Q4 2025 AdaptHealth Corp Earnings Call

February 24, 2026

Speaker #2: Please stand by. Your meeting is about to begin. Good day, everyone, and welcome to today's AdaptHealth 4th Quarter 2025 earnings release. Today's speakers will be Suzanne Foster, Chief Executive Officer of AdaptHealth, and Jason Clemens, Chief Financial Officer of AdaptHealth.

Speaker #2: Before we begin, I would like to remind everyone that statements included in this conference call and in the press release issued today may constitute forward-looking statements within the meaning of private securities litigation reform act.

Speaker #2: These statements include but are not limited to comments regarding financial results for 2025 and beyond. Actual results could differ materially from those projected in forward-looking statements.

Operator: These statements include, but are not limited to, comments regarding financial results for 2025 and beyond. Actual results could differ materially from those projected in forward-looking statements because of a number of risk factors and uncertainties, which are discussed at length in the company's annual and quarterly SEC filings. AdaptHealth Corp. has no obligation to update the information provided on this call to reflect such subsequent events. Additionally, on this morning's call, the company will reference certain financial measures such as EBITDA, adjusted EBITDA, adjusted EBITDA margin, and free cash flow, all of which are non-GAAP financial measures. You can find more information about these non-GAAP measures in the presentation materials accompanying today's call, which are posted on the company's website. This morning's call is being recorded, and a replay of the call will be available later today.

Speaker #2: Because of a number of risk factors and uncertainties which are discussed at length in the company's annual and quarterly SEC filings, AdaptHealth Corp. has no obligation to update the information provided on this call to reflect such subsequent events.

Speaker #2: Additionally, on this morning's call, the company will reference certain financial measures such as EBITDA, adjusted EBITDA, adjusted EBITDA margin, and free cash flow, all of which are non-GAAP financial measures.

Speaker #2: You can find more information about these non-GAAP measures in the presentation materials accompanying today's call, which are posted on the company's website. This morning's call is being recorded, and a replay of the call will be available later today.

Speaker #2: I am now pleased to introduce the Chief Executive Officer of AdaptHealth, Suzanne Foster. Thank you. Good morning, everyone, and welcome to the call. The 4th Quarter of 2025 capped a tremendous year of transition for us.

Operator: I am now pleased to introduce the Chief Executive Officer of AdaptHealth, Suzanne Foster.

Suzanne Foster: Thank you. Good morning, everyone. Welcome to the call. The Q4 of 2025 capped a tremendous year of transition for us. Over the course of 2025, we implemented a new operating model that drove standardization and process maturity across our enterprise. We closed the largest capitated contract in the history of the industry. We honed our portfolio by disposing of non-core assets, using those proceeds and our strong free cash flow to pay down debt and strengthen our balance sheet. The work we completed last year not only positions us for accelerated growth and improved financial performance in 2026 and beyond, but is essential to achieving our aspiration to become the most trusted and reliable partner in home medical equipment and services.

Speaker #2: Over the course of 2025, we implemented a new operating model that drove standardization and process maturity across our enterprise. We closed the largest capitated contract in the history of the industry, and we honed our portfolio by disposing of non-core assets using those proceeds in our strong free cash flow to pay down debt and strengthen our balance sheet.

Speaker #2: The work we completed last year not only positions us for accelerated growth and improved financial performance in 2026 and beyond, but is essential to achieving our aspiration to become the most trusted and reliable partner in home medical equipment and services.

Speaker #2: In the 4th Quarter, we continued that momentum. With broad-based patient census growth and strong revenue performance, along with meaningful operational improvements and commercial progress, let me walk you through the details.

Suzanne Foster: In Q4, we continued that momentum with broad-based patient census growth and strong revenue performance, along with meaningful operational improvements and commercial progress. Let me walk you through the details. Starting with the financial results, full-year revenue of $3.245 billion and Q4 revenue of $846.3 million both exceeded the midpoint of our guidance range. Organic revenue growth, which does not include changes in revenue from divestitures or acquisitions, was 1.7% for both the full year and Q4. Underlying this revenue performance, we set patient census records in Sleep Health, Respiratory Health, and Wellness at Home, and a retention record in Diabetes Health. In Sleep Health, new starts were up about 6% year-over-year and just a few hundred shy of the record set in Q1 2023 during the post-Philips recall demand snapback.

Speaker #2: Starting with the financial results, full-year revenue of $3.245 billion and Q4 revenue of $846.3 million both exceeded the midpoint of our guidance range. Organic revenue growth, which does not include changes in revenue from divestitures or acquisitions, was 1.7% for both the full year and Q4.

Speaker #2: Underlying this revenue performance, we set patient census records in sleep health, respiratory health, and wellness at home, and a retention record in diabetes health.

Speaker #2: In sleep health, new starts were up about 6% year over year, and just a few hundred shy of the record set in Q1 2023 during the post-Phillips recall demand snapback.

Speaker #2: Sleep health patient census grew 4% year over year and set another new record. In respiratory health, oxygen, and vent new starts were up about 4% and 5% respectively, and patient census for both product lines hit new all-time records.

Suzanne Foster: Sleep Health patient census grew 4% year-over-year and set another new record. In Respiratory Health, oxygen and vent new starts were up about 4% and 5%, respectively, and patient census for both product lines hit new all-time records, vents for the third consecutive quarter. In Wellness at Home, new starts for wheelchairs and beds were about 6 and 5% year-over-year, respectively, with patient census for both hitting all-time records. In Diabetes Health, patient retention was better than we have ever experienced, driven by the decision we made last year to integrate Diabetes resupply into our Sleep resupply operations. Diabetes patient census was flat year-over-year as the improved retention rate offset slower new starts.

Speaker #2: Vents for the third consecutive quarter. In wellness at home, new starts for wheelchairs and beds were about 6% and 5% year over year, respectively, with patient census for both hitting all-time records.

Speaker #2: And in diabetes health, patient retention was better than we have ever experienced. Driven by the decision we made last year to integrate diabetes resupply into our sleep resupply operations.

Speaker #2: Diabetes patient census was flat year over year, as the improved retention rate offsets slower new starts. Turning to profitability, adjusted EBITDA was $616.7 million for the full year, and $163.1 million for Q4.

Suzanne Foster: Turning to profitability, adjusted EBITDA was $616.7 million for the full year and $163.1 million for Q4. Both periods included a $14.5 million legal settlement and about $10 million of accelerated costs to bring our new capitated arrangement live in December ahead of schedule and to ensure an on-time go-live for the next phase, scheduled for Q1. Excluding these two items, adjusted EBITDA was in line with our full year 2025 guidance as we continued to demonstrate discipline on labor and operating expenses. The underlying earnings power of our business remains intact, and we are maintaining the 2026 guidance previewed on our Q3 earnings call. We continue to make progress on our balance sheet. During the quarter, we reduced our debt balance by another $25 million, bringing the year-to-date total to $250 million.

Speaker #2: Both periods included a $14.5 million legal settlement and about $10 million of accelerated cost to bring our new capitated arrangement live in December, ahead of schedule, and to ensure an on-time go-live for the next phase scheduled for Q1.

Speaker #2: Excluding these two items, adjusted EBITDA was in line with our full-year 2025 guidance, as we continue to demonstrate discipline on labor and operating expenses.

Speaker #2: The underlying earnings power of our business remains intact, and we are maintaining the 2026 guidance previewed on our Q3 earnings call. We continue to make progress on our balance sheet.

