AdaptHealth Corp. (NASDAQ: AHCO) (“AdaptHealth” or the
“Company”), a national leader in providing patient-centered,
healthcare-at-home solutions including home medical equipment,
medical supplies, and related services, announced today financial
results for the first quarter ended March 31, 2021.
Highlights
- As previously announced, the Company completed the acquisition
of AeroCare Holdings Inc. on February 1, 2021. Integration efforts
are on track and the Company expects to generate previously
announced pre-tax annual run rate cost synergies of approximately
$50 million, including $30 million in 2021. Our first quarter
results include two months of operations of AeroCare.
- Organic growth reported for the first quarter was 11.5%.
- In the first quarter, the Company closed four additional
acquisitions including previously announced Allina Health Home
Oxygen & Medical Equipment, a home medical equipment provider
in Minnesota with 10 locations.
- On April 30, 2021, AdaptHealth expanded its presence in New
England with the acquisition of Spiro Health Services, a provider
of home medical equipment and supplies operating with 22 locations
across eight states.
- In April 2021, AdaptHealth entered into an agreement with its
lenders to expand its existing credit facility to fund anticipated
M&A activity. The Company increased its term loan from $700
million to $800 million and expanded the maximum borrowing capacity
under its revolving credit facility from $250 million to $450
million.
- As of April 30, 2021, the Company had approximately $410
million available on its revolving credit facility and
approximately $97 million of cash on hand.
First Quarter Results
- Net revenue was $482.1 million, compared to $191.4 million in
the first quarter of 2020, a 152% increase.
- Net loss attributable to AdaptHealth Corp. was $4.0 million, or
$0.08 per diluted share, compared to a net loss of $34.6 million,
or $0.82 per diluted share, in the first quarter of 2020.
- Adjusted EBITDA was $104.2 million, compared to $30.5 million
in the first quarter of 2020, a 242% increase.
- Adjusted EBITDA less Patient Equipment Capex was $61.9 million,
compared to $17.5 million in the first quarter of 2020, a 254%
increase.
Increased Guidance
While it remains difficult to predict the duration and impact of
the COVID-19 crisis, based on current business and market trends,
the Company is increasing its previously issued financial guidance
for fiscal year 2021 as follows:
- Net revenue of $2.22 billion to $2.39 billion, up from prior
guidance of $2.18 billion to $2.35 billion
- Adjusted EBITDA of $525 million to $565 million, up from prior
guidance of $510 million to $550 million; and
- Adjusted EBITDA less Patient Equipment Capex of $330 million to
$360 million, up from prior guidance of $320 million to $350
million.
Management Commentary
Steve Griggs, Co-CEO of AdaptHealth, commented, “I’m very
pleased with our Q1 2021 financial performance which reflects the
continued dedication and focus of our 9,331 employees who have
worked under extremely challenging circumstances over the past 12
months. Our financial results also reflect the hard work done by
the AdaptHealth and AeroCare teams to complete the acquisition of
AeroCare and combine the operations of both companies while not
missing a beat with our patients, referring physicians and health
systems. These efforts, combined with our strong organic growth for
the quarter and the continued strength of our M&A pipeline, are
the reasons we remain excited about the outlook of our
business.”
Mr. Griggs continued, “In April, we closed the acquisition of
Spiro Health Services, a provider of home medical equipment and
supplies, which substantially expands our presence throughout New
England and the Mid-Atlantic states and provides opportunities for
both revenue and cost synergies. The Spiro Health acquisition, like
our acquisition of the Allina Health Home business in Minnesota,
demonstrates our ability to expand our footprint in growing markets
through strategic acquisitions of market leaders.”
Josh Parnes, President of AdaptHealth, commented, “We are
continuing to integrate and optimize technology across our
organization to improve efficiencies, enhance sales and increase
customer satisfaction. This includes advancing the use of our
e-prescribe platform, especially in our growing diabetes product
line. We are also very excited about the progress of our digital
connected patient experience, where new technology product
introductions will help deliver solutions that bring us closer to
our patients while improving outcomes and lowering costs.”
Conference Call
Management will host a conference at 8:30 am ET today to discuss
the results and business activities. Interested parties may
participate in the call by dialing:
- (877) 423-9820 (Domestic) or
- (201) 493-6749 (International)
Webcast registration: Click Here
Following the live call, a replay will be available for six
months on the Company's website, www.adapthealth.com under
"Investor Relations."
About AdaptHealth Corp.
AdaptHealth is a national leader in providing patient-centered,
healthcare-at-home solutions including home medical equipment,
medical supplies, and related services. AdaptHealth provides a full
suite of medical products and solutions designed to help patients
manage chronic conditions in the home, adapt to life and thrive.
