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AdaptHealth (AHCO)
NASDAQ:AHCO
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AdaptHealth
(NASDAQ:AHCO)
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Rating:63Neutral
Price Target:
$10.00
▲(12.49% Upside)
AdaptHealth's overall stock score is driven by its moderate financial performance and strategic initiatives highlighted in the earnings call. While the company shows potential for growth, challenges in maintaining margins and regulatory pressures weigh on the score. Technical indicators and valuation suggest a neutral stance.
Positive Factors
Major Capitated Contract
The new 5-year contract is expected to generate over $1 billion in revenue, significantly boosting recurring revenue and enhancing long-term financial stability.
Debt Reduction
Significant debt reduction improves financial flexibility and reduces interest expenses, strengthening the balance sheet and enhancing long-term financial health.
Technology and AI Advancements
Investing in technology and AI is expected to streamline operations, reduce costs, and improve patient services, enhancing competitive advantage and profitability.
Negative Factors
Revenue Decline
The decline in revenue indicates challenges in maintaining growth, potentially impacting long-term financial performance and market position.
CMS Proposed Rule Impact
Regulatory changes could increase cost pressures and reduce margins, posing a risk to profitability and operational stability in the long term.
Lowered EBITDA Guidance
Lowered EBITDA guidance reflects challenges in cost management and revenue generation, potentially affecting investor confidence and financial outlook.
AdaptHealth (AHCO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.20B
Dividend YieldN/A
Average Volume (3M)976.44K
Price to Earnings (P/E)16.6
Beta (1Y)0.76
Revenue Growth-0.61%
EPS GrowthN/A
CountryUS
Employees10,500
SectorHealthcare
Sector Strength45
IndustryMedical - Devices
Share Statistics
EPS (TTM)0.22
Shares Outstanding135,297,760
10 Day Avg. Volume1,142,343
30 Day Avg. Volume976,443
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap2.64
Enterprise Value/Revenue1.05
Enterprise Value/Gross Profit6.70
Enterprise Value/Ebitda4.92
Forecast
1Y Price Target
$13.08Price Target Upside47.13% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
AdaptHealth Business Overview & Revenue Model
Company DescriptionAdaptHealth Corp., together with its subsidiaries, provides home medical equipment (HME), medical supplies, and home and related services in the United States. The company provides sleep therapy equipment, supplies, and related services, such as CPAP and bi-PAP services to individuals suffering from obstructive sleep apnea; medical devices and supplies, including continuous glucose monitors and insulin pumps to patients for the treatment of diabetes; HME to patients discharged from acute care and other facilities; oxygen and related chronic therapy services in the home; and other HME devices and supplies on behalf of chronically ill patients with wound care, urological, incontinence, ostomy, and nutritional supply needs. It serves beneficiaries of Medicare, Medicaid, and commercial insurance payors. AdaptHealth Corp. is headquartered in Plymouth Meeting, Pennsylvania.
How the Company Makes MoneyAdaptHealth generates revenue through multiple streams, primarily by renting and selling durable medical equipment (DME) to patients and healthcare providers. The company's revenue model is heavily reliant on reimbursement from Medicare, Medicaid, and private insurance payers, which compensates for the provision of medical equipment and related services. Key revenue streams include the sale of respiratory devices, sleep therapy products, and mobility aids, as well as ongoing rental income from equipment leases. Furthermore, AdaptHealth has established strategic partnerships with hospitals, healthcare systems, and physician groups to enhance patient referrals and streamline service delivery, contributing significantly to its earnings. The company also invests in technology to improve operational efficiency and patient engagement, which enhances its competitive positioning in the home healthcare market.
AdaptHealth Earnings Call Summary
Earnings Call Date:Aug 05, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 11, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view with significant achievements such as a major new contract and advancements in technology, countered by challenges like revenue decline and potential pressures from regulatory changes. The sentiment is mixed with strong strategic positioning for future growth but current financial pressures.Q2-2025 Updates
Positive Updates
Strong Second Quarter Financial Performance
Second quarter revenue was $800.4 million, adjusted EBITDA was $155.5 million, and free cash flow was $73.3 million, all aligning with or exceeding expectations.
Major Capitated Contract Announcement
AdaptHealth signed a definitive agreement to become the exclusive provider for a major national healthcare system, expected to bring in over $1 billion in revenue over five years, significantly increasing recurring revenue.
Momentum in Respiratory and Diabetes Health Segments
The Respiratory Health segment revenue increased by 5.6%, and the Diabetes Health segment showed signs of recovery with new starts and resupply retention improving.
Debt Reduction Progress
The company reduced its debt by $175 million year-to-date and $345 million over the last six quarters, bringing net leverage down to 2.81x.
Advancements in Technology and AI
AdaptHealth is leveraging technology, including AI, to improve efficiency and patient experience, which is expected to reduce costs and enhance profitability.
Negative Updates
Decline in Overall Revenue
Net revenue declined by 0.7% compared to the previous year, largely due to asset dispositions and changes in revenue mix.
Challenges in Sleep Health Segment
Sleep Health segment revenue only increased by 0.9% year-over-year, affected by noncash impacts and market share challenges.
Potential Economic Pressure from CMS Proposed Rule
The CMS proposed rule on competitive bidding may cause economic pressure on industry operators, although AdaptHealth believes it is well-positioned to navigate these changes.
Lowered Adjusted EBITDA Guidance
Adjusted EBITDA guidance for 2025 was reduced by $20 million due to timing of payer rate negotiations and necessary infrastructure investments for the new capitated deal.