Speaker #2: During the quarter, we reduced our debt balance by another $25 million, bringing the year-to-date total to $250 million. And S&P and Moody's both upgraded our credit ratings, reflecting our focus on debt reduction and our strong free cash flow, which was $219.4 million for the full year.

Suzanne Foster: S&P and Moody's both upgraded our credit ratings, reflecting our focus on debt reduction and our strong free cash flow, which was $219.4 million for the full year. Let me take you behind these financial results to the operational progress that is beginning to show up in our numbers. The patient census growth I highlighted previously reflects our continued focus on rapid service delivery and clinical outcomes that drive physician referrals and patient retention. Central to that focus is the standard operating model implemented in Q3, which realigns our organizational structure and standardized workflows across the company. As part of that transformation, we centralized order intake in sleep in Q3, and we extended that to vents in Q4. This change is contributing to improved setup times and order conversion rates.

Speaker #2: Let me take you behind these financial results to the operational progress that is beginning to show up in our numbers. The patient census growth I highlighted previously reflects our continued focus on rapid service delivery and clinical outcomes that drive physician referrals and patient retention.

Speaker #2: Central to that focus is the standard operating model implemented in Q3, which realigned our organizational structure and standardized workflows across the company. As part of that transformation, we centralized order intake in sleep in Q3, and we extended that to vents in Q4.

Speaker #2: This change is contributing to improved setup times and order conversion rates. In sleep, referral-to-setup improved to 9 days, down from 10 days in Q3 and from 23 days a year ago.

Suzanne Foster: In sleep, referral to set up improved to 9 days, down from 10 days in Q3 and from 23 days a year ago. In respiratory, referral to set up improved by 3 days year-over-year for both oxygen and vents. We also operationalized new CMS documentation requirements for vents, requirements we believe could be challenging for smaller competitors and a tailwind for our vent share in 2026. We also continue to produce industry-leading clinical outcomes. For example, in sleep, adherence continues to be 10 percentage points above the industry top quartile. We are deploying technology to further enhance service delivery. An AI pilot for sleep order intake significantly reduced processing time, and our conversational AI for PAP self-scheduling meaningfully reduced patient phone time. Given the success of both pilots, we plan to roll them out to additional regions in 2026.

Speaker #2: In respiratory, referral-to-setup improved by 3 days, year over year, for both oxygen and vents. We also operationalized new CMS documentation requirements for vents requirements we believe could be challenging for smaller competitors and a tailwind for our vent share in 2026.

Speaker #2: We also continue to produce industry-leading clinical outcomes. For example, in sleep, adherence continues to be 10 percentage points above the industry top quartile. We are deploying technology to further enhance service delivery.

Speaker #2: An AI pilot for sleep order intake significantly reduced processing time, and our conversational AI for PAP self-scheduling meaningfully reduced patient phone time. Given the success of both pilots, we plan to roll them out to additional regions in 2026.

Speaker #2: We are also advancing our digital patient engagement capabilities with the self-scheduling feature we introduced in earlier 2025, helping to more than double my app users to over 327,000 at year-end.

Suzanne Foster: We are also advancing our digital patient engagement capabilities with the self-scheduling feature we introduced in earlier 2025, helping to more than double myAPP users to over 327,000 at year-end. Another element of our operational transformation, the centralized patient services contact center, introduced in Q3, proved critical to successfully onboarding the Mid-Atlantic cohort of patients for our new capitated contract, achieving 98% answer rates. That success is early proof of something that will matter enormously over the coming year, our ability to execute complex, large-scale transitions. Our new capitated contract is a massive undertaking, the largest service transition in the HME industry's history. To put that in context, when fully operational, we'll be serving over 10 million patients nationwide, with approximately 1,200 dedicated employees across 30 locations.

Speaker #2: Another element of our operational transformation, the centralized patient services contact center introduced in Q3, proved to be critical to successfully onboarding the Mid-Atlantic cohort of patients for our new capitated contract.

Speaker #2: Achieving 98% answer rates is early proof of something that will matter enormously over the coming year: our ability to execute complex, large-scale transitions.

Speaker #2: Our new capitated contract is a massive undertaking, the largest service transition in the HME industry's history. To put that in context, when fully operational, we'll be serving over 10 million patients nationwide with approximately 1,200 dedicated employees across 30 locations.

Speaker #2: We went live with the three Mid-Atlantic states in December, covering approximately 50,000 members. This was earlier than planned, and the transition has been remarkably smooth.

Suzanne Foster: We went live with the three Mid-Atlantic states in December, covering approximately 50,000 members. This was earlier than planned, and the transition has been remarkably smooth, thanks to seven months of preparation by our team and exceptional collaboration with both the incumbent provider and our customer. As I mentioned earlier, we have also been investing in the infrastructure and staffing required for the upcoming start dates. The preparation, collaboration, and forward investment give us confidence in our ability to onboard the remaining patients on schedule in the first half of 2026, while maintaining continuity of care as they transition between providers. It also gives us confidence in our ability to deliver on the contract's performance requirements, metrics like speed to serve, responsiveness, and patient satisfaction.

Speaker #2: Thanks to seven months of preparation by our team, and exceptional collaboration with both the incumbent provider and our customer. As I mentioned earlier, we have also been investing in the infrastructure and staffing required for the upcoming start dates.

Speaker #2: The preparation, collaboration, and forward investment give us confidence in our ability to onboard the remaining patients on schedule in the first half of 2026.

Speaker #2: While maintaining continuity of care, as they transition between providers. It also gives us confidence in our ability to deliver on the contract's performance requirements.

Speaker #2: Metrics like speed to serve, responsiveness, and patient satisfaction. We know we can meet these requirements because they essentially mirror what we've been delivering under the Humana capitated arrangement, which has demonstrated we can execute this model at scale.

Suzanne Foster: We know we can meet these requirements because they essentially mirror what we've been delivering under the Humana capitated arrangement, which has demonstrated we can execute this model at scale. Turning to our commercial progress. We continued to strengthen our sales organization in Q4. We deepened sales leadership across the organization and standardized daily management routines, giving our teams aligned data, clear structure, and shared accountability. These are the building blocks of sales force maturity. We continue to focus on building our capitated pipeline. Several years of demonstrated performance under our Humana arrangement, combined with the scale of the contract we won last year, have established us as a proven partner for large capitated arrangements. We believe our operational capacity, technology infrastructure, and focus on service excellence uniquely positions us to help payers and integrated delivery networks align incentives and keep patients healthy at the lowest sustainable cost.

Speaker #2: Turning to our commercial progress, we continue to strengthen our sales organization in the fourth quarter. We deepened sales leadership across the organization and standardized daily management routines.

Speaker #2: Giving our teams aligned data, clear structure, and shared accountability. These are the building blocks of Salesforce maturity. We continue to focus on building our capitated pipeline, several years of demonstrated performance under our Humana arrangement, combined with the scale of the contract we won last year, have established us as a proven partner for large capitated arrangements.

Speaker #2: We believe our operational capacity technology infrastructure and focus on service excellence uniquely positions us to help payers and integrated delivery networks align incentives and keep patients healthy at the lowest sustainable cost.

Speaker #2: On the regulatory front, we received a favorable outcome from CMS on the upcoming round of competitive bidding, with our core sleep and respiratory products excluded from the next round.

