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Name | Symbol | Market | Type |
---|---|---|---|
AdaptHealth Corporation | NASDAQ:AHCOW | NASDAQ | Equity Warrant |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.50 | 0.0001 | 199,999.99 | 0 | 01:00:00 |
AdaptHealth Corp. (NASDAQ: AHCO; AHCOW) (the “Company”), the third largest provider of home medical equipment (“HME”) in the United States, today announced financial results for its subsidiary, AdaptHealth Holdings LLC (“AdaptHealth Holdings”), for the three and nine months ended September 30, 2019.
AdaptHealth Corp. reported the results of AdaptHealth Holdings without giving effect to the impact of the consummation of the Company’s acquisition of AdaptHealth Holdings on November 8, 2019 (the “Business Combination”), although results for the 2019 periods include certain expenses related to the transaction.
AdaptHealth Holdings’ Third Quarter 2019 Financial Highlights Compared to Three Months Ended September 30, 2018
Acquisitions Update
During the three months ended September 30, 2019, AdaptHealth Holdings consummated three HME acquisitions, and has consummated an additional three HME transactions since October 1, 2019. In the aggregate, AdaptHealth Holdings expects the completed HME transactions to generate annual net revenues of approximately $58 million.
CEO Commentary
Luke McGee, the Company’s Chief Executive Officer, commented, “We are very pleased with AdaptHealth Holdings’ year-to-date 2019 financial results, which included significant increases in revenue and Adjusted EBITDA that demonstrate the successful execution of our strategy to grow organically and through accretive acquisitions. The third quarter of 2019 represented the best quarter in our history in terms of Net revenues, Adjusted EBITDA and Adjusted EBITDA Less Patient Equipment Capex.
“Our team has been heavily focused on acquisition integration and I am confident these efforts will be fruitful in Q4’19 and 2020. We are affirming the Company’s previously reported expectation that Adjusted EBITDA and Adjusted EBITDA Less Patient Equipment Capex for the twelve months ended December 31, 2019 will approximate $75 million and $123 million, respectively. Our potential acquisition pipeline is more robust than it has been at any point in the last three years, and we are truly excited about executing on these opportunities.”
About AdaptHealth Corp.
AdaptHealth Corp. (formerly known as DFB Healthcare Acquisitions Corp.) acquired AdapthHealth Holdings LLC on November 8, 2019. AdaptHealth Holdings commenced operations in 2012 and is headquartered in Plymouth Meeting, PA. AdaptHealth Corp. offers a full suite of medical products for both rental and sale, with a focus on respiratory and/or mobility equipment, including CPAP sleep equipment, oxygen equipment, wheelchairs, walkers, and hospital beds. AdaptHealth Corp. has created a scalable, purpose-built, and centralized operating platform that optimizes client service and delivery, improves compliance, drives operational and financial efficiencies, and increases enterprise-wide profitability. AdaptHealth Corp. utilizes an extensive and highly diversified network of referral sources, including acute care hospitals, sleep labs, pulmonologists, skilled nursing facilities, and clinics; many of these referral relationships average 10+ years. AdaptHealth Corp. maintains an attractive payor mix, primarily comprised of commercial insurers, Medicare and Medicaid.
For more information about AdaptHealth Corp.’s products and services, please visit 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. These statements are based on various assumptions and on the current expectations of AdaptHealth Corp. 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 AdaptHealth Corp. These forward-looking statements are subject to a number of risks and uncertainties, including the outcome of judicial and administrative proceedings to which AdaptHealth Corp. may become a party or governmental investigations to which AdaptHealth Corp. may become subject that could interrupt or limit AdaptHealth Corp.’s operations, result in adverse judgments, settlements or fines and create negative publicity; changes in AdaptHealth Corp.’s clients’ preferences, prospects and the competitive conditions prevailing in the healthcare sector, 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 AdaptHealth Corp. presently knows or that AdaptHealth Corp. currently believes is immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect AdaptHealth Corp.’s expectations, plans or forecasts of future events and views as of the date of this press release. AdaptHealth anticipates that subsequent events and developments will cause AdaptHealth Corp.’s assessments to change. However, while AdaptHealth Corp. may elect to update these forward-looking statements at some point in the future, AdaptHealth Corp. specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing AdaptHealth Corp.’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.