Company Guidance
During the AdaptHealth Second Quarter 2025 Earnings Call, Suzanne Foster, CEO, reported strong financial performance with a revenue of $800.4 million and an adjusted EBITDA of $155.5 million, resulting in an adjusted EBITDA margin of 19.4%. The company generated $73.3 million in free cash flow, surpassing expectations. AdaptHealth's strategic focus is on accelerating non-acquired revenue growth, enhancing profitability, and strengthening the balance sheet. They announced a significant 5-year contract with a major healthcare system, projected to generate over $1 billion in revenue, boosting capitated revenue to at least 10% of total revenue. Additionally, the company reduced its net debt by $175 million year-to-date and aims to further deleverage. AdaptHealth is also leveraging technology and AI to streamline operations and improve patient services, while navigating potential impacts from CMS's proposed competitive bidding rule changes. The company's full-year 2025 guidance for revenue is set between $3.18 billion and $3.26 billion, with adjusted EBITDA guidance revised to $642 million to $682 million.AdaptHealth Financial Statement Overview
Summary
AdaptHealth shows moderate financial performance with revenue growth and improved profitability. However, challenges exist in maintaining margins and generating free cash flow. The balance sheet is strong with reduced leverage, enhancing financial stability.Income Statement
AdaptHealth's income statement shows a moderate performance with a TTM revenue growth rate of 6.29%, indicating a positive trend. However, the gross profit margin has decreased from 20.89% in 2024 to 13.49% in TTM, suggesting increased cost pressures. The net profit margin is relatively low at 2.49%, but it has improved from negative margins in previous years, indicating a recovery in profitability. The EBIT and EBITDA margins are stable, reflecting operational efficiency.65
Positive
Balance Sheet
The balance sheet reflects a strong financial position with a low debt-to-equity ratio of 0.10 in TTM, significantly improved from 1.36 in 2024, indicating reduced leverage and financial risk. The return on equity is modest at 5.16%, showing a reasonable return on shareholders' investments. The equity ratio is healthy, suggesting a stable capital structure.72
Positive
Cash Flow
Cash flow analysis reveals challenges with a negative free cash flow growth rate of -15.8% in TTM, indicating potential liquidity issues. The operating cash flow to net income ratio is strong at 0.89, suggesting good cash generation relative to net income. However, the free cash flow to net income ratio is moderate at 0.42, reflecting constraints in free cash flow generation.58
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.04B | 3.26B | 3.20B | 2.97B | 2.45B | 1.06B |
| Gross Profit | 474.62M | 681.09M | 681.77M | 417.43M | 445.61M | 161.23M |
| EBITDA | 645.85M | 670.84M | -171.09M | 630.76M | 544.21M | -82.17M |
| Net Income | 81.74M | 90.42M | -678.89M | 69.32M | 156.18M | -161.63M |
Balance Sheet | ||||||
| Total Assets | 4.35B | 4.49B | 4.51B | 5.22B | 5.25B | 1.81B |
| Cash, Cash Equivalents and Short-Term Investments | 68.63M | 109.75M | 77.13M | 46.27M | 149.63M | 99.96M |
| Total Debt | 1.95B | 2.13B | 2.29B | 2.33B | 2.37B | 807.00M |
| Total Liabilities | 2.76B | 2.91B | 3.04B | 3.06B | 3.18B | 1.53B |
| Stockholders Equity | 1.59B | 1.57B | 1.46B | 2.16B | 2.07B | 354.89M |
Cash Flow | ||||||
| Free Cash Flow | 231.20M | 235.78M | 143.20M | -17.56M | 72.37M | 155.88M |
| Operating Cash Flow | 552.34M | 541.84M | 480.67M | 373.87M | 275.68M | 195.63M |
| Investing Cash Flow | -227.09M | -310.27M | -357.28M | -411.17M | -1.82B | -815.70M |
| Financing Cash Flow | -326.45M | -198.95M | -92.53M | -66.05M | 1.60B | 643.15M |
AdaptHealth Technical Analysis
Negative
8.89
Price Trends
9.28
Negative
9.12
Negative
9.41
Negative
Market Momentum
-0.12
Positive
44.93
Neutral
22.75
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AHCO, the sentiment is Negative. The current price of 8.89 is below the 20-day moving average (MA) of 9.14, below the 50-day MA of 9.28, and below the 200-day MA of 9.41, indicating a bearish trend. The MACD of -0.12 indicates Positive momentum. The RSI at 44.93 is Neutral, neither overbought nor oversold. The STOCH value of 22.75 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AHCO.
AdaptHealth Risk Analysis
AdaptHealth disclosed 46 risk factors in its most recent earnings report. AdaptHealth reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
AdaptHealth Peers Comparison
Overall Rating
UnderperformOutperform
Sector (51)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | 1.49B | 22.44 | 17.21% | ― | 40.98% | 34.80% | |
63 Neutral | $1.20B | 16.62 | 4.76% | ― | -0.61% | ― | |
61 Neutral | 2.92B | -13.73 | -18.82% | ― | 8.57% | -1154.64% | |
53 Neutral | 550.64M | -900.00 | -0.10% | ― | 5.08% | 99.38% | |
48 Neutral | 1.13B | -12.78 | -388.86% | ― | 17.22% | 1.65% | |
46 Neutral | 374.75M | -4.50 | -327.88% | ― | 5.94% | 25.16% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
Performance Comparison
AHCO
AdaptHealth
8.89
-2.34
-20.84%
UFPT
Ufp Technologies
193.54
-123.16
-38.89%
LIVN
LivaNova
53.44
0.90
1.71%
SENS
Senseonics Holdings
0.46
0.11
31.43%
ESTA
Establishment Labs Holdings
39.11
-4.16
-9.61%
BVS
Bioventus
6.66
-5.29
-44.27%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.