管理層發言
Good day, everyone, and welcome to today's AdaptHealth Second Quarter 2026 Earnings Release. Today's speaker will be Suzanne Foster, Chief Executive Officer of AdaptHealth; and Jason Clemens, Chief Financial Officer of AdaptHealth. Before we begin, I'd like to remind everyone that statements included in this conference call and in the press release issued today may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements include, but are not limited to, comments regarding financial results for 2026 and beyond. Actual results could differ materially from those projected in forward-looking statements. Because of a number of risk factors and uncertainties, which are discussed at length in the company's annual and quarterly SEC filings, AdaptHealth Corp. has no obligation to update the information provided on this call to reflect such subsequent events. Additionally, on this morning's call, the company will reference certain financial measures such as EBITDA, adjusted EBITDA, adjusted EBITDA margin and free cash flow, all of which are non-GAAP financial measures. You can find more information about these non-GAAP measures in the presentation materials accompanying today's call, which are posted on the company's website. This morning's call is being recorded, and a replay of the call will be available later today. I'm now pleased to introduce the Chief Executive Officer of AdaptHealth, Suzanne Foster.
Good morning, everyone, and thank you for joining our call today. I'm going to cover three topics this morning. First, we delivered 16% organic growth with record volume gains across the business. Second, we made significant progress sharpening our portfolio and focusing on the core business, announcing the sale of our diabetes business, exiting other noncore products within Wellness-at-Home and contributing our e-commerce business into a new joint venture to improve how we serve the direct-to-consumer market. And third, I'll speak to two near-term profitability challenges we're navigating: our West Coast capitated contract and a material price increase from one of our largest manufacturers. Starting with our financial results. Given the agreement we signed to divest our Diabetes Health business, I'll walk you through our results on a continuing operations basis, which excludes Diabetes Health included for prior year period comparisons. Revenue remains a bright spot. Second quarter net revenue from continuing operations was $740.3 million, up 12.7% versus the prior year quarter and 15.9% on an organic basis. Our West Coast capitated contract contributed 10.7 points of that organic growth with 5.2 points coming from our base business. Sleep Health net revenue was $386.5 million, up 15.5% versus the prior year. Respiratory Health net revenue was $194.4 million, up 14.1%. Wellness-at-Home net revenue was $159.4 million, up 4.9%. Total capitated revenue grew to $103.3 million in the quarter and now represents approximately 14% of our continuing operations net revenue. This is more than three times the prior year with our West Coast capitated contract driving nearly all of that increase. Second quarter adjusted EBITDA from continuing operations was $132 million, with an adjusted EBITDA margin of 17.8%, driven by elevated West Coast capitated contract costs, which I'll speak to later. Now turning to the work we have done on simplifying and focusing our business. Over the past two years, we have systematically reshaped AdaptHealth around our core sleep, respiratory and supporting home medical equipment businesses, the parts of our portfolio where we have the strongest value proposition and the clearest path to growth. In July, we took the most significant step yet in that effort. We signed a definitive agreement to sell our Diabetes Health business for $235 million, a move that we expect will ultimately improve our growth rate, enhance our margin profile and allow us to sidestep looming industry risks. We also took a further step in focusing our portfolio on the core by discontinuing proactive sales of certain product categories within our Wellness-at-Home segment. This action removes nonstrategic, low-growth and low-margin product lines from our portfolio. And last week, we signed an agreement to contribute the CPAP Shop, a direct-to-consumer e-commerce business we've built within our sleep segment into a newly created joint venture with a leading e-commerce competitor and a telehealth prescriber network. The JV will have an unrivaled set of capabilities to fulfill its strategic ambition to reach the vast undiagnosed OSA population through home sleep testing and a digitally enabled path from diagnosis to treatment. Our growth strategy is focused on improving our service levels in our core business, expanding our capitated relationships where it makes sense and growing the number of large health systems we serve. This quarter, we made progress on all three fronts. In May, we signed a new capitated agreement with Humana OneHome, successfully transitioning 478,000 new members in South Florida and Texas without disruption. Our capitated relationship with Humana now spans 33 states plus the District of Columbia and South Florida. We have a proven track record of successfully serving Humana patients under capitation over the past three years, and we're building on that experience as we take on this expansion. Our newly formed enterprise sales team exclusively focused on large health systems secured preferred provider agreements with several multi-hospital health systems. These customers recognize the clinical expertise we bring, the value of having our liaisons embedded in their systems to coordinate access to our services and care, and the operational excellence that shapes how their patients experience it. Now let me turn to the more difficult part of the quarter, starting with the challenges we are facing with our West Coast capitated agreement. Having spent the first half of this year executing the largest patient transition in the history of home medical equipment, we spent the second quarter working to stabilize that operation on the West Coast. Standing up a new geography this quickly—new buildings, new routes, new inventory, new people and a new customer relationship—has posed new challenges, some of which