ADAPTHEALTH HOLDINGS LLC AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(in thousands)
AssetsSeptember 30, 2019
December 31, 2018
Current assets: Cash and cash equivalents$
8,823
$
25,186
Accounts receivable, net
73,670
53,017
Inventory
14,234
7,673
Prepaid and other current assets
6,350
4,915
Total current assets
103,077
90,791
Equipment and other fixed assets, net
66,706
61,601
Goodwill
245,346
202,436
Other assets
5,893
5,050
Deferred tax asset
6,965
9,079
Total assets
$
427,987
$
368,957
Liabilities and Members’ Equity (Deficit) Current liabilities: Accounts payable and accrued expenses
$
90,456
$
85,558
Current portion of capital lease obligations
21,656
20,814
Current portion of long-term debt
8,894
7,090
Deferred revenue
9,097
7,508
Other liabilities
8,609
14,708
Total current liabilities
138,712
135,678
Long-term debt, less current portion
410,538
127,095
Capital lease obligations, less current portion
236
172
Other long-term liabilities
15,199
3,244
Total liabilities
564,685
266,189
Commitments and contingencies Members’ equity (deficit) Membership units
136,131
113,274
Controlling interest members’ deficit
(276,542
)
(13,371
)
Accumulated other comprehensive income850
— Total equity (deficit) attributable to AdaptHealth Holdings LLC
(139,561
)
99,903
Noncontrolling interest in subsidiaries
2,863
2,865
Total members' equity (deficit)
(136,698
)
102,768
Total liabilities and members’ equity (deficit)
$
427,987
$
368,957
ADAPTHEALTH HOLDINGS LLC AND SUBSIDIARIES
Consolidated Statements of Income (Loss) (Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
(in thousands)2019
2018
2019
2018
Revenue: Revenue, net of contractual allowances and discounts$
143,081
$
107,048
$
400,958
$
246,092
Provision for doubtful accounts(6,630)
(4,892)
(20,855)
(9,467)
Net revenue less provision for doubtful accounts136,451
102,156
380,103
236,625
Costs and expenses: Cost of net revenue114,797
86,315
317,174
199,586
General and administrative expenses12,090
4,825
31,508
12,229
Depreciation, excluding patient equipment depreciation840
1,038
2,439
2,293
Total costs and expenses127,727
92,178
351,121
214,108
Operating income8,724
9,978
28,982
22,517
Interest expense (includes loss of $2,922, gain of $363, loss of $12,359 and gain of $281, representing the change in fair value of interest rate swaps, respectively)10,756
2,108
31,651
5,200
Loss on extinguishment of debt, net — —2,121
1,399
(Loss) income before income taxes(2,032)
7,870
(4,790)
15,918
Income tax expense (benefit)1,027
(4,822)
5,444
(4,519)
Net (loss) income(3,059)
12,692
(10,234)
20,437
Net income attributable to noncontrolling interests627
296
1,336
681
Net (loss) income attributable to AdaptHealth Holdings LLC$
(3,686)
$
12,396
$
(11,570)
$
19,756
AdaptHealth Holdings operates as a single segment focused on the followingcore service lines. Net sales revenue: Sleep$
59,117
$
41,226
$
156,677
$
79,191
Respiratory1,397
1,267
4,121
3,529
Home Medical Equipment11,963
8,938
33,971
27,296
Other10,587
6,062
30,247
17,577
Total Net sales revenue$
83,064
$
57,493
$
225,016
$
127,593
Net revenue from fixed monthly equipment reimbursements: Sleep$
20,761
$
16,102
$
57,762
$
35,345
Respiratory19,646
19,246
60,085
47,040
Home Medical Equipment11,103
9,180
31,767
26,304
Other1,877
135
5,473
343
Total Net revenue from fixed monthly equipment reimbursements$
53,387
$
44,663
$
155,087
$
109,032
Total Net revenue Sleep$
79,878
$
57,328
$
214,439
$
114,536
Respiratory21,043
20,513
64,206
50,569
Home Medical Equipment23,066
18,118
65,738
53,600