Suzanne Foster: On the regulatory front, we received a favorable outcome from CMS on the upcoming round of competitive bidding, with our core sleep and respiratory products excluded from the next round, providing stability and clarity in our longer-term outlook. On the business development front, we closed the acquisition of a Hawaii-based HME provider, expanding our footprint to our 48th state. The deal provides the infrastructure needed to support our capitated contracts in the state and establishes a beachhead for winning other business there. We also completed one divestiture in Q4, exiting a small remaining infusion asset in our Wellness at Home segment, as part of our ongoing effort to sharpen our strategic focus and redeploy capital into our core businesses. Our acquisition pipeline remains active, and we continue to target home medical equipment providers that expand our footprint and increase patient success.

Speaker #2: Providing stability and clarity in our longer-term outlook. On the business development front, we closed the acquisition of a Hawaii-based HME provider, expanding our footprint to our 48th state.

Speaker #2: The deal provides the infrastructure needed to support our capitated contract in the state, and establishes a beachhead for winning other business there. We also completed one divestiture in the fourth quarter.

Speaker #2: Exiting a small remaining infusion asset in our Wellness at Home segment, as part of our ongoing effort to sharpen our strategic focus and redeploy capital into our core businesses.

Speaker #2: Our acquisition pipeline remains active, and we continue to target home medical equipment providers that expand our footprint and increase patient success. Patient access. Excuse me.

Suzanne Foster: Patient access, excuse me. In summary, as we enter 2026, we believe our house is in the best condition it has ever been. Our operational foundation is stronger, our portfolio is more focused, our balance sheet is healthier, our patient census is growing, and our capitated contract is ramping. The work of 2025 was hard but necessary, and we are confident it has positioned us to deliver on our commitments to patients, partners, and shareholders. We look forward to showing you what we can do. With that, I'll pass the call over to Jason to review our financials.

Speaker #2: In summary, as we enter 2026, we believe our house is in the best condition it has ever been. Our operational foundation is stronger, our portfolio is more focused, our balance sheet is healthier, our patient census is growing, and our capitated contract is ramping.

Speaker #2: The work of 2025 was hard, but necessary, and we are confident it has positioned us to deliver on our commitments to patients, partners, and shareholders.

Speaker #2: We look forward to showing you what we can do. And with that, I'll pass the call over to Jason to review our financials.

Speaker #1: Thank you, Suzanne. And thanks to everyone for joining our call today. I'll cover our full year and fourth quarter 2025 results, then review our balance sheet and capital allocation, before finishing with our 2026 guidance.

Jason Clemens: Thank you, Suzanne, and thanks to everyone for joining our call today. I'll cover our full year and Q4 2025 results, then review our balance sheet and capital allocation before finishing with our 2026 guidance. For full year 2025, net revenue of $3.245 billion decreased 0.5% versus the prior year on a reported basis. Organic revenue growth was $56.9 million, or 1.7% over prior year. Full year revenue increased by $19.5 million because of acquisitions, and decreased by $92.4 million because of dispositions. The dispositions were primarily attributable to the 3 businesses we sold within our Wellness at Home segment during 2025.

Speaker #1: For full year 2025, net revenue was $3.245 billion, a decrease of 0.5% versus the prior year on a reported basis. Organic revenue growth was $56.9 million, or 1.7% over the prior year.

Speaker #1: Full year revenue increased by 19.5 million, because of acquisitions and decreased by 92.4 million because of dispositions. The dispositions were primarily attributable to the three businesses we sold within our wellness at home segment during 2025.

Speaker #1: For the fourth quarter, net revenue of $846.3 million decreased 1.2% versus the prior year quarter. But increased 1.7% on an organic basis. Consistent with our full year rate, and was impacted by the disposition actions noted a moment ago.

Jason Clemens: For Q4, net revenue of $846.3 million decreased 1.2% versus the prior year quarter, but increased 1.7% on an organic basis, consistent with our full year rate, and was impacted by the disposition actions noted a moment ago. Sleep Health's net revenue was $372.3 million, up 4.4% versus the prior year. New starts were approximately 130,600, up about 6% year-over-year, in just a few hundred shy of the all-time record set in Q1, 2023. Sleep Health patient census grew 4% year-over-year to a new record of 1.73 million patients. Respiratory Health net revenue was $178.2 million, up 7.8% versus the prior year.

Speaker #1: Sleep Health net revenue was $372.3 million, up 4.4% versus the prior year. New starts were approximately 130,600, up about 6% year over year, and just a few hundred shy of the all-time record set in Q1 2023.

Speaker #1: Sleep health patient census grew 4% year over year, to a new record of 1.73 million patients. Respiratory health net revenue was $178.2 million, up 7.8% versus the prior year.

Speaker #1: Oxygen new starts were up about 4% year over year, and vent new starts were up about 5%. Oxygen patient census of approximately 335,000 patients set a new all-time record for the third consecutive quarter, and vent patient census also hit a new all-time record.

Jason Clemens: Oxygen new starts were up about 4% year-over-year. Vent new starts were up about 5%. Oxygen patient census of approximately 335,000 patients set a new all-time record for Q3. Vent patient census also hit a new all-time record. Diabetes Health net revenue was $158.5 million, down 7.4% from the prior year quarter. While new CGM starts remain soft, patient retention hit a new all-time record, the direct result of the changes we made to our resupply operations in late 2024. CGM patient census of approximately 153,000 patients was flat versus the prior year. The shift in payer mix from commercial insurance to government payers resulted in lower CGM reimbursement per patient.

Speaker #1: Diabetes health net revenue was $158.5 million. Down 7.4% from the prior year quarter. While new CGM starts remained soft, patient retention hit a new all-time record.

Speaker #1: The direct result of the changes we made to our resupply operations in late 2024. CGM patient census of approximately 153,000 patients was flat versus the prior year.

Speaker #1: But the shift in payer mix from commercial insurance to government payers resulted in lower CGM reimbursement per patient. Pumps and related supplies remained on track, growing patient starts and net revenue over the prior year.

Jason Clemens: Pumps and related supplies remained on track, growing patient starts and net revenue over the prior year. Overall, we are pleased with the continuing stabilization of the Diabetes Health segment. Wellness at Home net revenue of $137.3 million declined by 16.1%, driven primarily by the disposition of certain non-core assets completed during 2025. New starts for wheelchairs and beds were up about 6% and 5% year-over-year, respectively, with patient census for both hitting new all-time records. Turning to profitability. Full year adjusted EBITDA was $616.7 million, with an adjusted EBITDA margin of 19.0%. Q4 adjusted EBITDA was $163.1 million, with an adjusted EBITDA margin of 19.3%.

Speaker #1: Overall, we are pleased with the continuing stabilization of the diabetes health segment. Wellness at home net revenue of $137.3 million declined by 16.1%, driven primarily by the disposition of certain non-core assets completed during 2025.

Speaker #1: New up about 6% and 5% year over year, respectively, with patient census for both hitting new all-time records. Turning to profitability, full year adjusted EBITDA was $616.7 million.

Speaker #1: With an adjusted EBITDA margin of 19.0%. Fourth quarter adjusted EBITDA was $163.1 million, with an adjusted EBITDA margin of 19.3%. As Suzanne noted, both periods were impacted by a 14.5 million legal settlement and over $10 million of accelerated expenses to onboard our new capitated contract faster than we originally anticipated, which together account for the variance to our guidance.

