its Chief Executive Officer, who reviewed the financial information for the periods covered in this report on a consolidated level for purposes of allocating resources and evaluating financial performance, and as such, as of September 30, 2024, the Company’s operations constitute one operating segment and one reportable segment.
(i)    Accounting for Leases
The Company accounts for its leases in accordance with FASB ASC Topic 842, Leases ("ASC 842"). 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. ASC 842 applies to a number of arrangements to which the Company is a party.
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 to 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.
See Note 12, Leases, for additional information.
(j)    Recently Issued Accounting Pronouncements Not Yet Adopted
In March 2024, the FASB issued Accounting Standards update "ASU" No. 2024-02, Codification Improvements-Amendments to Remove References to the Concepts Statements, which removes various references to concepts statements from the FASB Accounting Standards Codification. This ASU is effective for the Company beginning in the first quarter of fiscal year 2026, with early adoption permitted. The Company does not expect that the new guidance will have a material impact on its consolidated financial statements, and intends to adopt the guidance when it becomes effective in the first quarter of fiscal year 2026.
In March 2024, the FASB issued ASU No. 2024-01, Compensation-Stock Compensation ("Topic 718"), which provides illustrative guidance to help entities determine whether profits interest and similar awards should be accounted for as share-based payment arrangements within the scope of ASC 718. ASU 2024-01 is effective for annual periods beginning
11
ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)
after December 15, 2024, and interim periods within those annual periods. The Company is currently evaluating the impact that this standard will have on its consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes ("Topic 740"). This ASU improves the transparency of income tax disclosures by requiring public business entities to disclose specific categories in the annual rate reconciliation as well as disclose income tax expense (or benefit) and the amount of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective on a prospective basis for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact that this standard will have on its consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting ("Topic 280"), which requires disclosure of incremental segment information, including significant segment expenses that are regularly provided to the chief operating decision maker and to disclose how reported measures of segment profit or loss are used in assessing segment performance and allocating resources. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact that this standard will have on its consolidated financial statements and related disclosures.

In August 2023, the FASB issued ASU No. 2023-05, Business Combinations-Joint Venture Formations ("Topic 805-60"), which requires that all entities that qualifies as either a joint venture or a corporate joint venture are required to apply a new basis of accounting. Specifically, the ASU provides that a joint venture or a corporate joint venture must initially measure its assets and liabilities at fair value on the formation date. ASU 2023-05 is effective for all joint ventures that are formed on or after January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact that this standard will have on its consolidated financial statements and related disclosures.

In March 2024, the SEC issued its final climate disclosure rule, which requires registrants to provide climate-related disclosures in their annual reports and registration statements. The new disclosure requirements will be effective for the Company beginning with its annual report for the year ending December 31, 2025. In April 2024, the SEC stayed its final climate rule to allow for a judicial review of pending legal challenges. The Company is currently evaluating the impact these rules will have on its consolidated financial statements and related disclosures and will monitor the litigation progress relating to these rules for possible impacts on the disclosure requirements under the rules.
(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, over the fixed monthly service period for equipment, or in the month in which eligible members are entitled to receive healthcare services in connection with at-risk capitation arrangements.
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, referred to as explicit price concessions, adjusted for estimates of variable consideration, such as implicit price concessions, based on historical reimbursement experience. The Company utilizes the expected value method to determine the amount of variable consideration, including implicit and explicit price concessions, that should be included to arrive at the transaction price, using contractual agreements and historical reimbursement experience. 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.
12
ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)
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 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 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 receives a per member per month (“PMPM”) fee under certain at-risk capitation arrangements, which refers to a model in which the Company receives a PMPM fee from the third-party payor, and is responsible for managing a range of healthcare services and associated costs of its members. In at-risk capitation arrangements, the Company is responsible for the cost of contracted healthcare services required by those members in accordance with the terms of each agreement. Capitated revenue contracts with payors are generally multi-year arrangements and have a single monthly stand ready performance obligation to provide all aspects of necessary medical care to members for the contracted period in accordance with the scope of the agreements. The Company recognizes revenue in the month in which eligible members are entitled to receive healthcare services during the contract term. The Company’s revenue recognized under its capitation arrangements by core product line for the three and nine months ended September 30, 2024 is included in the table below. The Company’s revenue recognized under its capitation arrangements for the three and nine months ended September 30, 2023 is included in net sales revenue and net revenue from fixed monthly equipment reimbursements by core product line in the table below, which was immaterial for those periods.
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, referred to as an explicit price concession, 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 product 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.