Other12,464
6,197
35,720
17,920
Total Net revenue$
136,451
$
102,156
$
380,103
$
236,625
ADAPTHEALTH HOLDINGS LLC AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30,
(in thousands)2019
2018
Cash flows from operating activities: Net (loss) income$
(10,234
)
$
20,437
Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation
45,076
33,011
Equity-based compensation
5,806
570
Deferred income tax
2,115
(5,045
)
Change in fair value of interest rate swaps, net of reclassification adjustment12,141
(281
)
Provision for doubtful accounts20,855
9,467
Amortization of deferred financing costs
830
341
Write-off of deferred financing costs
2,121
1,219
Gain on debt extinguishment —
(800
)
Changes in operating assets and liabilities, net of effects from acquisitions: — — Accounts receivable(38,105
)
(11,290
)
Due from affiliates and related parties —701
Inventory
(2,388
)
1,641
Prepaid and other assets
(2,381
)
(4,866
)
Accounts payable and accrued expenses7,338
(1,958
)
Net cash provided by operating activities43,174
43,147
Cash flows from investing activities: Purchases of equipment and other fixed assets
(14,453
)
(7,885
)
Payments for business acquisitions, net of cash acquired(47,946
)
(78,163
)
Net cash used in investing activities(62,399
)
(86,048
)
Cash flows from financing activities: Proceeds from borrowings on long-term debt317,000
140,000
Payments on long-term debt
(156,062
)
(23,114
)
Proceeds from issuance of promissory note payable100,000
— Proceeds from issuance of Common Units
20,000
— Payments for equity issuance costs
(837
)
— Payments of deferred financing costs(9,028
)
(2,716
)
Payments on capital leases(28,659
)
(18,894
)
Borrowings on lines of credit28,500
24,750
Payments on lines of credit —
(59,218
)
Distributions to members(250,000
)
— Payments for redemption of Preferred Units(3,714
)
— Payment of contingent consideration(13,000
)
— Payments for debt prepayment penalties —(980
)
Distributions to noncontrolling interest(1,338
)
(300
)
Net cash provided by financing activities2,862
59,528
Net (decrease) increase in cash and cash equivalents
(16,363
)
16,627
Cash and cash equivalents at beginning of period
25,186
4,274
Cash and cash equivalents at end of period
$
8,823
$
20,901
Supplemental disclosures: Cash paid for interest
$
15,769
$
4,369
Cash paid for income taxes
$
492
$
405
Noncash investing and financing activities: — — Equipment acquired under capital lease obligations
$
29,565
$
19,001
Unpaid equipment and other fixed asset purchases at end of period
$
8,483
$
10,107
Seller note issued in connection with acquisition of Gould's Discount Medical, LLC
$
2,000
$
— Contingent purchase price in connection with acquisitions
$
6,425
$
15,250
Deferred purchase price in connection with acquisition of American Ancillaries, Inc.
$
1,500
$
— Convertible debt issued in connection with acquisition of Verus Healthcare, Inc.
$
—
$
16,846
Non-GAAP Financial Measures
This press release presents AdaptHealth Holdings LLC’s EBITDA, Adjusted EBITDA and Adjusted EBITDA less Patient Equipment Capex for the three and nine months ended September 30, 2019 and 2018. AdaptHealth Holdings 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 it is useful to investors, as a supplement to U.S. GAAP measures. Under AdaptHealth Holdings’ existing credit agreement, its ability to engage in activities such as incurring additional indebtedness and making investments is governed, in part, by its ability to satisfy tests based on EBITDA, Adjusted EBITDA and Adjusted EBITDA less Patient Equipment Capex.
