AdaptHealth Corp. (AHCO) Misses Q2 EPS by 11c, Revenues Beat; Raises FY20 Net Revenue Guidance Above Consensus

AdaptHealth Corp. (NASDAQ: AHCO) reported Q2 EPS of $0.08, $0.11 worse than the analyst estimate of $0.19. Revenue for the quarter came in at $232.1 million versus the consensus estimate of $196.28 million.

Highlights

• AdaptHealth recorded record revenue and profitability during the second quarter of 2020 aided by its ability to supply critically needed equipment and medical supplies to referral partners during the COVID-19 pandemic.
• On July 1, 2020, the Company closed the acquisitions of Solara Medical Supplies and ActivStyle. These acquisitions bolster the Company’s recurring resupply business and expand AdaptHealth’s presence in the fast-growing continuous glucose monitoring business.
• In July 2020, the Company completed $1.2 billion of financing transactions, consisting of $134 million in net proceeds from a primary equity issuance, $225 million from a PIPE issuance, $343 million in net proceeds from an unsecured senior note issuance and a $450 million senior bank facility refinancing, resulting in significant liquidity to advance the Company’s strategic priorities. As a result of these transactions, the Company funded the July acquisitions and has significant cash on hand, a debt structure balanced between secured bank debt and unsecured bonds, and a net leverage ratio under 3X EBITDA.

Second Quarter Results

• Net revenue was $232.1 million, an 87% increase from the second quarter of 2019 and 21% higher than the first quarter of 2020; Patient Care Solutions (PCS), acquired in January 2020, generated net revenue of $33.0 million. The Company also recorded $28.4 million of net revenue to referral partners and healthcare facilities in support of their urgent needs for ventilator and respiratory equipment for COVID-19 patients.
• Net income attributable to AdaptHealth Corp. was $4.0 million, or $0.08 per diluted share, compared to a net loss of $2.1 million, or $0.10 per diluted share, in the second quarter of 2019.
• Adjusted EBITDA less Patient Equipment Capex was $30.6 million compared to $18.1 million in the second quarter of 2019. Excluding PCS, which incurred a quarterly loss of $3.6 million, Adjusted EBITDA less Patient Equipment Capex was $34.2 million, an 89% increase compared to the second quarter of 2019.
• Adjusted EBITDA was $42.6 million compared to $29.5 million in the second quarter of 2019. Excluding PCS, which incurred a quarterly loss of $3.6 million, Adjusted EBITDA was $46.2 million, a 57% increase compared to the second quarter of 2019.

GUIDANCE:

AdaptHealth Corp. sees FY2020 revenue of $935-983 million, versus the consensus of $888.77 million.

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."

For earnings history and earnings-related data on AdaptHealth Corp. (AHCO) click here.

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