13
ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)
The composition of net revenue by payor type for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Insurance$490,072 $486,136 $1,461,224 $1,397,748 
Government208,309 220,351 617,653 618,860 
Patient pay107,477 97,544 325,453 325,335 
Net revenue$805,858 $804,031 $2,404,330 $2,341,943 


14
ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)
The composition of net revenue by core product lines for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Net sales revenue:
Sleep$237,537 $227,005 $696,424 $656,311 
Diabetes137,099 157,328 431,339 464,893 
Supplies to the home43,534 48,349 132,447 143,227 
Respiratory8,148 8,164 23,723 24,284 
HME24,331 27,095 75,916 82,895 
Other60,044 64,184 173,389 174,403 
Total net sales revenue$510,693 $532,125 $1,533,238 $1,546,013 
Net revenue from fixed monthly equipment reimbursements:
Sleep$81,530 $88,387 $244,273 $256,092 
Diabetes2,438 2,609 7,099 10,326 
Respiratory140,930 142,919 417,061 423,531 
HME24,551 25,087 70,472 71,402 
Other12,866 12,904 36,074 34,579 
Total net revenue from fixed monthly equipment reimbursements$262,315 $271,906 $774,979 $795,930 
Net revenue from capitated revenue arrangements:
Sleep$7,380 $— $21,408 $— 
Diabetes1,535 $— 4,679 — 
Supplies to the home3,246 $— 9,536 — 
Respiratory14,939 $— 44,521 — 
HME4,115 $— 11,325 — 
Other1,635 $— 4,644 — 
Total net revenue from capitated revenue arrangements$32,850 $— $96,113 $— 
Total net revenue:
Sleep$326,447 $315,392 $962,105 $912,403 
Diabetes141,072 159,937 443,117 475,219 
Supplies to the home46,780 48,349 141,983 143,227 
Respiratory164,017 151,083 485,305 447,815 
HME52,997 52,182 157,713 154,297 
Other74,545 77,088 214,107 208,982 
Total net revenue$805,858 $804,031 $2,404,330 $2,341,943 
15
ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)
Accounts Receivable
Due to the continuing changes in the healthcare industry and third-party reimbursement environment, certain estimates are required to record accounts receivable at their net realizable values. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. The complexity of third-party billing arrangements and laws and regulations governing Medicare and Medicaid may result in adjustments to amounts originally recorded.
The Company performs a periodic analysis to review the valuation of accounts receivable and collectability of outstanding balances. Management’s evaluation takes into consideration such factors as historical cash collections experience, business and economic conditions, trends in healthcare coverage, other collection indicators and information about specific receivables. The Company’s evaluation also considers the age and composition of the outstanding amounts in determining their estimated net realizable value.
Receivables are considered past due when not collected by established due dates. Specific patient balances are written off after collection efforts have been followed and the account has been determined to be uncollectible. Revisions in receivable estimates are considered implicit price concession adjustments and are recognized as an adjustment to net revenue in the period of revision. The Company does not have any material bad debt expense.
Included in accounts receivable are earned but unbilled accounts receivables. Billing delays, ranging from several days to several weeks, can occur due to the Company’s policy of compiling required payor specific documentation prior to billing for its services rendered. As of September 30, 2024 and December 31, 2023, the Company’s unbilled accounts receivable was $29.9 million and $68.4 million, respectively.
(3)    Acquisitions
The Company’s acquisitions are accounted for using the acquisition method pursuant to the requirements of FASB ASC Topic 805, Business Combinations, and are included in the Company’s consolidated financial statements since the respective acquisition date.
The Company did not complete any acquisitions during the nine months ended September 30, 2024. During the nine months ended September 30, 2023, the Company acquired 100% of the equity interests of three providers of home medical equipment ("HME") and acquired certain assets of the home medical equipment businesses of two providers of HME. The following table summarizes the consideration paid at closing for all acquisitions during the nine months ended September 30, 2023 (in thousands):
Cash$18,173 
Deferred payments50 
Total$18,223 
16
ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)
The Company allocated the consideration paid to the net assets acquired based on their estimated acquisition date fair values. Based upon management’s evaluation, the consideration paid for all acquisitions during the nine months ended September 30, 2023 was allocated as follows during the period (in thousands):
Cash$256 
Accounts receivable1,798 
Inventory1,413 
Prepaid and other current assets10 
Equipment and other fixed assets9,008 
Operating lease right-of-use assets5,506 
Finance lease right-of-use assets200 
Goodwill7,297 
Accounts payable and accrued expenses(713)
Other current liabilities(846)
Operating lease liabilities(5,506)
Finance lease liabilities(200)
Net assets acquired$18,223 
Net revenue and operating income in the period of acquisition since the respective acquisition dates for the acquisitions described above were immaterial for the three and nine months ended September 30, 2023.
(4)    Equipment and Other Fixed Assets
Equipment and other fixed assets as of September 30, 2024 and December 31, 2023 are as follows (in thousands):
September 30,
2024		December 31,
2023
Patient medical equipment$815,523 $791,349 
Computers and software93,014 85,509 
Delivery vehicles33,638 35,021 
Other22,737 20,203 
Gross carrying value964,912 932,082 
Less accumulated depreciation(489,990)(436,981)
Equipment and other fixed assets, net$474,922 $495,101 
For the three months ended September 30, 2024 and 2023, the Company recognized depreciation expense of $85.2 million and $90.3 million, respectively. For the nine months ended September 30, 2024 and 2023, the Company recognized depreciation expense of $258.1 million and $263.4 million, respectively.
