AdaptHealth Corp.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
x    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2025
OR
o    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-38399
AdaptHealth Corp.
(Exact name of registrant as specified in its charter)
Delaware
82-3677704
(State of Other Jurisdiction of incorporation or Organization)
(I.R.S. Employer Identification No.)
555 East North Lane, Suite 5075, Conshohocken, Pennsylvania
19428
(Address of principal executive offices)
(Zip code)
Registrant’s telephone number, including area code: (610) 424-4515
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name Of Each Exchange
On Which Registered
Common Stock, par value $0.0001 per share
AHCO
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.0405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions
of "large accelerated filer,” "accelerated filer,” "smaller reporting company,” and "emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements. ¨
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers
during the relevant recovery period pursuant to §240.10D-1(b). ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of June 30, 2025, the last business day of the Registrant's most recently completed second fiscal quarter, the aggregate market value of the shares of Common Stock, par value $0.0001 per share,
held by non-affiliates of the Registrant, computed based on the closing sale price of $9.43 per share on June 30, 2025, as reported by The Nasdaq Stock Market LLC, was approximately $1.04 billion. Shares
of Common Stock held by each executive officer and director and by each shareholder affiliated with a director or an executive officer have been excluded from this calculation because such persons may be
deemed to be affiliates. As of February 20, 2026, there were 135,914,816 shares of the Registrant’s Common Stock outstanding.
Documents Incorporated by Reference
The information called for by Part III is incorporated by reference to the Definitive Proxy Statement for the 2026 Annual Meeting of Stockholders of the Registrant which will be filed with the U.S.
Securities and Exchange Commission not later than April 30, 2026.

TABLE OF CONTENTS
Page
PART I
Item 1. Business
5
Item 1A. Risk Factors
14
Item 1B. Unresolved Staff Comments
36
Item 1C. Cybersecurity
36
Item 2. Properties
37
Item 3. Legal Proceedings
37
Item 4. Mine Safety Disclosures
38
PART II
Item 5. Market Price of and Dividends on Registrant’s Common Equity and Related Stockholder Matters; Issuer Purchases of Equity Securities
39
Item 6. [Reserved]
39
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
39
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
64
Item 8. Financial Statements and Supplementary Data
65
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
123
Item 9A. Controls and Procedures
123
Item 9B. Other Information
124
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
124
PART III
Item 10. Directors, Executive Officers and Corporate Governance
124
Item 11. Executive Compensation
124
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
124
Item 13. Certain Relationships and Related Transactions, and Director Independence
124
Item 14. Principal Accountant’s Fees and Services
124
PART IV
Item 15. Exhibits and Financial Statement Schedules
125
Item 16. Form 10-K Summary
125
Signatures
129
1

CAUTIONARY STATEMENT
In this Annual Report on Form 10-K, including "Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7, and the documents
incorporated by reference herein, we make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements
relate to expectations for future financial performance, business strategies or expectations for our business. These statements may be preceded by, followed by or include the
words "may,” "might,” "will,” "will likely result,” "should,” "estimate,” "plan,” "project,” "forecast,” "intend,” "expect,” "anticipate,” "believe,” "seek,” "continue,” "target” or
similar expressions.
These forward-looking statements are based on information available to us as of the date they were made, and involve a number of risks and uncertainties which may
cause them to turn out to be wrong. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not
undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future
events or otherwise, except as may be required under applicable securities laws. As a result of a number of known and unknown risks and uncertainties, our actual results or
performance may be materially different from those expressed or implied by these forward- looking statements. Some factors that could cause actual results to differ include:
•
competition and the ability of our business to grow and manage profitable growth;
•
fluctuations in the U.S. and/or global stock markets;
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the possibility that we may be adversely affected by other economic, business, and/or competitive factors;
•
changes in applicable laws or regulations;
•
failure to consummate or realize the expected benefits of acquisitions; and
•
other risks and uncertainties set forth in this Form 10-K, as well as the documents incorporated by reference herein.
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SUMMARY RISK FACTORS
AdaptHealth’s business is subject to numerous risks and uncertainties, including those described in Item 1A, "Risk Factors.” These risks include, but are not limited to
the following:
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reliance on relatively few suppliers for the majority of our patient service equipment and supplies;
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supply chain disruptions and economy-wide labor shortages in the U.S.;
•
the impact of inflation;
•
cyber-attacks or security breaches experienced by us or our vendors or service providers, security breaches or the unauthorized access, disclosure, loss or use of
sensitive personal information, such as protected health information could cause a loss of confidential data, give rise to remediation and other expenses, expose us to
liability under applicable laws and regulations, including the Health Insurance Portability and Accountability Act of 1996 ("HIPAA”), consumer protection, common
law or other legal theories, subject us to litigation and federal and state governmental inquiries, enforcement actions, damage our reputation, and otherwise be
disruptive to our business;
•
our ability to successfully design, modify and implement technology-based and other process changes and our dependence on information systems, including
software licensed from third parties;
•
continuing efforts by private third-party payors to control their costs and payor contracts being subject to renegotiation or termination;
•
changes in governmental or private payor supply replenishment schedules and our ability to manage the complex and lengthy reimbursement process;
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reliance for a significant portion of our revenue on the provision of sleep therapy equipment and supplies to patients;
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consolidation among health insurers and other industry participants;
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failure to maintain controls and processes over billing and collections;
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ability to effectively implement controls and procedures required by the Sarbanes-Oxley Act;
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ability to maintain or develop relationships with patient referral sources;
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competition from numerous other sleep therapy equipment, home respiratory, mobility equipment, and diabetes medical devices and supplies providers;
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risks related to government regulation, including federal and state changes to reimbursement and other Medicaid and Medicare policies, and our ability to comply
with applicable laws, including healthcare fraud and abuse and false claims laws and regulations;
•
changes in medical equipment technology and development of new treatments;
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the use or anticipated use of artificial intelligence ("AI") technologies, including generative AI, by us or third parties;
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the risk of rupture or other accidents due to the transport of compressed and liquid oxygen;
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the timing and amount of share repurchases;
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outsourcing of a portion of our internal business functions to third-party providers;
•
ability to attract and retain key members of senior management and other key personnel;
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•
ability to execute our strategic growth plan, which involves the acquisition of other companies, including our ability to integrate the operations of acquired companies
into our business and realize the expected benefits of such acquisitions;
•
the impact of political and economic conditions;
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changes in the authorizations or documentation necessary for products we provide and the findings as a result of audits of reimbursement claims by various
governmental and private payor entities;
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significant reimbursement reductions and/or exclusion from markets or product lines;
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our ability to maintain required licenses and accreditation;
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the impact of global climate change and legal, regulatory or market responses to such change;
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the impact of writing down all or a portion of goodwill and/or identifiable intangible assets if required; and
•
our ability to generate sufficient cash flow or obtain additional capital to fund our operating subsidiaries and finance our growth.
4

PART I
Item 1. Business
AdaptHealth Corp. and subsidiaries ("AdaptHealth" or "the Company") is a national leader in providing patient-centered, healthcare-at-home solutions including home
medical equipment ("HME”), medical supplies, and related services. The Company operates under four reportable segments that align with its product categories: (i) Sleep Health,
(ii) Respiratory Health, (iii) Diabetes Health, and (iv) Wellness at Home. A description of the products and services provided within each of the Company’s four reportable
segments is provided below.
Sleep Health
The Sleep Health segment provides sleep therapy equipment, supplies and related services (including continuous positive airway pressure and BiLevel services) to
individuals for the treatment of obstructive sleep apnea.
Respiratory Health
The Respiratory Health segment provides oxygen and home mechanical ventilation equipment and supplies and related chronic therapy services to individuals for the
treatment of respiratory diseases, such as chronic obstructive pulmonary disease and chronic respiratory failure.
Diabetes Health
The Diabetes Health segment provides medical devices, including continuous glucose monitors and insulin pumps, and related services to patients for the treatment of
diabetes.
Wellness at Home
The Wellness at Home segment provides home medical equipment and services to patients in their homes including those who have been discharged from acute care and
other facilities. The segment tailors a service model to patients who are adjusting to new lifestyles or navigating complex disease states by providing essential medical supplies and
durable medical equipment.
The Company services beneficiaries of Medicare, Medicaid and commercial insurance payors. As of December 31, 2025, AdaptHealth serviced approximately 4.3 million
patients annually in all 50 states through our network of approximately 640 locations in 48 states. The Company's principal executive offices are located at 555 East North Lane,
Suite 5075, Conshohocken, Pennsylvania 19428.
Company Operations
Product Offering. AdaptHealth delivers patient-centered, healthcare-at-home solutions including home medical equipment, medical supplies, and related services directly
to a patient’s home upon discharge from a hospital and/or receipt of a physician/medical referral. The breadth of AdaptHealth’s products is particularly valuable to acute care
hospitals, sleep laboratories and long-term care facilities that discharge patients with complex conditions and multiple product needs.
For resupply sale and one-time sale products, which include those deemed to be consumables, AdaptHealth receives a single payment upon sale of the product. These
products, which include positive airway pressure ("PAP") masks and related supplies, continuous glucose monitors ("CGM"), diabetes management supplies, orthopedic bracing,
wound care supplies, home medical equipment and related accessories, incontinence supplies, medications, enteral supplies, and other products, accounted for approximately 63%
of AdaptHealth’s net revenue for the year ended December 31, 2025.
AdaptHealth is paid a fixed monthly amount for certain HME products as designated by the Centers for Medicare & Medicaid Services ("CMS”) or commercial insurance
payors, such as oxygen and home mechanical ventilation equipment, PAP equipment, hospital beds, and other products. These sales accounted for approximately 33% of
AdaptHealth’s net revenue for the year ended December 31, 2025.
AdaptHealth receives a per member per month ("PMPM”) fee under certain at-risk capitation arrangements, which refers to a model in which the Company receives a
PMPM fee from the third-party payor, and is responsible for
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managing a range of healthcare services and associated costs of its members. In at-risk capitation arrangements, AdaptHealth is responsible for the cost of contracted healthcare
services required by those members in accordance with the terms of each agreement. Capitated revenue contracts with payors are generally multi-year arrangements and have a
single monthly stand ready performance obligation to provide all aspects of necessary medical care to members for the contracted period in accordance with the scope of the
agreements. These at-risk capitation arrangements accounted for approximately 4.0% of AdaptHealth’s net revenue for the year ended December 31, 2025.
Supply Chain. AdaptHealth plays an important role in delivering HME products to patients in their homes. Manufacturers of home medical equipment and diabetes
medical devices sell and ship their products to AdaptHealth directly. AdaptHealth also contracts with national healthcare distribution companies to ship certain HME products and
diabetes medical devices directly to patients’ homes. These distributors invoice AdaptHealth for the cost of shipped products at the time of sale. AdaptHealth receives referrals
from a variety of sources, such as acute care hospitals, sleep laboratories, pulmonologist and endocrinologist offices, skilled nursing facilities, hospice operators, and primary care
providers, among others. AdaptHealth’s products are either shipped to patients’ homes by AdaptHealth-operated or contracted delivery trucks or shipped using proprietary or
third-party distribution services. AdaptHealth invoices payors and patients directly for the products that are delivered and for the services that are provided.
Operating Structure
Management. AdaptHealth is led by a proven management team with experience across a variety of organizations in the healthcare industry. AdaptHealth's management
structure is strategically aligned through its four reportable segments, which each have a general manager who are responsible for the operations of each segment. These general
managers report to AdaptHealth's Chief Operating Officer. AdaptHealth has a centralized approach for key business processes, including revenue cycle management, purchasing,
payor contracting, mergers and acquisitions ("M&A”) activity, finance, compliance, legal, human resources, IT, resupply and sales management. However, AdaptHealth believes
that the personalized nature of patient care and referral relationships, characteristic of the home healthcare industry, also requires a focus on operating locally as well. AdaptHealth
responds promptly and effectively to local market demands and opportunities through local managers, who are responsible and accountable for maintaining and developing
relationships with referral sources and serving patients.
IT. AdaptHealth has established an integrated, technology-enabled, centralized platform, distinguishing itself from many of its competitors that traditionally use less
automated processes that are typically complex, can be prone to mistakes and are less efficient. AdaptHealth’s technology enables automated, compliant, and integrated workflow
into patients’ delivery of care. AdaptHealth believes that this advanced technology platform provides it with a competitive advantage through its unique components that cater to
patients and physicians. AdaptHealth believes that its technology platform has several characteristics that appeal to physicians, including its ease of use, the improved
compliance it enables through its integrated systems, and the automated, integrated workflow it provides for patients’ delivery of care. AdaptHealth has formed close relationships
with its third-party software providers to optimize its workflow. Additionally, AdaptHealth’s e-prescribing capabilities enhance transparency and reduce transcription and other
errors. AdaptHealth believes that patients are also better served due to the efficiency from time of order to delivery and the seamless integration across points of care enabled by
AdaptHealth’s platform. The integrated system also provides AdaptHealth management with critical information in a timely manner, allowing them to track performance levels
company wide. AdaptHealth utilizes a proprietary mobile delivery technology called OTL, which has many features, including delivery notification, patient satisfaction applications
and referral source notifications.
We are deploying innovative programs, which use artificial intelligence, including generative artificial intelligence and similar tools and technologies (collectively, "AI”),
to improve or enhance patient and operational workflows. AI deployment involves internal resources as well as strategic partnerships focused on patient experience and
operational efficiencies. Any creation, use, or deployment of AI may subject us to additional risks under HIPAA and other laws and regulations governing privacy or AI. To the
extent we use personal information to train AI, we are required to comply with laws, regulations, and contractual requirements governing uses and disclosures of personal
information, which may require us to obtain patient authorizations or to de-identify personal information or protected health information. In addition, the Federal Trade Commission
("FTC”) has announced that they are taking a closer look at how AI is developed and used, including evaluating claims by companies regarding AI that could be false or
misleading, to take appropriate steps to reduce biases. For further discussion on AdaptHealth’s use of AI, see Item 1A, Risk Factors – "The use or anticipated use of artificial
intelligence ("AI”) technologies, including generative AI, by us or third parties, could result in reputational harm, competitive harm, and legal liability, and may increase or
create new operational risks.”
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See Item 1C, "Cybersecurity", of this Annual Report on Form 10-K, for discussion of AdaptHealth's risk management and strategy and governance relating to
cybersecurity.
Revenue Cycle Management. AdaptHealth’s revenue cycle management and billing processes have both automated and manual elements that are designed to maintain
the integrity of revenue and accounts receivable. A majority of AdaptHealth's third-party payors can accommodate electronic claims submission, such as Medicare, certain state
Medicaid payors and many commercial insurance payors, and are billed electronically on a daily basis. For payors that are unable to accept electronic submissions, AdaptHealth
generates paper claims and invoices.
Outsourced Providers
AdaptHealth contracts with business process outsourcing providers to provide certain billing, accounts payable and administrative functions. These providers are
primarily based in India and the Philippines, and provide AdaptHealth with the ability to scale its workforce in a cost-effective manner. As of December 31, 2025, approximately
4,400 full-time equivalent personnel were provided to AdaptHealth under such arrangements.
Sales and Marketing
Sales activities are generally carried out by AdaptHealth’s full-time sales representatives with assistance from on-site liaisons in certain markets who interact directly with
hospital discharge coordinators and patients. AdaptHealth’s sales team works in close alignment with AdaptHealth’s trained clinical team as part of their sales activities.
AdaptHealth primarily acquires new patients through referrals, and also acquires new patients through capitated arrangements with various managed care providers. Sources of
referrals include acute care hospitals, sleep laboratories, pulmonologist and endocrinologist offices, skilled nursing facilities, hospice operators, and primary care providers, among
others. AdaptHealth’s sales representatives maintain continual contact with medical professionals across these facilities. AdaptHealth believes that its relationships with its
referral sources are strong and that these entities will continue to be a source of organic revenue through new patients. While AdaptHealth views its referral sources as
fundamental to its business, no single referral source accounted for a material amount of its annual net revenue as of December 31, 2025.
Acquisitions
Continuing to grow through accretive acquisitions remains an element of AdaptHealth’s growth strategy, and AdaptHealth continuously reviews its pipeline of potential
acquisition candidates. AdaptHealth also leverages the acquisition of equipment from previous providers to facilitate the transition of patients related to newly awarded at-risk
capitated contracts. The revenue related to these newly awarded contracts is considered organic revenue. AdaptHealth leverages its scalable front-end and back-office technology
platform to facilitate acquisition integration to help realize short-term cost saving synergies and longer-term revenue growth synergies.
Suppliers
AdaptHealth purchases home healthcare equipment, medical devices and supplies from a variety of suppliers. AdaptHealth purchases these items primarily from two to
three suppliers for each of its product categories, including its sleep therapy equipment and supplies, its mobility and home services products (such as hospital beds, wheelchairs,
walkers and commodes) and its diabetes services products/CGM products.
Facilities
AdaptHealth does not own any properties and leases its operating locations. As of December 31, 2025, AdaptHealth serviced approximately 4.3 million patients annually
in all 50 states through its network of approximately 640 locations in 48 states. During the year ended December 31, 2025, AdaptHealth completed an average of approximately
38,500 equipment and supply deliveries a day. Full-service locations average approximately 5,800 square feet and are usually a combination of office and warehouse space. Many
of these facilities are accredited to provide patients with medical products, equipment and related services, and their adjacent warehouse space is used for storage of adequate
supplies of equipment and accessories for such patient services. AdaptHealth believes that these facilities are adequate to meet its current needs. AdaptHealth reviews its facility
footprint on a regular basis and adds locations as needed to support patient growth.
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Human Capital Resources
As of December 31, 2025, AdaptHealth had approximately 10,900 employees. AdaptHealth’s human capital resources objectives and compensation program include
attracting and retaining highly motivated, well-qualified employees and executives. AdaptHealth uses a mix of competitive salaries and other benefits to attract and retain
employees and executives. AdaptHealth believes that relations between its management and employees are good, and it is committed to inclusion and policies and procedures to
maintain a safe work environment. AdaptHealth is committed to its DIRECT Value Statements: Diversity and Inclusion, Integrity, Respect, Excellence, Compassion and Teamwork.
Talent Development and Retention
Building and strengthening AdaptHealth’s talent pipeline is imperative to its success. AdaptHealth's management team has a dedicated annual performance management
review process which provides a platform for feedback conversations around performance and goal setting. Leadership development trainings have been delivered quarterly
including topics on change management, conducting critical performance discussions, and talent acquisition practices. This encourages learning among our leaders and continues
AdaptHealth’s building of a foundation of excellence. AdaptHealth has also launched AdaptUniversity, a national learning system designed to teach valuable job skills that focus
on operational efficiencies and offer pathways for career development.
Competition
The HME market is fragmented and highly competitive. AdaptHealth competes with other large national providers, including Accendra Health, Lincare Holdings Inc.,
Rotech Healthcare, Inc., Cardinal Health, Inc. and Quipt Home Medical Corp; regional providers, including DASCO Home Medical Equipment, Binson’s Medical Equipment, Inc.,
Norco, Inc., Protech Home Medical Corp., and Viemed Healthcare, Inc.; and product-specific providers, including Breg, Inc., Inogen, Inc., Acelity L.P., and CCS Medical, as well as
numerous other smaller local providers. In addition, AdaptHealth competes with non-HME providers, including CVS and Amazon.
Consolidation of the HME market is a continuing trend, as required technology investments and reduced reimbursements put financial pressure on smaller providers.
Larger HME providers with integrated technology and automated processes are generally better positioned to gain market share and more attractive vendor pricing. The Medicare
Durable Medical Equipment, Prosthetics, Orthotics, & Supplies ("DMEPOS”) Competitive Bidding Program also emphasizes the importance of relationships with both the payors
and referral sources. Because payors typically select a limited number of exclusive suppliers, and physicians typically refer based on timely delivery and consistency, relationships
with both are critical to success in the market.
AdaptHealth believes that the most important competitive factors in the regional and local markets are:
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Quality of patient care, including clinical expertise;
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Service quality and an efficient, responsive referral process;
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Differentiated technology platform that provides a superior physician and patient experience;
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Reputation with referral sources, including local physicians and hospital-based professionals;
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Comprehensive offering across the home medical equipment space;
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Broad network of payor contracts and regional insurers; and
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Overall ease of doing business.
AdaptHealth believes that it competes favorably with competitors on the basis of these and other factors.
Legal Proceedings
See Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Commitments and Contingencies."
8

Government Regulation
The federal government and all states in which AdaptHealth currently operates regulate various aspects of AdaptHealth’s business. In particular, AdaptHealth’s
operations are subject to federal laws that regulate the reimbursement of its products and services under various government programs and that are designed to prevent fraud and
abuse. AdaptHealth’s operations are also subject to state laws governing, among other things, pharmacies, nursing services, medical equipment suppliers and certain types of
home health activities. State regulators may also determine that telephone marketing of AdaptHealth products and services to patients fall within state regulation of telemarketing.
Certain of AdaptHealth’s employees are subject to state laws and regulations governing the licensure and professional practice of respiratory therapy, pharmacy and nursing.
AdaptHealth maintains a Compliance Program that is designed to meet the regulations and guidelines set forth by the U.S. Department of Health and Human Services
("HHS"), provides ongoing compliance training designed to keep AdaptHealth’s officers, directors and employees well-educated and up-to-date regarding developments on
relevant topics and emphasizes AdaptHealth’s policy of strict compliance. Federal and state laws require that AdaptHealth obtain facility and other regulatory licenses and
accreditation and that AdaptHealth enroll as a supplier with federal and state health programs.
As a healthcare provider, AdaptHealth is subject to extensive regulation to prevent fraud and abuse and laws regulating reimbursement under various government
programs. The marketing, billing, documenting and other practices of healthcare companies are all subject to government scrutiny. To ensure compliance with Medicare, Medicaid
and other regulations, regional health insurance carriers and state agencies often conduct audits and request customer records and other documents to support AdaptHealth’s
claims submitted for payment of services rendered to customers. Similarly, government agencies and their contractors periodically open investigations and obtain information from
healthcare providers pursuant to the legal process. Violations of federal and state regulations can result in severe criminal, civil and administrative penalties and sanctions,
including disqualification from Medicare and other reimbursement programs, which could have a material adverse effect on AdaptHealth’s financial condition, results of
operations, and reputation.
Numerous federal and state laws and regulations, including HIPAA and the Health Information Technology for Economic and Clinical Health Act ("HITECH Act"),
govern the collection, dissemination, security, use and confidentiality of protected health information and other personal information. As part of AdaptHealth’s provision of, and
billing for, healthcare equipment and services, AdaptHealth is required to collect and maintain protected health information. In addition, various federal and state legislative and
regulatory bodies or self-regulatory organizations may expand current laws or regulations, enact new laws or regulations, or issue revised rules or guidance regarding privacy, data
protection and consumer protection. For instance, the California Consumer Privacy Act, as amended by the California Privacy Rights Act, and its implementing regulations
("CCPA”), provides California residents expanded rights regarding their personal information, including the right to access, delete, and correct their personal information, and opt
out of sharing or selling their personal information. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to
increase data breach litigation. Although there are limited exemptions for protected health information, the CCPA may increase AdaptHealth’s compliance costs and potential
liability. Many similar comprehensive privacy laws have been enacted in several states, including Washington (My Health My Data Act), Nevada (Consumer Health Data Privacy
Law), and New York (New York Health Information Privacy Act), each of which has its own specific rules, requirements, and penalties. New health information standards, whether
implemented pursuant to HIPAA, the HITECH Act, congressional action or otherwise, could have a significant effect on the manner in which AdaptHealth handles healthcare-
related data and communicate with payers, and the cost of complying with these standards could be significant. If AdaptHealth does not comply with existing or new laws and
regulations related to patient or consumer health information, it could be subject to criminal or civil sanctions.
Additionally, the Federal Trade Commission ("FTC") and many state attorneys general are interpreting existing federal and state consumer protection laws to impose
evolving standards for the online collection, use, dissemination and security of health-related and other personal information. Courts may also adopt the standards for fair
information practices promulgated by the FTC which concern consumer notice, choice, security and access. Consumer protection laws require AdaptHealth to publish notices that
describe how it handles personal information and rights provided to individuals to control their personal information. If any such notice that AdaptHealth publishes is considered
untrue, it may be subject to government claims of unfair or deceptive trade practices, which could lead to significant liabilities and consequences. Furthermore, according to the
FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair acts or practices in or affecting
commerce in violation of Section 5 of the FTC Act. Sending communications with AdaptHealth’s patients are also subject to laws and regulations,
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including the Telephone Consumer Protection Act of 1991 ("TCPA"), the Controlling the Assault of Non-Solicited Pornography And Marketing ("CAN-SPAM") Act, additional
fax regulations under the Junk Fax Act and the Telemarketing Sales Rule and Medicare regulations.
Healthcare is an area of rapid regulatory change. Changes in laws and regulations and new interpretations of existing laws and regulations may affect permissible
activities, the relative costs associated with doing business, and reimbursement amounts paid by federal, state and other third-party payers. Changes enacted by a new presidential
administration or Congress may impact Medicare and Medicaid programs, as well as insurance plans offered on the Affordable Care Act exchanges. As discussed further below,
Public Law 119-21, also known as the One Big Beautiful Bill Act ("OBBBA”), enacted on July 4, 2025, includes provisions affecting Medicaid eligibility and enrollment, many of
which do not take effect until 2027. These changes can result in reduction of reimbursements to AdaptHealth, increased regulatory complexity, and a reduction in the number of
beneficiaries covered by these programs or other changes that affect AdaptHealth. AdaptHealth cannot predict the future of federal, state and local regulation or legislation,
including Medicare and Medicaid statutes and regulations, or possible changes in national healthcare policies. Adapting to future legislative and regulatory changes could have a
material adverse effect on AdaptHealth’s financial condition and results of operations.
The long-term effects of climate change are difficult to predict and may be widespread. The impacts may include physical risks (such as rising sea levels or frequency and
severity of extreme weather conditions), social and human effects (such as population displacement or harm to health and well-being), compliance costs and transition risks (such
as regulatory or technological changes) and other adverse effects. The effects could impair, among other things, the availability and cost of certain products and commodities and
energy (including utilities), which may in turn impact AdaptHealth's ability to procure goods or services required for the operation of its business at the quantities and levels it
requires. AdaptHealth may bear losses incurred as a result of, among other things, physical damage to or destruction of its facilities (such as patient service offices and
warehouses), loss or spoilage of inventory, and business interruption due to weather events that may be attributable to climate change. Governments in the U.S. and abroad are
considering new or expanded laws to address climate change. Such laws may include limitations on greenhouse gas ("GHG”) emissions, mandates that companies implement
processes to monitor and disclose climate-related matters, additional taxes or offset charges on specified energy sources, and other requirements. In October 2023, the state of
California enacted the Climate Corporate Data Accountability Act ("SB-253"), which mandates the disclosure of GHG emissions, including Scope 1, Scope 2 and Scope 3 emissions;
and the Climate-Related Financial Risk Act ("SB-261"), which mandates the disclosure of climate-related financial risks, and measures adopted to reduce and adapt to such risks.
The effective date of the final rules is currently delayed until the first quarter of 2026. Compliance with climate-related laws may be further complicated by disparate regulatory
approaches in various jurisdictions. New or expanded climate-related laws could impose substantial costs on AdaptHealth. At the present time, we cannot predict their potential
effect on AdaptHealth's capital expenditures or results of operations.
Compliance with such laws and regulations is costly and may materially affect AdaptHealth's business and results of operations. Among other effects, healthcare
regulations substantially increase the time, difficulty and costs incurred in obtaining and maintaining approval to market newly developed and existing products. AdaptHealth
believes it is in material compliance with all statutes and regulations applicable to its operations.
Implemented Regulation
As a provider of home oxygen, respiratory and other chronic therapy equipment to the home healthcare market, AdaptHealth participates in Medicare Part B, the
Supplementary Medical Insurance Program, which was established by the Social Security Act of 1965. Providers of home oxygen and other respiratory therapy services and
equipment have historically been heavily dependent on Medicare reimbursement due to the high proportion of elderly persons suffering from respiratory diseases utilizing
Medicare benefits. Durable medical equipment, including oxygen equipment, is traditionally reimbursed by Medicare based on fixed fee schedules.
Impact of the MMA
In December 2003, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ("MMA") was signed into law. The MMA established a Recovery Audit
Contractors ("RAC") program, which implemented a new method for recovery of Medicare overpayments by utilizing private companies operating on a contingent fee basis to
identify and recoup Medicare overpayments, and implemented quality standards and accreditation requirements for Durable Medical Equipment ("DME") suppliers. The RACs are
empowered to audit claims submitted by healthcare providers and
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overpayments identified by the RACs can be recouped from future payments, including in cases where the reimbursement rules are unclear or subject to differing interpretations.
This activity, as well as the activity of intermediaries and others involved in government reimbursement, may include changes in long-standing interpretations of reimbursement
rules, which could adversely impact AdaptHealth’s future financial condition and results of operations. In October 2008, CMS established Zone Program Integrity Contractors
("ZPICs”) and Unified Program Integrity Contractors ("UPICs”), who are responsible for ensuring the integrity of all Medicare-related claims. CMS continues to utilize program
integrity contractors and has expanded its audit activity and enforcement efforts, including the increased use of medical review, payment audits, and data-driven oversight
initiatives. On November 25, 2025, the CMS administrator announced a nationwide initiative to coordinate with state authorities to identify and pursue potential Medicare-related
tax fraud and improper provider arrangements, which could impact providers such as AdaptHealth. These legislative and regulatory provisions, as currently in effect, have and will
continue to adversely impact AdaptHealth’s financial condition and results of operations.
Impact of Competitive Bidding
The MMA legislation directly impacted reimbursement for the primary respiratory and other DME products that AdaptHealth provides. Among other things, the MMA
established a competitive acquisition program for DME. The MMA instructed CMS to establish and implement programs under which competitive acquisition areas would be
established throughout the U.S. for the purposes of awarding contracts for the furnishing of competitively priced items of DME, including oxygen equipment. For each competitive
acquisition area, CMS is required to conduct an auction under which providers submit bids to supply certain covered items of DME. Successful bidders are expected to meet
certain program quality standards, volume commitments and surety bond requirements in order to be awarded a contract, and only successful bidders can supply the covered items
to Medicare beneficiaries in the respective acquisition area. There are, however, regulations in place that allow non-contracted suppliers to continue to provide equipment and
services to their existing customers at the new prices determined through the bidding process. Competitive bidding contracts are expected to be re-bid at least every three years.
CMS is required to award contracts to multiple entities submitting bids in each area for an item or service but has the authority to limit the number of contractors in a competitive
acquisition area to the number it determines to be necessary to meet projected demand.
In March 2019, CMS announced that it would consolidate all rounds and areas of the DMEPOS Competitive Bidding Program ("CBP”) into a single round of competition
effective January 1, 2021 named "Round 2021.” Round 2021 contracts became effective on January 1, 2021 and extended through December 31, 2023. CMS included 16 product
categories in Round 2021. On April 10, 2020, CMS announced that due to the COVID-19 pandemic, it removed the non-invasive ventilators product category from the Round 2021
DMEPOS Competitive Bidding Program.
On October 27, 2020, CMS announced that it would not award competitive bid contracts in 13 of the 15 remaining product categories due to a failure to achieve expected
savings and that contract awards would only be made for off-the-shelf ("OTS”) knee and back braces. All other product categories were removed from Round 2021. For the years
ended December 31, 2025, 2024, and 2023, net revenue generated with respect to providing OTS knee and back braces (excluding amounts generated in non-rural and rural non-bid
areas) were not material. AdaptHealth has obtained contracts for OTS knee and back braces and does not expect the single payment amounts imposed by CMS under such
contracts to have a material impact on AdaptHealth.
On May 25, 2023, CMS announced a temporary gap period for the CBP starting January 1, 2024, following the expiration of all Round 2021 contracts for OTS knee and
back braces on December 31, 2023. The gap period commenced as anticipated. On November 28, 2025, CMS issued the Calendar Year (CY) 2026 Home Health Prospective Payment
System Final Rule (CMS-1828-F) ("2026 Final Rule”), and announced that CBP will resume in 2026, following applicable rulemaking and implementation activities. The current CBP
timeline published by CMS contains, in relevant part, the following target dates: (1) late summer/early fall 2026 - bid window opens; (2) late summer/early fall 2027 - contracts
awarded and single payment amounts announced; and (3) no later than January 1, 2028 - contracts and single payment amounts in effect, and the six-month transition period
begins for beneficiaries to switch to contract suppliers. Product categories for the CBP include Class II continuous glucose monitors and insulin pumps, urological supplies,
ostomy supplies, hydrophilic urinary catheters, OTS back braces, OTS knee braces and OTS upper extremity braces. CMS also finalized updates to the DMEPOS Competitive
Bidding Program in the 2026 Final Rule, including revised bidding processes, changes to single payment amounts and bid limits, new product categories, a Remote Item Delivery
competitive model, and changes to provider enrollment and accreditation requirements. The resumption of the CBP beginning in 2026 could further alter reimbursement rates and
payment methodologies for certain DME items beyond the current fee schedule framework.
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The competitive bidding process has historically put pressure on the amount AdaptHealth is reimbursed in the markets in which it exists, as well as in areas that are not
subject to the DMEPOS Competitive Bidding Program. The rates required to win future competitive bids could continue to depress reimbursement rates. AdaptHealth will continue
to monitor developments regarding the DMEPOS Competitive Bidding Program. While AdaptHealth cannot predict the outcome of the DMEPOS Competitive Bidding Program on
its business in the future nor the Medicare payment rates that will be in effect in future years for the items subjected to competitive bidding, the program may materially adversely
affect its financial condition and results of operations.
CMS’s decision to cancel the 2021 competitive bidding program was a significant development for AdaptHealth. On December 28, 2021, CMS permanently finalized the
higher blended rates in rural and noncontiguous non-competitive bidding areas. Congress further extended a blended higher Medicare reimbursement rate in non-competitive
bidding/non-rural areas through December 31, 2023. After December 31, 2023, the reimbursement rate has reverted to 100% of the Medicare fee schedule, adjusted to inflation.
Impact of the OBBBA
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA”) was signed into law. The OBBBA introduces significant changes to U.S. health care policy and the federal tax
code. Although the most substantial health care provisions are not set to take effect until 2027 or later, the law imposes new limitations and eligibility requirements expected to
affect Medicaid funding and enrollment, as well as the Affordable Care Act ("ACA") health insurance marketplace.
The OBBBA is expected to reduce the federal government’s overall Medicaid expenditures and tighten Medicaid eligibility requirements. The law limits eligibility for
Medicaid by imposing work or community engagement requirements for adults under 65 years old in states that expanded their Medicaid programs under the ACA ("Expansion
States”). This includes states with waiver-based expansions, subject to limited exceptions, and requires Medicaid eligibility redetermination at least every six months. In addition to
changes made to federal healthcare programs, the OBBBA contains policy changes that are expected to decrease the number of individuals who obtain health insurance from the
marketplace platforms established by the ACA. The OBBBA effectively ends automatic renewals of coverage by requiring pre-enrollment verification of eligibility and restricts
subsidized marketplace coverage based on immigration status. The expiration of these enhanced subsidies may reduce the affordability of marketplace coverage, potentially
resulting in lower enrollment or migration to plans with higher cost-sharing and more limited benefits. In addition, the OBBBA authorizes states to impose Medicaid work
requirements and related eligibility conditions, which may further reduce Medicaid enrollment or increase administrative disenrollment. Any reduction in covered lives, or changes
to Medicaid eligibility and benefit structures, could adversely affect utilization, reimbursement levels, and AdaptHealth's revenues.
The OBBBA also introduces significant changes to Medicaid financing mechanisms, including restrictions on provider tax arrangements that are intended to reduce the
federal matching funds received by state Medicaid programs. The law prohibits states from establishing new provider taxes or increasing rates of existing provider taxes while also
limiting the structure of such taxes. Additionally, the OBBBA directs the U.S. Department of Health and Human Services to revise regulations governing state-directed payment
arrangements ("SDPs”) to cap total payment rates paid by Medicaid managed care organizations for specified services, including hospital services, by tying caps to Medicare
payment rates instead of average commercial rates and imposing lower caps in Expansion States. The revised regulations will apply to SDPs established on or after July 4, 2025,
unless the SDP meets certain grandfathering criteria that provide a time-limited exemption from the new payment limits. As states adjust SDP structures in response to enrollment
declines, budgetary pressures, or evolving CMS oversight, reimbursement levels and payment predictability for items reimbursed under Medicaid programs may be adversely
affected.
To support the delivery of health care in rural communities, the OBBBA established a temporary rural health grant initiative, the Rural Health Transformation Program,
which allocates $50 billion in rural health funding for fiscal years 2026 through 2030. The program’s implementation, including how funds will be distributed, which providers will
qualify, and the criteria CMS will apply to state applications, has not been finalized and the impact on AdaptHealth is uncertain.
In addition, the OBBBA contains modifications to sections of the Internal Revenue Code related to the deductibility of depreciation and business interest expense, which
became effective in 2025.
We are unable to predict at this time how states will implement various requirements of the OBBBA, nor can we predict whether or how future legislation, rulemaking, or
judicial action will impact implementation of the OBBBA. Given
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these uncertainties, we cannot estimate the OBBBA’s impact, nor can we predict the timing of that impact, on our future business, financial condition or results of operations.
Durable Medical Equipment Medicare Administrative Contractors
In order to ensure that Medicare beneficiaries only receive medically necessary and appropriate items and services, the Medicare program has adopted a number of
documentation requirements. For example, certain provisions under CMS guidance manuals, local coverage determinations, and the DME Medicare Administrative Contractors
("MAC”) Supplier Manuals provide that clinical information from the "patient’s medical record” is required to justify the initial and ongoing medical necessity for the provision of
DME. Some DME MACs, CMS staff and other government contractors have recently taken the position, among other things, that the "patient’s medical record” refers not to
documentation maintained by the DME supplier but instead to documentation maintained by the patient’s physician, healthcare facility or other clinician, and that clinical
information created by the DME supplier’s personnel and confirmed by the patient’s physician is not sufficient to establish medical necessity. If treating physicians do not
adequately document, among other things, their diagnoses and plans of care, the risk that AdaptHealth will be subject to audits and payment denials may increase. Moreover,
auditors’ interpretations of these policies are inconsistent and subject to individual interpretation, leading to significant increases in individual supplier and industry-wide
perceived error rates. High error rates could lead to further audit activity and regulatory burdens and could result in AdaptHealth making significant refunds and other payments to
Medicare and other government programs. Accordingly, AdaptHealth’s future revenues and cash flows from government healthcare programs may be delayed and/or reduced.
Private payors also may conduct audits and may take legal action to recover alleged overpayments. AdaptHealth could be adversely affected in some of the markets in which it
operates if the auditing payor alleges substantial overpayments were made to AdaptHealth due to coding errors or lack of documentation to support medical necessity
determinations. AdaptHealth cannot currently predict the adverse impact these measures might have on its financial condition and results of operations, but such impact could be
material.
Federal and state budgetary and other cost-containment pressures will continue to impact the home respiratory care industry. AdaptHealth cannot predict whether new
federal and state budgetary proposals will be adopted or the effect, if any, such proposals would have on its financial condition and results of operations.
Medicare Provider Enrollment Changes and Enhanced Oversight
Effective January 1, 2026, the 36-month rule pertaining to changes in majority ownership will apply to all DMEPOS suppliers. This rule, which currently applies to home
health agencies and hospices, was included in the 2026 Final Rule. CMS created the 36-month rule for home health agencies in 2010 and subsequently expanded it to include
hospices in 2024. Under the 2026 Final Rule, CMS mirrors the approach taken with respect to home health agencies and hospices. If a DMEPOS supplier has a change in majority
ownership within 36 months after the effective date of its initial enrollment in Medicare or within 36 months after its most recent change in majority ownership, then Medicare
billing privileges will not be conveyed to the new owner unless an exception applies. Instead, a prospective owner-buyer would have to enroll in Medicare as a new supplier, and
undergo a survey and obtain accreditation from an approved accrediting organization. The application of the rule to DMEPOS suppliers is likely to create significant additional
work and cost for suppliers and may create a reimbursement gap until initial enrollment is completed, and could impact AdaptHealth as to any transactions to acquire or sell any
DMEPOS supplier entities.
The 2026 Final Rule also changes the frequency of surveys for DMEPOS suppliers. Previously, suppliers were re-surveyed every three years; effective January 1, 2026,
suppliers will be re-surveyed and re-accredited at least once every 12 months; CMS has indicated that suppliers may be re-surveyed multiple times in a 12-month period. This could
result in increased compliance expenses and have unknown impacts on reimbursement.
Availability of Information
We file or furnish annual, quarterly and current reports, proxy statements and other documents with the Securities and Exchange Commission (the "SEC”) under the
Exchange Act. The SEC maintains an internet website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers, including
us, that file electronically with the SEC.
We also make available free of charge through our website, https://adapthealth.com/investorrelations, electronic copies of certain documents that we file with the SEC,
including our Annual Reports on Form 10-K, Quarterly Reports on
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Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably
practicable after we electronically file such material with, or furnish it to, the SEC. Information on our website or any other website is not incorporated by reference into, and does
not constitute a part of, this Annual Report.
Item 1A. Risk Factors
We operate in a rapidly changing environment that involves a number of risks. The following discussion highlights some of these risks and others are discussed
elsewhere in this report. These and other risks could materially adversely affect our business, revenue, financial condition and results of operations. Additional risk factors not
presently known to us or that we currently deem immaterial may also impair our business or results of operations.
Risks Related to Our Business and Industry
Reliance on relatively few suppliers for the majority of AdaptHealth's patient service equipment and supplies could adversely affect its ability to operate.
AdaptHealth currently relies on a relatively small number of suppliers to provide it with the majority of its patient service equipment and supplies. Significant price
increases, or disruptions in the ability to obtain such equipment and supplies from existing suppliers, may force AdaptHealth to use alternative suppliers. Additionally, trade policy
developments, including ongoing investigations, could result in new tariffs on imported medical equipment or components, which could increase the costs of manufacturing or
procuring patient service equipment and supplies. Such tariffs or any new excise taxes imposed on manufacturers of certain medical equipment could be passed on to customers,
such as AdaptHealth. Such manufacturers may be forced to make other changes to their products or manufacturing processes that are unacceptable to AdaptHealth, resulting in a
need to change suppliers. Any change in suppliers AdaptHealth uses could cause delays in the delivery of such products and possible losses in revenue, which could adversely
affect AdaptHealth’s results of operations. In addition, alternative suppliers may not be available, or may not provide their products and services at similar or favorable prices. If
AdaptHealth cannot obtain the patient service equipment and supplies it currently uses, or alternatives at similar or favorable prices, AdaptHealth’s ability to provide such
products may be severely impacted, which could have an adverse effect on its business, financial condition, results of operations, cash flow, capital resources and liquidity.
Supply chain disruptions and economy-wide labor shortages in the U.S. have negatively impacted, and may continue to negatively impact, AdaptHealth’s businesses.
Many companies, including AdaptHealth, have experienced supply chain and labor challenges. Materials, equipment and labor shortages, shipping, logistics and other
delays and other supply chain and related disruptions may make it more difficult and costly for AdaptHealth to obtain products or services from third parties. If these types of
disruptions occur, a material adverse effect on AdaptHealth’s business, financial condition, results of operations and cash flows could result. Continued labor shortages have
driven a significant increase in competition throughout the industry to attract and retain talent and have also led to increased labor costs.
Union activity is another factor that may contribute to increased labor costs. AdaptHealth currently has a minimal number of union employees, so an increase in labor
union activity could have a significant impact on AdaptHealth's labor costs. AdaptHealth's failure to recruit and retain qualified employees, or to control its labor costs, could have
a material adverse effect on its business, financial position, results of operations, and cash flows.
While AdaptHealth seeks to mitigate any cost increases, labor impacts and supply chain delays and shortages, these efforts may not be successful and AdaptHealth may
experience adverse impacts due to such factors. AdaptHealth cannot predict the extent of these current trends or other future increases in operating costs. To the extent such
costs continue to increase, AdaptHealth may be prevented, in whole or in part, from passing such cost increases through to its existing and prospective customers, or
AdaptHealth’s customers may seek other competitive sources due to supply chain delays, which could have a material adverse impact on AdaptHealth’s business, financial
position, results of operations and cash flows.
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AdaptHealth has been, and may continue to be, negatively impacted by inflation and rising interest rates.
Increases in inflation have had, and may continue to have, an adverse effect on AdaptHealth. Current and future inflationary effects may be driven by, among other
things, general inflationary cost increases, supply chain disruptions and governmental stimulus or fiscal policies. The cost to manufacture and distribute the equipment and
products that AdaptHealth purchases from vendors and provides to patients may be influenced by inflationary pressures and the cost of materials, labor, shipping, and
transportation, including fuel costs. The cost of equipment and products may also be impacted by a shortage in the availability of certain products. Additionally, it is not certain
that AdaptHealth will be able to pass increased costs onto customers to offset inflationary pressures. Increases in inflation could have an impact on the overall demand for
AdaptHealth’s products and services, its costs for labor, equipment and products, and the margins it is able to realize on its products, all of which could have an adverse impact on
AdaptHealth’s business, financial position, results of operations and cash flows. In addition, future volatility of general price inflation and the impact of inflation on costs and
availability of materials, costs for shipping and warehousing, workforce wage pressure, and other operational overhead could adversely affect AdaptHealth’s financial results.
Although there have been recent increases in inflation, AdaptHealth cannot predict whether these trends will continue. AdaptHealth’s primary mitigation efforts relating to these
inflationary pressures include utilizing AdaptHealth’s purchasing power in negotiations with vendors and the increased use of technology to drive operating efficiencies and
control costs, such as AdaptHealth’s digital platform for prescriptions, orders and delivery.
Future increases in inflation may result in higher interest rates which could increase interest expense related to AdaptHealth’s variable rate indebtedness and any
borrowings it may undertake to refinance existing fixed rate indebtedness. Higher interest rates also impact the discount rate used in the valuation of intangible assets, including
goodwill, and the impact on the discount rate could result in additional impairment charges for such assets. In addition, there can be no assurance that we will be able to refinance
our term loan upon maturity, or that any such refinancing would be on terms as favorable as the terms of the existing term loan. If we are unable to refinance the term loan at
maturity or are only able to do so at higher interest rates, our interest expense would increase and the amount of our cash flow and our financial condition could be adversely
affected.
AdaptHealth’s business depends on its information systems, including software licensed from or hosted by third parties, and any failure or significant disruption or
successful cyber-attacks or security breaches on any of these systems, or unauthorized disclosure of or loss of data stored therein could materially affect our business, results
of operations and financial condition.
AdaptHealth’s business depends on the proper functioning and availability of its information systems and networks and those of third parties on which it relies.
AdaptHealth relies on an external service provider to provide continual maintenance, upgrading and enhancement of AdaptHealth’s primary information systems used for its
operational needs. AdaptHealth licenses third-party software that supports intake, personnel scheduling and other human resources functions, office clinical and centralized billing
and receivables management in an integrated database, enabling AdaptHealth to standardize the care delivered across its network of locations and monitor its performance and
consumer outcomes. AdaptHealth also uses a third-party software provider for its order processing and inventory management platform. To the extent that its third-party providers
fail to support, maintain and upgrade such software or systems, or if AdaptHealth loses its licenses with third-party providers, the efficiency of AdaptHealth’s operations could be
disrupted or reduced.
The risk of a security breach or system disruption, particularly through cyber-attacks or cyber intrusion, including by threat actors, nation-state actors, and cyber
terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. In addition, the prevalent
use of mobile and other connected devices that allow access to confidential and sensitive information increases the risk of data security breaches, which could lead to the
unauthorized access to or loss of confidential or sensitive information or other intellectual property. AdaptHealth or its third-party vendors may experience data breaches and other
security incidents, including such incidents that remain undetected for an extended period. A cyber-attack or other incident that bypasses AdaptHealth’s or its third-party
vendors' information security measures or controls could cause a security breach that may lead to a material disruption to AdaptHealth's information systems infrastructure or
business and/or involve a significant loss of business or patient health or other protected data or information. If a cybersecurity attack affects the confidentiality, integrity or
availability of AdaptHealth’s or its third-party vendors' systems, or if an unauthorized attempt to access such systems or AdaptHealth's facilities were to be successful, it could
result in the theft, destruction, loss, misappropriation or release of
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confidential or sensitive information or intellectual property and could cause operational or business delays that may materially impact AdaptHealth’s ability to provide various
healthcare services.
Even when a security breach is detected, the full extent of the breach may not be determined immediately. If AdaptHealth experiences a reduction in the performance,
reliability, or availability of its information systems, its operations and ability to process transactions and produce timely and accurate reports could be materially adversely
affected. If AdaptHealth experiences difficulties with the transition and integration of information systems or is unable to implement, maintain, or expand its information systems
properly, AdaptHealth could suffer from, among other things, operational disruptions, delays, cessation of service, regulatory issues, increases in administrative expenses and
other harm to its business, operations, and competitive position.
There can be no assurance that AdaptHealth’s and its third-party software service providers’ security measures, including their disaster recovery plans will prevent
damage, interruption, breach of their information systems and operations or adverse impact to the data stored therein, such as unauthorized access to, or loss of, data. Because the
techniques used by threat actors to obtain unauthorized access, disable or degrade service, or sabotage information systems change frequently and may be difficult to detect,
AdaptHealth or its third-party service providers may be unable to anticipate these techniques or implement adequate preventive measures. In addition, hardware, software or
applications AdaptHealth develops or procures from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise the security
of its information systems. Unauthorized parties may attempt to gain access to AdaptHealth’s systems or facilities, or those of third parties with whom AdaptHealth does business,
including its confidential managed file transfer software providers, through fraud or other forms of deceiving its employees or contractors (e.g., social engineering). Costs and
potential problems and interruptions associated with any such unauthorized access or the implementation of new or upgraded systems and technology or with existing systems
and technology, also could disrupt or reduce the efficiency of AdaptHealth’s operations.
Any successful cybersecurity attack or other unauthorized access to AdaptHealth’s, AdaptHealth’s third-party vendors’, or any of its or their acquisition targets’
systems, facilities or patient health information also could result in negative publicity, which could damage AdaptHealth’s reputation or brand with its patients, referral sources,
payors or other third parties and could subject AdaptHealth to substantial penalties under HIPAA and other federal and state data protection laws, in addition to costs and
potential damages associated with any private litigation brought by affected individuals. Failure to maintain the security and functionality of AdaptHealth’s information systems
and related software or to contract with third parties which do, or a failure to reasonably defend against a cyber-attack or other attempt to gain unauthorized access to
AdaptHealth’s, AdaptHealth’s third-party vendors’, or any of its or their acquisition targets’ systems, facilities or patient health information, could expose AdaptHealth to a
number of adverse consequences, the vast majority of which are or may not be insurable, including, but not limited to, disruptions in AdaptHealth’s operations, regulatory and
other civil and criminal penalties, fines, investigations and enforcement actions (including, but not limited to, those arising from the SEC, FTC, the Office of Inspector General or
state attorneys general), private litigation with those affected by a data breach, loss of customers, disputes with payors and increased operating expense, all or any of which could
adversely impact AdaptHealth’s financial condition and results of operations.
AdaptHealth’s results of operations may be adversely impacted if expenses under capitated agreements exceed revenues.
AdaptHealth has made and continues to make upfront investments to fulfill its obligations pursuant to capitated agreements with various managed care providers, in
which AdaptHealth agreed to provide medical services in exchange for fixed payment amounts per patient per unit of time paid in advance for the delivery of healthcare services.
Accordingly, if care-related expenses incurred by AdaptHealth unexpectedly exceed the fixed payment amount received by AdaptHealth from third party payors, AdaptHealth’s
results of operations may be adversely impacted.
Further, reductions in Medicare reimbursement rates or the scope of services being reimbursed or any delay or default by the government in making these Medicare
reimbursement payments or other factors beyond AdaptHealth’s control such as turmoil in the financial markets, including in the capital and credit markets, could adversely affect
third party payors’ ability to fulfill their obligations under capitated agreements involving AdaptHealth and accordingly may adversely impact AdaptHealth’s financial condition
and results of operations.
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AdaptHealth's financial performance is affected by continuing efforts by private third-party payors to control their costs, and if AdaptHealth agrees to lower its
reimbursement rates due to pricing pressures from such private third-party payors, AdaptHealth’s financial condition and results of operations would likely deteriorate.
AdaptHealth derived approximately 61% of its net revenue for each of the years ended December 31, 2025 and 2024, from third-party private payors. Such payors
continually seek to control the cost of providing healthcare services through direct contracts with healthcare providers, increased oversight and greater enrollment of patients in
managed care programs and preferred provider organizations. These private payors are increasingly demanding discounted fee structures, including setting reimbursement rates
based on Medicare fee schedules or requiring healthcare providers or suppliers to assume a greater degree of financial risk related to patient care. Reimbursement rates under
private payor programs may not remain at current levels and may not be sufficient to cover the costs of caring for patients enrolled in such programs, and AdaptHealth may
experience a deterioration in pricing flexibility, changes in payor mix and growth in operating expenses in excess of increases in payments by private third-party payors.
AdaptHealth may be compelled to lower its prices due to increased pricing pressures, which could adversely impact AdaptHealth’s financial condition and results of operations.
AdaptHealth’s payor contracts are subject to renegotiation or termination, which could result in a decrease in AdaptHealth’s revenue or profits.
The majority of AdaptHealth’s payor contracts are subject to unilateral termination by either party on between 30 and 90 days’ prior written notice. Such contracts are
routinely amended (sometimes by unilateral action by payors regarding payment policy), renegotiated, subjected to a bidding process with AdaptHealth’s competitors, or
terminated altogether. Sometimes in the renegotiation process, certain lines of business may not be renewed or a payor may enlarge its provider network or otherwise change the
way it conducts its business in a way that adversely impacts AdaptHealth’s revenue. In other cases, a payor may reduce its provider network in exchange for lower payment rates.
AdaptHealth’s revenue from a payor may also be adversely affected if the payor alters its utilization management expectations and/or administrative procedures for payments and
audits, changes its order of preference among the providers to which it refers business or imposes a third-party administrator, network manager or other intermediary. Payors may
also decide to refer business to their owned provider subsidiaries, such as specialty pharmaceuticals and/or HME networks owned by such payors or by third-party management
companies. Any of these activities could materially reduce AdaptHealth’s revenue from these payors.
Changes made by payors to the way they cover products supplied by AdaptHealth could have an adverse impact on AdaptHealth’s revenue and operations.
Payors that provide coverage for products supplied by AdaptHealth can make changes to their plans and benefit designs that can have an adverse impact on
AdaptHealth’s revenue and operations. For example, in the 2026 Final Rule, CMS announced that for contracts awarded under the CBP in 2027 (with such contracts expected to be
effective no later than January 1, 2028), the payment for certain CGMs and insulin pumps and all necessary supplies and accessories will be on a bundled monthly rental basis.
Other payors have shifted coverage for CGMs from the medical benefit to the pharmacy benefit for their insureds. The impact of changing the benefit can include changes to the
types of providers that can provide CGMs, increased competition from pharmacies, changes to covered amounts, and changes to patient deductibles. Additionally, including
CGMs under the pharmacy benefit could allow pharmacy benefit managers to attempt to restrict how beneficiaries obtain CGMs, including attempts to shift to specifically
contracted providers with reduced reimbursement to the supplier or pharmacy.
Changes in governmental or private payor supply replenishment schedules could adversely affect AdaptHealth.
AdaptHealth generated approximately 32% and 30% of its net revenue for each of the years ended December 31, 2025 and 2024, respectively, through the sale of masks,
tubing and other ancillary products related to patients utilizing PAP devices. Medicare, Medicaid and private payors limit the number of times per year that patients may purchase
such supplies. To the extent that any governmental or private payor revises their resupply guidelines to reduce the number of times such supplies can be purchased, such
reductions could adversely impact AdaptHealth’s revenue, financial condition and results of operations.
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If AdaptHealth fails to manage the complex and lengthy reimbursement process, its revenue, financial condition and results of operations could suffer.
Because AdaptHealth depends upon reimbursement from Medicare, Medicaid and third-party payors for a significant majority of its revenues, AdaptHealth’s revenue,
financial condition and results of operations may be affected by the reimbursement process, which in the healthcare industry is complex and can involve lengthy delays between
the time that services are rendered and the time that the reimbursement amounts are settled. Depending on the payor, AdaptHealth may be required to obtain certain payor-specific
documentation from physicians and other healthcare providers before submitting claims for reimbursement. Certain payors have filing deadlines and will not pay claims submitted
after such deadlines. AdaptHealth cannot ensure that it will be able to effectively manage the reimbursement process and collect payments for its equipment and services promptly.
AdaptHealth generates a significant portion of its revenue from the provision of sleep therapy equipment and supplies to patients, and AdaptHealth’s success is
therefore highly dependent on its ability to furnish these items.
Approximately 42% and 41% of AdaptHealth’s net revenue for the years ended December 31, 2025 and 2024, respectively, was generated from the provision of sleep
therapy equipment and supplies to patients. AdaptHealth’s ability to execute its growth strategy therefore depends upon the adoption by patients, physicians and sleep centers,
among others, of AdaptHealth’s sleep therapy equipment and supplies for the treatment of OSA. There can be no assurance that AdaptHealth's sleep therapy equipment and
supplies will continue to maintain broad acceptance among physicians and patients. Any failure by AdaptHealth to satisfy physician or patient demand for its equipment and
supplies or to maintain meaningful market acceptance may harm its business and future prospects.
AdaptHealth may be adversely affected by consolidation among health insurers and other industry participants.
In recent years, there has been a continuing trend of health insurers merging or increasing efforts to consolidate with other non-governmental payors. Insurers are also
increasingly pursuing alignment initiatives with healthcare providers. Consolidation within the health insurance industry may result in insurers having increased negotiating
leverage and competitive advantages, such as greater access to performance and pricing data. AdaptHealth’s ability to negotiate prices and favorable terms with health insurers in
certain markets could be affected negatively as a result of this consolidation. In addition, the shift toward value-based payment models could be accelerated if larger insurers,
including those engaging in consolidation activities, find these models to be financially beneficial. There can be no assurance that AdaptHealth will be able to negotiate favorable
terms with payors and otherwise respond effectively to the impact of increased consolidation in the payor industry or vertical integration efforts.
AdaptHealth may be adversely affected if it is unable to maintain current levels of collectability, and the deterioration of the financial condition of AdaptHealth’s
payors or disputes with third parties could have a significant negative impact on its financial condition and results of operations.
The collection of accounts receivable requires constant focus and involvement by management and ongoing enhancements to information systems and billing center
operating procedures. There can be no assurance that AdaptHealth will be able to improve upon or maintain its current levels of collectability and days sales outstanding in future
periods. Further, some of AdaptHealth’s payors and/or patients may experience financial difficulties, or may otherwise not pay accounts receivable when due, resulting in
increased write-offs. If AdaptHealth is unable to properly bill and collect its accounts receivable, its financial condition and results of operations will be adversely affected. In
addition, from time-to-time AdaptHealth is involved in disputes with various parties, including its payors and their intermediaries regarding their performance of various contractual
or regulatory obligations. These disputes sometimes lead to legal and other proceedings and cause AdaptHealth to incur costs or experience delays in collections, increases in its
accounts receivable or loss of revenue. In addition, in the event such disputes are not resolved in AdaptHealth’s favor or cause AdaptHealth to terminate its relationships with
such parties, there may be an adverse impact on its financial condition and results of operations.
If AdaptHealth is unable to maintain or develop relationships with patient referral sources, its growth and profitability could be adversely affected.
AdaptHealth’s growth and profitability depend in large part on referrals from acute care hospitals, sleep laboratories, pulmonologist and endocrinologist offices, skilled
nursing facilities, hospice operators and other patient referral sources in the communities served by AdaptHealth, its ability to establish and maintain close working relationships
with such patient referral sources and to increase awareness and acceptance of the benefits of inpatient rehabilitation, home
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health, and hospice care by its referral sources and their patients. By law, referral sources cannot be contractually obligated to refer patients to any specific provider. In addition,
AdaptHealth’s relationships with referral sources are subject to federal and state healthcare laws such as the federal Anti-Kickback Statute and the Stark Law to the extent these
services provide a financial benefit to or relieve a financial burden for a potential referral source, or are subsequently found not to be for fair market value. However, there can be no
assurance that other market participants will not attempt to steer patients to competing post-acute providers or otherwise limit AdaptHealth’s access to potential referrals. The
establishment of joint ventures or networks between referral sources, such as acute care hospitals, and other post-acute providers may hinder patient referrals to AdaptHealth.
AdaptHealth’s loss of, or failure to maintain, existing relationships or its failure to develop new relationships with referral sources could adversely affect its ability to grow its
business and operate profitably.
AdaptHealth experiences competition from numerous other sleep therapy equipment, home respiratory, mobility equipment and diabetes medical devices and
supplies providers, and this competition could adversely affect its revenues and its business.
The sleep therapy equipment, home respiratory, mobility equipment and diabetes medical devices and supplies markets are highly competitive and include a large number
of providers, some of which are national providers, but most of which are either regional or local providers, including hospital systems, physician specialists and sleep labs. The
primary competitive factors are quality considerations such as responsiveness, access to payor contracts, the technical ability of the professional staff and the ability to provide
comprehensive services. These markets are very fragmented. Some of AdaptHealth’s competitors may now or in the future have greater financial resources or more effective sales
and marketing activities. AdaptHealth’s largest national home respiratory/home medical equipment provider competitors include Accendra Health, Lincare Holdings Inc., Rotech
Healthcare, Inc., Cardinal Health, Inc. and Quipt Home Medical Corp. The rest of the homecare market in the United States consists of regional providers and product-specific
providers, as well as numerous local organizations. Hospitals and health systems are routinely looking to provide coverage and better control of post-acute healthcare services,
including homecare services of the types AdaptHealth provides. These trends may continue as new payment models evolve, including bundled payment models, shared savings
programs, value-based purchasing and other payment systems.
New entrants to the sleep therapy equipment, home respiratory/home medical equipment and diabetes medical devices and supplies markets could have a material adverse
effect on AdaptHealth’s business, results of operations and financial condition. A number of manufacturers of home respiratory equipment currently provide equipment directly to
patients on a limited basis. Such manufacturers have the ability to provide their equipment at prices below those charged by AdaptHealth, and there can be no assurance that such
direct-to-patient sales efforts will not increase in the future or that such manufacturers will not seek reimbursement contracts directly with AdaptHealth’s third-party payors, who
could seek to provide equipment directly to patients from the manufacturer. In addition, pharmacy benefit managers, including CVS Health Corporation and the Optum business of
UnitedHealth Group Incorporated, have entered the HME market and compete with AdaptHealth. Large technology companies, such as Amazon.com, Inc. and Alphabet Inc., have
disrupted other supply businesses and have entered the healthcare market. In the event additional companies enter the HME market, AdaptHealth may experience a loss of
referrals or revenue.
Changes in medical equipment technology and development of new treatments may cause AdaptHealth’s current equipment or services to become obsolete.
AdaptHealth evaluates changes in home medical equipment technology and treatments on an ongoing basis for purposes of determining the feasibility of replacing or
supplementing items currently included in the patient service equipment inventory and services that AdaptHealth offers patients. AdaptHealth’s selection of medical equipment
and services is formulated based on a variety of factors, including overall quality, functional reliability, availability of supply, payor reimbursement policies, product features, labor
costs associated with the technology, acquisition, repair and ownership costs and overall patient and referral source demand, as well as patient therapeutic and lifestyle benefits.
Manufacturers continue to invest in research and development to introduce new products to the marketplace. It is possible that major changes in available technology, payor
benefit or coverage policies related to those changes or the preferences of patients and referral sources may cause AdaptHealth’s current product offerings to become less
competitive or obsolete, and it will be necessary to adapt to those changes. Unanticipated changes could cause AdaptHealth to incur increased capital expenditures and
accelerated equipment write-offs, and could force AdaptHealth to alter its sales, operations and marketing strategies.
In addition, the development and commercialization of new drugs to address obesity and type 2 diabetes may limit the prospects for AdaptHealth’s current equipment or
services. A number of glucagon-like peptide (GLP-1) receptor
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agonist drugs, including Mounjaro, Wegovy, and Ozempic, have entered the market. The long-term effect of these drugs on AdaptHealth's business is uncertain. However, these
drugs may have a significant impact on obesity rates over time, which may result in reduced demand for our current equipment or services and we may not be able to adapt to
those changes to stay competitive.
The use or anticipated use of artificial intelligence ("AI”) technologies, including generative AI, by us or third parties, could result in reputational harm,
competitive harm, and legal liability, and may increase or create new operational risks.
AI technologies offer numerous potential benefits, such as creating or increasing operational efficiencies, and we expect the use of AI and generative AI by us, third
parties on our behalf, and other market participants, including our competitors, to increase. However, the deployment of such technologies also poses certain risks, including that
they may be misused, or the models or datasets on which the models are trained may be flawed or otherwise may function in an unexpected manner. Further, the development of AI
could exacerbate our information technology and cybersecurity risks. The relative newness of the AI technology, the speed at which it is being adopted, and the new laws,
regulations or standards governing the use of AI increases these risks. Any such misuse could expose us to legal or regulatory risk, damage customer relationships or cause
reputational harm. Our existing competitors, new entrants, technology companies or other third parties may leverage AI to the benefit of their business or operations or may
incorporate AI into their products and services more quickly or more effectively than we do, which could cause competitive harm and negatively impact our results of operations.
AdaptHealth’s operations involve the transport of compressed and liquid oxygen, which carries an inherent risk of rupture or other accidents with the potential to
cause substantial loss, and have involved the operation of medical gas facilities that are subject to federal and state regulations, which requires significant compliance
oversight and expenses.
AdaptHealth’s operations are subject to the many hazards inherent in the transportation of medical gas products and compressed and liquid oxygen, including ruptures,
leaks and fires. These risks could result in substantial losses due to personal injury or loss of life, severe damage to and destruction of property and equipment and pollution or
other environmental damage and may result in curtailment or suspension of AdaptHealth’s related operations. If a significant accident or event occurs, it could adversely affect
AdaptHealth’s business, financial position and results of operations. Additionally, corrective action plans, fines, or other sanctions may be levied by government regulators that
oversee transportation of hazardous materials such as compressed or liquid oxygen.
AdaptHealth provides a significant number of patients with oxygen-based therapy, and from time to time, AdaptHealth has operated medical gas facilities in several states
subject to federal and state regulatory requirements. AdaptHealth’s medical gas facilities and operations are subject to extensive regulation by the FDA and other federal and state
authorities. The FDA regulates medical gases, including medical oxygen, pursuant to its authority under the federal Food, Drug and Cosmetic Act. Among other requirements, the
FDA’s current Good Manufacturing Practice ("cGMP”) regulations impose certain quality control, documentation and record keeping requirements on the receipt, processing and
distribution of medical gas. Further, in each such state, its medical gas facilities are subject to regulation under state health and safety laws, which vary from state to state. The
FDA and state authorities conduct periodic unannounced inspections at medical gas facilities to assess compliance with the cGMP and other regulations, and AdaptHealth
expends significant time, money and resources in an effort to achieve substantial compliance with the cGMP regulations and other federal and state law requirements at each of its
medical gas facilities. AdaptHealth also complies with the FDA’s requirement for medical gas providers to register their sites with the agency. There can be no assurance, however,
that these efforts will be successful and that AdaptHealth’s medical gas facilities will maintain compliance with federal and state law regulations. Failure by AdaptHealth to
maintain regulatory compliance at its medical gas facilities could result in enforcement action, including warning letters, fines, product recalls or seizures, temporary or permanent
injunctions, or suspensions in operations at one or more locations, and civil or criminal penalties which would materially harm its business, financial condition, results of
operations, cash flow, capital resources and liquidity.
AdaptHealth currently outsources, and from time to time in the future may outsource, a portion of its internal business functions to third-party providers, which has
significant risks, and AdaptHealth’s failure to manage these risks successfully could materially adversely affect its business, results of operations, and financial condition.
AdaptHealth currently outsources, and from time to time in the future may outsource, portions of its internal business functions, including billing and administrative
functions relating to revenue cycle management and accounts
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payable, to third-party providers in India and the Philippines, and utilizes third-party managed file transfer software providers to transfer its sensitive and protected customer data.
These third-party providers may not comply on a timely basis with all of AdaptHealth’s requirements, or may not provide AdaptHealth with an acceptable level of service or may
not properly protect AdaptHealth’s and its customers’ confidential or protected data. This could result in significant disruptions in AdaptHealth’s operations and significantly
increase costs to undertake AdaptHealth’s operations, either of which could damage AdaptHealth’s relationships with its customers. In addition, AdaptHealth’s outsourced
functions may be negatively impacted by any number of factors, including: political unrest; public health crises; social unrest; cyber-attacks; terrorism; war; vandalism; currency
fluctuations; changes to the laws of India, the Philippines, the United States or any other jurisdictions in which AdaptHealth does business or outsources operations; or increases
in the cost of labor and supplies in India, the Philippines, or any other jurisdiction in which AdaptHealth outsources any portion of its internal or other business functions.
AdaptHealth’s outsourced operations may also be affected by trade restrictions, such as tariffs or other trade controls. As a result of its outsourcing activities, it may also be more
difficult for AdaptHealth to recruit and retain qualified employees for its business needs at any time. AdaptHealth’s failure to successfully outsource certain of its business
functions could materially adversely affect its business, results of operations, and financial condition.
AdaptHealth's ability to successfully operate its business is largely dependent upon the efforts of key personnel of AdaptHealth, including senior management, the
loss of any of whom could negatively impact AdaptHealth's operations and financial results.
AdaptHealth is highly dependent on the performance and continued efforts of its senior management team. AdaptHealth’s future success is dependent on its ability to
continue to attract and retain qualified executive officers and senior management. Any inability to manage AdaptHealth’s operations effectively could adversely impact its financial
condition and results of operations.
AdaptHealth's ability to successfully operate its business is also dependent upon the efforts of certain other key personnel of AdaptHealth. It is possible that
AdaptHealth will lose some key personnel, the loss of which could negatively impact its operations and profitability.
AdaptHealth’s strategic growth plan, which historically involved the acquisition of other companies, may not succeed.
AdaptHealth’s strategic plan calls for significant growth in its business over the next several years through an increase in its density in select markets where it is
established as well as the expansion of its geographic footprint into new markets. This growth would place (and has placed) significant demands on AdaptHealth’s management
team, systems, internal controls and financial and professional resources. As a result, AdaptHealth could be required to incur (and has incurred) expenses for hiring additional
qualified personnel, retaining professionals to assist in developing the appropriate control systems and expanding AdaptHealth’s information technology infrastructure. If
AdaptHealth is unable to effectively manage growth, its financial results could be adversely impacted.
AdaptHealth’s strategic plan historically involved acquisitions of home medical equipment providers and such acquisitions remain an element of AdaptHealth's strategy.
AdaptHealth may face increased competition for attractive acquisition candidates, which may limit the number of acquisition opportunities available to AdaptHealth or lead to the
payment of higher prices for its acquisitions. Without successful acquisitions, AdaptHealth’s future growth rate could decline. In addition, AdaptHealth cannot guarantee that any
future acquisitions, if consummated, will result in further growth.
AdaptHealth’s strategic plan contemplates successful integration of acquired home medical equipment providers with AdaptHealth’s existing business, including
reduction in operating expenses with respect to the acquired companies. Integrating an acquisition could be expensive and time-consuming and could disrupt AdaptHealth’s
ongoing business, negatively affect cash flow and distract management and other key personnel from day-to-day operations. AdaptHealth may not be able to combine
successfully the operations of recently acquired companies with its operations, and, even if such integration is accomplished, AdaptHealth may never realize the potential benefits
of such acquisition.
The integration of acquisitions requires significant attention from management, may impose substantial demands on AdaptHealth’s operations or other projects and may
impose challenges on us including, but not limited to, consistencies in business standards, procedures, policies and business cultures. There can be no assurance that any future
acquisitions, if consummated, will result in further growth.
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Specific integration risks relating to the acquisition of other companies by AdaptHealth may include:
•
difficulties related to combining previously separate businesses into a single unit, including patient transitions, product and service offerings, distribution and
operational capabilities and business cultures;
•
availability of financing to the extent needed to fund acquisitions;
•
customer loss and other general business disruption;
•
managing the integration process while completing other independent acquisitions or dispositions;
•
diversion of management’s attention from day-to-day operations;
•
assumption of liabilities of an acquired business, including unforeseen or contingent liabilities or liabilities in excess of the amounts estimated;
•
failure to realize anticipated benefits and synergies, such as cost savings and revenue enhancements;
•
potentially substantial costs and expenses associated with acquisitions and dispositions;
•
failure to retain and motivate key employees;
•
coordinating research and development activities to enhance the introduction of new products and services;
•
difficulties in establishing and applying AdaptHealth’s internal control over financial reporting and disclosure controls and procedures to an acquired business;
•
obtaining necessary regulatory licenses and payor-specific approvals, which may impact the timing of when AdaptHealth is to bill and collect for services rendered;
•
AdaptHealth’s ability to transition patients in a timely manner may impact AdaptHealth’s ability to collect amounts for services rendered;
•
AdaptHealth’s estimates for revenue accruals during the integration of acquisitions may require adjustments in future periods as the transition of patient information
is finalized; and
•
delays in obtaining new government and commercial insurance payor identification numbers for acquired branches, resulting in a slowdown and/or loss of associated
revenue.
Political and economic conditions, including significant global or regional developments such as economic and political events, the imposition of tariffs, a
prolonged government shutdown, international conflicts (including the ongoing war in Ukraine and conflict in the Middle East), natural disasters and public health crises
that are out of AdaptHealth’s control, could adversely affect its revenue, financial condition and results of operations.
AdaptHealth’s business can be affected by a number of factors that are beyond its control, such as general geopolitical, economic and business conditions, including
slower economic growth, disruptions in financial markets, economic downturns in the form of either contained or widespread recessionary conditions, inflation, elevated
unemployment levels, sluggish or uneven economic recovery, government actions or changes in trade policy in the United States and other countries impacting trade agreements
including the imposition of trade restrictions such as tariffs and retaliatory counter measures, government deficit reduction, tax legislation increasing the federal corporate income
tax rates, natural and other disasters, public health crises affecting the operations of AdaptHealth or its customers or suppliers, staffing shortages, production slowdowns or
stoppages, raw material shortages and disruptions in delivery systems. We continue to monitor the worsening macroeconomic conditions, such as the war in Ukraine, conflict in
the Middle East and global geopolitical tension. Turmoil in the financial markets, including in the capital and credit markets, and any uncertainty over its breadth, depth and
duration may put pressure on the global economy and could have a negative effect on AdaptHealth’s business. If conditions in the global economy, U.S. economy or other key
vertical or geographic markets are weak or uncertain, AdaptHealth could experience material adverse impacts on its revenue, financial condition and results of operations. In
addition, the federal government may enter a shutdown for a prolonged period of time. Although
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Medicare and Medicaid reimbursement generally remains available through a shutdown, we may experience delays in payment for services rendered and other effects related to
government agencies operating at reduced capacity.
On September 2, 2025, the U.S. Department of Commerce announced an investigation under Section 232 of the Trade Expansion Act of 1962 into imports of personal
protective equipment, medical consumables, and medical equipment including devices in order to examine the impact of these imports on U.S. national security. The statute
provides that the Commerce Department report must be completed within 270 days of initiation and that the President must decide whether to take action to remedy any identified
threats, including by imposing additional tariffs, within 90 days of receiving the report.
The imposition of additional tariffs and implementation of other measures could have a material adverse effect on AdaptHealth's business and consolidated financial
condition, results of operations and cash flows.
AdaptHealth’s current insurance program is expensive to maintain and may expose it to unexpected costs and negatively affect its business, financial condition and
results of operations, particularly if it incurs losses not covered by its insurance or if claims or losses differ from its estimates.
There is an inherent risk of liability in the provision of healthcare services. As a participant in the healthcare industry, AdaptHealth may periodically be subject to
lawsuits, some of which may involve large claims and significant costs to defend, such as mass tort or other class actions. Although AdaptHealth’s insurance coverage reflects
deductibles, self-insured retentions, limits of liability and similar provisions that it believes are reasonable based on its operations, the coverage under its insurance programs may
not be adequate to protect it in all circumstances. AdaptHealth’s insurance policies contain exclusions and conditions that could have a materially adverse impact on
AdaptHealth’s ability to receive indemnification thereunder, as well as customary sub-limits for particular types of losses. Additionally, insurance companies that currently insure
companies in AdaptHealth’s industry may cease to do so, may change the coverage provided, or may substantially increase premiums in the future. The incurrence of losses and
liabilities that exceed AdaptHealth’s available coverage could therefore have a material adverse effect on its business, financial condition and results of operations.
AdaptHealth also maintains Directors and Officers ("D&O") Liability insurance coverage to protect all of its directors and executive officers. As premiums for insurance
covering directors' and officers' liability are rising, AdaptHealth may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same
or similar coverage. There can be no assurance that this D&O coverage will be sufficient to cover the costs of the events that may lead to its invocation, in which case, there could
be an adverse impact on AdaptHealth's financial condition, should such an unforeseen event occur. As a result, it may be more difficult for us to attract and retain qualified people
to serve on AdaptHealth's board of directors, its board committees, or as executive officers.
AdaptHealth currently self-insures a significant portion of expected losses under its workers’ compensation, automobile liability and employee health insurance programs
and, to offset negative insurance market trends, AdaptHealth may elect to increase its self-insurance coverage, accept higher deductibles or reduce the amount of coverage.
Unanticipated changes in any applicable actuarial assumptions and management estimates underlying its liabilities for these losses could result in materially different expenses
than expected under these programs, which could have a material adverse effect on AdaptHealth’s financial condition and results of operations. In addition, if AdaptHealth
experiences a greater number of these losses than it anticipates, it could have a material adverse effect on its business, financial condition and results of operations.
Risks Related to Regulation
AdaptHealth’s revenue could be impacted by federal and state changes to reimbursement and other Medicaid and Medicare policies.
AdaptHealth derived approximately 26% of its net revenue for both the years ended December 31, 2025 and 2024, from Medicare and various state-based Medicaid
programs. These programs are subject to statutory and regulatory changes affecting overall spending, base rates or basis of payment, retroactive rate adjustments, annual caps
that limit the amount that can be paid (including deductible and coinsurance amounts) for rehabilitation therapy services rendered to Medicare beneficiaries, administrative or
executive orders, and government funding restrictions, all of which may materially adversely affect the rates and frequency at which these programs reimburse AdaptHealth.
Changes enacted by a new presidential administration or Congress may impact Medicare and Medicaid programs, as well as insurance plans offered
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on the Affordable Care Act exchanges. For example, as discussed above, the OBBBA, enacted on July 4, 2025, includes provisions affecting Medicaid eligibility and enrollment,
many of which do not take effect until 2027. These changes can result in reduction of reimbursements to AdaptHealth, increased regulatory complexity, and a reduction in the
number of beneficiaries covered by these programs or other changes that affect AdaptHealth. Healthcare providers, suppliers, and payors are facing increasing pressure to reduce
healthcare costs, and recent budget proposals and legislation at both the federal and state levels have called for cuts in Medicare and Medicaid reimbursement rates. Enactment
and implementation of measures to reduce or delay reimbursement or overall Medicare or Medicaid spending could result in substantial reductions in AdaptHealth’s revenue and
profitability. Payors may disallow AdaptHealth’s requests for reimbursement based on determinations that certain costs are not reimbursable or reasonable because either
adequate or additional documentation was not provided or because certain services were not covered or considered medically necessary. Revenue from third-party payors can be
retroactively adjusted after a new examination during the claims settlement process or as a result of post-payment audits. AdaptHealth may also be subject to pre-payment review
of certain service lines or products and equipment as a result of negative audit findings or other third-party payor determinations, which can result in significant delays in claims
processing and could materially impact its revenue.
As a result of the Public Health Emergency Declaration, National Emergency Declaration, and pursuant to the provisions of the Coronavirus Aid, Relief, and Economic
Security Act (the "CARES Act"), among other things, CMS issued regulatory guidance indicating enforcement discretion and flexibility regarding the provisions of items and
services by DMEPOS suppliers like AdaptHealth. These provisions were announced through blanket waivers under Section 1135 of the Social Security Act and two Interim Final
Rules with Requests for Comment on April 6, 2020 and May 8, 2020, respectively, and through numerous forms of subregulatory guidance. These provisions included
modifications of various requirements under CMS regulations and Medicare and Medicaid program rules that aim to expand the capacity of healthcare providers and suppliers to
deliver healthcare services while minimizing the risk of viral exposure. CMS’s changes included the exercise of enforcement discretion with respect to the clinical conditions and
face-to-face encounter requirements required under certain national and local coverage determinations applicable to certain items and supplies AdaptHealth offers.
The public health emergency ended on May 11, 2023, which triggered the expiration of many of the waivers, enforcement discretion and flexibilities. AdaptHealth may be
required to alter its operations and processes to ensure compliance once these flexibilities and waivers terminate (including flexibilities and waivers terminated by CMS prior to the
end of the public health emergency).
While AdaptHealth cannot predict what Medicare payment rates or coverage determinations will be in effect in future years, changes to payment rates or benefit
coverages may materially impact its financial condition and results of operations.
The Statutory Pay-As-You-Go Act of 2010 ("PAYGO") required that automatic payment cuts of 4% be put into place if a statutory action is projected to create a net
increase in the deficit over either five or 10 years. The enactment of the American Rescue Plan Act in 2021 would have triggered PAYGO sequestration in 2021. Since its passage,
Congress has on multiple occasions delayed the PAYGO sequestration. In November 2025, Congress enacted Public Law No: 119-37 with a provision that set PAYGO scorecards
to zero. If not renewed, the PAYGO payment adjustment may adversely affect AdaptHealth.
AdaptHealth is subject to United States federal and state healthcare fraud and abuse and false claims laws and regulations, the prosecutions under which have
increased in recent years and AdaptHealth may become subject to such litigation, and if AdaptHealth is unable to comply or has not fully complied with such laws, it could
face substantial penalties.
AdaptHealth’s operations are subject to various state and federal fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute, the federal Stark
Law and the federal False Claims Act. These laws may impact, among other things, AdaptHealth’s sales, marketing and education programs.
The federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in
exchange for or to induce either the referral of an individual, or the furnishing or arranging for a good or service, for which payment may be made under a federal healthcare
program such as the Medicare and Medicaid programs. Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement
involving remuneration is to induce referrals of federal healthcare covered business, the statute has been violated. In addition, a person or entity does not need to have actual
knowledge of the statute or specific
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intent to violate it in order to have committed a violation. The Anti-Kickback Statute is broad and, despite a series of narrow safe harbors, prohibits many arrangements and
practices that are lawful in businesses outside of the healthcare industry. Penalties for violations of the federal Anti-Kickback Statute include criminal penalties and civil sanctions
such as fines, imprisonment and possible exclusion from Medicare, Medicaid and other federal healthcare programs. Many states have also adopted laws similar to the federal
Anti-Kickback Statute, some of which apply to the referral of patients for healthcare items or services reimbursed by any source, not only the Medicare and Medicaid programs.
The federal Ethics in Patient Referrals Act of 1989, commonly known as the "Stark Law,” prohibits, subject to certain exceptions, physician referrals of Medicare and, as
applicable under state law, Medicaid patients to an entity providing certain "designated health services” if the physician or an immediate family member has any financial
relationship with the entity. The Stark Law also prohibits the entity receiving the referral from billing any good or service furnished pursuant to an unlawful referral. Various states
have corollary laws to the Stark Law, including laws that require physicians to disclose any financial interest they may have with a healthcare provider to their patients when
referring patients to that provider. Both the scope and exceptions for such laws vary from state to state. The federal False Claims Act prohibits persons from knowingly filing, or
causing to be filed, a false claim to, or the knowing use of false statements to obtain payment from the federal government. The False Claims Act defines "knowingly” to include
actual knowledge, acting in deliberate ignorance of the truth or falsity of information, or acting in deliberate disregard of the truth or falsity of information. False Claims Act liability
includes liability for reverse false claims for avoiding or decreasing an obligation to pay or transmit money to the government. This includes False Claims Act liability for failing to
report and return overpayments within 60 days of the date on which the overpayment is "identified.” Penalties under the False Claims Act can include exclusion from the Medicare
program. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or
fraudulent claim for purposes of the False Claims Act. Suits filed under the False Claims Act, known as qui tam actions, can be brought by any individual on behalf of the
government and such individuals, commonly known as "whistleblowers,” may share in any amounts paid by the entity to the government in fines or settlement. The frequency of
filing qui tam actions has increased significantly in recent years, causing greater numbers of medical device, pharmaceutical and healthcare companies to have to defend a False
Claims Act action. When an entity is determined to have violated the federal False Claims Act, it may be required to pay up to three times the actual damages sustained by the
government, plus civil penalties for each separate false claim. Various states have also enacted laws modeled after the federal False Claims Act.
On July 29, 2024, the U.S. Attorney’s Office for the District of South Carolina issued a civil investigative demand to AdaptHealth pursuant to the FCA regarding whether
AdaptHealth submitted false claims in violation of the FCA related to its billing of, and reimbursements from, federal health care programs for humidifiers that are integrated with
PAP devices and provided to patients from January 1, 2017 to the present. AdaptHealth is fully cooperating with the investigation. Given the stage of the investigation, it is not
possible to determine whether it will have a material adverse effect on AdaptHealth.
On March 8, 2025, the U.S. Attorney’s Office for the Eastern District of Pennsylvania issued a civil investigative demand to AdaptHealth pursuant to the FCA
surrounding whether AdaptHealth submitted false claims in violation of the FCA related to its billing of, and reimbursements from, federal health care programs for respiratory
devices and related supplies provided to patients from January 1, 2018 to the present. AdaptHealth is fully cooperating with the investigation. Given the stage of the investigation,
it is not possible to determine whether it will have a material adverse effect on AdaptHealth.
HIPAA and its implementing regulations also created additional federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a
scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or
under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up
by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to
healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to
have committed a violation.
From time to time, AdaptHealth has been and is involved in various governmental audits, investigations and reviews related to its operations. Reviews and investigations
can lead to government actions, resulting in the assessment of damages, civil or criminal fines or penalties, or other sanctions, including restrictions or changes in the way
AdaptHealth conducts business, loss of licensure, or exclusion from participation in Medicare, Medicaid or other government programs. Additionally, as a result of these
investigations, healthcare providers and entities may face litigation or have to agree to
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settlements that can include monetary penalties and onerous compliance and reporting requirements as part of a consent decree or corporate integrity agreement. If AdaptHealth
fails to comply with applicable laws, regulations and rules, its financial condition and results of operations could be adversely affected. Furthermore, becoming subject to these
governmental investigations, audits and reviews may result in substantial costs and divert management’s attention from the business as AdaptHealth cooperates with the
government authorities, regardless of whether the particular investigation, audit or review leads to the identification of underlying issues.
AdaptHealth is unable to predict whether it could be subject to actions under any of these laws, or the impact of such actions. If AdaptHealth is found to be in violation
of any of the laws described above or other applicable state and federal fraud and abuse laws, AdaptHealth may be subject to penalties, including civil and criminal penalties,
damages, fines, exclusion from Medicare, Medicaid and other government healthcare reimbursement programs and the curtailment or restructuring of its operations.
Failure by AdaptHealth to successfully design, modify and implement technology-based and other process changes to maximize productivity and ensure compliance
could ultimately have a significant negative impact on AdaptHealth’s financial condition, reputation and results of operations.
AdaptHealth has identified a number of areas throughout its operations, including revenue cycle management, fulfillment logistics, and accounts payable, where it has
centralized and/or modified processes or systems in order to attain a higher level of productivity or ensure compliance. Failure to achieve the cost savings or enhanced quality
control expected from the successful design and implementation of such initiatives may adversely impact AdaptHealth’s financial condition and results of operations. Additionally,
Medicare and Medicaid often change their documentation requirements with respect to claims submissions. The standards and rules for healthcare transactions, code sets and
unique identifiers such as ICD-10 and HIPAA 5010 and other data security requirements, also continue to evolve. Moreover, government programs and/or commercial insurance
payors may have difficulty administering new standards and rules for healthcare transactions and this may adversely affect timelines of payment or payment error rates. The
DMEPOS Competitive Bidding Program also imposes new reporting requirements on contracted providers. Failure by AdaptHealth to successfully design and implement system or
process modifications could have a significant impact on its operations and financial condition. From time to time, AdaptHealth’s outsourced contractors for certain information
systems functions may make operational, leadership or other changes that could impact AdaptHealth’s plans and cost-savings goals. The implementation of many of the new
standards and rules will require AdaptHealth to make substantial investments. Further, the implementation of these system or process changes could have a disruptive effect on
related transaction processing and operations. If AdaptHealth’s implementation efforts related to systems development are unsuccessful, AdaptHealth may need to write off
amounts that it has capitalized related to systems development projects. Additionally, if systems development implementations do not occur, AdaptHealth may need to incur
additional costs to support its existing systems.
If CMS requires prior authorization or implements changes in documentation necessary for AdaptHealth’s products, AdaptHealth’s revenue, financial condition and
results of operations could be negatively impacted.
CMS has established and maintains a Master List of Items Frequently Subject to Unnecessary Utilization of certain DMEPOS items identified as being subject to
unnecessary utilization. This list identifies items that CMS has determined could potentially be subject to prior authorization as a condition of Medicare payment. Since 2012, CMS
has also maintained a list of categories of DMEPOS items that require face-to-face encounters with practitioners and written orders before the DMEPOS supplier may furnish the
items to beneficiaries. In a final rule issued in 2019, CMS combined and harmonized the two lists to create a single unified list (the "Master List”). CMS also reduced the financial
threshold for inclusion on the Master List. With certain exceptions for reductions in Payment Threshold (defined as an average purchase fee of $1,000 or greater, adjusted annually
for inflation, or an average monthly rental fee of $100 or greater, adjusted annually for inflation), items remain on the Master List for ten years from the date the item was added to
the Master List. The presence of an item on the Master List does not automatically mean that prior authorization is required. Under the 2019 final rule, CMS selects items from the
Master List for inclusion on the "Required Prior Authorization List.” The expanded Master List would increase the number of DMEPOS items potentially eligible to be selected for
prior authorization, face-to-face encounter and written order prior to delivery requirements as a condition of payment. CMS has added certain items that are part of AdaptHealth’s
product lines to the Master List and CMS may include the Company’s products on the Required Prior Authorization List. In August 2022, CMS suspended the prior authorization
requirement for specified orthosis items on the Required Prior Authorization List under certain circumstances when reported with certain modifiers, effective April 13, 2022. On
January 13, 2026, CMS published the annual F2F/WOPD Required List update in a federal register announcement to include 8 oxygen related items. To ensure practitioner
involvement, these items will require an in person face-to-face encounter or telehealth encounter and also require a written order prior to delivery
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("WOPD"). CMS also added an additional 18 codes to the Master List, including codes for the supply allowance for adjunctive, non-implanted CGMs, including all supplies and
accessories. The addition of CGMs was based on a November 25, 2025 Office of Inspector General of the Department of Health and Human Services (the "OIG-HHS”) report
entitled "Medicare Payments for Continuous Glucose Monitors and Supplies Exceeded Supplier Costs and Retail Market Prices, Indicating Medicare Can Save At Least Tens of
Millions of Dollars in One Year" (OEI-04-23-00430) (the "OIG Report"). As CMS adds additional products to the Master List, expands the list of items subject to prior authorization,
or expands face-to-face encounter requirements or provisions requiring a written order prior to delivery, these changes may adversely impact AdaptHealth’s revenue, financial
condition and results from operations.
If CMS pursued payment reductions to Medicare’s payment rates for CGMs and supplies or takes other actions recommended by the OIG-HHS in its November 2025
report regarding CGMs, AdaptHealth’s revenue, financial condition and results of operations could be negatively impacted.
On November 25, 2025, the OIG-HHS released the OIG Report. The OIG Report found that Medicare payments for CGMs and supplies exceeded suppliers’ acquisition
costs and suppliers’ estimated total costs and that CGM supplies represent the largest potential for savings by CMS. The OIG Report recommended that CMS should pursue
reductions to Medicare’s payment rates for CGMs and supplies. During the review period for the OIG Report, CMS issued a proposed rule to use the Competitive Bidding Program
("CBP") and CMS’ inherent reasonableness authority for CGMs and supplies. On November 28, 2025, in the Calendar Year (CY) 2026 Home Health Prospective Payment System
Final Rule (CMS-1828-F) ("2026 Final Rule”), CMS finalized the inclusion of Class II continuous glucose monitors in the CBP. The OIG Report also recommended that CMS should
take action to prevent overpayments caused by suppliers’ improper use of billing codes for CGMs and supplies, and CMS concurred with these recommendations. Changes to the
payment methodology for CGMs, inclusion of CGMs in the CBP, and increased oversight regarding CGMs could adversely impact AdaptHealth’s revenue, financial condition and
results of operations.
Reimbursement claims are subject to audits by various governmental and private payor entities from time to time and such audits may negatively affect
AdaptHealth’s revenue, financial condition and results of operations.
AdaptHealth receives a substantial portion of its revenues from the Medicare program. Medicare reimbursement claims made by healthcare providers, including HME
providers, are subject to audit from time to time by governmental payors and their agents, such as MACs that, among other things, process and pay Medicare claims, auditors
contracted by CMS, and insurance carriers, as well as the Office of Inspector General of the Department of Health and Human Services, CMS and state Medicaid programs. These
include specific requirements imposed by the Durable Medical Equipment Medicare Administrative Contractor ("DME MAC”) Supplier Manuals, Medicare DMEPOS enrollment
requirements and Medicare DMEPOS Supplier Standards. To ensure compliance with Medicare, Medicaid and other regulations, government agencies or their contractors,
including MACs, Recovery Audit Contractors ("RACs”), Unified Program Integrity Contractors ("UPICs”) and Zone Program Integrity Contractors ("ZPICs”), often conduct
audits and request customer records and other documents to support AdaptHealth’s claims submitted for payment of services rendered and compliance with government program
claim submission requirements. Some contractors are paid a percentage of the overpayments recovered. Negative audit findings or allegations of fraud or abuse may subject
AdaptHealth or its individual subsidiaries to liability, such as overpayment liability, refunds or recoupments of previously paid claims, payment suspension, or the revocation of
billing or payment privileges in governmental healthcare programs. If CMS or a state Medicaid agency determines that certain actions of the Company or an affiliated subsidiary
present an undue risk of fraud, waste, or abuse, they may suspend the billing or payment privileges of the entity, deny the entity’s enrollment or revalidation for Medicare or
Medicaid participation, and potentially deny the re-enrollments of other commonly owned entities. Such actions, if imposed on the Company or its subsidiaries, could materially
adversely impact the Company’s revenue, financial condition and results of operations.
In many instances, there are only limited publicly available guidelines and methodologies for determining errors with certain audits. As a result, there can be a significant
lack of clarity regarding required documentation and audit methodology. The clarity and completeness of each patient medical file, some of which is the work product of physicians
not employed by AdaptHealth, is essential to successfully challenging any payment denials. For example, certain provisions under CMS guidance manuals, local coverage
determinations, and the DME MAC Supplier Manuals provide that clinical information from the "patient’s medical record” is required to justify the initial and ongoing medical
necessity for the provision of DME. Some DME MACs, CMS staff and other government contractors have taken the position, that the "patient’s medical record” refers not to
documentation maintained by the DME supplier but instead to documentation maintained by the patient’s physician, healthcare facility or other clinician, and that clinical
information created by the DME supplier’s personnel and confirmed by the patient’s physician is not sufficient to establish medical necessity. If
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treating physicians do not adequately document, among other things, their diagnoses and plans of care, the risks that the Company will be subject to audits and payment denials
are likely to increase. Moreover, auditors’ interpretations of these policies are inconsistent and subject to individual interpretation, leading to significant increases in individual
supplier and industry-wide perceived error rates. High error rates could lead to further audit activity and regulatory burdens, and could result in AdaptHealth making significant
refunds and other payments to Medicare and other government programs. Accordingly, AdaptHealth’s future revenues and cash flows from government healthcare programs may
be reduced. Private payors also may conduct audits and may take legal action to recover alleged overpayments. AdaptHealth could be adversely affected in some of the markets in
which it operates if the auditing payor alleges substantial overpayments were made to AdaptHealth due to coding errors or lack of documentation to support medical necessity
determinations. AdaptHealth cannot currently predict the adverse impact these measures might have on its financial condition and results of operations, but such impact could be
material.
Moreover, provisions of the Patient Protection and Affordable Care Act ("ACA") implemented by CMS require that overpayments be reported and returned within 60
days of the date on which the overpayment is "identified.” Any overpayment retained after this deadline may be considered an "obligation” for purposes of the False Claims Act,
liability for which can result in the imposition of substantial fines and penalties. CMS currently requires a six-year "lookback period,” for reporting and returning overpayments.
AdaptHealth cannot currently predict the adverse impact, if any, that these audits, determinations, methodologies and interpretations might have on its financial condition
and results of operations.
Significant reimbursement reductions and/or exclusion from markets or product lines could adversely affect AdaptHealth.
In March 2019, CMS announced that it would consolidate all rounds and areas of the DMEPOS Competitive Bidding Program into Round 2021, a single round of
competition effective January 1, 2021, to consolidate prior CBAs. Round 2021 contracts became effective on January 1, 2021 and extended through December 31, 2023. CMS
included 16 product categories in the Round 2021. On April 10, 2020, CMS announced that due to the COVID-19 pandemic, it removed the non-invasive ventilators product
category from the Round 2021 DMEPOS Competitive Bidding Program.
On October 27, 2020, CMS announced that it would not award competitive bid contracts in 13 of the 15 remaining product categories due to a failure to achieve expected
savings, and that Round 2021 contract awards would only be made for off-the-shelf (OTS) knee and back braces. For the years ended December 31, 2025 and 2024, net revenue
generated with respect to providing OTS knee and back braces (excluding amounts generated in non-rural and rural non-bid areas) were not material. AdaptHealth has obtained
contracts for OTS knee and back braces, and does not expect the single payment amounts imposed by CMS under such contracts to have a material impact on the Company.
On May 25, 2023, CMS announced a temporary gap period for the CBP starting January 1, 2024, following the expiration of all Round 2021 contracts for OTS knee and
back braces on December 31, 2023. The gap period commenced as anticipated. On November 28, 2025, CMS finalized updates to the CBP in the 2026 Final Rule, including revised
bidding processes, changes to single payment amounts and bid limits, new product categories (such as CGMs and insulin pumps), a Remote Item Delivery competitive model, and
changes to provider enrollment and accreditation requirements. In the 2026 Final Rule, CMS announced that CBP will resume in 2026, following applicable rulemaking and
implementation activities. The current CBP timeline published by CMS contains, in relevant part, the following target dates: (1) late summer/early fall 2026 - bid window opens; (2)
late summer/early fall 2027 - contracts awarded and single payment amounts announced; and (3) no later than January 1, 2028 - contracts and single payment amounts in effect, and
the six-month transition period begins for beneficiaries to switch to contract suppliers. The resumption of the CBP could further alter reimbursement rates and payment
methodologies for certain DME items beyond the current fee schedule framework.
The competitive bidding process has historically put pressure on the amount AdaptHealth is reimbursed in the markets in which it exists, as well as in areas that are not
subject to the DMEPOS Competitive Bidding Program. The rates required to win future competitive bids could continue to depress reimbursement rates. AdaptHealth will continue
to monitor developments regarding the DMEPOS Competitive Bidding Program. While AdaptHealth cannot predict the outcome of the DMEPOS Competitive Bidding Program on
its business in the future nor the Medicare payment rates that will be in effect in future years for the items subjected to competitive bidding, the program may materially adversely
affect its financial condition and results of operations.
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Failure by AdaptHealth to maintain required licenses and accreditation could impact its operations.
AdaptHealth is required to maintain a significant number of state and/or federal licenses for its operations and facilities. Certain employees are required to maintain
licenses in the states in which they practice. AdaptHealth manages the facility licensing function centrally. In addition, individual clinical employees are responsible for obtaining,
maintaining and renewing their professional licenses, and AdaptHealth has processes in place designed to notify branch or pharmacy managers of renewal dates for the clinical
employees under their supervision. State and federal licensing requirements are complex and often open to subjective interpretation by various regulatory agencies. Accurate
licensure is also a critical threshold issue for the Medicare enrollment and the Medicare competitive bidding program. From time to time, AdaptHealth may also become subject to
new or different licensing requirements due to legislative or regulatory requirements developments or changes in its business, and such developments may cause AdaptHealth to
make further changes in its business, the results of which may be material. Although AdaptHealth believes it has appropriate systems in place to monitor licensure, violations of
licensing requirements may occur and failure by AdaptHealth to acquire or maintain appropriate licensure for its operations, facilities and clinicians could result in interruptions in
its operations, refunds to state and/or federal payors, sanctions or fines or the inability to serve Medicare beneficiaries in competitive bidding markets which could adversely
impact AdaptHealth’s financial condition and results of operations.
Accreditation is required by most of AdaptHealth’s managed care payors and is a mandatory requirement for all Medicare DMEPOS providers. If AdaptHealth or any of
its branches lose accreditation, or if any of its new branches are unable to become accredited, such failure to maintain accreditation or become accredited could adversely impact
AdaptHealth’s financial condition and results of operations.
Actual or perceived failures to comply with applicable data protection, privacy and security, and consumer protection laws, regulations, standards and other
requirements could adversely affect AdaptHealth's business, results of operations and financial condition.
Numerous federal and state laws and regulations addressing patient privacy and consumer privacy, including HIPAA and the HITECH Act, govern the collection,
dissemination, security, use and confidentiality of patient-identifiable health information or personal information. Such laws and regulations relating to privacy, data protection,
marketing and advertising, and consumer protection are evolving and subject to potentially differing interpretations. These requirements may be interpreted and applied in a
manner that varies from one jurisdiction to another and/or may conflict with other laws or regulations. As a result, AdaptHealth’s practices may not have fully complied or may not
fully comply in the future with all such laws, regulations, requirements and obligations. Any failure, or perceived failure, by AdaptHealth or any of its third-party partners or service
providers to comply with privacy policies or federal or state privacy or consumer protection-related laws, regulations, industry self-regulatory principles, industry standards or
codes of conduct, regulatory guidance, orders to which they may be subject, or other legal obligations relating to privacy or consumer protection, could adversely affect
AdaptHealth’s reputation, brand and business, and may result in claims, proceedings or actions against AdaptHealth by governmental entities, consumers, users, suppliers or
others. These proceedings may result in financial liabilities or increased compliance costs, or may require AdaptHealth to change its operations, including ceasing the use or
sharing of certain data sets, or otherwise substantially alter its business practices or procedures.
HIPAA and the HITECH Act and their implementing regulations require AdaptHealth to comply with standards for the use and disclosure of health information within
AdaptHealth and with third parties, and the safeguarding of such information. HIPAA and the HITECH Act also include standards for common healthcare electronic transactions
and code sets, such as claims information, plan eligibility, payment information, and privacy and security of individually identifiable health information.
HIPAA requires healthcare providers, including AdaptHealth, in addition to health plans and clearinghouses, to develop and maintain policies and procedures with
respect to protected health information that is used or disclosed. The HITECH Act includes notification requirements for breaches of patient-identifiable health information,
restricts certain disclosures and sales of patient-identifiable health information and provides a tiered system for civil monetary penalties for HIPAA violations. HIPAA also
provides for criminal penalties for certain violations.
In addition, various federal and state legislative and regulatory bodies, or self-regulatory organizations, may expand current laws or regulations, enact new laws or
regulations or issue revised rules or guidance regarding privacy, data protection and consumer protection. For instance, the CCPA gives California residents rights to access and
delete their personal information and opt out of sharing or selling of personal information. The CCPA provides for civil penalties for violations, as well as a private right of action
for data breaches that is expected to increase data breach litigation. Although
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there are limited exemptions for protected health information, the regulators in California have started to bring enforcement actions against companies for failure to comply with the
CCPA, and such trend may increase AdaptHealth’s compliance costs and potential liability. Similar comprehensive privacy laws have been enacted or proposed in more than
twenty U.S. states.
Additionally, the FTC and many state attorneys general are interpreting existing federal and state consumer protection laws to impose evolving standards for the online
collection, use, dissemination and security of health-related and other personal information. Courts may also adopt the standards for fair information practices promulgated by the
FTC, which concern consumer notice, choice, security and access. Consumer protection laws require AdaptHealth to publish statements that describe how it handles personal
information and rights provided to individuals to control the use of their personal information. If such notices that AdaptHealth publishes is considered untrue, it may be subject
to government claims of unfair or deceptive trade practices, which could lead to significant liabilities and consequences. Furthermore, according to the FTC, violating consumers’
privacy rights or failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair or deceptive acts or practices in or affecting commerce in
violation of Section 5 of the FTC Act.
Under the Federal CAN-SPAM Act, the TCPA and the Telemarketing Sales Rule and Medicare regulations, AdaptHealth is limited in the ways in which it can market and
service its products and services by use of email, text or telephone marketing. The actual or alleged improper sending of text messages may subject us to potential risks, including
liabilities or claims relating to consumer protection laws. Numerous class-action suits under federal and state laws have been filed in recent years against companies who conduct
SMS texting programs, with many resulting in multi-million-dollar settlements to the plaintiffs. Any future such litigation against us could be costly and time-consuming to defend.
For example, the TCPA, a federal statute that protects consumers from unwanted telephone calls, faxes and text messages, restricts telemarketing and the use of automated SMS
text messages without proper consent. Additionally, state regulators may determine that telephone calls to patients of AdaptHealth are subject to state telemarketing regulations. If
AdaptHealth does not comply with existing or new laws and regulations related to telephone contacts or patient health information, it could be subject to criminal or civil
sanctions. New health information standards, whether implemented pursuant to HIPAA, the HITECH Act, congressional action or otherwise, could have a significant effect on the
manner in which AdaptHealth handles healthcare-related data and communicates with payors, and the cost of complying with these standards could be significant. The scope and
interpretation of the laws that are or may be applicable to the delivery of consumer phone calls, emails and text messages are continuously evolving and developing. If
AdaptHealth does not comply with these laws or regulations or if it becomes liable under these laws or regulations, it could face direct liability, could be required to change some
portions of its business model, could face negative publicity and its business, financial condition and results of operations could be adversely affected. Even an unsuccessful
challenge of AdaptHealth’s phone, email or SMS text practices are brought by consumers, regulatory authorities or other third parties could result in negative publicity and could
require a costly response from and defense by AdaptHealth.
AdaptHealth may be adversely affected by global climate change or by legal, regulatory or market responses to such change.
The long-term effects of climate change are difficult to predict and may be widespread. The impacts may include physical risks (such as rising sea levels or frequency and
severity of extreme weather conditions), social and human effects (such as population displacement or harm to health and well-being), compliance costs and transition risks (such
as regulatory or technological changes) and other adverse effects. The effects could impair, among other things, the availability and cost of certain products and commodities and
energy (including utilities), which may in turn may impact AdaptHealth's ability to procure goods or services required for the operation of its business at the quantities and levels it
requires. AdaptHealth may bear losses incurred as a result of, among other things, physical damage to or destruction of its facilities (such as patient service offices and
warehouses), loss or spoilage of inventory, and business interruption due to weather events that may be attributable to climate change.
Governments in the U.S. and abroad are considering new or expanded laws to address climate change. Such laws may include limitations on GHG emissions, mandates that
companies implement processes to monitor and disclose climate-related matters, additional taxes or offset charges on specified energy sources, and other requirements. In October
2023, the state of California enacted SB-253, which mandates the disclosure of GHG emissions, including Scope 1, Scope 2 and Scope 3 emissions; and the Climate-Related
Financial Risk Act ("SB-261"), which mandates the disclosure of climate-related financial risks, and measures adopted to reduce and adapt to such risks. The agency tasked with
implementation of these statutes, the California Air Resources Board, is expected to adopt regulations implementing these requirements in 2026, which may determine the scope of
AdaptHealth's reporting obligations. Compliance with climate-
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related laws may be further complicated by disparate regulatory approaches in various jurisdictions. New or expanded climate-related laws could impose substantial costs on
AdaptHealth. At the present time, AdaptHealth cannot predict their potential effect on its capital expenditures or results of operations. These events and impacts could materially
adversely affect AdaptHealth's business and results of operations.
Risks Related to Our Financial Condition
If AdaptHealth were required to write down all or part of its goodwill, its net earnings and net worth could be materially adversely affected.
AdaptHealth had $2.5 billion of goodwill recorded on its Consolidated Balance Sheets at December 31, 2025. Goodwill represents the excess of cost over the fair market
value of net assets acquired in business combinations. Goodwill is not amortized, rather, it is assessed at the reporting unit level for impairment annually and also upon the
occurrence of a triggering event or change in circumstances indicating that the carrying value of goodwill may be impaired. A significant amount of judgment is involved in
determining if an indicator of impairment has occurred. Such triggering events potentially warranting an annual or interim goodwill impairment assessment include, among other
factors, declines in historical or projected reporting unit revenue, operating results or cash flows, and sustained decreases in AdaptHealth’s stock price or market capitalization.
Such changes in circumstance can include, among others, changes in the legal environment, reimbursement environment, operating performance, and/or future prospects. These
triggering events might indicate a decline in AdaptHealth's fair value and would require AdaptHealth to further evaluate whether its goodwill has been impaired. If, as part of
AdaptHealth’s annual review of goodwill, or if any triggering events are identified on an interim basis indicating a possible impairment of goodwill, AdaptHealth is required to write
down all or a significant part of its goodwill, its net earnings and net worth would be materially adversely affected, which could affect AdaptHealth’s flexibility to obtain additional
financing. In addition, if AdaptHealth’s assumptions used in preparing its valuations for purposes of impairment testing differ materially from actual future results, AdaptHealth
may record impairment charges in the future and its operating results may be materially adversely affected. Fair value determinations require considerable judgment and are
sensitive to changes in underlying assumptions and factors, such as estimates of a reporting unit's fair value, and judgment about impairment triggering events. Fair values of the
reporting units are estimated using a weighted methodology considering the output from both the income and market approaches. The income approach incorporates the use of a
discounted cash flow ("DCF”) analysis. A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows,
including revenue growth rates and discount rates. Several of these assumptions could vary among reporting units. The market approach is performed using the Guideline Public
Companies method, which is based on earnings multiple data. AdaptHealth performs a reconciliation between its market capitalization and its estimate of the aggregate fair value of
the reporting units, including consideration of an estimated control premium. As a result, there can be no assurance that the estimates and assumptions made for purposes of the
annual or interim goodwill impairment test will prove to be accurate predictions of the future.
In the fourth quarter of 2025, in connection with the Company's annual assessment of the recoverability of goodwill, AdaptHealth performed a quantitative goodwill
impairment test for each of the Company's reporting units. The impairment test indicated that the estimated fair value of the Company's Diabetes Health reporting unit was less than
its carrying value, and as such, AdaptHealth recognized a non-cash goodwill impairment charge of $128.0 million during the year ended December 31, 2025. While the Company's
quantitative goodwill impairment test did not result in an impairment charge of the Company's Wellness at Home or Respiratory Health reporting units, based on the results of such
test, the excess of the estimated fair value of the Wellness at Home reporting unit over its carrying value was less than 10%, and the excess of the estimated fair value of the
Respiratory Health reporting unit over its carrying value was less than 20%. If, in future periods, AdaptHealth were to identify events that indicate a potential impairment of
goodwill, AdaptHealth may be required to perform a goodwill impairment test at an interim or annual period and could be required to recognize a non-cash goodwill impairment
charge at that time, which could be material.
AdaptHealth may not be able to generate sufficient cash flow to cover required payments or comply with financial and operating covenants under its long-term debt
and long-term operating leases.
Failure to generate sufficient cash flow to cover required payments or comply with financial and operating covenants under AdaptHealth’s long-term debt and long-term
operating leases could result in defaults under such agreements and cross-defaults under other debt or operating lease arrangements, which could harm its operating subsidiaries.
AdaptHealth may not generate sufficient cash flow from operations to cover required interest, principal and lease payments. In addition, AdaptHealth’s current indebtedness
contain restrictive covenants and require AdaptHealth to maintain or satisfy specified coverage tests. These restrictions and financial and operating covenants include, among
other
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things, requirements with respect to total leverage ratios and an interest charge coverage ratio. These restrictions may interfere with AdaptHealth’s ability to obtain additional
advances under its existing credit facility or to obtain new financing or to engage in other business activities, which may inhibit AdaptHealth’s ability to grow its business and
increase revenue. In addition, failure by AdaptHealth to comply with these restrictive covenants could result in an event of default which, if not cured or waived, could result in the
acceleration of its debt.
AdaptHealth may need additional capital to fund its operating subsidiaries and finance its growth, and AdaptHealth may not be able to obtain it on acceptable
terms, or at all, which may limit its ability to grow.
AdaptHealth’s ability to maintain and enhance its operating subsidiaries and equipment to meet regulatory standards, operate efficiently and remain competitive in its
markets requires AdaptHealth to commit substantial resources to continued investment in its affiliated facilities and equipment. Additionally, the continued expansion of its
business through the acquisition of existing facilities, expansion of existing facilities and construction of new facilities may require additional capital, particularly if AdaptHealth
were to accelerate its acquisition and expansion plans. Financing may not be available or may be available only on terms that are not favorable. In addition, some of AdaptHealth’s
outstanding indebtedness restricts, among other things, its ability to incur additional debt. If AdaptHealth is unable to raise additional funds or obtain additional funds on
acceptable terms, it may have to delay or abandon some or all of its growth strategies. Further, if additional funds are raised through the issuance of additional equity securities,
the percentage ownership of AdaptHealth's stockholders would be diluted. Any newly issued equity securities may have rights, preferences or privileges senior to those of the
Common Stock.
AdaptHealth’s only significant asset is its ownership of AdaptHealth Holdings, and such ownership may not be sufficient to generate the funds necessary to meet its
financial obligations or to pay any dividends on its Common Stock.
AdaptHealth has no direct operations and no significant assets other than the ownership of AdaptHealth Holdings LLC ("AdaptHealth Holdings"). We depend on
AdaptHealth Holdings and its subsidiaries for distributions, loans and other payments to generate the funds necessary to meet our financial obligations or to pay any dividends
with respect to our Common Stock. Legal and contractual restrictions in agreements governing the indebtedness of subsidiaries of AdaptHealth Holdings may limit our ability to
ultimately obtain cash from AdaptHealth Holdings. The earnings from, or other available assets of, AdaptHealth Holdings and its subsidiaries may not be sufficient to enable us to
satisfy our financial obligations or pay any dividends on our Common Stock. To the extent that we require funds and AdaptHealth Holdings or its subsidiaries are restricted from
making distributions under applicable law or regulation or under the terms of their financing arrangements, or are otherwise unable to provide such funds, it could materially
adversely affect our liquidity and financial condition, including our ability to pay our income taxes when due.
Risks Related to Our Securities
We may not be able to effectively maintain controls and procedures required by Section 404 of the Sarbanes-Oxley Act that are applicable to us or remediate
material weaknesses.
As a public company, AdaptHealth is required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management
to certify financial and other information in AdaptHealth’s quarterly and annual reports and provide an annual management report on the effectiveness of internal control over
financial reporting. These rules and regulations also increase our legal and financial compliance costs and make some activities more time-consuming and costly. Further, our
independent registered public accounting firm is required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404.
As described in Item 9A. "Controls and Procedures,” we concluded that our internal control over financial reporting was effective as of December 31, 2025 and our
independent registered public accounting firm has expressed an unqualified opinion on the operating effectiveness of our internal control over financial reporting as of
December 31, 2025. As disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the prior fiscal year, we concluded that our internal control over financial reporting was
ineffective as of December 31, 2024 because a material weakness existed in our internal control over financial reporting. As described in Item 9A. "Controls and Procedures," such
material weakness was remediated during 2025.
The existence of material weaknesses in internal control over financial reporting could adversely affect our reputation or investor perceptions of us, and we may be unable
to provide required financial information in a timely,
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accurate and reliable manner. In addition, we have incurred, and may incur, costs to remediate material weaknesses in our internal control over financial reporting.
If we are not able to implement internal controls and procedures in accordance with the requirements of Section 404 in a timely manner or with adequate compliance, we
may not be able to conclude that our internal control over financial reporting is effective, which may subject us to adverse regulatory consequences and could harm investor
confidence and the market price of our Common Stock.
Fluctuations in the price of AdaptHealth’s securities could contribute to the loss of all or part of your investment.
The trading price of our Common Stock could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of
the factors listed below could have a material adverse effect on your investment in our Common Stock and our Common Stock may trade at prices significantly below the price you
paid for it. In such circumstances, the trading price of our Common Stock may not recover and may experience a further decline.
Factors affecting the trading price of our Common Stock may include:
•
actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;
•
changes in the market’s expectations about our operating results;
•
our operating results failing to meet the expectations of securities analysts, investors or our guidance in a particular period;
•
changes in financial estimates and recommendations by securities analysts concerning AdaptHealth or the home medical equipment industry in general;
•
operating and stock price performance of other companies that investors deem comparable to us;
•
our ability to market new and enhanced products on a timely basis;
•
changes in laws and regulations affecting our business;
•
our ability to meet compliance requirements;
•
commencement of, or involvement in, litigation involving us;
•
inability to quickly remediate material weaknesses or the continued identification of material weaknesses in internal control over financial reporting;
•
changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;
•
the volume of shares of our Common Stock available for public sale;
•
any major change in our board of directors or management;
•
sales of substantial amounts of common stock by our directors, executive officers or significant stockholders, or the perception that such sales could occur; and
•
general economic and political conditions such as recessions, interest rates, fuel prices, prolonged government shutdowns, international currency fluctuations and
acts of war or terrorism, including the ongoing war in Ukraine and conflict in the Middle East.
Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general, and
Nasdaq in particular, have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies
33

affected. The trading prices and valuations of these stocks, and of our Common Stock, may not be predictable. A loss of investor confidence in the market for retail stocks or the
stocks of other companies which investors perceive to be similar to us could depress our stock price regardless of our business, prospects, financial condition or results of
operations. A decline in the market price of our Common Stock also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in
the future.
The timing and amount of AdaptHealth’s share repurchases are subject to a number of uncertainties that could negatively impact the value of AdaptHealth’s shares
and its liquidity.
If AdaptHealth's board of directors authorize a share repurchase program, there can be no assurance as to the timing or amount of share repurchases, if any. If authorized
by the board, shares may be repurchased from time to time on the open market, through privately negotiated transactions or otherwise, as permitted under Exchange Act Rule 10b-
18. The timing and actual number of shares to be repurchased will depend upon market conditions and other factors. Purchases may be started or stopped at any time without prior
notice depending on market conditions and other factors.
Certain of AdaptHealth's principal stockholders have significant influence over us.
As of December 31, 2025, OEP AHCO Investment Holdings, LLC and Deerfield Management Company, L.P. beneficially owned approximately 10% and 8% of
AdaptHealth’s Common Stock, respectively. Additionally, Deerfield Management Company, L.P. beneficially owns 124,060.02 shares of Series B-1 Preferred Stock, which is
convertible into 12,406,002 shares of Common Stock. As long as OEP AHCO Investment Holdings, LLC and/or Deerfield Management Company, L.P. own or control a significant
percentage of our outstanding voting power, they will have the ability to significantly influence all corporate actions requiring stockholder approval, including the election and
removal of directors and the size of our board of directors, any amendment to our Charter, or the approval of any merger or other significant corporate transaction, including a sale
of substantially all of our assets.
The interests of OEP AHCO Investment Holdings, LLC and/or Deerfield Management Company, L.P. may not align with the interests of our other stockholders. Each of
OEP AHCO Investment Holdings, LLC and Deerfield Management Company, L.P. is in the business of making investments in companies and may acquire and hold interests in
businesses that compete directly or indirectly with us. Each of OEP AHCO Investment Holdings, LLC and Deerfield Management Company, L.P. may also pursue acquisition
opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. Our Charter provides that our stockholders
and our directors, including any who were designated by any of our stockholders, other than any such persons who are employees of us or any of our subsidiaries, do not have
any obligation to offer to us any corporate opportunity of which he or she may become aware prior to offering such opportunities to other entities with which they may be
affiliated, subject to certain limited exceptions.
Because AdaptHealth has no current plans to pay cash dividends on its Common Stock for the foreseeable future, you may not receive any return on investment
unless you sell your Common Stock for a price greater than that which you paid for it.
We may retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends for the foreseeable
future. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of
operations, financial condition, cash requirements, contractual restrictions and other factors that our board of directors may deem relevant. In addition, our ability to pay dividends
may be limited by covenants of any existing and future outstanding indebtedness we or our subsidiaries incur. As a result, you may not receive any return on an investment in our
Common Stock unless you sell our Common Stock for a price greater than that which you paid for it.
We are required to make payments under the Tax Receivable Agreement for certain tax benefits we may claim, and the amounts of such payments could be
significant.
AdaptHealth, f/k/a DFB Healthcare Acquisitions Corp. ("DFB"), was originally formed in November 2017 as a publicly traded special purpose acquisition company for the
purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination involving one or more businesses. On July
8, 2019, AdaptHealth Holdings entered into an Agreement and Plan of Merger (the "Merger Agreement"), as amended on October 15, 2019, with DFB, pursuant to which
AdaptHealth Holdings combined with DFB (the "Business Combination").
34

The Business Combination closed on November 8, 2019. In connection with the Business Combination, the name of the combined company was changed to AdaptHealth Corp.
The Tax Receivable Agreement, which we entered into at the closing of the Business Combination with certain pre-Business Combination owners of AdaptHealth Units
(collectively, the "TRA Holders”), generally provides for the payment by us of 85% of the net cash savings, if any, in U.S. federal, state and local income tax that we actually realize
(or are deemed to realize in certain circumstances) in periods after the closing as a result of: (i) certain tax attributes of Access Point Medical, Inc. existing prior to the Business
Combination; (ii) certain increases in tax basis resulting from exchanges of AdaptHealth Units; (iii) imputed interest deemed to be paid by us as a result of payments we make under
the Tax Receivable Agreement; and (iv) certain increases in tax basis resulting from payments we make under the Tax Receivable Agreement. We will retain the benefit of the
remaining 15% of these cash savings. The amount of the cash payments that we may be required to make under the Tax Receivable Agreement could be significant and is
dependent upon significant future events and assumptions, including the timing of the exchanges of AdaptHealth Units, the price of our Common Stock at the time of each
exchange, the extent to which such exchanges are taxable transactions and the amount of the exchanging TRA Holder’s tax basis in its AdaptHealth Units at the time of the
relevant exchange. The amount of such cash payments is also based on assumptions as to the amount and timing of taxable income we generate in the future, the U.S. federal
income tax rate then applicable and the portion of our payments under the Tax Receivable Agreement that constitute interest or give rise to depreciable or amortizable tax basis.
Moreover, payments under the Tax Receivable Agreement will be based on the tax reporting positions that we determine, which tax reporting positions are subject to challenge by
taxing authorities. We are dependent on distributions from AdaptHealth Holdings to make payments under the Tax Receivable Agreement, and we cannot guarantee that such
distributions will be made in sufficient amounts or at the times needed to enable us to make our required payments under the Tax Receivable Agreement, or at all. Any payments
made by us to the TRA Holders under the Tax Receivable Agreement will generally reduce the amount of overall cash flow that might have otherwise been available to us. To the
extent that we are unable to make timely payments under the Tax Receivable Agreement for any reason, the unpaid amounts will be deferred and will accrue interest until paid by
us. Nonpayment for a specified period may constitute a breach of a material obligation under the Tax Receivable Agreement, and therefore, may accelerate payments due under the
Tax Receivable Agreement. The payments under the Tax Receivable Agreement are also not conditioned upon the TRA Holders maintaining a continued ownership interest in
AdaptHealth Holdings or us.
In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits, if any, we realize in respect of the
tax attributes subject to the Tax Receivable Agreement.
The Tax Receivable Agreement provides that if we breach any of our material obligations under the Tax Receivable Agreement, if we undergo a change of control or if, at
any time, we elect an early termination of the Tax Receivable Agreement, then the Tax Receivable Agreement will terminate and our obligations, or our successor’s obligations, to
make payments under the Tax Receivable Agreement would accelerate and become immediately due and payable. The amount due and payable in those circumstances is
determined based on certain assumptions, including an assumption that we would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to
the Tax Receivable Agreement. We may need to incur debt to finance payments under the Tax Receivable Agreement to the extent our cash resources are insufficient to meet our
obligations under the Tax Receivable Agreement as a result of timing discrepancies or otherwise.
As a result of the foregoing, (i) we could be required to make cash payments to the TRA Holders that are greater than the specified percentage of the actual benefits we
ultimately realize in respect of the tax benefits that are subject to the Tax Receivable Agreement, and (ii) we would be required to make a cash payment equal to the present value of
the anticipated future tax benefits that are the subject of the Tax Receivable Agreement, which payment may be made significantly in advance of the actual realization, if any, of
such future tax benefits. In these situations, our obligations under the Tax Receivable Agreement could have a substantial negative impact on our liquidity and could have the
effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combination, or other changes of control due to the additional transaction costs a
potential acquirer may attribute to satisfying such obligations. There can be no assurance that we will be able to finance our obligations under the Tax Receivable Agreement.
We will not be reimbursed for any payments made to TRA Holders under the Tax Receivable Agreement in the event that any tax benefits are disallowed.
We will not be reimbursed for any cash payments previously made to the TRA Holders pursuant to the Tax Receivable Agreement if any tax benefits initially claimed by
us are subsequently challenged by a taxing authority and are
35

ultimately disallowed. Instead, any excess cash payments made by us to a TRA Holder will be netted against any future cash payments that we might otherwise be required to
make under the terms of the Tax Receivable Agreement. However, a challenge to any tax benefits initially claimed by us may not arise for a number of years following the initial time
of such payment or, even if challenged early, such excess cash payment may be greater than the amount of future cash payments that we might otherwise be required to make
under the terms of the Tax Receivable Agreement and, as a result, there might not be future cash payments from which to net against. The applicable U.S. federal income tax rules
are complex and factual in nature, and there can be no assurance that the Internal Revenue Service or a court will not disagree with our tax reporting positions. As a result, it is
possible that we could make cash payments under the Tax Receivable Agreement that are substantially greater than our actual cash tax savings.
The interests of the TRA Holders in our business may conflict with the interests of our stockholders.
The interests of the TRA Holders may conflict with the interests of holders of our Common Stock. For example, the TRA Holders may have different tax positions from us
which could influence their decisions regarding whether and when to dispose of assets, whether and when to incur new or refinance existing indebtedness, especially in light of
the existence of the Tax Receivable Agreement, and whether and when we should terminate the Tax Receivable Agreement and accelerate our obligations thereunder. In addition,
the structuring of future transactions may take into consideration tax or other considerations of TRA Holders even in situations where no similar considerations are relevant to us.
AdaptHealth's Charter requires that the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States of
America be the exclusive forums for substantially all disputes between AdaptHealth and its stockholders, which may have the effect of discouraging lawsuits against
AdaptHealth's directors and officers.
AdaptHealth’s Charter requires, to the fullest extent permitted by law, other than any claim to enforce a duty or liability created by the Exchange Act or other claim for
which federal courts have exclusive jurisdiction, that derivative actions brought in AdaptHealth’s name, actions against directors, officers and employees for breach of fiduciary
duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of the State of Delaware, the stockholder bringing
such suit will be deemed to have consented to service of process on such stockholder’s counsel. AdaptHealth’s Charter further provides that the federal district courts of the
United States of America are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. These provisions may have the effect of
discouraging lawsuits against AdaptHealth’s directors and officers. If a court were to find either exclusive forum provision in AdaptHealth’s Charter to be inapplicable or
unenforceable in an action, AdaptHealth may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm its business. Although
the Delaware Supreme Court held in March 2020 that exclusive forum provisions of federal district courts of the United States of America for resolving any complaint asserting a
cause of action arising under the Securities Act are facially valid, courts in other jurisdictions may find such provisions to be unenforceable.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Cybersecurity Risk Management and Strategy
AdaptHealth has physical, technical, and administrative security measures in place for Information Technology ("IT") systems, including a disaster recovery plan,
designed to identify, protect, detect and respond to, and manage reasonably foreseeable cybersecurity risks and threats. This cyber risk management program is integrated into,
and is part of, our overall enterprise risk management processes. AdaptHealth leverages applicable guidelines from standards such as the National Institute of Standards and
Technology ("NIST”) Special Publication 800, and its disaster recovery plan is managed by AdaptHealth’s Chief Technology Officer (the "CTO”), Chief Information Officer (the
"CIO”) and Chief Information Security Officer (the "CISO”), in collaboration across lines of business and corporate functions. AdaptHealth has internal programs and procedures
to identify and remediate vulnerabilities in its infrastructure and applications, and it deploys market leading defense tools to protect and secure its network and data. These
vulnerabilities and threats are also proactively monitored by AdaptHealth’s third party cybersecurity service providers.
36

AdaptHealth’s security measures aim to detect and prevent cyber threats and vulnerabilities. This includes a vendor management and risk assessment program to ensure
the third-party environments in which AdaptHealth’s data is stored or processed are built to standards sufficient to satisfy HIPAA security requirements. This includes a risk-
based due diligence process in selecting third-party service providers. Such due diligence process covers reviewing the third-party vendor’s general IT controls and IT facilities
used to service AdaptHealth’s business, which are essential to support AdaptHealth's compliance, internal controls and efficiency initiatives.
During the period covered by this report, AdaptHealth has not identified any previous cybersecurity incidents that have materially affected or are reasonably likely to
materially affect AdaptHealth, including its business strategy, results of operations or financial condition. For further discussion on AdaptHealth’s risks from cybersecurity
threats, see Item 1A, Risk Factors - "AdaptHealth’s business depends on its information systems, including software licensed from or hosted by third parties, and any failure or
significant disruption or successful cyber-attack or security breaches on any of these systems, or unauthorized disclosure of or loss of data stored therein could materially affect
our business, results of operations and financial condition.”
Cybersecurity Governance
AdaptHealth’s Board of Directors is responsible for oversight of AdaptHealth's cyber risk management program, including risk identification, mitigation strategy and
efforts, and resources. AdaptHealth’s cybersecurity program is led by AdaptHealth’s CTO, CIO and CISO, who provide periodic updates to the Audit Committee of AdaptHealth's
Board of Directors about the program, including information about cyber risk management governance and the status of ongoing efforts to strengthen cybersecurity effectiveness.
The CTO, CIO and CISO are senior-level executives with over fifty years of combined experience in the areas of cybersecurity and information technology.
The Audit Committee of AdaptHealth's Board is responsible for reviewing AdaptHealth's cybersecurity risks and incidents, and for overseeing management’s controls
over information security. The Audit Committee considers and reviews, at least annually, with the Company's CTO, CIO and CISO, the adequacy and effectiveness of the
Company’s monitoring of, and system of internal controls over, cybersecurity matters, including data and privacy protection policies and programs and the cybersecurity
materiality matrix utilized to determine timely disclosures. The Audit Committee also discusses any significant cybersecurity incidents or risk exposures that have come to
management’s attention during the conduct of their assessments and the steps management has taken to mitigate such exposures.
Item 2. Properties
We lease all of our offices and facilities. Our corporate headquarters currently consists of approximately 22,600 square feet in an office building located at 555 East North
Lane, Suite 5075, Conshohocken, Pennsylvania 19428. In addition to our corporate headquarters, we lease facilities for our operating locations, billing centers, and other warehouse
and office space. All facilities are leased pursuant to operating leases. We believe that our facilities are suitable and adequate for our current needs. We review our facility footprint
on a regular basis and add locations as needed to support patient growth.
Item 3. Legal Proceedings
From time to time and in the normal course of business, the Company is involved in legal proceedings relating to its business. While there can be no assurance, based on
the Company’s evaluation of information currently available, the Company’s management, following consultation with legal counsel, does not expect the ultimate disposition of
any or a combination of any such legal proceedings to have a material adverse effect on our business, financial condition or operating results. However, the Company’s
assessment may change in the future based upon availability of new information and further developments in such legal proceedings. The results of legal proceedings are
inherently uncertain, and material adverse outcomes are possible. Regardless of the outcome of any particular legal proceedings and the merits of any particular claim, litigation can
have a material adverse impact on the Company due to, among other reasons, any injunctive relief granted which could inhibit the Company’s ability to operate its business,
amounts paid as damages or in settlement of any such matter, diversion of management resources and defense costs. See Note 18, Commitments and Contingencies, and Item 7.
"Management's Discussion and Analysis of Financial Results and Operations - Commitments and Contingencies," in this report for information concerning other potential
contingent liabilities matters that do not rise to the level of materiality for purposes of disclosure hereunder.
37

Item 4. Mine Safety Disclosures
Not applicable.
38

PART II
Item 5. Market Price of and Dividends on Registrant’s Common Equity and Related Stockholder Matters; Issuer Purchases of Equity Securities
Market Information
Our Common Stock is currently listed on Nasdaq under the symbol "AHCO.” As of February 20, 2026, there were 37 holders of record of shares of our Common Stock.
Such number does not include beneficial owners holding our securities through nominee names.
Dividend Policy
We have not paid any cash dividends on our Common Stock to date. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if
any, capital requirements and general financial condition. The payment of any cash dividends will be within the discretion of our board of directors at such time. In addition, our
board of directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, our ability to declare dividends may be
limited by restrictive covenants contained in any of our existing or future indebtedness.
Securities Authorized for Issuance Under Equity Compensation Plans
See Part III, Item 12 of this Form 10-K for additional information required.
Recent Sales of Unregistered Securities
We had no sales of unregistered equity securities during the period covered by this report that were not previously reported in a Quarterly Report on Form 10-Q or a
Current Report on Form 8-K.
Issuer Purchases of Equity Securities
There were no purchases of equity securities by us or any of our "affiliated purchasers," as defined in Rule 10b-18(a)(3) of the Securities Exchange Act of 1934, during the
quarter ended December 31, 2025.
Item 6. [Reserved]
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with AdaptHealth Corp.'s ("AdaptHealth" or the "Company") consolidated financial statements and the
accompanying notes included in this report. All amounts presented are in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"), except as noted. In
addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ
materially from management's expectations. Factors that could cause such differences include, but are not limited to, those discussed in Item 1A, "Risk Factors," of this Annual
Report on Form 10-K. Certain amounts that appear in this section may not sum due to rounding.
AdaptHealth Corp. Overview
AdaptHealth is a national leader in providing patient-centered, healthcare-at-home solutions including home medical equipment ("HME"), medical supplies, and related
services. The Company operates under four reportable segments that align with its product categories: (i) Sleep Health, (ii) Respiratory Health, (iii) Diabetes Health, and (iv)
Wellness at Home. A description of the products and services provided within each of the Company’s four reportable segments is provided below.
Sleep Health
The Sleep Health segment provides sleep therapy equipment, supplies and related services (including continuous positive airway pressure and BiLevel services) to
individuals for the treatment of obstructive sleep apnea.
39

Respiratory Health
The Respiratory Health segment provides oxygen and home mechanical ventilation equipment and supplies and related chronic therapy services to individuals for the
treatment of respiratory diseases, such as chronic obstructive pulmonary disease and chronic respiratory failure.
Diabetes Health
The Diabetes Health segment provides medical devices, including continuous glucose monitors and insulin pumps, and related services to patients for the treatment of
diabetes.
Wellness at Home
The Wellness at Home segment provides home medical equipment and services to patients in their homes including those who have been discharged from acute care and
other facilities. The segment tailors a service model to patients who are adjusting to new lifestyles or navigating complex disease states by providing essential medical supplies and
durable medical equipment.
The Company services beneficiaries of Medicare, Medicaid and commercial insurance payors. As of December 31, 2025, AdaptHealth serviced approximately 4.3 million
patients annually in all 50 states through its network of approximately 640 locations in 48 states. The Company's principal executive offices are located at 555 East North Lane, Suite
5075, Conshohocken, Pennsylvania 19428.
Impact of Inflation
The cost to manufacture and distribute the equipment and products that AdaptHealth purchases from vendors and provides to patients is influenced by the cost of
materials, labor, shipping, and transportation, including fuel costs. Current and future inflationary effects may be driven by, among other things, general inflationary cost increases,
supply chain disruptions and governmental stimulus or fiscal policies. Increases in inflation could impact the overall demand for AdaptHealth’s products and services, availability
of materials, its costs for labor, equipment and products, shipping, warehousing and other operational overhead and the margins it is able to realize on its products, all of which
could have an adverse impact on AdaptHealth’s business, financial position, results of operations and cash flows. Additionally, it is not certain whether AdaptHealth would be
able to pass increased costs onto customers to offset inflationary pressures. AdaptHealth has experienced inflationary pressure and higher costs as a result of increased cost of
materials, labor, shipping and transportation. Although there have been increases in inflation, AdaptHealth cannot predict whether these trends will continue. AdaptHealth’s
mitigation efforts relating to these inflationary pressures include utilizing AdaptHealth’s purchasing power in negotiations with vendors and the increased use of technology to
drive operating efficiencies and control costs, such as AdaptHealth’s digital platform for prescriptions, orders and delivery.
Key Components of Operating Results
Net Revenue. Net revenue is recognized for services and related products that AdaptHealth provides to patients for healthcare-at-home solutions including HME, medical
supplies and related services. Revenues are recognized either at a point in time for the sale of supplies and consumables, over the service period for equipment rental (including,
but not limited to, PAP machines, hospital beds, wheelchairs and other equipment), net of implicit price concessions for amounts estimated to be received from patients or under
reimbursement arrangements with Medicare, Medicaid and other third-party payors, including private insurers, or in the month in which eligible members are entitled to receive
healthcare services in connection with at-risk capitation arrangements. Certain trends or uncertainties that may have a material impact on revenue growth and operating results
include the Company's ability to obtain new at-risk capitation arrangements, new patient starts and to generate referrals from patient referral sources and the ability to meet the
increased demand considering inflationary pressures.
Cost of Net Revenue. Cost of net revenue primarily includes the cost of non-capitalized medical equipment and supplies, distribution expenses, labor costs, facilities and
vehicle rental costs, and depreciation for capitalized patient equipment. Distribution expenses represent the cost incurred to coordinate and deliver products and services to the
patients. Included in distribution expenses are leasing, maintenance, licensing and fuel costs for the vehicle fleet; salaries, benefits and other costs related to drivers and dispatch
personnel; and amounts paid to couriers.
40

General and Administrative Expenses. General and administrative expenses consist of corporate support costs including revenue cycle management costs, information
technology, human resources, finance, contracting, legal, compliance, equity-based compensation, and other administrative costs.
Depreciation and Amortization, Excluding Patient Equipment Depreciation. Depreciation expense includes depreciation charges for capital assets other than patient
equipment (which is included as part of the cost of net revenue). Amortization expense includes amortization of identifiable intangible assets.
Factors Affecting AdaptHealth’s Operating Results
AdaptHealth’s operating results and financial performance are influenced by certain unique events during the periods discussed herein, including the following:
Goodwill Impairment
AdaptHealth has a significant amount of goodwill on its balance sheet that resulted from the business acquisitions AdaptHealth has made. Goodwill is not amortized,
rather, it is assessed at the reporting unit level for impairment annually and also upon the occurrence of a triggering event or change in circumstances indicating that the carrying
value of goodwill may be impaired. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such triggering events potentially
warranting an annual or interim goodwill impairment assessment include, among other factors, declines in historical or projected reporting unit revenue, operating results or cash
flows, and sustained decreases in AdaptHealth's stock price or market capitalization. Such changes in circumstance can include, among others, changes in the legal environment,
reimbursement environment, operating performance, and/or future prospects. AdaptHealth performs its annual impairment assessment of goodwill during the fourth quarter of each
year. The impairment assessment can be performed on either a qualitative or quantitative basis. AdaptHealth first assesses qualitative factors to determine whether it is necessary
to perform a quantitative goodwill impairment analysis. Under the qualitative assessment, the Company is not required to calculate the fair value of a reporting unit unless the
Company determines that it is more likely than not that its fair value is less than its carrying amount. If determined necessary, AdaptHealth applies the quantitative impairment test
to identify and measure the amount of impairment, if any, by comparing the fair value of a reporting unit to its carrying amount, including goodwill. If under the quantitative test the
fair value of a reporting unit is less than its carrying amount, then the amount of the impairment loss, if any, is determined based on the amount by which the carrying amount
exceeds the fair value up to the total value of goodwill assigned to the reporting unit. Fair value determinations require considerable judgment and are sensitive to changes in
underlying assumptions and factors, such as estimates of a reporting unit's fair value, and judgment about impairment triggering events. Fair values of the reporting units are
estimated using a weighted methodology considering the output from both the income and market approaches. The income approach incorporates the use of a discounted cash
flow ("DCF”) analysis. A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including revenue
growth rates and discount rates. Several of these assumptions could vary among reporting units. The market approach is performed using the Guideline Public Companies method
which is based on earnings multiple data. The Company performs a reconciliation between its market capitalization and its estimate of the aggregate fair value of the reporting units,
including consideration of an estimated control premium. As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual or interim
goodwill impairment test will prove to be accurate predictions of the future.
In the fourth quarter of 2025, in connection with the Company's annual assessment of the recoverability of goodwill, management performed a quantitative goodwill
impairment test for each of the Company's reporting units. The fair value of the Company’s reporting units were computed using the methodology described above. The
impairment test indicated that the estimated fair value of the Company's Diabetes Health reporting unit was less than its carrying value, and as such, the Company recognized a
non-cash goodwill impairment charge of $128.0 million during the year ended December 31, 2025.
During the year ended December 31, 2024, AdaptHealth recorded non-cash goodwill impairment charges totaling $13.1 million related to the disposition of certain
immaterial custom rehab technology assets. The Company recognized an immaterial loss as a result of this transaction.
During the year ended December 31, 2023, AdaptHealth experienced declines in its market capitalization as a result of sustained decreases in AdaptHealth's stock price
and also revised its financial projections. AdaptHealth considered these items to represent triggering events and performed a goodwill impairment test at each quarterly reporting
date during 2023. Based on the results of the tests performed as of September 30, 2023 and December 31, 2023, it was concluded that
41

the estimated fair value of AdaptHealth's reporting unit at that time was less than its carrying values at such dates; as such, AdaptHealth recognized an aggregate non-cash
goodwill impairment charge of $830.8 million during the year ended December 31, 2023.
Gain on Sale of Businesses
During the year ended December 31, 2025, the Company closed the disposition of certain businesses that were included in its Wellness at Home segment. In connection
with these transactions, the Company recognized total pre-tax gains of $32.6 million.
Seasonality
AdaptHealth’s business experiences some seasonality. Its patients are generally responsible for a greater percentage of the cost of their treatment or therapy during the
early months of the year due to co-insurance, co-payments and deductibles, and therefore may defer treatment and services of certain therapies until meeting their annual
deductibles. In addition, changes to employer insurance coverage often go into effect at the beginning of each calendar year which may impact eligibility requirements and delay or
defer treatment. Also, net revenue generated by AdaptHealth’s Diabetes Health segment is typically higher in the fourth quarter compared to the earlier part of the year due to the
timing of when patients meet their annual deductibles and their associated reordering patterns. These factors may lead to lower net revenue and cash flow in the early part of the
year versus the latter half of the year. Additionally, the increased incidence of respiratory infections during the winter season may result in initiation of additional respiratory
services such as oxygen therapy for certain patient populations, which could impact the timing of revenue generated by AdaptHealth's Respiratory Health segment. AdaptHealth’s
quarterly operating results may fluctuate significantly in the future depending on these and other factors.
42

Key Business Metrics
AdaptHealth focuses on Net revenue, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and free cash flow as it reviews its performance. Refer to EBITDA,
Adjusted EBITDA, Adjusted EBITDA Margin and free cash flow included in the non-GAAP measures section below.
Total net revenue is comprised of net sales revenue, net revenue from fixed monthly equipment reimbursements, and net revenue from capitated revenue arrangements.
Net sales revenue consists of revenue recognized at a point in time for the sale of supplies and consumables. Net revenue from fixed monthly equipment reimbursements consists
of revenue recognized over the service period for equipment (including, but not limited to, PAP machines, oxygen concentrators, ventilators, hospital beds, wheelchairs and other
equipment). Net revenue from capitated revenue arrangements consists of revenue recognized in the month in which eligible members are entitled to receive healthcare services in
connection with at-risk capitation arrangements. AdaptHealth’s revenue recognized under its capitation arrangements for the year ended December 31, 2023 is included in net sales
revenue and net revenue from fixed monthly equipment reimbursements by segment in the tables below, which was immaterial for that period.
Three Months Ended
Net Revenue
March 31, 2025
June 30, 2025
September 30, 2025
December 31, 2025
(in thousands, except revenue percentages)
$
%
$
%
$
%
$
%
Total $
 %
(Unaudited)
Net sales revenue:
Sleep Health
$
241,171 
31.0 % $
254,593 
31.8 % $
265,995 
32.4 % $
278,627 
32.9 % $
1,040,386 
32.1 %
Respiratory Health
8,261 
1.1 %
7,826 
1.0 %
8,997 
1.1 %
8,411 
1.0 %
33,495 
1.0 %
Diabetes Health
134,386 
17.3 %
140,544 
17.6 %
145,316 
17.7 %
153,444 
18.1 %
573,690 
17.7 %
Wellness at Home
111,704 
14.3 %
101,752 
12.7 %
85,974 
10.5 %
84,011 
9.9 %
383,441 
11.8 %
Total net sales revenue
$
495,522 
63.7 % $
504,715 
63.1 % $
506,282 
61.7 % $
524,493 
61.9 % $
2,031,012 
62.6 %
Net revenue from fixed monthly equipment reimbursements:
Sleep Health
$
67,541 
8.7 % $
73,292 
9.2 % $
81,792 
10.0 % $
86,159 
10.2 % $
308,784 
9.5 %
Respiratory Health
142,174 
18.3 %
148,827 
18.6 %
154,228 
18.8 %
156,277 
18.5 %
601,506 
18.5 %
Diabetes Health
2,834 
0.4 %
2,992 
0.4 %
3,275 
0.4 %
3,475 
0.4 %
12,576 
0.4 %
Wellness at Home
36,986 
4.7 %
39,476 
4.8 %
43,194 
5.2 %
43,619 
5.2 %
163,275 
5.0 %
Total net revenue from fixed monthly equipment
reimbursements
$
249,535 
32.1 % $
264,587 
33.0 % $
282,489 
34.4 % $
289,530 
34.3 % $
1,086,141 
33.4 %
Net revenue from capitated revenue arrangements:
Sleep Health
$
7,639 
1.0 % $
6,804 
0.9 % $
7,049 
0.9 % $
7,485 
0.9 % $
28,977 
0.9 %
Respiratory Health
15,046 
1.9 %
13,797 
1.7 %
13,771 
1.7 %
13,545 
1.6 %
56,159 
1.7 %
Diabetes Health
1,624 
0.2 %
1,425 
0.2 %
1,484 
0.2 %
1,614 
0.2 %
6,147 
0.2 %
Wellness at Home
8,516 
1.1 %
9,044 
1.1 %
9,239 
1.1 %
9,622 
1.1 %
36,421 
1.2 %
Total net revenue from capitated revenue arrangements
$
32,825 
4.2 % $
31,070 
3.9 % $
31,543 
3.9 % $
32,266 
3.8 % $
127,704 
4.0 %
Total net revenue:
Sleep Health
$
316,351 
40.7 % $
334,689 
41.8 % $
354,836 
43.3 % $
372,271 
44.0 % $
1,378,147 
42.5 %
Respiratory Health
165,481 
21.3 %
170,450 
21.3 %
176,996 
21.6 %
178,233 
21.1 %
691,160 
21.2 %
Diabetes Health
138,844 
17.9 %
144,961 
18.1 %
150,075 
18.3 %
158,533 
18.7 %
592,413 
18.3 %
Wellness at Home
157,206 
20.1 %
150,272 
18.8 %
138,407 
16.8 %
137,252 
16.2 %
583,137 
18.0 %
Total net revenue
$
777,882 
100.0 % $
800,372 
100.0 % $
820,314 
100.0 % $
846,289 
100.0 % $
3,244,857 
100.0 %
43

Three Months Ended
Net Revenue
March 31, 2024
June 30, 2024
September 30, 2024
December 31, 2024
(in thousands, except revenue percentages)
$
%
$
%
$
%
$
%
Total $
%
(Unaudited)
Net sales revenue:
Sleep Health
$
237,592 
30.0 % $
242,526 
30.1 % $
246,895 
30.6 % $
265,319 
31.0 % $
992,332 
30.4 %
Respiratory Health
7,905 
1.0 %
8,033 
1.0 %
8,307 
1.0 %
8,443 
1.0 %
32,688 
1.0 %
Diabetes Health
146,979 
18.5 %
147,260 
18.3 %
137,099 
17.0 %
167,108 
19.5 %
598,446 
18.4 %
Wellness at Home
113,664 
14.4 %
118,586 
14.7 %
118,392 
14.8 %
116,663 
13.6 %
467,305 
14.3 %
Total net sales revenue
$
506,140 
63.9 % $
516,405 
64.1 % $
510,693 
63.4 % $
557,533 
65.1 % $
2,090,771 
64.1 %
Net revenue from fixed monthly equipment reimbursements:
Sleep Health
$
80,690 
10.2 % $
82,053 
10.2 % $
81,530 
10.1 % $
83,456 
9.7 % $
327,729 
10.1 %
Respiratory Health
137,232 
17.3 %
138,898 
17.2 %
140,930 
17.5 %
141,469 
16.5 %
558,529 
17.1 %
Diabetes Health
2,279 
0.3 %
2,383 
0.3 %
2,437 
0.3 %
2,605 
0.3 %
9,704 
0.3 %
Wellness at Home
34,137 
4.3 %
34,992 
4.3 %
37,418 
4.7 %
37,548 
4.4 %
144,095 
4.4 %
Total net revenue from fixed monthly equipment
reimbursements
$
254,338 
32.1 % $
258,326 
32.0 % $
262,315 
32.6 % $
265,078 
30.9 % $
1,040,057 
31.9 %
Net revenue from capitated revenue arrangements:
Sleep Health
$
7,052 
0.9 % $
6,976 
0.9 % $
7,379 
0.9 % $
7,745 
0.9 % $
29,152 
0.9 %
Respiratory Health
15,126 
1.9 %
14,455 
1.8 %
14,942 
1.9 %
15,410 
1.8 %
59,933 
1.8 %
Diabetes Health
1,598 
0.2 %
1,546 
0.2 %
1,536 
0.2 %
1,580 
0.2 %
6,260 
0.2 %
Wellness at Home
8,243 
1.0 %
8,267 
1.0 %
8,993 
1.0 %
9,299 
1.1 %
34,802 
1.1 %
Total net revenue from capitated revenue arrangements
$
32,019 
4.0 % $
31,244 
3.9 % $
32,850 
4.0 % $
34,034 
4.0 % $
130,147 
4.0 %
Total net revenue
Sleep Health
$
325,334 
41.1 % $
331,555 
41.2 % $
335,804 
41.6 % $
356,520 
41.6 % $
1,349,213 
41.4 %
Respiratory Health
160,263 
20.2 %
161,386 
20.0 %
164,179 
20.4 %
165,322 
19.3 %
651,150 
19.9 %
Diabetes Health
150,856 
19.0 %
151,189 
18.8 %
141,072 
17.5 %
171,293 
20.0 %
614,410 
18.9 %
Wellness at Home
156,044 
19.7 %
161,845 
20.0 %
164,803 
20.5 %
163,510 
19.1 %
646,202 
19.8 %
Total net revenue
$
792,497 
100.0 % $
805,975 
100.0 % $
805,858 
100.0 % $
856,645 
100.0 % $
3,260,975 
100.0 %
44

Three Months Ended
Net Revenue
March 31, 2023
June 30, 2023
September 30, 2023
December 31, 2023
(in thousands, except revenue percentages)
$
%
$
%
$
%
$
%
Total $
%
(Unaudited)
Net sales revenue:
Sleep Health
$
223,007 
29.9 % $
225,364 
28.4 % $
242,113 
30.1 % $
256,619 
29.9 % $
947,103 
29.6 %
Respiratory Health
7,839 
1.1 %
8,076 
1.0 %
10,632 
1.3 %
18,672 
2.2 %
45,219 
1.4 %
Diabetes Health
142,544 
19.1 %
165,021 
20.8 %
157,328 
19.6 %
182,538 
21.3 %
647,431 
20.2 %
Wellness at Home
118,865 
16.0 %
123,172 
15.6 %
122,052 
15.2 %
127,460 
14.8 %
491,549 
15.4 %
Total net sales revenue
$
492,255 
66.1 % $
521,633 
65.8 % $
532,125 
66.2 % $
585,289 
68.2 % $
2,131,302 
66.6 %
Net revenue from fixed monthly equipment reimbursements:
Sleep Health
$
80,922 
10.9 % $
86,783 
10.9 % $
88,596 
11.0 % $
88,310 
10.3 % $
344,611 
10.8 %
Respiratory Health
134,723 
18.1 %
145,889 
18.4 %
143,752 
17.9 %
144,980 
16.9 %
569,344 
17.8 %
Diabetes Health
3,831 
0.5 %
3,886 
0.5 %
2,609 
0.3 %
2,282 
0.3 %
12,608 
0.4 %
Wellness at Home
32,895 
4.4 %
35,095 
4.4 %
36,949 
4.6 %
37,373 
4.3 %
142,312 
4.4 %
Total net revenue from fixed monthly equipment
reimbursements
$
252,371 
33.9 % $
271,653 
34.2 % $
271,906 
33.8 % $
272,945 
31.8 % $
1,068,875 
33.4 %
Total net revenue
Sleep Health
$
303,929 
40.8 % $
312,147 
39.3 % $
330,709 
41.1 % $
344,929 
40.2 % $
1,291,714 
40.4 %
Respiratory Health
142,562 
19.2 %
153,965 
19.4 %
154,384 
19.2 %
163,652 
19.1 %
614,563 
19.2 %
Diabetes Health
146,375 
19.6 %
168,907 
21.3 %
159,937 
19.9 %
184,820 
21.6 %
660,039 
20.6 %
Wellness at Home
151,760 
20.4 %
158,267 
20.0 %
159,001 
19.8 %
164,833 
19.1 %
633,861 
19.8 %
Total net revenue
$
744,626 
100.0 % $
793,286 
100.0 % $
804,031 
100.0 % $
858,234 
100.0 % $
3,200,177 
100.0 %
45

Consolidated Results of Operations
Comparison of Year Ended December 31, 2025 and Year Ended December 31, 2024.
The following table summarizes AdaptHealth’s consolidated results of operations for the years ended December 31, 2025 and 2024:
(in thousands, except percentages)
Year Ended December 31,
2025
2024
Dollars
Revenue
Percentage
Dollars
Revenue
Percentage
Increase/(Decrease)
Dollars
Percentage
(Unaudited)
Net revenue
$
3,244,857 
100.0 % $
3,260,975 
100.0 % $
(16,118)
(0.5) %
Costs and expenses:
Cost of net revenue
2,635,658 
81.2 %
2,579,882 
79.1 %
55,776 
2.2 %
General and administrative expenses
382,293 
11.8 %
359,238 
11.0 %
23,055 
6.4 %
Depreciation and amortization, excluding patient
equipment depreciation
40,640 
1.3 %
45,045 
1.4 %
(4,405)
(9.8) %
Goodwill impairment
127,995 
3.9 %
13,078 
0.4 %
114,917 
878.7 %
Total costs and expenses
3,186,586 
98.2 %
2,997,243 
91.9 %
189,343 
6.3 %
Gain on sale of businesses
(32,602)
(1.0) %
— 
— %
(32,602)
— %
Operating income
90,873 
2.8 %
263,732 
8.1 %
(172,859)
(65.5) %
Interest expense, net
105,753 
3.3 %
126,668 
3.9 %
(20,915)
(16.5) %
Change in fair value of warrant liability
— 
— %
(4,021)
(0.1) %
4,021 
(100.0) %
Loss on extinguishment of debt
— 
— %
2,273 
0.1 %
(2,273)
(100.0) %
Other loss, net
274 
— %
2,793 
0.1 %
(2,519)
(90.2) %
(Loss) income before income taxes
(15,154)
(0.5) %
136,019 
4.1 %
(151,173)
(111.1) %
Income tax expense
50,884 
1.6 %
41,239 
1.2 %
9,645 
23.4 %
Net (loss) income
(66,038)
(2.1) %
94,780 
2.9 %
(160,818)
(169.7) %
Income attributable to noncontrolling interests
4,756 
0.1 %
4,358 
0.1 %
398 
9.1 %
Net (loss) income attributable to AdaptHealth
Corp.
$
(70,794)
(2.2) % $
90,422 
2.8 % $
(161,216)
(178.3) %
Net Revenue.
Change in Methodology for Reporting Net Revenue Change Drivers
Beginning with the quarter ended September 30, 2025, AdaptHealth has changed how it presents the drivers that contribute to the change in net revenue between periods.
AdaptHealth now presents:
(a) Organic revenue: All changes in reported net revenue from the comparable period presented excluding the impacts from acquisition (b) and disposition (c).
(b) Acquisition: The change in net revenue attributable to businesses and/or assets AdaptHealth has owned for less than one year based on the month of acquisition,
excluding the acquisition of equipment from previous providers to facilitate the transition of patients related to newly awarded at-risk capitated contracts, since the
revenue related to these agreements is earned organically.
46

(c) Disposition: Net revenue generated in the comparative prior year period from divested product lines, services, and/or businesses for which there is no revenue
recognized in the comparative months within the current period presented.
This revised presentation eliminates the "change from non-acquired” driver previously reported. The "change from non-acquired” driver represented the change in net
revenue excluding the impact of revenue of businesses and/or assets AdaptHealth owned for less than one year based on the month of acquisition. This revised presentation
replaces the "change from non-acquired” driver by separating the unique drivers of change for "dispositions” and "organic,” where "organic” excludes acquisitions and also
excludes the impact of dispositions. Since there is no revenue generated from a divested business subsequent to the date of disposition, the impact to the change in net revenue
will exist for only one year from the date of disposition. The "organic” driver measures how AdaptHealth changes organically—that is, within its existing operations using its own
resources. The change in net revenue from organic revenue is reported as organic revenue as a percentage of prior period total reported net revenue. As a result of the increased
impact on net revenue from recent disposition activity, AdaptHealth believes separating the "organic” and "disposition” drivers provides appropriate visibility into revenue trends
and more closely aligns with how management currently evaluates the business subsequent to the increased disposition activity.
This revised presentation has no impact on AdaptHealth's historically reported U.S. GAAP net revenues for any period.
The comparability of AdaptHealth's net revenue between periods was impacted by certain factors as described below. The table below presents the items that impacted
the change in AdaptHealth's net revenue between periods.
Year Ended December 31,
Variance 2025 vs. 2024
(in thousands, except percentages)
$
%
(Unaudited)
Revenue change driver:
Organic revenue (a)
$
56,857 
1.7 %
Acquisition (b)
19,452 
0.6 %
Disposition (c)
(92,427)
(2.8) %
Total change in net revenue
$
(16,118)
(0.5)%
(a) All changes in reported net revenue from the comparable period presented excluding the impacts from acquisition (b) and disposition (c).
(b) The change in net revenue attributable to businesses and/or assets AdaptHealth has owned for less than one year based on the month of acquisition, excluding the
acquisition of equipment from previous providers to facilitate the transition of patients related to newly awarded at-risk capitated contracts, since the revenue related to these
agreements is earned organically.
(c) Net revenue generated in the comparative prior year period from divested product lines, services, and/or businesses for which there is no revenue recognized in the
comparative months within the current period presented.
Net revenue from AdaptHealth's Sleep Health segment increased by $28.9 million, or 2.1%, for the year ended December 31, 2025 compared to the prior year period,
primarily due to an increase in sleep sales revenue primarily from higher patient census from sales of PAP resupply products, partially offset by a decrease in net revenue from fixed
monthly equipment reimbursements from lower sleep rental products. Net revenue from AdaptHealth's Respiratory Health segment increased by $40.0 million, or 6.1%, for the year
ended December 31, 2025 compared to the prior year period, primarily due to higher fixed monthly equipment reimbursements from higher patient census for oxygen equipment
products. Net revenue from AdaptHealth's Diabetes Health segment decreased by $22.0 million, or 3.6%, for the year ended December 31, 2025 compared to the prior year period,
primarily due to a shift in payor mix from commercial insurance to government payors, partially offset by growth in patient census for insulin pumps and supplies. Net revenue from
AdaptHealth's Wellness at Home segment decreased by $63.1 million, or 9.8% for the year ended December 31, 2025 compared to the prior year period, primarily due to decreased
revenues from the disposition of certain incontinence and infusion businesses during 2025, and to a lesser extent, the disposition of certain custom rehab technology assets during
47

2024, which combined reduced net revenue by $92.4 million, partially offset by increased revenues primarily from HME products within this segment.
For the year ended December 31, 2025, net sales revenue comprised 62.6% of total net revenue, compared to 64.1% of total net revenue for the year ended December 31,
2024. For the year ended December 31, 2025, net revenue from fixed monthly equipment reimbursements comprised 33.4% of total net revenue, compared to 31.9% of total net
revenue for the year ended December 31, 2024. For the years ended December 31, 2025 and 2024, net revenue from capitated revenue arrangements comprised 4.0% of total net
revenue.
Cost of Net Revenue.
The following table summarizes cost of net revenue for the years ended December 31, 2025 and 2024:
(in thousands, except percentages)
Year Ended December 31,
2025
2024
Dollars
Revenue Percentage
Dollars
Revenue Percentage
Increase/(Decrease)
Dollars
Percentage
(Unaudited)
Costs of net revenue:
Cost of products and supplies
$
1,294,423 
39.9 % $
1,288,162 
39.5 % $
6,261 
0.5 
%
Salaries, labor and benefits
750,309 
23.1 %
730,597 
22.4 %
19,712 
2.7 
%
Patient equipment depreciation
341,287 
10.5 %
320,289 
9.8 %
20,998 
6.6 
%
Rent and occupancy
74,391 
2.3 %
71,874 
2.2 %
2,517 
3.5 
%
Other operating expenses
175,248 
5.4 %
168,960 
5.2 %
6,288 
3.7 
%
Total cost of net revenue
$
2,635,658 
81.2 % $
2,579,882 
79.1 % $
55,776 
2.2 %
Cost of net revenue for the years ended December 31, 2025 and 2024 was $2,635.7 million and $2,579.9 million, respectively, an increase of $55.8 million or 2.2%. Refer to the
section below titled "Segment Results of Operations” for a discussion of the changes in cost of products and supplies, salaries, labor and benefits, and rent and other operating
expenses. Patient equipment depreciation increased by $21.0 million, primarily due to higher fixed monthly equipment reimbursements and higher medical equipment prices, as well
as accelerated depreciation on certain respiratory equipment resulting from a change in the estimated useful life of the assets.
General and Administrative Expenses. General and administrative expenses for the years ended December 31, 2025 and 2024 were $382.3 million and $359.2 million,
respectively, an increase of $23.1 million or 6.4%. This increase is primarily due to higher legal settlement costs, equity-based compensation, software costs, and salaries, labor and
benefits, partially offset by lower severance charges.
Depreciation and amortization, excluding patient equipment depreciation. Depreciation and amortization, excluding patient equipment depreciation, for the years
ended December 31, 2025 and 2024 was $40.6 million and $45.0 million, respectively, a decrease of $4.4 million, primarily related to lower depreciation expense from owned delivery
vehicles and lower intangible amortization expense.
Goodwill Impairment. AdaptHealth performed a quantitative goodwill impairment test for each of its reporting units during the fourth quarter of 2025. The impairment test
indicated that the estimated fair value of AdaptHealth's Diabetes Health reporting unit was less than its carrying value, and as such, AdaptHealth recognized a non-cash goodwill
impairment charge of $128.0 million during the year ended December 31, 2025. The non-cash goodwill impairment charge for the year ended December 31, 2024 related to the
disposition of certain immaterial custom rehab technology assets during 2024. See Note 7, Goodwill and Identifiable Intangible Assets, for additional details.
Gain on sale of businesses. The gain on sale of businesses for the year ended December 31, 2025 primarily relates to the disposition of certain incontinence and infusion
businesses within AdaptHealth's Wellness at Home segment. See Note 4, Disposals, for additional information.
Interest Expense, net. Interest expense, net for the years ended December 31, 2025 and 2024 was $105.8 million and $126.7 million, respectively, a decrease of $20.9 million.
Interest expense related to AdaptHealth's credit agreement
48

decreased by $23.6 million in 2025 compared to 2024 as a result of lower average outstanding borrowings in 2025 compared to 2024 as well as lower interest rates. This decrease was
partially offset by an increase of $0.4 million related to AdaptHealth's finance leases in 2025 compared to 2024. In addition, the impact from AdaptHealth's interest rate swap
agreements reduced interest expense by $3.3 million and $6.3 million in 2025 and 2024, respectively.
Change in Fair Value of Warrant Liability. AdaptHealth had outstanding warrants to purchase shares of Common Stock, as discussed in Note 13, Stockholders' Equity
– Warrants, to the accompanying December 31, 2025 consolidated financial statements. These warrants were liability-classified, and the change in fair value of the warrant liability
represented a non-cash gain in the year ended December 31, 2024 for the change in the estimated fair value of such liability during such period. These warrants expired on
November 8, 2024.
Loss on Extinguishment of Debt. Loss on extinguishment of debt for the year ended December 31, 2024 consisted of lender fees and the write-off of unamortized deferred
financing costs in connection with AdaptHealth refinancing its credit facility in 2024.
Other loss, net. Other loss, net for the years ended December 31, 2025 and 2024 consisted of immaterial items.
Income Tax Expense. Income tax expense for the years ended December 31, 2025 and 2024 was $50.9 million and $41.2 million, respectively. Income tax expense increased
primarily due to gains recognized on the disposition of certain incontinence and infusion businesses within the Wellness at Home segment. See Note 4, Disposals, to the
accompanying December 31, 2025 consolidated financial statements for additional details. Additionally, the Company recognized a $10.1 million and $1.0 million income tax benefit,
and corresponding increase to net deferred tax assets, related to non-cash goodwill impairment charges of $128.0 million and $13.1 million recognized during the years ended
December 31, 2025 and 2024, respectively. See Note 7, Goodwill and Identifiable Intangible Assets, to the accompanying December 31, 2025 consolidated financial statements for
additional details.
Comparison of Year Ended December 31, 2024 and Year Ended December 31, 2023.
For a comparison of AdaptHealth's results of operations for the years ended December 31, 2024 and 2023, see "Part II, Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations" of AdaptHealth's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 25, 2025.
Organic Revenue
AdaptHealth uses organic revenue (as defined below), which is a financial measure that is not in accordance with generally accepted accounting principles in the United
States, or U.S. GAAP, to analyze its financial results and believes that it is useful to investors, as a supplement to U.S. GAAP measures. The change in net revenue from organic
revenue is reported as organic revenue as a percentage of prior period total reported net revenue. Management believes organic revenue is meaningful to investors as it provides
appropriate visibility into how AdaptHealth changes organically—that is, within its existing operations using its own resources.
Organic revenue is defined as all changes in reported net revenues from the comparable period presented, excluding: (1) increases in net revenue in the current period from
acquisitions attributable to businesses and/or assets AdaptHealth has owned for less than one year based on the month of acquisition, excluding the acquisition of equipment
from previous providers to facilitate the transition of patients related to newly awarded at-risk capitated contracts, since the revenue related to these agreements is earned
organically ("Acquisition”); and (2) decreases in net revenue from dispositions existing in the prior period from divested product lines, services, and/or businesses for which there
is no revenue recognized in the current period ("Disposition”).
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
AdaptHealth uses EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, which are financial measures that are not in accordance with generally accepted
accounting principles in the United States, or U.S. GAAP, to analyze its financial results and believes that they are useful to investors, as a supplement to U.S. GAAP measures. In
addition, AdaptHealth’s ability to incur additional indebtedness and make investments under its existing credit agreement is governed, in part, by its ability to satisfy tests based
on a variation of Adjusted EBITDA.
49

AdaptHealth defines EBITDA as net income (loss) attributable to AdaptHealth Corp., plus net income (loss) attributable to noncontrolling interests, interest expense, net,
income tax expense (benefit), and depreciation and amortization, including patient equipment depreciation.
AdaptHealth defines Adjusted EBITDA as EBITDA (as defined above), plus equity-based compensation expense, change in fair value of the warrant liability, goodwill
impairment, loss on extinguishment of debt, litigation settlement expense, gain on sale of businesses, and other non-recurring items of expense or income.
AdaptHealth defines Adjusted EBITDA Margin as Adjusted EBITDA (as defined above) as a percentage of net revenue.
AdaptHealth believes Adjusted EBITDA and Adjusted EBITDA Margin are useful to investors in evaluating AdaptHealth’s financial performance. AdaptHealth uses
Adjusted EBITDA as the profitability measure in its incentive compensation plans that have a profitability component and to evaluate acquisition opportunities, where it is most
often used for purposes of contingent consideration arrangements.
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin should not be considered as measures of financial performance under U.S. GAAP, and the items excluded
from EBITDA and Adjusted EBITDA are significant components in understanding and assessing financial performance. Accordingly, these key business metrics have limitations
as an analytical tool. They should not be considered as an alternative to net income or any other performance measures derived in accordance with U.S. GAAP or as an alternative
to cash flows from operating activities as a measure of AdaptHealth’s liquidity.
The following unaudited table presents the reconciliation of net (loss) income attributable to AdaptHealth Corp., to EBITDA and Adjusted EBITDA, and the
reconciliation of net (loss) income attributable to AdaptHealth Corp. as a percentage of net revenue to Adjusted EBITDA Margin, for the years ended December 31, 2025, 2024 and
2023:
Year Ended December 31,
2025
2024
2023
(in thousands, except percentages)
Dollars
Revenue Percentage
Dollars
Revenue Percentage
Dollars
Revenue Percentage
(Unaudited)
Net (loss) income attributable to AdaptHealth Corp.
$
(70,794)
(2.2) % $
90,422 
2.8 % $
(678,895)
(21.2) %
Income attributable to noncontrolling interest
4,756 
0.1 %
4,358 
0.1 %
4,115 
0.1 %
Interest expense, net
105,753 
3.3 %
126,668 
3.9 %
130,299 
4.1 %
Income tax expense
50,884 
1.6 %
41,239 
1.3 %
(49,004)
(1.5) %
Depreciation and amortization, including patient
equipment depreciation
381,927 
11.8 %
365,334 
11.1 %
382,783 
12.0 %
EBITDA
472,526 
14.6 %
628,021 
19.2 %
(210,702)
(6.5) %
Equity-based compensation expense (a)
21,876 
0.7 %
14,880 
0.5 %
22,468 
0.7 %
Change in fair value of warrant liability (b)
— 
— %
(4,021)
(0.1) %
(34,482)
(1.1) %
Goodwill impairment (c)
127,995 
3.9 %
13,078 
0.4 %
830,787 
26.0 %
Loss on extinguishment of debt (d)
— 
— %
2,273 
0.1 %
— 
— %
Litigation settlement expense (e)
1,000 
— %
3,338 
0.1 %
25,140 
0.8 %
Gain on sale of businesses (f)
(32,602)
(1.0) %
— 
— %
— 
— %
Other non-recurring expenses, net (g)
25,886 
0.8 %
31,088 
0.9 %
37,584 
1.1 %
Adjusted EBITDA
$
616,681 
19.0 %
$
688,657 
21.1 % $
670,795 
21.0 %
Adjusted EBITDA Margin
19.0 %
21.1 %
21.0 %
(a) Represents equity-based compensation expense for awards granted to employees and non-employee directors.
50

(b) Represents non-cash gains for the changes in the estimated fair value of the warrant liability. The warrants expired on November 8, 2024.
(c) The 2025 period includes a non-cash goodwill impairment charge as a result of the fair value of the Company's Diabetes Health reporting unit being less than its carrying
value. The 2024 period includes non-cash goodwill impairment charges relating to an immaterial business disposal during 2024. The 2023 period includes non-cash
goodwill impairment charges as a result of the fair value of the Company’s reporting unit at that time being less than its carrying value. See Note 7, Goodwill and
Identifiable Intangible Assets, included in the accompanying notes to the consolidated financial statements for the year ended December 31, 2025 for additional
discussion of such impairment charges.
(d) Represents lender fees and the write-off of unamortized deferred financing costs in connection with the refinancing of the Company's credit agreement. See Note 12, Debt,
included in the accompanying notes to the consolidated financial statements for the year ended December 31, 2025 for additional discussion of such refinancing.
(e) The expense in 2025 represents the estimated amount expected to be funded by the Company relating to a previously disclosed securities settlement. See Note 18,
Commitments and Contingencies, to the accompanying December 31, 2025 consolidated financial statements for additional details. The expense in 2024 includes a $2.4
million charge for the change in fair value of the shares of Common Stock of the Company that were issued in July 2024 following final court approval of a previously
disclosed securities settlement, as well as an expense of $0.9 million to settle a shareholder derivative complaint. The expense in 2023 includes a charge relating to a
previously disclosed securities settlement, net of contributions from the Company’s insurers.
(f) Represents pre-tax gains primarily associated with the disposition of certain incontinence and infusion businesses within the Company's Wellness at Home segment. See
Note 4, Disposals, for additional information.
(g) The 2025 period consists of $10.7 million of consulting expenses associated with asset dispositions (of which $5.1 million relates to contingent success fees from the sales
of businesses), $2.6 million of transaction costs associated with acquisitions, $2.6 million of consulting expenses associated with a reorganization project, $2.4 million of
consulting expenses associated with systems implementation activities, $1.6 million of expenses associated with securities litigation, $1.2 million write-off of assets, $1.2
million of severance charges, and $3.6 million of other non-recurring expenses. The 2024 period consists of $13.9 million of consulting expenses associated with systems
implementation activities, $4.5 million of consulting expenses associated with asset dispositions, $4.2 million of expenses associated with litigation, $3.9 million of
severance charges (primarily related to the separation of the Company's former President), $2.7 million write-down of assets, and $1.9 million of other non-recurring
expenses. The 2023 period consists of $13.9 million of expenses associated with litigation, $7.1 million of severance charges (of which $2.9 million relates to the separation
of the Company's former CEO), $5.6 million of consulting expenses associated with systems implementation activities, $5.2 million of consulting expenses associated with
cost savings initiatives, $4.8 million of lease termination costs associated with a cost management program, $1.0 million of transaction costs and expenses related to
integration efforts related to acquisitions, $0.9 million of net impairments of operating lease right-of-use assets as a result of vacating the leased facilities, and $1.6 million
of other non-recurring expenses, offset by income of $2.5 million related to changes in the Company's estimated TRA liability.
Segment Results of Operations
Comparison of Year Ended December 31, 2025 and Year Ended December 31, 2024.
Operating segments are defined as components of a public entity for which discrete financial information is available that is evaluated regularly by the Chief Operating
Decision Maker ("CODM”) for purposes of allocating resources and evaluating financial performance. AdaptHealth’s CODM is its Chief Executive Officer. AdaptHealth operates
under four reportable segments that align with its product categories: (i) Sleep Health, (ii) Respiratory Health, (iii) Diabetes Health, and (iv) Wellness at Home.
The CODM evaluates performance of the reportable segments based on Adjusted EBITDA. Refer to the section above titled "EBITDA and Adjusted EBITDA” for the
Company’s definition of Adjusted EBITDA.
51

The following table summarizes the performance of the Company’s reportable segments for the years ended December 31, 2025 and 2024:
(in thousands)
Sleep Health
Respiratory Health
Diabetes Health
Wellness at Home
Consolidated Totals (a)
2025
Net revenue
$
1,378,147 
$
691,160 
$
592,413 
$
583,137 
$
3,244,857 
Adjusted EBITDA
310,559 
209,749 
26,073 
70,300 
616,681 
2024
Net revenue
1,349,213 
651,150 
614,410 
646,202 
3,260,975 
Adjusted EBITDA
348,744 
200,112 
60,525 
79,276 
688,657 
(a)     See Note 6, Segment Information, in the accompanying notes to the consolidated financial statements for the year ended December 31, 2025 for a reconciliation of
consolidated Adjusted EBITDA to consolidated income (loss) before income taxes.
Sleep Health Segment
The following table summarizes the Sleep Health segment’s performance for the years ended December 31, 2025 and 2024:
Increase/(Decrease)
Year Ended December 31,
2025 vs. 2024
(in thousands, except percentages)
2025
2024
Dollars
Percentage
Net revenue
$
1,378,147 
$
1,349,213 
$
28,934 
2.1 
%
Less:
Cost of products and supplies (1)
445,098 
424,388 
20,710 
4.9 
%
Labor cost (1)
347,356 
321,194 
26,162 
8.1 
%
Other operating expenses (1)
134,734 
126,761 
7,973 
6.3 
%
Other segment items (2)
140,400 
128,126 
12,274 
9.6 
%
Adjusted EBITDA
$
310,559 
$
348,744 
$
(38,185)
(10.9)
%
Adjusted EBITDA Margin
22.5%
25.8%
Patient equipment depreciation
$
157,868 
$
161,911 
$
(4,043)
(2.5)
%
(1)     Represents the significant segment expense categories disclosed in Note 6, Segment Information, in the accompanying notes to the consolidated financial
statements for the year ended December 31, 2025.
(2)    Other segment items include allocated costs related to various general and administrative functions, such as revenue cycle management (including billing and
collections), customer service, technology and communications, sales and marketing, accounting and finance, executive administration, human resources,
information technology and legal and compliance.
Net Revenue
Net revenue from the Sleep Health segment increased by $28.9 million, or 2.1%, for the year ended December 31, 2025 compared to the year ended December 31, 2024,
primarily due to an increase in sleep sales revenue primarily from higher patient census from sales of PAP resupply products, partially offset by a decrease in net revenue from fixed
monthly equipment reimbursements from lower sleep rental products.
Adjusted EBITDA
Adjusted EBITDA from the Sleep Health segment decreased by $38.2 million or 10.9%, for the year ended December 31, 2025 compared to the year ended December 31,
2024, primarily due to higher net revenue from a shift in
52

product mix (as discussed above), which was offset by increased costs and expenses. The increase in the cost of products and supplies was primarily due to an increase in sales
revenue and general inflationary cost increases. The increase in labor cost was primarily due to merit and inflationary increases as well as increases in benefits costs. The increase
in other operating expenses was primarily due to higher distribution-related expenses and software costs. The increase in other segment items was due to an increase in general
and administrative expenses that were allocated to the segment.
Respiratory Health Segment
The following table summarizes the Respiratory Health segment’s performance for the years ended December 31, 2025 and 2024:
Increase/(Decrease)
Year Ended December 31,
2025 vs. 2024
(in thousands, except percentages)
2025
2024
Dollars
Percentage
Net revenue
$
691,160 $
651,150 $
40,010 
6.1 %
Less:
Cost of products and supplies (1)
132,534 
119,865 
12,669 
10.6 %
Labor cost (1)
216,002 
210,701 
5,301 
2.5 %
Other operating expenses (1)
60,621 
54,300 
6,321 
11.6 %
Other segment items (2)
72,254 
66,172 
6,082 
9.2 %
Adjusted EBITDA
$
209,749 $
200,112 $
9,637 
4.8 %
Adjusted EBITDA Margin
30.3%
30.7%
Patient equipment depreciation
$
127,415 $
95,546 $
31,869 
33.4 %
(1)     Represents the significant segment expense categories disclosed in Note 6, Segment Information, in the accompanying notes to the consolidated financial
statements for the year ended December 31, 2025.
(2)    Other segment items include allocated costs related to various general and administrative functions, such as revenue cycle management (including billing and
collections), customer service, technology and communications, sales and marketing, accounting and finance, executive administration, human resources,
information technology and legal and compliance.
Net Revenue
Net revenue from the Respiratory Health segment increased by $40.0 million, or 6.1%, for the year ended December 31, 2025 compared to the year ended December 31,
2024, primarily due to higher fixed monthly equipment reimbursements from higher patient census for oxygen equipment products.
Adjusted EBITDA
Adjusted EBITDA from the Respiratory Health segment increased by $9.6 million, or 4.8%, for the year ended December 31, 2025 compared to the year ended December 31,
2024, due to higher net revenue (as discussed above), partially offset by increased costs and expenses. The increase in cost of products and supplies was primarily due to credits
received from a supplier during 2024 related to certain product recalls which were recognized as a reduction to the cost of products and supplies during the year ended
December 31, 2024, as well as higher patient census for oxygen equipment products and general inflationary cost increases. The increase in labor cost was primarily due to merit
and inflationary increases as well as increases in benefits costs. The increase in other operating expenses was primarily due to higher distribution-related expenses and software
costs. The increase in other segment items was due to an increase in general and administrative expenses that were allocated to the segment.
53

Diabetes Health Segment
The following table summarizes the Diabetes Health segment’s performance for the years ended December 31, 2025 and 2024:
Increase/(Decrease)
Year Ended December 31,
2025 vs. 2024
(in thousands, except percentages)
2025
2024
Dollars
Percentage
Net revenue
$
592,413 
$
614,410 
$
(21,997)
(3.6)
%
Less:
Cost of products and supplies (1)
442,435 
434,808 
7,627 
1.8 
%
Labor cost (1)
52,849 
50,776 
2,073 
4.1 
%
Other operating expenses (1)
8,387 
9,588 
(1,201)
(12.5)
%
Other segment items (2)
62,669 
58,713 
3,956 
6.7 
%
Adjusted EBITDA
$
26,073 
$
60,525 
$
(34,452)
(56.9)
%
Adjusted EBITDA Margin
4.4%
9.9%
Patient equipment depreciation
$
9,540 
$
8,185 
$
1,355 
16.6 
%
(1)     Represents the significant segment expense categories disclosed in Note 6, Segment Information, in the accompanying notes to the consolidated financial
statements for the year ended December 31, 2025.
(2)    Other segment items include allocated costs related to various general and administrative functions, such as revenue cycle management (including billing and
collections), customer service, technology and communications, sales and marketing, accounting and finance, executive administration, human resources,
information technology and legal and compliance.
Net Revenue
Net revenue from the Diabetes Health segment decreased by $22.0 million, or 3.6%, for the year ended December 31, 2025 compared to the year ended December 31, 2024,
primarily due to a shift in payor mix from commercial insurance to government payors, partially offset by growth in patient census for insulin pumps and supplies.
Adjusted EBITDA
Adjusted EBITDA from the Diabetes Health segment decreased by $34.5 million, or 56.9%, for the year ended December 31, 2025 compared to the year ended December 31,
2024, due to lower net revenue (as discussed above), and to a lesser extent, increased costs and expenses. The increase in the cost of products and supplies was primarily due to
growth in patient census for insulin pumps and supplies, and general inflationary cost increases. The increase in labor cost was primarily due to merit and inflationary increases as
well as increases in benefits costs. The decrease in other operating expenses was primarily due to lower rent and occupancy costs, partially offset by higher distribution-related
expenses and software costs.
54

Wellness at Home Segment
The following table summarizes the Wellness at Home segment’s performance for the years ended December 31, 2025 and 2024:
Increase/(Decrease)
Year Ended December 31,
2025 vs. 2024
(in thousands, except percentages)
2025
2024
Dollars
Percentage
Net revenue
$
583,137 
$
646,202 
$
(63,065)
(9.8)
%
Less:
Cost of products and supplies (1)
274,356 
309,101 
(34,745)
(11.2)
%
Labor cost (1)
130,003 
144,335 
(14,332)
(9.9)
%
Other operating expenses (1)
44,868 
47,767 
(2,899)
(6.1)
%
Other segment items (2)
63,610 
65,723 
(2,113)
(3.2)
%
Adjusted EBITDA
$
70,300 
$
79,276 
$
(8,976)
(11.3)
%
Adjusted EBITDA Margin
12.1%
12.3%
Patient equipment depreciation
$
46,464 
$
54,647 
$
(8,183)
(15.0)
%
(1)     Represents the significant segment expense categories disclosed in Note 6, Segment Information, in the accompanying notes to the consolidated financial
statements for the year ended December 31, 2025.
(2)    Other segment items include allocated costs related to various general and administrative functions, such as revenue cycle management (including billing and
collections), customer service, technology and communications, sales and marketing, accounting and finance, executive administration, human resources,
information technology and legal and compliance.
Net Revenue
Net revenue from the Wellness at Home segment decreased by $63.1 million, or 9.8%, for the year ended December 31, 2025 compared to the year ended December 31,
2024, primarily due to decreased revenues from the disposition of certain incontinence and infusion businesses during 2025, and to a lesser extent, the disposition of certain
custom rehab technology assets during 2024, which combined reduced net revenue by $92.4 million, partially offset by increased revenues primarily from HME products within this
segment.
Adjusted EBITDA
Adjusted EBITDA from the Wellness at Home segment decreased by $9.0 million, or 11.3%, for the year ended December 31, 2025 compared to the year ended
December 31, 2024, primarily due to lower net revenue (as discussed above), partially offset by lower costs and expenses. The decrease in total costs and expenses is primarily due
to the disposition of certain incontinence and infusion businesses during 2025, and to a lesser extent, the disposition of certain custom rehab technology assets in the third quarter
of 2024, partially offset by general inflationary cost increases.
Comparison of Year Ended December 31, 2024 and Year Ended December 31, 2023.
For a comparison of segment results of operations for the years ended December 31, 2024 and 2023, see "Part II, Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations" of AdaptHealth's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 25, 2025.
Free Cash Flow
AdaptHealth uses free cash flow, which is a financial measure that is not in accordance with U.S. GAAP, in its operational and financial decision-making and believes free
cash flow is useful to investors because similar measures are frequently used by securities analysts, investors, ratings agencies and other interested parties to evaluate
AdaptHealth's competitors and to measure the ability of companies to service their debt. AdaptHealth's presentation of free cash flow
55

should not be construed as a measure of liquidity or discretionary cash available to AdaptHealth to fund its cash needs, including investing in the growth of its business and
meeting its obligations.
Free cash flow should not be considered as a measure of financial performance under U.S. GAAP. Accordingly, this key business metric has limitations as an analytical
tool. It should not be considered as an alternative to any performance measures derived in accordance with U.S. GAAP or as an alternative to cash flows from operating activities
as a measure of AdaptHealth’s liquidity.
AdaptHealth defines free cash flow as net cash provided by operating activities less cash paid for purchases of equipment and other fixed assets. For further discussion
on free cash flow, including a reconciliation from cash flows provided by operating activities, see Liquidity and Capital Resources - Free Cash Flow below.
Liquidity and Capital Resources
AdaptHealth’s principal sources of liquidity are its operating cash flows, borrowings under its credit agreements and other debt arrangements. AdaptHealth has used
these funds to meet its capital requirements, which primarily consist of capital expenditures including patient equipment, product and supply costs, salaries, labor, benefits and
other employee-related costs, third-party customer service, billing and collections and logistics costs, acquisitions, debt service, and to fund share repurchases. AdaptHealth’s
future capital expenditure requirements will depend on many factors, including its patient volume and revenue growth rates.
AdaptHealth’s capital expenditures are made in advance of patients beginning service. Certain operating costs are incurred at the beginning of the equipment service
period and during initial patient set-up.
AdaptHealth believes that its expected operating cash flows, together with its existing cash and amounts available under its existing credit agreement, will continue to be
sufficient to fund its operations and growth strategies for at least the next twelve months.
AdaptHealth may seek additional equity or debt financing in connection with the growth of its business, primarily for acquisitions. In addition, economic conditions may
cause disruption in the capital markets, which could make financing more difficult and/or expensive. In the event that additional financing is required from outside sources,
AdaptHealth may not be able to raise it on acceptable terms or at all. If additional capital is unavailable when desired, AdaptHealth’s business, results of operations, and financial
condition could be materially adversely affected.
As of December 31, 2025, AdaptHealth had approximately $106.1 million of cash.
In September 2024, AdaptHealth entered into an amendment to its existing credit agreement (as amended, the "2024 Credit Agreement"). The 2024 Credit Agreement
included a $650 million term loan (the "2024 Term Loan”) and $300 million in revolving credit commitments with a $55 million letter of credit sublimit (the "2024 Revolver”, and
together with the 2024 Term Loan, the "2024 Credit Facility"). The 2024 Credit Facility matures in September 2029. However, if the 6.125% Senior Notes (as defined below) have not
been refinanced (to extend the maturity date to a date that is later than December 13, 2029) or repaid in full, on or prior to December 31, 2027, then the 2024 Credit Facility will mature
on May 1, 2028; and, if the 4.625% Senior Notes (as defined below) have not been refinanced (to extend the maturity date to a date that is later than December 13, 2029) or repaid in
full, on or prior to December 31, 2028, then the 2024 Credit Facility will mature on May 1, 2029. As of December 31, 2025, the outstanding borrowing under the 2024 Term Loan
require quarterly principal repayments of $4.1 million through September 30, 2026, increasing to $8.1 million from December 31, 2026 through June 30, 2029, and the remaining unpaid
principal balance is due in September 2029. During the years ended December 31, 2025 and 2024, AdaptHealth made voluntary repayments on the 2024 Term Loan totaling $218.8
million and $95.9 million, respectively. At December 31, 2025 and 2024, there was $315.0 million and $550.0 million, respectively, outstanding under the 2024 Term Loan. Borrowings
under the 2024 Revolver may be used for working capital and other general corporate purposes, including for capital expenditures and acquisitions permitted under the 2024 Credit
Agreement. At December 31, 2025, there was $26.3 million outstanding under letters of credit. Subsequent to December 31, 2025, the Company borrowed $100.0 million under the
2024 Revolver for working capital and other general corporate purposes. As of the date of this filing, there was $100.0 million of outstanding borrowings under the 2024 Revolver.
At December 31, 2025, based on the financial debt covenants under the 2024 Credit Agreement, the maximum amount AdaptHealth could borrow under the 2024 Revolver and
remain in compliance with the financial debt covenants under the agreement was $273.7 million.
56

