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”, in our 2025 Annual Report on Form 10-K filed with the SEC on February 24, 2026 and in our Quarterly Report on Form 10-Q for the three months ended March 31, 2026 filed with the SEC on May 5, 2026. 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 three reportable segments that align with its product categories: (i) Sleep Health, (ii) Respiratory Health, and (iii) Wellness at Home. A description of the products and services provided within each of the Company’s three 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.
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 June 30, 2026, AdaptHealth serviced approximately 4.8 million patients annually in all 50 states through its network of approximately 670 locations in 48 states. The Company’s principal executive offices are located at 555 East North Lane, Suite 5075, Conshohocken, Pennsylvania 19428.
Pending Sale of Diabetes Health Business
In June 2026, the Company's board of directors approved the divestiture of the Company's Diabetes Health business. In July 2026, the Company entered into an agreement to sell the Diabetes Health business for $235.0 million in cash, subject to customary purchase price adjustments. The transaction is expected to close in the first quarter of 2027, subject to regulatory review under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other customary closing conditions. The Diabetes Health business provides medical devices, including continuous glucose monitors and insulin pumps, and related services to patients for the treatment of diabetes. As a result of this transaction, the Diabetes Health business met the criteria to be reported as discontinued operations. Therefore, the Company has reported the results of the Diabetes Health business, including the results of operations, and related assets and liabilities, as discontinued operations for all periods presented herein. Accordingly, the Company no longer reports Diabetes Health as a reportable segment.
In accordance with U.S. GAAP, the financial position and results of operations of the Diabetes Health business are presented as assets and liabilities held for sale and discontinued operations and, as such, have been excluded from continuing operations for all periods presented. All discussion, unless otherwise noted, reflects the continuing operations of
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AdapthHealth. See Note 5, Held for Sale and Discontinued Operations, in the accompanying notes to the interim consolidated financial statements, for additional information regarding discontinued operations and assets and liabilities held for sale.
Restructuring Plan
In June 2026, management approved a plan aimed at reducing costs, streamlining operations, and optimizing resources, which included headcount reductions and the wind down of an immaterial business. The total costs associated with this plan is expected to be approximately $7.0 million, and the Company expects to realize annual savings of approximately $26.8 million as a result of these actions. The actions regarding the headcount reductions were substantially complete as of June 30, 2026. The Company expects the actions related to the wind down of an immaterial business to be completed by the fourth quarter of 2027.
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, as well as the impact of the war with Iran on fuel prices. 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, fuel, 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 and costs, AdaptHealth cannot predict whether these trends will continue. AdaptHealth’s mitigation efforts relating to these inflationary pressures and costs 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.
Cybersecurity Incident
As previously disclosed in the Company’s Current Report on Form 8-K filed with the SEC on July 2, 2026, the Company experienced a security incident whereby a threat actor gained unauthorized access to Company systems and exfiltrated certain data therefrom. On June 15, 2026, the Company received a communication from a threat actor claiming to have obtained certain data from the Company's systems. Upon learning of the incident, the Company promptly activated its incident response procedures, launched an investigation with the support of external advisors and cybersecurity experts to assess and contain the threat, and notified law enforcement.
Based on the investigation, the Company learned that a threat actor gained unauthorized access to certain of the Company’s cloud-based business applications, including certain internal patient management systems and document storage platforms. The incident was the result of a successful social engineering attack that compromised a single Company user session. The Company has confirmed that certain data was exfiltrated from its systems, including patient information and a stored password file associated with insurance billing.
The Company does not collect Social Security numbers in the affected systems and does not store individual financial account information or payment card information in those systems. The Company is not aware of any actual or attempted identity theft, fraud, or other misuse of the affected information as a result of this incident.
Following detection, the Company promptly terminated the unauthorized access and implemented containment measures, including disabling the compromised user account, resetting affected credentials, and implementing additional security measures. The Company continues to review and enhance its safeguards, policies, procedures, training, and internal access controls. The Company is notifying affected individuals and others as required by law. The Company has also taken steps intended to mitigate the risk of dissemination of the exfiltrated data.
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As of the date of this report, the incident has not had a material impact on the Company’s operations and has not affected the Company’s ability to service its patients. The Company has not yet been able to determine the full financial impact of the incident, including remediation and response costs, legal, regulatory and notification-related matters, and possible effects on patients, counterparties and the Company’s reputation, but currently believes the incident is not reasonably likely to have a material impact on its financial condition or results of operations. The Company maintains cybersecurity insurance that may cover certain losses associated with the incident.
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, positive airway pressure ("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.
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:
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. 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.
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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.
Three Months Ended
June 30, 2026 June 30, 2025
Net Revenue (in thousands, except revenue percentages) Dollars Revenue Percentage Dollars Revenue Percentage
(Unaudited)
Net sales revenue:
Sleep Health $ 267,764 36.2 % $ 254,593 38.7 %
Respiratory Health 9,186 1.2 % 7,826 1.2 %
Wellness at Home 81,197 11.0 % 102,002 15.6 %
Total net sales revenue $ 358,147 48.4 % $ 364,421 55.5 %
Net revenue from fixed monthly equipment reimbursements:
Sleep Health $ 84,025 11.4 % $ 73,292 11.2 %
Respiratory Health 151,684 20.5 % 148,827 22.6 %
Wellness at Home 43,114 5.8 % 39,490 6.0 %
Total net revenue from fixed monthly equipment reimbursements $ 278,823 37.7 % $ 261,609 39.8 %
Net revenue from capitated revenue arrangements:
Sleep Health $ 34,672 4.6 % $ 6,804 1.0 %
Respiratory Health 33,532 4.6 % 13,797 2.1 %
Wellness at Home 35,133 4.7 % 10,469 1.6 %
Total net revenue from capitated revenue arrangements $ 103,337 13.9 % $ 31,070 4.7 %
Total net revenue:
Sleep Health $ 386,461 52.2 % $ 334,689 50.9 %
Respiratory Health 194,402 26.3 % 170,450 25.9 %
Wellness at Home 159,444 21.5 % 151,961 23.2 %
Total net revenue $ 740,307 100.0 % $ 657,100 100.0 %
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Six Months Ended
June 30, 2026 June 30, 2025
Net Revenue (dollars in thousands) Dollars Revenue Percentage Dollars Revenue Percentage
(Unaudited)
Net sales revenue:
Sleep Health $ 519,517 36.6 % $ 495,764 38.0 %
Respiratory Health 17,443 1.2 % 16,087 1.2 %
Wellness at Home 157,280 11.1 % 217,557 16.8 %
Total net sales revenue $ 694,240 48.9 % $ 729,408 56.0 %
Net revenue from fixed monthly equipment reimbursements:
Sleep Health $ 165,649 11.7 % $ 140,833 10.8 %
Respiratory Health 298,443 21.0 % 291,001 22.4 %
Wellness at Home 83,584 5.9 % 76,510 5.9 %
Total net revenue from fixed monthly equipment reimbursements $ 547,676 38.6 % $ 508,344 39.1 %
Net revenue from capitated revenue arrangements:
Sleep Health $ 59,790 4.2 % $ 14,443 1.2 %
Respiratory Health 56,656 4.0 % 28,843 2.2 %
Wellness at Home 61,818 4.3 % 20,609 1.5 %
Total net revenue from capitated revenue arrangements $ 178,264 12.5 % $ 63,895 4.9 %
Total net revenue:
Sleep Health $ 744,956 52.5 % $ 651,040 50.0 %
Respiratory Health 372,542 26.2 % 335,931 25.8 %
Wellness at Home 302,682 21.3 % 314,676 24.2 %
Total net revenue $ 1,420,180 100.0 % $ 1,301,647 100.0 %
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Consolidated Results of Operations
Comparison of Three Months Ended June 30, 2026 and Three Months Ended June 30, 2025.
