Adapthealth at Canaccord Conference: Strategic Growth and Technology Focus

On Wednesday, 13 August 2025, AdaptHealth (NASDAQ:AHCO) outlined its strategic direction at Canaccord Genuity’s 45th Annual Growth Conference. The company emphasized its recent performance, management restructuring, and technology investments, while also acknowledging challenges in certain business segments. AdaptHealth remains optimistic about future growth, driven by a significant new contract and advancements in patient engagement technologies.

Key Takeaways

• AdaptHealth reported strong Q2 results, meeting revenue and EBITDA expectations and reducing debt by $150 million.
• A major new contract with a national hospital is expected to generate $200 million in annual revenue starting in 2026.
• The company is investing in technology, such as the MyAdapt app and AgenTik AI, to improve patient experience and operational efficiency.
• Management restructuring has simplified operations, with a focus on centralizing customer service.
• The diabetes and sleep businesses are showing signs of growth after addressing previous challenges.

Financial Results

• Q2 2024 performance met expectations for revenue, adjusted EBITDA, and free cash flow.
• The company paid off $150 million in debt during the second quarter.
• Completed divestitures of Custom Rehab, ActiveStyle, and Home Infusion to streamline operations.

Operational Updates

• Management restructuring reduced operating regions from six to four and centralized customer service in regional offices.
• Technology investments include expanded features in the MyAdapt app and scaling up AgenTik AI, which handles over 10% of call volume.
• The diabetes business is showing growth in CGM starts and has achieved record retention rates through Nashville resupply operations.
• The sleep business rebounded with 128,000 new patient starts in Q2, close to company records.

Future Outlook

• The new contract is expected to ramp up in 2026, bringing in at least $200 million annually for five years.
• The diabetes business is projected to return to growth in the second half of the year and continue expanding in 2026.
• AdaptHealth is well-positioned for the upcoming competitive bidding process, which could reduce the number of suppliers and benefit the company.

Q&A Highlights

• The new contract was secured through an RFP process, leveraging AdaptHealth’s success with Humana and technological capabilities.
• The company sees opportunities for incremental revenue from patients outside traditional insurance systems.
• AdaptHealth believes it is best positioned to navigate the competitive bidding landscape and potentially gain from a reduced supplier pool.

For further details, readers are encouraged to refer to the full transcript of the conference call.

Full transcript - Canaccord Genuity’s 45th Annual Growth Conference:

Richard Close, Analyst, Canaccord Genuity: Rick, good morning, and thank you for attending the conference. I’m Richard Close with Canaccord Genuity covering digital and tech enabled health. We’re excited to have Adapt Health here again this year, sit down with CFO Jason Clemens to discuss the current business trends and update on the operational initiatives put in place over the last year, and then the outlook going forward, and then some comments on the big beautiful bill that we’ve been asking everyone, their perspectives. And so Jason, thanks for being here. Thanks for having us.

Maybe just to kick off, there’s been a lot of simplification in the business over the last year, really some management coming in dealing with some of the issues from previous years. Just curious in terms of your perception in terms of the progress that you’ve made over the last several years and set the table for the discussion going forward. Sure. Sure.

Jason Clemens, CFO, Adapt Health: I’d be happy to. So I I guess I’d start first at at the at the top of the company within senior management, most importantly, new CEO. I guess we can’t say new anymore. It’s been been just over a year since Suzanne Foster joined the company from Danaher, where she was running a pretty big business over there. You know, I I think that, you know, Suzanne’s, you know, biggest accomplishment in the first year was really getting the operating model simplified as you said and recruiting a really A plus team across management.

Today, there’s six direct reports to the CEO. You know, there’s someone in charge of commercial operations and that’s all that person does. So Russ Schuster joined us most recently from Cardinal. He was running their Canada at home business. He joined us in December, and so he’s running all things commercial.

That’s business development and M and A. It includes top line growth in terms of sales as well as rate, so managed care negotiations, things like that. But he’s been great. He’s just a pleasure to work with, know, what what you’d expect from a commercial officer. You know, our chief operating officer joined most recently from Curate, the parent company of QVC.

So Scott Barnhart joined in October, had worked as a peer as Suzanne’s back at Cardinal. Was running their global supply chain during the the COVID pandemic. He’s he I mean, he’s a class a COO. He’s he’s been doing a great job. And and then there’s others in so essentially top of the p and l, middle of the p and l.

