AdaptHealth sits ‘above high water’ in 2021

PLYMOUTH MEETING, Pa. – AdaptHealth posted a record-breaking year in 2020 and its acquisition of AeroCare in February sets up the company for accelerated growth in 2021, execs said on a recent earnings call.

AdaptHealth reported net revenue of $348.4 million for the fourth quarter of 2020, a 133% increase compared to the same period in 2019, and $1.06 billion for the full year, a 99% increase compared to 2019.

“Our patient’s home health needs have only grown throughout the duration of 2020,” said CEO Luke McGee, “and now that AdaptHealth and AeroCare have combined, we have amplified our ability to empower our patients to live their best lives out of the hospital and in their home.”

AdaptHealth provided HME to more than 43,000 patients with COVID-19 in 2020, as well as respiratory equipment, including ventilators and “thousands” of oxygen concentrators, to its hospital partners.

The company’s oxygen business was elevated throughout 2020, with an increase in the second half of the fourth quarter and into 2021. 

“We expect oxygen new starts to remain above pre-pandemic levels for at least the balance of the first quarter,” said CFO Jason Clemens.

Additionally, AdaptHealth’s new start business rebounded in the fourth quarter from pandemic lows in the second quarter.

“Specifically, our PAP new start business, which declined more than 30% from pre-pandemic highs in Q2, has nearly reached those pre-pandemic highs,” said Clemens said. “The uptake in COVID cases in December 2020 and so far in 2021 has slowed down some of that recovery, but we remain confident we will be above high water for new starts for PAP and other HME by the end of Q1 2021.”

AdaptHealth's active M&A pipeline in 2020, which included 22 acquisitions, has continued into 2021. Already, it has acquired Allina Health Home Oxygen & Medical Equipment in Minnesota in February and two more companies in the Midwest and southern California in early March. The company’s organic growth also increased 5.7% in the fourth quarter and 8.6% in 2020.

"We remain confident in our organic growth prospects between 8% and 10% for 2021,” Clemens said.

AeroCare integration on track

Efforts to integrate AdaptHealth and AeroCare are well underway, with an initial focus on their sleep businesses, where they will combine best practices for patient setup procedures and align resources across sleep coaches and compliance teams.

“We remain on track to deliver $50 million in annual run rate synergies,” said co-CEO Steve Griggs. “Prior to closing, we expected to achieve revenue synergy in a few key areas focused on helping patients stay adherent to their prescribed protocols, ensuring patients get the resupplies they need when they need it and streamlining the revenue cycle.”

AdaptHealth has already begun leveraging its enhanced scale to negotiate new purchasing terms with manufacturers, says Josh Parnes, president.

“We expect these new purchasing terms to combine to contribute significantly to our $50 million cost synergy target with the majority of these savings already being realized in Q1,” he said.

Other savings will be realized through consolidation of back-office operations, locations, vehicles and other resources across the country.

“We are pleased by progress this far and are running ahead of plan, but we will remain focused on completing the plan,” said McGee.