AdaptHealth Corp

Previous wording

Net revenue for the six months ended June 30, 2024 and 2023 was $1,598.5 million and $1,537.9 million, respectively, an increase of $60.6 million, or 3.9%. The increase in net revenue was primarily driven by non-acquired growth $58.0 million, as well as acquisitions, which increased revenue by $2.6 million. Net revenue from AdaptHealth's sleep business increased by $38.6 million, or 6.5%, for the six months ended June 30, 2024 compared to the prior year period, primarily due to increased patient census driven by strong patient demand for sleep products, including CPAP resupply products. In addition, net revenue from AdaptHealth's respiratory business increased by $24.6 million, or 8.3%, for the six months ended June 30, 2024 compared to the prior year period, primarily due to increased patient census driven by strong patient demand for respiratory products. These increases were partially offset by a decrease in net revenue from

Current wording

Net revenue for the three months ended September 30, 2024 and 2023 was $805.9 million and $804.0 million, respectively, an increase of $1.8 million, or 0.2%. The increase in net revenue was primarily driven by non-acquired growth of $1.5 million, as well as acquisitions, which increased revenue by $0.4 million. Net revenue from AdaptHealth's sleep product category increased by $11.1 million, or 3.5%, for the three months ended September 30, 2024 compared to the prior year period, primarily due to increased patient census driven by strong patient demand for sleep products, including CPAP resupply products. In addition, net revenue from AdaptHealth's respiratory product category increased by $12.9 million, or 8.6%, for the three months ended September 30, 2024 compared to the prior year period, primarily due to increased patient census driven by strong patient demand for respiratory products. These increases were partially offset by a decrease in net revenue from AdaptHealth's diabetes product category, which decreased by $18.9 million, or 11.8%, for the three months ended September 30, 2024 compared to the prior year period, primarily due to a shift in diabetes patients by certain large commercial insurance and other payors from DME suppliers to dual-benefit and pharmacy-only suppliers, and a decrease in CGM patient census.

Previous wording

For the three months ended June 30, 2024, net sales revenue (recognized at a point in time) comprised 64% of total net revenue, compared to 66% of total net revenue for the three months ended June 30, 2023. For the three months ended June 30, 2024, net revenue from fixed monthly equipment reimbursements comprised 32% of total net revenue, compared to 34% of total net revenue for the three months ended June 30, 2023. For the three months ended June 30, 2024, net revenue from capitated revenue arrangements comprised 4% of total net revenue. For the three months ended June 30, 2023, net revenue from capitated revenue arrangements was immaterial, and is included in net sales revenue and net revenue from fixed monthly equipment reimbursements by core product line.

Current wording

For the three months ended September 30, 2024, net sales revenue (recognized at a point in time) comprised 63% of total net revenue, compared to 66% of total net revenue for the three months ended September 30, 2023. For the three months ended September 30, 2024, net revenue from fixed monthly equipment reimbursements comprised 33% of total net revenue, compared to 34% of total net revenue for the three months ended September 30, 2023. For the three months ended September 30, 2024, net revenue from capitated revenue arrangements comprised 4% of total net revenue. For the three months ended September 30, 2023, net revenue from capitated revenue arrangements was immaterial, and is included in net sales revenue and net revenue from fixed monthly equipment reimbursements by core product line.

Previous wording

Cost of net revenue for the six months ended June 30, 2024 and 2023 was $1,354.7 million and $1,328.8 million, respectively, an increase of $25.9 million or 1.9%. The cost of products and supplies decreased by $5.8 million. Slightly higher net sales revenue and general inflationary cost increases resulted in higher costs of products and supplies, however, the impact of credits received from a supplier related to certain product recalls which were recognized as a reduction to the cost of products and supplies contributed to the overall decrease compared to the prior year period. Salaries, labor and benefits increased by $10.4 million, primarily due to increased benefits costs and annual merit increases, partially offset by cost savings actions implemented in the second half of 2023 resulting in headcount reductions. Patient equipment depreciation decreased by $0.8 million, primarily due to lower net revenue from fixed monthly equipment reimbursements, partially offset by higher medical equipment prices. The increase in other operating expenses was primarily due to higher distribution expenses, vehicle rental costs, and revenue cycle management costs.

