AdaptHealth Corp. (Nasdaq: AHCO) reported flat second-quarter earnings as CEO Suzanne Foster said the national home medical equipment provider is “gaining momentum” as it moves forward on a number of its goals … and as the industry braces for the resumption of Medicare’s competitive bidding program.
AdaptHealth reported those second-quarter earnings on Aug. 5 for the second quarter ending June 30, 2025. Net revenue for the quarter was $800.4 million, compared to $806.0 million for the same period last year, a decrease of 0.7%.
“AdaptHealth’s momentum continues to build,” Foster said. “We delivered another quarter of solid results in the second quarter. We are driving revenue growth, underscored by today’s milestone announcement of a new capitated partnership with a major national health-care system. We are advancing multiple initiatives to boost operating efficiency, elevate the patient experience, and expand our profit margins. And we are making rapid progress reducing debt and fortifying our financial position. Step by step, we are executing on a focused plan to unlock the full value of our enterprise, guided by our dedication to providing exceptional service to the 4.2 million patients that depend on us.”
Foster also announced that AdaptHealth has “signed a definitive agreement to become the exclusive provider of home medical equipment and supplies for major national health-care systems and across the system’s broad network of hospitals and medical offices.”
The new partnership “features a capitation payment model that will cover the systems’ more than 10 million members across multiple states,” Foster added. “The contract is through a five-year term totaling more than $1 billion of revenue over the term of the contract at adjusted EBITDA margins that are projected to be in line with our enterprise margins.”
AdaptHealth has not yet identified the health-care systems in the agreement.
“Once ramped, this new arrangement will elevate capitated revenue to at least 10% of our total revenue, increasing our mix of recurring revenue,” Foster said. “This new partnership is a clear endorsement of our ability to deliver patient service excellence at scale from a leading managed care organization.”
Reporting on respiratory, diabetes, sleep apnea segments
Foster said AdaptHealth’s respiratory business “continued to accelerate” in the second quarter “as a result of the sales incentive-based compensation changes introduced earlier in the year and a streamlined order intake process that reduces the administrative burden on our referring providers.”
The company’s diabetes segment “delivered a third consecutive quarter of sequential improvement in new starts and a resupply retention rate that once again outperformed the comparable quarters of the past two years. This momentum under this momentum in underlying business trends, if sustained, would allow us to resume growth in diabetes health revenue possibly as early as the second half of this year, easing what has been a hindrance to enterprise growth.”
As for sleep apnea, Foster said AdaptHealth is working “to standardize scheduling practices and order intake, [which] are producing quicker setup times, which have already improved by a third from the prior quarter.
“We’ve given patients greater flexibility to choose the timing and format that best fits their setup needs by offering expanded appointment availability, same-day scheduling and offering in-person as well as virtual setups. As a result, sleep health new setups accelerated in Q2, as these efforts eclipse the dynamics that drove lighter new starts in Q1. In fact, Q2 new setups were the highest since the recall recovery in Q2 2023, with this strength continuing through July. Looking forward, the rollout of our standard operating model and the automation of intake, both of which are currently underway, will reduce order cycle time and further accelerate setup time with the goal of becoming the most reliable and convenient in the industry.”
Preparing for competitive bidding
Foster also discussed how AdaptHealth is working internally to optimize efficiencies. “We are prioritizing initiatives that will drive labor productivity, increase the capacity of our operating assets, expand our adjusted EBITDA margin and amplify returns on our invested capital,” she said. “We are well into rolling out a standard field operating model across our regions, which will establish a uniform approach for operating our business and delivering care.”
Strategies include regional centralization of patient order intake qualification and “scheduling functions and technology solutions that support capacity planning, productivity and patient service consistency.”
“Building on the foundation of our standard operating model, we are advancing a series of initiatives on our three year roadmap,” Foster added. “We are leveraging technology, including automation and AI [artificial intelligence] to streamline inbound and outbound call handling.”
While the Centers for Medicare & Medicaid Services (CMS) has yet to release the full timeline for its reintroduction of Medicare competitive bidding, Foster said, “Based on historical precedent, we believe it is likely that CMS will release the final rule in the third or fourth quarter of this year, and that bidding windows could open as early as 2026 with implementation beginning in 2027. CMS has also yet to release which specific product categories will be included in the bidding program. However, as anticipated, the proposed rule specifically references CGMs and medical supplies, including ostomy and urology as potential new additions.
“Additionally, the proposed bidding process appears nuanced and includes some notable methodological changes from prior rounds. With many details still unfolding, the situation remains fluid, and it remains too early to quantify any potential impact.”
She added that AdaptHealth is well positioned for competitive bidding’s potential new structure and policies.
“At a high level, the proposed rule seems to prioritize containing costs, and this could potentially cause some economic pressure on industry operators,” Foster acknowledged. “At the same time, the proposed rule also cites an intent to reduce the number of contracts awarded, suggesting that the winning suppliers have an opportunity to capture a greater portion of volume.
“We believe our scale better equips us to navigate both these dynamics. In the meantime, we’re deeply engaged in policy advocacy, working closely with our industry partners, and we are sharply focused on internal preparation. These efforts include a thorough evaluation of proposed rule implications across our four core segments, along with profitability and balance sheet enhancement initiatives I just outlined, which will strengthen our organization whatever the outcome of the bidding program.”
AdaptHealth, based in Conshohocken, Pennsylvania, has four business units: sleep health, respiratory health, diabetes health, and wellness at home.