we did not fully anticipate, but which have become clearer as the contract fully scaled. Throughout, we refused to compromise patient care and have remained fully committed to serving patients, whatever it took. With the benefit of a full quarter of operating this contract, here is what we know. Order volumes are running higher than expected, primarily in sleep resupply and enteral products. The outsized sleep resupply volume largely reflects transition-related pent-up demand and should prove transitory, while enteral volumes will require further intervention. As we solve these two items, we believe gross margins will recover toward our original expectations. Second, there are inefficiencies in the inherited workflows, including the nonstandard use of urgent orders. These are contributing to unanticipated logistics costs downstream, which in turn have caused labor costs to remain elevated. We have met these elevated demands, but doing so at this level is not a sustainable model. We are working with our partner to align ordering practices with the original assumptions of the contract while rapidly introducing technology to streamline the workflows, shifting more of our fulfillment to drop ship rather than in-person delivery and rightsizing our fleet and labor accordingly. The combination of these items represents $40 million of expected impact on profitability relative to our prior projections for the second half of this year. We remain confident that with sustained work and additional time, the contract will be a strong contributor to our profitability. Our long-term profitability outlook for the West Coast contract has always assumed we'd be able to use the footprint we built to serve additional business beyond the current capitated membership. Currently, we are only able to serve our existing patients through our 40 new West Coast locations, and that will remain the case until the government-imposed DME moratorium put in place last February is lifted, and we can secure new PTANs, which are the Medicare billing numbers required to serve fee-for-service patients from these locations. Once that happens, we see substantial opportunity to serve patients who use our customers' health systems but are insured through other payers and to sell proactively to other customers located near or within our new footprint. That incremental fee-for-service revenue will help absorb the fixed cost infrastructure we've built out on the West Coast. To help offset the cost pressures I just described, we made the difficult decision in the second quarter to restructure our workforce, delivering $19 million in annualized savings while maintaining full operational delivery across every function. This required real sacrifice from our team who took on more so that we could continue serving patients without interruption. The other lever we're pulling on is technology, using it to fundamentally reengineer the patient journey from diagnosis to treatment, improving patient experience and accelerating cost efficiencies along the way. We are already seeing what a digitally enhanced patient experience looks like in practice. Our myAPP platform now connects nearly the entire patient journey. Let me walk you through it. It starts with a digital front door. Patients can enter our platform before they are even officially a patient. It's as easy as scanning a QR code. From there, AI-powered intake walks them through insurance setup. They receive real-time order status tracking, and they can instantly self-schedule a virtual or in-person path setup without a phone call, order supplies in the app and access live or AI-powered chat support. And this quarter, we added our newest feature, an AI-powered mask fitting tool, which converted 92% of in-app scans to completed orders in its first two weeks, with early signs that it has reduced mask refittings that delay therapy. These features and the ease of use are driving rapid adoption of myAPP, which now has 512,000 users, up 56% since the end of 2025 and an app store rating of 4.8 stars. This and similar work to reengineer the patient and provider experience share a common thread. By removing the human intermediary, it frees up our people to focus on higher value, higher touch work and in return supports our efforts to improve our cost basis. Addressing the key manufacturer price challenge I mentioned earlier, we were notified on June 30 by the manufacturer of their decision to terminate our contract and impose an immediate price increase effective July 1. As it stands, this results in a $30 million impact in the second half of the year. We are actively working with the manufacturer to secure improved pricing and terms. But at this point, we've reflected the full impact in our outlook. That brings me to guidance. Our underlying base business continues to grow and is performing in line with our expectations. However, between the portfolio actions we've taken, the challenges we currently have with our West Coast capitated contract as well as the manufacturer's price increase, we must reset our full year outlook. Let me close with how we're thinking about the road ahead. Everything we are doing is to enhance the important role we play within a critical part of the health care ecosystem upon which millions of patients depend. The portfolio actions we've completed position us as a more focused company built around sleep and respiratory, where we have the strongest value proposition. Our rapid growth demonstrates that health care providers see the clinical and economic value of the services we provide. And in addition, with all the realities facing our industry, we are well positioned to benefit from the industry's ongoing consolidation with the size and scale to take on significant volume. We acknowledge that growing this fast over a short period of time has stressed our cost structure. These near-term pains come with a silver lining. Our growth is pushing us to think differently, to leverage technology and innovate in ways we never thought possible. These innovations are benefiting patients and providers today and, over time, will lower our cost to serve. Ultimately, these growing pains will make us a stronger, more efficient company. And with that, let me turn it over to Jason to review the financials.
