AdaptHealth sees small but positive trends 

PLYMOUTH MEETING, Pa. – AdaptHealth’s diabetes business “outperformed expectations” during the first quarter of 2024 and company execs are cautiously optimistic that their efforts to boost the segment are starting to make headway. 

Diabetes revenue was $149.3 million for the quarter, a 2% increase and the first year-over-year increase for the segment since the second quarter of 2023, driven by the company’s moves to double its sales force, name Briah Carey as president of diabetes and open up key markets in the pharmacy channel, say execs. 

“So, look, it's one quarter,” said Jason Clemens, CFO, during a recent call to discuss the company’s earnings. “We're not going to (get) excited about it, but we do intend to continue that trend.” 

For the second quarter in a row, AdaptHealth put out more tubeless pumps than tube-based pumps, a sign that the market is shifting, and CGMs are performing well, Clemens said. 

‘Very, very good place’ 

Sleep continued to perform well, with revenue of $306.2 million, a 4% increase year over year. Sleep rental revenue was flat, while sleep sales revenue was up 5.6%, driven by resupply, which reached a new record of 1.58 million patients. 

“We're the No. 1 in sleep by a good margin and our market share is increasing each year, each quarter,” said Richard Barasch, chairman and interim CEO. “So, we're starting from a very, very good place. We are adding sleep in target-rich places where we think we have an opportunity to grow. We believe that we can grow – continue to grow – very, very nicely and no one disputes the fact that there's a huge number of undiagnosed OSA folks out there.” 

AdaptHealth is keeping an eye on some global supply chain slowdowns that are impacting its costs, says Clemens. 

“There's things we can do with those suppliers to get around some of that by airfreighting and such, which obviously increases cost,” he said. “But at the end of day, we're doing everything we can to get the product that our patients are asking for.” 

The Change effect 

Like other companies in the industry, AdaptHealth was not immune to the impact of the Change Healthcare cyberattack in February. The company saw its free cash flow nosedive to a negative $38.9 million compared to $51.1 million. It held back claims peaking at about $150 million for payers using Change and drew $75 million on its revolving credit to tide it through, said Clemens.  

“Our revenue cycle team has acted swiftly and decisively to mitigate that impact,” he said. “Since the end of the quarter, our health claims for this matter have compressed to approximately $30 million. As a result, cash inflows have started to normalize, and we paid off the balance on the revolver near the end of April.” 

Clemens added: “With delayed payments largely caught up, we are reiterating our free cash flow guidance for the first half of 2024 and for the full year.”