AdaptHealth mobilizes infrastructure for new contract 

PLYMOUTH MEETING, Pa. – AdaptHealth has begun laying the groundwork for a new five-year, $1 billion capitated agreement that it expects will accelerate growth in 2026. 

As part of the agreement, announced Aug. 5, AdaptHealth will provide home medical equipment and supplies for 10 million members in multiple states who are part of a major national health care system.  

“This new partnership is a clear endorsement of our ability to deliver patient service excellence at scale from a leading managed care organization,” CEO Suzanne Foster told investors on a call to discuss the company’s Q2 earnings. “Through the RFP process, we were able to demonstrate how our combination of talent, expertise and tech-enabled patient experience aligns with the health care system's innovative approach to serving its membership. Securing this agreement strengthens our conviction that we have a tremendous opportunity to (become) the most reliable operator in our core market segments.” 

AdaptHealth is making considerable infrastructure investments to fulfill the contract, including opening new locations and buying new vehicles. The company also plans to recruit 1,000 new employees who must be trained and ready to go in advance of go-live dates, says CFO Jason Clemens. 

“The contract was signed very recently, so the detailed planning is now underway,” he said. “Although we have good estimates for the investments required to support the contract, the specific timing of those investments will get nailed down over the next few months. The infrastructure will ramp between now and the end of the first quarter of 2026, and the revenue will start two to three months after.” 

Sleep & diabetes: Momentum building? 

While AdaptHealth’s second quarter earnings were relatively flat, its Sleep Health division showed signs of improvement, with approximately 128,000 starts, its highest quarter in two years, with a census of 1.7 million patients, up from 1.68 million in the prior quarter. The growth is a result of recent efforts by the company to standardize scheduling practices and order intake, says Foster. 

“We've given patients greater flexibility to choose the timing and format that best fits their setup needs by offering expanded appointment availability, same-day scheduling and offering in-person, as well as virtual, setups,” she said. 

The Diabetes Health segment saw net revenue decline 4.1% versus the prior year quarter, but company execs maintain there is “momentum” as the company continues its turnaround efforts. 

“Not only are they adding new patients, that's translating into better retention rates in our resupply business,” said Foster. “So, I couldn't be prouder of the team and how quickly they've turned this business around. If the momentum continues and the execution continues as we're seeing, we do expect that business to, as I say, remove the parenthesis around the growth number and turn positive in the back half of this year.” 

Consolidation: The next wave? 

Across the industry, mounting external pressures, including a resurrected Medicare national competitive bidding program, are accelerating conditions for another wave of consolidation, says Foster. AdaptHealth’s approach to M&A will continue to be disciplined, she says. 

“We've had some inbounds around the small regionals and some indications that there are some larger assets coming to the market,” she said. “What I can say is, what we're particularly interested in is staying within our core competencies of sleep and respiratory, which a lot of these assets are focused on. That would be the type of assets that we're reviewing and looking at to see if they strategically fit for some reason. For example, (it) gives us pockets of the geography where we may be light or some other thing that it brings to us that we would benefit from.” 

• Related: AdaptHealth’s diabetes biz continues to lag.