Full Press Release Details
ADAPTHEALTH CORP. ANNOUNCES FOURTH
QUARTER AND FULL YEAR 2019 FINANCIAL RESULTS
Plymouth Meeting, PA - February 25, 2020 - AdaptHealth
Corp. (NASDAQ: AHCO) ("AdaptHealth" or the "Company"), the third largest provider of home medical equipment
("HME") 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 ("AdaptHealth Holdings") with the Company
(formerly DFB Healthcare Acquisitions Corp. ("DFB")) in November 2019.
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."
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
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.
Management will host a conference at 8:30
am ET today to discuss the results and business activities. Interested parties may participate in the call by dialing:
(877) 423-9820 (Domestic) or
(201) 493-6749 (International)
Webcast registration: Click Here
Following the live call, a replay will be available for six
months on the Company's website, www.adapthealth.com under "Investor Relations."
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.
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 the Company's acquisition pipeline. These statements are based on various assumptions
and on the current expectations of AdaptHealth management and are not predictions of actual performance.
These forward-looking statements are based on information
available to the Company as of the date they were made, and involve a number of risks and uncertainties which may cause them
to turn out to be wrong. Accordingly, forward-looking statements should not be relied upon as representing the
Company's views as of any subsequent date, and the Company does not undertake any obligation to update forward-looking
statements to reflect events or circumstances after the date they were made, whether as a result of new information, future
events or otherwise, except as may be required under applicable securities laws. As a result of a number of known and unknown
risks and uncertainties, the Company's actual results or performance may be materially different from those expressed
or implied by these forward- looking statements. These risks and uncertainties include the ability to identify, consummate
and integrate acquisitions, regulatory, competitive and other developments in the healthcare industry and other factors
described in the Company's public disclosures and filings with the SEC, including those described under "Risk
Factors" in its Form 8-K filed on November 14, 2019.
Condensed Consolidated Balance Sheets
| December 31, | ||||||||
| (in thousands, except share data) | 2019 | 2018 | ||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 76,878 | $ | 25,186 | ||||
| Accounts receivable, net | 78,619 | 53,017 | ||||||
| Inventory | 13,239 | 7,673 | ||||||
| Prepaid and other current assets | 12,679 | 4,915 | ||||||
| Total current assets | 181,415 | 90,791 | ||||||
| Equipment and other fixed assets, net | 63,559 | 61,601 | ||||||
| Goodwill | 266,791 | 202,436 | ||||||
| Other assets | 6,851 | 5,050 | ||||||
| Deferred tax asset | 28,418 | 9,079 | ||||||
| Total assets | $ | 547,034 | $ | 368,957 | ||||
| Liabilities and Stockholders' / Members' Equity (Deficit) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | 103,641 | 85,558 | ||||||
| Current portion of capital lease obligations | 19,750 | 20,814 | ||||||
| Current portion of long-term debt | 1,721 | 7,090 | ||||||
| Deferred revenue | 9,556 | 7,508 | ||||||
| Other liabilities | 15,514 | 14,708 | ||||||
| Total current liabilities | 150,182 | 135,678 | ||||||
| Long-term debt, less current portion | 395,112 | 127,095 | ||||||
| Capital lease obligations, less current portion | 233 | 172 | ||||||
| Other long-term liabilities | 30,756 | 3,244 | ||||||
| Total liabilities | 576,283 | 266,189 | ||||||
| Total Stockholders' / Members' Equity (Deficit) | (29,249 | ) | 102,768 | |||||
| Total Liabilities and Stockholders' / Members' Equity (Deficit) | $ | 547,034 | $ | 368,957 | ||||
| Number of issued and oustanding shares as of December 31, 2019: | ||||||||
| Class A Common Stock | 40,816,293 | |||||||
| Class B Common Stock | 31,563,798 |
Condensed Consolidated Statements
of Operations (Unaudited)
| Three Months Ended | Year Ended | |||||||||||||||
| (in thousands, except per share data) | December 31, | December 31, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net revenue | $ | 149,541 | $ | 108,653 | $ | 529,644 | $ | 345,278 | ||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of net revenue | 123,212 | 93,798 | 440,386 | 293,384 | ||||||||||||
| General and administrative expenses | 24,985 | 5,840 | 56,493 | 18,069 | ||||||||||||
| Depreciation, excluding patient equipment depreciation | 630 | 441 | 3,069 | 2,734 | ||||||||||||
| Total costs and expenses | 148,827 | 100,079 | 499,948 | 314,187 | ||||||||||||
| Operating income | 714 | 8,574 | 29,696 | 31,091 | ||||||||||||
| Interest expense | 7,653 | 2,253 | 39,304 | 7,453 | ||||||||||||
| Loss on extinguishment of debt, net | - | - | 2,121 | 1,399 | ||||||||||||
| (Loss) income before income taxes | (6,939 | ) | 6,321 | (11,729 | ) | 22,239 | ||||||||||
| Income tax expense (benefit) | (4,288 | ) | 2,421 | 1,156 | (2,098 | ) | ||||||||||
| Net (loss) income | (2,651 | ) | 3,900 | (12,885 | ) | 24,337 | ||||||||||
| Income attributable to noncontrolling interests | 775 | 396 | 2,111 | 1,077 | ||||||||||||
| Net (loss) income attributable to AdaptHealth Corp. | $ | (3,426 | ) | $ | 3,504 | $ | (14,996 | ) | $ | 23,260 | ||||||
| (Loss) income per common share: | ||||||||||||||||
| Basic and diluted | $ | (0.10 | ) | $ | 0.27 | $ | (0.66 | ) | $ | 1.95 | ||||||
| Weighted average shares outstanding for net (loss) income | ||||||||||||||||
| attributable to AdaptHealth Corp.: | ||||||||||||||||
| Basic and diluted | 32,726 | 12,770 | 22,557 | 11,900 |
Condensed Consolidated Statements
of Cash Flows (Unaudited)
| Three Months Ended | Year Ended | |||||||||||||||
| (in thousands) | December 31, | December 31, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net cash provided by operating activities | $ | 17,244 | $ | 25,280 | $ | 60,418 | $ | 68,427 | ||||||||
| Net cash used in investing activities | (22,471 | ) | (10,236 | ) | (84,870 | ) | (96,284 | ) | ||||||||
| Net cash provided by (used in) financing activities | 73,282 | (10,759 | ) | 76,144 | 48,769 | |||||||||||
| Net increase in cash and cash equivalents | 68,055 | 4,285 | 51,692 | 20,912 | ||||||||||||
| Cash and cash equivalents at beginning of period | 8,823 | 20,901 | 25,186 | 4,274 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 76,878 | $ | 25,186 | $ | 76,878 | $ | 25,186 |
Non-GAAP Financial Measures
This press release presents AdaptHealth's EBITDA, Adjusted
EBITDA and Adjusted EBITDA less Patient Equipment Capex for the three months and years ended December 31, 2019 and 2018.
AdaptHealth defines EBITDA as net income (loss) attributable
to AdaptHealth Corp., plus net income attributable to noncontrolling interests, interest expense (income), income tax expense (benefit),
AdaptHealth defines Adjusted EBITDA as EBITDA (as defined above),
plus loss on extinguishment of debt, equity based compensation
expense, transaction costs, severance, earnout liability activity, and other non recurring
AdaptHealth 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.
The following unaudited table presents the reconciliation of
net income (loss) attributable to AdaptHealth Corp., to EBITDA, Adjusted EBITDA and Adjusted EBITDA less Patient Equipment Capex
for the three months and years ended December 31, 2019 and 2018: