AdaptHealth’s fast start on contract boosts confidence

PLYMOUTH MEETING, Pa. – AdaptHealth’s ability to service large, capitated agreements – underscored by the early ramp-up of a $1 billion contract – will underpin future growth, company execs said during a recent call to discuss fourth quarter and full-year 2025 earnings.

That contract, first announced in August, went live in December in three mid-Atlantic states covering approximately 50,000 members, said Suzanne Foster, CEO. When fully operational, it is expected to bring 10 million patients on board nationwide.

“Our new capitated contract is a massive undertaking – the largest service transition in the HME industry's history,” she said. “(The December launch) was earlier than planned and the transition has been remarkably smooth, thanks to seven months of preparation by our team and exceptional collaboration with both the incumbent provider and our customer.”

AdaptHealth had previously anticipated the contract would contribute growth in the range of 3% to 5% in 2026, but the company has now stepped that up to 5% to 6%.

The accelerated launch of the contract did come with a $10 million price tag, said CFO Jason Clemens.

“Expense came bigger and faster than we said it would,” he said. “However, the revenue is also coming bigger and faster than we said it would. So, we feel pretty good about it.”

There’s an appetite for fee-for-service alternatives

AdaptHealth is currently fielding “some” inbound and outbound requests to discuss how it operates capitated agreements and what the value is for the payer and the patient, said Foster.

“As I've said before, we can service this business, whether it's fee-for-service or capitated,” she said. “And I think there is some market interest in getting to a place where incentives are aligned. So, we're going to continue to push forward and have those conversations, but I do see that there is market appetite for these, call it, not for fee-for-service arrangements.”

With lawsuit settled, company moves ahead with tighter practices

During the fourth quarter, AdaptHealth settled a consumer credit lawsuit for $14.5 million. The lawsuit, filed in October 2022 in the U.S. District Court for the Middle District of North Carolina, alleged that the company and its related entities (Family Medical Supply, LLC and SIMM Associates, Inc.) engaged in improper billing and debt collection practices.

While AdaptHealth is not saying it was in violation of such practices, it viewed the settlement as an opportunity to put the lawsuit behind it, tighten processes and “further derisk the business,” execs said. The company also recently received a “clean bill of health” from its auditor in meeting the Sarbanes–Oxley (SOX) Act, which governs internal controls over financial reporting, they said.

“I might add that since 2022, there's been significant maturing in the overall control environment here at AdaptHealth,” said Clemens. “And so prior year material weaknesses, really at various points along the way, have been remediated, which we're very happy about.”