AdaptHealth: 'We're feeling good about fourth quarter’

PLYMOUTH MEETING, Pa. – AdaptHealth is using its size to its advantage to navigate headwinds from supply chain constraints and a Philips recall of certain CPAP devices, company leaders say. 

Supply chain constraints, including port backlogs affecting products shipped from Asia, are impacting certain DME and related product categories that represent about 15% of total revenues, says President Josh Parnes. 

“Despite these delays, we benefited from our national scale and procurement expertise to mitigate these issues and are implementing several strategies, including sourcing from alternate suppliers, contracting directly with manufacturers, and entering into expedited shipping arrangements, including air freight,” he said. 

AdaptHealth anticipates the ongoing Philips recall to result in headwinds of $10 million for Q4 and $20 million for the first half of 2022. 

The company has taken steps in a number of areas to dampen the impact of the recall throughout the period, says CEO Steve Griggs. 

“We’ve been able to utilize our inventory and the allocations from ResMed, which are less than historic,” he said. “We’re caught up now, so we feel confident with those allocations. In addition, our patient asset recovery has improved, and we’ve engaged with other suppliers to fill that gap. We’re feeling good about the fourth quarter. October was a very good month for patient set ups – just short of our June level.” 

Looking ahead to 2022, Adapt Health is planning for about 8% organic growth across its product lines, with DME and supplies growing at 4%, home respiratory normalizing to 5%, and sleep continuing to improve to around 7% growth. Its top growth category: diabetes, which it believes will grow about 18%, through further acquisitions and the increased adoption of e-prescribing, says Parnes.

“More than half of our CGM orders are now coming from e-prescribe, up from zero a year ago,” he said.