AHCO earnings analysis
What we found in AHCO's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
AdaptHealth delivered 12.7% year-over-year continuing-operations revenue growth to $740.307 million, but profitability and cash conversion deteriorated: gross margin fell to 14.1% from 20.7%, operating margin swung to negative 18.6% from positive 10.0%, and diluted EPS was a loss of $0.99. Sequentially, revenue improved from the implied first-quarter continuing-operations level of $679.873 million, but the Q2 $144.236 million goodwill impairment drove a substantially larger operating loss. Growth from the 2025 capitated contract supported all three segment revenue lines, while elevated labor, distribution, patient-equipment depreciation, and other operating costs impaired segment profitability outside Respiratory Health.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue growth led by capitation
- Continuing-operations revenue rose $83.207 million, or 12.7%, year over year to $740.307 million, led by $104.369 million of organic growth (15.9%). Capitated-revenue arrangements increased to $103.337 million, or 13.9% of revenue, from $31.070 million, or 4.7%.
- Respiratory segment expanded profitably
- Respiratory Health was the sole segment with both revenue and profit expansion: revenue rose 14.1% to $194.402 million and Adjusted EBITDA increased 17.2% to $53.089 million; margin improved to 27.3% from 26.6%.
- Cost actions target $26.8M annual savings
- Management approved a restructuring plan expected to produce approximately $26.8 million of annual savings for approximately $7.0 million of total costs. Headcount actions were substantially complete by June 30, 2026.
- Diabetes divestiture targets $235M cash
- The planned Diabetes Health divestiture is for $235.0 million in cash, subject to customary adjustments, and is expected to close in the first quarter of 2027. The business is now reported as discontinued operations, sharpening the continuing-operations focus.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Goodwill impairment drove substantial GAAP loss
- GAAP profitability deteriorated sharply: operating income swung from $65.694 million (10.0% margin) to an operating loss of $137.802 million (-18.6% margin), while net loss attributable to AdaptHealth was $145.316 million versus $4.227 million of income. The result included a $144.236 million non-cash goodwill impairment in Respiratory Health and Wellness at Home.
- Capitation investment turned free cash flow negative
- Cash conversion weakened as Q2 free cash flow fell to negative $20.942 million from positive $73.329 million, because equipment and fixed-asset purchases rose to $166.244 million from $88.665 million. First-half capex was $287.456 million, or about 20.2% of first-half revenue, largely to support capitated arrangements.
- Diabetes sale carries closing and value-realization risk
- New risk factors address execution of the $235.0 million Diabetes Health sale, which is subject to regulatory review and is expected in Q1 2027 but may not close. If completed, the company may not realize anticipated debt reduction and higher-growth/higher-margin capital deployment benefits, and a portion of purchase consideration will be escrowed for indemnification obligations.
- Cash decline and negative working capital
- Liquidity tightened: cash ended June 30 at $43.289 million, down from $106.136 million at year-end, and continuing-operations working capital was negative $79.3 million versus negative $19.3 million. The company also had $1.425 billion of senior notes outstanding and $475.0 million drawn under its term loan and revolver at June 30.
- Cost growth materially compressed margins
- Margins were pressured despite revenue growth. Cost of net revenue increased 22.0% to $636.101 million, faster than the 12.7% revenue increase, reducing gross margin to 14.1% from 20.7%; Sleep Health Adjusted EBITDA margin fell to 18.2% from 22.0% and Wellness at Home fell to 5.4% from 11.5%.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $-0.99
- Gross margin
- 14.1%
- Operating margin
- -18.6%
- Segment
- Sleep Health: revenue $386.461 million, up $51.772 million (15.5%) year over year; Adjusted EBITDA $70.248 million, down $3.424 million (4.6%).
- Segment
- Respiratory Health: revenue $194.402 million, up $23.952 million (14.1%) year over year; Adjusted EBITDA $53.089 million, up $7.808 million (17.2%).
- Segment
- Wellness at Home: revenue $159.444 million, up $7.483 million (4.9%) year over year; Adjusted EBITDA $8.656 million, down $8.810 million (50.4%).
What they said about what is next.
The 10-Q does not provide numeric FY2026 revenue or EPS guidance. Management states that the Diabetes Health sale is expected to close in Q1 2027 for $235.0 million in cash, subject to adjustments and closing conditions; its June restructuring plan is expected to cost approximately $7.0 million and generate approximately $26.8 million of annual savings.
The filing reads worse than the one before it.
What came before.
- 10-Q · May 5, 2026
- AdaptHealth Corp. reported Q1 2026 results with revenue of $819.8 million, exceeding expectations of $796.9 million. However, the company's EPS was a loss of $0.05, missing estimates by 4%. Despite a reduction in…
- 10-K · February 24, 2026
- AdaptHealth positions itself as a national, technology-enabled HME provider operating four segments (Sleep Health, Respiratory Health, Diabetes Health, Wellness at Home) and servicing ~4.3 million patients through ~640…
- 10-Q · November 4, 2025
- AdaptHealth reported Q3 net revenue of $820.3M (three months ended September 30, 2025) versus $805.9M in Q3 2024 and $800.0M in Q2 2025, with diluted EPS of $0.16. Gross margin compressed slightly to ~19.7% and…
- 10-Q · May 6, 2025
- AdaptHealth reported Q1 2025 net revenue of $777,882,000 and GAAP diluted loss per share of $(0.05). Gross margin compressed to 15.5% and operating income fell to $23,170,000, while operating cash flow remained strong…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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