Thank you, Suzanne, and thanks to everyone for joining our call today. I'll cover our second quarter financial results, followed by a review of our balance sheet, capital allocation and outlook. As Suzanne noted, given our agreement to divest Diabetes Health, all figures I'll discuss are on a continuing operations basis, including prior period comparisons, unless otherwise noted. For the second quarter, net revenue of $740.3 million increased 12.6% versus the prior year quarter with organic growth of 15.9%. Second quarter adjusted EBITDA was $132.0 million versus $136.4 million for the prior year quarter. As Suzanne discussed, this reflects continued elevated costs associated with the West Coast capitated contract ramp. Second quarter adjusted EBITDA margin was 17.8%. Discontinued operations produced approximately $23 million of adjusted EBITDA, covering $14 million of corporate overhead expenses that remain in continuing operations. The West Coast capitated contract missed our expectations by $15 million, so we are adjusting for this run rate in full year guidance that I will cover later. Turning to the balance sheet and cash flows. We ended the quarter with a consolidated total leverage ratio of 3.06x. After quarter end, we triggered the $325 million delayed draw term loan secured as part of our April refinancing and used the proceeds to redeem our 6.125% senior notes due 2028. This action eliminated our highest cost tranche of debt and extended our overall maturity. We intend to prioritize repayment of our revolving credit facility over the remainder of the year and remain committed to our net leverage target of 2.5x. We intend to direct a significant portion of the proceeds from the Diabetes Health divestiture to further debt reduction. Regarding goodwill, the Diabetes Health divestiture required us to reallocate shared corporate costs previously carried by that segment across our remaining reporting segments and the resulting revision to Respiratory Health and Wellness-at-Home triggered a $144.2 million noncash goodwill impairment. Free cash flow was negative $20.9 million for the quarter, driven primarily by $166.2 million of capital expenditures to support the capitated contract, including approximately $25 million of one-time equipment and vehicle purchases. I'll note that until our Diabetes Health divestiture closes, cash flows from that previously reported segment will continue to be presented on a consolidated basis with the cash flows from continuing operations. Our capital allocation priorities remain unchanged: investing to accelerate organic growth, reducing our leverage and pursuing disciplined smaller tuck-in acquisitions. Turning to guidance. On a continuing operations basis, our full year 2026 net revenue projection is $2.85 billion to $2.89 billion, which excludes $630 million of the anticipated full year revenue from Diabetes Health that is moving into discontinued operations. At the midpoint, this represents an increase of roughly $15 million from our prior guidance, reflecting the net impact of second quarter revenue outperformance, the revenue contributed to the e-commerce JV that will no longer consolidate and the revenue disposed with the exit of certain noncore assets in Wellness-at-Home. On a continuing operations basis, our full year EBITDA guidance is $490 million to $520 million, and let me bridge that to our prior guidance of $680 million to $730 million. First, the impact of the Diabetes Health divestiture is $100 million, which includes approximately $40 million of the anticipated full year adjusted EBITDA moving with that segment into discontinued operations and an additional $60 million of corporate overhead that had previously been allocated to Diabetes Health but will remain with continuing operations. We expect roughly half of that stranded cost to be removed within 12 months of closing the deal. Second, $55 million of guide down relates to our revised full year 2026 expectations for our largest capitated contract, which includes a miss of $15 million versus our prior expectations for Q2 and $40 million of revised projections for the second half of 2026. We continue to view a margin of 20% as the right long-term target for this contract but reaching it will take continued work and additional time. We expect sequential improvement over the next several quarters, reaching run rate profitability next year. Third, as Suzanne mentioned, we recently received notification that a large supplier has increased prices effective July 1, which we anticipate will have a $30 million impact in the second half of 2026. Finally, we are reducing our second half projections by $15 million for other intentional actions