Current wording

Cost of net revenue for the three months ended September 30, 2024 and 2023 was $681.9 million and $693.5 million, respectively, a decrease of $11.6 million or 1.7%. The cost of products and supplies decreased by $12.3 million, primarily as a result of lower net sales revenue from AdaptHealth's diabetes product category, partially offset by general inflationary cost increases. Salaries, labor and benefits increased by $0.6 million, primarily due to annual merit increases, offset by a decrease in incentive-based compensation and the impact of cost savings actions implemented in the second half of 2023 resulting in headcount reductions. Patient equipment depreciation decreased by $3.3 million, primarily due to lower net revenue from fixed monthly equipment reimbursements, partially offset by higher medical equipment prices. The increase in other operating expenses was primarily due to higher distribution expenses, vehicle rental costs, equipment repair costs, and revenue cycle management costs.

Previous wording

General and Administrative Expenses. General and administrative expenses for the three months ended June 30, 2024 and 2023 were $57.0 million and $50.1 million respectively, an increase of $6.9 million or 13.8%. This increase is primarily due to higher legal and professional fees, incentive-based compensation, contract labor costs and other non-recurring expenses, partially offset by lower restructuring expenses related to a cost savings program that was implemented in 2023 and, to a lesser extent, equity-based compensation expense. General and administrative expenses as a percentage of net revenue was 7.1% in the 2024 period, compared to 6.3% in the 2023 period. General and administrative expenses in the 2024 period included $4.5 million of equity-based compensation expense and other non-recurring expenses of $9.2 million, consisting of $5.8 million of expenses associated with systems implementation activities, $1.6 million of expenses associated with litigation, and $1.8 million of other expenses, primarily related toprofessional and consulting expenses. General and administrative expenses in the 2023 period included $7.7 million of equity-based compensation expense and other non-recurring expenses of $9.5 million, consisting of $5.5 million of expenses associated with a cost savings program,

Current wording

General and Administrative Expenses. General and administrative expenses for the three months ended September 30, 2024 and 2023 were $49.2 million and $45.2 million respectively, an increase of $4.0 million or 8.9%. This increase is primarily due to higher professional and consulting fees, software costs, severance charges, and increased legal reserves, partially offset by lower equity-based compensation expense. General and administrative expenses as a percentage of net revenue was 6.1% in the 2024 period, compared to 5.6% in the 2023 period. General and administrative expenses in the 2024 period included $0.4 million of equity-based compensation expense and other non-recurring expenses of $8.4 million, consisting of $3.2 million of severance charges (primarily related to the separation of the Company's former President), $2.8 million of expenses associated with systems implementation activities, $1.9 million of other net expenses, primarily related toprofessional and consulting expenses, and$0.5 million of expenses associated with litigation. General and administrative expenses in the 2023 period included $3.5 million of equity-based compensation expense and other non- recurring expenses of $7.3 million, consisting of $2.9 million of expenses associated with litigation, $2.3 million of expenses associated with a cost savings program, $1.3 million of expenses associated with systems implementation activities, and $0.8 million of other expenses.

Previous wording

Depreciation and amortization, excluding patient equipment depreciation. Depreciation and amortization, excluding patient equipment depreciation, for the three months ended June 30, 2024 and 2023 was $11.4 million and $15.5 million, respectively, a decrease of $4.2 million, primarily related to lower intangible amortization expense.

Current wording

Depreciation and amortization, excluding patient equipment depreciation. Depreciation and amortization, excluding patient equipment depreciation, for the three months ended September 30, 2024 and 2023 was $11.3 million and $14.5 million, respectively, a decrease of $3.3 million, primarily related to lower intangible amortization expense.

Previous wording

Interest Expense, net. Interest expense, net for the three months ended June 30, 2024 and 2023 was $33.0 million and $32.6 million, respectively, an increase of $0.5 million. Interest expense related to AdaptHealth's credit agreement decreased slightly in 2024 compared to 2023, primarily as a result of lower average outstanding borrowings in 2024 compared to 2023, offset by higher interest rates. Interest expense on AdaptHealth's finance leases increased by $0.6 million in 2024 compared to 2023.

Current wording

Interest Expense, net. Interest expense, net for the three months ended September 30, 2024 and 2023 was $31.4 million and $32.3 million, respectively, a decrease of $0.9 million. Interest expense related to AdaptHealth's credit agreement decreased $1.5 million in 2024 compared to 2023, primarily as a result of lower interest rates as well as lower average outstanding borrowings in 2024 compared to 2023. Interest expense on AdaptHealth's finance leases increased by $0.7 million in 2024 compared to 2023.

Previous wording

Change in Fair Value of Warrant Liability. AdaptHealth has outstanding warrants to purchase shares of Common Stock, as discussed in Note 10, Stockholders’ Equity, to the accompanying June 30, 2024 interim consolidated financial statements. These warrants are liability-classified, and the change in fair value of the warrant liability represents a non-cash gain in the 2024 and 2023 periods for the change in the estimated fair value of such liability during the respective periods.

Current wording

Change in Fair Value of Warrant Liability. AdaptHealth has outstanding warrants to purchase shares of Common Stock, as discussed in Note 10, Stockholders’ Equity, to the accompanying September 30, 2024 interim consolidated financial statements. These warrants are liability-classified, and the change in fair value of the warrant liability represents a non-cash gain in the 2024 and 2023 periods for the change in the estimated fair value of such liability during the respective periods. These warrants expire on November 8, 2024.

Previous wording

Income Tax Expense. Income tax expense for the three months ended June 30, 2024 and 2023 was $7.2 million and $5.4 million, respectively. Income tax expense on ordinary income increased due to higher pre-tax income, net of warrant liability fair value adjustments and a goodwill impairment charge.

Current wording

Income Tax Expense/Benefit. Income tax expense and income tax benefit for the three months ended September 30, 2024 and 2023 was $8.1 million and $34.6 million, respectively. Income tax expense on ordinary income increased due to higher pre-tax income, net of warrant liability fair value adjustments.

Previous wording

The following table summarizes AdaptHealth’s consolidated results of operations for the six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes AdaptHealth’s consolidated results of operations for the nine months ended September 30, 2024 and 2023:

Previous wording

Net revenue for the three months ended June 30, 2024 and 2023 was $806.0 million and $793.3 million, respectively, an increase of $12.7 million, or 1.6%. The increase in net revenue was primarily driven by non-acquired growth of $11.9 million, as well as acquisitions, which increased revenue by $0.8 million. Net revenue from AdaptHealth's sleep business increased by $19.8 million, or 6.5%, for the three months ended June 30, 2024 compared to the prior year period, primarily due to increased patient census driven by strong patient demand for sleep products, including CPAP resupply products. In addition, net revenue from AdaptHealth's respiratory business increased by $7.1 million, or 4.6%, for the three months ended June 30, 2024 compared to the prior year period, primarily due to increased patient census driven by strong patient demand for respiratory products. These increases were partially offset by a decrease in net revenue from AdaptHealth's diabetes business, which decreased by $17.7 million, or 10.5%, for the three months ended June 30, 2024 compared to the prior year period, primarily due to a shift in diabetes patients by certain large commercial insurance and other payors from DME suppliers to dual-benefit and pharmacy-only suppliers, and lower net revenue from insulin pumps and supplies as a result of a shift toward more pumps being sold to patients through the pharmacy channel, as well as the effect from manufacturers bringing additional distribution business in-house and a decrease in CGM supplies patient census.