Product and services offerings include (i) sleep therapy equipment,
supplies and related services (including CPAP and bi PAP services)
to individuals suffering from obstructive sleep apnea, (ii) medical
devices and supplies to patients for the treatment of diabetes
(including continuous glucose monitors and insulin pumps), (iii)
home medical equipment (HME) to patients discharged from acute care
and other facilities, (iv) oxygen and related chronic therapy
services in the home, and (v) other HME medical devices and
supplies on behalf of chronically ill patients with wound care,
urological, incontinence, ostomy and nutritional supply needs. The
Company is proud to partner with an extensive and highly
diversified network of referral sources, including acute care
hospitals, sleep labs, pulmonologists, skilled nursing facilities,
and clinics. AdaptHealth services beneficiaries of Medicare,
Medicaid and commercial insurance payors. AdaptHealth services
approximately 3 million patients annually in all 50 states through
its network of 614 locations in 47 states. Learn more at
www.adapthealth.com.
Forward-Looking
Statements
This press release includes certain statements that are not
historical facts but are forward-looking statements for purposes of
the safe harbor provisions under the United States Private
Securities Litigation Reform Act of 1995. Forward-looking
statements generally are accompanied by words such as “believe,”
“may,” “will,” “estimate,” “continue,” “anticipate,” “intend,”
“expect,” “should,” “would,” “plan,” “predict,” “potential,”
“seem,” “seek,” “future,” “outlook,” and similar expressions that
predict or indicate future events or trends or that are not
statements of historical matters. These forward-looking statements
include, but are not limited to, statements regarding projections,
estimates and forecasts of revenue and other financial and
performance metrics and projections of market opportunity and
expectations and the Company’s acquisition pipeline. These
statements are based on various assumptions and on the current
expectations of AdaptHealth management and are not predictions of
actual performance. These forward-looking statements are provided
for illustrative purposes only and are not intended to serve as,
and must not be relied on, by any investor as, a guarantee, an
assurance, a prediction or a definitive statement of fact or
probability. Actual events and circumstances are difficult or
impossible to predict and will differ from assumptions. Many actual
events and circumstances are beyond the control of the Company.
These forward-looking statements are subject to a number of
risks and uncertainties, including the outcome of judicial and
administrative proceedings to which the Company may become a party
or governmental investigations to which the Company may become
subject that could interrupt or limit the Company’s operations,
result in adverse judgments, settlements or fines and create
negative publicity; changes in the Company’s clients’ preferences,
prospects and the competitive conditions prevailing in the
healthcare sector; and the impact of the recent coronavirus
(COVID-19) pandemic and the Company’s response to it. A further
description of such risks and uncertainties can be found in the
Company’s filings with the Securities and Exchange Commission. If
the risks materialize or assumptions prove incorrect, actual
results could differ materially from the results implied by these
forward-looking statements. There may be additional risks that the
Company presently knows or that the Company currently believes are
immaterial that could also cause actual results to differ from
those contained in the forward-looking statements. In addition,
forward-looking statements reflect the Company’s expectations,
plans or forecasts of future events and views as of the date of
this press release. The Company anticipates that subsequent events
and developments will cause the Company’s assessments to change.
However, while the Company may elect to update these
forward-looking statements at some point in the future, the Company
specifically disclaims any obligation to do so. These
forward-looking statements should not be relied upon as
representing the Company’s assessments as of any date subsequent to
the date of this press release. Accordingly, undue reliance should
not be placed upon the forward-looking statements.
Use of Non-GAAP Financial Information
and Financial Guidance
This release contains non-GAAP financial guidance, which is
adjusted to exclude certain costs, expenses, gains and losses and
other specified items that are evaluated on an individual basis.
These non-GAAP items are adjusted after considering their
quantitative and qualitative aspects and typically have one or more
of the following characteristics, such as being highly variable,
difficult to project, unusual in nature, significant to the results
of a particular period or not indicative of future operating
results. Similar charges or gains were recognized in prior periods
and will likely reoccur in future periods.
The Company uses EBITDA, Adjusted EBITDA and Adjusted EBITDA
less Patient Equipment Capex, which are financial measures that are
not prepared in accordance with generally accepted accounting
principles in the United States, or U.S. GAAP, to analyze its
financial results and believes that they are useful to investors,
as a supplement to U.S. GAAP measures. In addition, the Company’s
ability to incur additional indebtedness and make investments under
its existing credit agreement is governed, in part, by its ability
to satisfy tests based on a variation of Adjusted EBITDA less
Patient Equipment Capex.
The Company believes Adjusted EBITDA less Patient Equipment
Capex is useful to investors in evaluating the Company’s financial
performance. The Company’s business requires significant investment
in equipment purchases to maintain its patient equipment inventory.