Jason Clemens: As Suzanne noted, both periods were impacted by a $14.5 million legal settlement and over $10 million of accelerated expenses to onboard our new capitated contract faster than we originally anticipated, which together account for the variance to our guidance. Before leaving profitability, I want to note that our Q4 GAAP results include a non-cash goodwill impairment charge of $128 million, recognized as part of our annual goodwill impairment assessment and related to the estimated fair value of the Diabetes Health segment relative to its carrying value. This charge is excluded from adjusted EBITDA and has no impact on our cash flows or operations. Moving to cash flow. Q4 cash flow from operations was $183.2 million.

Speaker #1: Before leaving profitability, I want to note that our Q4 gap results included a non-cash goodwill and payment charge of $128 million, recognized as part of our annual goodwill impairment assessment and related to the estimated fair value of the diabetes health segment relative to its carrying value.

Speaker #1: This charge is excluded from adjusted EBITDA and has no impact on our cash flows or operations. Moving to cash flow. Fourth quarter cash flow from operations was $183.2 million.

Speaker #1: Capital expenditures were $103.9 million, or 12.3% of revenue, reflecting continued investment in patient growth, as well as forward investment to support the capitated contract ramp.

Jason Clemens: Capital expenditures were $103.9 million, or 12.3% of revenue, reflecting continued investment in patient growth as well as forward investment to support the capitated contract ramp. Free cash flow was $79.3 million for the quarter, and for the full year, free cash flow was $219.4 million, meaningfully exceeding the top end of our guidance range. Turning to the balance sheet. We ended the year with $106.1 million in unrestricted cash. Working capital of $16.5 million was lower than normal due to the aforementioned legal settlement and infrastructure expenses. We continued to compress our cash conversion cycle over the course of 2025, and we ended the year at 40.8 days sales outstanding, the lowest since the Change Healthcare outage in 2024.

Speaker #1: Free cash flow was $79.3 million for the quarter. And for the full year, free cash flow was $219.4 million, meaningfully exceeding the top end of our guidance range.

Speaker #1: Turning to the balance sheet. We ended the year with $106.1 million in unrestricted cash. Working capital of $16.5 million was lower than normal due to the aforementioned legal settlement and infrastructure expenses.

Speaker #1: We continued to compress our cash conversion cycle over the course of 2025, and we ended the year at $40.8 days sales outstanding, the lowest since the change healthcare outage in 2024.

Speaker #1: Net debt stood at $1.694 billion at year-end, with a net leverage ratio of 2.75 times. This is up modestly from 2.68 times at the end of Q3, reflecting the impact of the litigation settlement and pre-revenue contract costs on trailing adjusted EBITDA.

Jason Clemens: Net debt stood at $1.694 billion at year-end, with a net leverage ratio of 2.75x. This is up modestly from 2.68x at the end of Q3, reflecting the impact of the litigation settlement in pre-revenue contract costs on trailing adjusted EBITDA. We remain focused on our 2.5x net leverage target and continue to view debt reduction as among our highest capital allocation priorities, as we believe a strong balance sheet is essential to unlocking and sustaining value for shareholders. We decreased interest expense by approximately $20 million, $21 million versus the prior year. The recent credit upgrades from both S&P and Moody's in Q4 reflect the progress we've made as an organization.

Speaker #1: We remain focused on our $2.5 times net leverage target and continue to view debt reduction as among our highest capital allocation priorities, as we believe a strong balance sheet is essential to unlocking and sustaining value for shareholders.

Speaker #1: We decreased interest expense by approximately $20 million versus the prior year, and the recent credit upgrades from both S&P and Moody's in the fourth quarter reflect the progress we've made as an organization.

Speaker #1: On capital allocation, our priorities remain investing to accelerate organic growth, debt reduction, and selective tuck-in acquisitions that expand our geographic footprint and increase patient access.

Jason Clemens: On capital allocation, our priorities remain investing to accelerate organic growth, debt reduction, and selective tuck-in acquisitions that expand our geographic footprint and increase patient access. During 2025, we deployed $250 million to debt reduction and approximately $42 million to acquisitions, all funded entirely through our free cash flow and disposition proceeds, recycling capital from non-core assets into businesses with stronger returns and better strategic fit. This disciplined approach to capital allocation is how we intend to drive improved return on invested capital in 2026 and beyond. Turning to guidance, we expect net revenue of $3.44 to 3.51 billion, adjusted EBITDA of $680 to 730 million, free cash flow of $175 to 225 million.

Speaker #1: During 2025, we deployed $250 million to debt reduction and approximately $42 million to acquisitions. It's all funded entirely through our free cash flow and disposition proceeds.

Speaker #1: Recycling capital from non-core assets into businesses with stronger returns and better strategic fit. This disciplined approach to capital allocation is how we intend to drive improved return on invested capital in 2026 and beyond.

Speaker #1: Turning to guidance. We expect net revenue of $3.44 to $3.51 billion. Adjusted EBITDA of $680 to $730 million, free cash flow of $175 to $225 million.

Speaker #1: Our underlying assumptions for revenue represent 6 to 8 percent growth over 2025. We anticipate that organic growth of 7.5 to 9.5 will be offset by about 1.5% compression.

Jason Clemens: Our underlying assumptions for revenue represent 6% to 8% growth over 2025. We anticipate that organic growth of 7.5% to 9.5% will be offset by about 1.5% compression, net from acquisition and disposition revenue from previously closed deals. We expect 5% to 6% growth over 2025 revenue, resulting from a new capitated agreement, and we expect another 2.5% to 3.5% growth from the rest of the business. We believe Sleep Health and Respiratory Health will grow faster than that range, offset by generally flat expectations for Diabetes Health and Wellness at Home. For Q1 2026, we expect revenue growth of 2% to 3% over the prior year quarter.

Speaker #1: Net from acquisition and disposition revenue from previously closed deals. We expect 5 to 6 percent growth over 2025 revenue resulting from a new capitated agreement, and we expect another 2.5 to 3.5 percent growth from the rest of the business.

Speaker #1: We believe Sleep Health and Respiratory Health will grow faster than that range, offset by generally flat expectations for diabetes health and wellness at home.

Speaker #1: For the first quarter of 2026, we expect revenue growth of 2 to 3 percent over the prior year quarter. Over the course of the year, we expect ramping capitated revenue to result in adding a few points of incremental year-over-year growth each quarter, peaking at low double digits by Q4.

Jason Clemens: Over the course of the year, we expect ramping capitated revenue to result in adding a few points of incremental year-over-year growth each quarter, peaking at low double digits by Q4. Our 2026 midpoint for adjusted EBITDA translates to approximately 20.3% adjusted EBITDA margin, a full percentage point better than 2025. For Q1 2026, we expect adjusted EBITDA margin of approximately 16%, as we expect to carry capitated infrastructure expenses in the first part of the quarter prior to revenues ramping in the back half. We expect improving margin throughout the year as the capitated revenue ramps, particularly in the back half. Similarly, we expect free cash flow to be -$20 to -$40 million in Q1, with improvement throughout the year as the capitated revenue ramps and the associated infrastructure costs are absorbed.

Speaker #1: Our 2026 midpoint for adjusted EBITDA translates to approximately 20.3% adjusted EBITDA margin, a full percentage point better than 2025. For the first quarter of 2026, we expect adjusted EBITDA margin of approximately 16%, as we expect to carry capitated infrastructure expenses in the first part of the quarter prior to revenues ramping in the back half.

Speaker #1: We expect improving margin throughout the year, as the capitated revenue ramps, particularly in the back half. Similarly, we expect free cash flow to be negative $20 to negative $40 million in the first quarter, with improvement throughout the year as the capitated revenue ramps and the associated infrastructure costs are absorbed.

Speaker #1: As usual, we expect to generate approximately one-third of our full-year free cash flow in the first half of the year, with the remainder coming in the back half.

Jason Clemens: As usual, we expect to generate approximately one-third of our full-year free cash flow in the first half of the year, with the remainder coming in the back half. I have one last point regarding the infrastructure investments we are making to support our new capitated contract. As you'll note in our forthcoming 10-K, subsequent to 31 December 2025, we acquired certain assets of a provider of home medical equipment for total consideration of $47.6 million. To support that acquisition and potential similar future acquisitions, we drew $100 million from our revolving credit facility. We believe that these equipment acquisitions will support smooth patient transitions, and we expect to pay down the revolver as free cash flow builds throughout the year. That brings me to the end of my remarks. Operator, will you please open up the call for questions?

Speaker #1: I have one last point regarding the infrastructure investments we are making to support our new capitated contract. As you'll note in our forthcoming 10-K, subsequent to December 31st, 2025, we acquired certain assets of a provider of home medical equipment for total consideration of $47.6 million.

Speaker #1: To support that acquisition and potential similar future acquisitions, we drew $100 million from a revolving credit facility. We believe that these equipment acquisitions will support smooth patient transitions and we expect to pay down the revolver as free cash flow builds throughout the year.

Speaker #1: That brings me to the end of my remarks. Operator, will you please open up the call for questions?

Speaker #2: Thank you. And if you would like to ask a question, please press star one on your keypad. To leave the queue at any time, press star two.

Operator: Thank you. If you would like to ask a question, please press star one on your keypad. To leave the queue at any time, press star two. We ask that you please limit yourself to one question and one follow-up. Once again, that is star and one to ask a question. We will pause for just a moment to allow everyone a chance to join the queue. We'll take our first question from Eric Coldwell with Baird. Please go ahead. Your line is open.

Speaker #2: We ask that you please limit yourself to one question and one follow-up. Once again, that is star and one to ask a question. And we will pause for just a moment to allow everyone a chance to join the queue.

Speaker #2: We'll take our first question from Eric Caldwell with Baird. Please go ahead. Your line is open.

Speaker #3: Thanks very much. Good morning. I just wanted to touch on the legal settlement. I wanted to confirm if this is the civil debt collection class action from North Carolina that was initiated several years ago.

Eric Coldwell: Thanks very much. Good morning. I just wanted to hit on the legal settlement. I wanted to confirm if this is the civil debt collection class action from North Carolina that was initiated several years ago. Is the $14 and a half million a final settlement or an estimate? Does it cover all similar or potential claims? In other words, can we expect that this is one time and won't repeat? Finally, obviously, these claims relate to activities that began many years ago under different leadership, but what steps has the company taken to prevent similar complaints or issues in the future? Thanks very much.

Speaker #3: And is the $14.5 million a final settlement or an estimate? Does it cover all similar or potential claims? In other words, can we expect that this is one-time and won't repeat?

Speaker #3: And then finally, obviously, these claims relate to activities that began many years ago under different leadership, but what steps has the company taken to prevent similar complaints or issues in the future?

Speaker #3: Thanks very much.

Speaker #4: Appreciate that, Eric. Yes to all of your assumptions above, meaning that this was a claim that was brought against the company in 2022. And to your point, it deals with a technicality in debt collection practices.

Suzanne Foster: Appreciate that, Eric. Yes, to all of your assumptions above, meaning that this was a claim that was brought against the company in 2022. To your point, it deals with a technicality in debt collection practices. It does. It is the final amount and settles all claims in that state. Since then, or even right after that, those, on the technicality, we do not, or have fixed anything that would be perceived as a violation of that technicality. Not saying that we thought that we were in violation of it to begin with, however, anything that could be interpreted as such, has been fixed. We decided to settle this rather than pursue this litigation as a means to further de-risk the business.

Speaker #4: It does. It is the final amount and settles all claims in that state. And since then, or even right after that, those on the technicality — we do not, or have fixed anything that would be perceived as a violation of that technicality.

Speaker #4: Not saying that we thought that we were in violation of it to begin with. However, anything that could be interpreted as such has been fixed.

Speaker #4: And we decided to settle this rather than pursue this litigation as a means to further de-risk the business. We have so much to look forward to in the next couple of years that we thought getting this legacy lawsuit behind us made a lot more sense at this point.

Suzanne Foster: We have so much to look forward to the next couple of years that we thought getting this legacy lawsuit behind us made a lot more sense at this point.

Speaker #3: You know, Eric, this is Jason. I might add that since 2022, there's been significant maturing in the overall control environment here at AdaptHealth. So much so that you'll note in the forthcoming 10-K this afternoon, that for the first time, AdaptHealth has achieved an opinion from our auditor with a clean bill of health regarding our SOX environment.

Jason Clemens: You know, Eric, I, this is Jason. I might add that, since 2022, there's been significant maturing in the overall control environment here at AdaptHealth. So much so that you'll note in the forthcoming 10-K this afternoon, that you'll see for the first time, AdaptHealth has achieved an opinion from our auditor with a clean bill of health regarding our SOX environment. Prior year material weaknesses, really at various points along the way, have been remediated, which we're very happy about.

Speaker #3: And so, prior-year material weaknesses really, at various points along the way, have been remediated, which we're very happy about.

Speaker #5: Thanks. Thanks very much, guys. I appreciate it.

David Brown: Thanks. Thanks very much, guys. I appreciate it.

Eric Coldwell: Thanks. Thanks very much, guys. I appreciate it.

Speaker #2: Thank you. We will move next with Kevin Caliendo with UBS. Please go ahead. Your line is open.

Operator: Thank you. We will move next with Kevin Caliendo with UBS. Please go ahead. Your line is open.

Speaker #6: Thanks for taking my question, guys. I appreciate it. And Jason, thanks for the color on the cadence. I just want to make sure I understand fully how to think through the impact of the investment in 4Q and the guidance, like the margin cadence for fiscal 26.

Kevin Caliendo: Thanks for taking my question, guys. I appreciate it. Jason, thanks for the color on the cadence. I just want to make sure I understand fully how to think through the impact of the investment in 4.2 and the guidance, like, the margin cadence for fiscal 2026. It sounds like it's going to be different than fiscal 2025 a little bit, right? There's a mix of business in your onboarding. How should we think about it in the context of over the course of the year? I know you made comments around Q1 and free cash flow, but any more specifics there as we just think about modeling it to start?

Speaker #6: It sounds like it's going to be different than fiscal 25 a little bit, right? There's a mix of business in your onboarding. How should we think about it in the context of over the course of the year?

Speaker #6: I know you made comments around Q1 and free cash flow, but any more specifics there as we just think about modeling it? To start.

Speaker #3: Sure. Yeah, Kevin. So we started with a Q4 guidance of top line at 2 to 3 percent revenue growth. And adjusted EBIT margin of approximately 16 percent.

Jason Clemens: Yeah, Kevin. You know, we started with a Q4 guidance of top line at 2% to 3% revenue growth and adjusted EBITDA margin of approximately 16%. Particularly as the new capitated arrangement starts ramping, you know, we expect revenue, you know, as we get into Q2, to be up another 3% or so incremental from Q1. We expect Q3 to be up another 3% or so incremental in terms of growth against Q2. As we said in our prepared remarks, you know, we expect in Q4, over the prior year, to grow revenue in the low double digits.

Speaker #3: And so particularly as the new capitated arrangement starts ramping, we expect revenue as we get into the second quarter to be up another 3 percent or so incremental.

