AdaptHealth (Nasdaq: AHCO) is focusing on strengthening its presence in the sleep, respiratory, and diabetes markets.
The home medical equipment (HME) company is also focused on shedding some non-core assets, AdaptHealth executives said during the company’s Q2 earnings call Tuesday.
“We are evaluating non-core assets, rationalizing our footprint, and we are paying down debt,” CEO Suzanne Foster said during the call. “All these efforts are focused on increasing our free cash flow yield.”
To that end, the company announced that it recently signed an agreement to sell certain Complex Rehab Technology assets to National Seating & Mobility, a North American seating and wheeled mobility provider.
“For AdaptHealth, these products represented a small amount of revenue from individual acquisitions over the years, but in aggregate represent about a point of enterprise revenue,” Chief Financial Officer Jason Clemens said during the call.
AdaptHealth is headquartered in Pennsylvania and specializes in HME and in-home care solutions across the U.S.
The divestment, in combination with investments in sales forces, IT, and clinical and operational talent will allow AdaptHealth to continue to grow in its core markets, Foster said.
“We are building a strategy for long-term sustainable growth, one that positions ourselves for increased clinical and payer relevance,” she said.
As for the segments, sleep revenue increased by 6.5% to $322.4 million in Q2 2024, with strong new starts and a growing resupply census. And with growth driven by onboarding new Humana patients, respiratory revenue remained on target.
For the diabetes segment, Q2 revenue was $151.2 million, which was down $17.7 million compared to the prior year. However, new product launches and market adjustments are expected to boost performance in the second half, Clemens said.
He added that AdaptHealth will continue to reevaluate products that do not fit its strategic roadmap and do not drive ancillary volumes.
