AdaptHealth Corp. (NASDAQ: AHCO) (“AdaptHealth” or the
“Company”), a national leader in providing patient-centered,
healthcare-at-home solutions including home medical equipment,
medical supplies, and related services, announced today financial
results for the fourth quarter and fiscal year ended December 31,
2022.
Highlights of 2022
- AdaptHealth provides needed medical equipment and supplies to
approximately 3.9 million patients annually.
- Net revenue increased 21% over full-year 2021, driven by
acquired growth of 17.9% and non-acquired growth of 3.5%.
- Net income attributable to AdaptHealth Corp. was $69.3 million,
or $0.33 per diluted share, compared to $156.2 million, or $0.67
per diluted share, in 2021.
- Adjusted EBITDA was $593.8 million, an increase of 4.9% from
full-year 2021.
- Cash flow from operations was $373.9 million in 2022, up from
$275.7 million in 2021.
Fourth Quarter Results and
Highlights
- AdaptHealth reported Net revenue of $780.3 million for the
fourth quarter of 2022 compared to $702.1 million in the fourth
quarter of 2021, an increase of 11.1% including non-acquired growth
of 5.3%.
- Strong sequential growth in Sleep revenue and further
improvement in supply of PAP equipment.
- Net loss attributable to AdaptHealth Corp. was $2.6 million, or
$(0.02) per diluted share, compared to net income attributable to
AdaptHealth Corp. of $22.9 million, or $0.15 per diluted share, in
the fourth quarter of 2021.
- Adjusted EBITDA was $146.0 million, compared to $158.1 million
in the fourth quarter of 2021, a decrease of 7.7%.
- Cash flow from operations was $96.9 million, compared to $100.9
million in the fourth quarter of 2021.
Guidance Updated for Fiscal Year
2023
The Company is updating its initial financial guidance for
fiscal year 2023, as follows:
- Net revenue of $3.160 billion to $3.240 billion (previously
$3.210 billion to $3.290 billion);
- Adjusted EBITDA of $650 million to $710 million (previously
$690 million to $750 million);
- Total capital expenditures representing 10-12% of net revenue
(previously 9-11% of net revenue).
Guidance for fiscal year 2023 does not include any contributions
from acquisitions that have not yet closed.
Management Commentary
Steve Griggs, Chief Executive Officer, commented, “2022 was
another year of substantial progress for AdaptHealth. We advanced a
number of strategic initiatives, including completing the
integration of our merger with AeroCare, stabilizing and optimizing
our internal processes, and continuing to invest in the technology,
tools, and talent to deliver on the goals that we presented at our
Capital Markets Day. As a result of these investments and the
efforts of our 10,931 employees, AdaptHealth has continued to grow
and prosper, and the company is entering 2023 from a position of
strength.
We are disappointed that Adjusted EBITDA fell short of our
full-year guidance due primarily to larger impacts from revenue mix
and cost pressures than we previously expected. However, we are
excited about the immediate future and our long-term opportunities,
and are confident that management will execute on new cost
containment programs to ensure we deliver on our updated
guidance.”
Josh Parnes, President, said, “Over the past year, AdaptHealth
took the first steps toward building our vision for the future of
our company and our expectations to help lead the transition of
value-based care into the home. We are already playing a critical
role in the healthcare continuum, especially for post-acute and
chronic disease patients, and are now in the process of enhancing
the connectivity for the benefit of our patients, payors, and
provider partners.”
Conference Call
Management will host a conference call at 8:30 am ET tomorrow to
discuss the results and business activities. Interested parties may
participate in the call by dialing:
- (800) 245-3047 (Domestic) or
- (203) 518-9765 (International)
When prompted, reference Conference ID: AHCO4Q22
Webcast registration: Click Here
Following the live call, a replay will be available for six
months on the Company's website,www.adapthealth.com under "Investor
Relations."
About AdaptHealth Corp.
AdaptHealth is a national leader in providing patient-centered,
healthcare-at-home solutions including home medical equipment
(HME), medical supplies, and related services. The Company provides
a full suite of medical products and solutions designed to help
patients manage chronic conditions in the home, adapt to challenges
in their activities of daily living, and thrive. Product and
service offerings include (i) sleep therapy equipment, supplies,
and related services (including CPAP and bi PAP services) to
individuals suffering from obstructive sleep apnea, (ii) medical
devices and supplies to patients for the treatment of diabetes
(including continuous glucose monitors and insulin pumps), (iii)
HME to patients discharged from acute care and other facilities,
(iv) oxygen and related chronic therapy services in the home, and
(v) other HME devices and supplies on behalf of chronically ill
patients with wound care, urological, incontinence, ostomy and
nutritional supply needs. The Company is proud to partner with an
extensive and highly diversified network of referral sources,
including acute care hospitals, sleep labs, pulmonologists, skilled
nursing facilities, and clinics. AdaptHealth services beneficiaries
of Medicare, Medicaid, and commercial insurance payors, reaching
approximately 3.9 million patients annually in all 50 states
through its network of approximately 725 locations in 47
states.
Forward-Looking
Statements
This press release includes certain statements that are not
historical facts but are forward-looking statements for purposes of
the safe harbor provisions under the United States Private
Securities Litigation Reform Act of 1995. Forward-looking
statements generally are accompanied by words such as “believe,”
“may,” “will,” “estimate,” “continue,” “anticipate,” “intend,”
“expect,” “should,” “would,” “plan,” “predict,” “potential,”
“seem,” “seek,” “future,” “outlook,” and similar expressions that
predict or indicate future events or trends or that are not
statements of historical matters. These forward-looking statements
include, but are not limited to, statements regarding projections,
estimates and forecasts of revenue and other financial and
performance metrics and projections of market opportunity and
expectations and the Company’s acquisition pipeline. These
statements are based on various assumptions and on the current
expectations of AdaptHealth management and are not predictions of
actual performance. These forward-looking statements are provided
for illustrative purposes only and are not intended to serve as,
and must not be relied on, by any investor as, a guarantee, an
assurance, a prediction or a definitive statement of fact or
probability. Actual events and circumstances are difficult or
impossible to predict and will differ from assumptions. Many actual
events and circumstances are beyond the control of the Company.
These forward-looking statements are subject to a number of
risks and uncertainties, including the outcome of judicial and
administrative proceedings to which the Company may become a party
or governmental investigations to which the Company may become
subject that could interrupt or limit the Company’s operations,
result in adverse judgments, settlements or fines and create
negative publicity; changes in the Company’s customers’
preferences, prospects and the competitive conditions prevailing in
the healthcare sector. 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 Free Cash Flow,
which are financial measures that are not 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.
The Company believes Adjusted EBITDA is useful to investors in
evaluating the Company’s financial performance. 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.
EBITDA and Adjusted EBITDA should not be considered as measures
of financial performance under U.S. GAAP, and the items excluded
from EBITDA and Adjusted EBITDA 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.
The Company uses free cash flow in its operational and financial
decision-making and believes free cash flow is useful to investors
because similar measures are frequently used by securities
analysts, investors, ratings agencies and other interested parties
to evaluate the Company's competitors and to measure the ability of
companies to service their debt. The Company's presentation of free
cash flow should not be construed as a measure of liquidity or
discretionary cash available to the Company to fund its cash needs,
including investing in the growth of its business and meeting its
obligations.
There is no reliable or reasonably estimable comparable GAAP
measure for the Company’s non-GAAP financial guidance because the
Company is not able to reliably predict the impact of certain
items, including equity-based compensation expense, transaction
costs, changes in fair value of the warrant liability, and other
non-recurring items of expense or income in full year 2023. 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 financial guidance is subject
to risks and uncertainties applicable to all forward-looking
statements as described elsewhere in this press release.
ADAPTHEALTH CORP. Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
December 31, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
46,272
$
149,627
Accounts receivable
359,146
359,896
Inventory
127,754
123,095
Prepaid and other current assets
52,136
37,440
Total current assets
585,308
670,058
Equipment and other fixed assets, net
487,079
398,577
Operating lease right-of-use assets
129,506
147,760
Finance lease right-of-use assets
5,423
—
Goodwill
3,545,297
3,512,567
Identifiable intangible assets, net
162,773
202,231
Other assets
22,415
15,098
Deferred tax assets
281,786
304,193
Total Assets
$
5,219,587
$
5,250,484
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable and accrued expenses
$
337,498
$
358,384
Current portion of long-term debt
35,000
20,000
Current portion of operating lease
obligations
30,001
31,418
Current portion of finance lease
obligations
2,211
15,446
Contract liabilities
31,641
31,370
Other liabilities
19,863
43,194
Total current liabilities
456,214
499,812
Long-term debt, less current portion
2,153,267
2,183,552
Operating lease obligations, less current
portion
104,394
120,180
Finance lease obligations, less current
portion
3,950
—
Other long-term liabilities
305,501
322,487
Warrant liability
38,503
57,764
Total Liabilities
3,061,829
3,183,795
Total Stockholders' Equity
2,157,758
2,066,689
Total Liabilities and Stockholders'
Equity
$
5,219,587
$
5,250,484
ADAPTHEALTH CORP. Consolidated Statements of Operations
(Unaudited)
Three Months Ended
Twelve Months Ended
(in thousands, except per share
data)
December 31,
December 31,
2022
2021
2022
2021
Net revenue
$
780,283
$
702,106
$
2,970,595
$
2,454,535
Grant income
—
10,595
—
10,595
Costs and expenses:
Cost of net revenue
699,322
591,620
2,553,169
2,008,925
General and administrative expenses
37,452
34,921
162,125
167,505
Depreciation and amortization, excluding
patient equipment depreciation
16,777
17,081
64,890
63,095
Total costs and expenses
753,551
643,622
2,780,184
2,239,525
Operating income
26,732
69,079
190,411
225,605
Interest expense, net
30,509
25,611
109,414
95,195
Change in fair value of warrant
liability
(13
)
4,178
(17,158
)
(53,181
)
Change in fair value of contingent
consideration common shares liability
—
4,661
—
(29,389
)
Loss on extinguishment of debt
—
—
—
20,189
Other (income) loss, net
(6,926
)
1,134
253
1,832
Income before income taxes
3,162
33,495
97,902
190,959
Income tax expense
4,733
10,024
24,769
32,806
Net (loss) income
(1,571
)
23,471
73,133
158,153
Income attritbutable to noncontrolling
interests
1,017
529
3,817
1,978
Net (loss) income attributable to
AdpatHealth Corp.