Speaker #3: From Q1, we expect Q3 to be up another 3 percent or so incremental in terms of growth against Q2. And then, as we said in our prepared remarks, we expect in Q4, over the prior year, to grow revenue in the low double digits.

Jason Clemens: You know, to go in line with that revenue growth, again, we're facing that pressure in Q1 from carrying significant expenses on the PNL prior to, you know, really the substantial contract dates, really starting here in Q1 and going throughout the year. You know, we expect margin to be at or near 20% as we get into Q2, and then we think we'll add about 1.5 points to that in each of Q3, and then incremental again into Q4. Again, full year, you know, we think that revenue growth will be 7% at the mid.

Speaker #3: To go in line with that revenue growth, again, we're facing that pressure in the first quarter from carrying significant expenses on the P&L prior to really the substantial contract dates, really starting here in the first quarter and going throughout the year.

Speaker #3: We expect margin to be at or near 20 percent as we get into that second quarter. And then we think we'll add about a point and a half to that in each of the third and then incremental again into the fourth quarter.

Speaker #3: So again, full year, we think that revenue growth will be 7 percent at the mid. We think the full year adjusted EBIT margin will be just over 20 percent, representing an incremental point over the prior year.

Jason Clemens: We think the full year, adjusted EBITDA margin will be just over 20%, representing an incremental point over the prior year.

Speaker #6: And just a quick follow-up—you mentioned the two pilots for fiscal '26. Are they material in any way to your financial performance here?

Kevin Caliendo: A quick, just a quick follow-up. You mentioned the two pilots for fiscal 26. Are they material in any way to your financial performance year? How should we think about that? Is there updates that we get on these over the course of the year?

Speaker #6: How should we think about that? Is there updates that we get on these over the course of the year?

Speaker #3: Well, Kevin, I'd say that they're not yet material. Certainly in the Q4 that we just reported, nor in the Q1 guidance, the formal guidance that we brought forth this morning.

Jason Clemens: Well, I, Kevin, I'd say that they're not yet material, certainly in the Q4 that we just reported, nor in the Q1 guidance, you know, the formal guidance that we brought forth this morning. We do, however, believe that we will get operating leverage over the course of the year, related to these technology investments, and that is embedded in the guidance that we brought forward.

Speaker #3: We do, however, believe that we will get operating leverage over the course of the year related to these technology investments. And that is embedded in the guidance that we brought forth.

Speaker #6: Thanks, guys, so much.

Kevin Caliendo: Thanks, guys, so much.

Speaker #3: Thanks, Kevin.

Jason Clemens: Thanks, Kevin.

Speaker #2: Thank you. Our next question comes from Richard Close with Canaccord Genuity. Please go ahead. Your line is open.

Operator: Thank you. Our next question comes from Richard Close with Canaccord Genuity. Please go ahead. Your line is open.

Speaker #7: Yeah, thanks for the questions. I'm curious if you can talk about the pipeline of capitated agreements. Obviously, a strong start to this large contract and continued execution on the previous Humana—so maybe just a lay of the land on the opportunities that exist going forward on that front.

Suzanne Foster: Thanks for the questions. I'm curious if you guys can talk about the pipeline of capitated agreements. You know, obviously a strong start to this large contract and continued execution on the previous Humana. Maybe just a lay of the land on the opportunities that exist going forward on that front. I'll start there. You know, we are out there obviously responding to some inbound and obviously some outbound requests to discuss how we operate that business, the value to both sides and the patient under these types of arrangements. As I've said before, you know, we can service this business, whether it's fee for service or capitated, and I think there is some market interest in getting to a place where incentives are aligned.

Richard Close: Thanks for the questions. I'm curious if you guys can talk about the pipeline of capitated agreements. You know, obviously a strong start to this large contract and continued execution on the previous Humana. Maybe just a lay of the land on the opportunities that exist going forward on that front. I'll start there. You know, we are out there obviously responding to some inbound and obviously some outbound requests to discuss how we operate that business, the value to both sides and the patient under these types of arrangements. As I've said before, you know, we can service this business, whether it's fee for service or capitated, and I think there is some market interest in getting to a place where incentives are aligned.

Speaker #4: I'll start there. We are out there, obviously, responding to some inbound and obviously some outbound requests to discuss how we operate that business, the value to both sides and the patient under these types of arrangements.

Speaker #4: As I've said before, we can service this business, whether it's fee-for-service or capitated. And I think there is some market interest in getting to a place where incentives are aligned.

Speaker #4: So there's many conversations going on that are proceeding forth. But these do take time. If you think about the contract we just won, that was a over-a-year, call it two-year conversation.

Suzanne Foster: There's many conversations going on that are proceeding forth, but these do take time. You know, if you think about the contract we just won, that was, you know, over a year, call it two-year conversation. There's infrastructure and IT systems and things that have to happen, especially if it's a, if it's a new capitated arrangement. We're gonna continue to push forward and have those conversations, but I do see that there is market appetite for these, you know, call it, not for fee-for-service arrangements.

Speaker #4: There's infrastructure and IT systems and things that have to happen, especially if it's a new capitated arrangement. So we're going to continue to push forward and have those conversations.

Speaker #4: But I do see that there is market appetite for these, call it, not-for-fee-for-service arrangements.

Speaker #5: Richard, the last thing I'd add there is that we view the capitated pipeline much like we view our M&A pipeline. Is that we are continuing to pursue both, but we do not assume any impact inside of our guidance until or unless we close deals.

Jason Clemens: Richard, the last thing I'd add there is that we view the capitated pipeline, much like we do our M&A pipeline, is that, you know, we are continuing to pursue both, but we do not assume any impact inside of our guidance until or unless we close deals.

Speaker #7: Okay. That's helpful. And then maybe just really quickly on diabetes, appreciate the success on the retention and consolidating that with the sleep. I'm just curious when you expect that from a new start perspective to, I guess, begin to show growth.

Richard Close: Okay, that's helpful. Maybe just really quickly on diabetes. Appreciate the success on the retention and consolidating, you know, that with the sleep. I'm just curious when you expect that from a new start perspective to, I guess, begin to show growth? Or what are your long-term thoughts on the growth of that segment?

Speaker #7: Or, what are your long-term thoughts on the growth of that segment?

Speaker #4: Sure, I'll start there. Yeah. Thank you for calling out the hard work that our Resupply Nashville team has done around really improving substantially how we service our resupply patients, and the retention rates are proof of that.

Suzanne Foster: Sure. I'll start there. Yeah, thank you for calling out the hard work that our resupply Nashville team has done around really improving substantially how we service our resupply patients, and the retention rates are proof of that. We knew going into the turnaround that we initiated, what, 18 months ago or in the fall of 2024, that our the confidence in the team down in Nashville would produce a sooner, better outlook for diabetes, and that it takes time to build up the sales force, retrain them, and to earn the trust back of the referring providers. That has been the work over the past year, to the point that we have also started to see improvements there in pockets of the country.

Speaker #4: We knew going into the turnaround that we initiated, what, 18 months ago or in the fall of 2024, that our confidence in the team down in Nashville would produce a sooner, better outlook for diabetes.

Speaker #4: And that it takes time to build up the sales force, retrain them, and to earn the trust back of the referring providers. And so that has been the work over the past year to the point that we have also started to see improvements there in pockets of the country.

Speaker #4: And we've also made the decision to grow our diabetes sales force to improve our CGM, particularly our CGM new starts in 2026, notwithstanding that we're holding the expectation to flat till that proves out.

Suzanne Foster: We've also made the decision to grow our diabetes sales force to improve our CGM, particularly our CGM new starts in 2026, notwithstanding that we're holding the expectation to flat till that proves out. You had a last part of that question?

Speaker #4: And then you had a last part of that question.

Speaker #3: Yeah. I'd say, Richard, if we think about the components of the segment—in CGMs, we've got the resupply Suzanne referenced. We've got new start activity that we are making key investments in, in an attempt to jumpstart the start activity from our field force as well as our pharmacy operations.

Jason Clemens: Yeah. I'd say, Richard, if we think about the components of the segments, you know, in CGMs, we've got the resupplies Suzanne referenced. We've got new start activity that we are making key investments in an attempt to jumpstart the start activity from our field force as well as our pharmacy operations. We feel pretty good about being able to achieve that as we get later in the year. Finally, don't forget pumps. I mean, we had a good year with pump revenues. In Q4, both new starts and net revenue for pumps was up low double digits.

Speaker #3: And so, we feel pretty good about being able to achieve that as we get later in the year. And then finally, don't forget PUMS.

Speaker #3: I mean, we had a good year with PUMP revenues in Q4, both new starts and net revenue. For PUMS, it was up low double digits.

Speaker #7: All right. Thank you.

Richard Close: All right. Thank you.

Speaker #2: Thank you. Our next question comes from Brian Tanquilat with Jefferies. Please go ahead. Your line is open.

Operator: Thank you. Our next question comes from Brian Tanquilut with Jefferies. Please go ahead. Your line is open.

Speaker #8: Good morning. This is Megan Holton for Brian Tanquilat. Thanks for taking our question. I just wanted to begin with, can you provide us any update on the infrastructure readiness for this new national healthcare system partnership this year?

Megan Holton: Good morning. This is Megan Holton for Brian Tanquilut. Thanks for taking our question. I just wanted to begin with, can you provide us any update on the infrastructure readiness for this new national healthcare system partnership this year? Are there any additional investments we need to be thinking about, or are you in line with your initial outlook?

Megan Holtz: Good morning. This is Megan Holtz on for Brian Tanquilut. Thanks for taking our question. I just wanted to begin with, can you provide us any update on the infrastructure readiness for this new national healthcare system partnership this year? Are there any additional investments we need to be thinking about, or are you in line with your initial outlook?

Speaker #8: Are there any additional investments we need to be thinking about, or are you in line with your initial outlook?

Speaker #3: Hey, Megan. I would say that we are right down the fairway with our initial outlook. The investments that we made in Q4 and that we're carrying through Q1, they have shored up a February 1st start date.

Jason Clemens: Hey, Megan. I would say that we are right down the fairway with our initial outlook. You know, the investments that we made in Q4 and that we're carrying through Q1, they have shored up a 1 February start date on the West Coast that we are now taking care of a lot of patients from this new capitated arrangement. You know, we do have subsequent start dates as we get into the back half of Q1 and on throughout the year. We've made key investments there. We talked about the Hawaii acquisition, which is a terrific business on its own, and, you know, it will be part of supporting Hawaiian operations for this contract as that start date occurs later in the year.

Speaker #3: On the West Coast, we are now taking care of a lot of patients from this new capitated arrangement. We do have subsequent start dates.

Speaker #3: As we get into the back half of Q1 and on throughout the year, we've made key investments there. We talked about the Hawaii acquisition, which is a terrific business on its own.

Speaker #3: And it will be part of supporting Hawaiian operations for this contract. As that start date occurs later in the year, and then finally, we referenced the $100 million draw and the revolver in reference to an acquisition that's already closed.

Jason Clemens: Finally, we referenced the $100 million draw on the revolver in reference to an acquisition that's already closed in support of that February start date. You know, we are pursuing similar acquisitions to support the rest of the West Coast operations. We're not, you know, we're not celebrating yet. I mean, there's still a lot of work ahead, but overall, we're very pleased with getting the December and February start dates secured, and we feel good about the rest of the year.

Speaker #3: In support of that February start date and we are pursuing similar acquisitions to support the rest of the West Coast operations. And so we're not celebrating yet.

Speaker #3: I mean, there's still a lot of work ahead, but overall, we're very pleased with getting the December and February start dates secured. And we feel good about the rest of the year.

Speaker #8: Okay. Thanks. And then as a quick follow-up, as we think about free cash flow guidance, CapEx stepped up, obviously, in regards to supporting this contract as well.

Megan Holton: Okay, thanks. As a quick follow-up, as we think about free cash flow guidance, CapEx stepped up, obviously, in regards to supporting this contract as well. As we exit Q4, is this the right run rate going forward?

Megan Holtz: Okay, thanks. As a quick follow-up, as we think about free cash flow guidance, CapEx stepped up, obviously, in regards to supporting this contract as well. As we exit Q4, is this the right run rate going forward?

Speaker #8: As we exit Q4, is this the right run rate going forward?

Speaker #3: Yes, we do think that this is just about the right run rate as a percent of revenue. I mean, I would point out that through the disposition activity, over the last, call it, five quarters or so, I mean, we did take out about 5% of top-line revenue.

Jason Clemens: Yes, we do think that this is just about the right run rate as a percent of revenue. I mean, I would point out that through the disposition activity over the last, call it, 5 quarters or so, I mean, we did take out about 5% of top-line revenue. Now, none of those businesses sold really had any CapEx at all. You know, that alone adds about 0.5 points to CapEx, which is why the run rate we're seeing here in Q4, we feel pretty comfortable with going forward.

Speaker #3: Now, none of those businesses sold really had any CapEx at all. And so that alone adds about a half a point to CapEx. And which is why the run rate we're seeing here in Q4, we feel pretty comfortable with going forward.

Speaker #8: Got it. Thank you, guys.

Megan Holton: Got it. Thank you, guys.

Megan Holtz: Got it. Thank you, guys.

Speaker #2: Thank you. We will move next with Peter Chikering with Deutsche Bank. Please go ahead. Your line is open.

Operator: Thank you. We will move next with Pito Chickering with Deutsche Bank. Please go ahead. Your line is open.

Speaker #9: Hi there. This is Kieran Ryan on for Peter. Thanks for taking the questions. Just wanted to check in on the sleep business first. Just see if there's anything that we should be aware of there on cadence or on year-over-year comps or if there's anything that you'd want to highlight around maybe from the price mix perspective or should we generally just expect revenues to be tracking with the strong new starts and census you're seeing?

Kieran Ryan: Hi there, this is Kieran Ryan on for Peter. Thanks for taking the questions. Just wanted to check in on the sleep business first. Just see if there's anything that we should be aware of there on cadence or on year-over-year comps, or if there's anything that you'd want to highlight around, maybe from the price mix perspective, or should we generally just expect revenues to be tracking with the strong new starts and census you're seeing?

Kieran Ryan: Hi there, this is Kieran Ryan on for Pito. Thanks for taking the questions. Just wanted to check in on the sleep business first. Just see if there's anything that we should be aware of there on cadence or on year-over-year comps, or if there's anything that you'd want to highlight around, maybe from the price mix perspective, or should we generally just expect revenues to be tracking with the strong new starts and census you're seeing?

Speaker #3: Hey, Kieran. It's Jason. I'm glad you're calling this out because there is some noise in the comparable in 2025. You might recall that we had discussed a change in the rental and sales mix within sleep last year related to the accounting of a component of the CPAPs.

