AdaptHealth seeks to 'unlock' diabetes market

PLYMOUTH MEETING, Pa. - The diabetes market is a “high priority” for AdaptHealth as it seeks both strategic and organic growth, say company officials.

The company, which closed on Solara Medical Supplies in July, acquired several additional supply and home medical businesses in the third quarter, most recently Pinnacle Medical Solutions, a provider of diabetes supplies, including continuous glucose monitors and insulin pumps, on Oct. 1.

“We like the landscape in diabetes,” said CEO Luke McGee during a recent earnings call. “There's robust growth in terms of new patients, but Medicare only started covering CGMs in 2017, so we're relatively early in the census where new starts outweigh attrition. We have yet to unlock (that market).”

AdaptHealth reported net revenues of $284.4 million for the third quarter of 2020, a 108% increase over the same quarter one year ago. Adjusted EBITDA was $53.2 million vs. $31.7 million.

One way AdaptHealth is trying to “unlock” the diabetes market: The company has launched an e-prescribing pilot program for CGMs with a goal of driving up the number of paperless orders to 50%, from about 30% right now, says President Josh Parnes.

“The real friction point with providers is on the new order,” he said. “We believe e-prescribing will help us increase turnaround times.”

In the sleep therapy market, after a COVID-19 related decline in the second quarter, new referrals have rebounded to about 90% of what they were pre-pandemic, says Jason Clemens, CFO.

“As elective procedures have come back, so have referrals,” he said. “There's also a growing reopening of sleep centers, as volumes revert to normal levels.”

Company officials also commented on CMS's recent decision to drop most product categories from Round 2021 of its competitive bidding program, saying it didn't come as a big surprise.

“We didn't expect there would be savings, but increases,” said McGee. “The market has told CMS they have found the bottom and maybe even below the bottom.”

AdaptHealth also increased its financial guidance for fiscal year 2020 from a range of $935 million to $983 million to $1 billion to $1.04 billion.