we took to focus and strengthen our portfolio. As Suzanne described, we recently made the decision to wind down certain noncore wellness products. The company has already started the process of shutting down sales channels for these products, so revenue will quickly decrease. However, the cost of servicing our existing census will continue until we transition patients to other providers over the next few quarters. Stepping back from the current year financial expectations, we want to provide perspective on how to think about these areas beyond this year. We believe that we will eliminate roughly half of the stranded corporate overhead within 12 months of closing the Diabetes Health transaction. We expect to achieve our long-term profitability target for our West Coast capitated business next year. We expect to negotiate the recent notification by a large supplier and take actions to otherwise mitigate the impact. And finally, for Wellness-at-Home, we will reduce our labor and operating expenses as patients transition. For the full year 2026, we expect free cash flow of $80 million to $120 million, which, as noted, includes cash flow from our Diabetes Health segment. For the third quarter of 2026, we expect net revenue of $720 million to $740 million. We expect modest sequential growth to offset approximately $20 million of revenue coming out of the second quarter run rate following the JV and portfolio management actions. We expect an adjusted EBITDA margin of approximately 17.9%, and we expect free cash flow to be approximately $50 million. That brings us to the end of our prepared remarks. Operator, please open the call for questions.
分析師問答
We'll take our first question from Ben Hendrix with RBC Capital Markets. In the etes Health segment, for the third quarter of 2026, we expect net revenue of $720 million to $740 million. We expect modest sequential growth to offset approximately $20 million of revenue coming out of the second quarter run rate following the JV and portfolio management actions. We expect an adjusted EBITDA margin of approximately 17.9%, and we expect free cash flow to be approximately $50 million. That brings us to the end of our prepared remarks. Operator, please open the call for questions.
This is Michael Murray on for Ben. The revised guidance includes $30 million impact from the manufacturer price increase. I'm sorry if I missed this, but what segment did this impact? And given the magnitude, what levers do you have to offset this, whether through contract renegotiation, passing costs through to the payers or other operational actions? And over what time frame should we expect those offsets to materialize?
Sure. At this point, given we're in active negotiation, I prefer not to say which segment it is hitting, but I can talk about what we're doing now. Obviously, mid-year, we do not, as a company, have the opportunity to pass through price. We are hopeful that we'll be able to resolve this. But in the meantime, the actions we would have to take are things like looking at supplier mix and profitability of those products within the mix to help offset it. We have CPI-U coming. But this is kind of TBD right now with this situation until we really get through the negotiation, which we'll be able to update you at the end of this quarter.
Okay. And then just another quick one. The revised guidance also includes a $15 million impact from other portfolio actions. Can you walk us through what those entail? Are these additional divestitures, product line exits, restructuring of existing operations? And should we think of this as a one-time headwind or an ongoing drag?
Yes, this is Jason. You should think of this as a one-time headwind. And the reason for that is we have already started shutting down certain sales channels that produce new patient volumes and the related revenues that come with it. The way to think about this is as $1 of revenue comes out for these product lines, we drop off about 35%, which is the gross profit of that revenue. So significantly lower margins than the rest of our business from a cost-of-goods perspective. That work has already happened. However, we're still taking care of the patient census that we've got in the third quarter as we had in the second quarter. We're actively working to transition those patients to reputable and proper providers. And that will take us a little time. So we're going to continue to carry the labor and operating expense associated with taking care of those patients. We do believe we'll get through this over the next couple of quarters, which is why for out years '27 and beyond, this won't be a repeating expense.
We will move on now to Brian Tanquilut with Jefferies.
Suzanne, moves you're making. As I think about it, is there a strategy or direction here to shrink the business essentially? I get the idea of streamlining but balancing that with the deleveraging of the corporate overhead. Just walk us through how you and the Board are thinking about all these strategic moves and the direction that you want to take the company to eventually. What is the goal and what is the endpoint?
Yes. Thank you, Brian. Let me remind everyone that this company was built through a series of over 150 acquisitions. When we did the portfolio review a couple of years ago, what we found were a whole host of subscale products, channels, and businesses that were baked into our different segments, which was one of the reasons we ended up going the segment route to get our arms around what we were offering in the product portfolio. Coupled with those types of acquisitions, you can imagine the different workflows and different ways of working. Two years ago, we really set out on this path to say we need to simplify and focus on the portfolios where we have the biggest growth opportunity and highest profitability, which equates to the best value proposition. Through that portfolio management, we identified a series of moves we had to make, which we've executed in incontinence, custom rehab, and home infusion. These were all product areas where we were subscale and that would require additional investment if we wanted to bring them to be #1 or #2 in the market. This quarter is the completion of that strategy. All of these are good businesses—Diabetes is a great business, e-commerce is a strong asset, as are some of these urology and ostomy lines—but with looming threats such as competitive bidding and the need to invest to grow, we thought it would be better to shrink to our core and build from there. This disciplined portfolio pruning has been a journey that we're now at a point of completing. Now all of our additional dollars that we generate can be invested back into our Sleep and Respiratory business where it makes sense or in support of our home medical equipment business, but it has to be in service to our Sleep & Respiratory business where we serve either fee-for-service, capitated or, more recently, with a real focus on our enterprise health systems because we're trying to build density and proximity in the major markets. So yes, there is, to your point, a deliberate shrinking in order to improve the growth outlook and long-term EBITDA margins of the portfolio, which I believe will make us a stronger company. A couple of years ago, we believed technology and AI could improve our business, but the problem was nothing was standardized, so we had no processes to deploy that technology at scale. As we shrink down to a simplified, focused portfolio, we've been able to roll out technology and deploy AI much faster, and we think we can accelerate that under the current portfolio and structure.
Understand. And then maybe, Jason, just as I think about the West Coast contract, obviously there's some execution there in terms of trying to get the utilization to where it needs to be. But just curious, what exactly operationally needs to be done? And are there opportunities to maybe reprice given the higher-than-expected utilization? And then Suzanne, related to this, as we think about the Humana contract expansion, are there further opportunities there? How did that work given I think the other half of that contract was with a different provider—are you pulling business away from that provider or is Humana piecing that out?
Yes. I'm actually going to take both of those, and Jason can assist if I missed anything. Starting with our West Coast contract, there's two buckets of work: order volume and utilization, and inherited workflows and operational inefficiencies. We understand now, after operating this contract for about one and a half quarters, what is going on, and our relationship with our partner remains incredibly strong. If we can't fix some operational issues, I can't promise a renegotiation, but both companies recognize the need to serve those patients profitably. Order volume and utilization: we have to ensure volumes are appropriate. For example, when we transitioned patients, we sent letters to incumbent sleep resupply patients informing them of the new provider. That likely caused some patients who weren't adherent to re-engage, which produced a spike in demand that we believe is transitory and have seen decline since the quarter. Enteral volumes are another area that will require intervention. Second, there were messy inherited workflows we couldn't predict in diligence—urgent orders being the most significant. Providers sometimes mark orders urgent when they are not, and we took those at face value, which increased downstream logistics and labor costs. We're focused on correcting ordering practices with our partner, introducing technology to streamline workflows, shifting more fulfillment to drop ship rather than in-person delivery and rightsizing fleet and labor. Those two areas—volume/utilization and workflow—are the primary items. Once controlled, the contract will improve materially. Regarding Humana, the South Florida and Texas business was an area Humana decided to re-solicit. We did not take it from another provider. Humana RFP'ed it, we won it, and we transitioned 478,000 members into our operations. Florida was a new geography for us, but with our history with Humana, this is effectively a tuck-in. We know how to operate these agreements. In total, we have about 10 capitated contracts, with Humana and the West Coast being the largest. Over the next four to five quarters, I am confident we will make our West Coast operations both strong and financially sustainable in partnership with our customer.
