AdaptHealth (NASDAQ:AHCO) reported fourth-quarter and full-year 2025 results that management said capped a “tremendous year of transition,” highlighted by the rollout of a new operating model, broad-based patient census growth, portfolio divestitures, and continued debt reduction.
Revenue and growth trends
For full-year 2025, the company posted net revenue of $3.245 billion, which Chief Executive Officer Suzanne Foster said exceeded the midpoint of guidance. Reported revenue was down 0.5% versus the prior year, but organic revenue growth was 1.7%, according to Chief Financial Officer Jason Clemens.
Segment performance and patient metrics
Management pointed to patient census records in Sleep Health, Respiratory Health, and Wellness at Home, along with record retention in Diabetes Health.
- Sleep Health: Q4 net revenue was $372.3 million, up 4.4% year over year. New starts were approximately 130,600, up about 6%, and patient census rose 4% to a record 1.73 million.
- Respiratory Health: Q4 net revenue was $178.2 million, up 7.8%. Oxygen new starts increased about 4% and vent new starts about 5%. Oxygen patient census of approximately 335,000 reached a new record for the third consecutive quarter, and vent patient census also hit an all-time high.
- Diabetes Health: Q4 net revenue was $158.5 million, down 7.4%. Clemens said new CGM starts remained soft, but retention reached an all-time high following resupply operational changes made in late 2024. CGM patient census was approximately 153,000, flat year over year, and the company cited a shift in payer mix from commercial to government payers as a driver of lower reimbursement per CGM patient. The company said pump revenues performed better, with Q4 pump new starts and net revenue up low double digits.
- Wellness at Home: Q4 net revenue was $137.3 million, down 16.1%, which management linked primarily to 2025 dispositions. The company said new starts for wheelchairs and beds were up about 6% and 5%, respectively, with patient census in both reaching all-time records.
On Sleep Health comparability, Clemens noted there was “noise” in 2025 results tied to a change in rental versus sales mix related to accounting for a CPAP component. He said the impact was roughly $15 million in the first quarter of last year and diminished through the year, setting up easier comparisons in 2026.
Profitability, cash flow, and balance sheet
Adjusted EBITDA was $616.7 million for 2025 and $163.1 million for Q4, representing Adjusted EBITDA margins of 19.0% and 19.3%, respectively. Foster and Clemens said both periods included a $14.5 million legal settlement and over $10 million of accelerated costs tied to bringing a new capitated arrangement live earlier than planned and preparing the next phase.
Clemens also highlighted a $128 million non-cash goodwill impairment charge in Q4 GAAP results related to the estimated fair value of the Diabetes Health segment. He said the charge is excluded from Adjusted EBITDA and has no impact on cash flows or operations.
Fourth-quarter cash flow from operations was $183.2 million. Capital expenditures were $103.9 million, or 12.3% of revenue, reflecting investment in patient growth and forward investment for the capitated contract ramp. Free cash flow was $79.3 million in Q4 and $219.4 million for the full year, which management said exceeded the top end of guidance.
AdaptHealth ended 2025 with $106.1 million in unrestricted cash and net debt of $1.694 billion. The company reported a net leverage ratio of 2.75x, up modestly from 2.68x at the end of Q3, which it attributed to the litigation settlement and pre-revenue contract costs affecting trailing Adjusted EBITDA. Foster said the company reduced debt by $25 million in Q4 and $250 million for the year, and noted credit rating upgrades from S&P and Moody’s.
Operational initiatives and capitated contract ramp
Foster said AdaptHealth implemented a new operating model in 2025 aimed at standardizing workflows and improving service delivery. The company centralized order intake in Sleep Health in Q3 and extended the approach to vents in Q4, which management said improved setup times and order conversion. In sleep, referral-to-setup improved to nine days in Q4 from 10 days in Q3 and 23 days a year earlier. In respiratory, referral-to-setup improved by three days year over year for both oxygen and vents.
The company also described technology pilots, including an AI pilot for sleep order intake that reduced processing time and a conversational AI tool for PAP self-scheduling that reduced patient phone time. Management said the pilots are not yet material to results but are expected to contribute operating leverage embedded in 2026 guidance. AdaptHealth also said myAPP users more than doubled to over 327,000 at year-end.
On its new capitated contract—described by Foster as the largest service transition in HME industry history—the company said it went live in three Mid-Atlantic states in December, covering about 50,000 members, earlier than planned. Foster said that, when fully operational, the arrangement is expected to serve over 10 million patients nationwide with about 1,200 dedicated employees across 30 locations. Management said it expects to onboard remaining patients on schedule in the first half of 2026.
In Q&A, Clemens said the company spent more than previously communicated on onboarding costs in Q4, with the delta to guidance “just a touch under” $10 million (about $8 million). He added that the company also increased its expectation for the contract’s 2026 contribution, stepping expected growth attributed to the arrangement up to 5%-6% from 3%-5% previously discussed.
Guidance and other updates
For 2026, AdaptHealth guided to:
- Net revenue: $3.44 billion to $3.51 billion
- Adjusted EBITDA: $680 million to $730 million
- Free cash flow: $175 million to $225 million
Clemens said revenue assumptions reflect 6%-8% growth over 2025, with 7.5%-9.5% organic growth offset by about 1.5% net compression from previously completed acquisition and disposition activity. He said the company expects 5%-6% growth from the new capitated agreement and another 2.5%-3.5% from the rest of the business, with Sleep Health and Respiratory Health expected to grow faster than that range, offset by generally flat expectations for Diabetes Health and Wellness at Home.
For Q1 2026, the company projected revenue growth of 2%-3% year over year and an Adjusted EBITDA margin of approximately 16%, reflecting infrastructure expenses ahead of revenue ramp. It also guided to Q1 free cash flow of negative $20 million to negative $40 million, with improvement expected through the year as capitated revenue ramps and costs are absorbed.
AdaptHealth also disclosed a Hawaii-based HME acquisition that expands its footprint to its 48th state, and said it completed a divestiture of a small remaining infusion asset in Wellness at Home. In a post-year-end update, Clemens said the company acquired certain assets of an HME provider for $47.6 million and drew $100 million from its revolving credit facility to support that and potential similar acquisitions, expecting to pay down the revolver as free cash flow builds during 2026.
On regulatory developments, Foster said the company received a favorable CMS outcome on competitive bidding, with its core sleep and respiratory products excluded from the next round, which she said provides longer-term stability and clarity.
Finally, management addressed the $14.5 million legal settlement in response to analyst questions, saying it related to a North Carolina debt collection class action initiated in 2022. Executives said it is a final settlement that resolves claims in the state and that the company has addressed the technical issue underlying the complaint. Clemens added that the company’s control environment has matured since 2022, and he said the forthcoming 10-K will reflect a clean auditor opinion regarding its SOX environment following remediation of prior material weaknesses.
About AdaptHealth (NASDAQ:AHCO)
AdaptHealth, Inc operates as a leading provider of home medical equipment (HME) and related services in the United States. The company focuses on delivering respiratory care, mobility solutions and bathroom safety products to patients with chronic and acute medical needs. Through its comprehensive service offerings, AdaptHealth aims to enhance quality of life and clinical outcomes for patients who require long-term support outside of a hospital setting.
The company’s respiratory portfolio includes products such as continuous positive airway pressure (CPAP) devices, oxygen concentrators, ventilators, and associated supplies for patients with sleep apnea, COPD and other pulmonary conditions.
