Full Press Release Details
ADAPTHEALTH CORP. ANNOUNCES SECOND
QUARTER 2020 FINANCIAL RESULTS
Meeting, PA - August 4, 2020 - AdaptHealth Corp. (NASDAQ: AHCO) ("AdaptHealth" or the "Company"),
a leading provider of home healthcare equipment, medical supplies to the home and related services in the United States, announced
today financial results for the three- and six-month periods ended June 30, 2020.
Second Quarter Results
Luke McGee, Chief Executive Officer of AdaptHealth, commented,
"Our strong year-to-date 2020 performance reflects the extraordinary hard work, resilience and dedication of our outstanding
AdaptHealth team and their support of our patients and healthcare partners. We are continuing to successfully deploy a scalable
growth model focused on organic sales, acquisitions, accretive capital deployment, and cash generation. The COVID-19 pandemic has
presented unique challenges, but we've been able to offset certain headwinds with new business opportunities and growth in
other product categories. More specifically, PAP new starts, orthotics and other business lines closely linked to discretionary
hospital and long-term care facility discharges were significantly down and our costs were higher in the second quarter of 2020.
Offsetting these negative trends, new respiratory starts increased, and our teams successfully focused on our resupply businesses.
Additionally, we were able to supply critical products needed to meet the emergency needs of non-traditional and new customers.
We generated approximately $28 million of business-to-business (B2B) revenues in the quarter and opened new channels and customers
which we expect to have future positive impacts. In the aggregate, the improvements in our resupply business and the B2B revenue
growth more than offset the weakness in our traditional businesses. While volumes in several of the impacted products have begun
to stabilize since the end of the second quarter of 2020, the Company does not expect volumes in those product categories to return
to pre-pandemic levels in 2020.
our home medical supplies business, generated net revenue of $33.0 million for the quarter and negative EBITDA of $3.6 million.
As previously disclosed, PCS is a turn-around situation and as part of our investment we expect $15 million in one-time
restructuring and operational losses in 2020. We are pleased with our progress in addressing and curing various issues at PCS in
the first half of the year and continue to believe PCS will be profitable in the fourth quarter of 2020.
"We are very excited about our July 1, 2020 acquisition
of Solara Medical Supplies (Solara). Solara is a large national distributor of continuous glucose monitors (CGM) as part of its
comprehensive suite of direct-to-patient diabetes supplies. The company maintains relationships with leading national manufacturers
and managed care plans and is registered as a pharmacy in all 50 states. Diabetes is among the most costly and pervasive chronic
diseases in the United States and the numbers of diagnosed cases continues to increase. We believe we will continue to see rapid
adoption of CGM technology which has the potential to provide patients with better outcomes and better quality of life.
"Taken together with our focus on patients with obstructive
sleep apnea, our recent acquisitions, which make us a national leader in distribution of CGMs and other diabetes supplies, add
to our expanding suite of products and will generate cross selling opportunities due to the co-morbidities. We believe these acquisitions
will further our goal to enhance care for our patients with chronic conditions and become a leading provider of connected health
solutions for care in the home."
2020 Outlook Increased
While it is impossible to predict the duration of the COVID-19
crisis or the full impact on the Company's business, based on current business and market trends (and taking into consideration
the recent acquisitions of Solara and ActivStyle on July 1, 2020), the Company is offering financial guidance for fiscal year 2020
of net revenue between $935 million to $983 million, Adjusted EBITDA of $169 million to $178 million, and Adjusted EBITDA less
Patient Equipment Capex of $120 million to $127 million. This outlook includes anticipated Adjusted EBITDA losses for PCS. The
Company's previous guidance excluded expected PCS losses of approximately $7 million.