The following table summarizes AdaptHealth’s results of operations for the three months ended June 30, 2026 and 2025:
Three Months Ended June 30,
2026 2025
Dollars RevenuePercentage Dollars RevenuePercentage Increase/(Decrease)
(in thousands, except percentages) Dollars Percentage
(Unaudited)
Net revenue $ 740,307 100.0% $ 657,100 100.0% $ 83,207 12.7%
Costs and expenses:
Cost of net revenue 636,101 85.9% 521,312 79.3% 114,789 22.0%
General and administrative expenses 96,093 13.0% 95,263 14.5% 830 0.9%
Depreciation and amortization, excluding patient equipment depreciation 7,948 1.1% 7,056 1.1% 892 12.6%
Goodwill impairment 144,236 19.5 % — —% 144,236 — %
Total costs and expenses 884,378 119.5% 623,631 94.9% 260,747 41.8%
Gain on sale of businesses (6,269) (0.9)% (32,225) (4.9) % 25,956 (80.5)%
Operating (loss) income (137,802) (18.6)% 65,694 10.0% (203,496) (309.8) %
Interest expense, net 26,209 3.5% 27,533 4.2% (1,324) (4.8)%
Loss on extinguishment of debt 1,322 0.2% — —% 1,322 100.0%
(Loss) income before income taxes (165,333) (22.3)% 38,161 5.8% (203,494) (533.3) %
Income tax (benefit) expense (21,227) (2.8)% 32,780 5.0% (54,007) (164.8)%
Net (loss) income (144,106) (19.5)% 5,381 0.8% (149,487) (2778.1) %
Income attributable to noncontrolling interest 1,210 0.1% 1,154 0.2% 56 4.9%
Net (loss) income attributable to AdaptHealth Corp. $ (145,316) (19.6)% $ 4,227 0.6% $ (149,543) (3537.8) %
Net Revenue.
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.
Three Months Ended June 30,
Variance 2026 vs. 2025
(in thousands, except percentages) $ %
Revenue change driver: (Unaudited)
Organic revenue (a) $ 104,369 15.9 %
Acquisition (b) 4,932 0.8 %
Disposition (c) (26,094) (4.0) %
Total change in net revenue $ 83,207 12.7 %
(a) All changes in reported net revenue from the comparable period presented excluding the impacts from acquisition (b) and disposition (c).
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(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. This excludes the acquisition of assets 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 $51.8 million, or 15.5%, for the three months ended June 30, 2026 compared to the prior year period, primarily due to a capitated revenue contract that was entered into in the third quarter of 2025. The increase was also attributable to increased net sales revenue primarily from higher patient census from sales of PAP resupply products, as well as increased net revenue from fixed monthly equipment reimbursements from higher sleep rental products. Net revenue from AdaptHealth's Respiratory Health segment increased by $24.0 million, or 14.1%, for the three months ended June 30, 2026 compared to the prior year period, primarily due to a capitated revenue contract that was entered into in the third quarter of 2025, and to a lesser extent, higher fixed monthly equipment reimbursements from higher patient census for oxygen equipment products. Net revenue from AdaptHealth's Wellness at Home segment increased by $7.5 million, or 4.9% for the three months ended June 30, 2026 compared to the prior year period, primarily due to a capitated revenue contract that was entered into in the third quarter of 2025, and to a lesser extent, higher fixed monthly equipment reimbursements, partially offset by decreased net sales revenues from the disposition of certain incontinence and infusion businesses during 2025.
For the three months ended June 30, 2026, net sales revenue comprised 48.4% of total net revenue, compared to 55.5% of total net revenue for the three months ended June 30, 2025. For the three months ended June 30, 2026, net revenue from fixed monthly equipment reimbursements comprised 37.7% of total net revenue, compared to 39.8% of total net revenue for the three months ended June 30, 2025. For the three months ended June 30, 2026, net revenue from capitated revenue arrangements comprised 13.9% of total net revenue, compared to 4.7% of total net revenue for the three months ended June 30, 2025.
Cost of Net Revenue.
The following table summarizes cost of net revenue for the three months ended June 30, 2026 and 2025:
Three Months Ended June 30,
2026 2025
Dollars RevenuePercentage Dollars RevenuePercentage Increase/(Decrease)
(in thousands, except percentages) Dollars Percentage
(Unaudited)
Costs of net revenue:
Cost of products and supplies $ 234,845 31.7 % $ 209,664 31.9 % $ 25,181 12.0 %
Salaries, labor and benefits 203,251 27.5 % 172,595 26.3 % 30,656 17.8 %
Patient equipment depreciation 106,818 14.4 % 79,869 12.2 % 26,949 33.7 %
Rent and occupancy 21,663 2.9 % 17,103 2.6 % 4,560 26.7 %
Other operating expenses 69,524 9.4 % 42,081 6.3 % 27,443 65.2 %
Total cost of net revenue $ 636,101 85.9 % $ 521,312 79.3 % $ 114,789 22.0 %
Cost of net revenue for the three months ended June 30, 2026 and 2025 was $636.1 million and $521.3 million, respectively, an increase of $114.8 million or 22.0%. 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, rent and occupancy, and other operating expenses. Patient equipment depreciation increased by $26.9 million, primarily due to an increase in patient medical equipment acquired during 2026 to support capitated revenue arrangements.
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General and Administrative Expenses. General and administrative expenses for the three months ended June 30, 2026 and 2025 were $96.1 million and $95.3 million respectively, an increase of $0.8 million or 0.9%. This increase is primarily due to higher software costs, restructuring expenses, insurance-related costs, salaries, labor and benefits, and equity-based compensation, partially offset by lower consulting costs, legal fees, and marketing fees.
