PLYMOUTH MEETING, Pa.–(BUSINESS WIRE)–AdaptHealth Corp. (NASDAQ: AHCO), a national leader in providing patient-centric and technology-enabled chronic disease management solutions including home healthcare equipment, medical supplies to the home and related services in the United States, announced today financial results for the fourth quarter and full year ended December 31, 2020.
Highlights
- The Company closed the acquisition of AeroCare Holdings Inc. on February 1, 2021. Integration efforts are underway and progressing well. The Company expects to generate previously announced pre-tax annual run rate cost synergies of approximately $50 million.
- In the fourth quarter, the Company acquired several additional diabetes management businesses including Pinnacle Medical Solutions (October 1, 2020), New England Home Medical (November 30, 2020), and Diabetes Management and Supply (December 31, 2020).
- The Company acquired several additional Home Medical Equipment businesses in the fourth quarter of 2020 and the first quarter of 2021 including Allina Health Home Oxygen & Medical Equipment on February 22, 2021.
- In January 2021, the Company completed approximately $1.7 billion of financing transactions, including its issuance of $500 million unsecured senior notes, its equity offering with gross proceeds of approximately $280 million, and its refinancing of, and increase to, its existing senior secured credit facilities including a $700 million term loan A and a $250 million revolving credit facility.
Fourth Quarter Results
- Net revenue was $348.4 million, a 133% increase from the fourth quarter of 2019 and 23% higher than the third quarter of 2020.
- Net loss attributable to AdaptHealth Corp. was $31.0 million, or $0.47 per diluted share, compared to a net loss of $3.4 million, or $0.10 per diluted share, in the fourth quarter of 2019. The fourth quarter of 2020 was impacted by a $56.9 million ($0.72 per diluted share) pre-tax non-cash charge for the change in the estimated fair value of contingent consideration common shares issuable as part of the Business Combination (as described more fully below).
- Adjusted EBITDA less Patient Equipment Capex was $58.5 million compared to $21.8 million in the fourth quarter of 2019.
- Adjusted EBITDA was $79.4 million compared to $33.7 million in the fourth quarter of 2019.
- The Company’s fourth quarter results included income of $14.3 million from the recognition of amounts received in connection with the CARES Act provider relief fund.
Full Year Results
- Net revenue was $1.06 billion, a 99% increase from full year 2019.
- Net loss attributable to AdaptHealth Corp. was $64.5 million, or $1.23 per diluted share, compared to a net loss of $15.0 million, or $0.66 per diluted share, in full year 2019. The full year 2020 was impacted by a $98.7 million ($1.56 per diluted share) pre-tax non-cash charge for the change in the estimated fair value of contingent consideration common shares issuable as part of the Business Combination (as described more fully below).
- Adjusted EBITDA less Patient Equipment Capex was $142.5 million compared to $75.6 million in full year 2019.
- Adjusted EBITDA was $205.6 million compared to $123.0 million in full year 2019.
- The Company’s full year results included income of $14.3 million from the recognition of amounts received in connection with the CARES Act provider relief fund.
Increased Guidance
While it is difficult to predict the duration and impact of the COVID-19 crisis, based on current business and market trends, the Company is increasing its previously issued financial guidance for fiscal year 2021 as follows:
- Net revenue of $2.18 billion to $2.35 billion, up from prior guidance of $2.05 billion to $2.20 billion
- Adjusted EBITDA of $510 million to $550 million, up from prior guidance of $480 million to $515 million; and
- Adjusted EBITDA less Patient Equipment Capex to $320 million to $350 million, up from prior guidance of $300 million to $330 million.
CEO Commentary
Luke McGee, Co-CEO of AdaptHealth, commented, “We are very pleased with our 2020 performance, which we believe is a testament to our relentless focus on our patients and referral sources and our ability to drive growth through process improvements and technology solutions. In the fourth quarter, our diabetes business drove substantial growth as the result of high ordering patterns in December and our continued investment in accretive acquisitions. We are increasing guidance for 2021 as a result of these acquisitions as well as from our prospects for organic growth in 2021. We are benefiting not only from the underlying growth in the diabetes business in general, but also from our investments in our other chronic disease businesses such as obstructive sleep apnea. The enhanced scale of the combined AdaptHealth and AeroCare (serving nearly 3 million patients annually) positions us as a national leader in helping patients manage chronic diseases.”
Steve Griggs, Co-CEO of AdaptHealth, added, “Joining the AdaptHealth team and witnessing the collaboration between AdaptHealth and AeroCare employees has been incredibly rewarding. As a result of the strong cultural fit between both organizations, we feel we have already become one company. The AeroCare team has been welcomed with open arms and recognized for the complementary skills we’re able to bring to AdaptHealth. The transition has thus far been incredibly smooth and we are already hard at work to deliver the $50 million cost synergy target and enhance the organic growth of the combined company.”
Luke and Steve together commented, “One of the most exciting aspects of our integration is bringing together the proprietary patient care technology both organizations have been developing independently. We are combining the best features of each technology solution as part of our integration plans. Our technology enables interactive patient engagement, advances compliance and monitoring capabilities, lowers operating costs, and provides patients with greater care.”
Accounting for Contingent Consideration Common Shares Liability
Together with our independent auditors, we have reevaluated the accounting treatment of the previously disclosed contingent consideration common shares to which the former owners of AdaptHealth Holdings are entitled (the “Contingent Common Shares”) in connection with the Business Combination. Due to the fact that the issuance of the Contingent Common Shares would be accelerated on a change of control regardless of the transaction value, we have determined, consistent with recent SEC comments to other SPAC registrants, to present the Contingent Common Shares as liability-classified, not equity-classified as previously presented. Accordingly, the fair value of the Contingent Common Shares is reflected as a liability on the Company’s consolidated balance sheets at December 31, 2020 and 2019, and the non-cash change in the fair value each period is recognized in the Company’s consolidated statements of operations. In our 2020 Form 10-K we will recast our December 31, 2019 consolidated balance sheet and adjust our unaudited 2020 quarterly consolidated statements of operations to reflect such accounting. We will also update our unaudited pro forma financial information recently filed on Form 8-K with respect to the AeroCare acquisition, consistent with this treatment. When presenting diluted earnings (loss) per share for 2020 and 2019 periods in prior SEC filings, the Contingent Common Shares were included in the diluted share count in accordance with U.S. GAAP. The change in fair value each period is a non-cash charge and has no impact on historical reported revenues, operating income and adjusted EBITDA of the Company for any period.
About AdaptHealth Corp.
AdaptHealth is a national leader in providing patient-centric and technology enabled chronic disease management solutions including home healthcare equipment, medical supplies to the home and related services 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 (i) sleep therapy equipment, supplies and related services (including CPAP and bi PAP services) to individuals suffering from obstructive sleep apnea, (ii) medical devices and supplies to patients for the treatment of diabetes (including continuous glucose monitors and insulin pumps), (iii) home medical equipment (HME) to patients discharged from acute care and other facilities, (iv) oxygen and related chronic therapy services in the home, and (v) other HME medical devices and supplies on behalf of chronically ill patients with wound care, urological, incontinence, ostomy and nutritional supply needs. 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. AdaptHealth services nearly 3 million patients annually in all 50 states through its network of over 500 locations in 46 states. Learn more at www.adapthealth.com.