Mr. McGee concluded, "I am very proud of our financial
performance so far this this year but even more proud of how our AdaptHealth employees have responded to this unprecedented crisis
by supporting our patients and healthcare partners. Our employees on the front line in patient-facing roles have continued to serve
with professionalism and courage. I'm also very proud of our company's role in delivering life-saving equipment to
our referral partners. "
Redemption of Public Warrants
The Company also announced today that it will redeem all of
its outstanding public warrants (the "Public Warrants") to purchase shares of the Company's Class A Common Stock,
par value $0.0001 per share (the "Common Stock"), that were issued under the Warrant Agreement , dated February 15,
2018 (the "Warrant Agreement"), by and between the Company and Continental Stock Transfer & Trust Company, as warrant
agent (the "Warrant Agent"), as part of the units sold in the Company's initial public offering (the "IPO"),
for a redemption price of $0.01 per Public Warrant (the "Redemption Price"), that remain outstanding at 5:00 p.m. New
York City time on September 2, 2020 (the "Redemption Date"). Warrants to purchase Common Stock that were issued under
the Warrant Agreement in a private placement simultaneously with the IPO and still held by the initial holders thereof or their
permitted transferees are not subject to this redemption.
Under the terms of the Warrant Agreement, the Company is entitled
to redeem all of the outstanding Public Warrants if the last sales price of the Common Stock is at least $18.00 per share on each
of twenty trading days within any thirty-day trading period ending on the third trading day prior to the date on which a notice
of redemption is given. At the direction of the Company, the Warrant Agent has delivered a notice of redemption to each of the
registered holders of the outstanding Public Warrants.
In addition, in accordance with the Warrant Agreement, the Company's
board of directors has elected to require that, upon delivery of the notice of redemption, all Public Warrants are to be exercised
only on a "cashless basis." Accordingly, holders may no longer exercise Public Warrants and receive Common Stock in
exchange for payment in cash of the $11.50 per warrant exercise price. Instead, a holder exercising a Public Warrant will be deemed
to pay the $11.50 per warrant exercise price by the surrender of 0.6144 of a share of Common Stock (such fraction determined as
described below) that such holder would have been entitled to receive upon a cash exercise of a Public Warrant. Accordingly, by
virtue of the cashless exercise of the Public Warrants, exercising warrant holders will receive 0.3856 of a share of Common Stock
for each Public Warrant surrendered for exercise. Any Public Warrants that remain unexercised at 5:00 p.m. New York City time on
the Redemption Date will be void and no longer exercisable, and the holders will have no rights with respect to those Public Warrants,
except to receive the Redemption Price (or as otherwise described in the redemption notice for holders who hold their Public Warrants
The number of shares of Common Stock that each exercising warrant
holder will receive by virtue of the cashless exercise (instead of paying the $11.50 per Public Warrant cash exercise price) was
calculated in accordance with the terms of the Warrant Agreement and is equal to the quotient obtained by dividing (x) the product
of the number of shares underlying the Public Warrants held by such warrant holder, multiplied by the difference between $18.7175,
the average last sale price of the Common Stock for the ten trading days ending on July 29, 2020, the third trading day prior to
the date of the redemption notice (the "Fair Market Value") and $11.50, by (y) the Fair Market Value. If any holder
of Public Warrants would, after taking into account all of such holder's Public Warrants exercised at one time, be entitled
to receive a fractional interest in a share of Common Stock, the number of shares the holder will be entitled to receive will be
rounded down to the nearest whole number of shares.
Questions concerning redemption and exercise of the Public Warrants
can be directed to Continental Stock Transfer & Trust Company, 1 State Street, 30th Floor, New York, New York 10004, Attention:
Compliance Department, telephone number (212) 509-4000.
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:
registration: Click Here
the live call, a replay will be available for six months on the Company's website, www.adapthealth.com under "Investor
About AdaptHealth Corp.
Corp. ("AdaptHealth") is a leading provider of 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) home medical equipment (HME) to patients discharged from acute care and other facilities, (iii)
oxygen and related chronic therapy services in the home, and (iv) other HME medical devices and supplies on behalf of chronically
ill patients with diabetes care, wound care, urological, 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 over approximately 1.7 million patients annually in all 50 states through its network of 251 locations in
40 states. Learn more at www.adapthealth.com.