$
(2,588
)
$
22,942
$
69,316
$
156,175
Weighted average common shares outstanding
- basic
134,139
132,470
134,175
126,306
Weighted average common shares outstanding
- diluted
134,139
136,376
138,988
133,034
Basic net (loss) income per share
$
(0.02
)
$
0.16
$
0.47
$
1.12
Diluted net (loss) income per share
$
(0.02
)
$
0.15
$
0.33
$
0.67
ADAPTHEALTH CORP. Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Twelve Months Ended December
31,
2022
2021
Cash flows from operating activities:
Net income
$
73,133
$
158,153
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization, including
patient equipment depreciation
351,178
258,053
Equity-based compensation
22,397
25,323
Change in fair value of warrant
liability
(17,158
)
(53,181
)
Change in fair value of contingent
consideration common shares liability
—
(29,389
)
Reduction in the carrying amount of
operating lease right-of-use assets
32,264
28,624
Deferred income tax expense
18,036
22,380
Change in fair value of interest rate
swaps, net of reclassification adjustment
(2,936
)
(2,927
)
Amortization of deferred financing
costs
5,234
5,378
Write-off of deferred financing costs
—
4,054
Loss on extinguishment of debt from
prepayment penalty
—
16,135
Other
(285
)
(3,615
)
Changes in operating assets and
liabilities, net of effects from acquisitions:
Accounts receivable
(209
)
(29,694
)
Inventory
(6,300
)
(14,920
)
Prepaid and other assets
(13,143
)
2,731
Operating lease obligations
(31,213
)
(28,043
)
Operating liabilities
(57,131
)
(83,383
)
Net cash provided by operating
activities
373,867
275,679
Cash flows from investing activities:
Payments for business acquisitions, net of
cash acquired
(19,017
)
(1,620,320
)
Purchases of equipment and other fixed
assets
(391,423
)
(203,308
)
Payments for cost method investments
(731
)
(1,125
)
Net cash used in investing activities
(411,171
)
(1,824,753
)
Cash flows from financing activities:
Proceeds from borrowings on long-term debt
and lines of credit
—
1,165,000
Repayments on long-term debt and lines of
credit
(20,000
)
(827,271
)
Repayments of finance lease
obligations
(16,176
)
(42,164
)
Payments for shares purchased under share
repurchase program
(13,992
)
—
Proceeds from the exercise of stock
options
2,510
12,320
Proceeds received in connection with
employee stock purchase plan
1,616
1,016
Payments for tax withholdings from
equity-based compensation and stock option exercises
(3,516
)
(3,557
)
Payments of contingent consideration and
deferred purchase price from acquisitions
(14,493
)
(25,233
)
Distributions to noncontrolling
interests
(2,000
)
(1,070
)
Proceeds from the issuance of senior
unsecured notes
—
1,100,000
Proceeds from the issuance of Class A
Common Stock
—
278,850
Payments for equity issuance costs
—
(13,832
)
Payments of deferred financing costs
—
(29,185
)
Payments for debt prepayment penalties
—
(16,135
)
Net cash (used in) provided by financing
activities
(66,051
)
1,598,739
Net (decrease) increase in cash and cash
equivalents
(103,355
)
49,665
Cash and cash equivalents at beginning of
period
149,627
99,962
Cash and cash equivalents at end of
period
$
46,272
$
149,627
Non-GAAP Financial
Measures
EBITDA and Adjusted EBITDA
This press release presents AdaptHealth’s EBITDA and Adjusted
EBITDA for the three and twelve months ended December 31, 2022 and
2021.
