AdaptHealth (AHCO) investor relations material

Business performance and segment growth

• All four business segments achieved organic growth in Q1, with sleep and respiratory growing 3%-4% year-over-year and diabetes growing over 2% organically for the first time in a while.

• Wellness at home segment also grew organically, excluding prior year dispositions.

• Total organic growth exceeded 9% in Q1, with core business up over 4% year-over-year.

• Double-digit referral growth in sleep, driven by increased awareness and diagnostic tools, is expected to sustain future growth.

• Sleep and respiratory represent nearly 70% of revenue, with long-term growth expected at 3%-4% annually.

Capitated contracts and financial impact

• A major new capitated agreement with a large West Coast hospital system now covers over 12 million members, contributing to significant revenue growth.

• Q1 saw higher labor costs due to onboarding, but profitability is expected to step up in Q2 as revenue from the contract flows through.

• Capitated revenue was 9% of enterprise revenue in Q1, expected to reach 15% by year-end as the contract ramps up.

• The contract is expected to achieve at least a 20% margin by the end of 2026.

• Additional contracts are being pursued, with a dedicated team pricing and pitching new opportunities.

Operational investments and efficiency

• Infrastructure ramp-up for the new contract included 35 new locations, over 1,200 hires, and $80 million in patient equipment acquired.

• Most upfront costs are now absorbed, and margins are expected to improve rapidly as revenue stabilizes.

• No significant new fixed costs are required for expected Humana membership growth, though some additional CapEx will be needed.

• AI and automation are reducing offshore labor, especially in revenue cycle management, and patient-facing technology is expanding.

• Over 400,000 patients are registered on the patient app, which streamlines resupply and billing through AI chatbots.