Some equipment title transfers to patients’ ownership after a
prescribed number of fixed monthly payments. Equipment that does
not transfer wears out or often times is not recovered after a
patient’s use of the equipment terminates. The Company uses this
metric as the profitability measure in its incentive compensation
plans that have a profitability component and to evaluate
acquisition opportunities, where it is most often used for purposes
of contingent consideration arrangements. In addition, the
Company’s debt agreements contain covenants that use a variation of
Adjusted EBITDA less Patient Equipment Capex for purposes of
determining debt covenant compliance. For purposes of this metric,
patient equipment capital expenditure is measured as the value of
the patient equipment received during the accounting period without
regard to whether the equipment is purchased or financed through
lease transactions.
EBITDA, Adjusted EBITDA and Adjusted EBITDA less Patient
Equipment Capex should not be considered as measures of financial
performance under U.S. GAAP, and the items excluded from EBITDA,
Adjusted EBITDA and Adjusted EBITDA less Patient Equipment Capex
are significant components in understanding and assessing financial
performance. Accordingly, these key business metrics have
limitations as an analytical tool. They should not be considered as
an alternative to net income or any other performance measures
derived in accordance with U.S. GAAP or as an alternative to cash
flows from operating activities as a measure of the Company’s
liquidity.
There is no reliable or reasonably estimable comparable GAAP
measure for the Company’s non-GAAP financial guidance because the
Company is not able to reliably predict the impact of certain
items, including equity-based compensation expense, transaction
costs, changes in fair value of both the contingent consideration
common shares liability and the warrant liability, and other
non-recurring (income) expense in full year 2021. As a result,
reconciliation of these non-GAAP measures to the most directly
comparable GAAP measure is not available without unreasonable
effort. In addition, the Company believes such a reconciliation
would imply a degree of precision and certainty that could be
confusing to investors. The variability of the specified items may
have a significant and unpredictable impact on the Company’s future
GAAP results.
In addition, the Company’s non-GAAP financial guidance in this
release excludes the impact of any potential additional future
strategic acquisitions and any specified items that have not yet
been identified and quantified. The guidance also excludes
macro-economic effects due to the COVID-19 pandemic that are not
yet quantifiable. The financial guidance is subject to risks and
uncertainties applicable to all forward-looking statements as
described elsewhere in this press release.
ADAPTHEALTH CORP.
Condensed Consolidated Balance Sheets
(Unaudited) (in thousands) March 31,
2021 December 31, 2020 Assets Current assets:
Cash and cash equivalents $
132,137
$
99,962
Accounts receivable
260,761
171,065
Inventory
75,487
58,783
Prepaid and other current assets
35,117
33,441
Total current assets
503,502
363,251
Equipment and other fixed assets, net
298,537
110,468
Goodwill
3,142,076
998,810
Identifiable intangible assets, net
245,239
116,061
Other assets
19,204
16,483
Deferred tax asset
311,510
208,399
Total assets $
4,520,068
$
1,813,472
Liabilities and Stockholders' Equity Current liabilities:
Accounts payable and accrued expenses
305,928
254,212
Current portion of capital lease obligations
20,162
22,282
Current portion of long-term debt
17,500
8,146
Contract liabilities
25,168
11,043
Other liabilities
108,279
89,524
Contingent consideration common shares liability
36,103
36,846
Total current liabilities
513,140
422,053
Long-term debt, less current portion
1,748,829
776,568
Other long-term liabilities
322,475
186,470
Long-term portion of contingent consideration common shares
liability
32,409
33,631
Warrant liability
110,737
113,905
Total liabilities
2,727,590
1,532,627
Total Stockholders' Equity
1,792,478
280,845
Total Liabilities and Stockholders' Equity $
4,520,068
$
1,813,472
ADAPTHEALTH CORP.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
(in thousands, except per share data)
March 31,
2021
2020
Net revenue $
482,119
$
191,439
Costs and expenses: Cost of net revenue
396,698
167,630
General and administrative expenses
56,632
14,347
Depreciation and amortization, excluding patient equipment
depreciation
13,380
1,242
Total costs and expenses
466,710
183,219
Operating income
15,409
8,220
Interest expense
22,185
7,938
Loss on extinguishment of debt, net
4,213
—
Change in fair value of contingent consideration common shares
liability
(1,965)
16,367
Change in fair value of warrant liability
(3,168)
36,100
Other income, net
(519)
(1,091)
Loss before income taxes
(5,337)
(51,094)
Income tax benefit
(1,695)
(1,641)
Net loss
(3,642)
(49,453)
Income (loss) attributable to noncontrolling interests
324
(14,902)
Net loss attributable to AdaptHealth Corp. $
(3,966)
$
(34,551)
Weighted average common shares outstanding - basic
111,109
41,977
Weighted average common shares outstanding - diluted
115,995
41,977
Basic loss per share $
(0.04)
$
(0.82)
Diluted loss per share $
(0.08)
$
(0.82)
ADAPTHEALTH CORP.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
(in thousands) March 31,
2021
2020
Net cash provided by operating activities $
18,380
$
24,380
Net cash used in investing activities
(1,213,764)
(111,329)
Net cash provided by financing activities
1,227,559
58,235
Net increase (decrease) in cash and cash equivalents
32,175
(28,714)
Cash and cash equivalents at beginning of period
99,962
76,878
Cash and cash equivalents at end of period $
132,137
$
48,164
Non-GAAP Financial
Measures
This press release presents AdaptHealth’s EBITDA, Adjusted
EBITDA and Adjusted EBITDA less Patient Equipment Capex for the
three months ended March 31, 2021 and 2020.