17
ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)
(5)    Goodwill and Identifiable Intangible Assets
Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The change in the carrying amount of goodwill for the nine months ended September 30, 2024 was as follows (in thousands):
Gross carrying
amount
Balance at December 31, 2023$2,724,958 
Goodwill impairment(13,078)
Write off from sale of assets(4,598)
Balance at September 30, 2024$2,707,282 
Management is required to perform an assessment of the recoverability of goodwill on an annual basis and upon the identification of a triggering event. Triggering events potentially warranting an interim goodwill impairment assessment include, among other factors, declines in historical or projected revenue, operating results or cash flows, and sustained decreases in the Company’s stock price or market capitalization. While management cannot predict if or when future goodwill impairments may occur, a non-cash goodwill impairment charge could have a material adverse effect on the Company’s operating results, net assets and the Company’s cost of, or access to, capital. The Company did not identify any triggering events indicating a possible impairment of goodwill at September 30, 2024.
During the nine months ended September 30, 2023, the Company experienced a decline in its market capitalization as a result of a sustained decrease in the Company’s stock price and also revised its financial projections. The Company considered these items to represent a triggering event and performed a goodwill impairment test as of September 30, 2023. Based on the results of the test performed as of that date, it was concluded that the estimated fair value of the Company’s reporting unit was less than its carrying value, as such, the Company recognized a non-cash goodwill impairment charge of $511.9 million during the three and nine months ended September 30, 2023.

The non-cash goodwill impairment charges included in the table above, includes $6.6 million and $6.5 million recognized during the three months ended March 31, 2024 and June 30, 2024, respectively, related to the disposition of certain immaterial custom rehab technology assets, which closed in the third quarter of 2024. The Company recognized an immaterial loss as a result of this transaction.
Identifiable intangible assets that are separable and have determinable useful lives are valued separately and amortized over the period which reflects the pattern in which the economic benefits of the assets are expected to be consumed. Identifiable intangible assets consisted of the following at September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024
Weighted-Average
Remaining Life (Years)
Tradenames, net of accumulated amortization of $47,927
$64,8736.0
Payor contracts, net of accumulated amortization of $34,366
47,6345.8
Developed technology, net of accumulated amortization of $5,355
9450.8
Identifiable intangible assets, net$113,452
18
ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)
December 31, 2023
Weighted-Average
Remaining Life (Years)
Tradenames, net of accumulated amortization of $38,314
$74,4866.6
Payor contracts, net of accumulated amortization of $28,216
53,7846.6
Developed technology, net of accumulated amortization of $4,410
1,8901.5
Identifiable intangible assets, net$130,160
Amortization expense related to identifiable intangible assets, which is included in depreciation and amortization, excluding patient equipment depreciation, in the accompanying statements of operations was $5.6 million and $16.7 million for the three and nine months ended September 30, 2024, respectively, and was $7.0 million and $27.0 million for the three and nine months ended September 30, 2023, respectively.
Future amortization expense related to identifiable intangible assets is estimated to be as follows (in thousands):
Twelve months ending September 30,
2025$21,828 
202619,618 
202718,190 
202817,936 
202917,936 
Thereafter17,944 
Total$113,452 
The Company did not recognize any impairment charges related to identifiable intangible assets during the nine months ended September 30, 2024 and 2023.
(6)    Fair Value of Assets and Liabilities
FASB ASC Topic 820, Fair Value Measurements and Disclosures ("ASC 820"), creates a single definition of fair value, establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements. Assets and liabilities adjusted to fair value in the balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Level inputs, as defined by ASC 820, are as follows:
Level inputInput Definition
Level 1Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level 2Inputs, other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the measurement date.
Level 3Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.
The following table presents the valuation of the Company’s financial assets and liabilities as of September 30, 2024 and December 31, 2023 measured at fair value on a recurring basis. The fair value estimates presented herein are based on
19
ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Interim Consolidated Financial Statements (Unaudited) (Continued)
information available to management as of September 30, 2024 and December 31, 2023. These estimates are not necessarily indicative of the amounts the Company could ultimately realize.
(in thousands)Level 1Level 2Level 3
September 30, 2024
Assets   
Interest rate swap agreements-short term$—$2,115$—
Interest rate swap agreements-long term—71—
Total assets measured at fair value$—$2,186$—
Liabilities   
Warrant liability——2,221
Total liabilities measured at fair value$—$—$2,221
(in thousands)Level 1Level 2Level 3
December 31, 2023
Assets
Interest rate swap agreements-short term$— $4,482 $— 
Interest rate swap agreements-long term— 986 — 
Total assets measured at fair value$— $5,468 $— 
Liabilities   
Acquisition-related contingent consideration-short term$— $— $6,850 
Warrant liability— — 4,021 
Total liabilities measured at fair value$— $— $10,871 
Interest Rate Swaps
The Company uses interest rate swap agreements to manage interest rate risk by converting a portion of its variable rate borrowings to a fixed rate and recognizes