Adapthealth ((AHCO)) has held its Q3 earnings call. Read on for the main highlights of the call.
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AdaptHealth’s latest earnings call conveyed a generally positive sentiment, highlighting strong organic growth, improved profitability, and significant debt reduction. However, challenges were noted in the Wellness at Home segment and softer than expected starts in Diabetes Health.
Organic Revenue Growth
AdaptHealth reported a 5.1% organic revenue growth in Q3 2025, showcasing strength across all four segments. This growth underscores the company’s robust performance and strategic positioning in the market.
Sleep and Respiratory Health Growth
The company experienced a notable increase in Sleep and Respiratory Health, with sleep new starts rising nearly 7% from the previous year, marking the highest quarter in two years. Additionally, Respiratory Health net revenue saw a 7.8% increase, reflecting strong demand and effective execution.
Debt Reduction
AdaptHealth successfully reduced its debt by $50 million in Q3, bringing the year-to-date total debt reduction to $225 million. This achievement moves the company closer to its target net leverage ratio of 2.50x, demonstrating prudent financial management.
Improvement in Adjusted EBITDA
The company reported an adjusted EBITDA of $170.1 million for Q3 2025, up 3.5% from the previous year. The EBITDA margin also increased by 30 basis points, indicating enhanced operational efficiency and profitability.
Strategic Capitated Agreements
AdaptHealth announced a new capitated agreement with a major payer, adding 170,000 lives. This move, along with strong performance in existing partnerships, highlights the company’s strategic focus on expanding its service reach and revenue streams.
Wellness at Home Revenue Decline
The Wellness at Home segment faced a 16.0% decline in net revenue, attributed to the impact of dispositions of noncore assets. This challenge indicates areas for potential improvement and strategic realignment.
Diabetes Health Challenges
Despite a 6.4% revenue increase in the Diabetes Health segment, the company faced softer than expected CGM starts. This suggests a need for targeted strategies to bolster growth in this area.
Forward-Looking Guidance
Looking ahead, AdaptHealth maintained its full-year 2025 revenue guidance, anticipating a 6% to 8% revenue growth in 2026. This forecast is supported by a significant capitated agreement expected to generate at least $200 million annually, alongside strategic operational improvements.
In summary, AdaptHealth’s earnings call reflected a positive outlook with strong growth and financial management, despite some challenges in specific segments. The company’s strategic initiatives and forward-looking guidance suggest continued momentum and potential for future success.