08-05-2025
AdaptHealth Corp (AHCO) Q1 2025 Earnings Call Highlights: Navigating Challenges with Strategic ...
The company reduced its full-year revenue expectations by $40 million and adjusted EBITDA expectations by $5 million due to the disposition of certain incontinence assets.
Free cash flow was negative, and certain cash collections anticipated in the first quarter were pushed into the second quarter.
Net revenue for the first quarter declined 1.8% compared to the prior year quarter, partly due to one less business day.
AdaptHealth Corp ( NASDAQ:AHCO ) has a broad geographic footprint with over 660 locations, positioning it well to capture market share and lead the transformation of the home health industry.
The company is on track to achieve its free cash flow guidance for the full year, with a significant improvement from negative $38.9 million in the prior year quarter to negative $0.1 million.
AdaptHealth Corp ( NASDAQ:AHCO ) reduced its debt balance by $25 million in Q1, contributing to a total debt repayment of $195 million over the last five quarters.
The Diabetes Health segment showed signs of recovery with sequential improvement in new starts and the best resupply attrition rate in two years.
First quarter revenue exceeded the midpoint of guidance by $13.1 million, driven by strong performance in the Respiratory Health and Diabetes Health segments.
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Q & A Highlights
Q: Can you provide additional color on the improvements in the Diabetes business, particularly regarding growth in pumps and CGM? Also, is the guidance change only due to the incontinence asset sale? A: The guidance change is exclusively for the disposal of certain incontinence assets. Regarding diabetes, we saw positive movement in our pump business, showing growth over the first quarter of 2024. In CGMs, we experienced a second consecutive quarter of sequential growth in new starts, indicating a turnaround in the diabetes segment. - Jason Clemens, CFO
Q: Regarding new starts in Sleep Health, is this a market issue or a market share issue? Are you losing share, and how do you plan to address it? A: Starts were slightly off, but it's not due to external factors. In certain geographies, we need to improve our setup speed and operations. We have detailed plans with our Commercial and operations teams to address these gaps, and we remain confident in our full-year guidance. - Jason Clemens, CFO
Q: Can you clarify the impact of tariffs on your fiscal 2026 outlook, given recent developments? A: We are feeling better about our tariff exposure than we did previously. Many manufacturers received clarifications on their Nairobi classification, which may reduce our potential impact. We are not in a position to change our $10 million potential impact estimate for fiscal '26 yet, but the outlook is more positive. - Jason Clemens, CFO
Q: There was a step-up in CapEx this quarter. Is this related to tariffs or increased demand? A: The increase in CapEx is due to outperformance in Respiratory Health, driven by increased sales during a heavy flu season. This is unrelated to tariffs and is a result of patient census growth in respiratory conditions. - Jason Clemens, CFO
Q: Can you discuss the progress and future expectations for the One Adapt strategy? A: One Adapt focuses on leveraging our scale from past acquisitions to deliver operational efficiency and brand unity. We aim to simplify our entity structure and enhance our commercial team's reach to maximize patient access. This strategy is expected to drive growth in the back half of 2025 and into 2026. - Suzanne Foster, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
