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AdaptHealth (AHCO)
NASDAQ:AHCO
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AdaptHealth
(NASDAQ:AHCO)
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Rating:56Neutral
Price Target:
$9.00
▼(-6.64% Downside)
Action:ReiteratedDate:02/25/26
The score is anchored by strong cash flow generation despite volatile and recently weaker reported financial performance (sharp TTM revenue decline and a return to net loss) and still-elevated leverage. Technicals are weak with the stock trading below key moving averages, while the latest earnings call guidance provides a partial offset via expected 2026 growth, margin improvement, and free cash flow supported by the capitated contract (despite near-term ramp headwinds).
Positive Factors
Cash generation
Sustained operating cash flow and positive free cash flow provide durable financial flexibility. Strong cash generation funds capex and onboarding costs for strategic contracts, supports ongoing debt reduction and credit stability, and cushions the business through revenue volatility while enabling investments that can improve long-term margins.
Capitated contract win
The large capitated agreement represents a structural shift to more predictable, recurring revenue and margin upside once scaled. Successful early onboarding and planned geographic scale create long-term revenue visibility, operational leverage, and differentiated competitive positioning versus fee-for-service peers as the contract ramps over multiple quarters.
Operational improvements & technology
Process standardization, digital tools and higher clinical adherence are durable improvements that lower unit costs, accelerate revenue recognition, and drive patient retention. These operational efficiencies strengthen margins and create stickier service economics, supporting scalable growth and competitive differentiation over the medium term.
Negative Factors
Revenue volatility & net loss
Large year-over-year revenue declines and a swing to net losses indicate unstable underlying demand and earnings power. Such volatility complicates multi-period planning, raises the risk of margin compression during downturns, and reduces predictability of free cash flow and returns, increasing execution risk for strategic investments.
Elevated leverage
Material leverage limits financial flexibility and raises interest and refinancing risk, especially if revenue or cash flow underperform guidance. While management is reducing debt, revolver draws and near-term capex for the capitated ramp increase short-term leverage sensitivity, constraining the company's ability to pursue opportunistic M&A or absorb shocks without raising costs.
Diabetes segment weakness & goodwill hit
Persistent weakness in the Diabetes segment and a large goodwill impairment signal structural demand and reimbursement challenges and potential overpayment in past acquisitions. This reduces future earnings power from that segment, tightens capital allocation choices, and raises the risk of additional impairments if recovery is slower than expected.
AdaptHealth (AHCO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.31B
Dividend YieldN/A
Average Volume (3M)1.10M
Price to Earnings (P/E)―
Beta (1Y)0.70
Revenue Growth-0.23%
EPS GrowthN/A
CountryUS
Employees10,500
SectorHealthcare
Sector Strength45
IndustryMedical - Devices
Share Statistics
EPS (TTM)0.23
Shares Outstanding135,914,810
10 Day Avg. Volume1,575,925
30 Day Avg. Volume1,096,202
Financial Highlights & Ratios
PEG Ratio0.10
Price to Book (P/B)0.89
Price to Sales (P/S)0.41
P/FCF Ratio6.14
Enterprise Value/Market Cap2.35
Enterprise Value/Revenue1.08
Enterprise Value/Gross Profit16.78
Enterprise Value/Ebitda6.35
Forecast
1Y Price Target
$12.38Price Target Upside28.42% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
EPS Forecast (FY)1
Revenue Forecast (FY)$3.47B
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 channels, primarily by leasing and selling durable medical equipment (DME) and respiratory devices. Key revenue streams include reimbursement from Medicare, Medicaid, and private insurance for the equipment and services provided to patients. The company also benefits from partnerships with healthcare providers and hospitals, facilitating patient transitions from inpatient to home care. Additionally, AdaptHealth engages in direct-to-consumer sales and offers ongoing support and supplies, which contribute to recurring revenue. The strategic expansion through acquisitions of other healthcare companies further enhances its market presence and revenue potential.
AdaptHealth Key Performance Indicators (KPIs)
Any
Revenue by Segment
Breaks down income from various business segments, indicating which parts of the company are generating the most revenue and where growth opportunities or challenges may exist.
Breaks down income from various business segments, indicating which parts of the company are generating the most revenue and where growth opportunities or challenges may exist.
Data provided by:
The Fly
The FlyAdaptHealth Earnings Call Summary
Earnings Call Date:Feb 24, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Positive
The call presents a largely positive outlook driven by operational improvements, record patient census in key segments, strong adjusted EBITDA and free cash flow performance, meaningful debt reduction, credit upgrades, and a major capitated contract with successful early onboarding and clear revenue/margin upside in 2026. Offsetting risks include reported revenue declines due to dispositions, weakness and a goodwill impairment in the Diabetes segment, a one-time legal settlement and accelerated onboarding costs that pressure near-term working capital and leverage, and anticipated negative free cash flow and margin drag in Q1 2026 as the capitated contract ramps. Overall, the positive operational momentum, cash generation, strategic contract win and upwardly revised 2026 guidance outweigh the near-term financial headwinds and one-time charges.Q4-2025 Updates
Positive Updates
Revenue Beat and Organic Growth
Full year 2025 net revenue of $3.245B and Q4 revenue of $846.3M both exceeded the midpoint of guidance; organic revenue growth was 1.7% for both the full year and Q4.
Record Patient Census and New Starts Across Key Segments
Sleep health patient census reached a record 1.73M (+4% YoY) with new starts ~130,600 (+~6% YoY). Respiratory health set new records for oxygen (~335k patients) and vents; oxygen and vent new starts rose ~4% and ~5%, respectively. Wellness at Home new starts for wheelchairs and beds rose ~6% and ~5%, with patient census records.
Adjusted EBITDA and Margin Strength
Full year adjusted EBITDA of $616.7M (19.0% margin) and Q4 adjusted EBITDA of $163.1M (19.3% margin). Excluding a $14.5M legal settlement and ~ $10M of accelerated capitated onboarding costs, adjusted EBITDA was in line with FY25 guidance.
Strong Free Cash Flow and Cash Generation
Full year free cash flow of $219.4M, meaningfully exceeding the top end of guidance; Q4 cash flow from operations was $183.2M and Q4 free cash flow was $79.3M.
Debt Reduction and Credit Upgrades
Debt reduced by $25M in Q4 and $250M year-to-date; net debt $1.694B and net leverage 2.75x. Interest expense decreased ~ $21M YoY and both S&P and Moody's upgraded the company’s credit ratings.
Largest Capitated Contract Win and Early Successful Onboarding
Closed the largest capitated contract in the industry; Dec go-live for 3 Mid-Atlantic states (~50k members) executed ahead of plan with a 98% contact center answer rate. Fully scaled contract expected to serve >10M patients with ~1,200 employees across 30 locations.
Operational Improvements and Technology Initiatives
Standardized operating model improved referral-to-setup in sleep to 9 days (from 23 a year ago); respiratory referral-to-setup improved by 3 days YoY. Clinical adherence ~10 percentage points above industry top quartile. AI pilots reduced processing time and PAP self-scheduling cut patient phone times; myAPP users grew to >327,000.
2026 Guidance: Growth and Margin Upside
2026 guidance: net revenue $3.44B–$3.51B (6%–8% growth), adjusted EBITDA $680M–$730M (midpoint ~20.3% margin, +~1 ppt vs 2025), and free cash flow $175M–$225M. Company expects capitated contract to contribute ~5%–6% revenue growth in 2026 and ramp to low-double-digit YoY growth by Q4.
Negative Updates
Reported Revenue Slightly Down on a Reported Basis
Full year 2025 net revenue decreased 0.5% YoY on a reported basis; Q4 net revenue decreased 1.2% YoY on a reported basis (though organic +1.7%). Dispositions reduced FY revenue by $92.4M.
Diabetes Health Weakness and Goodwill Impairment
Diabetes health net revenue was $158.5M in Q4, down 7.4% YoY. CGM new starts remained soft and a shift in payer mix lowered CGM reimbursement per patient. Company recorded a $128M noncash goodwill impairment related to the Diabetes Health segment.
Wellness at Home Revenue Decline from Dispositions
Wellness at Home net revenue declined 16.1% YoY in Q4, driven primarily by disposition of noncore assets sold during 2025.
One-Time Legal Settlement and Accelerated Onboarding Costs
Q4 and FY results included a $14.5M legal settlement (final settlement of a 2022 class action in North Carolina) and ~ $10M of accelerated costs to bring the new capitated arrangement live early; these items pressured working capital and leverage in the quarter.
Short-Term Leverage and Working Capital Pressure
Net leverage rose modestly to 2.75x from 2.68x at Q3-end, and unrestricted cash ended at $106.1M. Working capital was $16.5M, lower than normal due to the legal settlement and infrastructure spending.
Near-Term Cash Flow and Margin Drag from Capitated Ramp
Company expects Q1 2026 free cash flow to be negative $20M to $40M and adjusted EBITDA margin of ~16% in Q1 as infrastructure and pre-revenue costs are carried ahead of capitated revenue ramp. CapEx stepped up: Q4 CapEx $103.9M (12.3% of revenue).
Higher Run-Rate Spending and Revolver Draw
Drew $100M on the revolver to fund equipment acquisitions related to capitated contract support (acquisition cost highlighted of $47.6M). These near-term draws increase leverage until free cash flow ramps through 2026.
Segment-Specific Risks and Mixed Recovery Timelines
Diabetes new starts and CGM demand remain soft and management is holding expectations generally flat until investments in sales force and operations prove out; recovery is expected but timing is uncertain.