We will move on now to Pito Chickering with Deutsche Bank.
Just following up on that line of questioning on the capitated contract. Can you split out the $55 million between the increase from sleep demand versus increased actual demand versus logistics? And does this change your view around capitated contracts in general versus the simplicity of fee-for-service? Might you pivot to being primarily fee-for-service at a lower cost rather than underwriting these capitated agreements which have inherent risk?
I'll start and turn it over to Jason for the split out. Pito, I enjoy this topic. My view on capitation has not changed. While I wish we had a different first six months in understanding the transition, capitation has strategic value: it gets us into a footprint, gives us majority access to patients, and ordering patterns come to Adapt, which creates a halo effect as we pile up exclusive deals. We haven't been able to capitalize on the halo effect in the West Coast because of the DME moratorium. We believed we would first secure the capitated membership operations, then serve the 10% to 20% non-capitated patients within those health systems, and then add sales to capture additional accounts that the footprint could service. The moratorium has delayed that. We hope the moratorium expires on August 24, but we're acting as though it may extend until we know otherwise. I believe a mix of capitation and fee-for-service is the right long-term model; capitation will not be the majority but is a meaningful part of our portfolio. Now I'll turn it over to Jason for the split.
On the split, it's roughly two-thirds volume-driven—those patient volumes Suzanne discussed—and the remainder is labor. In terms of our outlook, we have planned modest sequential improvement from Q2 of about $1 million a quarter into Q3 and then into Q4. We're comfortable with the changes Suzanne mentioned and the impacts those will drive.
One last thing I forgot to mention: in a capitated arrangement, those accounts don't require us to fund the sales force as we would in fee-for-service. You still have liaisons and clinical staff, but there are long-term savings from not having a full salesforce expense. You also have reduced administrative costs because capitation simplifies prior authorization, billing and collections. Those are additional non-visible benefits of capitation. I don't want to be disingenuous—this account has work to fix the cost basis—but for all the reasons we've discussed and the ongoing savings I mentioned, I continue to believe a portion of capitated deals in our portfolio makes strategic sense.
We will move on now to Richard Close with Canaccord Genuity.
Just maybe back on capitated and the halo impact. Remind us what your target margin expectation is for capitated agreements like this? And is that dependent on getting the halo effect, or is the halo effect separate from that target margin?
We've always said our capitated target is enterprise margins of 20%, which does not include any halo effect. The halo effect is upside beyond that target.
We will move on now to Kevin Caliendo with UBS.
My questions are on the contract and the idea that a supplier contract gets terminated or pricing changed on June 30. How shocking is it that a company can do this? More specifically, what was the magnitude of the price increase—was it, for example, 5% or 30%—and was there any visibility going in that this was even a risk to happen?
I would agree with you that it is unusual and unfortunate. We typically have ongoing discussions with suppliers about volumes, supply, and recalls, but this particular notice on June 30 surprised us. We are in active discussions with the manufacturer. The price increase notified to us on June 30 resulted in an immediate percentage increase effective July 1. Given we're negotiating, I prefer not to disclose the exact percentage publicly right now. Where we are in the quarter and having to report today, we made the decision that as we sit today, there is no contract, so anything we order today is under those new price terms. We felt it would be disingenuous not to call out that risk. I sincerely hope for a different outcome when I speak with you next.
We'll move on now to Yujin Park with Baird.
I wanted to touch on the cybersecurity incident. Can you explain more about what exactly happened? Any disruptions to date and expected cost to remediate and how you treated that cost—was it adjusted or included in adjusted results—and next steps?
We were notified that a threat actor had obtained some data. We have closed that out. We believe we've resolved the matter and moved on. There is no lingering risk and no further exposure. It is behind us now. I'll let Jason speak to any financial implications.
The settlement expenses to close out the matter are included in our nonrecurring expenses adjusting to EBITDA.
It appears we have concluded our Q&A. I'd be happy to return the call to our host for any closing comments.
I just want to thank everyone. I recognize there were a lot of moving pieces this quarter, but I do hope you can see that the underlying business and the strategic moves we are making are setting us up for a successful future. We understand we have work to do to improve the cost basis, and that's what we're focused on next. Thanks for joining our call.
Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.