You know, I’m obviously on balance sheet and then we’ve got some of our support functions including technology and shared services and legal. You know, so that sounds pretty simple but it was a very big deal for the organization. You know, as part of that reorg, I mean, we’ve gone from six operating regions down to four. You know, within those four operating regions, we’ve now got regional offices that there are leaders in each of these regional offices, as an example, in charge of intake, patient intake. So that’s still a heavy kind of paper driven, we’re installing a lot of e prescribe, a lot of tech, but we’ve got someone in each region that that’s all they do all day long is they’re focused on intake of patient documentation information, chasing what is maybe missing from the referring provider and bringing that into the system, as well as customer service.

So we’ve centralized in those regional offices the customer service function and we’ve hired great leaders across contact center, fleet, real estate, some of the core functions that are all in Scott’s organization within the COO function. You know, that’s I’d say is really the biggest achievement that’s been accomplished in the last year. I’d say a close second is the technology that we continue to invest in, including the MyApp. So that’s our proprietary app. We’ve added a lot of features in the last twelve months.

Patients can go to the Adapt Health MyApp, not across all business lines yet, but in diabetes and supplies to the home, they can reorder their supplies without, you know, talking to a human if they don’t want to. You know, we’re working on sleep resupply. That’ll be launching in the in the pretty near future. Folks can schedule their oxygen tank delivery and pickup. So if you’re a caregiver of a maybe an elderly parent, you know, that’s that’s worked out great.

It’s been well received. You know, we’ve got 20 fourseven ability to text with an agent if that’s what they want to do. And so again, outside of healthcare in general or outside of DME particularly, you know, these sound like features of apps that you use every day to interface mostly in a retail environment. But within our industry, I mean, these are head and shoulder capabilities and improvements above what the competition’s offering. I’d wrap by saying in terms of AgenTik AI, some of the conversational AI that you might be aware of as you might call in and ask where your order is or reschedule an appointment or or even reorder your your supply.

We’re we’re coming out of pilot phase. We had talked about piloting this probably about two or three quarters ago. We’re now starting to scale it. So now over 10% of our volume is going into those queues, those call queues, and it’s actually pretty incredible to see how fast the AI learns and delivers a better patient experience. And again, it’s without the labor line for humans to take care of that.

So we’re pretty excited about it.

Richard Close, Analyst, Canaccord Genuity: That’s good. Needless to say, definitely a lot of room for technology

Jason Clemens, CFO, Adapt Health: No doubt.

Richard Close, Analyst, Canaccord Genuity: Adoption, digitization, in health care. You reported the second quarter, last week. It was a busy quarter for all of us on the street, but it’s probably worth it to hit on the highlights of that, and then we can obviously drill down into some other news items.

Jason Clemens, CFO, Adapt Health: Sure. So, you know, we had a very solid second quarter. I mean, we met our expectations really across every every layer that we that we guide to, which is revenue, adjusted EBITDA, and and free cash flow. On the revenue line, there there are a lot of ins and outs this year. We did a little bit of M and A.

We signed two terrific hospital system DME companies. You know, we welcome them to the Adapt family on June 1. You know, with that comes the employees, the infrastructure, locations, and the inventory, but but as importantly is those referring relationships of, you know, being the easy button for these hospitals as discharges come out and and those patients have needs at home for for their chronic care needs. So we’re excited about that. We were very pleased to essentially finalize our disposition program.

We launched this about two years ago, the kind of the analytics and just the deep dives on what made sense strategically versus maybe what didn’t. And so we completed now three different divestitures, the first being custom rehab, which is essentially like motorized wheelchairs, specialty wheelchairs. We sold that business late last year. I guess it was the third quarter of last year. And then within the second quarter, we we announced the divestiture of ActiveStyle, which was an adult incontinence business, kind of direct to consumer, think like television ads, mostly kind of late night cable television ads.

You know, we had bought that business back in 2020, actually a couple days before I arrived, and we just determined it it it didn’t make a lot of sense. It doesn’t drive ancillary revenue into the core of the business. We still offer incontinence products, but it’s not through that direct to consumer channel, so we were pleased to sell that on May 1. And then separately, we got out of the home infusion business. We had essentially built up a collection of these assets through DME acquisitions over the years.