Company Guidance
AdaptHealth guided 2026 net revenue of $3.44–3.51 billion (6–8% growth vs. 2025, ~7% at the midpoint), adjusted EBITDA of $680–730 million (midpoint implying ~20.3% adjusted EBITDA margin, ~1 ppt improvement vs. 2025) and free cash flow of $175–225 million; management expects organic growth of 7.5–9.5% partially offset by ~1.5% net revenue compression from acquisitions/dispositions, with 5–6% of 2026 growth attributable to the new capitated agreement and 2.5–3.5% from the rest of the business. They forecast Q1 revenue +2–3% year‑over‑year, a Q1 adjusted EBITDA margin of ~16% (carrying upfront capitated costs), Q1 free cash flow of negative $20–40 million, and a quarter‑by‑quarter capitated ramp that adds “a few points” each quarter to reach low‑double‑digit growth by Q4; roughly one‑third of full‑year free cash flow is expected in the first half. CapEx was ~12.3% of revenue in Q4 and management indicated that run‑rate is broadly sustainable as they absorb infrastructure costs.AdaptHealth Financial Statement Overview
Summary
Cash generation is a key strength (TTM operating cash flow $601.8M; free cash flow $219.4M). However, operating results are unstable: TTM revenue fell 36.3% and the company swung to a net loss (-$72.9M) with gross margin compression, while leverage remains an overhang (debt-to-equity ~1.18 in TTM).Income Statement
Results are volatile. Revenue declined sharply in TTM (Trailing-Twelve-Months) (down 36.3%), and the company moved to a net loss (-$72.9M) after being profitable in 2024. Profitability is mixed: EBITDA margin in TTM (Trailing-Twelve-Months) remains solid (~22.8%) and EBIT margin improved versus 2024, but gross margin compressed meaningfully versus 2024 and net results have swung between profits (2021, 2022, 2024) and large losses (2020, 2023, TTM).44
Neutral
Balance Sheet
Leverage remains a key overhang, with debt running above equity (debt-to-equity ~1.08–1.57 historically, ~1.18 in TTM), though it has improved from the 2023 peak. Equity is sizable ($1.53B in TTM), providing some balance sheet support, but returns on equity are modest in profitable years and have been deeply negative in loss years, highlighting earnings instability against a leveraged capital structure.52
Neutral
Cash Flow
Cash generation is a relative strength. Operating cash flow was strong in TTM (Trailing-Twelve-Months) ($601.8M) and free cash flow remained healthy ($219.4M), with a large step-up in free cash flow growth versus the prior period. The main drawback is that cash conversion versus accounting earnings is inconsistent across years (and TTM shows a net loss despite positive free cash flow), suggesting earnings quality and working-capital/timing effects should be monitored.70
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 3.24B | 3.26B | 3.20B | 2.97B | 2.45B |
| Gross Profit | 568.56M | 681.09M | 681.77M | 417.43M | 445.61M |
| EBITDA | 503.64M | 628.02M | -171.09M | 630.76M | 544.21M |
| Net Income | -70.79M | 90.42M | -678.89M | 69.32M | 156.18M |
Balance Sheet | |||||
| Total Assets | 4.32B | 4.49B | 4.51B | 5.22B | 5.25B |
| Cash, Cash Equivalents and Short-Term Investments | 106.14M | 109.75M | 77.13M | 46.27M | 149.63M |
| Total Debt | 186.82M | 2.13B | 2.29B | 2.33B | 2.37B |
| Total Liabilities | 2.79B | 2.91B | 3.04B | 3.06B | 3.18B |
| Stockholders Equity | 1.52B | 1.57B | 1.46B | 2.15B | 2.06B |
Cash Flow | |||||
| Free Cash Flow | 219.38M | 235.78M | 143.20M | -17.56M | 72.37M |
| Operating Cash Flow | 601.77M | 541.84M | 480.67M | 373.87M | 275.68M |
| Investing Cash Flow | -303.19M | -310.27M | -357.28M | -411.17M | -1.82B |
| Financing Cash Flow | -302.19M | -198.95M | -92.53M | -66.05M | 1.60B |
AdaptHealth Technical Analysis
Negative
9.64
Price Trends
10.16
Negative
9.81
Negative
9.48
Positive
Market Momentum
-0.23
Positive
45.78
Neutral
39.55
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 9.64 is below the 20-day moving average (MA) of 10.04, below the 50-day MA of 10.16, and above the 200-day MA of 9.48, indicating a neutral trend. The MACD of -0.23 indicates Positive momentum. The RSI at 45.78 is Neutral, neither overbought nor oversold. The STOCH value of 39.55 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 47 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
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $1.58B | 23.28 | 17.82% | ― | 29.47% | 23.24% | |
61 Neutral | $1.41B | 30.45 | 6.60% | 2.02% | 4.69% | -51.57% | |
56 Neutral | $1.31B | -18.16 | -4.62% | ― | -0.23% | ― | |
56 Neutral | $1.59B | -90.49 | -1.90% | ― | 18.72% | 85.77% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
47 Neutral | $812.89M | -1.55 | -39.90% | ― | 4.99% | -7151.40% | |
45 Neutral | $1.72B | -8.22 | -97.88% | ― | 17.87% | -57.03% |
* Healthcare Sector Average
AHCO
AdaptHealth
9.64
-0.70
-6.77%
CNMD
Conmed
45.79
-11.29
-19.77%
IART
Integra Lifesciences
10.43
-11.48
-52.40%
UFPT
Ufp Technologies
204.30
-8.58
-4.03%
TNDM
Tandem Diabetes Care
25.23
5.74
29.45%
AXGN
AxoGen
30.65
12.03
64.61%
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.