AdaptHealth Holdings defines EBITDA as net income (loss) attributable to AdaptHealth Holdings LLC, plus net income (loss) attributable to noncontrolling interest, plus interest expense, income tax expense (benefit), depreciation and amortization and loss from discontinued operations, net of tax.
AdaptHealth Holdings defines Adjusted EBITDA as EBITDA (as defined above), plus loss on extinguishment from debt, equity‑based compensation, transaction costs, severance, and certain other non‑recurring expenses.
AdaptHealth Holdings 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.
AdaptHealth Holdings presents Adjusted EBITDA less Patient Equipment Capex because it believes this measure is useful to investors in evaluating AdaptHealth Holdings’ financial performance. AdaptHealth Holdings’ 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 oftentimes is not recovered after a patient’s use of the equipment terminates.
AdaptHealth Holdings uses the Adjusted EBITDA less Patient Equipment Capex metric internally in the following ways:
For purposes of this metric, patient equipment capital expenditures are 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. Both key business metrics have limitations as an analytical tool. Some of these limitations are:
Because of these limitations, EBITDA, Adjusted EBITDA and Adjusted EBITDA less Patient Equipment Capex should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP, and 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 AdaptHealth Holdings’ liquidity.
The following unaudited table presents the reconciliation of net income (loss) attributable to AdaptHealth Holdings Holdings LLC, to EBITDA, Adjusted EBITDA and Adjusted EBITDA less Patient Equipment Capex for the three and nine months ended September 30, 2019 and 2018:
Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands)
2019
2018
2019
2018
(Unaudited)
Net (loss) income attributable to AdaptHealth Holdings LLC................................................................
$
(3,686
)
$
12,396
$
(11,570
)
$
19,756
Income attributable to noncontrolling interest.............
627
296
1,336
681
Interest expense excluding change in fair value of interest rate swaps.........................................................
7,834
2,471
19,292
5,481
Interest expense (income) representing change in fair value of interest rate swaps.........................................
2,922
(363
)
12,359
(281
)
Income tax expense (benefit)..........................................
1,027
(4,822
)
5,444
(4,519
)
Depreciation.......................................................................
16,871
13,500
45,077
33,012
EBITDA.............................................................................
25,595
23,478
71,938
54,130
Loss on extinguishment of debt, net(a).........................
-
-
2,121
1,399
Equity‑based compensation expense(b)........................
400
313
5,806
571
Transaction costs(c)..........................................................
5,282
486
8,232
1,342
Severance(d).......................................................................
33
907
721
1,198
Non‑recurring expenses(e)..............................................
346
77
534
94
Adjusted EBITDA...........................................................
31,656
25,261
89,352
58,734
Less: Patient equipment capex(f)...................................
(12,941
)
(10,443
)
(35,589
)
(27,906
)
Adjusted EBITDA less Patient Equipment Capex...........................................................
$
18,715
$
14,818
$
53,763
$
30,828
(a)
Represents write off of deferred financing costs and prepayment penalty expense related to refinancing of debt offset by gain on debt extinguishment.
(b)
Represents amortization of equity‑based compensation to employees and expense resulting from accelerated vesting and modification of certain profit interests.
(c)
Represents transaction costs primarily related to acquisition growth, the 2019 Recapitalization, and costs related to the DFB merger.
(d)
Represents severance costs related to acquisition integration and internal AdaptHealth Holdings restructuring and workforce reduction activities.
(e)
Represents one‑time legal and consulting expenses, in addition to certain other non‑recurring expenses.
(f)
Represents patient equipment acquired during the respective period without regard to the manner in which the equipment was financed.
View source version on businesswire.com: https://www.businesswire.com/news/home/20191113005929/en/
AdaptHealth Corp. Gregg Holst Chief Financial Officer (484) 301-6599 gholst@adapthealth.com
Brittany Lett Vice President, Marketing (909) 915-4983 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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