AdaptHealth Corp.

Second quarter net revenue from continuing operations was $740.3 million, up 12.7% year over year and 15.9% organically. Sleep Health revenue was $386.5 million, up 15.5%; Respiratory Health revenue was $194.4 million, up 14.1%; and Wellness-at-Home revenue was $159.4 million, up 4.9%. Adjusted EBITDA from continuing operations was $132.0 million versus $136.4 million a year ago, with adjusted EBITDA margin of 17.8%. Total capitated revenue was $103.3 million, about 14% of continuing operations revenue. Free cash flow was negative $20.9 million in the quarter, driven by $166.2 million of capital expenditures, including about $25 million of one-time equipment and vehicle purchases. For full-year 2026, management guided to net revenue of $2.85 billion to $2.89 billion on a continuing operations basis and EBITDA of $490 million to $520 million. They also guided to full-year free cash flow of $80 million to $120 million. For Q3 2026, management expects revenue of $720 million to $740 million, adjusted EBITDA margin of about 17.9%, and free cash flow of about $50 million.

Suzanne Foster framed the quarter as a deliberate pivot toward a simpler core business built around sleep, respiratory and supporting home medical equipment. She emphasized that the company is pruning subscale, low-margin products so future investment can go into the core, technology, and enterprise health system relationships. Her tone was confident but candid about short-term pain, especially on the West Coast capitated contract and the supplier price increase, while arguing these issues are temporary and the business will be stronger and more efficient after the reset.

Jason Clemens highlighted the financial bridge behind the guide-down: the Diabetes Health divestiture removes about $100 million of EBITDA impact, the West Coast contract cuts $55 million versus prior expectations, the supplier price hike adds a $30 million headwind, and portfolio actions reduce second-half projections by $15 million. He also pointed to a $144.2 million noncash goodwill impairment tied to reallocating shared corporate costs, and said the company ended the quarter at 3.06x consolidated total leverage. On capital allocation, he said they drew the $325 million delayed-draw term loan to redeem 6.125% senior notes due 2028, plan to prioritize revolver repayment, and intend to use a significant portion of Diabetes Health sale proceeds for debt reduction.

Analysts focused heavily on whether AdaptHealth is shrinking the business, and management said the portfolio moves are intentional simplification rather than a retreat, aimed at improving growth, margins, and technology deployment in the core. On the West Coast contract, management said about two-thirds of the $55 million miss is volume-related and the rest is labor, with roughly $1 million of sequential improvement per quarter expected into Q3 and Q4. On capitation more broadly, Suzanne Foster said the company still believes in a mix of capitated and fee-for-service, with a 20% margin target for capitated contracts excluding halo effects. They also said the manufacturer price increase was a surprise, they cannot pass through price mid-year, and they are in active negotiation to improve terms.