AdaptHealth defines EBITDA as net income (loss) attributable to
AdaptHealth Corp., plus net income (loss) attributable to
noncontrolling interests, interest expense, net, income tax expense
(benefit), and depreciation and amortization.
AdaptHealth defines Adjusted EBITDA as EBITDA (as defined
above), plus loss on extinguishment of debt, equity-based
compensation expense, transaction costs, change in fair value of
the contingent consideration common shares liability, change in
fair value of the warrant liability, and other non-recurring items
of expense or income.
The following unaudited table presents the reconciliation of net
income attributable to AdaptHealth Corp. to EBITDA and Adjusted
EBITDA for the three and twelve months ended December 31, 2022 and
2021:
Three Months Ended
Twelve Months Ended
(in thousands)
December 31,
December 31,
2022
2021
2022
2021
Net (loss) income attributable to
AdpatHealth Corp.
$
(2,588
)
$
22,942
$
69,316
$
156,175
Income attributable to noncontrolling
interest
1,017
529
3,817
1,978
Interest expense, net
30,509
25,611
109,414
95,195
Income tax expense
4,733
10,024
24,769
32,806
Depreciation and amortization, including
patient equipment depreciation
102,343
77,226
351,178
258,053
EBITDA
136,014
136,332
558,494
544,207
Loss on extinguishment of debt (a)
—
—
—
20,189
Equity-based compensation expense (b)
5,613
3,929
22,397
25,323
Transaction costs (c)
171
4,511
6,003
49,081
Change in fair value of warrant liability
(d)
(13
)
4,178
(17,158
)
(53,181
)
Change in fair value of contingent
consideration common shares liability (e)
—
4,661
—
(29,389
)
Other non-recurring expense, net (f)
4,171
4,467
24,034
9,688
Adjusted EBITDA
$
145,956
$
158,078
$
593,770
$
565,918
(a)
Represents the write-off of unamortized
deferred financing costs and other expenses related to refinancing
of debt and prepayment penalties for early debt payoff.
(b)
Represents equity-based compensation
expense for awards granted to employees and non-employee directors.
The higher expense in 2021 is primarily due to expense resulting
from accelerated vesting of certain awards, including accelerated
vesting of certain awards in connection with the separation of the
Company’s former Co-CEO.
(c)
Represents transaction costs and expenses
related to integration efforts related to acquisitions.
(d)
Represents a non-cash gain or charge for
the change in the estimated fair value of the warrant
liability.
(e)
Represents a non-cash gain or charge for
the change in the estimated fair value of the contingent
consideration common shares liability.
(f)
The 2022 period consists of $11.7 million
of consulting expenses associated with systems implementation
activities and post-implementation support services, $10.5 million
of expenses associated with litigation, a $0.8 million loss related
to the write-off of an investment, and $3.9 million of net other
non-recurring expenses, offset by income of $2.9 million related to
changes in AdaptHealth’s estimated TRA liability. The 2021 period
includes $2.1 million of expenses related to legal and other costs
associated with the separation of the Company’s former Co-CEO, $3.9
million of expenses associated with litigation, claims and
settlements, $1.9 million of expenses associated with lease
terminations, and $4.6 million of net other non-recurring expenses,
offset by a $1.9 million gain in connection with the consolidation
of an equity method investment, and $0.9 million of net reductions
in the fair value of contingent consideration liabilities related
to acquisitions.
Free Cash Flow
This press release presents AdaptHealth’s Free Cash Flow for the
three and twelve months ended December 31, 2022 and 2021.
AdaptHealth defines Free Cash Flow as net cash provided by
operating activities less cash paid for purchases of equipment and
other fixed assets.
The following unaudited table reconciles net cash provided by
operating activities to the free cash flow measure for the three
and twelve months ended December 31, 2022 and 2021:
Three Months Ended
Twelve Months Ended
(in thousands)
December 31,
December 31,
2022
2021
2022
2021
Net cash provided by operating
activities
$
96,920
$
100,929
$
373,867
$
275,679
Purchases of equipment and other fixed
assets
(142,912
)
(63,622
)
(391,423
)
(203,308
)
Free cash flow
$
(45,992
)
$
37,307
$
(17,556
)
$
72,371
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230227005934/en/
AdaptHealth Corp. Jason Clemens, CFA Chief Financial
Officer Anton Hie Vice President, Investor Relations
IR@adapthealth.com
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