At the option of AdaptHealth, amounts borrowed under the 2024 Credit Agreement bear interest at variable rates based upon either the Base Rate (as defined in the 2024
Credit Agreement), payable quarterly, or Term SOFR (as defined in the 2024 Credit Agreement), payable monthly or every three months depending on the interest period selected.
Interest periods for Term SOFR loans are available for one, three, or six months at the option of AdaptHealth. Base Rate loans accrue interest at a per annum rate equal to the sum
of (a) the Base Rate determined on each day (subject to a zero percent floor), plus an applicable margin ranging from 0.50% to 2.25% per annum based on AdaptHealth's
Consolidated Senior Secured Leverage Ratio (as defined in the 2024 Credit Agreement). Term SOFR loans accrue interest at a per annum rate equal to the sum of (a) Term SOFR for
the applicable interest period (subject to a zero percent floor), plus (b) an applicable margin ranging from 1.50% to 3.25% per annum based on AdaptHealth's Consolidated Senior
Secured Leverage Ratio. The 2024 Revolver carries a commitment fee during the term of the 2024 Credit Agreement ranging from 0.25% to 0.50% per annum of the actual daily
undrawn portion of the 2024 Revolver depending upon AdaptHealth's Consolidated Senior Secured Leverage Ratio.
Under the 2024 Credit Agreement, AdaptHealth is subject to a number of restrictive covenants that, among other things, impose operating and financial restrictions on
AdaptHealth. Financial covenants include a Consolidated Total Leverage Ratio and a Consolidated Interest Coverage Ratio, both as defined in the 2024 Credit Agreement. The
2024 Credit Agreement also contains certain customary events of default, including, among other things, failure to make payments when due thereunder, failure to observe or
perform certain covenants, cross-defaults, bankruptcy and insolvency-related events, and non-compliance with healthcare laws. AdaptHealth was in compliance with the
applicable covenants in the 2024 Credit Agreement as of December 31, 2025.
Any borrowing under the 2024 Credit Agreement may be repaid, in whole or in part, at any time and from time to time without premium or penalty, other than customary
breakage costs, and any amounts repaid under the 2024 Revolver may be reborrowed. Mandatory prepayments are required under the 2024 Revolver when borrowings and letter of
credit usage exceed the total commitments for revolving credit loans. Mandatory prepayments are also required in connection with certain dispositions of assets and receipt of
certain insurance proceeds or condemnation awards to the extent proceeds thereof are not reinvested, and unpermitted debt transactions.
At December 31, 2025, AdaptHealth had $1,435.0 million aggregate principal amount of unsecured senior notes outstanding. In August 2021, AdaptHealth issued $600.0
million aggregate principal amount of 5.125% senior unsecured notes (the "5.125% Senior Notes”). The 5.125% Senior Notes will mature on March 1, 2030. Interest on the 5.125%
Senior Notes is payable on March 1st and September 1st of each year. The 5.125% Senior Notes are redeemable at AdaptHealth’s option, in whole or in part, and the redemption
price for the 5.125% Senior Notes if redeemed during the 12 months beginning (i) March 1, 2025 is 102.563%, (ii) March 1, 2026 is 101.281%, (iii) March 1, 2027 and thereafter is
100.000%, in each case together with accrued and unpaid interest. In addition, AdaptHealth may be required to make an offer to purchase the 5.125% Senior Notes upon the sale of
certain assets or upon specific kinds of changes of control.
In January 2021, AdaptHealth issued $500.0 million aggregate principal amount of 4.625% senior unsecured notes (the "4.625% Senior Notes”). The 4.625% Senior Notes
will mature on August 1, 2029. Interest on the 4.625% Senior Notes is payable on February 1st and August 1st of each year. The 4.625% Senior Notes are redeemable at
AdaptHealth’s option, in whole or in part, and the redemption price for the 4.625% Senior Notes if redeemed during the 12 months beginning February 1, 2026 and thereafter is
100.000%, in each case together with accrued and unpaid interest. In addition, AdaptHealth may be required to make an offer to purchase the 4.625% Senior Notes upon the sale of
certain assets or upon specific kinds of changes of control.
In July 2020, AdaptHealth issued $350.0 million aggregate principal amount of 6.125% senior unsecured notes (the "6.125% Senior Notes”). The 6.125% Senior Notes will
mature on August 1, 2028. Interest on the 6.125% Senior Notes is payable on February 1st and August 1st of each year. The 6.125% Senior Notes are redeemable at AdaptHealth’s
option, in whole or in part, and the redemption price for the 6.125% Senior Notes if redeemed during the 12 months beginning (i) August 1, 2025 is 101.021% and (ii) August 1, 2026
and thereafter is 100.000%, in each case together with accrued and unpaid interest. In addition, AdaptHealth may be required to make an offer to purchase the 6.125% Senior Notes
upon the sale of certain assets or upon specific kinds of changes of control. In November 2025 and January 2026, the Company repurchased $15.0 million and $10.0 million
aggregate principal amount of the 6.125% Senior Notes at an average price of 100.253% and 100.800% of such principal amounts, respectively, through open market transactions.
On July 4, 2025, the President signed the One Big Beautiful Bill Act (the "OBBBA") into law. The tax law changes under the OBBBA reduced AdaptHealth’s 2025
estimated cash income tax liability, resulting in a $29.2 million current income tax receivable, which is included in prepaid and other current assets in the accompanying consolidated
57

balance sheets as of December 31, 2025. The majority of AdaptHealth’s income tax receivable relates to federal and state corporate income tax refunds, $10.0 million of which was
received in January 2026. The remaining refunds are expected to be received in 2026.
As of December 31, 2025 and 2024, AdaptHealth had working capital of $16.5 million and $188.8 million, respectively. A significant portion of AdaptHealth’s current assets
consists of accounts receivable from third-party payors that are responsible for payment for the products and services that AdaptHealth provides.
Cash Flow. The following table presents selected data from AdaptHealth’s consolidated statements of cash flows for years ended December 31, 2025, 2024 and 2023:
Year Ended December 31,
(in thousands)
2025
2024
2023
(Unaudited)
Net cash provided by operating activities
$
601,771 $
541,839 $
480,666
Net cash used in investing activities
(303,190)
(310,275)
(357,278)
Net cash used in financing activities
(302,192)
(198,949)
(92,528)
Net (decrease) increase in cash
(3,611)
32,615
30,860
Cash at beginning of period
109,747
77,132
46,272
Cash at end of period
$
106,136 $
109,747 $
77,132
Net cash provided by operating activities for the years ended December 31, 2025 and 2024 was $601.8 million and $541.8 million, respectively, an increase of $60.0 million.
The increase was the result of a $160.8 million decrease in net income (loss), a net increase of $128.1 million in non-cash charges, primarily from a goodwill impairment charge,
depreciation and amortization, deferred income taxes, and the reduction in the carrying amount of operating and finance lease right-of-use assets, and a net $92.7 million increase
resulting from the change in operating assets and liabilities, primarily from the change in accounts receivable, inventory, accounts payable and accrued expenses, and income tax
receivables.
Net cash provided by operating activities for the years ended December 31, 2024 and 2023 was $541.8 million and $480.7 million, respectively, an increase of $61.2 million.
The increase was the result of a $769.6 million increase in net income, a net decrease of $709.3 million in non-cash charges, primarily from goodwill impairment charges, depreciation
and amortization, the change in the estimated fair value of the warrant liability, deferred income taxes, and the reduction in the carrying amount of operating and finance lease right-
of-use assets, a payment of $1.9 million for contingent consideration in connection with an acquisition, and a net $1.0 million decrease resulting from the change in operating assets
and liabilities, primarily from the change in accounts receivable, inventory and accounts payable and accrued expenses.
Net cash used in investing activities for the years ended December 31, 2025, 2024 and 2023 was $303.2 million, $310.3 million and $357.3 million, respectively. The use of
funds in 2025 primarily consisted of $382.4 million for equipment and other fixed asset purchases, $42.4 million for business acquisitions, partially offset by $120.4 million of
proceeds from the sale of businesses. The use of funds in 2024 consisted of $306.1 million for equipment and other fixed asset purchases, $9.5 million for business acquisitions,
partially offset by $5.3 million of proceeds from the sale of assets. The use of funds in 2023 consisted of $337.5 million for equipment and other fixed asset purchases, $19.7 million
for business acquisitions, and $0.1 million for other investments.
Net cash used in financing activities for 2025 was $302.2 million and primarily consisted of repayments of $268.5 million on long-term debt and finance lease liabilities,
payments of $25.0 million in connection with the Company's liability relating to the TRA, payments of $7.0 million for distributions to the noncontrolling interest, and payments of
$2.7 million for tax withholdings associated with equity-based compensation, partially offset by proceeds of $1.2 million in connection with the employee stock purchase plan.
Net cash used in financing activities for 2024 was $198.9 million and consisted of repayments of $433.3 million on long-term debt (primarily in connection with the
refinancing of the Company's credit agreement) and finance lease liabilities, payments of $6.4 million for debt issuance costs, payments of $5.6 million for distributions to the
noncontrolling interest, payments of $5.3 million for contingent consideration and deferred purchase price in connection with acquisitions,
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payments of $2.1 million for tax withholdings associated with equity-based compensation, and payments of $1.4 million in connection with the Company's liability relating to the
TRA, offset by borrowings on long-term debt and lines of credit of $253.5 million, proceeds of $1.0 million in connection with the employee stock purchase plan, and proceeds of
$0.7 million relating to stock option exercises.
Net cash used in financing activities for 2023 was $92.5 million and consisted of repayments of $101.8 million on long-term debt and finance lease liabilities, payments of
$29.3 million for Common Stock purchases under a share repurchase program, payments of $3.2 million in connection with the Company's liability relating to the TRA, payments of
$5.8 million for tax withholdings associated with equity-based compensation and stock option exercises, a payment of $2.5 million for a distribution to the noncontrolling interest,
and payments of $2.5 million for deferred purchase price in connection with acquisitions, offset by borrowings of long-term debt of $50.0 million, proceeds of $2.0 million in
connection with the employee stock purchase plan and proceeds of $0.6 million relating to stock option exercises.
Free Cash Flow
The following table reconciles net cash provided by operating activities to free cash flow for the years ended December 31, 2025, 2024 and 2023:
Year Ended December 31,
(in thousands)
2025
2024
2023
(Unaudited)
Net cash provided by operating activities
$
601,771 $
541,839 $
480,666 
Purchases of equipment and other fixed assets
(382,388)
(306,055)
(337,463)
Free cash flow
$
219,383 $
235,784 $
143,203 
Free cash flow was $219.4 million for the year ended December 31, 2025, compared to $235.8 million for the year ended December 31, 2024. The decrease in free cash flow
was due to an increase in, and timing of, purchases of patient medical equipment for operating requirements, partially offset by higher net cash provided by operating activities,
primarily due to a net increase in the cash provided from operating assets and liabilities related to accounts receivable, inventory and accounts payable and accrued expenses.
Free cash flow was $235.8 million for the year ended December 31, 2024, compared to $143.2 million for the year ended December 31, 2023. The increase in free cash flow
was due to higher net cash provided by operating activities, primarily due to higher net income, and to a lesser extent, a net decrease in the use of cash from operating assets and
liabilities, primarily from accounts receivable, inventory and accounts payable and accrued expenses. The increase in free cash flow was also due to a decrease in, and timing of,
purchases of patient medical equipment for operating requirements.
59

Critical Accounting Policies and Estimates
The discussion and analysis of the Company’s financial condition and results of operations is based upon the Company’s consolidated financial statements, which have
been prepared in accordance with U.S. GAAP. The preparation of the Company’s consolidated financial statements requires its management to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures of contingent assets and liabilities. The Company’s management bases its estimates,
assumptions and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Different assumptions and judgments would change the
estimates used in the preparation of the Company’s consolidated financial statements which, in turn, could change the results from those reported. In addition, actual results may
differ from these estimates and such differences could be material to the Company’s financial position and results of operations.
Critical estimates are those that the Company’s management considers the most important to the portrayal of the Company’s financial condition and results of operations
because they require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently
uncertain. The Company’s critical estimates in relation to its consolidated financial statements include those related to revenue recognition and recoverability of goodwill.
Revenue Recognition
Revenues are recognized either at a point in time for the sale of supplies and consumables, over the service period for equipment rental (including, but not limited to, PAP
machines, hospital beds, wheelchairs and other equipment), net of implicit price concessions for amounts estimated to be received from patients or under reimbursement
arrangements with Medicare, Medicaid and other third-party payors, including private insurers, or in the month in which eligible members are entitled to receive healthcare services
in connection with at-risk capitation arrangements. The Company determines the transaction price based on contractually agreed-upon amounts or rates, referred to as explicit price
concessions, adjusted for estimates of variable consideration, such as implicit price concessions, based on historical reimbursement experience. The Company utilizes the expected
value method to determine the amount of variable consideration, including implicit and explicit price concessions, that should be included to arrive at the transaction price, using
contractual agreements and historical reimbursement experience. The Company applies a constraint to the transaction price, such that net revenue is recorded only to the extent
that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in the future. If actual amounts of consideration ultimately received
differ from the Company’s estimates, the Company adjusts these estimates, which would affect net revenue in the period such adjustments become known.
The estimated implicit price concession requires significant judgment as it involves the complexity of third-party billing arrangements, contractual terms and the
uncertainty of reimbursement amounts. The estimated implicit price concession is developed using assumptions based on the best information available to the Company at the
time, but which are inherently uncertain and unpredictable and as a result, actual results may differ significantly from the Company's estimates.
Recoverability of Goodwill
The Company has a significant amount of goodwill on its balance sheet that resulted from the business acquisitions the Company has made. Goodwill is not amortized,
rather, it is assessed at the reporting unit level for impairment annually and also upon the occurrence of a triggering event or change in circumstances indicating that the carrying
value of goodwill may be impaired. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such triggering events potentially
warranting an annual or interim goodwill impairment assessment include, among other factors, declines in historical or projected reporting unit revenue, operating results or cash
flows, and sustained decreases in the Company’s stock price or market capitalization. Such changes in circumstance can include, among others, changes in the legal environment,
reimbursement environment, operating performance, and/or future prospects. In addition, if applicable, a goodwill impairment test is also performed immediately before and after a
reorganization of the Company’s reporting structure when the reorganization would affect the composition of one or more of the Company’s reporting units.
The Company performs its annual impairment assessment of goodwill during the fourth quarter of each year. The impairment assessment can be performed on either a
qualitative or quantitative basis. The Company first assesses qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test. Under the
60

qualitative assessment, the Company is not required to calculate the fair value of a reporting unit unless the Company determines that it is more likely than not that its fair value is
less than its carrying amount. If determined necessary, the Company applies the quantitative impairment test to identify and measure the amount of impairment, if any, by
comparing the fair value of a reporting unit to its carrying amount, including goodwill. If under the quantitative test the fair value of a reporting unit is less than its carrying amount,
then the amount of the impairment loss, if any, is determined based on the amount by which the carrying amount exceeds the fair value up to the total value of goodwill assigned to
the reporting unit.
Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors, such as estimates of a reporting unit's fair
value, and judgment about impairment triggering events. Fair values of the reporting units are estimated using a weighted methodology considering the output from both the
income and market approaches. The income approach incorporates the use of a discounted cash flow ("DCF”) analysis. A number of significant assumptions and estimates are
involved in the application of the DCF model to forecast operating cash flows, including revenue growth rates and discount rates. Several of these assumptions could vary among
reporting units. The market approach is performed using the Guideline Public Companies method which is based on earnings multiple data. The Company performs a reconciliation
between its market capitalization and its estimate of the aggregate fair value of the reporting units, including consideration of an estimated control premium. As a result, there can
be no assurance that the estimates and assumptions made for purposes of the annual or interim goodwill impairment test will prove to be accurate predictions of the future.
Recent Accounting Pronouncements
Recently issued accounting pronouncements that may be relevant to the Company’s operations but have not yet been adopted are outlined in Note 2, Summary of
Significant Accounting Policies - (ee) Recently Issued Accounting Pronouncements Not Yet Adopted, to its consolidated financial statements included in this report.
Commitments and Contingencies
From time to time and in the normal course of business, the Company is subject to loss contingencies, arising from legal proceedings, claims, and governmental and other
investigations under or with respect to various governmental programs and state and federal laws relating to its business, including as a result of or following acquisitions and
other business activities, that cover a wide range of matters. In accordance with FASB ASC Topic 450, Accounting for Contingencies, the Company records accruals for such loss
contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If there is no probable estimate within a range of
reasonably possible outcomes, the Company’s policy is to record at the low end of the range of such reasonably possible outcomes. Judgment is required to determine both
probability and the estimated amount. The Company reviews its accruals quarterly and adjusts accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal
counsel, and updated information. At this time, the Company has no material accruals related to lawsuits, claims, investigations or proceedings, except as disclosed. While there
can be no assurance, based on the Company’s evaluation of information currently available, the Company’s management believes any liability that may ultimately result from
resolution of such loss contingencies will not have a material adverse effect on the Company’s financial condition or results of operations. However, the Company’s assessment
may change in the future based upon availability of new information and further developments in the proceedings of such matters. The results of legal proceedings, claims and
investigations are inherently uncertain, and material adverse outcomes are possible. Professional legal fees associated with any such legal proceedings, claims and investigations
are expensed as they are incurred. On October 24, 2023, Allegheny County Employees’ Retirement System, a purported shareholder of the Company, filed a purported class action
complaint against the Company and certain of its current and former officers, and certain underwriters in the United States District Court for the Eastern District of Pennsylvania.
On January 23, 2024, the court entered an order appointing Allegheny County Employees' Retirement System, International Union of Operating Engineers, Local No. 793, Members
Pension Benefit Trust of Ontario, and City of Tallahassee Pension Plan as Lead Plaintiffs (the "Allegheny Lead Plaintiffs"). On May 14, 2024, Allegheny Lead Plaintiffs filed a
consolidated complaint against the Company and certain of its current and former officers and directors, and certain underwriters, on behalf of shareholders that purchased or
otherwise acquired the Company’s stock between August 4, 2020 and November 7, 2023 (as to the complaint the "Allegheny County Consolidated Complaint”; as to the action, the
"Allegheny County Consolidated Class Action”). The Allegheny County Consolidated Complaint alleges, among other things, that the defendants violated federal securities laws
by making allegedly false and misleading statements and/or failing to disclose material information regarding (i) the Company’s billing practices with respect to its diabetes product
category, and (ii) the Company’s compliance programs and integration with respect to acquired companies. The Allegheny County Consolidated Complaint seeks unspecified
damages. On July 23, 2024, the
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defendants filed a motion to dismiss the Allegheny County Consolidated Complaint. The Allegheny Lead Plaintiffs filed their opposition brief on October 1, 2024, and defendants
filed their reply brief on November 15, 2024.
On May 28, 2025, the parties jointly filed a letter requesting that the Court hold the motion to dismiss in abeyance pending the outcome of a private mediation between the
parties. On October 8, 2025, the parties attended a private mediation. On October 24, 2025, after subsequent settlement discussions, the parties jointly filed a letter informing the
Court that the parties had reached an agreement in principle to settle the litigation and requesting until November 24, 2025 to negotiate the formal settlement agreement and file a
preliminary approval motion. On November 21, 2025, Allegheny Lead Plaintiffs informed the Court that the parties required additional time to finalize the settlement papers and that
Lead Plaintiffs intended to file the Motion for Preliminary Approval of Proposed Settlement and Approval of Notice to the Settlement Class on or before December 19, 2025.
On December 19, 2025, the parties filed said Motion and the preliminary approval order was granted by the Court on February 2, 2026. The proposed settlement is expected
to be funded as follows: (i) $34.0 million of cash from the Company’s insurance carriers and (ii) $1.0 million of cash from the Company. At December 31, 2025, the Company recorded
a liability of $35.0 million, consisting of the aggregate cash payments, which is included in accounts payable and accrued expenses in the accompanying consolidated balance
sheets. In addition, at December 31, 2025, the Company recorded a receivable of $34.0 million, representing the amount to be received from the Company’s insurance carriers, which
is included in prepaid expenses and other current assets in the accompanying consolidated balance sheets. For the year ended December 31, 2025, the Company recorded an
expense of $1.0 million associated with the proposed settlement, which is included in other loss, net in the accompanying consolidated statements of operations. The proposed
settlement is subject to preliminary and final Court approval and other customary closing conditions. Upon the effectiveness of the proposed settlement, the Company and its
directors and officers as well as the other defendants named in the Allegheny County Consolidated Complaint will be released from the claims that were asserted or could have
been asserted in the Consolidated Class Action, with certain limitations, by class members participating in the settlement. The Company has always maintained, and continues to
believe, that it did not engage in any wrongdoing or otherwise commit any violation of federal or state securities laws or other laws. The settlement includes no admission of
liability or wrongdoing and is subject to court approval. There can be no assurance that the settlement will be finalized and approved and, even if approved, whether the conditions
to closing will be satisfied, and the actual outcome of this matter may differ materially from the terms of the settlement described herein.
On January 13, 2026, after consultation with the parties, the Court denied Defendants’ pending motion to dismiss as moot, without prejudice, due to the pending
settlement.
On March 20, 2024, a putative shareholder of the Company, Weiding Wu, filed a shareholder derivative complaint related to the allegations in the Allegheny County
Complaint, and against certain current and former directors and officers of the Company in the United States District Court for the Eastern District of Pennsylvania (as to the
complaint, the "Wu Derivative Complaint”; as to the action, the "Wu Derivative Action”). The Wu Derivative Complaint alleges, among other things, that the defendants breached
their fiduciary duties and violated federal securities laws by making allegedly false and misleading statements and/or failing to disclose material information regarding (i) the
Company’s billing practices with respect to its diabetes product category, and (ii) the Company's compliance programs and integration with respect to acquired companies. The
Wu Derivative Complaint also alleges claims for unjust enrichment, waste of corporate assets, abuse of control, and gross mismanagement. The Wu Derivative Complaint seeks,
among other things, an award of money damages.
On July 25, 2024, the parties to the Wu Derivative Action stipulated to stay the Wu Derivative Action pending final resolution of the Allegheny County Consolidated
Class Action. On July 26, 2024, the court so-ordered the parties’ stipulation.
The Company intends to vigorously defend against the allegations contained in the Wu Derivative Complaint, but there can be no assurance that the defense will be
successful.
On December 9, 2025, a putative shareholder, Aaron Frankel, filed under seal a shareholder derivative complaint against certain current and former directors and officers of
the Company in the United States District Court for the Eastern District of Pennsylvania (as to the complaint, the "Frankel Derivative Complaint”; as to the action, the "Frankel
Derivative Action”). On January 7, 2026, the Court unsealed the Frankel Derivative Action, and Frankel notified the Company of the Frankel Derivative Action and conferred with
the Company regarding necessary redactions of the Frankel Derivative Complaint. On January 28, 2026, Frankel filed a redacted amended complaint on the public docket.
62

The Frankel Derivative Complaint is related to the allegations in the Allegheny County Complaint and Wu Derivative Complaint. It alleges, among other things, that the
defendants breached their fiduciary duties and violated federal securities laws by making allegedly false and misleading statements and/or failing to disclose material information
regarding (i) the Company’s billing practices with respect to its diabetes product category, and (ii) the Company's compliance programs and integration with respect to acquired
companies. The Frankel Derivative Complaint also alleges claims for unjust enrichment and waste of corporate assets. The Frankel Derivative Complaint seeks, among other things,
an award of money damages.
The Company intends to vigorously defend against the allegations contained in the Frankel Derivative Complaint, but there can be no assurance that the defense will be
successful.
On June 24, 2025, a putative shareholder of the Company, Blake T. Myers, filed against the Company a complaint in the Court of Chancery of the State of Delaware
seeking to compel an inspection of books and records under 8 Del. C. § 220 ("Section 220”) (as to the complaint, the "Myers Section 220 Complaint”; as to the action, the "Myers
Section 220 Action”). The Myers Section 220 Complaint asserts the putative shareholder’s right to inspect certain corporate books and records relevant to the issues in the
Allegheny County Consolidated Class Action for the purported purposes of (i) investigating potential wrongdoing by the current and/or former members of the Board and the
Company’s current and/or former executive officers, (ii) supporting appropriate action in the event current and/or former directors or executive officers did not properly discharge
their fiduciary duties, and (iii) evaluating whether members of the current Board have a conflict of interest such that making a demand upon the Board to bring a derivative action
on behalf of the Company would be futile.
On July 1, 2025, the parties to the Myers Section 220 Action met and conferred regarding a mutually agreeable resolution to obviate the need for litigation and agreed that
a thirty-day window to continue negotiations was appropriate. On July 2, 2025, putative shareholder Myers filed a letter to the Court requesting upcoming deadlines to be extended
through August 1, 2025. The Court granted the requested extension on July 8, 2025. On July 31, 2025, Myers filed a letter to the Court requesting upcoming deadlines be extended
through August 31, 2025, which the Court granted on August 5, 2025. On September 3, 2025, Myers filed a letter to the Court requesting upcoming deadlines be extended through
October 3, 2025. On September 26, 2025, the Company completed its production to Myers. On October 3, 2025, Myers filed a letter to the Court requesting additional time for the
parties to confer about the Company’s production and offering to provide a subsequent update to the Court on November 3, 2025. On October 6, 2025, the Court stayed the action
pending any further requests of the parties. On November 3, 2025, Myers filed a letter informing the Court that the parties are continuing to confer and offering to provide a
subsequent update to the Court on December 3, 2025. The Company completed its production on November 19, 2025.
On December 3, 2025, Myers voluntarily dismissed the action.
On February 6, 2026, Myers filed a shareholder derivative complaint under seal related to the allegations in the Allegheny County Consolidated Complaint against certain
current and former directors and officers of the Company in the Delaware Court of Chancery (as to the Complaint, the "Myers Derivative Complaint;” as to the action, the "Myers
Derivative Action”). The Myers Derivative Complaint alleges claims for breach of fiduciary duty, insider trading, and unjust enrichment under Delaware law. On February 12, 2026,
Myers filed a redacted complaint on the public docket.
The Company intends to vigorously defend against the allegations contained in the Myers Derivative Complaint, but there can be no assurance that the defense will be
successful.
In October 2022, a former customer of the Company, Mr. Ray ("Plaintiff”), filed an individual action against the Company and a collection agency for violation of North
Carolina’s Debt Collection Practices Act ("the Act”) based on allegations that the Company failed to address Mr. Ray’s billing concerns and issue a refund in a timely manner
related to his return of medical equipment. Plaintiff was permitted to amend his individual complaint to a class action complaint on behalf of similarly situated North Carolina
residents who allegedly experienced improper billing issues after the asserted return of medical equipment. Over continued objection, and after withdrawing a motion for class
certification, Plaintiff amended his class action complaint again in May 2025 to assert violations of the Act related to three classes of North Carolinians: (a) a class of patients who
were allegedly improperly billed after returning equipment, (b) a class of patients who were allegedly improperly charged a late fee after assertedly returning their equipment, and (c)
a class of patients who received collection letters that allegedly violated the Act. Plaintiff has argued that the claims are meritorious, and the classes could be certified up to and
including approximately 130,000 North Carolina patients. The Company has vigorously defended the case; believes the claims lack merit; and, believes that none of the three
classes could be certified. Neither the
63

merits of the case nor the certification of these classes have been reviewed by the Court. While nonetheless strongly defending the case, to minimize exposure and risk under the
Act, and reduce further litigation expenses, the Company has also pursued settlement options. The Company and the Plaintiff, a proposed class representative, recently agreed to
inform the Court that the parties have agreed to certify the classes and settle the case as to Class A, Class B and Class C members for a total settlement payment to be made by the
Company of $14.5 million in consideration for full releases of the Company. At December 31, 2025, the Company recorded a liability of $14.5 million, which is included in accounts
payable and accrued expenses in the accompanying consolidated balance sheets. For the year ended December 31, 2025, the Company recorded an expense of $14.5 million
associated with the proposed settlement, which is included in general and administrative expenses in the accompanying consolidated statements of operations. This outcome,
while considered likely by the Company, is not fixed and is contingent on factors not wholly within the Company’s control, including finalizing additional material terms with
Plaintiff, seeking and achieving preliminary approval by the Court, an administrative process, and obtaining final approvals from the Court. Should this pathway for resolution fail,
the Company will continue its robust defense of the case.
On July 29, 2024, the U.S. Attorney’s Office for the District of South Carolina issued a civil investigative demand to the Company pursuant to the FCA regarding whether
the Company submitted false claims in violation of the FCA related to its billing of, and reimbursements from, federal health care programs for humidifiers that are integrated with
PAP devices and provided to patients from January 1, 2017 to the present. The Company is fully cooperating with the investigation. Given the stage of the investigation, it is not
possible to determine whether it will have a material adverse effect on the Company.
On March 8, 2025, the U.S. Attorney’s Office for the Eastern District of Pennsylvania issued a civil investigative demand to the Company pursuant to the FCA
surrounding whether the Company submitted false claims in violation of the FCA related to its billing of, and reimbursements from, federal health care programs for respiratory
devices and related supplies provided to patients from January 1, 2018 to the present. The Company is fully cooperating with the investigation. Given the stage of the
investigation, it is not possible to determine whether it will have a material adverse effect on the Company.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Our exposure to market risk relates to fluctuations in interest rates from borrowings under the 2024 Credit Agreement. As of December 31, 2025, there was $315.0 million
outstanding under the 2024 Term Loan, $26.3 million outstanding under letters of credit, and based on the financial debt covenants under the 2024 Credit Agreement, the maximum
amount the Company could borrow under the 2024 Revolver and remain in compliance with the financial debt covenants under the agreement was $273.7 million. Amounts
borrowed under the 2024 Credit Agreement bear interest at variable rates determined in relation to the Base Rate (as defined) or Term SOFR (as defined), at our option. Due to the
interest rates being variable, fluctuations in interest rates may impact our earnings. Based on our current level of debt, we estimate that a 100 basis point change in interest rates
would have a $3.0 million annual impact on our net income (loss) before taxes.
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Item 8. Financial Statements and Supplementary Data
ADAPTHEALTH CORP. AND SUBSIDIARIES
Table of Contents
Page
Number
Consolidated Financial Statements—AdaptHealth Corp. and Subsidiaries
Reports of Independent Registered Public Accounting Firm (KPMG LLP, Philadelphia, Pennsylvania, Auditor Firm ID: 185)
66
Consolidated Balance Sheets—December 31, 2025 and 2024
69
Consolidated Statements of Operations—For the years ended December 31, 2025, 2024 and 2023
70
Consolidated Statements of Comprehensive Income (Loss)—For the years ended December 31, 2025, 2024 and 2023
71
Consolidated Statements of Changes in Stockholders’ Equity—For the years ended December 31, 2025, 2024 and 2023
72
Consolidated Statements of Cash Flows—For the years ended December 31, 2025, 2024 and 2023
73
Notes to Consolidated Financial Statements
75
65

Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
AdaptHealth Corp:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of AdaptHealth Corp. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated
statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025,
and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31,
2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over
financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission, and our report dated February 24, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over
financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be
communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as
a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which
they relate.
Implicit Price Concession
As discussed in Note 2 to the consolidated financial statements, the Company generates revenues for services and related products that the Company provides to patients and
receives payments from Medicare, Medicaid, third-party, and patient payors. The Company’s net revenue was $3,244.9 million for the year ended December 31, 2025. Revenues are
recorded using payor-specific transaction prices based on amounts in effect or contractually agreed by Medicare, Medicaid, third-party, and patient payors, and are adjusted for
estimated implicit price concessions, to reflect the net revenues which the Company expects to receive. The Company utilizes historical reimbursement experience to determine the
estimated implicit price concessions.
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We identified the evaluation of the implicit price concession estimate as a critical audit matter. Complex and subjective auditor judgment was required to evaluate the relevance and
reliability of the historical reimbursement experience.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and operating effectiveness of certain internal controls over
the Company’s implicit price concession estimate. To evaluate the relevance and reliability of historical reimbursement experience in the Company’s implicit price concession
estimate, we:
•
compared the implicit price concession estimate recorded in the prior year to actual results to evaluate the Company’s ability to estimate
•
assessed current year trends in reimbursement rates, to identify any circumstances or conditions that were relevant to the determination of the current year implicit price
concession estimate
•
tested the relevance and reliability of the underlying data that served as a basis for the implicit price concession estimate which included the historical reimbursement
experience by selecting certain historical payments and agreeing to underlying support
•
evaluated the Company’s historical reimbursement experience on net revenues recorded during the current year.
Recoverability of Goodwill
As discussed in Notes 2 and 7 to the consolidated financial statements, the Company has $2,541.4 million of goodwill as of December 31, 2025. The Company performs an
assessment of the recoverability of goodwill at the reporting unit level on an annual basis during the fourth quarter of each year, and upon the occurrence of a triggering event or
change in circumstances indicating that the carrying value of goodwill may be impaired. In connection with the Company's annual assessment of the recoverability of goodwill,
management performed a quantitative goodwill impairment test for each of the Company's reporting units. Based on the results of the annual goodwill impairment test, it was
concluded that the estimated fair value of the Company’s Diabetes Health reporting unit was less than its carrying value, and as such, the Company recognized a goodwill
impairment charge of $128.0 million during the year ended December 31, 2025. In addition, the fair value of the Company’s Wellness at Home reporting unit was in excess of the
carrying value and therefore no impairment charge was recorded.
We identified the evaluation of the recoverability of goodwill for the Diabetes Health and Wellness at Home reporting units as a critical audit matter. Subjective auditor judgment
was required to evaluate certain assumptions, including projected revenue growth rates and discount rates as they were based on subjective determinations of future market and
economic conditions. Minor changes to these assumptions could have had a significant effect on the Company's assessment of the fair value of the reporting units.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal
controls related to the recoverability of goodwill. This included controls related to management's determination of the projected revenue growth rates and discount rates. We
evaluated the reasonableness of the Company's projected revenue growth rates by comparing the growth assumptions to projected revenue growth rates in the Company’s public
guidance and analyst expectations for the Company. We compared the Company’s historical revenue forecasts to actual results to assess the Company’s ability to accurately
forecast. We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the discount rates used by management by comparing them to
independently developed discount rates using publicly available market data for comparable companies.
/s/ KPMG LLP
We have served as the Company’s auditor since 2015.
Philadelphia, Pennsylvania
February 24, 2026
67

Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
AdaptHealth Corp.:
Opinion on Internal Control Over Financial Reporting
We have audited AdaptHealth Corp. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal
Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the
Company as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows for
each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements), and our report dated February 24,
2026 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ KPMG LLP
Philadelphia, Pennsylvania
February 24, 2026
68

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ADAPTHEALTH CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share and per share data)
December 31,
2025
December 31,
2024
Assets
Current assets:
 
 
Cash
$
106,136 $
109,747 
Accounts receivable
370,897 
408,019 
Inventory
151,247 
139,842 
Prepaid and other current assets
100,619 
45,432 
Assets held for sale
— 
52,748 
Total current assets
728,899 
755,788 
Equipment and other fixed assets, net
509,956 
474,556 
Operating lease right-of-use assets
111,968 
105,999 
Finance lease right-of-use assets
52,300 
37,801 
Goodwill
2,541,428 
2,675,166 
Identifiable intangible assets, net
85,121 
105,548 
Deferred tax assets
267,786 
314,505 
Other assets
19,119 
17,584 
Total Assets
$
4,316,577 $
4,486,947 
Liabilities and Stockholders' Equity
 
 
Current liabilities:
 
 
Accounts payable and accrued expenses
$
553,700 $
437,985 
Current portion of long-term debt
20,313 
16,250 
Current portion of operating lease obligations
30,728 
29,945 
Current portion of finance lease obligations
17,702 
14,315 
Contract liabilities
59,843 
34,944 
Other liabilities
30,106 
26,505 
Liabilities held for sale
— 
7,043 
Total current liabilities
712,392 
566,987 
Long-term debt, less current portion
1,715,983 
1,964,921 
Operating lease obligations, less current portion
85,470 
80,275 
Finance lease obligations, less current portion
32,604 
24,630 
Other long-term liabilities
243,804 
272,016 
Total Liabilities
2,790,253 
2,908,829 
Commitments and contingencies (Note 18)
Stockholders' Equity:
 
 
Common Stock, par value of $0.0001 per share, 300,000,000 shares authorized and 135,450,364 and 134,602,317 shares issued and outstanding as of
December 31, 2025 and 2024, respectively
13 
13 
Preferred Stock, par value of $0.0001 per share, 5,000,000 shares authorized; 124,060 shares issued and outstanding as of December 31, 2025 and
2024
1 
1 
Treasury stock, at cost (2,935,035 shares as of December 31, 2025 and 2024)
(25,548)
(25,548)
Additional paid-in capital
2,176,990 
2,156,604 
Accumulated deficit
(632,972)
(562,178)
Accumulated other comprehensive income
78 
2,253 
Total stockholders' equity attributable to AdaptHealth Corp.
1,518,562 
1,571,145 
Noncontrolling interest in subsidiary
7,762 
6,973 
Total Stockholders' Equity
1,526,324 
1,578,118 
Total Liabilities and Stockholders' Equity
$
4,316,577 $
4,486,947 
See accompanying notes to consolidated financial statements.
69

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ADAPTHEALTH CORP. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
Year Ended December 31,
2025
2024
2023
Net revenue
$
3,244,857 $
3,260,975 $
3,200,177 
Costs and expenses:
 
 
 
Cost of net revenue
2,635,658 
2,579,882 
2,576,110 
General and administrative expenses
382,293 
359,238 
334,594 
Depreciation and amortization, excluding patient equipment depreciation
40,640 
45,045 
57,087 
Goodwill impairment (note 7)
127,995 
13,078 
830,787 
Total costs and expenses
3,186,586 
2,997,243 
3,798,578 
Gain on sale of businesses (note 4)
(32,602)
— 
— 
Operating income (loss)
90,873 
263,732 
(598,401)
Interest expense, net
105,753 
126,668 
130,299 
Loss on extinguishment of debt
— 
2,273 
— 
Change in fair value of warrant liability (note 13)
— 
(4,021)
(34,482)
Other loss, net
274 
2,793 
29,566 
(Loss) income before income taxes
(15,154)
136,019 
(723,784)
Income tax expense (benefit)
50,884 
41,239 
(49,004)
Net (loss) income
(66,038)
94,780 
(674,780)
Income attributable to noncontrolling interest
4,756 
4,358 
4,115 
Net (loss) income attributable to AdaptHealth Corp.
$
(70,794) $
90,422 $
(678,895)
Weighted average common shares outstanding - basic
135,146
133,756
134,156
Weighted average common shares outstanding - diluted
135,146
135,531
134,418
Basic net (loss) income per share (note 14)
$
(0.52) $
0.62 $
(5.06)
Diluted net (loss) income per share (note 14)
$
(0.52) $
0.61 $
(5.31)
See accompanying notes to consolidated financial statements.
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
Year Ended December 31,
2025
2024
2023
Net (loss) income
$
(66,038) $
94,780 $
(674,780)
Other comprehensive (loss) income:
 
 
 
Change in fair value of interest rate swaps, inclusive of reclassification adjustment, net of tax
(2,175)
(2,103)
(4,337)
Comprehensive (loss) income
(68,213)
92,677
(679,117)
Income attributable to noncontrolling interest
4,756
4,358 
4,115 
Comprehensive (loss) income attributable to AdaptHealth Corp.
$
(72,969) $
88,319 $
(683,232)
See accompanying notes to consolidated financial statements.
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity
(in thousands)
Common Stock
Preferred Stock
Treasury Stock
Additional
paid-in
capital
(Accumulated
deficit)
Retained 
earnings
Accumulated
other
comprehensive
income (loss)
Noncontrolling
interests in
subsidiaries
Total
Shares  Amount  Shares  Amount
Shares
Amount  
 
 
 
 
Balance, December 31, 2022
134,435 $
13 
124 $
1 
751 $(13,992) $2,130,148 $
26,295 $
8,693 
$
6,600 
$2,157,758 
Equity-based compensation
808
— 
—
— 
—
— 
22,468 
— 
— 
— 
22,468 
Exercise of stock options
440
— 
—
— 
—
— 
587 
— 
— 
— 
587 
Payments for tax withholdings from restricted
stock vestings and stock option exercises
—
— 
—
— 
—
— 
(5,283)
— 
— 
— 
(5,283)
Shares purchased under share repurchase
program
(3,184)
— 
—
— 
3,184
(29,275)
— 
— 
— 
— 
(29,275)
Common Stock issued in connection with
employee stock purchase plan
136
— 
—
— 
—
—
2,031 
— 
— 
— 
2,031 
Distribution to noncontrolling interest
—
— 
—
— 
—
— 
— 
— 
— 
(2,500)
(2,500)
Net (loss) income
—
— 
—
— 
—
— 
— 
(678,895)
— 
4,115 
(674,780)
Change in fair value of interest rate swaps,
inclusive of reclassification adjustment, net of
tax
—
— 
—
— 
—
— 
— 
— 
(4,337)
— 
(4,337)
Balance, December 31, 2023
132,635 $
13 
124 $
1 
3,935 $(43,267) $2,149,951 $
(652,600) $
4,356 
$
8,215 
$1,466,669 
Equity-based compensation
624
— 
—
— 
—
— 
14,880 
— 
— 
— 
14,880 
Exercise of stock options
221
— 
—
— 
—
— 
742 
— 
— 
— 
742 
Payments for tax withholdings from restricted
stock vestings and stock option exercises
—
— 
—
— 
—
— 
(1,999)
— 
— 
— 
(1,999)
Issuance of Settlement Shares
1,000
— 
—
— 
(1,000)
17,719 
(7,969)
— 
— 
— 
9,750 
Common Stock issued in connection with
employee stock purchase plan
122
— 
—
— 
—
— 
999 
— 
— 
— 
999 
Distribution to noncontrolling interest
—
— 
—
— 
—
— 
— 
— 
— 
(5,600)
(5,600)
Net income
—
— 
—
— 
—
— 
— 
90,422 
— 
4,358 
94,780 
Change in fair value of interest rate swaps,
inclusive of reclassification adjustment, net of
tax
—
— 
—
— 
—
— 
— 
— 
(2,103)
— 
(2,103)
Balance, December 31, 2024
134,602 $
13 
124 $
1 
2,935 $(25,548) $2,156,604 $
(562,178) $
2,253 
$
6,973 
$1,578,118 
Equity-based compensation
721
— 
—
— 
—
— 
21,876 
— 
21,876 
Payments for tax withholdings from restricted
stock vestings
—
— 
—
— 
—
— 
(2,701)
— 
(2,701)
Common Stock issued in connection with
employee stock purchase plan
127
— 
—
— 
—
— 
1,211 
— 
1,211 
Distribution to noncontrolling interest
—
— 
—
— 
—
— 
— 
— 
(6,967)
(6,967)
Capital contribution by noncontrolling interest
—
— 
—
— 
—
— 
— 
— 
3,000 
3,000 
Net (loss) income
—
— 
—
— 
—
— 
— 
(70,794)
— 
4,756 
(66,038)
Change in fair value of interest rate swaps,
inclusive of reclassification adjustment, net of
tax
—
— 
—
— 
—
— 
— 
— 
(2,175)
(2,175)
Balance, December 31, 2025
135,450 $
13 
124 $
1 
2,935 $(25,548) $2,176,990 $
(632,972) $
78 
$
7,762 
$1,526,324 
See accompanying notes to consolidated financial statements.
72

ADAPTHEALTH CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31,
2025
2024
2023
Cash flows from operating activities:
Net (loss) income
$
(66,038) $
94,780 $
(674,780)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization, including patient equipment depreciation
381,927 
365,334 
382,783 
Goodwill impairment
127,995 
13,078 
830,787 
Equity-based compensation
21,876 
14,880 
22,468 
Change in fair value of warrant liability
— 
(4,021)
(34,482)
Reduction in the carrying amount of operating lease right-of-use assets
31,114 
32,848 
31,873 
Reduction in the carrying amount of finance lease right-of-use assets
15,342 
11,100 
5,938 
Deferred income tax expense (benefit)
47,163 
32,049 
(62,595)
Change in fair value of interest rate swaps, net of reclassification adjustment
— 
(367)
(1,801)
Amortization of deferred financing costs
5,694 
5,666 
5,234 
Loss on extinguishment of debt
— 
2,273 
— 
Payment of contingent consideration from an acquisition
— 
(1,850)
— 
Gain on sale of businesses
(32,602)
— 
— 
Other
2,721 
2,128 
350 
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable
30,986 
(26,217)
(28,862)
Inventory
(11,491)
(28,065)
15,531 
Prepaid and other assets
(61,071)
27,325 
(20,305)
Operating lease obligations
(31,117)
(32,934)
(32,428)
Operating liabilities
139,272 
33,832 
40,955 
Net cash provided by operating activities
601,771 
541,839 
480,666 
Cash flows from investing activities:
Purchases of equipment and other fixed assets
(382,388)
(306,055)
(337,463)
Payments for business acquisitions, net of cash acquired
(42,378)
(9,536)
(19,687)
Proceeds from the sale of businesses, net of cash disposed
120,420 
— 
— 
Proceeds from the sale of assets
— 
5,316 
— 
Payments for cost method investments
— 
— 
(128)
Receipt of contingent consideration from the sale of assets
1,156 
— 
— 
Net cash used in investing activities
(303,190)
(310,275)
(357,278)
Cash flows from financing activities:
Repayments on long-term debt and lines of credit
(250,000)
(423,477)
(95,000)
Proceeds from borrowings on lines of credit
— 
253,477 
50,000 
Repayments of finance lease obligations
(18,478)
(9,865)
(6,769)
Payments for shares purchased under share repurchase program
— 
— 
(29,275)
Proceeds from the exercise of stock options
— 
742 
587 
Proceeds received in connection with employee stock purchase plan
1,211 
999 
2,031 
Payments relating to the Tax Receivable Agreement
(25,045)
(1,432)
(3,224)
Payments of debt financing costs
— 
(6,429)
— 
Distributions to noncontrolling interests
(6,967)
(5,600)
(2,500)
Payments for tax withholdings from vesting of restricted stock units
(2,701)
(2,066)
(5,843)
Payments of contingent consideration and deferred purchase price from acquisitions
(212)
(5,298)
(2,535)
Net cash used in financing activities
(302,192)
(198,949)
(92,528)
Net (decrease) increase in cash
(3,611)
32,615 
30,860 
Cash at beginning of period
109,747 
77,132 
46,272 
Cash at end of period
$
106,136 $
109,747 $
77,132 
Supplemental disclosures:
Cash paid for interest
$
101,243 $
122,072 $
126,228 
Cash paid for income taxes, net of refunds
24,283 
14,139 
14,756 
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (continued)
(in thousands)
Year Ended December 31,
2025
2024
2023
Noncash investing and financing activities:
Unpaid equipment and other fixed asset purchases at end of period
$
65,892 $
56,123 $
35,867 
Assets subject to operating lease obligations
37,872 
35,871 
22,000 
Operating lease obligations
(37,872)
(35,871)
(22,000)
Write-off of assets subject to operating lease obligations
(2,605)
(6,653)
(14,675)
Write-off of operating lease obligations
2,605 
6,653 
14,675 
Assets subject to finance lease obligations
31,392 
17,871 
32,101 
Finance lease obligations
(31,392)
(17,871)
(32,101)
Write-off of assets subject to finance lease obligations
(1,552)
(513)
— 
Write-off of finance lease obligations
1,552 
513 
— 
Deferred purchase price in connection with acquisitions
355 
— 
137 
See accompanying notes to consolidated financial statements.
74

