PLYMOUTH MEETING, Pa.--(BUSINESS WIRE)--AdaptHealth Corp. (NASDAQ: AHCO), the third largest provider of home medical equipment in the United States, announced today financial results for the fourth quarter and full year ended December 31, 2019. Results for the 2019 periods included costs and expenses related to the closing of the previously announced business combination of AdaptHealth Holdings LLC with the Company in November 2019.
Fourth Quarter 2019
- Net revenue was $149.5 million, a 38% increase from the fourth quarter of 2018 and 10% higher than the third quarter of 2019.
- Net loss attributable to AdaptHealth Corp. was $3.4 million, which included $5.3 million of equity-based compensation and $7.8 million of transaction costs primarily related to the merger with DFB.
- Adjusted EBITDA less Patient Equipment Capex was $21.8 million, a 53% increase compared to the fourth quarter of 2018 and 17% higher than the third quarter of 2019.
- Adjusted EBITDA was $33.7 million, a 31% increase compared to the fourth quarter of 2018 and a 6% increase over the third quarter of 2019.
Full Year 2019
- Net revenue was $529.6 million, a 53% increase over 2018.
- Net loss attributable to AdaptHealth Corp. was $15.0 million, which included equity-based compensation of $11.1 million, transaction costs of $16.0 million, and non-cash interest expense of $11.4 million related to interest rate swaps. Net income attributable to AdaptHealth Corp. in 2018 included a $2.1 million income tax benefit relating to the reversal of a valuation allowance against deferred tax assets.
- Adjusted EBITDA less Patient Equipment Capex was $75.6 million, a 68% increase compared to 2018.
- Adjusted EBITDA was $123.0 million, 46% higher than 2018.
CEO Commentary
Luke McGee, Chief Executive Officer of AdaptHealth, commented, “we are very pleased with our 2019 performance, which we believe reflects our success in deploying a scalable growth model focused on organic sales, acquisitions, accretive capital deployment, margin expansion, and cash generation. We reported a record 2019 across key financial metrics, closed on a near record number of acquisitions, and generated strong organic top line growth. In the fourth quarter of 2019, we generated record net revenues, Adjusted EBITDA, and Adjusted EBITDA less Patient Equipment Capex driven in large part by ordering patterns, particularly on Positive Airway Pressure (PAP) resupply that are typically highest in the fourth quarter.”
Acquisitions Update
For the full year 2019, AdaptHealth completed 18 HME transactions that are expected to add annual net revenues of approximately $116 million, three of which were closed in the fourth quarter of 2019 and represent approximately $18 million in anticipated annual net revenue in 2020.
On January 2, 2020, AdaptHealth completed the previously announced acquisition of the home medical supplies business of McKesson Patient Care Solutions (PCS), which is expected to add net revenues of approximately $117 million in 2020. The PCS acquisition broadens AdaptHealth’s HME product portfolio, expands its addressable markets, and increases its potential patient base by adding urological and ostomy products. It also increases the Company’s exposure in areas such as wound care, breast pumps, incontinence supplies, and diabetic care. AdaptHealth believes it can leverage its existing re-supply platform to drive reorders at PCS. PCS is expected to breakeven during the fourth quarter of 2020.
On December 9, 2019, AdaptHealth announced the acquisition of the HME business of North Carolina-based Advanced Home Care (Advanced). This transaction, which will expand the Company’s currently underpenetrated presence in the Southeast, is expected to add approximately $66 million of HME revenue in calendar 2020, and is scheduled to close in the first quarter of 2020. Advanced is a well-run company that operates in AdaptHealth’s core business. AdaptHealth expects to migrate Advanced’s operations onto its fully integrated technology platform upon closing of the transaction and expects that Advanced will be immediately accretive to earnings.
In addition to the PCS and Advanced transactions, AdaptHealth is currently pursuing a pipeline of acquisition candidates and expects to acquire an incremental $100 million in annualized revenue during 2020.
2020 Outlook Increased
AdaptHealth has increased its outlook for 2020. AdaptHealth now expects to generate net revenue of $765 million to $782 million, Adjusted EBITDA of $155 million to $158 million, and Adjusted EBITDA less Patient Equipment Capex of $95 million to $97 million. This outlook reflects the acquisitions of Advanced and PCS but excludes anticipated first year PCS operating losses as well as severance and restructuring costs associated with the PCS acquisition totaling approximately $15 million.
About AdaptHealth Corp.
AdaptHealth is the third largest provider of home medical equipment in the United States. AdaptHealth provides a full suite of medical products and solutions designed to help patients manage chronic conditions in the home, adapt to life and thrive. Product and services offerings include sleep therapy equipment (CPAP and BiPAP machines and supplies), respiratory equipment (including oxygen, invasive and non-invasive ventilation), mobility equipment, wheelchairs, walkers, and hospital beds. AdaptHealth also provides custom bracing services, hospice focused HME services, wound therapy and nutritional HME services. The company is proud to partner with an extensive and highly diversified network of referral sources, including acute care hospitals, sleep labs, pulmonologists, skilled nursing facilities, and clinics. AdaptHealth services beneficiaries of Medicare, Medicaid and commercial insurance payors. Following the acquisition of PCS in January 2020, AdaptHealth services over 1.4 million patients annually in all 50 states through its network of 187 locations. Learn more at www.adapthealth.com.
