AdaptHealth 2025 Q1 Earnings Misses Targets as Net Income Worsens by 448%

AdaptHealth (AHCO) reported its fiscal 2025 Q1 earnings on May 06th, 2025. The company missed Wall Street's revenue expectations, posting a 1.8% decline year-over-year. AdaptHealth also adjusted its financial guidance for fiscal 2025, reflecting asset dispositions with net revenue expected between $3.18 billion and $3.32 billion, missing analyst estimates at the midpoint. Adjusted EBITDA is forecasted between $665 million and $705 million, aligning with expectations. The company anticipates free cash flow between $180 million and $220 million, unchanged from previous forecasts.

Revenue

AdaptHealth's total revenue fell by 1.8% in Q1 2025, reaching $777.88 million compared to $792.50 million in the same quarter last year. The Sleep segment contributed $316.35 million, while Respiratory accounted for $165.48 million. The Diabetes segment showed signs of improvement, generating $138.84 million, and HME brought in $157.21 million. Overall, total net revenue stood at $777.88 million.

Earnings/Net Income

In Q1 2025, AdaptHealth's losses widened to $0.05 per share, a significant increase from the $0.02 per share loss in Q1 2024. The company's net loss expanded to $-6.08 million, a 448.2% increase from the previous year's $-1.11 million loss. This indicates a concerning trend in EPS performance.

Price Action

The stock price of AdaptHealth edged down 0.67% during the latest trading day, climbed 5.73% over the most recent full trading week, and tumbled 14.33% month-to-date.

Post-Earnings Price Action Review

Over the past five years, the strategy of purchasing AdaptHealth shares after a quarter with a revenue drop and holding them for 30 days has yielded a 10.65% return, significantly underperforming the benchmark by 72.47%. The strategy's compound annual growth rate stood at 2.07%, with a maximum drawdown of -9.83% and a Sharpe ratio of 0.25, which indicates moderate risk and return characteristics. Despite this historical underperformance, investors may weigh the potential for future gains against the inherent risks, considering the company's current financial position and market dynamics.

CEO Commentary

"Amid elevated uncertainty in the external environment, we at AdaptHealth have stayed the course, with a relentless focus on improving our business and providing exceptional service to the 4.2 million patients that depend on us," said Suzanne Foster, Chief Executive Officer of AdaptHealth. The company delivered solid results while making progress on its financial position through additional debt reduction. For the second consecutive quarter, the Diabetes Health segment showed signs of improvement. Foster expressed optimism about leveraging geographic reach, operational scale, and patient service excellence to capture market share and drive consistent organic growth across all segments.

Guidance

The Company is updating its financial guidance for fiscal year 2025 to reflect the disposition of certain incontinence assets, projecting net revenue between $3.18 billion and $3.32 billion, adjusted EBITDA between $665 million and $705 million, and free cash flow between $180 million and $220 million, with no changes to the free cash flow estimate.

Additional News

AdaptHealth has been active in strategic moves post-March 31, 2025, finalizing the sale of certain incontinence assets in its Wellness at Home segment. Additionally, the company signed an agreement to sell specific infusion assets, with the transaction expected to close in Q2 2025. These asset disposals are aimed at streamlining operations and optimizing the company's portfolio. Furthermore, AdaptHealth is focused on strengthening its financial position, reducing debt, and aligning its resources to support growth opportunities across its core business lines. These actions reflect a strategic shift towards enhancing operational efficiency and expanding market presence, despite challenges in the healthcare industry.