Table of Contents
ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
(1)    Nature of Business
AdaptHealth Corp. and subsidiaries ("AdaptHealth" or "the Company") is a national leader in providing patient-centered, healthcare-at-home solutions including home
medical equipment ("HME"), medical supplies, and related services. AdaptHealth services beneficiaries of Medicare, Medicaid and commercial insurance payors. The Company
operates under four reportable segments that align with its product categories: (i) Sleep Health, (ii) Respiratory Health, (iii) Diabetes Health, and (iv) Wellness at Home. The Sleep
Health segment provides sleep therapy equipment, supplies and related services (including continuous positive airway pressure and BiLevel services) to individuals for the
treatment of obstructive sleep apnea. The Respiratory Health segment provides oxygen and home mechanical ventilation equipment and supplies and related chronic therapy
services to individuals for the treatment of respiratory diseases, such as chronic obstructive pulmonary disease and chronic respiratory failure. The Diabetes Health segment
provides medical devices, including continuous glucose monitors ("CGM") and insulin pumps, and related services to patients for the treatment of diabetes. The Wellness at Home
segment provides home medical equipment and services to patients in their homes including those who have been discharged from acute care and other facilities. The segment
tailors a service model to patients who are adjusting to new lifestyles or navigating complex disease states by providing essential medical supplies and durable medical equipment.
(2) Summary of Significant Accounting Policies
(a)    Basis of Presentation
The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America
("U.S. GAAP"). In the opinion of management, the consolidated financial statements include all necessary adjustments for a fair presentation of the financial position and results of
operations for the periods presented.
(b)    Basis of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation.
(c)    Accounting Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and reported amounts of revenues and
expenses during the reporting period. Management bases these estimates and assumptions upon historical experience, existing and known circumstances, authoritative accounting
pronouncements and other factors that management believes to be reasonable. Significant areas requiring the use of management estimates relate to revenue recognition and the
valuation of accounts receivable (implicit price concession), income taxes and the tax receivable agreement, equity-based compensation, long-lived assets, including goodwill and
identifiable intangible assets, business combinations and contingencies. Actual results could differ from those estimates.
(d)    Revenue Recognition
The Company generates revenues for services and related products that the Company provides to patients for home medical equipment, related supplies, and other items.
The Company’s revenues are recognized in the period in which services and related products are provided to customers and are recorded either at a point in time for the sale of
supplies and consumables, over the fixed monthly service period for equipment, or in the month in which eligible members are entitled to receive healthcare services in connection
with at-risk capitation arrangements.
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
Revenues are recognized when control of the promised good or service is transferred to customers, in an amount that reflects the consideration the Company expects to
receive from patients or under reimbursement arrangements with Medicare, Medicaid and third-party payors, in exchange for those goods and services.
The Company determines the transaction price based on contractually agreed-upon amounts or rates, referred to as explicit price concessions, adjusted for estimates of
variable consideration, such as implicit price concessions, based on historical reimbursement experience. The Company utilizes the expected value method to determine the amount
of variable consideration, including implicit and explicit price concessions, that should be included to arrive at the transaction price, using contractual agreements and historical
reimbursement experience. The Company applies a constraint to the transaction price, such that net revenue is recorded only to the extent that it is probable that a significant
reversal in the amount of the cumulative revenue recognized will not occur in the future. If actual amounts of consideration ultimately received differ from the Company’s estimates,
the Company adjusts these estimates, which would affect net revenue in the period such adjustments become known.
Sales revenue is recognized upon transfer of control of products or services to customers in an amount that reflects the consideration the Company expects to receive in
exchange for those products or services. Revenues for the sale of sleep therapy equipment supplies (including PAP resupply products), home medical equipment and related
supplies (including wheelchairs, hospital beds and infusion pumps), diabetic medical devices and supplies (including CGM and insulin pumps), and other HME products and
supplies are recognized when control of the promised good or service is transferred to customers, which is generally upon shipment for direct to consumer medical devices and
supplies and upon delivery to the home for home medical equipment.
The Company provides certain equipment to patients which is reimbursed periodically in fixed monthly payments for as long as the patient is using the equipment and
medical necessity continues (in certain cases, the fixed monthly payments are capped at a certain amount). The equipment provided to the patient is based upon medical necessity
as documented by prescriptions and other documentation received from the patient’s physician. The patient generally does not select the manufacturer or model of the equipment
prescribed by their physician and delivered by the Company. Once initial delivery of this equipment is made to the patient for initial setup, a monthly billing process is established
based on the initial setup service date. The Company recognizes the fixed monthly revenue ratably over the service period as earned, less estimated adjustments, and defers
revenue for the portion of the monthly bill that is unearned. No separate revenue is earned from the initial setup process. Included in fixed monthly revenue are unbilled amounts
for which the revenue recognition criteria had been met as of period-end but were not yet billed to the payor. The estimate of net unbilled fixed monthly revenue recognized is
based on historical trends and estimates of future collectability.
The Company receives a per member per month ("PMPM”) fee under certain at-risk capitation arrangements, which refers to a model in which the Company receives a
PMPM fee from the third-party payor, and is responsible for managing a range of healthcare services and associated costs of its members. In at-risk capitation arrangements, the
Company is responsible for the cost of contracted healthcare services required by those members in accordance with the terms of each agreement. Capitated revenue contracts
with payors are generally multi-year arrangements and have a single monthly stand ready performance obligation to provide all aspects of necessary medical care to members for
the contracted period in accordance with the scope of the agreements. The Company recognizes revenue in the month in which eligible members are entitled to receive healthcare
services during the contract term. The Company’s revenue recognized under its capitation arrangements by segment for the years ended December 31, 2025 and 2024 is included in
the table below. The Company’s revenue recognized under its capitation arrangements for the year ended December 31, 2023 is included in net sales revenue and net revenue from
fixed monthly equipment reimbursements by segment in the table below, which was immaterial in that period.
The Company’s billing system contains payor-specific price tables that reflect the fee schedule amounts in effect or contractually agreed upon by various government
and commercial insurance payors for each item of equipment or supply provided to a customer. Revenues are recorded based on the applicable fee schedule. The Company has
established a contractual allowance, referred to as an explicit price concession, to account for adjustments that result from differences between the payment amount received and
the expected realizable amount. If the payment amount received differs from the
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
net realizable amount, an adjustment is recorded to revenues in the period that these payment differences are determined. The Company reports revenues in its consolidated
financial statements net of such adjustments.
The Company recognizes revenue in the consolidated statements of operations and contract assets on the consolidated balance sheets only when services have been
provided. Since the Company has performed its obligation under the contract, it has unconditional rights to the consideration recorded as contract assets and therefore classifies
those billed and unbilled contract assets as accounts receivable.
Fixed monthly payments that the Company receives from customers in advance of providing services represent contract liabilities. Such payments primarily relate to
patients who are billed monthly in advance and are recognized over the period as earned.
The Company disaggregates net revenue from contracts with customers by payor type and by segment. The Company believes that disaggregation of net revenue into
these categories depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The payment terms and conditions within the
Company’s revenue-generating contracts vary by payor type and payor source. All of the Company’s net revenues are derived from within the U.S.
The composition of net revenue by payor type for the years ended December 31, 2025, 2024 and 2023 are as follows (in thousands):
Year Ended December 31,
2025
2024
2023
Insurance
$
1,963,190 $
1,998,722 $
1,933,440
Government
852,988
842,552
852,789
Patient pay
428,679
419,701
413,948
Net revenue
$
3,244,857 $
3,260,975 $
3,200,177
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
The composition of net revenue by segment for the years ended December 31, 2025, 2024 and 2023 are as follows (in thousands):
Year Ended December 31,
2025
2024
2023
Net sales revenue:
Sleep Health
$
1,040,386 $
992,332 $
947,103
Respiratory Health
33,495
32,688
45,219
Diabetes Health
573,690
598,446
647,431
Wellness at Home
383,441
467,305
491,549
Total net sales revenue
$
2,031,012 $
2,090,771 $
2,131,302
Net revenue from fixed monthly equipment reimbursements:
Sleep Health
$
308,784 $
327,729 $
344,611
Respiratory Health
601,506
558,529
569,344
Diabetes Health
12,576
9,704
12,608
Wellness at Home
163,275
144,095
142,312
Total net revenue from fixed monthly equipment reimbursements
$
1,086,141 $
1,040,057 $
1,068,875
Net revenue from capitated revenue arrangements:
Sleep Health
$
28,977 $
29,152 $
—
Respiratory Health
56,159
59,933
—
Diabetes Health
6,147
6,260
—
Wellness at Home
36,421
34,802
—
Total net revenue from capitated revenue arrangements
$
127,704 $
130,147 $
—
Total net revenue:
Sleep Health
$
1,378,147 $
1,349,213 $
1,291,714
Respiratory Health
691,160
651,150
614,563
Diabetes Health
592,413
614,410
660,039
Wellness at Home
583,137
646,202
633,861
Total net revenue
$
3,244,857 $
3,260,975 $
3,200,177
(e)    Accounts Receivable
Due to the continuing changes in the healthcare industry and third-party reimbursement environment, certain estimates are required to record accounts receivable at their
net realizable values. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. The complexity of third-party
billing arrangements and laws and regulations governing Medicare and Medicaid may result in adjustments to amounts originally recorded.
The Company performs a periodic analysis to review the valuation of accounts receivable and collectability of outstanding balances. Management’s evaluation takes into
consideration such factors as historical cash collections experience, business and economic conditions, trends in healthcare coverage, other collection indicators and information
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
about specific receivables. The Company’s evaluation also considers the age and composition of the outstanding amounts in determining their estimated net realizable value.
Receivables are considered past due when not collected by established due dates. Specific patient balances are written off after collection efforts have been followed and
the account has been determined to be uncollectible. Revisions in receivable estimates are considered implicit price concession adjustments and are recognized as an adjustment to
net revenue in the period of revision. The Company does not have any material bad debt expense.
Included in accounts receivable are earned but unbilled accounts receivable. Billing delays, ranging from several days to several weeks, can occur due to the Company’s
policy of compiling required payor specific documentation prior to billing for its services rendered. As of December 31, 2025 and 2024, the Company’s unbilled accounts receivable
was $44.7 million and $41.6 million, respectively.
(f)    Fair Value Accounting
Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 820, Fair Value Measurements and Disclosures ("ASC 820"),
creates a single definition of fair value, establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements. ASC 820
emphasizes that fair value is a market-based measurement, not an entity specific measurement, and states that a fair value measurement is to estimate the price at which an orderly
transaction to sell an asset or to transfer the liability would take place between market participants at the measurement date under current market conditions. Assets and liabilities
adjusted to fair value in the balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value.
Level inputs, as defined by ASC 820, are as follows:
Level input
Input Definition
Level 1
Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level 2
Inputs, other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with market data at the
measurement date.
Level 3
Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement
date.
See Note 8, Fair Value of Assets and Liabilities, for additional information.
(g)    Fair Value of Financial Instruments
The Company’s financial instruments consist of cash, accounts receivable, prepaid and other current assets, accounts payable and accrued expenses. The carrying values
of the Company’s financial instruments approximate their fair value based on their short-term nature.
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
The table below shows the carrying amounts and estimated fair values, net of unamortized deferred financing costs, of the Company’s long-term debt arrangements (in
thousands):
December 31, 2025
December 31, 2024
Carrying Value
Fair Value
Carrying Value
Fair Value
Secured term loan
$
313,722 $
313,722 $
547,281 $
547,281
Senior unsecured notes
1,422,574
1,394,599
1,433,890
1,318,820
$
1,736,296 $
1,708,321 $
1,981,171 $
1,866,101
The borrowings under the Company’s secured term loan bear interest at the variable rates described in Note 12, Debt, which management believes approximates fair value.
The fair value of the Company’s senior unsecured notes is based upon observable inputs which fall within Level 2 of the fair value hierarchy.
(h)    Cash and Cash Equivalents
The Company considers all short-term highly liquid investments with a maturity of three months or less to be cash equivalents. Cash represents cash on hand and
deposits held at banks. The Company maintains cash in demand deposit accounts with federally insured banks. At times, the balances in these accounts may be in excess of
federally insured limits. The Company had no cash equivalents at December 31, 2025 and 2024.
(i)    Inventory
Inventory consists of equipment and medical supplies to be sold to customers and is stated at the lower of cost or net realizable value. Cost is determined by the first-in-
first-out method. These items are charged to cost of net revenue in the period in which products and related services are provided to patients.
(j)    Equipment and Other Fixed Assets
Equipment and other fixed assets are stated at cost less accumulated depreciation, or, when acquired as part of a business combination, fair value at the date of
acquisition. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. The useful lives for patient medical equipment correlate
with the medical reimbursement periods. Computer equipment, vehicles and other fixed assets are depreciated over the estimated useful lives of the assets. Major expenditures for
property acquisitions and those expenditures that substantially increase useful lives are capitalized. Expenditures for maintenance, repairs and minor replacements are expensed as
incurred.
The useful lives of property and equipment for purposes of computing depreciation are:
Patient medical equipment
13 months - 5 years
Computers and software
5 - 10 years
Delivery vehicles
5 years
Other
2 - 10 years
(k)    Long-Lived Assets
The Company’s long-lived assets, such as equipment and other fixed assets, operating lease right-of-use assets, finance lease right-of-use assets and definite-lived
identifiable intangible assets, are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be
generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. The Company's tangible long-
lived assets are located within the U.S.
Definite-lived identifiable intangible assets consist of tradenames, payor contracts, contractual rental agreements and developed technology. These assets are amortized
using the straight-line method over their estimated useful lives, which reflects the pattern in which the economic benefits of the assets are expected to be consumed. In addition to
consideration of impairment upon the events or changes in circumstances described above, management regularly evaluates the remaining useful lives of its long-lived assets. The
following table summarizes the useful lives of the Company’s identifiable intangible assets:
Tradenames
5 to 10 years
Payor contracts
10 years
The Company did not recognize any impairment charges on long-lived assets for the years ended December 31, 2025, 2024 and 2023.
(l)    Recoverability of Goodwill
The Company has a significant amount of goodwill on its balance sheet that resulted from the business acquisitions the Company has made. Goodwill is not amortized,
rather, it is assessed at the reporting unit level for impairment annually and also upon the occurrence of a triggering event or change in circumstances indicating that the carrying
value of goodwill may be impaired. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such triggering events potentially
warranting an annual or interim goodwill impairment assessment include, among other factors, declines in historical or projected reporting unit revenue, operating results or cash
flows, and sustained decreases in the Company’s stock price or market capitalization. Such changes in circumstance can include, among others, changes in the legal environment,
reimbursement environment, operating performance, and/or future prospects. In addition, if applicable, a goodwill impairment test is also performed immediately before and after a
reorganization of the Company’s reporting structure when the reorganization would affect the composition of one or more of the Company’s reporting units.
The Company performs its annual impairment assessment of goodwill during the fourth quarter of each year. The impairment assessment can be performed on either a
qualitative or quantitative basis. The Company first assesses qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test. Under the
qualitative assessment, the Company is not required to calculate the fair value of a reporting unit unless the Company determines that it is more likely than not that its fair value is
less than its carrying amount. If determined necessary, the Company applies the quantitative impairment test to identify and measure the amount of impairment, if any, by
comparing the fair value of a reporting unit to its carrying amount, including goodwill. If under the quantitative test the fair value of a reporting unit is less than its carrying amount,
then the amount of the impairment loss, if any, is determined based on the amount by which the carrying amount exceeds the fair value up to the total value of goodwill assigned to
the reporting unit.
Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors, such as estimates of a reporting unit's fair
value, and judgment about impairment triggering events. Fair values of the reporting units are estimated using a weighted methodology considering the output from both the
income and market approaches. The income approach incorporates the use of a discounted cash flow ("DCF”) analysis. A number of significant assumptions and estimates are
involved in the application of the DCF model to forecast operating cash flows, including revenue growth rates and discount rates. Several of these assumptions could vary among
reporting units. The market approach is performed using the Guideline Public Companies method which is based on earnings multiple data. The Company performs a reconciliation
between its market capitalization and its estimate of the aggregate fair value of the reporting units, including consideration of an estimated control premium. As a result, there can
be no assurance that the estimates and assumptions made for purposes of the annual or interim goodwill impairment test will prove to be accurate predictions of the future.
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
(m)    Gain or Loss on Disposals
From time to time, the Company may sell individual businesses when doing so aligns with its strategic priorities. When a business is sold, goodwill along with identified
tangible and intangible assets and liabilities are netted against the sales proceeds to determine the associated gain or loss on disposal. Goodwill is allocated to the disposed
business using the relative fair value of the disposed business to the associated reporting unit in which it was included. These transactions may include potential future payments
that are contingent upon the achievement of certain conditions. The Company recognizes these future payments at the settlement amount as a gain when the condition for
achievement is satisfied and the amounts are realized or realizable.
(n)    Business Combinations
The Company applies the acquisition method of accounting for business acquisitions. The results of operations of the businesses acquired by the Company are included
as of the respective acquisition date. The acquisition-date fair value of the consideration transferred, including the fair value of any contingent consideration, is allocated to the
underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition. To the extent the acquisition-date fair value of the
consideration transferred exceeds the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed, such excess is allocated to goodwill. Patient
relationships, medical records and patient lists are not reported as separate intangible assets due to regulatory requirements and lack of contractual agreements but are part of
goodwill. Customer related relationships are not reported as separate intangible assets but are part of goodwill as authorizing physicians are under no obligation to refer the
Company’s services to their patients, who are free to change physicians and service providers at any time. The Company may adjust the preliminary purchase price allocation, as
necessary, as it obtains more information regarding asset valuations and liabilities assumed that existed but were not available at the acquisition date, which is generally up to one
year after the acquisition closing date. Acquisition related expenses are recognized separately from the business combination and are expensed as incurred.
(o)    Deferred Financing Costs
Costs incurred in connection with the Company’s borrowings, referred to as financing costs, are capitalized and included on the accompanying consolidated balance
sheets in other assets for costs associated with revolving credit facilities, and as a reduction of the carrying value of debt for costs associated with secured term loans and senior
unsecured notes. The capitalized financing costs are amortized to interest expense using the effective interest method over the term of the related financing agreement. See Note 10,
Deferred Financing Costs, for additional information.
(p)    Accounting for Leases
The Company accounts for its leases in accordance with FASB ASC Topic 842, Leases ("ASC 842"). ASC 842 requires the Company to recognize a lease liability, which
represents the discounted obligation to make future minimum lease payments, and a corresponding right-of-use ("ROU") asset on its consolidated balance sheet for most leases,
and disclose key information about leasing arrangements. ASC 842 applies to a number of arrangements to which the Company is a party.
Generally, upon the commencement of a lease, the Company will record a lease liability and a ROU asset. However, the Company has elected, for all underlying leases with
initial terms of twelve months or less (known as short-term leases), to not recognize a lease liability or ROU asset. Lease liabilities are initially recorded at lease commencement as
the present value of future lease payments. ROU assets are initially recorded at lease commencement as the initial amount of the lease liability, together with the following, if
applicable: (i) initial direct costs incurred by the lessee and (ii) lease payments made to the lessor net of lease incentives received, prior to lease commencement.
Over the lease term, the Company generally increases its lease liabilities using the effective interest method and decreases its lease liabilities for lease payments made. For
finance leases, amortization and interest expense are recognized separately in the consolidated statements of operations, with amortization expense generally recorded on a
straight-line
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
basis over the lease term and interest expense recorded using the effective interest method. For operating leases, a single lease cost is generally recognized in the consolidated
statements of operations on a straight-line basis over the lease term unless an impairment has been recorded with respect to a leased asset. Lease costs for short-term leases not
recognized in the consolidated balance sheets are recognized in the consolidated statements of operations on a straight-line basis over the lease term. Variable lease costs not
initially included in the lease liability and ROU asset impairment charges are expensed as incurred. ROU assets are assessed for impairment, similar to other long-lived assets.
See Note 15, Leases, for additional information.
(q)    Commitments and Contingencies
From time to time and in the normal course of business, the Company is subject to loss contingencies, arising from legal proceedings, claims, and governmental and other
investigations under or with respect to various governmental programs and state and federal laws relating to its business, including as a result of or following acquisitions and
other business activities, that cover a wide range of matters. In accordance with FASB ASC Topic 450, Accounting for Contingencies, the Company records accruals for such loss
contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If there is no probable estimate within a range of
reasonably possible outcomes, the Company’s policy is to record at the low end of the range of such reasonably possible outcomes. Judgment is required to determine both
probability and the estimated amount. The Company reviews its accruals quarterly and adjusts accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal
counsel, and updated information. At this time, the Company has no material accruals related to lawsuits, claims, investigations or proceedings, except as disclosed. While there
can be no assurance, based on the Company’s evaluation of information currently available, the Company’s management believes any liability that may ultimately result from
resolution of such loss contingencies will not have a material adverse effect on the Company’s financial condition or results of operations. However, the Company’s assessment
may change in the future based upon availability of new information and further developments in the proceedings of such matters. The results of legal proceedings, claims and
investigations are inherently uncertain, and material adverse outcomes are possible. Professional legal fees associated with any such legal proceedings, claims and investigations
are expensed as they are incurred. See Note 18, Commitments and Contingencies, for additional information.
(r)    Advertising Costs
Advertising costs are charged to expense as incurred. The Company’s advertising costs for the years ended December 31, 2025, 2024 and 2023 were $21.5 million, $22.5
million and $22.8 million, respectively.
(s)    Equity-based Compensation
The Company accounts for its equity-based compensation in accordance with FASB ASC Topic 718, Compensation Stock Compensation, which establishes accounting
for share-based awards exchanged for employee services and requires companies to expense the estimated fair value of these awards over the requisite employee service period.
Equity-based compensation expense related to these grants is included within general and administrative expenses and cost of net revenue in the accompanying consolidated
statements of operations. The Company measures and recognizes equity-based compensation expense for such awards based on their estimated fair values on the date of grant.
For share-based awards with service only or service and performance conditions, the value of the portion of the award that is ultimately expected to vest is recognized as expense
over the requisite service period in the Company’s consolidated financial statements. For share-based awards with only a service condition, equity-based compensation expense is
recognized on a straight-line basis over the requisite service period. For awards with performance conditions, equity-based compensation expense is recognized straight-line on a
tranche-by-tranche basis over the employees’ requisite service period subject to management’s estimation of the probability of vesting of such awards. If management determines
that the performance conditions are no longer probable of achievement, the Company will reverse the previously recognized equity-based compensation expense in the period of
determination. For awards with market conditions, the grant-date fair value is estimated using a monte-carlo simulation analysis, which is recognized straight-line on a tranche-by-
tranche basis over the employees’ requisite service period regardless of whether or the extent to which the awards ultimately vest. The Company
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
does not estimate forfeitures in connection with its accounting for equity-based compensation, and instead accounts for forfeitures as they occur. See Note 13, Stockholders’
Equity, for additional information regarding the Company’s equity-based compensation expense.
(t)    Cost of Net Revenue
Cost of net revenue primarily includes the cost of non-capitalized medical equipment and supplies, distribution expenses, labor costs, facilities and vehicle rental costs,
and depreciation for capitalized patient equipment. Distribution expenses represent the cost incurred to coordinate and deliver products and services to the patients. Included in
distribution expenses are leasing, maintenance, licensing and fuel costs for the vehicle fleet; salaries, benefits and other costs related to drivers and dispatch personnel; and
amounts paid to couriers.
Cost of net revenue for the years ended December 31, 2025, 2024 and 2023 consisted of the following (in thousands):
Year Ended December 31,
2025
2024
2023
Cost of products and supplies
$
1,294,423 $
1,288,162 $
1,310,213
Salaries, labor and benefits
750,309
730,597
716,531
Patient equipment depreciation
341,287
320,289
325,696
Rent and occupancy
74,391
71,874
68,375
Other operating expenses
175,248
168,960
155,295
Total
$
2,635,658 $
2,579,882 $
2,576,110
(u)    General and Administrative Expenses
General and administrative expenses ("G&A") consist of corporate support costs including revenue cycle management costs, information technology, human resources,
finance, contracting, legal, compliance, equity-based compensation, and other administrative costs. Included in G&A during the years ended December 31, 2025, 2024 and 2023 are
salaries, labor and benefits expenses (including equity-based compensation and severance) of $165.8 million, $157.2 million and $146.3 million, respectively.
(v)    Business Segments
Operating segments are defined as components of a public entity for which discrete financial information is available that is evaluated regularly by the Chief Operating
Decision Maker ("CODM”) for purposes of allocating resources and evaluating financial performance. The Company’s CODM is its Chief Executive Officer. The Company is
organized under four reportable segments that align to the Company’s product categories: Sleep Health, Respiratory Health, Diabetes Health, and Wellness at Home. See Note 6,
Segment Information, for more information on the Company’s segments.
(w)    Concentration of Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. The Company
maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is
not exposed to any significant credit risk on cash. As of December 31, 2025 and 2024, approximately 14% and 10% of the Company’s net accounts receivable, respectively, are from
patients under co-pay or private plan arrangements.
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
(x)    Concentration of Customers
The Company provides patient-centered, healthcare-at-home solutions including home medical equipment, medical supplies, and related services, to its customers. This
results in a customer concentration relating to government healthcare reimbursement programs. During the years ended December 31, 2025, 2024 and 2023, the Company derived
approximately 26%, 26% and 27% of its net revenue from government healthcare programs, including Medicare and Medicaid, respectively. Each of the Company’s reportable
segments sold to government healthcare reimbursement programs during the years ended December 31, 2025, 2024 and 2023. Concentration of credit risk with respect to other
payors is limited due to the large number of such payors and varied geographical locations.
(y)    Self-Insurance Risk
The Company is subject to workers’ compensation, auto liability and employee medical claims, which are primarily self-insured; however, the Company maintains certain
stop-loss and other insurance coverage which it believes to be appropriate. Provisions for estimated settlements relating to the workers’ compensation and medical plans are
provided in the period of the related claim on a case-by-case basis plus an amount for incurred but not reported claims. Differences between the amounts accrued and subsequent
settlements are recorded in operations in the period of settlement.
(z)    Derivative Instruments
The Company recognizes all derivative instruments as either assets or liabilities in the accompanying consolidated balance sheets at fair value. Derivative instruments
consist of interest rate swap agreements. The interest rate swap agreements are used to manage interest rate risk associated with the Company’s variable rate debt. The Company
utilizes the interest rate swap agreements to modify the Company’s exposure to interest rate risk by converting a portion of its variable rate borrowings to a fixed rate. See Note 9,
Derivative Instruments and Hedging Activities, for additional information.
(aa)    Income Taxes
The Company uses the asset and liability method of accounting for income taxes, under which deferred tax assets and liabilities are recognized for the future tax
consequences of (i) temporary differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities and (ii) operating loss and tax credit
carryforwards. Deferred income tax assets and liabilities are based on enacted tax rates applicable to the future period when those temporary differences are expected to be
recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period the rate change is enacted. A valuation allowance
is provided for deferred tax assets when it is more likely than not the deferred tax assets will not be realized. The Company’s deferred tax calculations and valuation allowance
requires management to make certain estimates about future operations. Changes in state or federal tax laws, as well as changes in the Company’s financial condition or the
carrying value of existing assets and liabilities, could affect those estimates. The effect of a change in tax rates is recognized as income or expense in the period that the rate is
enacted.
FASB ASC 740, Income Taxes, prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing
authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There was no material amount of expense for
interest and penalties related to unrecognized tax benefits for the years ended December 31, 2025, 2024 and 2023.
(bb)    Earnings (Loss) Per Share
Earnings (loss) per share is based upon the weighted average number of common shares outstanding during the respective periods. The Company follows the provisions
of the authoritative guidance for determining whether instruments
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
granted in equity-based compensation transactions or other instruments are participating securities for purposes of calculating earnings (loss) per share. See Note 14, Earnings
(Loss) Per Share, for additional information.
(cc)     Held for Sale
Assets and liabilities are classified as held for sale when all of the held for sale criteria as defined in FASB ASC Topic 360, Property, Plant and Equipment, have been met.
When all of the criteria have been met, the assets and liabilities are classified as held for sale in the Company’s consolidated balance sheets. Assets classified as held for sale are
reported at the lower of their carrying value or fair value less costs to sell. Depreciation and amortization of assets ceases upon designation as held for sale. The Company
assesses the recoverability of assets classified as held for sale each reporting period that they remain classified as held for sale and if their carrying value exceeds their fair value,
less an estimated cost to sell, an impairment charge is recorded for the excess.
(dd)    Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 amends ASC 740, Income Taxes, to
enhance income tax disclosures primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. ASU 2023-09 is
effective for annual periods beginning after December 15, 2024. The Company adopted ASU 2023-09 for the year ended December 31, 2025 on a prospective basis. See Note 20,
Income Taxes, for additional information.
(ee)    Recently Issued Accounting Pronouncements Not Yet Adopted
In September 2025, the FASB issued Accounting Standards Update (ASU) No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):
Targeted Improvements to the Accounting for Internal-Use Software. This amendment modernizes the accounting for internal-use software costs by increasing the operability of
the recognition guidance considering different methods of software development related to accounting for internal-use software costs. The amendment is effective for annual
periods beginning after December 15, 2027, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that this
standard will have on its consolidated financial statements and related disclosures.
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and
Contract Assets. The amendments provide a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset
when estimating expected credit losses for current accounts receivable and current contract assets. The amendments are effective for annual reporting periods beginning after
December 15, 2025, and interim reporting periods within those annual reporting periods. The Company does not expect that this standard will have a material impact on its
consolidated financial statements, and intends to adopt this standard when it becomes effective in the first quarter of fiscal year 2026.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40),
which requires new financial statement disclosures in tabular format, in the notes to the financial statements, of specified information about certain costs and expenses. This ASU
will be effective for annual periods beginning after December 15, 2026. Early adoption is permitted and is effective on either a prospective basis or retrospective basis. The
Company is currently evaluating the impact that this standard will have on its consolidated financial statements and related disclosures.
In March 2024, the SEC issued its final climate disclosure rule, which requires registrants to provide climate-related disclosures in their annual reports and registration
statements. The new disclosure requirements would have been effective for the Company beginning with its annual report for the year ending December 31, 2025. In April 2024, the
SEC stayed its final climate rule to allow for a judicial review of pending legal challenges, and in March 2025, the SEC voted to end its defense of the rules and withdrew from the
litigation. The Company is currently monitoring developments with respect to these rules, including whether they will become effective.
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
(3) Acquisitions
During the years ended December 31, 2025, 2024 and 2023, the Company completed several acquisitions to strengthen its current market share in existing markets or to
expand into new markets. Each of the Company’s acquisitions was accounted for using the acquisition method pursuant to the requirements of FASB ASC Topic 805, Business
Combinations, and are included in the Company’s consolidated financial statements since the respective acquisition date. The goodwill generated from these acquisitions is
attributable to expected growth and cost synergies and the expected contribution of each acquisition to the Company’s overall strategy. The goodwill recorded during the year
ended December 31, 2025 is expected to be deductible for tax purposes.
Year ended December 31, 2025
During the year ended December 31, 2025, the Company acquired certain assets of four providers of home medical equipment, and 100% of the equity interests in one
provider of home medical equipment, each of which were accounted for as a business combination under ASC 805. The total consideration paid at closing for these acquisitions
during the year ended December 31, 2025 consisted of cash payments totaling $42.8 million, and a deferred payment of $0.3 million.
The Company allocated the consideration paid to the net assets acquired based on their estimated acquisition date fair values. Based upon management’s evaluation, the
consideration paid for all acquisitions during the year ended December 31, 2025 was allocated as follows during the period (in thousands):
Cash
$
379 
Accounts receivable
779 
Inventory
1,155 
Equipment and other fixed assets
8,436 
Other Long Term Assets
38 
ROU Asset
2,522 
Goodwill
33,260 
Accounts payable and accrued expenses
(625)
Operating lease liabilities
(2,522)
Deferred Tax Liabilities
(309)
Net assets acquired
$
43,113 
Year ended December 31, 2024
During the year ended December 31, 2024, the Company acquired certain assets from a provider of HME. The consideration paid at closing for the acquisition during the
year ended December 31, 2024 consisted of a cash payment of $9.5 million.
The Company allocated the consideration paid to the net assets acquired based on their estimated acquisition date fair values. Based upon management’s evaluation, the
consideration paid for the acquisition during the year ended December 31, 2024 was allocated as follows during the period (in thousands):
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
Inventory
$
192 
Equipment and other fixed assets
249 
Goodwill
9,095 
Net assets acquired
$
9,536 
Year ended December 31, 2023
During the year ended December 31, 2023, the Company acquired 100% of the equity interests of two providers of HME and acquired certain assets from four providers of
home medical equipment. The following table summarizes the consideration paid at closing for all acquisitions during the year ended December 31, 2023 (in thousands):
Cash
$
19,943 
Deferred payments
137 
Total
$
20,080 
The Company allocated the consideration paid to the net assets acquired based on their acquisition date fair values. Based upon management’s evaluation, the
consideration paid for all acquisitions during the year ended December 31, 2023 was allocated as follows during the period (in thousands):
Cash
$
256 
Accounts receivable
1,264 
Inventory
1,483 
Prepaid and other current assets
10 
Equipment and other fixed assets
9,011 
Operating lease right-of-use assets
5,506 
Finance lease right-of-use assets
200 
Goodwill
9,616 
Accounts payable and accrued expenses
(713)
Operating lease liabilities
(5,506)
Finance lease liabilities
(200)
Other current liabilities
(847)
Net assets acquired
$
20,080 
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
(4)    Disposals
On May 1, 2025, the Company closed the disposition of an incontinence business that was included in its Wellness at Home segment. In connection with the closing, the
Company received gross proceeds of $69.1 million.
On June 9, 2025, the Company closed the disposition of an infusion business that was included in its Wellness at Home segment. In connection with this transaction, the
Company received gross proceeds of $53.5 million. The Company is entitled to future potential contingent payments of up to $12.5 million based upon the achievement of certain
conditions in accordance with the terms of the sale agreement. Any future contingent payments will be recognized at the settlement amount as a gain when the condition for
achievement is satisfied and the amounts are realized or realizable.
On December 1, 2025, the Company closed the disposition of a business that was included in its Wellness at Home segment. In connection with the closing, the Company
received gross proceeds of $3.0 million.
The dispositions described above did not represent a strategic shift for the Company. As such, they do not meet the requirements to be classified and presented as
discontinued operations.
The following table presents the total pre-tax gain associated with the dispositions described above (in thousands):
Gross sales proceeds
$
125,581 
Net assets sold
(92,979)
Total
$
32,602 
The carrying value of the net assets sold at their respective closing dates associated with the dispositions described above were as follows (in thousands):
Cash
$
5,161 
Accounts receivable
14,023 
Inventory
1,877 
Prepaid and other current assets
1,153 
Equipment and other fixed assets
910 
Operating lease right-of-use assets
1,698 
Goodwill (1)
82,530 
Identifiable intangible assets
2,435 
Other assets
11 
Accounts payable and accrued expenses
(13,645)
Operating lease liabilities
(1,724)
Other liabilities
(1,450)
Total
$
92,979 
(1)    This amount includes $41.2 million of goodwill which was included in assets held for sale in the accompanying consolidated balance sheet as of December 31, 2024.
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
(5) Equipment and Other Fixed Assets
Equipment and other fixed assets as of December 31, 2025 and 2024 are as follows (in thousands):
December 31,
2025
December 31,
2024
Patient medical equipment
$
922,912 $
843,198 
Computers and software
72,177 
92,664 
Delivery vehicles
14,498 
33,637 
Other
24,517 
23,233 
Gross carrying value
1,034,104 
992,732 
Less accumulated depreciation
(524,148)
(518,176)
Equipment and other fixed assets, net
$
509,956 $
474,556 
For the years ended December 31, 2025, 2024 and 2023, the Company recorded depreciation expense of $361.6 million, $343.1 million and $350.2 million, respectively.
(6) Segment Information
The Company operates its business through four reportable segments that align to the Company’s product categories: Sleep Health, Respiratory Health, Diabetes Health,
and Wellness at Home. A description of the products and services provided within each of the Company’s four reportable segments is provided below.
Sleep Health
The Sleep Health segment provides sleep therapy equipment, supplies and related services (including continuous positive airway pressure and BiLevel services) to
individuals for the treatment of obstructive sleep apnea.
Respiratory Health
The Respiratory Health segment provides oxygen and home mechanical ventilation equipment and supplies and related chronic therapy services to individuals for the
treatment of respiratory diseases, such as chronic obstructive pulmonary disease and chronic respiratory failure.
Diabetes Health
The Diabetes Health segment provides medical devices, including continuous glucose monitors and insulin pumps, and related services to patients for the treatment of
diabetes.
Wellness at Home
The Wellness at Home segment provides home medical equipment and services to patients in their homes including those who have been discharged from acute care and
other facilities. The segment tailors a service model to patients who are adjusting to new lifestyles or navigating complex disease states by providing essential medical supplies and
durable medical equipment.
The CODM evaluates performance of the reportable segments based on Adjusted EBITDA, which is the primary measure of segment profitability. The CODM uses
Adjusted EBITDA to evaluate segment operating performance, generate future operating plans, and to assist with the evaluation of strategic business decisions, including
potential acquisitions or divestitures, and whether to invest in certain products or services. Adjusted EBITDA excludes interest expense, net, income tax expense (benefit),
depreciation and amortization, including patient equipment depreciation, equity-based compensation expense, change in fair value of the warrant liability, goodwill impairment, loss
on extinguishment of debt, litigation
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
settlement expense (gain), gain on sale of businesses, and other non-recurring items of expense or income that the Company does not consider part of its reportable segments’ core
operating results. Adjusted EBITDA includes certain centrally incurred corporate and shared function costs, which are allocated to the reportable segments based on
methodologies designed to correlate with each segment’s consumption of the related cost. Segment assets are not regularly provided to the CODM and therefore have not been
disclosed.
The following tables present segment net revenue, significant segment expenses, and other segment items that are included in the Company’s reported measure of
segment profit or loss for the years ended December 31, 2025, 2024, and 2023 (in thousands):
Year Ended December 31, 2025
Sleep Health
Respiratory Health
Diabetes Health
Wellness at Home
Total
Net revenue
$
1,378,147 
$
691,160 
$
592,413 
$
583,137 
$
3,244,857 
Less:
Cost of product and supplies (a)
445,098 
132,534 
442,435 
274,356 
1,294,423 
Labor cost (a) (b)
347,356 
216,002 
52,849 
130,003 
746,210 
Other operating expenses (a) (c)
134,734 
60,621 
8,387 
44,868 
248,610 
Other segment items (d)
140,400 
72,254 
62,669 
63,610 
338,933 
Adjusted EBITDA
$
310,559 
$
209,749 
$
26,073 
$
70,300 
$
616,681 
Year Ended December 31, 2024
Sleep Health
Respiratory Health
Diabetes Health
Wellness at Home
Total
Net revenue
$
1,349,213 
$
651,150 
$
614,410 
$
646,202 
$
3,260,975 
Less:
Cost of product and supplies (a)
424,388 
119,865 
434,808 
309,101 
1,288,162 
Labor cost (a) (b)
321,194 
210,701 
50,776 
144,335 
727,006 
Other operating expenses (a) (c)
126,761 
54,300 
9,588 
47,767 
238,416 
Other segment items (d)
128,126 
66,172 
58,713 
65,723 
318,734 
Adjusted EBITDA
$
348,744 
$
200,112 
$
60,525 
$
79,276 
$
688,657 
Year Ended December 31, 2023
Sleep Health
Respiratory Health
Diabetes Health
Wellness at Home
Total
Net revenue
$
1,291,714 
$
614,563 
$
660,039 
$
633,861 
$
3,200,177 
Less:
Cost of product and supplies (a)
391,206 
132,013 
467,566 
319,428 
1,310,213 
Labor cost (a) (b)
320,370 
198,476 
48,908 
143,976 
711,730 
Other operating expenses (a) (c)
120,021 
49,560 
7,126 
45,397 
222,104 
Other segment items (d)
111,414 
57,481 
56,823 
59,617 
285,335 
Adjusted EBITDA
$
348,703 
$
177,033 
$
79,616 
$
65,443 
$
670,795 
(a) These expense categories align with the segment-level information that is regularly provided to the CODM and are considered significant to the segment in accordance
with ASU No. 2023-07, Segment Reporting ("Topic 280"). The expense categories included in the tables above exclude amounts for patient equipment depreciation since
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
these amounts are not reflected in the segment measure of profit or loss. Refer to the section below, titled Patient Equipment Depreciation, for discussion of such
amounts.
(b) Excludes salaries, labor and benefits for corporate employees. Salaries, labor and benefits for corporate employees are included within Other segment items.
(c) Other operating expenses primarily include costs relating to rent and occupancy, facilities, fleet, and other operating costs.
(d) Other segment items include allocated costs related to various general and administrative functions, including revenue cycle management, customer service, technology
and communications, sales and marketing, billings and collections, accounting and finance, executive administration, human resources, information technology and legal
and compliance.
The following table presents a reconciliation of total Adjusted EBITDA to consolidated income (loss) before income taxes (in thousands):
Year Ended December 31,
2025
2024
2023
Total Adjusted EBITDA
$
616,681 
$
688,657 
$
670,795 
Interest expense, net
(105,753)
(126,668)
(130,299)
Depreciation and amortization, including patient equipment depreciation
(381,927)
(365,334)
(382,783)
Equity-based compensation expense (a)
(21,876)
(14,880)
(22,468)
Change in fair value of warrant liability (b)
— 
4,021 
34,482 
Goodwill impairment (c)
(127,995)
(13,078)
(830,787)
Gain on sale of businesses (d)
32,602 
— 
— 
Loss on extinguishment of debt (e)
— 
(2,273)
— 
Litigation settlement expense (f)
(1,000)
(3,338)
(25,140)
Other non-recurring expenses, net (g)
(25,886)
(31,088)
(37,584)
(Loss) income before income taxes
$
(15,154)
$
136,019 
$
(723,784)
(a) Represents equity-based compensation expense for awards granted to employees and non-employee directors.
(b) Represents non-cash gains for the changes in the estimated fair value of the warrant liability. See Note 13, Stockholders' Equity – Warrants for additional discussion of
such non-cash gains. The warrants expired on November 8, 2024.
(c) The 2025 period includes a non-cash goodwill impairment charge as a result of the fair value of the Company's Diabetes Health reporting unit being less than its carrying
value. The 2024 period includes non-cash goodwill impairment charges relating to an immaterial business disposal during 2024. The 2023 period includes non-cash
goodwill impairment charges as a result of the fair value of the Company’s reporting unit at that time being less than its carrying value. See Note 7, Goodwill and
Identifiable Intangible Assets, for additional discussion of such impairment charges.
(d) Represents pre-tax gains primarily associated with the disposition of certain incontinence and infusion businesses within the Company's Wellness at Home segment. See
Note 4, Disposals, for additional discussion of such gains.
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
(e) Represents lender fees and the write-off of unamortized deferred financing costs in connection with the refinancing of the Company's credit agreement. See Note 12, Debt,
for additional discussion of the refinancing.
(f) The expense in 2025 represents the estimated amount expected to be funded by the Company relating to a previously disclosed securities settlement. See Note 18,
Commitments and Contingencies, for additional details. The expense in 2024 includes a $2.4 million charge for the change in fair value of shares of Common Stock of the
Company that were issued in July 2024 following final court approval of a previously disclosed securities settlement, as well as an expense of $0.9 million to settle a
shareholder derivative complaint. The expense in 2023 includes a charge relating to a previously disclosed securities settlement, net of contributions from the Company’s
insurers.
(g) The 2025 period consists of $10.7 million of consulting expenses associated with asset dispositions (of which $5.1 million relates to contingent success fees from the sales
of businesses), $2.6 million of transaction costs associated with acquisitions, $2.6 million of consulting expenses associated with a reorganization project, $2.4 million of
consulting expenses associated with systems implementation activities, $1.6 million of expenses associated with securities litigation, $1.2 million write-off of assets, $1.2
million of severance charges, and $3.6 million of other non-recurring expenses. The 2024 period consists of $13.9 million of consulting expenses associated with systems
implementation activities, $4.5 million of consulting expenses associated with asset dispositions, $4.2 million of expenses associated with litigation, $3.9 million of
severance charges (primarily related to the separation of the Company's former President), $2.7 million write-down of assets, and $1.9 million of other non-recurring
expenses. The 2023 period consists of $13.9 million of expenses associated with litigation, $7.1 million of severance charges (of which $2.9 million relates to the separation
of the Company's former CEO), $5.6 million of consulting expenses associated with systems implementation activities, $5.2 million of consulting expenses associated with
cost savings initiatives, $4.8 million of lease termination costs associated with a cost management program, $1.0 million of transaction costs and expenses related to
integration efforts related to acquisitions, $0.9 million of net impairments of operating lease right-of-use assets as a result of vacating the leased facilities, and $1.6 million
of other non-recurring expenses, offset by income of $2.5 million related to changes in the Company's estimated TRA liability.
Patient Equipment Depreciation
The following table presents the amounts of patient equipment depreciation by reportable segment (in thousands):
Year Ended December 31,
2025
2024
2023
Patient equipment depreciation:
Sleep Health
$
157,868 
$
161,911 
$
175,975 
Respiratory Health
127,415 
95,546 
71,002 
Diabetes Health
9,540 
8,185 
10,182 
Wellness at Home
46,464 
54,647 
68,537 
Total patient equipment depreciation (1)
$
341,287 
$
320,289 
$
325,696 
(1) Patient equipment depreciation is included in Cost of net revenue in the accompanying consolidated statements of operations. Patient equipment depreciation is not
reflected in the segment measure of profit or loss but the CODM regularly reviews this information by reportable segment. Refer to Note 2, Summary of Significant
Accounting Policies, for a breakout of Cost of net revenue by category.
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
(7) Goodwill and Identifiable Intangible Assets
Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and
separately recognized.
The change in the carrying amount of goodwill by reportable segment for the years ended December 31, 2025 and 2024 was as follows (in thousands):
Sleep Health
Respiratory Health
Diabetes Health
Wellness at Home
Total
Balance at December 31, 2023
$
2,724,958 
Goodwill impairment
(13,078)
Write-off from sale of assets
(4,598)
Reallocation adjustment (1)
1,581,039 
676,747 
211,796 
237,700 
2,707,282 
Goodwill classified as assets held for sale
— 
— 
— 
(41,211)
(41,211)
Goodwill from acquisitions (note 3)
— 
— 
— 
9,095 
9,095 
Balance at December 31, 2024
$
1,581,039 $
676,747 $
211,796 $
205,584 $
2,675,166 
Goodwill from acquisitions (note 3)
12,893 
5,039 
— 
15,328 
33,260 
Write-off from dispositions (note 4)
— 
— 
— 
(41,319)
(41,319)
Other (2)
1,151 
225 
— 
940 
2,316 
Goodwill impairment
— 
— 
(127,995)
— 
(127,995)
Balance at December 31, 2025 (3)
$
1,595,083 $
682,011 $
83,801 $
180,533 $
2,541,428 
(1)    Represents the reallocation of goodwill from one reportable segment to the Sleep Health, Respiratory Health, Diabetes Health, and Wellness at Home reportable
segments, using a relative fair value approach, as a result of the change in reportable segments in the fourth quarter of 2024.
(2)    The Company is a member of a joint venture subsidiary which includes another member who has a noncontrolling interest in such subsidiary. During the year ended
December 31, 2025, the noncontrolling interest member contributed certain assets to the joint venture totaling $3.0 million, of which $2.3 million was attributed to goodwill.
This transaction was treated as a business combination under ASC 805.
(3)    On a consolidated basis, gross and net goodwill as of December 31, 2025 was $3.5 billion and $2.5 billion, respectively. The total amount of accumulated impairment
charges as of December 31, 2025 was $1.0 billion.
Management is required to perform an assessment of the recoverability of goodwill on an annual basis and upon the occurrence of a triggering event. Triggering events
potentially warranting an interim goodwill impairment assessment include, among other factors, declines in historical or projected reporting unit revenue, operating results or cash
flows, and sustained decreases in the Company’s stock price or market capitalization. While management cannot predict if or when future goodwill impairments may occur, a non-
cash goodwill impairment charge could have a material adverse effect on the Company’s operating results, net assets and the Company’s cost of, or access to, capital.
In the fourth quarter of 2025, in connection with the Company's annual assessment of the recoverability of goodwill, management performed a quantitative goodwill
impairment test for each of the Company's reporting units. The fair value of the Company’s reporting units were computed using (1) a discounted cash flow method which includes
assumptions on the projected future cash flows, earnings, discount rates, working capital adjustments, long-term growth rates, and others, and (2) a market approach method to
estimate value through the analysis of recent sales of comparable assets or business entities. The impairment test indicated that the estimated fair value of the Company's Diabetes
Health reporting unit was less than its carrying value, and as such, the Company recognized a non-cash goodwill impairment
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
charge of $128.0 million during the year ended December 31, 2025. The impairment charge was primarily driven by revisions to the Company's financial projections.
While the Company's quantitative goodwill impairment test did not result in an impairment charge of the Company's Wellness at Home or Respiratory Health reporting
units, based on the results of such test, the excess of the estimated fair value of the Wellness at Home reporting unit over its carrying value was less than 10%, and the excess of
the estimated fair value of the Respiratory Health reporting unit over its carrying value was less than 20%. If, in future periods, the Company were to identify events that indicate a
potential impairment of goodwill, the Company may be required to perform a goodwill impairment test at an interim or annual period and could be required to recognize a non-cash
goodwill impairment charge at that time, which could be material.
The goodwill impairment charge recognized during the year ended December 31, 2024 related to the disposition of certain immaterial custom rehab technology assets.
Identifiable intangible assets that are separable and have determinable useful lives are valued separately and amortized over the period which reflects the pattern in which
the economic benefits of the assets are expected to be consumed. Identifiable intangible assets consisted of the following at December 31, 2025 and 2024 (in thousands):
December 31, 2025
Weighted-Average
Remaining Life (Years)
Tradenames, net of accumulated amortization of $61,564
$
47,737 
4.9
Payor contracts, net of accumulated amortization of $44,616
37,384 
4.6
Identifiable intangible assets, net
$
85,121 
December 31, 2024
Weighted-Average
Remaining Life (Years)
Tradenames, net of accumulated amortization of $49,736
$
59,964 
5.6
Payor contracts, net of accumulated amortization of $36,416
45,584 
5.6
Identifiable intangible assets, net
$
105,548 
Amortization expense related to identifiable intangible assets, which is included in depreciation and amortization, excluding patient equipment depreciation, in the
accompanying statements of operations was $20.3 million, $22.3 million and $32.6 million for the years ended December 31, 2025, 2024 and 2023, respectively.
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
Future amortization expense related to identifiable intangible assets is estimated to be as follows (in thousands):
Twelve months ending December 31,
2026
$
18,913 
2027
17,650 
2028
17,626 
2029
17,626 
2030
12,728 
Thereafter
578 
Total
$
85,121 
The Company did not recognize any impairment charges related to identifiable intangible assets during the years ended December 31, 2025, 2024 and 2023.
(8) Fair Value of Assets and Liabilities
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market
participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. A
hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable
inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from
independent sources. Unobservable inputs are inputs that reflect a company’s judgment concerning the assumptions that market participants would use in pricing the asset or
liability developed based on the best information available under the circumstances. The fair value hierarchy is broken down into three levels based on the reliability of inputs.
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.
Accordingly, the Company’s degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure
fair value may fall into different levels of the fair value hierarchy. In such cases an asset or liability is classified in its entirety based on the lowest level of input that is significant to
the measurement of fair value.
Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific
measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing
the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date, including periods of market dislocation. In periods
of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition in the future may cause the Company’s financial instruments to
be reclassified from Level 1 to Level 2 or from Level 2 to Level 3. During the years ended December 31, 2025, 2024 and 2023, the Company did not have any reclassifications in
levels.
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
The following table presents the valuation of the Company’s financial assets as of December 31, 2025 and 2024 measured at fair value on a recurring basis. The fair value
estimates presented herein are based on information available to management as of December 31, 2025 and 2024. These estimates are not necessarily indicative of the amounts the
Company could ultimately realize. The Company had no financial liabilities as of December 31, 2025 and 2024 measured at fair value on a recurring basis.
(in thousands)
Level 1
Level 2
Level 3
December 31, 2025
Assets
Interest rate swap agreements - short term
— 
104 
— 
Total assets measured at fair value
$
— $
104 $
— 
(in thousands)
Level 1
Level 2
Level 3
December 31, 2024
Assets
Interest rate swap agreements - short term
$
— $
2,898 $
— 
Interest rate swap agreements - long term
— 
132 
— 
Total assets measured at fair value
$
— $
3,030 $
— 
Interest Rate Swaps
The Company uses interest rate swap agreements to manage interest rate risk by converting a portion of its variable rate borrowings to a fixed rate and recognizes these
derivative instruments as either assets or liabilities in the accompanying consolidated balance sheets at fair value. The valuation of these derivative instruments is determined
using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of
the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair value of the Company’s
interest rate swaps is determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash
payments receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. To comply
with the provisions of FASB ASC Topic 820, Fair Value Measurement, the Company incorporates credit valuation adjustments to appropriately reflect both its own
nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of
nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and
guarantees.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation
adjustments associated with the Company’s derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and
the respective counterparties. The Company has determined that the significance of the impact of the credit valuation adjustments made to its derivative contracts, which
determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of the Company’s derivatives held as of
December 31, 2025 and 2024 were classified as Level 2 of the fair value hierarchy. See Note 9, Derivative Instruments and Hedging Activities, for additional information regarding
the Company’s derivative instruments.
Acquisition-Related Contingent Consideration
The Company estimates the fair value of acquisition-related contingent consideration liabilities by applying the income approach using a probability-weighted discounted
cash flow model. This fair value measurement is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Level 3 instruments are valued
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
based on unobservable inputs that are supported by little or no market activity and reflect the Company’s own assumptions in measuring fair value. Each period, the Company
evaluates the fair value of acquisition-related contingent consideration obligations and records any changes in the fair value of such liabilities in other income/loss in the
Company’s consolidated statements of operations. There are no contingent consideration liabilities recognized as of December 31, 2025 and 2024. A reconciliation of the
Company’s contingent consideration liabilities related to acquisitions for the year ended December 31, 2024 is as follows (in thousands):
Year Ended December 31, 2024
Beginning Balance
Additions
Payments
Change in Fair
Value
Other activity
Ending Balance
Contingent consideration - Level 3 liabilities
$
6,850 $
— 
$
(6,850) $
— $
— $
— 
Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis
During the years ended December 31, 2025, 2024 and 2023, other than the non-cash goodwill impairment charges and the allocation of consolidated goodwill to the four
reportable segments as discussed in Note 7, Goodwill and Identifiable Intangible Assets, there were no fair value measurements on a non-recurring basis for the Company’s non-
financial assets.
(9) Derivative Instruments and Hedging Activities
FASB ASC Topic 815, Derivatives and Hedging ("ASC 815"), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users
of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and
related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative
disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses
on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.
As discussed in Note 8, Fair Value of Assets and Liabilities, and as required by ASC 815, the Company records all derivatives on its consolidated balance sheet at fair
value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a
hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and
qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting
generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the earnings effect of the hedged forecasted
transactions in a cash flow hedge.
The Company is exposed to certain risks arising from economic conditions. The Company principally manages its exposures to interest rate risk through the use of
derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage differences in the amount, timing and duration of the Company’s
known or expected cash payments principally related to the Company’s variable rate borrowings.
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish
this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the
receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying
notional amount.
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive
income and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Amounts reported in accumulated other
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. In the twelve months
subsequent to December 31, 2025, the Company estimates that an additional $0.1 million will be reclassified as a reduction to interest expense.
As of December 31, 2025 and 2024, the Company had outstanding interest rate derivatives with third parties in which the Company pays a fixed interest rate and receives a
rate equal to the one-month Secured Overnight Financing Rate ("Term SOFR").
The notional amount associated with interest rate swap agreements that were outstanding as of December 31, 2025 was $250 million, and such swap agreements matured
in January 2026. The Company has designated its swaps as effective cash flow hedges of interest rate risk. Accordingly, changes in the fair value of the interest rate swaps are
recorded as a component of accumulated other comprehensive income within stockholders’ equity and subsequently reclassified into interest expense in the same period during
which the hedged transaction affects earnings.
The table below presents the fair value of the Company’s derivatives related to its interest rate swap agreements, which are designated as hedging instruments, as well as
their classification in the consolidated balance sheets at December 31, 2025 and 2024 (in thousands):
December 31, 2025
December 31, 2024
Balance Sheet Location
Asset
Prepaid and other current assets
$
104 $
2,898 
Other assets
— 
132 
Total
$
104 $
3,030 
During the year ended December 31, 2025, as a result of the effect of cash flow hedge accounting, the Company recognized a loss, net of tax, of $2.2 million in other
comprehensive income (loss). In addition, during the year ended December 31, 2025, no amount was reclassified from other comprehensive income (loss) and recognized as a
reduction to interest expense, net, in the accompanying consolidated statements of operations. During the year ended December 31, 2024, as a result of the effect of cash flow
hedge accounting, the Company recognized a loss, net of tax, of $1.7 million in other comprehensive income (loss). In addition, during the year ended December 31, 2024, $0.4
million was reclassified from other comprehensive income (loss) and recognized as a reduction to interest expense, net, in the accompanying consolidated statements of operations.
During the year ended December 31, 2023, as a result of the effect of cash flow hedge accounting, the Company recognized a loss, net of tax, of $2.5 million in other comprehensive
income (loss). In addition, during the year ended December 31, 2023, $1.8 million was reclassified from other comprehensive income (loss) and recognized as a reduction to interest
expense, net, in the accompanying consolidated statements of operations.
(10) Deferred Financing Costs
The change in the carrying amount of deferred financing costs for the years ended December 31, 2025 and 2024 was as follows (in thousands):
Year Ended December 31,
2025
2024
Balance at beginning of period
$
21,484 
$
22,995 
Capitalized fees
— 
4,592 
Amortization
(5,694)
(5,666)
Write-off due to debt refinancing
— 
(437)
Balance at end of period
$
15,790 
$
21,484 
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
Amortization expense relating to deferred financing costs was $5.7 million, $5.7 million and $5.2 million during the years ended December 31, 2025, 2024 and 2023,
respectively, and is included in interest expense, net in the accompanying consolidated statements of operations.
The December 31, 2025 balance of deferred financing costs of $15.8 million is estimated to be amortized to interest expense, net as follows (in thousands):
Twelve months ending December 31,
2026
$
4,453 
2027
4,453 
2028
4,032 
2029
2,631 
2030
221 
$
15,790 
(11) Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses as of December 31, 2025 and 2024 consisted of the following (in thousands):
December 31,
2025
December 31,
2024
Accounts payable
$
352,381 $
281,852 
Employee-related accruals
64,080 
54,627 
Litigation reserves
49,800 
2,750 
Accrued interest
28,447 
28,818 
Other
58,992 
69,938 
Total
$
553,700 $
437,985 
(12) Debt
The following is a summary of long-term debt as of December 31, 2025 and 2024 (in thousands):
December 31,
2025
December 31,
2024
Secured term loan
$
315,000 $
550,000 
Senior unsecured notes
1,435,000 
1,450,000 
Unamortized deferred financing fees
(13,704)
(18,829)
1,736,296 
1,981,171 
Current portion
(20,313)
(16,250)
Long-term portion
$
1,715,983 $
1,964,921 
Interest expense related to long-term debt agreements, including amortization of deferred financing costs and payments made or received under the Company’s interest
rate swap agreements, for the years ended December 31, 2025, 2024 and 2023 was $103.6 million, $124.7 million and $131.0 million, respectively.
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
On September 13, 2024, the Company entered into an amendment to its then existing credit agreement (as amended, the "2024 Credit Agreement”). Prior to the amendment,
the outstanding borrowings under the Company's then existing credit agreement were $650.0 million. In connection with the amendment, the outstanding borrowings of certain
existing lenders totaling $178.5 million were repaid in full, and such amount was borrowed from the remaining existing lenders. The 2024 Credit Agreement includes a $650 million
term loan (the "2024 Term Loan"), and $300 million in revolving credit commitments (the "2024 Revolver", and together with the 2024 Term Loan, the "2024 Credit Facility") with a
$55 million letter of credit sublimit. The 2024 Credit Facility matures in September 2029. However, if the 6.125% Senior Notes (as defined below) have not been refinanced (to extend
the maturity date to a date that is later than December 13, 2029) or repaid in full, on or prior to December 31, 2027, then the 2024 Credit Facility will mature on May 1, 2028; and, if the
4.625% Senior Notes (as defined below) have not been refinanced (to extend the maturity date to a date that is later than December 13, 2029) or repaid in full, on or prior to
December 31, 2028, then the 2024 Credit Facility will mature on May 1, 2029. At the option of the Company, amounts borrowed under the 2024 Credit Facility bear interest at variable
rates based upon either the Base Rate (as defined in the 2024 Credit Agreement), payable quarterly, or Term SOFR (as defined in the 2024 Credit Agreement), payable monthly or
every three months depending on the interest period selected. Interest periods for Term SOFR loans are available for one, three, or six months at the option of the Company. Base
Rate loans accrue interest at a per annum rate equal to the sum of (a) the Base Rate determined on each day (subject to a zero percent floor), plus an applicable margin ranging from
0.50% to 2.25% per annum based on the Company's Consolidated Senior Secured Leverage Ratio (as defined in the 2024 Credit Agreement). Term SOFR loans accrue interest at a
per annum rate equal to the sum of (a) Term SOFR for the applicable interest period (subject to a zero percent floor), plus (b) an applicable margin ranging from 1.50% to 3.25% per
annum based on the Company's Consolidated Senior Secured Leverage Ratio. The 2024 Revolver carries a commitment fee during the term of the 2024 Credit Agreement ranging
from 0.25% to 0.50% per annum of the actual daily undrawn portion of the 2024 Revolver depending upon the Company's Consolidated Senior Secured Leverage Ratio. In
connection with the 2024 Credit Agreement, during the year ended December 31, 2024, the Company paid financing costs of $6.4 million and recognized a loss on debt
extinguishment of $2.3 million consisting of lender fees and the write-off of unamortized deferred financing costs.
Under the 2024 Credit Agreement, the Company is subject to a number of restrictive covenants that, among other things, impose operating and financial restrictions on
the Company. Financial covenants include a Consolidated Total Leverage Ratio and a Consolidated Interest Coverage Ratio, both as defined in the 2024 Credit Agreement. The
2024 Credit Agreement also contains certain customary events of default, including, among other things, failure to make payments when due thereunder, failure to observe or
perform certain covenants, cross-defaults, bankruptcy and insolvency-related events, and non-compliance with healthcare laws. The Company was in compliance with the
applicable covenants in the 2024 Credit Agreement as of December 31, 2025.
Any borrowing under the 2024 Credit Agreement may be repaid, in whole or in part, at any time and from time to time without premium or penalty, other than customary
breakage costs, and any amounts repaid under the 2024 Revolver may be reborrowed. Mandatory prepayments are required under the 2024 Revolver when borrowings and letter of
credit usage exceed the total commitments for revolving credit loans. Mandatory prepayments are also required in connection with certain dispositions of assets and receipt of
certain insurance proceeds or condemnation awards to the extent proceeds thereof are not reinvested, and unpermitted debt transactions.
Secured Term Loan
As of December 31, 2025, the outstanding borrowings under the 2024 Term Loan require quarterly principal repayments of $4.1 million through September 30, 2026,
increasing to $8.1 million from December 31, 2026 through June 30, 2029, and the remaining unpaid principal balance is due in September 2029. During the years ended December 31,
2025 and 2024, the Company made voluntary repayments on the 2024 Term Loan totaling $218.8 million and $95.9 million, respectively. At December 31, 2025 and 2024, there was
$315.0 million and $550.0 million, respectively, outstanding under the 2024 Term Loan. The per annum interest rate under the 2024 Term Loan was 5.5% at December 31, 2025.
Revolving Credit Facility
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
There were no borrowings under the 2024 Revolver during the years ended December 31, 2025 and 2024. Subsequent to December 31, 2025, the Company borrowed $100.0
million under the 2024 Revolver for working capital and other general corporate purposes. Borrowings under the 2024 Revolver may be used for working capital and other general
corporate purposes, including for capital expenditures and acquisitions permitted under the 2024 Credit Agreement. At December 31, 2025, there was $26.3 million outstanding
under letters of credit. At December 31, 2025, based on the financial debt covenants under the 2024 Credit Agreement, the maximum amount the Company could borrow under the
2024 Revolver and remain in compliance with the financial debt covenants under the agreement was $273.7 million.
Senior Unsecured Notes
In August 2021, the Company issued $600.0 million aggregate principal amount of 5.125% senior unsecured notes (the "5.125% Senior Notes"). The 5.125% Senior Notes
will mature on March 1, 2030. Interest on the 5.125% Senior Notes is payable on March 1st and September 1st of each year. The 5.125% Senior Notes are redeemable at the
Company’s option, in whole or in part, and the redemption price for the 5.125% Senior Notes if redeemed during the 12 months beginning (i) March 1, 2025 is 102.563%, (ii) March 1,
2026 is 101.281%, (iii) March 1, 2027 and thereafter is 100.000%, in each case together with accrued and unpaid interest. In addition, the Company may be required to make an offer
to purchase the 5.125% Senior Notes upon the sale of certain assets or upon specific kinds of changes of control.
In January 2021, the Company issued $500.0 million aggregate principal amount of 4.625% senior unsecured notes (the "4.625% Senior Notes"). The 4.625% Senior Notes
will mature on August 1, 2029. Interest on the 4.625% Senior Notes is payable on February 1st and August 1st of each year. The 4.625% Senior Notes are redeemable at the
Company’s option, in whole or in part, and the redemption price for the 4.625% Senior Notes if redeemed during the 12 months beginning February 1, 2026 and thereafter is
100.000%, in each case together with accrued and unpaid interest. In addition, the Company may be required to make an offer to purchase the 4.625% Senior Notes upon the sale of
certain assets or upon specific kinds of changes of control.
In July 2020, the Company issued $350.0 million aggregate principal amount of 6.125% senior unsecured notes (the "6.125% Senior Notes"). The 6.125% Senior Notes will
mature on August 1, 2028. Interest on the 6.125% Senior Notes is payable on February 1st and August 1st of each year. The 6.125% Senior Notes are redeemable at the Company’s
option, in whole or in part, and the redemption price for the 6.125% Senior Notes if redeemed during the 12 months beginning (i) August 1, 2025 is 101.021% and (ii) August 1, 2026
and thereafter is 100.000%, in each case together with accrued and unpaid interest. In addition, the Company may be required to make an offer to purchase the 6.125% Senior Notes
upon the sale of certain assets or upon specific kinds of changes of control. In November 2025 and January 2026, the Company repurchased $15.0 million and $10.0 million
aggregate principal amount of the 6.125% Senior Notes at an average price of 100.253% and 100.800% of such principal amounts, respectively, through open market transactions.
The future maturity of total debt, excluding unamortized deferred financing fees, at December 31, 2025 is as follows (in thousands):
Twelve months ended December 31,
2026
$
20,313
2027
32,500
2028
367,500
2029
729,687
2030
600,000
Total debt maturity
$
1,750,000
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
(13) Stockholders' Equity
Under the Company's Third Amended and Restated Certificate of Incorporation, there are 300,000,000 shares of authorized Common Stock and 5,000,000 shares of
authorized Preferred Stock. Holders of Common Stock are entitled to one vote for each share. The shares of Preferred Stock shall be issued with such designations, voting and
other rights and preferences as may be determined from time to time by the Company’s board of directors.
Treasury Stock
In May 2022, the Company's board of directors authorized a share repurchase program for up to $200.0 million of the Company's Common Stock, which expired on
December 31, 2023 (the "Share Repurchase Program"). The timing and actual number of shares repurchased depended upon market conditions and other factors. Shares of the
Company's Common Stock were repurchased from time to time on the open market, through privately negotiated transactions or otherwise. During the year ended December 31,
2023, the Company purchased 3,184,200 shares of the Company's Common Stock for $29.3 million under the Share Repurchase Program, which is reflected in Treasury Stock in the
accompanying consolidated statements of stockholders' equity. During the year ended December 31, 2024, as discussed in Note 18, Commitments and Contingencies, the
Company issued 1 million shares from its Treasury Stock in connection with a litigation settlement.
Warrants
The Company had 3,871,557 outstanding warrants, which expired on November 8, 2024. Prior to the expiration, each warrant was exercisable into one share of Common
Stock at a price of $11.50 per share. There were no warrants exercised during the years ended December 31, 2024 and 2023.
The Company classified its warrants as a liability in its consolidated balance sheets because of certain terms included in the corresponding warrant agreement. The
estimated fair value of the warrants was recorded as a liability, with such fair value reclassified to stockholders’ equity upon the exercise of such warrants. Prior to exercise, the
change in the estimated fair value of such warrants each period was recognized as a non-cash charge or gain in the Company’s consolidated statements of operations.
A reconciliation of the changes in the warrant liability during the years ended December 31, 2024 and 2023 was as follows (in thousands):
Estimated fair value of warrant liability at December 31, 2022
$
38,503 
Change in estimated fair value of the warrant liability
(34,482)
Estimated fair value of warrant liability at December 31, 2023
4,021 
Change in estimated fair value of the warrant liability
(4,021)
Estimated fair value of warrant liability at December 31, 2024
$
— 
Equity-based Compensation
In connection with the Company’s 2019 Stock Incentive Plan (the "2019 Plan"), the Company provides equity-based compensation to attract and retain employees while
also aligning employees’ interest with the interests of its stockholders. The 2019 Plan permits the grant of various equity-based awards to selected employees and non-employee
directors. On June 20, 2024, the stockholders of the Company approved an amendment and restatement of the 2019 Plan to increase the number of shares of Common Stock of the
Company reserved and available for issuance under the 2019 Plan by 8,350,000 shares (and increase the number of incentive stock options that may be granted under the 2019 Plan
by the same amount), to permit the grant of up to 18,350,000 shares of Common Stock, subject to certain adjustments and limitations. At December 31, 2025, 8,165,473 shares of the
Company’s Common Stock were available for issuance under the 2019 Plan.
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
Stock Options
There were no stock options granted during the years ended December 31, 2025, 2024 and 2023. The following table provides the activity regarding the Company’s
outstanding stock options during the years ended December 31, 2025, 2024 and 2023 that were granted in connection with the 2019 Plan (in thousands, except per share data):
Number of
Options
Weighted-
Average
Grant Date
Fair Value
per Share
Weighted-
Average
Exercise Price
per Share
Weighted-Average
Remaining
Contractual Term
Outstanding, December 31, 2022
2,219
$
3.75 
$
19.36 
Activity - none
—
Outstanding, December 31, 2023
2,219
$
3.75 
$
19.36 
Expired
(969)
Outstanding, December 31, 2024
1,250
$
2.12 
$
11.50 
Expired
(1,250)
$
2.12 
$
11.50 
Outstanding, December 31, 2025
—
$
— 
$
— 
The following table provides the activity for all outstanding stock options during the years ended December 31, 2025, 2024 and 2023 (in thousands, except per share data):
Number of
Options
Weighted-
Average
Exercise Price
per Share
Weighted-Average
Remaining
Contractual Term
Outstanding, December 31, 2022
4,962
$
12.19 
Exercised
(1,553)
$
6.24 
Outstanding, December 31, 2023
3,409
$
14.90 
Exercised
(245)
$
3.97 
Expired
(969)
$
29.51 
Outstanding, December 31, 2024
2,195
$
9.67 
Expired
(1,250)
$
11.50 
Outstanding, December 31, 2025
945
$
7.24 
3.1 Years
There were no stock options exercised during the year ended December 31, 2025. During the year ended December 31, 2024, 207,002 stock options were exercised resulting
in $0.7 million of cash proceeds received by the Company and the issuance of 207,002 shares of the Company's Common Stock. Also, during the year ended December 31, 2024,
38,014 stock options were exercised in cashless transactions resulting in the issuance of 13,509 shares of the Company's Common Stock. During the year ended December 31, 2023,
211,185 stock options were exercised resulting in $0.6 million of cash proceeds received by the Company and the issuance of 211,185 shares of the Company's Common Stock.
Additionally, during the year ended December 31, 2023, 1,341,770 stock options were exercised in cashless transactions resulting in the issuance of 228,466 shares of the
Company's Common Stock.
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
The following table provides the activity for exercisable stock options during the years ended December 31, 2025, 2024, and 2023 (in thousands, except per share data):
Number of
Options
Weighted-
Average
Exercise Price
per Share
Weighted-Average
Remaining
Contractual Term
Exercisable, December 31, 2022
4,649
$
9.73 
Vested
234
$
48.72 
Exercised
(1,553)
$
6.24 
Exercisable, December 31, 2023
3,330
$
14.10 
Vested
79
$
48.72 
Exercised
(245)
$
3.97 
Expired
(969)
$
29.51 
Exercisable, December 31, 2024
2,195
$
9.67 
Vested
—
$
— 
Exercised
—
$
— 
Expired
(1,250)
$
11.50 
Exercisable, December 31, 2025
945
$
7.24 
3.1 Years
The following table provides the activity for unexercisable stock options during the years ended December 31, 2024 and 2023 (in thousands, except per share data):
Number of
Options
Weighted-
Average
Exercise Price
per Share
Weighted-Average
Remaining
Contractual Term
Unexercisable, December 31, 2022
313
$
48.72 
Vested
(234)
$
48.72 
Unexercisable, December 31, 2023
79
$
48.72 
Vested
(79)
$
48.72 
Unexercisable, December 31, 2024
— 
$
— 
Restricted Stock
During the year ended December 31, 2025, the Company granted the following shares of restricted stock units:
•
1,589,526 shares of restricted stock to various employees which vest ratably over the three-year period following the vesting commencement dates, subject to the
employees’ continuous employment through the applicable vesting dates. The grant-date fair value of these awards was $17.0 million.
•
185,674 shares of restricted stock to the Company's non-employee directors which vest within one year following the grant date. The grant-date fair value of
these awards was $1.7 million.
•
732,379 shares of performance-vested restricted stock units ("Performance RSUs") to senior executive management of the Company which vest on the third
anniversary of the vesting commencement date
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
subject to the achievement of specified goals relative to the Company’s three-year relative total shareholder return ("Relative TSR") performance versus the
Company’s defined peer group (the "Peer Group"), which is considered a market condition, and is also subject to the employees’ continuous employment
through the vesting date. The grant-date fair value of these awards, using a Monte-Carlo simulation analysis, was $12.4 million. The payout of shares on the
vesting date are as follows based on the Company’s Relative TSR versus the Peer Group (for performance between the stated goals noted below, straight-line
interpolation will be applied):
◦
Less than 25th Percentile – No payout
◦
Greater than or equal to 25  Percentile – 50% of Performance RSUs
◦
Equal to 50  Percentile – 100% of Performance RSUs
◦
Greater than or equal to 75  Percentile – 200% of Performance RSUs
During the year ended December 31, 2024, the Company granted the following shares of restricted stock and restricted stock units:
•
1,985,404 shares of restricted stock to various employees which vest ratably over the two or three-year periods following the vesting commencement dates,
subject to the employees’ continuous employment through the applicable vesting dates. The grant-date fair value of these awards was $17.8 million.
•
52,326 shares of restricted stock to an employee which vested on the two-month anniversary following the applicable vesting commencement dates. The grant-
date fair value of these awards was $0.5 million.
•
134,362 shares of restricted stock to the Company's non-employee directors which vest approximately one year following the grant date. The grant-date fair value
of these awards was $1.4 million.
•
1,047,291 shares of performance-vested restricted stock units ("Performance RSUs") to certain employees of the Company which will vest on the three-year
period following the vesting commencement dates subject to the achievement of specified goals relative to the Company’s three-year relative total shareholder
return ("Relative TSR") performance versus the Company’s defined peer group (the "Peer Group"), which is considered a market condition, and is also subject to
the employees’ continuous employment through the vesting dates. The grant-date fair value of these awards, using a Monte-Carlo simulation analysis, was $19.2
million
•
The payout of shares on the vesting dates are as follows based on the Company’s Relative TSR versus the Peer Group (for performance between the stated goals
noted below, straight-line interpolation will be applied):
◦
Less than 25th Percentile – No payout
◦
Greater than or equal to 25th Percentile – 50% of Performance RSUs
◦
Equal to 50th Percentile – 100% of Performance RSUs
◦
Greater than or equal to 75th Percentile – 200% of Performance RSUs
During the year ended December 31, 2023, the Company granted the following shares of restricted stock:
•
732,810 shares to various employees which vest ratably over the three-year period following the vesting commencement date (which is generally the grant date),
subject to the employees’ continuous employment through the applicable vesting date. The grant-date fair value of these awards was $9.3 million.
•
58,795 shares to various employees which vested immediately on the grant date. The grant-date fair value of these awards was $0.5 million.
th
th
th
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December 31, 2025, 2024 and 2023
•
139,190 shares to its non-employee directors, which vest one year following the grant date. The grant-date fair value of these awards was $1.4 million.
•
53,732 shares to its interim CEO, which vest on the two-month anniversary following the grant date. The grant-date fair value of these awards was $0.5 million.
•
327,000 shares of performance-vested restricted stock units ("Performance RSUs") to senior executive management of the Company which will vest on the third
anniversary of the vesting commencement date (February 1, 2023) subject to the achievement of specified goals relative to the Company’s three-year relative
total shareholder return ("Relative TSR") performance versus the Company’s defined peer group (the "Peer Group"), which is considered a market condition, and
is also subject to the employees’ continuous employment through the vesting date. The grant-date fair value of these awards, using a Monte-Carlo simulation
analysis, was $6.6 million. The payout of shares on the vesting date are as follows based on the Company’s Relative TSR versus the Peer Group (for performance
between the stated goals noted below, straight-line interpolation will be applied):
◦
Less than 25th Percentile – No payout
◦
Greater than or equal to 25th Percentile – 50% of Performance RSUs
◦
Equal to 50th Percentile – 100% of Performance RSUs
◦
Greater than or equal to 75th Percentile – 200% of Performance RSUs
Activity related to the Company’s non-vested restricted stock units for the years ended December 31, 2025, 2024 and 2023 is presented below (in thousands, except per
share data):
Number of Shares of
Restricted Stock
Weighted-Average
Grant Date
Fair Value per
Share
Non-vested balance, December 31, 2022
2,261
$
23.90 
Granted
1,311
$
13.85 
Vested
(1,063)
$
19.59 
Forfeited
(441)
$
25.95 
Non-vested balance, December 31, 2023
2,068
$
19.16 
Granted
3,220
$
12.07 
Vested
(840)
$
37.25 
Forfeited
(1,370)
$
15.00 
Non-vested balance, December 31, 2024
3,078
$
13.99 
Granted
2,507
$
12.40 
Vested
(1,017)
$
12.86 
Forfeited
(551)
$
16.52 
Non-vested balance, December 31, 2025
4,017
$
12.95 
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
Equity-Based Compensation Expense
The table below presents the equity-based compensation expense recognized during the years ended December 31, 2025, 2024 and 2023, as well as the classification of
amounts in the consolidated statements of operations (in thousands):
Year Ended December 31,
2025
2024
2023
General and administrative expense
$
17,777 $
11,290 $
17,667 
Cost of net revenue
4,099 
3,590 
4,801 
Total
$
21,876 $
14,880 $
22,468 
The Company recognized an increase to income tax expense of $0.7 million, $1.6 million and $0.6 million for the years ended December 31, 2025, 2024 and 2023, respectively,
as a result of a shortfall associated with equity-based compensation.
At December 31, 2025, there was $29.9 million of unrecognized compensation expense related to equity-based compensation awards, which is expected to be recognized
over a weighted-average period of 1.8 years.
As previously disclosed, by mutual agreement with the Company, the Company's former President resigned from all positions held with the Company on August 31, 2024
and served as a non-executive member of the board of directors until December 31, 2024. In connection with his termination of employment on August 31, 2024, 311,018 restricted
stock units subject to time-based vesting conditions and 391,408 restricted stock units subject to performance-based vesting conditions that were unvested at the time of his
resignation were forfeited. As a result of these forfeitures, during the year ended December 31, 2024, the Company reversed $3.3 million of previously recognized equity-based
compensation expense, which was recognized as a reduction to general and administrative expenses in the accompanying consolidated statements of operations for the year ended
December 31, 2024.
As previously disclosed, by mutual agreement with the Company, effective June 30, 2023, Stephen Griggs resigned as Chief Executive Officer of the Company. In
connection with Mr. Griggs’ separation, the Company accelerated the vesting of 78,130 unvested stock options and 143,739 unvested shares of restricted stock which were subject
to time-based vesting conditions only. In addition, the Company modified the vesting conditions for 159,555 shares of Performance RSU's to allow for vesting based on the
achievement of the applicable Relative TSR, but no longer requires continuous employment through the applicable vesting date. In connection with the accelerated vesting and
modification, the Company recognized $4.0 million of equity-based compensation expense, which is included in general and administrative expenses in the accompanying
consolidated statements of operations for the year ended December 31, 2023.
(14) Earnings (Loss) Per Share
Earnings (Loss) Per Share ("EPS") is computed by dividing net (loss) income by the weighted average number of common shares outstanding during the period on a basic
and diluted basis. The Company computes diluted net (loss) income per share using the more dilutive of the treasury stock method and the two-class method after giving effect to
all potential dilutive Common Stock.
The Company’s potentially dilutive securities include potential common shares related to unvested restricted stock, outstanding stock options and outstanding preferred
stock. See Note 13, Stockholders' Equity, for additional discussion of these potential dilutive securities.
Diluted net (loss) income per share considers the impact of potentially dilutive securities except when the potential common shares have an antidilutive effect. The
Company’s outstanding preferred stock are considered participating securities, thus requiring the two-class method of computing diluted net (loss) income per share. Computation
of diluted net (loss) income per share under the two-class method excludes from the numerator any dividends paid or owed on
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
participating securities and any undistributed earnings considered to be attributable to participating securities. The related participating securities are similarly excluded from the
denominator.
Computations of basic and diluted net (loss) income per share were as follows (in thousands, except per share data):
Year Ended December 31,
2025
2024
2023
Numerator
Net (loss) income attributable to AdaptHealth Corp.
$
(70,794) $
90,422 $
(678,895)
Less: Earnings allocated to participating securities 
— 
7,675 
— 
Net (loss) income for basic EPS
$
(70,794) $
82,747 $
(678,895)
Change in fair value of warrant liability 
— 
— 
(34,482)
Net (loss) income for diluted EPS
$
(70,794) $
82,747 $
(713,377)
Denominator 
Basic weighted-average common shares outstanding
135,146 
133,756 
134,156 
Add: Warrants 
— 
— 
262 
Add: Stock options
— 
251 
— 
Add: Unvested restricted stock
— 
1,524 
— 
Diluted weighted-average common shares outstanding
135,146 
135,531 
134,418 
Basic net (loss) income per share
$
(0.52) $
0.62 $
(5.06)
Diluted net (loss) income per share
$
(0.52) $
0.61 $
(5.31)
(1) The Company's preferred stock are considered participating securities. Computation of EPS under the two-class method excludes from the numerator any dividends paid
or owed on participating securities and any undistributed earnings considered to be attributable to participating securities. The related participating securities are similarly
excluded from the denominator. There were no amounts allocated to the participating securities during the years ended December 31, 2025 and 2023 due to the net losses
reported in those periods.
(2) For the year ended December 31, 2023, the impact to earnings from the change in fair value of the Company’s warrant liability is excluded from the numerator, and the
corresponding security is included in the denominator, for purposes of computing diluted net loss per share. This adjustment is included as the effect of the numerator
and denominator adjustments for this derivative instrument is dilutive as a result of the non-cash gain recognized for the change in fair value of this instrument during the
period. For the years ended December 31, 2025 and 2024, this adjustment was not applicable to the computation of diluted net (loss) income per share since the warrants
were no longer outstanding as of December 31, 2025 and 2024. See Note 13, Stockholders' Equity, for additional details.
Due to the Company reporting a net loss attributable to AdaptHealth Corp. for the years ended December 31, 2025 and 2023, all potentially dilutive securities related
to unvested restricted stock and outstanding stock options were excluded from the computation of diluted net loss per share for those periods as their inclusion would have
been anti-dilutive.
(1)
(2)
(1) (2)
(2)
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in the Company’s computation of
diluted net (loss) income per share for the years ended December 31, 2025, 2024 and 2023 because to do so would be antidilutive (in thousands):
Year Ended December 31,
2025
2024
2023
Preferred Stock
12,406
12,406
12,406
Stock Options
945
1,943
3,409
Unvested restricted stock
4,017
1,545
1,993
Total
17,368
15,894
17,808
(15) Leases
The Company leases its operating locations and office facilities under noncancelable lease agreements which expire at various dates through May 2038. Some of these
lease agreements include an option to renew at the end of the term. The Company also leases certain office facilities on a month-to-month basis. In some instances, the Company is
also required to pay its pro rata share of real estate taxes and utility costs in connection with the premises. Some of the leases contain fixed annual increases of minimum rent.
The Company’s leases frequently allow for lease payments that could vary based on factors such as inflation and the incurrence of contractual charges such as those for
common area maintenance or utilities.
Renewal and/or early termination options are common in the lease arrangements, particularly with respect to real estate leases. The Company’s right-of-use ("ROU")
assets and lease liabilities generally include periods covered by renewal options and exclude periods covered by early termination options (based on the conclusion that it is
reasonably certain that the Company will exercise such renewal options and not exercise such early termination options).
The Company is also party to certain sublease arrangements related to real estate leases, where the Company acts as the lessee and intermediate lessor.
The Company leases certain of its vehicles through finance leases. The finance lease obligations represent the present value of minimum lease payments under the
respective agreement, payable monthly at various interest rates.
The following table presents information about lease costs and expenses and sublease income for the years ended December 31, 2025, 2024 and 2023 (in thousands). The
amounts below, with the exception of interest on lease liabilities, are included in cost of net revenue in the accompanying consolidated statements of operations for the periods
presented. The interest on lease liabilities is included in interest expense, net in the accompanying consolidated statements of operations for the periods presented.
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
Year Ended December 31,
2025
2024
2023
Operating lease costs
$
44,940 $
44,667 $
38,365
Finance lease costs:
Amortization of ROU assets
$
15,342 $
11,100 $
5,761
Interest on lease liabilities
$
2,686 $
2,361 $
1,058
Other lease costs and income:
Variable leases costs 
$
24,585 $
24,127 $
20,769
Sublease income
$
798 $
730 $
1,427
(1) Amounts represent variable costs incurred that were not included in the initial measurement of the lease liability such as common area maintenance and utilities costs
associated with leased real estate.
The following table provides the weighted average remaining lease terms and weighted average discount rates for the Company’s leases as of December 31, 2025 and
2024:
December 31,
2025
2024
Weighted average remaining lease term, weighted based on lease liability balances:
Operating leases
4.8 years
5.2 years
Finance leases
3.1 years
3.1 years
Weighted average discount rate, weighted based on remaining balance of lease payments:
Operating leases
5.1 %
4.9 %
Finance leases
6.4 %
6.9 %
The following table provides the undiscounted amount of future cash flows related to the Company's operating and finance leases, as well as a reconciliation of such
undiscounted cash flows to the amounts included in the Company’s lease liabilities as of December 31, 2025 (in thousands):
Operating Leases
Finance Leases
2026
$
35,949 $
20,473
2027
29,271
18,143
2028
23,567
10,802
2029
17,334
5,816
2030
12,819
186
Thereafter
14,654
—
Total future undiscounted lease payments
$
133,594 $
55,420
Less: amount representing interest
(17,396)
(5,114)
Present value of future lease payments (lease liability)
$
116,198 $
50,306
(1)
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
The following table provides certain cash flow and supplemental non-cash information related to the Company's lease liabilities for the years ended December 31, 2025 and
2024 (in thousands):
Year Ended December 31,
2025
2024
2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash payments for operating leases
$
36,942 $
40,392 $
38,328
Financing cash payments for finance leases
$
18,478 $
9,865 $
6,769
Lease liabilities arising from obtaining right-of-use assets:
Operating leases
$
37,872 $
35,871 $
22,000
Finance leases
$
31,392 $
17,871 $
32,101
(16) Retirement Plans
At December 31, 2025, the Company had a single consolidated retirement plan (the "AdaptHealth Plan"). The AdaptHealth Plan allows employees to contribute up to the
annual limitation imposed by the Internal Revenue Code. The Company makes matching contributions to the AdaptHealth Plan. During the years ended December 31, 2025, 2024,
and 2023, the Company recorded matching contribution expense of $8.5 million, $7.8 million, and $5.6 million, respectively, related to the AdaptHealth Plan.
(17) Self-Insured Plans
The Company was self-insured for its employees’ medical, auto and workers’ compensation claims during 2025, 2024 and 2023. The Company purchased medical stop loss
insurance that covers the excess of each specific loss over $500,000 in 2025, and over $300,000 in 2024 and 2023. In 2025, 2024 and 2023, the Company purchased workers’
compensation stop loss insurance which has occurrence-based limits that vary by state based on statutory rules. The Company is subject to an aggregate annual limit. Self-
insurance reserves include estimates of both known claims filed and estimates of claims incurred but not reported. The Company uses historical paid claims information to estimate
its claims liability. The liability for self-insurance reserves was $25.6 million and $23.9 million as of December 31, 2025 and 2024, respectively. This liability is included within
accounts payable and accrued expenses in the accompanying consolidated balance sheets.
(18) Commitments and Contingencies
From time to time and in the normal course of business, the Company is subject to loss contingencies, arising from legal proceedings, claims, and governmental and other
investigations under or with respect to various governmental programs and state and federal laws relating to its business, including as a result of or following acquisitions and
other business activities, that cover a wide range of matters. In accordance with FASB ASC Topic 450, Accounting for Contingencies, the Company records accruals for such loss
contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If there is no probable estimate within a range of
reasonably possible outcomes, the Company’s policy is to record at the low end of the range of such reasonably possible outcomes. Judgment is required to determine both
probability and the estimated amount. The Company reviews its accruals quarterly and adjusts accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal
counsel, and updated information. At this time, the Company has no material accruals related to lawsuits, claims, investigations or proceedings, except as disclosed. While there
can be no assurance, based on the Company’s evaluation of information currently available, the Company’s management believes any liability that may ultimately result from
resolution of such loss contingencies will not have a material adverse effect on the Company’s financial condition or results of operations. However, the Company’s assessment
may change in the future based upon availability of new information and further developments in the proceedings of such matters. The results of legal proceedings, claims and
investigations are inherently uncertain, and material adverse outcomes are possible. Professional legal fees associated with any such legal proceedings, claims and investigations
are expensed as they are incurred.
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
On October 24, 2023, Allegheny County Employees’ Retirement System, a purported shareholder of the Company, filed a purported class action complaint against the
Company and certain of its current and former officers, and certain underwriters in the United States District Court for the Eastern District of Pennsylvania. On January 23, 2024, the
court entered an order appointing Allegheny County Employees' Retirement System, International Union of Operating Engineers, Local No. 793, Members Pension Benefit Trust of
Ontario, and City of Tallahassee Pension Plan as Lead Plaintiffs (the "Allegheny Lead Plaintiffs"). On May 14, 2024, Allegheny Lead Plaintiffs filed a consolidated complaint
against the Company and certain of its current and former officers and directors, and certain underwriters, on behalf of shareholders that purchased or otherwise acquired the
Company’s stock between August 4, 2020 and November 7, 2023 (as to the complaint the "Allegheny County Consolidated Complaint”; as to the action, the "Allegheny County
Consolidated Class Action”). The Allegheny County Consolidated Complaint alleges, among other things, that the defendants violated federal securities laws by making allegedly
false and misleading statements and/or failing to disclose material information regarding (i) the Company’s billing practices with respect to its diabetes product category, and (ii)
the Company’s compliance programs and integration with respect to acquired companies. The Allegheny County Consolidated Complaint seeks unspecified damages. On July 23,
2024, the defendants filed a motion to dismiss the Allegheny County Consolidated Complaint. The Allegheny Lead Plaintiffs filed their opposition brief on October 1, 2024, and
defendants filed their reply brief on November 15, 2024.
On May 28, 2025, the parties jointly filed a letter requesting that the Court hold the motion to dismiss in abeyance pending the outcome of a private mediation between the
parties. On October 8, 2025, the parties attended a private mediation. On October 24, 2025, after subsequent settlement discussions, the parties jointly filed a letter informing the
Court that the parties had reached an agreement in principle to settle the litigation and requesting until November 24, 2025 to negotiate the formal settlement agreement and file a
preliminary approval motion. On November 21, 2025, Allegheny Lead Plaintiffs informed the Court that the parties required additional time to finalize the settlement papers and that
Lead Plaintiffs intended to file the Motion for Preliminary Approval of Proposed Settlement and Approval of Notice to the Settlement Class on or before December 19, 2025.
On December 19, 2025, the parties filed said Motion and the preliminary approval order was granted by the Court on February 2, 2026. The proposed settlement is expected
to be funded as follows: (i) $34.0 million of cash from the Company’s insurance carriers and (ii) $1.0 million of cash from the Company. At December 31, 2025, the Company recorded
a liability of $35.0 million, consisting of the aggregate cash payments, which is included in accounts payable and accrued expenses in the accompanying consolidated balance
sheets. In addition, at December 31, 2025, the Company recorded a receivable of $34.0 million, representing the amount to be received from the Company’s insurance carriers, which
is included in prepaid expenses and other current assets in the accompanying consolidated balance sheets. For the year ended December 31, 2025, the Company recorded an
expense of $1.0 million associated with the proposed settlement, which is included in other loss, net in the accompanying consolidated statements of operations. The proposed
settlement is subject to preliminary and final Court approval and other customary closing conditions. Upon the effectiveness of the proposed settlement, the Company and its
directors and officers as well as the other defendants named in the Allegheny County Consolidated Complaint will be released from the claims that were asserted or could have
been asserted in the Consolidated Class Action, with certain limitations, by class members participating in the settlement. The Company has always maintained, and continues to
believe, that it did not engage in any wrongdoing or otherwise commit any violation of federal or state securities laws or other laws. The settlement includes no admission of
liability or wrongdoing and is subject to court approval. There can be no assurance that the settlement will be finalized and approved and, even if approved, whether the conditions
to closing will be satisfied, and the actual outcome of this matter may differ materially from the terms of the settlement described herein.
On January 13, 2026, after consultation with the parties, the Court denied Defendants’ pending motion to dismiss as moot, without prejudice, due to the pending
settlement.
On March 20, 2024, a putative shareholder of the Company, Weiding Wu, filed a shareholder derivative complaint related to the allegations in the Allegheny County
Complaint, and against certain current and former directors and officers of the Company in the United States District Court for the Eastern District of Pennsylvania (as to the
complaint, the "Wu Derivative Complaint”; as to the action, the "Wu Derivative Action”). The Wu Derivative Complaint alleges, among other things, that the defendants breached
their fiduciary duties and violated federal securities laws by making allegedly false and
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
misleading statements and/or failing to disclose material information regarding (i) the Company’s billing practices with respect to its diabetes product category, and (ii) the
Company's compliance programs and integration with respect to acquired companies. The Wu Derivative Complaint also alleges claims for unjust enrichment, waste of corporate
assets, abuse of control, and gross mismanagement. The Wu Derivative Complaint seeks, among other things, an award of money damages.
On July 25, 2024, the parties to the Wu Derivative Action stipulated to stay the Wu Derivative Action pending final resolution of the Allegheny County Consolidated
Class Action. On July 26, 2024, the court so-ordered the parties’ stipulation.
The Company intends to vigorously defend against the allegations contained in the Wu Derivative Complaint, but there can be no assurance that the defense will be
successful.
On December 9, 2025, a putative shareholder, Aaron Frankel, filed under seal a shareholder derivative complaint against certain current and former directors and officers of
the Company in the United States District Court for the Eastern District of Pennsylvania (as to the complaint, the "Frankel Derivative Complaint”; as to the action, the "Frankel
Derivative Action”). On January 7, 2026, the Court unsealed the Frankel Derivative Action, and Frankel notified the Company of the Frankel Derivative Action and conferred with
the Company regarding necessary redactions of the Frankel Derivative Complaint. On January 28, 2026, Frankel filed a redacted amended complaint on the public docket.
The Frankel Derivative Complaint is related to the allegations in the Allegheny County Complaint and Wu Derivative Complaint. It alleges, among other things, that the
defendants breached their fiduciary duties and violated federal securities laws by making allegedly false and misleading statements and/or failing to disclose material information
regarding (i) the Company’s billing practices with respect to its diabetes product category, and (ii) the Company's compliance programs and integration with respect to acquired
companies. The Frankel Derivative Complaint also alleges claims for unjust enrichment and waste of corporate assets. The Frankel Derivative Complaint seeks, among other things,
an award of money damages.
The Company intends to vigorously defend against the allegations contained in the Frankel Derivative Complaint, but there can be no assurance that the defense will be
successful.
On June 24, 2025, a putative shareholder of the Company, Blake T. Myers, filed against the Company a complaint in the Court of Chancery of the State of Delaware
seeking to compel an inspection of books and records under 8 Del. C. § 220 ("Section 220”) (as to the complaint, the "Myers Section 220 Complaint”; as to the action, the "Myers
Section 220 Action”). The Myers Section 220 Complaint asserts the putative shareholder’s right to inspect certain corporate books and records relevant to the issues in the
Allegheny County Consolidated Class Action for the purported purposes of (i) investigating potential wrongdoing by the current and/or former members of the Board and the
Company’s current and/or former executive officers, (ii) supporting appropriate action in the event current and/or former directors or executive officers did not properly discharge
their fiduciary duties, and (iii) evaluating whether members of the current Board have a conflict of interest such that making a demand upon the Board to bring a derivative action
on behalf of the Company would be futile.
On July 1, 2025, the parties to the Myers Section 220 Action met and conferred regarding a mutually agreeable resolution to obviate the need for litigation and agreed that
a thirty-day window to continue negotiations was appropriate. On July 2, 2025, putative shareholder Myers filed a letter to the Court requesting upcoming deadlines to be extended
through August 1, 2025. The Court granted the requested extension on July 8, 2025. On July 31, 2025, Myers filed a letter to the Court requesting upcoming deadlines be extended
through August 31, 2025, which the Court granted on August 5, 2025. On September 3, 2025, Myers filed a letter to the Court requesting upcoming deadlines be extended through
October 3, 2025. On September 26, 2025, the Company completed its production to Myers. On October 3, 2025, Myers filed a letter to the Court requesting additional time for the
parties to confer about the Company’s production and offering to provide a subsequent update to the Court on November 3, 2025. On October 6, 2025, the Court stayed the action
pending any further requests of the parties. On November 3, 2025, Myers filed a letter informing the Court that the parties are continuing to
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Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
confer and offering to provide a subsequent update to the Court on December 3, 2025. The Company completed its production on November 19, 2025.
On December 3, 2025, Myers voluntarily dismissed the action.
On February 6, 2026, Myers filed a shareholder derivative complaint under seal related to the allegations in the Allegheny County Consolidated Complaint against certain
current and former directors and officers of the Company in the Delaware Court of Chancery (as to the Complaint, the "Myers Derivative Complaint;” as to the action, the "Myers
Derivative Action”). The Myers Derivative Complaint alleges claims for breach of fiduciary duty, insider trading, and unjust enrichment under Delaware law. On February 12, 2026,
Myers filed a redacted complaint on the public docket.
The Company intends to vigorously defend against the allegations contained in the Myers Derivative Complaint, but there can be no assurance that the defense will be
successful.
In October 2022, a former customer of the Company, Mr. Ray ("Plaintiff”), filed an individual action against the Company and a collection agency for violation of North
Carolina’s Debt Collection Practices Act ("the Act”) based on allegations that the Company failed to address Mr. Ray’s billing concerns and issue a refund in a timely manner
related to his return of medical equipment. Plaintiff was permitted to amend his individual complaint to a class action complaint on behalf of similarly situated North Carolina
residents who allegedly experienced improper billing issues after the asserted return of medical equipment. Over continued objection, and after withdrawing a motion for class
certification, Plaintiff amended his class action complaint again in May 2025 to assert violations of the Act related to three classes of North Carolinians: (a) a class of patients who
were allegedly improperly billed after returning equipment, (b) a class of patients who were allegedly improperly charged a late fee after assertedly returning their equipment, and (c)
a class of patients who received collection letters that allegedly violated the Act. Plaintiff has argued that the claims are meritorious, and the classes could be certified up to and
including approximately 130,000 North Carolina patients. The Company has vigorously defended the case; believes the claims lack merit; and, believes that none of the three
classes could be certified. Neither the merits of the case nor the certification of these classes have been reviewed by the Court. While nonetheless strongly defending the case, to
minimize exposure and risk under the Act, and reduce further litigation expenses, the Company has also pursued settlement options. The Company and the Plaintiff, a proposed
class representative, recently agreed to inform the Court that the parties have agreed to certify the classes and settle the case as to Class A, Class B and Class C members for a
total settlement payment to be made by the Company of $14.5 million in consideration for full releases of the Company. At December 31, 2025, the Company recorded a liability of
$14.5 million, which is included in accounts payable and accrued expenses in the accompanying consolidated balance sheets. For the year ended December 31, 2025, the Company
recorded an expense of $14.5 million associated with the proposed settlement, which is included in general and administrative expenses in the accompanying consolidated
statements of operations. This outcome, while considered likely by the Company, is not fixed and is contingent on factors not wholly within the Company’s control, including
finalizing additional material terms with Plaintiff, seeking and achieving preliminary approval by the Court, an administrative process, and obtaining final approvals from the Court.
Should this pathway for resolution fail, the Company will continue its robust defense of the case.
On July 29, 2024, the U.S. Attorney’s Office for the District of South Carolina issued a civil investigative demand to the Company pursuant to the FCA regarding whether
the Company submitted false claims in violation of the FCA related to its billing of, and reimbursements from, federal health care programs for humidifiers that are integrated with
PAP devices and provided to patients from January 1, 2017 to the present. The Company is fully cooperating with the investigation. Given the stage of the investigation, it is not
possible to determine whether it will have a material adverse effect on the Company.
On March 8, 2025, the U.S. Attorney’s Office for the Eastern District of Pennsylvania issued a civil investigative demand to the Company pursuant to the FCA
surrounding whether the Company submitted false claims in violation of the FCA related to its billing of, and reimbursements from, federal health care programs for respiratory
devices and related supplies provided to patients from January 1, 2018 to the present. The Company is fully cooperating with the investigation. Given the stage of the
investigation, it is not possible to determine whether it will have a material adverse effect on the Company.
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
(19) Related Party Transactions
The Company owns an equity interest in a vendor that provides automated order intake software. The expense related to this vendor was $19.1 million, $14.9 million, and
$11.3 million for the years ended December 31, 2025, 2024, and 2023, respectively. The Company accounts for this investment under the cost method of accounting based on its
level of equity ownership. As of December 31, 2025 and 2024, the Company had an immaterial outstanding accounts payable balance to this vendor.
A director of the Company serves on the board of directors of a third-party payor that does business with the Company in the normal course of providing services to
patients. Net revenue from this third-party payor was approximately 1.1%, 1.0%, and 1.0% of the Company’s consolidated net revenue during the years ended December 31, 2025,
2024, and 2023, respectively. As of December 31, 2025 and 2024, the Company had an immaterial outstanding accounts receivable balance from this third-party payor.
A director of the Company is an employee of a beneficial owner of more than 5% of the Company’s Common Stock as of December 31, 2025. This beneficial owner is also a
minority shareholder of a vendor that provides medical equipment and supplies to the Company in the normal course of business. Payments to this vendor were approximately
$77.7 million, $73.9 million, and $24.2 million during the years ended December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025 and 2024, the Company had an
immaterial outstanding accounts payable balance to this vendor.
(20) Income Taxes
The Company is subject to U.S. federal, state, and local income taxes. For the years ended December 31, 2025, 2024, and 2023, the Company recorded income tax expense
of $50.9 million, income tax expense of $41.2 million, and an income tax benefit of $49.0 million, respectively. For the year ended December 31, 2025, the Company recognized a $10.1
million income tax benefit, and corresponding increase to net deferred tax assets, related to a non-cash goodwill impairment charge of $128.0 million. For the year ended
December 31, 2024, the Company recognized a $1.0 million income tax benefit, and corresponding increase to net deferred tax assets, related to non-cash goodwill impairment
charges of $13.1 million. For the year ended December 31, 2023, the Company recognized a $64.8 million income tax benefit, and corresponding increase to net deferred tax assets,
related to non-cash goodwill impairment charges of $830.8 million. See Note 7, Goodwill and Identifiable Intangible Assets, for additional details.
Income (loss) from continuing operations before income tax expense (benefit) are attributed to the following regions for the years ended December 31, 2025, 2024 and 2023
(in thousands):
Year Ended December 31,
2025
2024
2023
Domestic
$
(15,154) $
136,019 $
(723,784)
Foreign
— 
— 
— 
Total income (loss) before taxes
$
(15,154) $
136,019 $
(723,784)
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
The current and deferred income tax expense (benefit) for the years ended December 31, 2025, 2024 and 2023 is as follows (in thousands):
Year Ended December 31,
2025
2024
2023
Current:
 
