AdaptHealth (AHCO) Canaccord Genuity's 46th Annual Growth Conference summary

Strategic transformation and portfolio focus

• Completed a two-year portfolio rationalization, exiting diabetes and e-commerce businesses to focus on sleep, respiratory, and home medical equipment segments.

• Sale of the diabetes business to Cardinal Health was driven by lack of strategic fit, industry shifts, and the need to prioritize capital and debt reduction.

• Portfolio changes aimed to simplify operations, pay down debt, and concentrate resources on higher-growth, core markets.

• Overhead costs of $60 million remain post-transaction, with half targeted for removal in the first year and the rest through growth and M&A in year two.

Operational performance and growth drivers

• Achieved 16% top-line growth, with 10% from West Coast expansion and 5% from the base business.

• Sleep segment saw 15% growth, driven by increased awareness, wearables, and GLP therapies, resulting in record referrals.

• Respiratory business continues steady growth, supported by strong clinical value propositions.

• CapEx for ongoing operations expected at 13–14% of revenue, with most investment in patient equipment and infrastructure.

Capitated contract and West Coast expansion

• Onboarded a major capitated contract covering 13 million members, requiring 40 new locations and significant hiring.

• Initial onboarding challenges impacted profitability, but ongoing adjustments to utilization and ordering patterns are expected to stabilize costs.

• Capitation model seen as beneficial for administrative efficiency and long-term growth, with a positive halo effect on provider referrals.

• Future incremental growth possible if DME moratorium expires, allowing expansion into fee-for-service business in new geographies.