Depreciation and amortization, excluding patient equipment depreciation. Depreciation and amortization, excluding patient equipment depreciation, for the three months ended June 30, 2026 and 2025 was $7.9 million and $7.1 million, respectively, an increase of $0.9 million, primarily related to higher depreciation attributable to delivery vehicles.
Goodwill impairment. AdaptHealth performed a quantitative goodwill impairment test for each of its reporting units during the second quarter of 2026. The impairment test indicated that the estimated fair values of AdaptHealth's Respiratory Health and Wellness at Home reporting units were less than their respective carrying values, and as such, AdaptHealth recognized non-cash goodwill impairment charges totaling $144.2 million during the three months ended June 30, 2026. See Note 8, Goodwill and Identifiable Intangible Assets, for additional details.
Loss on extinguishment of debt. The loss on extinguishment of debt for the three months ended June 30, 2026 relates to third-party fees and the write-off of unamortized deferred financing costs in connection with the refinancing of AdaptHealth's credit agreement. See Note 12, Debt, for additional discussion of the refinancing.
Gain on sale of businesses. The gain for the three months ended June 30, 2026 relates to the receipt of a contingent payment from the disposition of a business that occurred in 2025. The gain for the three months ended June 30, 2025 relates to the disposition of two businesses within AdaptHealth's Wellness at Home segment.
Interest expense, net. Interest expense, net for the three months ended June 30, 2026 and 2025 was $26.2 million and $27.5 million, respectively, a decrease of $1.3 million. Interest expense related to AdaptHealth's debt decreased by $1.7 million in 2026 compared to 2025 as a result of lower average outstanding borrowings in 2026 compared to 2025, and to a lesser extent, lower interest rates.
Income Tax (Benefit) Expense. Income tax benefit and income tax expense for the three months ended June 30, 2026 and 2025 was $21.2 million and $32.8 million, respectively. Income tax expense on ordinary income decreased due to lower pre-tax income. For the three months ended June 30, 2026, AdaptHealth recognized a $15.5 million discrete income tax benefit, and corresponding increase to net deferred tax assets, related to non-cash goodwill impairment charges totaling $144.2 million. Additionally, for the three months ended June 30, 2025, AdaptHealth recognized a $27.4 million discrete income tax expense related to the dispositions of two businesses within the Wellness at Home segment.
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Comparison of Six Months Ended June 30, 2026 and Six Months Ended June 30, 2025.
The following table summarizes AdaptHealth’s results of operations for the six months ended June 30, 2026 and 2025:
Six Months Ended June 30,
2026 2025
Dollars RevenuePercentage Dollars RevenuePercentage Increase/(Decrease)
(in thousands, except percentages) Dollars Percentage
(Unaudited)
Net revenue $ 1,420,180 100.0 % $ 1,301,647 100.0 % $ 118,533 9.1 %
Costs and expenses:
Cost of net revenue 1,220,342 85.9 % 1,060,281 81.5 % 160,061 15.1 %
General and administrative expenses 189,977 13.4 % 180,158 13.8 % 9,819 5.5 %
Depreciation and amortization, excluding patient equipment depreciation 15,117 1.1 % 14,328 1.1 % 789 5.5 %
Goodwill impairment 144,236 10.1 % — — % 144,236 — %
Total costs and expenses 1,569,672 110.5 % 1,254,767 96.4 % 314,905 25.1 %
Gain on sale of businesses (6,269) (0.4) % (32,225) (2.5) % 25,956 (80.5) %
Operating (loss) income (143,223) (10.1) % 79,105 6.1 % (222,328) (281.1) %
Interest expense, net 51,803 3.6 % 55,932 4.3 % (4,129) (7.4) %
Loss on extinguishment of debt 1,322 0.1 % — — % 1,322 100.0 %
(Loss) income before income taxes (196,348) (13.8) % 23,173 1.8 % (219,521) (947.3) %
Income tax (benefit) expense (28,392) (2.0) % 30,294 2.3 % (58,686) (193.7) %
Net loss (167,956) (11.8) % (7,121) (0.5) % (160,835) 2258.6 %
Income attributable to noncontrolling interest 2,377 0.2 % 2,282 0.2 % 95 4.2 %
Net loss attributable to AdaptHealth Corp. $ (170,333) (12.0) % $ (9,403) (0.7) % $ (160,930) 1711.5 %
Net Revenue.
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.
Six Months Ended June 30,
Variance 2026 vs. 2025
(in thousands, except percentages) $ %
Revenue change driver: (Unaudited)
Organic revenue (a) $ 168,901 13.0 %
Acquisition (b) 11,518 0.9 %
Disposition (c) $ (61,886) (4.8) %
Total change in net revenue $ 118,533 9.1 %
(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. This excludes the acquisition of assets from previous providers to facilitate the transition
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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 $93.9 million, or 14.4%, for the six months ended June 30, 2026 compared to the prior year period, primarily due to a capitated revenue contract that was entered into in the third quarter of 2025. The increase was also attributable to increased net sales revenue primarily from higher patient census from sales of PAP resupply products, as well as increased net revenue from fixed monthly equipment reimbursements from higher sleep rental products. Net revenue from AdaptHealth's Respiratory Health segment increased by $36.6 million, or 10.9%, for the six months ended June 30, 2026 compared to the prior year period, primarily due to a capitated revenue contract that was entered into in the third quarter of 2025, and to a lesser extent, higher fixed monthly equipment reimbursements from higher patient census for oxygen equipment products. Net revenue from AdaptHealth's Wellness at Home segment decreased by $12.0 million, or 3.8% for the six months ended June 30, 2026 compared to the prior year period, primarily due to decreased net sales revenues from the disposition of certain incontinence and infusion businesses during 2025, partially offset by an increase in net revenues from a capitated revenue contract that was entered into in the third quarter of 2025, and to a lesser extent, higher fixed monthly equipment reimbursements.
For the six months ended June 30, 2026, net sales revenue comprised 48.9% of total net revenue, compared to 56.0% of total net revenue for the six months ended June 30, 2025. For the six months ended June 30, 2026, net revenue from fixed monthly equipment reimbursements comprised 38.6% of total net revenue, compared to 39.1% of total net revenue for the six months ended June 30, 2025. For the six months ended June 30, 2026, net revenue from capitated revenue arrangements comprised 12.5% of total net revenue, compared to 4.9% of total net revenue for the six months ended June 30, 2025.
Cost of Net Revenue.
The following table summarizes cost of net revenue for the six months ended June 30, 2026 and 2025:
Six Months Ended June 30,
2026 2025
Dollars RevenuePercentage Dollars RevenuePercentage Increase/(Decrease)
(in thousands, except percentages) Dollars Percentage
(Unaudited)
Costs of net revenue:
Cost of products and supplies $ 451,548 31.8 % $ 433,890 33.3 % $ 17,658 4.1 %
Salaries, labor and benefits 403,041 28.4 % 344,063 26.5 % 58,978 17.1 %
Patient equipment depreciation 200,566 14.1 % 161,538 12.4 % 39,028 24.2 %
Rent and occupancy 42,752 3.0 % 36,843 2.8 % 5,909 16.0 %
Other operating expenses 122,435 8.6 % 83,947 6.5 % 38,488 45.8 %
Total cost of net revenue $ 1,220,342 85.9 % $ 1,060,281 81.5 % $ 160,061 15.1 %
Cost of net revenue for the six months ended June 30, 2026 and 2025 was $1,220.3 million and $1,060.3 million, respectively, an increase of $160.1 million or 15.1%. 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, rent and occupancy, and other operating expenses. Patient equipment depreciation increased by $39.0 million, primarily due to an increase in patient medical equipment acquired during 2026 to support capitated revenue arrangements.
General and Administrative Expenses. General and administrative expenses for the six months ended June 30, 2026 and 2025 were $190.0 million and $180.2 million, respectively, an increase of $9.8 million or 5.5%. This increase is primarily due to higher software costs, salaries, labor and benefits, insurance-related costs, restructuring expenses, and equity-based compensation, partially offset by lower consulting costs, legal fees, and marketing fees.
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Depreciation and amortization, excluding patient equipment depreciation. Depreciation and amortization, excluding patient equipment depreciation, for the six months ended June 30, 2026 and 2025 was $15.1 million and $14.3 million, respectively, an increase of $0.8 million, primarily related to higher depreciation attributable to delivery vehicles.
Goodwill impairment. AdaptHealth performed a quantitative goodwill impairment test for each of its reporting units during the second quarter of 2026. The impairment test indicated that the estimated fair values of AdaptHealth's Respiratory Health and Wellness at Home reporting units were less than their respective carrying values, and as such, AdaptHealth recognized non-cash goodwill impairment charges totaling $144.2 million during the six months ended June 30, 2026. See Note 8, Goodwill and Identifiable Intangible Assets, for additional details.
Loss on extinguishment of debt. The loss on extinguishment of debt for the six months ended June 30, 2026 relates to third-party 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.
Gain on sale of businesses. The gain for the six months ended June 30, 2026 relates to the receipt of a contingent payment from the disposition of a business that occurred in 2025. The gain for the six months ended June 30, 2025 relates to the disposition of two businesses within AdaptHealth's Wellness at Home segment.
Interest expense, net. Interest expense, net for the six months ended June 30, 2026 and 2025 was $51.8 million and $55.9 million, respectively, a decrease of $4.1 million. Interest expense related to AdaptHealth's debt decreased by $5.1 million in 2026 compared to 2025 as a result of lower average outstanding borrowings in 2026 compared to 2025, and to a lesser extent, lower interest rates. This decrease was partially offset by the impact from AdaptHealth's interest rate swap agreements, which reduced interest expense by $0.1 million and $1.8 million in 2026 and 2025, respectively.
Income Tax (Benefit) Expense. Income tax benefit and income tax expense for the six months ended June 30, 2026 and 2025 was $28.4 million and $30.3 million, respectively. Income tax expense on ordinary income decreased due to lower pre-tax income, net of gains recognized on the disposition of two businesses within the Wellness at Home segment. For the six months ended June 30, 2026, AdaptHealth recognized a $15.5 million discrete income tax benefit, and corresponding increase to net deferred tax assets, related to non-cash goodwill impairment charges totaling $144.2 million. Additionally, for the six months ended June 30, 2025, AdaptHealth recognized a $27.4 million discrete income tax expense related to the dispositions of two businesses within the Wellness at Home segment.
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. This excludes the acquisition of assets 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.
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AdaptHealth defines EBITDA as net income (loss) from continuing operations, plus 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, litigation settlement expense, gain on sale of businesses, restructuring expenses, loss on extinguishment of debt, goodwill impairment, 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 income (loss) from continuing operations to EBITDA and Adjusted EBITDA, and the reconciliation of net income (loss) from continuing operations as a percentage of net revenue to Adjusted EBITDA Margin, for the three months ended June 30, 2026 and 2025:
Three Months Ended June 30,
2026 2025
(in thousands, except percentages) Dollars Revenue Percentage Dollars Revenue Percentage
(Unaudited)
Net (loss) income from continuing operations $ (144,106) (19.5)% $ 5,381 0.8%
Interest expense, net 26,209 3.5% 27,533 4.2%
Income tax (benefit) expense (21,227) (2.9)% 32,780 5.0%
Depreciation and amortization, including patient equipment depreciation 114,766 15.6% 86,925 13.2%
EBITDA (24,358) (3.3)% 152,619 23.2%
Equity-based compensation expense (a) 5,398 0.7% 6,010 0.9%
Gain on sale of businesses (b) (6,269) (0.8)% (32,225) (4.9)%
Restructuring expenses (c) 6,070 0.7% — —%
Loss on extinguishment of debt (d) 1,322 0.2% — —%
Goodwill impairment (e) 144,236 19.5% — —%
Other non-recurring expenses, net (f) 5,594 0.8% 10,015 1.6%
Adjusted EBITDA $ 131,993 17.8% $ 136,419 20.8%
Adjusted EBITDA Margin 17.8% 20.8%
(a)Represents equity-based compensation expense for awards granted to employees and non-employee directors.
(b)Represents pre-tax gains associated with the dispositions of two businesses within the Company's Wellness at Home segment.
(c)Represents expenses related to a cost savings plan that was implemented in June 2026. See Note 19, Restructuring Charges, for additional information.
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(d)Represents third-party 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.
(e)Represents non-cash goodwill impairment charges as a result of the fair values of the Company's Respiratory Health and Wellness at Home reporting units being less than their respective carrying values. See Note 8, Goodwill and Identifiable Intangible Assets, for additional information.
(f)The 2026 period consists of $2.7 million of consulting expenses associated with asset dispositions, $1.4 million of transaction costs associated with acquisitions, and $1.5 million of other non-recurring expenses. The 2025 period consists of $6.9 million of consulting expenses associated with asset dispositions (of which $5.1 million relates to contingent success fees from the sales of businesses), $1.0 million of transaction costs associated with acquisitions, and $2.1 million of other non-recurring expenses.
The following unaudited table presents the reconciliation of net loss from continuing operations to EBITDA and Adjusted EBITDA, and the reconciliation of net loss from continuing operations as a percentage of net revenue to Adjusted EBITDA Margin, for the six months ended June 30, 2026 and 2025:
Six Months Ended June 30,
2026 2025
(in thousands, except percentages) Dollars Revenue Percentage Dollars Revenue Percentage
(Unaudited)
Net loss from continuing operations $ (167,956) (11.8)% $ (7,121) (0.5)%
Interest expense, net 51,803 3.6% 55,932 4.3%
Income tax (benefit) expense (28,392) (2.0)% 30,294 2.3%
Depreciation and amortization, including patient equipment depreciation 215,683 15.2% 175,866 13.5%
EBITDA 71,138 5.0% 254,971 19.6%
Equity-based compensation expense (a) 11,764 0.8% 11,202 0.9%
Litigation settlement expense (b) 500 —% — —%
Gain on sale of businesses (c) (6,269) (0.4)% (32,225) (2.5)%
Restructuring expenses (d) 6,070 0.4% — —%
Loss on extinguishment of debt (e) 1,322 0.1% — —%
Goodwill impairment (f) 144,236 10.2% — —%
Other non-recurring expenses, net (g) 7,797 0.6% 15,141 1.1%
Adjusted EBITDA $ 236,558 16.7% $ 249,089 19.1%
Adjusted EBITDA Margin 16.7% 19.1%
(a)Represents equity-based compensation expense for awards granted to employees and non-employee directors.
(b)Represents an estimated expense to settle a shareholder derivative complaint.
(c)Represents pre-tax gains associated with the dispositions of two businesses within the Company's Wellness at Home segment.
(d)Represents expenses related to a cost savings plan that was implemented in June 2026. See Note 19, Restructuring Charges, for additional information.
(e)Represents third-party 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.
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(f)Represents non-cash goodwill impairment charges as a result of the fair values of the Company's Respiratory Health and Wellness at Home reporting units being less than their respective carrying values. See Note 8, Goodwill and Identifiable Intangible Assets, for additional information.
(g)The 2026 period consists of $4.3 million of consulting expenses associated with asset dispositions, $2.2 million of transaction costs associated with acquisitions, and $1.3 million of other non-recurring expenses. The 2025 period consists of $9.2 million of consulting expenses associated with asset dispositions (of which $5.1 million relates to contingent success fees from the sales of businesses), $2.0 million of consulting expenses associated with systems implementation activities, $1.1 million of transaction costs associated with acquisitions, and $2.8 million of other non-recurring expenses.
Segment Results of Operations
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 three reportable segments that align with its product categories: (i) Sleep Health, (ii) Respiratory Health, and (iii) Wellness at Home.
The CODM evaluates performance of the reportable segments based on Adjusted EBITDA. Refer to the section above titled “EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin” for the Company’s definition of Adjusted EBITDA.
Comparison of Three Months Ended June 30, 2026 and Three Months Ended June 30, 2025.
The following table summarizes the performance of the Company’s reportable segments for the three months ended June 30, 2026 and 2025:
Three Months Ended June 30,
2026 2025
(in thousands) Net Revenue Adjusted EBITDA Net Revenue Adjusted EBITDA
(Unaudited)
Sleep Health $ 386,461 $ 70,248 $ 334,689 $ 73,672
Respiratory Health 194,402 53,089 170,450 45,281
Wellness at Home 159,444 8,656 151,961 17,466
Consolidated Totals (a) $ 740,307 $ 131,993 $ 657,100 $ 136,419
(a) See Note 7, Segment Information, in the accompanying notes to the interim consolidated financial statements for the three and six months ended June 30, 2026 and 2025 for a reconciliation of consolidated Adjusted EBITDA to consolidated (loss) income from continuing operations before income taxes.
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Sleep Health Segment
The following table summarizes the Sleep Health segment’s performance for the three months ended June 30, 2026 and 2025:
Increase/(Decrease)
Three Months Ended June 30, 2026 vs. 2025
(in thousands, except percentages) 2026 2025 Dollars Percentage
(Unaudited)
Net revenue $ 386,461 $ 334,689 $ 51,772 15.5 %
Less:
Cost of products and supplies (1) 123,473 105,915 17,558 16.6 %
Labor cost (1) 104,486 81,863 22,623 27.6 %
Other operating expenses (1) 46,751 32,840 13,911 42.4 %
Other segment items (2) 41,503 40,399 1,104 2.7 %
Adjusted EBITDA 70,248 73,672 (3,424) (4.6) %
Adjusted EBITDA Margin 18.2% 22.0%
Patient equipment depreciation $ 49,185 $ 38,592 $ 10,593 27.4 %
(1) Represents the significant segment expense categories disclosed in Note 7, Segment Information, in the accompanying notes to the interim consolidated financial statements for the three and six months ended June 30, 2026 and 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 $51.8 million, or 15.5%, for the three months ended June 30, 2026 compared to the prior year period, primarily due to a capitated revenue contract that was entered into in the third quarter of 2025. The increase was also attributable to increased net sales revenue primarily from higher patient census from sales of PAP resupply products, as well as increased net revenue from fixed monthly equipment reimbursements from higher sleep rental products.
Adjusted EBITDA
Adjusted EBITDA from the Sleep Health segment decreased by $3.4 million or 4.6%, for the three months ended June 30, 2026 compared to the prior year period, primarily due to increased costs and expenses, partially offset by higher net revenue (as discussed above). 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 increased headcount, including variable labor to support a capitated revenue agreement entered into in the third quarter of 2025, as well as increases from merit and benefits costs, and inflationary increases. The increase in other operating expenses was primarily due to higher distribution-related expenses, facilities costs and marketing and advertising costs. The increase in other segment items was due to an increase in general and administrative expenses that were allocated to the segment.
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Respiratory Health Segment
The following table summarizes the Respiratory Health segment’s performance for the three months ended June 30, 2026 and 2025:
Increase/(Decrease)
Three Months Ended June 30, 2026 vs. 2025
(in thousands, except percentages) 2026 2025 Dollars Percentage
(Unaudited)
Net revenue $ 194,402 $ 170,450 $ 23,952 14.1 %
Less:
Cost of products and supplies (1) 37,288 31,719 5,569 17.6 %
Labor cost (1) 58,968 56,746 2,222 3.9 %
Other operating expenses (1) 23,422 15,411 8,011 52.0 %
Other segment items (2) 21,635 21,293 342 1.6 %
Adjusted EBITDA 53,089 45,281 7,808 17.2 %
Adjusted EBITDA Margin 27.3% 26.6%
Patient equipment depreciation $ 38,107 $ 29,800 $ 8,307 27.9 %
(1) Represents the significant segment expense categories disclosed in Note 7, Segment Information, in the accompanying notes to the interim consolidated financial statements for the three and six months ended June 30, 2026 and 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 $24.0 million, or 14.1%, for the three months ended June 30, 2026 compared to the prior year period, primarily due to a capitated revenue contract that was entered into in the third quarter of 2025, and to a lesser extent, higher fixed monthly equipment reimbursements from higher patient census for oxygen equipment products.
Adjusted EBITDA
Adjusted EBITDA from the Respiratory Health segment increased by $7.8 million or 17.2%, for the three months ended June 30, 2026 compared to the prior year period, 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 higher patient census for oxygen equipment products and general inflationary cost increases. The increase in labor cost was primarily due to increased headcount, including variable labor to support a capitated revenue agreement entered into in the third quarter of 2025, as well as increases from merit and benefits costs, and inflationary increases. The increase in other operating expenses was primarily due to higher distribution-related expenses, facilities costs and marketing and advertising costs.
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Wellness at Home Segment
The following table summarizes the Wellness at Home segment’s performance for the three months ended June 30, 2026 and 2025:
Increase/(Decrease)
Three Months Ended June 30, 2026 vs. 2025
(in thousands, except percentages) 2026 2025 Dollars Percentage
(Unaudited)
Net revenue $ 159,444 $ 151,961 $ 7,483 4.9 %
Less:
Cost of products and supplies (1) 74,084 72,030 2,054 2.9 %
Labor cost (1) 39,897 32,489 7,408 22.8 %
Other operating expenses (1) 18,615 10,854 7,761 71.5 %
Other segment items (2) 18,192 19,122 (930) (4.9) %
Adjusted EBITDA 8,656 17,466 (8,810) (50.4) %
Adjusted EBITDA Margin 5.4% 11.5%
Patient equipment depreciation $ 19,526 $ 11,477 $ 8,049 70.1 %
(1) Represents the significant segment expense categories disclosed in Note 7, Segment Information, in the accompanying notes to the interim consolidated financial statements for the three and six months ended June 30, 2026 and 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 increased by $7.5 million, or 4.9%, for the three months ended June 30, 2026 compared to the prior year period, primarily due to a capitated revenue contract that was entered into in the third quarter of 2025, and to a lesser extent, higher fixed monthly equipment reimbursements, partially offset by decreased net sales revenues from the disposition of certain incontinence and infusion businesses during 2025, which combined reduced revenue by $26.1 million.
Adjusted EBITDA
Adjusted EBITDA from the Wellness at Home segment decreased by $8.8 million or 50.4%, for the three months ended June 30, 2026 compared to the prior year period, due to higher costs and expenses, partially offset by higher net revenue (as discussed above). The increase in the cost of products and supplies was primarily due to an increase in costs from a capitated revenue contract entered into in the third quarter of 2025, partially offset by the disposition of certain incontinence and infusion businesses during 2025. The increase in labor cost was primarily due to increased headcount to support a capitated revenue agreement entered into in the third quarter of 2025, and to a lesser extent, increased merits and benefits costs, partially offset by a reduction in labor cost due to the disposition of certain incontinence and infusion businesses during 2025. The increase in other operating expenses was primarily due to higher distribution-related expenses, facilities costs and marketing and advertising costs.
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Comparison of Six Months Ended June 30, 2026 and Six Months Ended June 30, 2025.
The following table summarizes the performance of the Company’s reportable segments for the six months ended June 30, 2026 and 2025:
Six Months Ended June 30,
2026 2025
(in thousands) Net Revenue Adjusted EBITDA Net Revenue Adjusted EBITDA
(Unaudited)
Sleep Health $ 744,956 $ 125,359 $ 651,040 $ 131,329
Respiratory Health 372,542 99,253 335,931 87,484
Wellness at Home 302,682 11,946 314,676 30,276
Consolidated Totals (a) $ 1,420,180 $ 236,558 $ 1,301,647 $ 249,089
(a) See Note 7, Segment Information, in the accompanying notes to the interim consolidated financial statements for the three and six months ended June 30, 2026 and 2025 for a reconciliation of consolidated Adjusted EBITDA to consolidated (loss) income from continuing operations before income taxes.
Sleep Health Segment
The following table summarizes the Sleep Health segment’s performance for the six months ended June 30, 2026 and 2025:
Increase/(Decrease)
Six Months Ended June 30, 2026 vs. 2025
(in thousands, except percentages) 2026 2025 Dollars Percentage
(Unaudited)
Net revenue $ 744,956 $ 651,040 $ 93,916 14.4 %
Less:
Cost of products and supplies (1) 237,781 214,088 23,693 11.1 %
Labor cost (1) 208,074 163,084 44,990 27.6 %
Other operating expenses (1) 88,136 65,814 22,322 33.9 %
Other segment items (2) 85,606 76,725 8,881 11.6 %
Adjusted EBITDA 125,359 131,329 (5,970) (4.5) %
Adjusted EBITDA Margin 16.8% 20.2%
Patient equipment depreciation $ 93,645 $ 76,797 $ 16,848 21.9 %
(1) Represents the significant segment expense categories disclosed in Note 7, Segment Information, in the accompanying notes to the interim consolidated financial statements for the three and six months ended June 30, 2026 and 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.
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Net Revenue
Net revenue from the Sleep Health segment increased by $93.9 million, or 14.4%, for the six months ended June 30, 2026 compared to the prior year period, primarily due to a capitated revenue contract that was entered into in the third quarter of 2025. The increase was also attributable to increased net sales revenue primarily from higher patient census from sales of PAP resupply products, as well as increased net revenue from fixed monthly equipment reimbursements from higher sleep rental products.
Adjusted EBITDA
Adjusted EBITDA from the Sleep Health segment decreased by $6.0 million or 4.5%, for the six months ended June 30, 2026 compared to the prior year period, primarily due to increased costs and expenses, partially offset by higher net revenue (as discussed above). The increase in the cost of products and supplies was primarily due to an increase in sales revenue, higher fixed monthly equipment reimbursements, and general inflationary cost increases. The increase in labor cost was primarily due to increased headcount, including variable labor to support a capitated revenue contract entered into in the third quarter of 2025, as well as increases from merit and benefits costs, and inflationary increases. The increase in other operating expenses was primarily due to higher distribution-related expenses, facilities costs and marketing and advertising 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 six months ended June 30, 2026 and 2025:
Increase/(Decrease)
Six Months Ended June 30, 2026 vs. 2025
(in thousands, except percentages) 2026 2025 Dollars Percentage
(Unaudited)
Net revenue $ 372,542 $ 335,931 $ 36,611 10.9 %
Less:
Cost of products and supplies (1) 72,128 65,773 6,355 9.7 %
Labor cost (1) 114,717 111,079 3,638 3.3 %
Other operating expenses (1) 41,936 30,330 11,606 38.3 %
Other segment items (2) 44,508 41,265 3,243 7.9 %
Adjusted EBITDA 99,253 87,484 11,769 13.5 %
Adjusted EBITDA Margin 26.6% 26.0%
Patient equipment depreciation $ 71,164 $ 60,916 $ 10,248 16.8 %
(1) Represents the significant segment expense categories disclosed in Note 7, Segment Information, in the accompanying notes to the interim consolidated financial statements for the three and six months ended June 30, 2026 and 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.
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Net Revenue
Net revenue from the Respiratory Health segment increased by $36.6 million, or 10.9%, for the six months ended June 30, 2026 compared to the prior year period, primarily due to a capitated revenue contract that was entered into in the third quarter of 2025, and to a lesser extent, higher fixed monthly equipment reimbursements from higher patient census for oxygen equipment products.
Adjusted EBITDA
Adjusted EBITDA from the Respiratory Health segment increased by $11.8 million or 13.5%, for the six months ended June 30, 2026 compared to the prior year period, 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 higher patient census for oxygen equipment products and general inflationary cost increases. The increase in labor cost was primarily due to increased headcount, including variable labor to support a capitated revenue contract entered into in the third quarter of 2025, as well as increases from merit and benefits costs, and inflationary increases. The increase in other operating expenses was primarily due to higher distribution-related expenses, facilities costs and marketing and advertising costs. The increase in other segment items was due to an increase in general and administrative expenses that were allocated to the segment.
Wellness at Home Segment
The following table summarizes the Wellness at Home segment’s performance for the six months ended June 30, 2026 and 2025:
Increase/(Decrease)
Six Months Ended June 30, 2026 vs. 2025
(in thousands, except percentages) 2026 2025 Dollars Percentage
(Unaudited)
Net revenue $ 302,682 $ 314,676 $ (11,994) (3.8) %
Less:
Cost of products and supplies (1) 141,639 154,029 (12,390) (8.0) %
Labor cost (1) 79,633 67,285 12,348 18.4 %
Other operating expenses (1) 32,641 24,509 8,132 33.2 %
Other segment items (2) 36,823 38,577 (1,754) (4.5) %
Adjusted EBITDA 11,946 30,276 (18,330) (60.5) %
Adjusted EBITDA Margin 3.9% 9.6%
Patient equipment depreciation $ 35,757 $ 23,825 $ 11,932 50.1 %
(1) Represents the significant segment expense categories disclosed in Note 7, Segment Information, in the accompanying notes to the interim consolidated financial statements for the three and six months ended June 30, 2026 and 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.
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Net Revenue
Net revenue from the Wellness at Home segment decreased by $12.0 million, or 3.8%, for the six months ended June 30, 2026 compared to the prior year period, primarily due to decreased net sales revenues from the disposition of certain incontinence and infusion businesses during 2025, which combined reduced net revenue by $61.9 million, partially offset by an increase in net revenues from a capitated revenue contract that was entered into in the third quarter of 2025, and to a lesser extent, higher fixed monthly equipment reimbursements.
Adjusted EBITDA
Adjusted EBITDA from the Wellness at Home segment decreased by $18.3 million or 60.5%, for the six months ended June 30, 2026 compared to the prior year period, due to lower net revenue (as discussed above), and to a lesser extent, higher costs and expenses. The decrease in the cost of products and supplies was primarily due to the disposition of certain incontinence and infusion businesses during 2025, partially offset by an increase in costs from a capitated revenue agreement entered into in the third quarter of 2025. The increase in labor cost was primarily due to increased headcount to support a capitated revenue agreement entered into in the third quarter of 2025, and to a lesser extent, increased merits and benefits costs, partially offset by a reduction in labor cost due to the disposition of certain incontinence and infusion businesses during 2025. The increase in other operating expenses was primarily due to higher distribution-related expenses, facilities costs and marketing and advertising costs. The decrease in other segment items was due to a decrease in general and administrative expenses that were allocated to the segment.
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 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.
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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 June 30, 2026, AdaptHealth had $43.3 million of cash.
On April 10, 2026, AdaptHealth refinanced its debt borrowings under its then existing credit agreement and entered into a new credit agreement (the "2026 Credit Agreement"). The 2026 Credit Agreement consists of a $325.0 million term loan (the "2026 Term Loan"), a $325.0 million delayed draw term loan (the "2026 Delayed Draw Term Loan"), and $450.0 million in commitments for revolving credit loans with a $75.0 million letter of credit sublimit and a $45.0 million swing line sublimit (the "2026 Revolver", and together with the 2026 Term Loan and the 2026 Delayed Draw Term Loan, the "2026 Credit Facility"). At closing, the Company borrowed $100.0 million under the 2026 Revolver. Borrowings under the 2026 Term Loan and the 2026 Revolver at closing were used in part to repay existing amounts outstanding under its prior credit agreement, and to pay related fees and expenses. The 2026 Credit Facility has a maturity in April 2031. However, the maturity of the 2026 Credit Facility is subject to a springing maturity date that is 91 days prior to the stated maturity dates of the Company's 4.625% Senior Notes and 5.125% Senior Notes (each as defined below), in each case if more than $150.0 million aggregate principal amount of such senior unsecured notes remains outstanding on such springing maturity date. The borrowings under the 2026 Term Loan requires quarterly principal repayments of $2.0 million beginning September 30, 2026 through June 30, 2028, increasing to $4.1 million beginning September 30, 2028 through March 31, 2031, and the unpaid principal balance is due at maturity in April 2031. Borrowings under the 2026 Revolver may be used for working capital and other general corporate purposes, including for capital expenditures and acquisitions permitted under the 2026 Credit Agreement. As of the date of this filing, there were $150.0 million in outstanding borrowings under the 2026 Revolver. At the option of the Company, amounts borrowed under the 2026 Credit Facility bear interest at variable rates based upon either the Base Rate (as defined in the 2026 Credit Agreement), payable quarterly, or Term SOFR (as defined in the 2026 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 (b) an applicable margin ranging from 0.125% to 1.0% per annum based on the Company's Consolidated Total Leverage Ratio (as defined in the 2026 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 1.125% to 2.0% per annum based on the Company's Consolidated Total Leverage Ratio. The 2026 Revolver carries a commitment fee during the term of the 2026 Credit Agreement ranging from 0.15% to 0.30% per annum of the actual daily undrawn portion of the 2026 Revolver depending upon the Company's Consolidated Total Leverage Ratio. In addition, the 2026 Delayed Draw Term Loan carries a commitment fee during the term of the 2026 Credit Agreement ranging from 0.15% to 0.30% per annum of the actual daily undrawn portion of the 2026 Delayed Draw Term Loan depending upon the Company's Consolidated Total Leverage Ratio beginning 45 days after closing. At June 30, 2026, there was $325.0 million outstanding under the 2026 Term Loan. At June 30, 2026, there was $34.3 million outstanding under letters of credit. At June 30, 2026, based on the financial debt covenants under the 2026 Credit Agreement, the maximum amount the Company could borrow under the 2026 Revolver and remain in compliance with the financial debt covenants under the agreement was $265.7 million.