Federal
$
(654) $
3,792 $
5,689 
State
4,375 
5,398 
7,902 
$
3,721 $
9,190 $
13,591 
Deferred:
 
 
Federal
$
37,659 $
25,330 $
(42,720)
State
9,504 
6,719 
(19,875)
$
47,163 $
32,049 $
(62,595)
Income tax expense (benefit)
$
50,884 $
41,239 $
(49,004)
A reconciliation of income tax expense attributable to continuing operations (in thousands) and the effective income tax rate to the applicable statutory federal income tax
rate for the year ended December 31, 2025 is as follows:
Year Ended December 31,
2025
Amount
Percent
United States Statutory Tax Rate
$
(3,182)
21.0 %
State and Local Income Taxes, Net of Federal Income Tax Effect (a)
13,127 
(86.6)%
Foreign Tax Effects
Other foreign jurisdictions
— 
— %
Effect of Changes in Tax Laws or Rates Enacted in the Current Period
— 
— %
Effect of Cross-Border Tax Laws
— 
— %
Tax Credits
— 
— %
Changes in Valuation Allowances
— 
— %
Nontaxable or Nondeductible items
Statutory tax rate difference
(2,497)
16.5 %
Share-based payment awards
1,617 
(10.7)%
Goodwill impairment
18,512 
(122.2)%
Interest in Partnership
1,499 
(9.9)%
Gain on divestiture of assets
18,116 
(119.6)%
Other
498 
(3.3)%
Changes in Unrecognized Tax Benefits
— 
— %
Other Adjustments
Other
3,194 
(21.0)%
Total income tax expense and effective tax rate
$
50,884 
(335.8)%
(a) State taxes in New York, Pennsylvania, Illinois, New Jersey, Florida, California, Michigan, and Tennessee comprise the majority (greater than 50 percent) of the tax effect in
this category for the year ended December 31, 2025.
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
A reconciliation of the effective income tax rate with the applicable statutory federal income tax rate for the years ended December 31, 2024 and 2023 is as follows:
Year Ended December 31,
2024
2023
Federal statutory rate
21.0 %
21.0 %
State income taxes, net of federal benefit
3.0 %
1.0 %
Equity-based compensation
1.6 %
(0.4)%
Change in valuation allowance
3.8 %
(0.3)%
Change in fair value of warrant liability
(0.6)%
1.0 %
Goodwill impairment
1.4 %
(16.6)%
Deferred tax only adjustment
(0.8)%
1.1 %
Deferred tax impact of state effective tax rate changes
— %
— %
Other
0.9 %
— %
Effective income tax rate
30.3 %
6.8 %
Income taxes paid (net of refunds) for the year ended December 31, 2025 (in thousands):
Year Ended December 31,
2025
2024
2023
Federal
$
17,475 
State and local
6,808 
Foreign
— 
Total cash paid (net of refunds) during the period for income taxes
$
24,283 
Cash paid (net of refunds) for income taxes (prior to ASU 2023-09)
$
14,139 $
14,756 
Individual jurisdictions equaling 5% or more of the total income taxes paid (net of refunds) for the year ended December 31, 2025 include U.S. federal of $17.5 million and
Tennessee of $1.6 million.
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
Deferred income tax assets and liabilities are comprised of the following at December 31, 2025 and 2024 (in thousands):
December 31,
2025
2024
Deferred income tax assets:
Accounts receivable
$
17,823 $
18,915 
Goodwill and intangible assets
232,793 
259,976 
Inventory
1,943 
1,321 
Accruals
20,118 
14,361 
Net operating losses and credits
47,054 
14,162 
Transaction costs
728 
522 
Equity-based compensation
2,852 
4,220 
Excess business interest expense
39,102 
64,429 
Lease liability
42,025 
36,158 
Other
333 
132 
Total deferred income tax assets
404,771 
414,196 
Valuation allowance
(11,553)
(8,916)
Net deferred income tax assets
$
393,218 $
405,280 
Deferred income tax liabilities:
 
 
Right-of-use assets
$
(41,454) $
(34,841)
Contingent consideration
(1,984)
(2,328)
Investment in partnership
(1,268)
(812)
Unrealized gains
(27)
(779)
Equipment and other fixed assets
(80,699)
(52,015)
Total deferred income tax liabilities
(125,432)
(90,775)
Noncurrent net deferred income tax assets
$
267,786 $
314,505 
Activity related to the Company's valuation allowance consisted of the following (in thousands):
Year Ended December
31,
2025
Balance, beginning of period
$
(8,916)
Charged (credited) to expense
(2,637)
Balance, end of period
$
(11,553)
Deferred income taxes are determined based on the temporary differences between the financial statement book basis and the tax basis of assets and liabilities using
enacted tax rates in effect in the years in which the differences are expected to reverse. In assessing the realizability of deferred income tax assets, management considers whether it
is more likely than not that all, or some portion, of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income
tax liabilities and projected future taxable income in making this assessment. Management evaluates the need for valuation allowances on the deferred income tax assets according
to the provisions of FASB ASC 740, Income Taxes. In making this
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
determination, management assesses all available evidence, both positive and negative, available at the time balance sheet date. This includes, but is not limited to, recent earnings,
internally prepared income projections, and historical financial performance. A history of cumulative losses is a significant piece of negative evidence used in the assessment. As
of December 31, 2025 and 2024, the Company had a valuation allowance recorded against net deferred tax assets of $11.6 million, and $8.9 million, respectively.
As of December 31, 2025 and 2024, the Company had federal net operating losses ("NOLs") carryforwards of $149.3 million and $4.8 million, respectively and state NOLs
of $342.0 million and $293.4 million, respectively. The Company believes $4.8 million of federal NOLs are fully limited as a result of ownership changes within the meaning of
Internal Revenue Code Section 382 ("Section 382") and has maintained a valuation allowance against these NOL deferred tax assets. Federal NOLs not limited under Section 382
may be carried forward indefinitely. The rules regarding state NOL carryforwards vary and the ability to utilize NOLs varies based on timing and amount. The majority of state NOL
carryforwards generated prior to 2018 will expire, if unused, in 2037. Certain state NOL carryforwards generated after 2017 have an indefinite carryforward period. As of
December 31, 2025 and 2024, the Company had interest expense carryforwards of $142.5 million and $262.4 million, which may be carried forward indefinitely.
The Company will recognize a tax benefit in the financial statements for an uncertain tax position only if management’s assessment is that the position is "more likely than
not” (i.e., a likelihood greater than 50 percent) to be allowed by the tax jurisdiction based solely on the technical merits of the position. The term "tax position” refers to a position
in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for financial
reporting purposes.
A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2025, 2024 and 2023 is as follows (in thousands):
Balance, December 31, 2022
$
6,639 
Additions for tax positions acquired
— 
Reductions due to lapse of statute of limitations
(43)
Balance, December 31, 2023
6,596 
Additions for tax positions acquired
12 
Reductions due to lapse of statute of limitations
(3,868)
Balance, December 31, 2024
2,740 
Additions for tax positions acquired
— 
Reductions due to lapse of statute of limitations
— 
Balance, December 31, 2025
$
2,740 
The unrecognized tax benefit of $2.7 million at December 31, 2025 relates to tax positions taken in pre-closing tax periods of companies acquired in 2021, for which the
Company received tax indemnifications against any losses. As such, the Company recognized a corresponding asset on its consolidated balance sheet and no amount of the
Company’s uncertain tax positions, if recognized, would impact the effective tax rate of the Company. As of December 31, 2025 and 2024, the Company’s accrued liability for
interest and penalties is $2.2 million and $1.7 million, respectively.
The Company files income tax returns in the U.S. federal jurisdiction and in various state jurisdictions. The Company generally is no longer subject to U.S. or state
examinations by tax authorities for taxable years prior to 2021, based on the U.S. statute of limitations. However, net operating losses utilized from prior years in subsequent years’
tax returns are subject to examination until three years after the filing of subsequent years’ tax returns.
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
Tax Receivable Agreement
At the closing of the Business Combination, the Company and AdaptHealth Holdings entered into a Tax Receivable Agreement (TRA) with certain sellers and
AdaptHealth Holdings members. The TRA will generally provide for the payment by the Company to the corresponding sellers and AdaptHealth Holdings members of 85% of the
net cash savings, if any, in U.S. federal, state and local income tax that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the closing of
the Business Combination as a result of: (i) certain tax attributes of the corresponding sellers existing prior to the Business Combination; (ii) certain increases in tax basis resulting
from exchanges of New AdaptHealth Units and shares of Class B Common Stock; (iii) imputed interest deemed to be paid by the Company as a result of payments it makes under
the TRA; and (iv) certain increases in tax basis resulting from payments the Company makes under the TRA. Under the TRA, the benefits deemed realized by the Company as a
result of the increase in tax basis attributable to the AdaptHealth Holdings members generally will be computed by comparing the actual income tax liability of the Company to the
amount of such taxes that the Company would have been required to pay had there been no such increase in tax basis.
Estimating the amount of payments that may be made under the TRA depends on a variety of factors. The actual increase in tax basis and deductions, as well as the
amount and timing of any payments under the TRA, will vary depending upon several factors, including:
•
The timing of such exchanges – for instance, the increase in any tax deductions will vary depending on the fair value of the depreciable or amortizable assets of
AdaptHealth Holdings at the time of each exchange;
•
The price of the Company’s Common Stock at the time of the exchange – the increase in any tax deductions, and the tax basis increase in other assets of AdaptHealth
Holdings is directly proportional to the price of the Company’s Common Stock at the time of the exchange;
•
The amount and timing of the Company’s income – the Company is required to pay 85% of the deemed benefits as and when deemed realized. If AdaptHealth Holdings
does not have taxable income, the Company is generally not required (absent a change in control or circumstances requiring an early termination payment) to make
payments under the TRA for that taxable year because no benefit will have been realized. However, any tax benefits that do not result in realized benefits in a given tax
year likely will generate tax attributes that may be utilized to generate benefits in previous or future tax years. The utilization of such tax attributes will result in payments
under the TRA; and
•
Future tax rates of jurisdictions in which the Company has tax liability.
The TRA also provides that upon certain mergers, asset sales, other forms of business combinations or other changes of control, AdaptHealth Holdings’ (or its
successor’s) obligations under the TRA would be based on certain assumptions defined in the TRA. As a result of these assumptions, AdaptHealth could be required to make
payments under the TRA that are greater or less than the specified percentage of the actual benefits realized by the Company that are subject to the TRA. In addition, if
AdaptHealth Holdings elects to terminate the TRA early, it would be required to make an early termination payment, which upfront payment may be made significantly in advance
of the anticipated future tax benefits.
Payments generally are due under the TRA within a specified period following the filing of AdaptHealth Holdings’ U.S. federal and state income tax returns for the taxable
year with respect to which the payment obligation arises. Payments under the TRA generally will be based on the tax reporting positions that AdaptHealth Holdings will determine.
Although AdaptHealth Holdings does not expect the Internal Revenue Service (IRS) to challenge the Company’s tax reporting positions, AdaptHealth Holdings will not be
reimbursed for any overpayments previously made under the TRA, but instead the overpayments will reduce future payments. As a result, in certain circumstances, payments
could be made under the TRA in excess of the benefits that AdaptHealth Holdings realizes in respect of the tax attributes subject to the TRA.
The term of the TRA generally will continue until all applicable tax benefits have been utilized or expired, unless the Company exercises its right to terminate the TRA and
make an early termination payment.
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ADAPTHEALTH CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2025, 2024 and 2023
In certain circumstances (such as certain changes in control, the election of the Company to exercise its right to terminate the agreement and make an early termination
payment or an IRS challenge to a tax basis increase) it is possible that cash payments under the TRA may exceed actual cash savings.
At December 31, 2025, the Company’s liability relating to the TRA was $265.7 million, of which $26.8 million and $238.9 million is included in other liabilities and other long-
term liabilities, respectively, in the accompanying consolidated balance sheets. At December 31, 2024, the Company's liability relating to the TRA was $290.4 million, of which
$25.0 million and $265.4 million is included in other liabilities and other long-term liabilities, respectively, in the accompanying consolidated balance sheets. During the years ended
December 31, 2025 and 2024, the Company recognized a loss of $0.4 million and $0.2 million, respectively, related to changes in the estimated TRA liability.
On July 4, 2025, the President signed the One Big Beautiful Bill Act (the "OBBBA") into law. The OBBBA, among other things, indefinitely reinstates (i) 100 percent bonus
depreciation for qualified property and (ii) favorable interest deduction limitations. In accordance with ASC Topic 740, Income Taxes, the Company remeasured its deferred income
tax assets and liabilities, which has been reflected in the Company’s consolidated financial statements for the year ended December 31, 2025. The OBBBA reduced the Company’s
2025 estimated cash income tax liability, resulting in a $29.2 million current income tax receivable, which is included in prepaid and other current assets in the accompanying
consolidated balance sheets as of December 31, 2025. The majority of AdaptHealth’s income tax receivable relates to federal and state corporate income tax refunds, $10.0 million of
which was received in January 2026. The remaining refunds are expected to be received in 2026.
(21) Subsequent Events
The Company evaluated subsequent events for the period from December 31, 2025 through the date that the Company’s consolidated financial statements were available
to be issued. There were no subsequent events requiring adjustment to the Company’s consolidated financial statements or additional disclosure, other than as discussed below
and in Note 12, Debt, and Note 18, Commitments and Contingencies.
Subsequent to December 31, 2025, the Company acquired certain assets of a provider of home medical equipment for total consideration of $47.6 million. As of the date the
consolidated financial statements were available to be issued, the Company was in the process of determining the allocation of the consideration paid to the fair value of the assets
acquired.
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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation
of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act”)) as of
December 31, 2025. Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed,
summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including
our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that, as of December 31, 2025, our internal control over financial reporting was effective.
Management’s Report on Internal Control Over Financial Reporting
Management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial
reporting for the Company. The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and board of directors regarding
the reliability of financial reporting and the preparation of published financial statements in accordance with generally accepted accounting principles ("GAAP”). The Company’s
internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the
consolidated financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the
Company’s management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
Company's assets that could have a material effect on the consolidated financial statements.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025, based on the criteria set forth in 2013 by
the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Based on that assessment, management concluded that the
Company's internal control over financial reporting was effective.
Our independent registered public accounting firm, KPMG LLP, who audited the consolidated financial statements included in this Annual Report on Form 10-K, has
expressed an opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025. KPMG LLP's report appears on page 68 of this
Annual Report on Form 10-K.
Remediation of Previously Reported Material Weakness in Internal Control Over Financial Reporting
As previously disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the prior fiscal year, management identified the following material weakness in internal
control over financial reporting as of December 31, 2024.
•
The Company did not design and implement process-level controls over the determination of excess or obsolete medical equipment and other inventory balances.
Specifically, the Company did not have a mechanism in place to track the movement and status of specific medical equipment and other inventory which could affect the
valuation of its inventory. This material weakness is hereinafter referred to as "the Inventory Valuation Material Weakness".
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Table of Contents
The Inventory Valuation Material Weakness was remediated during 2025. Management has completed its remediation efforts by designing and implementing a new
quarterly control to perform a structured review of inventory movements, incorporating sales and rental transactions for the period to ensure accurate valuation and to mitigate the
risk of a material misstatement. This control operated for a sufficient period of time to remediate this material weakness.
Changes in Internal Control over Financial Reporting
Except with respect to the changes in connection with the implementation of the initiatives to remediate the material weakness noted above, there were no changes in the
Company’s internal control over financial reporting that occurred during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting.
Item 9B. Other Information
During the three months ended December 31, 2025, none of the Company's directors or officers adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-
Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers, and Corporate Governance
The information required by this item will be set forth in our definitive proxy statement with respect to our 2026 annual meeting of the stockholders to be filed on or before
April 30, 2026 and is incorporated herein by reference.
Item 11. Executive Compensation
The information required by this item will be set forth in our definitive proxy statement with respect to our 2026 annual meeting of the stockholders to be filed on or before
April 30, 2026 and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item will be set forth in our definitive proxy statement with respect to our 2026 annual meeting of the stockholders to be filed on or before
April 30, 2026 and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item will be set forth in our definitive proxy statement with respect to our 2026 annual meeting of the stockholders to be filed on or before
April 30, 2026 and is incorporated herein by reference.
Item 14. Principal Accountant’s Fees and Services
The information required by this item will be set forth in our definitive proxy statement with respect to our 2026 annual meeting of the stockholders to be filed on or before
April 30, 2026 and is incorporated herein by reference.
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PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) Consolidated Financial Statements and Supplementary Data:
Financial Statements. The following is a list of the Consolidated Financial Statements of AdaptHealth Corp. and its subsidiaries included in Item 8 of Part II of this report.
Page
Number
Reports of Independent Registered Public Accounting Firm (KPMG LLP, Philadelphia, Pennsylvania, Auditor Firm ID: 185)
66
Consolidated Balance Sheets—December 31, 2025 and 2024
69
Consolidated Statements of Operations—For the years ended December 31, 2025, 2024 and 2023
70
Consolidated Statements of Comprehensive Income (Loss)—For the years ended December 31, 2025, 2024 and 2023
71
Consolidated Statements of Changes in Stockholders’ Equity—For the years ended December 31, 2025, 2024 and 2023
72
Consolidated Statements of Cash Flows—For the years ended December 31, 2025, 2024 and 2023
73
Notes to Consolidated Financial Statements
75
(b) Exhibits. The exhibits filed as a part of this report as required by Item 601 of Regulation S-K are listed in the Index to Exhibits starting on page 126 of this Annual Report on
Form 10-K.
Item 16. Form 10-K Summary
None
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EXHIBIT INDEX
Exhibit
Number
Description
3.1
Fourth Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, filed
with the SEC on June 21, 2024).
3.2
Second Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q, filed with the SEC on
August 6, 2024).
3.3
Certificate of Designations of Preferences, Rights and Limitations of Series B-1 Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the
Company’s Current Report on Form 8-K filed with the SEC on June 26, 2020).
4.1
Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.2 of the Company’s Registration Statement on Form S-1, filed with the SEC on
February 13, 2018).
4.2
Description of Securities (incorporated by reference to Exhibit 4.4 of the Company's Annual Report on Form 10-K filed with the SEC on February 27, 2024).
4.3
Amended and Restated Registration Rights Agreement, dated as of July 1, 2020, by and among the Company, OEP AHCO Investment Holdings, LLC,
Deerfield Partners, L.P., Deerfield Private Design Fund IV, L.P. and the other persons listed on the signature pages thereto (incorporated by reference to
Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 2, 2020).
4.4
Amendment to Amended and Restated Registration Rights Agreement, dated as of December 1, 2020, by and among the Company, AdaptHealth Holdings
LLC and the other persons listed on the signature pages thereto (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K,
filed with the SEC on December 7, 2020).
4.5
Indenture, dated as of July 29, 2020, by and among AdaptHealth LLC, the guarantors party thereto and The Bank of New York Mellon Trust Company,
N.A., as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 4, 2020).
4.6
Indenture, dated as of January 4, 2021, by and among AdaptHealth LLC, the guarantors party thereto and The Bank of New York Mellon Trust Company,
N.A., as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 8, 2021).
4.7
Indenture, dated as of August 19, 2021, by and among AdaptHealth LLC, the guarantors party thereto and The Bank of New York Mellon Trust Company,
N.A., as trustee (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on August 20, 2021).
10.1
Credit Agreement, dated January 20, 2021, by and between AdaptHealth LLC, the lenders party thereto and Regions Bank, as administrative agent
(incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on February 2, 2021).
10.2
First Incremental Facility Amendment dated as of April 23, 2021 to the Credit Agreement, dated as of January 20, 2021, among AdaptHealth LLC, the
guarantors named therein, Regions Bank as administrative agent and collateral agent and the lenders party thereto (incorporated by reference to Exhibit
10.1 of the Company’s Current Report on Form 8-K filed with the SEC on April 29, 2021).
10.3
Second Amendment dated as of August 16, 2021 to the Credit Agreement, dated as of January 20, 2021, among AdaptHealth LLC, the guarantors named
therein, Regions Bank as administrative agent and collateral agent and the lenders party thereto (incorporated by reference to Exhibit 10.1 of the
Company’s Current Report on Form 8-K filed with the SEC on August 20, 2021).
10.4
Third Amendment dated as of March 31, 2023 to the Credit Agreement, dated as of January 20, 2021, among AdaptHealth LLC, the guarantors named
therein, Regions Bank as administrative agent and collateral agent and the lenders party thereto (incorporated by reference to Exhibit 10.1 of the
Company’s Quarterly Report on Form 10-Q filed with the SEC on May 9, 2023).
10.5
Fourth Amendment, dated as of September 13, 2024 to the Credit Agreement, dated as of January 20, 2021 among AdaptHealth LLC, the guarantors named
therein, Regions Bank, as administrative agent and collateral agent and the lenders party thereto (incorporated by reference to Exhibit 10.1 of the
Company’s Current Report on Form 8-K filed with the SEC on September 16, 2024).
10.6
Tax Receivable Agreement, dated November 8, 2019, by and among AdaptHealth Holdings, the Company and the Non-Blocker AdaptHealth Members
and the Blocker Sellers (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed with the SEC on November 14, 2019).
126

Table of Contents
10.7†
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K, filed with the SEC on
November 14, 2019).
10.8†
Employment Agreement, dated as of May 1, 2020, by and between the Company and Jason Clemens (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed with the SEC on May 22, 2020).
10.9†
Employment and Non-Competition Agreement, dated as of April 21, 2014, by and between Aerocare Holdings, Inc. and Albert Prast (incorporated by
reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q, filed with the SEC on May 10, 2022).
10.10†
Amended and Restated 2019 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the
SEC on July 29, 2021).
10.11†
Form of Restricted Stock Grant Notice and Agreement under the AdaptHealth Corp. 2019 Stock Incentive Plan (incorporated by reference to Exhibit 10.13 of
the Company’s Current Report on Form 8-K, filed with the SEC on November 14, 2019).
10.12†
Form of Option Grant Notice and Agreement under the AdaptHealth Corp. 2019 Stock Incentive Plan (incorporated by reference to Exhibit 10.14 of the
Company’s Current Report on Form 8-K, filed with the SEC on November 14, 2019).
10.13†
AdaptHealth Corp. 2019 Employee Stock Purchase Plan (incorporated by reference to Exhibit 4.7 to the Company’s Registration Statement on Form S-8 filed
with the SEC on January 22, 2020).
10.14
Investment Agreement, dated as of May 25, 2020, by and among the Company, OEP AHCO Investment Holdings, LLC and, solely for purposes of Section
3.10, One Equity Partners VII, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 29,
2020).
10.15
Exchange Agreement, dated as of June 24, 2020, by and between AdaptHealth Corp. and Deerfield Private Design Fund IV, L.P. (incorporated by reference
to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 26, 2020).
10.16
Investment Agreement, dated as of June 24, 2020, by and between AdaptHealth Corp. and Deerfield Partners, L.P. (incorporated by reference to Exhibit 10.2
to the Company’s Current Report on Form 8-K filed with the SEC on June 26, 2020).
10.17
Consent Agreement, dated as of May 9, 2022, among AdaptHealth LLC, the guarantors named therein, Regions Bank as administrative agent and collateral
agent and the lenders party thereto (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the SEC on May 12,
2022).
10.18†
Employment Agreement, dated July 24, 2023, by and between AdaptHealth Corp. and Albert Prast (incorporated by reference to Exhibit 10.1 of the
Company’s Current Report on Form 8-K filed with the SEC on July 27, 2023).
10.19
AdaptHealth LLC Non-qualified Deferred Compensation Plan (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed
with the SEC on November 22, 2023).
10.20†
Employment Agreement, dated as of April 10, 2024, by and between AdaptHealth Corp. and Suzanne Foster (incorporated by reference to Exhibit 10.1 of the
Company’s Current Report on Form 8-K filed with the SEC on April 17, 2024).
10.21†
Amendment to Employment Agreement, dated as of April 15, 2024, between AdaptHealth Corp. and Jason Clemens (incorporated by reference to Exhibit
10.3 of the Company's Current Report on Form 8-K filed with the SEC on April 17, 2024).
10.22†
Amended and Restated 2019 Stock Incentive Plan of the Company (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K
filed with the SEC on June 21, 2024).
10.23†
Employment Agreement, dated as of August 1, 2024, by and between AdaptHealth Corp. and Toby Scott Barnhart (incorporated by reference to Exhibit
10.1 of the Company’s Current Report on Form 8-K filed with the SEC on August 26, 2024).
10.24†
Employment Agreement, dated as of October 29, 2024, by and between AdaptHealth Corp. and Albert Prast (incorporated by reference to Exhibit 10.1 of the
Company’s Current Report on Form 8-K filed with the SEC on October 30, 2024).
10.25†
Offer of Employment, dated as of August 15, 2022, by and between AdaptHealth Corp. and Christine Archbold (incorporated by reference to Exhibit 10.1 of
the Company's Quarterly Report on Form 10-Q filed with the SEC on May 6, 2025).
127

Table of Contents
10.26†
Amendment, dated as of February 23, 2023, to Offer of Employment, dated as of August 17, 2022, by and between AdaptHealth Corp. and Christine
Archbold (incorporated by reference to Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q filed with the SEC on May 6, 2025).
10.27
Non-Employee Director Fee Deferral Policy, effective May 30, 2025 (incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on
Form 10-Q filed with the SEC on August 5, 2025).
19.1
AdaptHealth Corp. Insider Trading Policy (incorporated by reference to Exhibit 19.1 of the Company's Annual Report on Form 10-K filed with the SEC
on February 25, 2025).
21.1*
Subsidiaries of the Company.
23.1*
Consent of Independent Registered Public Accounting Firm.
24.1*
Powers of Attorney (included on the signature page hereof).
31.1*
Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2*
Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32**
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
97.1
AdaptHealth Corp. Policy for the Recovery of Erroneously Awarded Compensation (incorporated by reference to Form 10-K filed with the SEC on
February 27, 2024).
101.INS***
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline
XBRL document
101.SCH***
XBRL Taxonomy Extension Schema Document
101.CAL***
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF***
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB***
XBRL Taxonomy Extension Label Linkbase Document
101.PRE***
XBRL Taxonomy Extension Presentation Linkbase Document
Exhibit 104 
***
Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded
within the Inline XBRL document
_____________________________
* Filed herewith.
** Furnished herewith.
*** XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of
the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these
sections.
† Management contract or compensatory plan or arrangement.
128

Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on February 24, 2026.
AdaptHealth Corp.
By:
/s/ Suzanne Foster
Suzanne Foster
Chief Executive Officer and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Suzanne Foster and Richard Rew, jointly and
severally, his attorney-in-fact, each with the full power of substitution, for such person, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-
K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact
and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes
as he might do or could do in person hereby ratifying and confirming all that each of said attorneys-in-fact and agents, or his substitute, may do or cause to be done by virtue
hereof.
129

Table of Contents
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on February 24, 2026 by the following persons on behalf of the
registrant and in the capacities indicated:
Signature
Title
By:
/s/ Suzanne Foster
Chief Executive Officer and Director
Suzanne Foster
(Principal Executive Officer)
By:
/s/ Jason Clemens
Chief Financial Officer
Jason Clemens
(Principal Financial Officer)
By:
/s/ Christine E. Archbold
Chief Accounting Officer
Christine E. Archbold
(Principal Accounting Officer)
By:
/s/ Dale Wolf
Chairman of the Board
Dale Wolf
By:
/s/ Gregory A. Belinfanti
Director
Gregory A. Belinfanti
By:
/s/ Terence Connors
Director
Terence Connors
By:
/s/ Bradley Coppens
Director
Bradley Coppens
By:
/s/ Theodore S. Lundberg
Director
Theodore S. Lundberg
By:
/s/ Diana Nole
Director
Diana Nole
By:
/s/ Dr. Susan Weaver
Director
Dr. Susan Weaver
By:
/s/ David S. Williams III
Director
David S. Williams III
130

Exhibit 21.1
The Company’s principal subsidiaries as of December 31, 2025 are listed below. All other subsidiaries of the Company, if considered in the aggregate as a single affiliate, would not
constitute a significant subsidiary of the Company.
Subsidiaries (Alphabetically)
State of Inc.
ABC Medical, LLC
SOUTH CAROLINA
Absolute Respiratory Care, LLC
RHODE ISLAND
Access Medical, LLC
MICHIGAN
Accucare Medical Equipment, LLC
OKLAHOMA
ActivStyle Holding Company
DELAWARE
AdaptHealth - Missouri LLC
MISSOURI
AdaptHealth Holdings LLC
DELAWARE
AdaptHealth Intermediate HoldCo LLC
DELAWARE
AdaptHealth LLC
DELAWARE
AdaptHealth Minnesota LLC
MINNESOTA
AdaptHealth New England LLC
DELAWARE
AdaptHealth Patient Care Solutions LLC
PENNSYLVANIA
AdaptHealth West LLC
DELAWARE
Aerocare Home Medical Equipment, Inc.
TEXAS
Aerocare Home Medical Equipment, Inc. (MO)
MISSOURI
Aerocare Home Medical, Inc.
TEXAS
Aerocare, Inc.
NEVADA
Agile Medical LLC
PENNSYLVANIA
Agilis Med Holdings LLC
DELAWARE
AirCare Home Respiratory, LLC
CALIFORNIA
Airway Oxygen, Inc.
MICHIGAN
All American Oxygen, Inc.
KENTUCKY
American Ancillaries, Inc.
NEVADA
American Home Medical, Inc.
FLORIDA
America's Health Care at Home, LLC
DELAWARE
Americoast Maryland LLC
DELAWARE
Ameri-Quipt of North Carolina, Inc.
NORTH CAROLINA
Atlantic Medical Supply, Inc.
FLORIDA
Atlantic Medical, Inc.
VIRGINIA
Austin Respiratory Equipment, Inc.
FLORIDA
Beacon Respiratory Services of Georgia, Inc.
DELAWARE
Beacon Respiratory Services, Inc.
DELAWARE
Bennett Medical Services LLC
NEVADA
BestMED Respiratory, Inc.
IOWA
BHS, Inc.
KENTUCKY

Subsidiaries (Alphabetically)
State of Inc.
Bird & Bear Medical, Inc.
ARKANSAS
Blue Dot Medical, LLC
MISSISSIPPI
Bluegrass Oxygen, Inc.
KENTUCKY
B-Pharm, Inc.
MISSOURI
Braden Partners, L.P.
CALIFORNIA
Brannons Rentals and Sales, Inc.
CALIFORNIA
Bradley DME LLC
TENNESSEE
Breathe Grace Medical Supply, LLC
MARYLAND
Buffalo Wheelchair, Inc.
NEW YORK
BuypapUSA.com, Inc.
OREGON
Cair Respiratory Services LLC
MARYLAND
Cape Medical Supply, LLC
MASSACHUSETTS
Care Plus Oxygen, LLC
PENNSYLVANIA
Carmichaels Home Medical Equipment, Inc.
GEORGIA
Choice Medical Health Care, LLC
ILLINOIS
Choice Respiratory & Medical Equipment, Inc.
VIRGINIA
Clay Home Medical, Inc.
VIRGINIA
Clearview Medical Incorporated
TEXAS
Community Medical Supply, Inc.
IOWA
Community Surgical Supply of Toms River LLC
DELAWARE
Cornerstone Medical Services -- Midwest, LLC
OHIO
Cornerstone Medical Services of Columbus, LLC
OHIO
CressCare Medical, Inc.
PENNSYLVANIA
Desloge Home Oxygen and Medical Equipment, Inc.
FLORIDA
Diabetes Management & Supplies LLC
LOUISIANA
Diabetes Supply Center of the Midlands LLC
NEBRASKA
DSCM Holdco Inc
NEBRASKA
Edge Medical Supply, LLC
TEXAS
Express Medical Supply, LLC
TEXAS
Family Home Medical Supply LLC
PENNSYLVANIA
Family Medical Supply LLC
NORTH CAROLINA
First Choice In-HomeCare, Inc.
VIRGINIA
First Choice Home Medical Equipment, LLC
DELAWARE
First Choice Medical Equipment, Inc.
ILLINOIS
Fletchers Medical Supplies Inc
FLORIDA
Florida Home Cair, Inc.
FLORIDA
Florida Home Medical Supply, LLC
FLORIDA
Freedom Respiratory, Inc.
VIRGINIA
Gammie Homecare Inc.
HAWAII
Georgia Home Medical - Columbus, Inc.
GEORGIA

Subsidiaries (Alphabetically)
State of Inc.
Georgia Home Medical, Inc.
GEORGIA
GME Medical Supply, Inc.
VIRGINIA
Gould’s Discount Medical, LLC
KENTUCKY
Grace Healthcare Incorporated
LOUISIANA
Grace Healthcare Medical, Inc.
MISSISSIPPI
Grace Healthcare, Inc.
MISSISSIPPI
Grace Medical Equipment, Inc.
ALABAMA
Grace Medical, Inc.
FLORIDA
Halprin, Incorporated
NEW YORK
Health Complex Medical, LLC
CONNECTICUT
Health Products Plus, Inc.
GEORGIA
Healthline Medical Equipment, LLC
TEXAS
Healthy Living Medical Supply, LLC
MICHIGAN
Heartland Medical Equipment, Inc.
MISSOURI
Home Care Medical, Inc.
WISCONSIN
Home Medical Express, Inc.
ILLINOIS
Home Medical Products and Services LLC
WISCONSIN
Home Mediservice, LLC
MARYLAND
Home Nursing Care, Inc.
VIRGINIA
Home Respiratory Solution's, Inc.
FLORIDA
Hometown Respiratory Consultants, LLC
TENNESSEE
Hub's Home Oxygen & Medical Supplies, LLC
PENNSYLVANIA
Huey’s Home Medical, LLC
DELAWARE
Hurst Medical Equipment, Inc.
WEST VIRGINIA
J.M.R. Medical, LLC
DELAWARE
Keene Medical Products LLC
NEW HAMPSHIRE
Lamar, LLC
FLORIDA
LCP Solara Blocker Corp
DELAWARE
Legacy Medical, LLC
OHIO
Lehigh Valley Respiratory Care - Lancaster, LLC
PENNSYLVANIA
LifeHME, Inc.
SOUTH CAROLINA
Loftis Home Medical, LLC
NORTH CAROLINA
Lookout Medical Services, Inc.
TENNESSEE
Louisville O2, Inc.
KENTUCKY
Lovell Medical Supply, Inc.
NORTH CAROLINA
Madison County Medical Equipment, Inc.
IOWA
Major Medical Supply of Brighton, LLC
COLORADO
Major Medical Supply of Colorado Springs, LLC
COLORADO
Major Medical Supply of Denver, LLC
COLORADO
Major Medical Supply of Fort Collins, LLC
COLORADO

Subsidiaries (Alphabetically)
State of Inc.
Major Medical Supply of Greeley, LLC
COLORADO
Major Medical Supply, LLC
COLORADO
Manor Respiratory Care, Inc.
TENNESSEE
Matrix Medical, LLC
FLORIDA
McFarland Group, LLC
TENNESSEE
Med Star Surgical & Breathing Equipment Inc.
NEW YORK
Med Way Medical, Inc.
UTAH
MedBridge Home Medical LLC
DELAWARE
Med-Equip, Inc.
PENNSYLVANIA
Medical Logic Ft. Walton, Inc.
ALABAMA
Medical Logic, Inc.
ALABAMA
Medical Necessities and Services, LLC
TENNESSEE
Medidex, LLC
MISSOURI
Medlogic Anniston, Inc.
ALABAMA
Medlogic Birmingham, Inc.
ALABAMA
Medstar Holdings LLC
DELAWARE
Medway Medical Equipment, LLC
TEXAS
Mississippi HMA DME, LLC
MISSISSIPPI
MME II, LLC
TEXAS
Montgomery Medical Supply, Inc.
ALABAMA
New England Home Medical Equipment LLC
MASSACHUSETTS
Northshore Respiratory and Rehab Specialties, Inc.
LOUISIANA
NRE Holding LLC
DELAWARE
Ocean Breeze Infusion Care LLC
NEW YORK
Ocean Home Health of PA LLC
PENNSYLVANIA
Ocean Home Health Supply LLC
NEW JERSEY
Ogles Oxygen, LLC
SOUTH CAROLINA
Olympia Respiratory Services LLC
WASHINGTON
Ours Corporation
ILLINOIS
Oxygen & Sleep Associates, Inc.
TENNESSEE
Oxygen One, Inc.
WISCONSIN
Oxygen Supply Shop, LLC
NEW JERSEY
Pal-Med, LLC
SOUTH CAROLINA
Palmetto Oxygen, LLC
SOUTH CAROLINA
Parrish Home Medical, Inc.
SOUTH CAROLINA
Peach Home Health Care, Inc.
GEORGIA
Pharmacy, Inc.
DELAWARE
Pinnacle Medical Solutions LLC
MISSISSIPPI
Pinnacle Medical Solutions, Inc.
DELAWARE
PPS HME Holdings LLC
DELAWARE

Subsidiaries (Alphabetically)
State of Inc.
PPS HME LLC
DELAWARE
Prattville Medical Equipment, Inc.
ALABAMA
Premier Home Care, Inc.
KENTUCKY
Premier Home Medical Equipment Services, LLC
PENNSYLVANIA
Promise Medical, Inc.
TEXAS
Provider Plus, LLC
MISSOURI
Pumps It Inc
TEXAS
PVHS Home Medical Supply, LLC
COLORADO
Quality Home Medical, Inc.
SOUTH CAROLINA
Quality Medical Services, Inc.
IOWA
Quality Respi-Care, Inc.
GEORGIA
Reliable Medical Equipment, LLC
SOUTH CAROLINA
Reliable Medical of Conway, LLC
SOUTH CAROLINA
Resp-I-Care, LLC
TENNESSEE
Respiratory Home Care of Bristol, LLC
TENNESSEE
Respiratory Services of Western New York Inc
NEW YORK
Respracare, Inc.
NORTH CAROLINA
Roberts Home Medical, LLC
MARYLAND
Rocky Mountain Medical Equipment, Inc.
COLORADO
Rocky Mountain Medical Equipment, LLC
COLORADO
Royal Homestar LLC
DELAWARE
Royal Medical Supply LLC
NEW JERSEY
Skinny, LLC
FLORIDA
Skoro Enterprises LLC
TEXAS
SleepEasy Therapeutics, Inc.
NORTH DAKOTA
Sleep Therapy LLC
MINNESOTA
Solara Holdings, LLC
DELAWARE
Solara Intermediate, LLC
DELAWARE
Solara Medical Supplies, LLC
CALIFORNIA
Sound Oxygen Service LLC
WASHINGTON
Southern Home Respiratory & Equipment, Inc.
VIRGINIA
Specialized Medical Devices, Inc.
ALABAMA
Spiro Health Services, LLC
DELAWARE
Sunbelt Medical Supply & Oxygen, Inc.
FLORIDA
TC Medical Supply, LLC
FLORIDA
The 3700 Company, L.L.C.
COLORADO
THH Acquisition LLC I
DELAWARE
TMS VT, LLC
VERMONT
Total Homecare LLC
VIRGINIA
Total Respiratory, LLC
DELAWARE

Subsidiaries (Alphabetically)
State of Inc.
Tricorex, Inc.
MISSOURI
TriCounty Medical Equipment and Supply, LLC
PENNSYLVANIA
Trinity Healthcare of Winston-Salem, Inc.
GEORGIA
Twin Rivers Respiratory Care, Inc.
ARKANSAS
Verio Healthcare, Inc.
CALIFORNIA
Verus Healthcare LLC
DELAWARE
Verus Healthcare Holdings LLC
DELAWARE
Vitacare, L.L.C.
OKLAHOMA
WeCare Medical Somerset, LLC
KENTUCKY
WeCare Medical, LLC
KENTUCKY
Wolf Industries, Inc.
MISSISSIPPI

Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statements (No. 333-280364, No.333-279453, No. 333-276029, No. 333-258601, No. 333-256824, and No. 333-236012)
on Form S-8 and registration statements (No. 333-257493 and No.333-251452) on Form S-3 of our reports dated February 24, 2026, with respect to the consolidated financial
statements of AdaptHealth Corp. and the effectiveness of internal control over financial reporting.
/s/ KPMG LLP
Philadelphia, Pennsylvania
February 24, 2026

Exhibit 31.1
CERTIFICATION
PURSUANT TO RULES 13A-14 AND 15D-14
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Suzanne Foster, certify that:
1.
I have reviewed this Annual Report on Form 10-K of AdaptHealth Corp.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements and other financial information included in this report, fairly present, in all material respects, the financial condition,
results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-
15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with
generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting.
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors
and the audit committee of the registrant’s board of directors:
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant’s ability to record, process, summarize, and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial
reporting.
February 24, 2026
/s/ Suzanne Foster
Suzanne Foster
Chief Executive Officer and Director
(Principal Executive Officer)

Exhibit 31.2
CERTIFICATION
PURSUANT TO RULES 13A-14 AND 15D-14
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Jason Clemens, certify that:
1.
I have reviewed this Annual Report on Form 10-K of AdaptHealth Corp.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements and other financial information included in this report, fairly present, in all material respects, the financial condition,
results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-
15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with
generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting.
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors
and the audit committee of the registrant’s board of directors:
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant’s ability to record, process, summarize, and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial
reporting.
February 24, 2026
/s/ Jason Clemens
Jason Clemens
Chief Financial Officer
(Principal Financial Officer)

Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS REQUIRED BY
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of AdaptHealth Corp. (the "Company”) on Form 10-K for the period ending December 31, 2025, as filed with the Securities and Exchange
Commission on the date hereof (the "Report”), the undersigned hereby certify that to the best of our knowledge:
1.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
February 24, 2026
/s/ Suzanne Foster
Chief Executive Officer and Director
Suzanne Foster
(Principal Executive Officer)
February 24, 2026
/s/ Jason Clemens
Chief Financial Officer
Jason Clemens
(Principal Financial Officer)