I think it’s no surprise infusion multiples are running pretty nicely lately, so we were very pleased to sell that business on and we completed that that divestiture on June 9. So with all that and our free cash flow, which which beat our expectations, I mean, we we paid off another $150,000,000 of debt just in the second quarter. So we we we felt pretty good about about the quarter and the momentum coming out the back half with sleep starts, you know, near record start levels, respiratory at record census level, diabetes census now back to growth mode for the second quarter in a row. So the momentum’s feeling pretty good in the back half, and then of course we announced what we think is a truly transformational contract with a national hospital and payer relationship. We’ve asked to shield the name and the specifics from the public domain by our new partner, but I mean it’s a very large book of business.

We’ve we’ve said that once it ramps and it will ramp over the course of ’26 that, you know, we believe that it will be producing at least $200,000,000 of revenue a year for the next five years. So I mean, this is a billion dollar contract. So we were, I

Richard Close, Analyst, Canaccord Genuity: mean, we’re thrilled. You took my next question.

Jason Clemens, CFO, Adapt Health: Sorry. I could talk more about it.

Richard Close, Analyst, Canaccord Genuity: Let’s just dig into that a little bit It’d be interesting to hear what was the genesis of that contract? Was it or that relationship? What exactly what they what was the client looking for in terms of a relationship? Maybe what they were doing before with respect to that, and the competitive nature of the transaction.

Jason Clemens, CFO, Adapt Health: Sure. So there were some similarities to the business that we won with Humana a couple of years ago. Like Humana, you know, this new partner came to market with an RFP, you know, so you can that implies somebody was running that business previously, so, you know, they had their reasons for RFP ing this book of business. You know, we believe that our success with Humana was a big part of that win. You know, I mean, this this is a this is a lot of business and, you know, no one in the industry, to my knowledge, has ever pulled off anything near this size and scope until we did that with Humana.

I mean 33 states, every single patient, if you’re on Humana HMO in those states, like you’re coming to Adapt Health. And so that didn’t come out that didn’t come without its without its its mistakes and lessons for the company. We had a lot of startup costs, about $20,000,000 that that we had put into that startup. But today, I mean, it’s running it’s running great, utilization’s spot on. I mean, Humana’s you know, I won’t speak for them, but, you know, appears to be very satisfied.

We’ve signed up for some pretty significant SLAs as part of that contract. We’re doing that in the new contract. You know, we’re putting our money where our mouth is in terms of operations, one time delivery, patient satisfaction, customer service statistics, like time to answer phone calls and things like that. And so again, just having the ability to demonstrate that we’ve done this before, that was a big part of winning this new piece of business. The other part of this is much like Humana, I mean this hospital system and payer is a very forward thinking healthcare organization.

Technology is the answer to a lot of the inefficiency and cost challenges in healthcare in general, and this organization is at the tip of the spear on that. So what they another aspect of what they liked about Adapt Health was some of that MyApp that I was talking about earlier. I mean, we can turn some dials and cater that patient experience for this new customer and their patients. We can send them alerts. We can notify them when certain messages need to be sent.

The incumbent, to our knowledge, didn’t have that type of capability, and our competitors, to our knowledge, didn’t have that capability, at least at the scale that we’re offering it at. And so that patient engagement through the app and through tech was another big part of us winning the relationship. And at the end of the day, I think our ops and sales teams, look, we pride ourselves in kind of the easy button in DME and being just easy to do business with, which frankly at the end of the day is sometimes more important even than cost. But for this amount of volume, we’re certainly happy to give a little bit of a reimbursement relief to a new partner if they’re going bring this kind of volume to us. So we were happy to do that as well.

What about the,

Richard Close, Analyst, Canaccord Genuity: you know, I’d call it the adjacent opportunities? Is there any geographic, like this new geography for you, and can you expand off that? How do you think about that?

Jason Clemens, CFO, Adapt Health: Yeah. So there there are two incremental revenue streams that we haven’t put a number on. I don’t know that we will until we’re really up and running, but they’re material, we know for sure. Unlike Humana, which when we came in and we won that RFP, there was fair amount of cannibalization that happened because we were already servicing a lot of Humana patients that were on HMO MA plans. This is different.

