AdaptHealth’s Q2 results were met with a notably positive market reaction, as investors looked past flat year-on-year sales to focus on operational progress and margin improvement. Management attributed performance to its recent success in non-acquired revenue growth, especially through accelerating momentum in its Sleep and Respiratory Health segments. CEO Suzanne Foster highlighted improvements in patient setup times and order intake processes, which led to higher volumes in core lines. Additionally, profitability initiatives—such as standardizing operations and leveraging technology—drove operating margin expansion despite segment-level headwinds.
Is now the time to buy AHCO? Find out in our full research report (it’s free).
AdaptHealth (AHCO) Q2 CY2025 Highlights:
- Revenue: $800.4 million vs analyst estimates of $804 million (flat year on year, in line)
- Adjusted EPS: $0.09 vs analyst expectations of $0.16 (42.8% miss)
- Adjusted EBITDA: $155.5 million vs analyst estimates of $150.8 million (19.4% margin, 3.1% beat)
- The company dropped its revenue guidance for the full year to $3.22 billion at the midpoint from $3.25 billion, a 0.9% decrease
- EBITDA guidance for the full year is $662 million at the midpoint, below analyst estimates of $676.6 million
- Operating Margin: 9.9%, up from 6.5% in the same quarter last year
- Market Capitalization: $1.26 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From AdaptHealth’s Q2 Earnings Call
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Eric Coldwell (Baird) asked about the revenue ramp, pricing, and growth expectations of the new capitated contract. CFO Jason Clemens clarified that $200 million annual revenue is a conservative estimate, ramping through 2026, with additional upside possible from expanded sales coverage.
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Philip Chickering (Deutsche Bank) questioned the adjusted EBITDA guidance reduction. Clemens explained that the drop was driven by delayed payer rate negotiations and infrastructure investment for the new contract, not by asset divestitures.
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Chickering (Deutsche Bank) followed up on market share in Sleep Health relative to competitors like ResMed. Clemens pointed to a 3% increase in starts and expects further improvement as operational changes take full effect in coming quarters.
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Brian Tanquilut (Jefferies) queried management’s approach to upcoming CMS competitive bidding and diabetes pricing. CEO Suzanne Foster acknowledged uncertainty but stressed AdaptHealth’s scale and ongoing efficiency efforts as advantages in navigating reimbursement pressure.
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Unidentified Analyst (RBC Capital Markets) asked about M&A opportunities and leverage tolerance. Foster and Clemens said M&A remains disciplined and focused on core segments, with any deals likely self-funded and not increasing leverage.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will track (1) the pace and operational execution of the new capitated contract rollout, (2) the impact of automation and standardization on margin trends, and (3) outcomes of key CMS policy decisions and payer negotiations. The trajectory of Diabetes Health segment recovery and ongoing industry consolidation will also be critical signposts for AdaptHealth’s growth and profitability.
AdaptHealth currently trades at $9.59, up from $9.13 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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