AdaptHealth (Nasdaq: AHCO) closed out 2024 on a strong note and is bullish on its growth trajectory moving forward, CEO Suzanne Foster said during the company’s Q4 earnings call on Feb. 25.
The Plymouth Meeting, Pennsylvania-based AdaptHealth provides home medical equipment (HME), medical supplies and related services across much of the United States, serving millions of patients annually.
For the full-year 2024, AdaptHealth’s net revenue totaled about $3.26 billion, a roughly 1.9% increase compared to the $3.20 billion the company recorded during the prior year. Growth in the company’s sleep health and respiratory health segments offset declines that occurred in diabetes health, Foster said.
“In December, our Q4 2024 attrition rate was the lowest we have seen in two years, and we exceeded our Q4 2024 diabetes resupply revenue forecast, albeit off of our reduced expectations,” she said during the earnings call.
Among its current priorities, AdaptHealth is working to rebuild trust with referral sources, Foster said.
“One quarter does not make a trend, but we are cautiously optimistic that diabetes will become less of a drag on our overall organic growth rate over time,” she said. “We were encouraged to see a sequential increase in new diabetes patients during Q4 2024, which contrasts with the sequential contraction we saw in the prior-year quarter.”
AdaptHealth also appointed a new leadership team for the diabetes segment and integrated diabetes resupply into its sleep resupply operations to help carry over best practices, Foster said.
Another focus has been using AI and automation to improve efficiency and patient experience.
“In October, we introduced a self-pay feature in our mobile application called MyApp, and following through on an initiative I mentioned last quarter, in December, we launched a CPAP self-scheduling feature,” Foster said. “Our self-scheduling feature eliminates the need for patients to interact with the customer service representative to schedule a CPAP setup. These new features provide additional convenience and simplicity.”
Foster also said that she sees opportunities in capitated payment models, noting that AdaptHealth recently extended a multi-year agreement with Humana.
“Since last quarter, we have signed additional capitated arrangements,” she said. “In capitated models, a provider receives a fixed amount per patient from a payer for a specified period, regardless of how many services the patient uses.
“In signing the contract extension, both parties have said that things are going quite well, and we’d like to continue the relationship over multiple years,” she continued.
AdaptHealth reduced its debt by $170 million in 2024, including $50 million in Q4.
“At year-end 2024, our net leverage ratio stood at 2.8 times,” CFO Jason Clemens said during the call.
The company has also exited some non-strategic product lines, selling some custom rehab and incontinence assets, with plans to divest additional non-core assets in 2025, Clemens added.
“We expect these divestitures to be accretive to our adjusted EBITDA margin and to generate proceeds for further debt reduction,” Foster said.
For 2025, AdaptHealth projected revenue between $3.22 billion and $3.36 billion.
“We expect 2025 to be somewhat of a transition year for growth,” Clemens said. “We are executing our five areas of focus to strengthen our foundation and are confident that we’re on a path to accelerated growth in 2026 and beyond.”
More on AdaptHealth’s financial performance
For the fourth quarter of 2024, AdaptHealth saw net revenue of about $856.6 million, a slight decrease compared to the prior year’s Q4, when the company’s net revenue totaled $858.2 million.
In terms of its overall payer mix, private insurers make up about 62.7% of its business, followed by government payers (26.3%) and patients as payers (11%).
AdaptHealth’s largest business segment is its sleep health division, which accounts for roughly 41% of the company’s model. Diabetes health, respiratory health and the now divested “Wellness at Home” segment each make up 19% to 20% of AdaptHealth’s business mix.