AdaptHealth defines EBITDA as net income (loss) attributable to
AdaptHealth Corp., plus net income (loss) attributable to
noncontrolling interests, interest expense (income), income tax
expense (benefit), and depreciation and amortization.
AdaptHealth defines Adjusted EBITDA as EBITDA (as defined
above), plus loss on extinguishment of debt, equity‑based
compensation expense, transaction costs, severance, change in fair
value of the contingent consideration common shares liability,
change in fair value of the warrant liability, and non-recurring
items of expense (income).
AdaptHealth defines Adjusted EBITDA less Patient Equipment Capex
as Adjusted EBITDA (as defined above) less patient equipment
acquired during the period without regard to whether the equipment
was purchased or financed through lease transactions.
The following unaudited table presents the reconciliation of net
loss attributable to AdaptHealth Corp. to EBITDA, Adjusted EBITDA
and Adjusted EBITDA less Patient Equipment Capex for the three
months ended March 31, 2021 and 2020:
Three Months Ended
(in thousands)
March 31,
2021
2020
Net loss attributable to AdaptHealth Corp. $
(3,966)
$
(34,551)
Income (loss) attributable to noncontrolling interests
324
(14,902)
Interest expense, net
22,185
7,938
Income tax benefit
(1,695)
(1,641)
Depreciation and amortization, including patient equipment
depreciation
47,206
16,740
EBITDA
64,054
(26,416)
Loss on extinguishment of debt (a)
4,213
—
Equity-based compensation expense (b)
8,582
2,223
Transaction costs (c)
31,854
2,858
Severance (d)
939
419
Change in fair value of contingent consideration common shares
liability (e)
(1,965)
16,367
Change in fair value of warrant liability (f)
(3,168)
36,100
Other non-recurring income (g)
(334)
(1,091)
Adjusted EBITDA
104,175
30,460
Less: Patient equipment capex (h)
(42,258)
(12,967)
Adjusted EBITDA less Patient Equipment Capex $
61,917
$
17,493
(a)
Represents write offs of deferred
financing costs related to refinancing of debt.
(b)
Represents equity-based compensation
expense for awards granted to employees and non-employee directors.
The higher expense in the 2021 period is due to overall increased
equity-compensation grant activity in that period, as well as
expense resulting from accelerated vesting of certain awards in
that period.
(c)
Represents transaction costs related to
acquisitions.
(d)
Represents severance costs related to
acquisition integration and internal AdaptHealth restructuring and
workforce reduction activities.
(e)
Represents a non-cash charge or gain for
the change in the estimated fair value of contingent consideration
common shares issuable as part of the Business Combination.
(f)
Represents a non-cash charge or gain for
the change in the estimated fair value of the Company’s
warrants.
(g)
The 2021 period includes a gain of $0.5
million for the receipt of earnout proceeds in connection with a
cost method investment that was sold in 2020, offset by a $0.2
million charge for the increase in the fair value of a contingent
consideration liability related to an acquisition. The 2020 period
includes a $2.0 million reduction in the fair value of a contingent
consideration liability related to an acquisition, a gain of $0.6
million related to the sale of an investment, offset by a $1.5
million expense related to a transition services agreement executed
in connection with an acquisition completed in 2020.
(h)
Represents the value of the patient
equipment obtained during the respective period without regard to
whether the equipment is purchased or financed through lease
transactions.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210506005591/en/
AdaptHealth Corp. Jason Clemens, CFA Chief Financial
Officer jclemens@adapthealth.com
Brittany Lett Vice President, Marketing (646) 394-9207
blett@adapthealth.com
The Equity Group Inc. Devin Sullivan Senior Vice
President (212) 836-9608 dsullivan@equityny.com
Kalle Ahl, CFA Vice President (212) 836-9614
kahl@equityny.com
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