These are, you know, 100% new patient volume. You know, there are a handful of markets that will start over the coming months that we already operate in today, and so we’ve already got that fixed cost and that infrastructure paid for, so like, we’re confident those margins will be quite nice because you’re just layering in more patients on the capacity that you’ve already got. In other markets, we don’t have locations or we have very few. And so what’s unique about this is we’ve got a new revenue stream that’s going to pay for that fixed cost as we stand up. I mean, we’re going to stand up a few dozen new locations.

You know, we got to bring in a few 100 vehicles that we’ll bring into this revenue stream. And then those locations, we’re not sizing just for this revenue stream. We’re sizing it, call it twice as big, because we’re looking for that capacity in these new markets. So the two incremental revenue streams I talked about, the first is, you know, are patients that show up at this healthcare system, either in their hospitals or their hundreds of clinics that we’re now supporting, and they don’t have the same insurance, they don’t have that healthcare system’s insurance carrier. They might have United or something else.

But we’re hardwiring into their EMRs in the hospitals and the clinics to catch that referral stream. So that’s not priced in, that’s not part of this, that’s all incremental business. Again, your fixed cost paid for, you know, you you know, margin can be pretty good. Separately, you know, since these are locations we don’t operate in today, what do you think the next thing we’re gonna do is? We’re gonna drop in salespeople left and right because there’s a lot of business in these in these these particular states and these markets that we just don’t compete in today.

Again, now we’ve got the revenue stream to support it and so everything else that that that you win through your new Salesforce that you’re going to deploy is incremental. So we’re we’re pretty excited about that. I wouldn’t expect that for at least probably another year or so. You know, if we do our jobs maybe a little sooner, but it’s it’s going to take some time to ramp. I mean, number one is to take care of of this large chunk of business that we just want.

Richard Close, Analyst, Canaccord Genuity: Well, I definitely see the opportunity there once the provider is comfortable with you guys on the other side. Like, it almost becomes automatic in terms of referring patients. I had another company that, you you had the HMO business on Humana but they lost PPO.

Jason Clemens, CFO, Adapt Health: PPO as well, yep. Yeah, that halo effect is a real thing.

Richard Close, Analyst, Canaccord Genuity: Yeah. Maybe just on diabetes, spend some time there. The business is improving. It’s been a challenge for two years. But as you mentioned, you’ve seen some progress in starts.

Can you just talk about, like, where you stand on that? I know you shifted the supply down to Nashville and and just an update on how the whole diabetes Yeah. You’re seeing that.

Jason Clemens, CFO, Adapt Health: Yeah. Sure. So so I’d I’d start with the easy part or the smaller part, which is pump and pump supplies. You know, we went about a two year period where we were we were compressing year over year each quarter. That was a result of some of the new tubeless pumps that had come to market in late twenty two.

Or was it ’23? I wasn’t track at this point. But when Omnipod came out from Insulet, that took a lot of share quickly from Tandem and Medtronic, and historically we had been a pretty big Tandem and Medtronic shop. We’re happy to report both quarters this year, we’re growing pumps again. We’re getting our fair share of Omnipod.

We’ll distribute that through our 50 state URAC pharmacy, as well as Beta Bionics, which is a newer entrant. We’re getting, we think, our fair share there as well. And of course, you know, we’re pleased to put out tandem and Medtronic pumps when that’s what’s prescribed. So, you know, that’s some good news is that that what was a pressure for the last couple of years is now back to growth mode. So then shifting to the bigger part of the business which is CGM.

So think about like Dexcom and Abbott and there’s some other entrants out there, but I mean predominantly those are the two CGMs And so we made a lot of changes. So when I talked about in the opening about Suzanne’s leadership changes, some of that, there were some exits, some key exits that occurred as part of that reorganization as well, particularly in the diabetes business. So it was mid September last year where, you know, we installed brand new leadership on top of the division, so that included a kind of a general manager of the business who’s a long time DME person, Gary Sheehan, I think you know Gary. He’s he’s a new Englander and sold a big business to us about four years ago now.

He’s running that business and doing a tremendous job. We’ve got a new sales leader that was with Suzanne at Medtronic as well as Cardinal and joined us most recently from Google Health. You know, he’s been running that Salesforce. And then as you said in Nashville, we picked up the resupply operations and we installed it under our the same team that runs our billion dollar a year revenue stream in sleep resupply down in Nashville. And so the significance of that is on the top line of new patients, what our new GM and sales leader are doing, I mean, they’ve grown sequential CGM starts now for three quarters in a row, so essentially from the quarter they got installed until now, they continue to show growth, which is great.

