AdaptHealth sees oxygen 'broadly up'

PLYMOUTH MEETING, Pa. - It's impossible to predict the full impact of the COVID-19 crisis on its business, but AdaptHealth remains confident about its strategy and its prospects, company executives said during an earnings call.

“The past 60 days have been unlike anything I've experienced in my 15 years in the HME industry,” said President and COO Josh Parnes. “In six days in March, we transitioned more than 75% of employees to work from home. We've continued to meet the needs of patients and referrals on a daily basis.”

AdaptHealth reported net revenue of $191.4 million for the first quarter of 2020—including $33.9 million from Patient Care Solutions—a 60% increase over the same quarter last year.

The company has seen increased patient demand for ventilators and oxygen concentrators, and increased sales and rentals to hospitals and other health care providers in hard hit areas like New York and New Jersey, said CEO Luke McGee.

“We're seeing oxygen broadly up, very much related to the impact in New York, with discharges up more than 100% in April and continuing into May,” he said. “We expect there to be a (long-term) shift in the need for home oxygen. Some of these patients are going to need oxygen for quite some time.”

AdaptHealth's CPAP resupply business remained strong in the first quarter, driven by heightened awareness for respiratory hygiene, while demand for “elective” products like new CPAPs and orthotics, decreased due to the crisis, said execs.

Other impacts from the crisis:

• In response to shifting demands in volume, AdaptHealth reduced its workforce by 6% in April.

• In the first quarter, the company incurred additional costs to acquire personal protective equipment for patient-facing employees, and increased its inventory in anticipation of increased equipment demands.

• The company received $47 million in advance payments and $17 million in COVID-19 relief funds.

AdaptHealthaffirmed its guidance for 2020 of net revenue between $790 million to $808 million, adjusted EBITDA of $160 million to $164 million, and adjusted EBITDA less patient equipment capex of $98 million to $101 million.

The outlook excludes anticipated first year operating losses at PCS, as well as severance and restructuring costs associated with the acquisition totaling approximately $15 million.