Jason Clemens: Hey, Kieran, it's Jason. I'm glad you're calling this out because there is some noise in the comparable in 2025. You might recall that we had discussed a change in the rental and sales mix within Sleep last year related to the accounting of a component of the CPAPs. I mean, in the Q1 last year, that was about $15 million, just a touch under. That cut in half approximately in the Q2 and again in the Q3, then started running out in the Q4. That does set up an easier comparable in 2026 over 2025. Otherwise, you know, our start growth, we've been very pleased with.

Speaker #3: I mean, in the first quarter last year, that was about $15 million just a touch under. That cut in half approximately in the second quarter and again in the third.

Speaker #3: And then started running out in the fourth quarter. And so that does set up an easier comparable in 2026 over 2025. Otherwise, our start growth, we've been very pleased with.

Speaker #3: We're nearing record start activity for sleep, and we're feeling 2026.

Jason Clemens: We are nearing record start activity for sleep, and we're feeling very good about the sleep business for 2026.

Speaker #9: Perfect. Thank you. And then, just to follow up once more on diabetes, I just kind of wanted to check in and see what you're seeing on the DME versus pharmacy side there.

Kieran Ryan: Perfect. Thank you. Then just to follow up once more on diabetes, just kind of wanted to check in and see what you're seeing on the, on the DME versus pharmacy side there. I know, I think you've seen most of that shift already occur on the CGM side. Kind of just wondering if that's, if that's stable and then more so just what you're seeing in pumps as we see more pumps kind of moving into that channel. Thanks a lot.

Speaker #9: I know I think you've seen most of that shift already occur on the CGM side. So kind of just wondering if that's stable and then more so just what you're seeing in PUMS as we see more PUMS kind of moving into that channel.

Speaker #9: Thanks a lot.

Speaker #3: Sure, Kieran. So I'd say on the CGM side of things, we absolutely saw fewer payer policy changes or notifications as we're starting this year versus what we saw in 2025 and particularly in 2024.

Jason Clemens: Sure, Kieran. I'd say on the CGM side of things, we absolutely saw fewer payer policy changes or notifications as we're starting this year versus what we saw in 2025 and particularly in 2024. You know, that's a good thing for the business. Then on the pump side of things, you know, we do have full capability within our pharmacy operations to distribute pumps through that channel as well as through the more traditional DME channel, which is part of why we're seeing, you know, very good pump growth here in the back half of 25, and we think that'll continue in 2026.

Speaker #3: So that's a good thing for the business. And then on the PUMS side of things, we do have full capability within our pharmacy operations to distribute PUMS through that channel as well as through the more traditional DME channel, which is part of why we're seeing very good PUMS growth here in the back half of '25.

Speaker #3: And we think that'll continue in 2026.

Speaker #2: Thank you. We do have a follow-up from Eric Caldwell with Baird. Please go ahead. Your line is open.

Operator: Thank you. We do have a follow-up from Eric Coldwell with Baird. Please go ahead. Your line is open.

Speaker #10: Yeah. Thanks very much. And I just wanted, for posterity, I wanted to go back to the capitated contract onboarding expense in the fourth quarter of I think it was just over $10 million.

Eric Coldwell: Thanks very much. And I just wanted, for posterity, I wanted to go back to the capitated contract onboarding expense in Q4 of, I think it was just over $10 million. Can you remind us how that compared to what was embedded in your guidance previously? Was there any delta on that number? I might have a quick follow-up. Thanks.

Speaker #10: Can you remind us how that compared to what was embedded in your guidance previously? Was there any delta on that number? And then I have a might have a quick follow-up.

Speaker #10: Thanks.

Speaker #3: Sure, Eric. The delta was just a touch under 10 at approximately $8 million. Now, considering that we guided first week of November, I mean, we certainly had a sense that we were going to overrun and overspend on labor and vehicles and general OPEX within the quarter.

Jason Clemens: Sure, Eric. You know, the delta was just a touch under 10 at approximately $8 million. You know, considering that we guided first week of November, I mean, we certainly had a sense that we were going to overrun and overspend on labor and vehicles and general OpEx within the quarter. We wanted to be cautious in communicating that without the corresponding revenue ramp that was going to come with it. At the end of the day, I mean, we spent more than we communicated. The initial outlook we provided in 2026 and the revenue that came with that, you'll note that we stepped up the contribution from this capitated arrangement pretty meaningfully.

Speaker #3: However, we wanted to be cautious in communicating that, without the corresponding revenue ramp that was going to come with it. So, at the end of the day, I mean, we spent more than we communicated.

Speaker #3: However, the initial outlook we provided in '26 and the revenue that came with that, you'll note that we stepped up the contribution from this capitated arrangement pretty meaningfully.

Speaker #3: I mean, back in November, we said that we believed it would be 3% to 5% growth attributed to that contract in 2026.

Jason Clemens: I mean, back in November, we said that we believed it would be 3% to 5% growth would be attributed to that contract in 2026. Today we stepped that up to 5% to 6% growth. You know, this was timing. Expense came bigger and faster than we said it would. However, the revenue is also coming bigger and faster than we said it would, so we're feeling pretty good about it.

Speaker #3: And today, we stepped that up to 5% to 6% growth. So this was timing—expense came bigger and faster than we said it would.

Speaker #3: However, the revenue is also coming bigger and faster than we said it would. So we're feeling pretty good about it.

Speaker #10: And then on the Hawaii acquisition, I may have missed this, but did you size the revenue contribution? I know you gave us a net impact of M&A and dispositions in the embedded in the outlook for growth.

Eric Coldwell: On the Hawaii acquisition, and I may have missed this, did you size the revenue contribution? I know you gave us a net impact of M&A and dispositions in the embedded in the outlook for growth. Did you size the Hawaii deal specifically?

Speaker #10: But did you size the Hawaii deal specifically?

Speaker #3: We didn't, but we're happy to, Eric. That Hawaii deal excluding any impact from the upcoming capitated arrangement, the run rate's about a little over a million a month.

Jason Clemens: We didn't, but we're happy to, Eric. You know, that Hawaii deal, excluding any impact from the upcoming capitated arrangement, the run rate's about a little over $1 million a month. Now, we netted that against, you know, what we project to be a third and final disposition in our home infusion assets, which was also just over $1 million a month. That deal closed on 1 January. Subsequent to the end of the quarter, you'll see that in the filing. They really wash out, which is why we didn't mention it.

Speaker #3: Now, we netted that against a what we project to be a third and final disposition in our home infusion assets. Which was also just over a million a month.

Speaker #3: That deal closed on January 1st. So subsequent to the end of the quarter, you'll see that in the filing. And so they really wash out, which is why we didn't mention it.

Speaker #10: Okay. Thanks very much, guys.

Eric Coldwell: Okay, thanks very much, guys.

Speaker #3: Thanks, Eric.

Jason Clemens: Thanks, Eric.

Speaker #2: Thank you. And once again, if you would like to ask a question, please press star and one on your keypad now. And we will pause for just a moment.

Operator: Thank you. Once again, if you would like to ask a question, please press Star and One on your keypad now. We will pause for just a moment. We show no further questions at this time. This will conclude our Q&A session as well as our conference call. Thank you all for your participation, and you may disconnect at any time.

Speaker #2: And we show no further questions at this time. This will conclude our Q&A session. As well as our conference call. Thank you all for your participation.

Q4 2025 AdaptHealth Corp Earnings Call

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