I mean those are the patients coming in at the top of the funnel. On the back end in terms of what you retain and what you continue to resupply, that Nashville team, literally the quarter after we made the change, record retention in diabetes, that’s now happened for three consecutive quarters. And so, you know, we’re coming up now on a year of arguably easier comps in the back half And we really got the volumes going. Now payer mix is still a little tough. That resulted in we dropped revenue about 4%.

I think it was 4.1% in the second quarter. However, we’re getting to the point that volume is going to greatly outpace that payer mix shift. And so, you know, we’re pretty confident that as soon as the second half diabetes will be back to growth mode and we think in as we look towards 2026 that, you know, we’re looking at a growing business again. So we’re So far so good. I mean, no one’s high fiving I’d say, but so far so good.

Like we’re making good progress.

Richard Close, Analyst, Canaccord Genuity: Good. Sleep ran into a little bit of an issue in terms of in a few markets that you called out in first quarter, some improvement in second quarter. Can you go, you know, just go over what changed and, you know, how quickly you saw that take take a a hold?

Jason Clemens, CFO, Adapt Health: Yeah. So I’d say, you know, first quarter was disappointing. We had started 113,000 patients. For a for a q one, we would typically expect closer to one fifteen to one twenty. And so we were off, you know, we were off our expectations.

A year ago, had put out 117, so we were off. You know, as we ran the Pareto and kind of the deep dive on the reasons, really pointed at one thing, and it was that in a few specific markets we got very slow to set up. And so inefficiencies in that intake, I talked about the operating model changes a little earlier, intake as well as availability for scheduling. So you know, this wasn’t total rocket science I’d say, but it did take a big lift to open up access, so not in every location but in many, you know, not closing the doors at four or five, you know, staying open until 07:00 for setups, opening up weekend setup hours, more group setups, as well as turning back on the virtual setups. You can’t do that in every state because many states require a certified respiratory therapist to conduct the setup and so you can’t do it everywhere, but we did turn that back know, that was pretty big during COVID, the ability to set up virtually.

And, you know, we didn’t maintain it as a strategy coming out of COVID. Well, that’s been turned back on as well. So the result was pretty fantastic. I mean, we set up one hundred and twenty eight thousand patients in the second quarter. That’s just 3,000 short of company records, and we had good momentum coming out of the second quarter.

So we’re feeling pretty optimistic that the changes that went in are effective and we think they’ll continue to be effective, and so we intend to continue to grow share.

Richard Close, Analyst, Canaccord Genuity: We’re going to do lightning round here since we got a I couple do want to just get a quick comment on competitive bidding and how you’re viewing that. I’ll let you take it.

Jason Clemens, CFO, Adapt Health: Yeah. I mean, so the proposed rule was released, you know, several weeks back. We are in a comment period, so we, as well as the industry, you know, our lobbyists, etcetera, are working on delivering comments by the August. You know, we we fully expect the the final rule by the end of this year, this calendar year. We think it’s most probable that bids, you know, the bidding process will start next year and then our contracts will be awarded for a 2027 start.

That could slip to ’28, but, you know, we we think it’s most likely that that’s gonna that’s gonna occur sooner versus later. I’d say, you know, the CMS has been very clear that they intend to reduce the number of suppliers, the number of operators in the space. Now that’s Competitive Bid has been very effective in doing that over the last decade or so. And so, you know, once we understand the rules, you know, there’s there’s a lot of details on the max bid versus the seventy fifth percentile, and and there’s there’s nuance in there that will will give us insight into whether we think rates will go up or down as part of this program, so we’ll have a view on that once we understand the final rules. Either way, look, we’re the biggest in the industry.

We think we’re best positioned to steer into competitive bid, you know, win the contracts we want to win. And, you know, if the CMS is effective in reducing the number of suppliers, that’s a good thing for Adapt. That means more business for us to take and or more folks that become buyers, I’m sorry, sellers as they just can’t withstand the pressure competitive bid. So bigger picture, I mean, we’re look, it’s a business we’re in. We’re we’re looking forward to understanding the rules and and taking the next steps.

Richard Close, Analyst, Canaccord Genuity: Good. We’re out of time. So thanks a lot for your participation.

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