Under the 2026 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 2026 Credit Agreement. The 2026 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 2026 Credit Agreement as of June 30, 2026.
Any borrowing under the 2026 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 2026 Revolver may be reborrowed. Mandatory prepayments are required under the 2026 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
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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 June 30, 2026, AdaptHealth LLC had $1,425.0 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, 2026 is 101.281% and (ii) 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. On May 28, 2026, the Company, the guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee, executed and delivered a Supplemental Indenture, amending and supplementing the indenture providing for the issuance of the 5.125% Senior Notes, pursuant to which each of the guarantors party thereto unconditionally guaranteed all of the Company’s obligations under the 5.125% Senior Notes and the indenture on the terms and conditions set forth therein.
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 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. On May 28, 2026, the Company, the guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee, executed and delivered a Supplemental Indenture, amending and supplementing the indenture providing for the issuance of the 4.625% Senior Notes, pursuant to which each of the guarantors party thereto unconditionally guaranteed all of the Company’s obligations under the 4.625% Senior Notes and the indenture on the terms and conditions set forth therein.
In July 2020, the Company issued $350.0 million aggregate principal amount of 6.125% senior unsecured notes (the "6.125% Senior Notes"). 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. As of June 30, 2026, the outstanding balance under the 6.125% Senior Notes was scheduled to mature on August 1, 2028. Interest on the 6.125% Senior Notes was payable on February 1st and August 1st of each year. On May 28, 2026, the Company, the guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee, executed and delivered a Supplemental Indenture, amending and supplementing the indenture providing for the issuance of the 6.125% Senior Notes, pursuant to which each of the guarantors unconditionally guaranteed all of the Company’s obligations under the 6.125% Senior Notes and the indenture on the terms and conditions set forth therein. On July 6, 2026, the Company issued a notice of redemption for all of its outstanding 6.125% Senior Notes in an aggregate principal amount of $325.0 million at a redemption price equal to 100.000% of the aggregate principal amount of the 6.125% Senior Notes, plus accrued and unpaid interest to the redemption date (the "Redemption Price"). The redemption date was August 1, 2026. On July 27, 2026, the Company borrowed $325.0 million under the 2026 Delayed Draw Term Loan. The Company used the proceeds from the 2026 Delayed Draw Term Loan plus cash on hand to redeem the notes and pay the Redemption Price on August 3, 2026.
A $17.4 million income tax receivable is included in prepaid and other current assets in the accompanying consolidated balance sheets as of June 30, 2026. The majority of the Company’s income tax receivable relates to federal corporate income tax refunds, which are expected to be received later in 2026.
As of June 30, 2026 and December 31, 2025, AdaptHealth had negative working capital for continuing operations of $79.3 million and $19.3 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.
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Cash Flow. The following table presents selected data from AdaptHealth’s consolidated statements of cash flows, which includes the cash flows from continuing operations and discontinued operations, for the six months ended June 30, 2026 and 2025:
Six Months Ended June 30,
(in thousands) 2026 2025
(Unaudited)
Net cash provided by operating activities $ 239,024 $ 257,521
Net cash used in investing activities (407,170) (85,981)
Net cash provided by (used in) financing activities 105,299 (212,657)
Net decrease in cash (62,847) (41,117)
Cash at beginning of period 106,136 109,747
Cash at end of period $ 43,289 $ 68,630
Net cash provided by operating activities for the six months ended June 30, 2026 and 2025 was $239.0 million and $257.5 million, respectively, decrease of $18.5 million. The decrease was the result of an $157.3 million increase in net loss, a net increase of $187.0 million in non-cash charges, primarily from goodwill impairment, depreciation and amortization, the reduction in the carrying amount of operating and finance lease right-of-use assets, and equity-based compensation, partially offset by a decrease in deferred income taxes, and a net $48.2 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 six months ended June 30, 2026 and 2025 was $407.2 million and $86.0 million, respectively. The use of funds in 2026 primarily consisted of $287.5 million for equipment and other fixed asset purchases, $127.4 million for business acquisitions, partially offset by $6.3 million received related to a contingent payment from the disposition of a business that occurred in 2025, and $1.4 million of proceeds from the sale of assets. The net use of funds for the 2025 period consisted of $184.3 million for equipment and other fixed asset purchases and $18.6 million for business acquisitions, partially offset by$115.7 million of proceeds from the sale of businesses
For the six months ended June 30, 2026 and 2025, net cash provided by financing activities was $105.3 million and net cash used in financing activities was $212.7 million, respectively. The net cash provided by financing activities for the 2026 period primarily consisted of borrowings on long-term debt and lines of credit of $575.0 million and proceeds of $1.0 million in connection with the employee stock purchase plan, partially offset by repayments of $433.1 million on long-term debt, lines of credit and finance lease liabilities, payments of $26.8 million in connection with the Company's liability relating to the TRA, payments of $5.0 million for debt financing costs, payments of $3.1 million for tax withholdings associated with equity-based compensation and stock option exercises, and payments of $2.3 million for distributions to the noncontrolling interest. Net cash used in financing activities for the 2025 period primarily consisted of repayments of $183.3 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, a payment of $2.6 million for a distribution to the noncontrolling interest, and payments of $2.1 million for tax withholdings associated with equity-based compensation, offset by proceeds of $0.6 million in connection with the employee stock purchase plan.
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Free Cash Flow
The following table reconciles net cash provided by operating activities to free cash flow, which includes the cash flows from continuing operations and discontinued operations, for the three and six months ended June 30, 2026 and 2025:
Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2026 2025 2026 2025
(Unaudited)
Net cash provided by operating activities $ 145,302 $ 161,994 $ 239,024 $ 257,521
Purchases of equipment and other fixed assets (166,244) (88,665) (287,456) (184,250)
Free cash flow $ (20,942) $ 73,329 $ (48,432) $ 73,271
Free cash flow was negative $20.9 million for the three months ended June 30, 2026 compared to $73.3 million for the three months ended June 30, 2025. The decrease in free cash flow was due to an increase in purchases of patient medical equipment during the three months ended June 30, 2026 primarily to support capitated revenue arrangements.
Free cash flow was negative $48.4 million for the six months ended June 30, 2026 compared to $73.3 million for the six months ended June 30, 2025. The decrease in free cash flow was due to an increase in purchases of patient medical equipment during the six months ended June 30, 2026 primarily to support capitated revenue arrangements.
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 valuation of goodwill. There have been no material changes in the Company’s critical accounting policies and critical estimates as compared to the critical accounting policies and critical estimates described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.