Current wording

Net revenue for the nine months ended September 30, 2024 and 2023 was $2,404.3 million and $2,341.9 million, respectively, an increase of $62.4 million, or 2.7%. The increase in net revenue was primarily driven by non-acquired growth $59.4 million, as well as acquisitions, which increased revenue by $2.9 million. Net revenue from AdaptHealth's sleep product category increased by $49.7 million, or 5.4%, for the nine months ended September 30, 2024 compared to the prior year period, primarily due to increased patient census driven by strong patient demand for sleep products, including CPAP resupply products. In addition, net revenue from AdaptHealth's respiratory product category increased by $37.5 million, or 8.4%, for the nine months ended September 30, 2024 compared to the prior year period, primarily due to increased patient census driven by strong patient demand for respiratory products. These increases were partially offset by a decrease in net revenue from AdaptHealth's diabetes product category, which decreased by $32.1 million, or 6.8%, for the nine months ended September 30, 2024 compared to the prior year period, primarily due to a shift in diabetes patients by certain large commercial insurance and other payors from DME suppliers to dual-benefit and pharmacy-only suppliers, and lower net revenue from insulin pumps and supplies as a result of a shift toward more pumps being sold to patients through the pharmacy channel, as well as the effect from manufacturers bringing additional distribution business in-house and a decrease in CGM patient census.

Previous wording

For the six months ended June 30, 2024, net sales revenue comprised 64% of total net revenue, compared to 66% of total net revenue for the six months ended June 30, 2023. For the six months ended June 30, 2024, net revenue from fixed monthly equipment reimbursements comprised 32% of total net revenue, compared to 34% of total net revenue for the six months ended June 30, 2023. For the six months ended June 30, 2024, net revenue from capitated revenue arrangements comprised 4% of total net revenue. For the six months ended June 30, 2023, net revenue from capitated revenue arrangements was immaterial, and is included in net sales revenue and net revenue from fixed monthly equipment reimbursements by core product line.

Current wording

For the nine months ended September 30, 2024, net sales revenue comprised 64% of total net revenue, compared to 66% of total net revenue for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, net revenue from fixed monthly equipment reimbursements comprised 32% of total net revenue, compared to 34% of total net revenue for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, net revenue from capitated revenue arrangements comprised 4% of total net revenue. For the nine months ended September 30, 2023, net revenue from capitated revenue arrangements was immaterial, and is included in net sales revenue and net revenue from fixed monthly equipment reimbursements by core product line.

Previous wording

The following table summarizes cost of net revenue for the six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes cost of net revenue for the nine months ended September 30, 2024 and 2023:

Previous wording

Cost of net revenue for the three months ended June 30, 2024 and 2023 was $679.0 million and $673.4 million, respectively, an increase of $5.6 million or 0.8%. The cost of products and supplies decreased by $9.6 million primarily as a result of lower net sales revenue and the impact of credits received from a supplier related to certain product recalls which were recognized as a reduction to the cost of products and supplies, which were partially offset by general inflationary cost increases. Salaries, labor and benefits increased by $8.5 million, primarily due to increased benefits costs and annual merit increases, partially offset by cost savings actions implemented in the second half of 2023 resulting in headcount reductions. Patient equipment depreciation decreased by $4.0 million, primarily due to lower net revenue from fixed monthly equipment reimbursements, partially offset by higher medical equipment prices. The increase in other operating expenses was primarily due to higher distribution expenses, vehicle rental costs, and revenue cycle management costs.

Current wording

Cost of net revenue for the nine months ended September 30, 2024 and 2023 was $2,036.5 million and $2,022.3 million, respectively, an increase of $14.3 million or 0.7%. The cost of products and supplies decreased by $18.0 million, primarily related to a decrease in net sales revenue from AdaptHealth's diabetes product category and the impact of credits received from a supplier related to certain product recalls which were recognized as a reduction to the cost of products and supplies, partially offset by general inflationary cost increases. Salaries, labor and benefits increased by $10.9 million, primarily due to increased benefits costs and annual merit increases, partially offset by cost savings actions implemented in the second half of 2023 resulting in headcount reductions. Patient equipment depreciation decreased by $4.1 million, primarily due to lower net revenue from fixed monthly equipment reimbursements, partially offset by higher medical equipment prices. The increase in other operating expenses was primarily due to higher distribution expenses, vehicle rental costs, equipment repair costs, and revenue cycle management costs.

Previous wording

General and Administrative Expenses. General and administrative expenses for the six months ended June 30, 2024 and 2023 were $105.4 million and $97.6 million, respectively, an increase of $7.8 million or 8.0%. This increase is primarily due to higher legal and professional fees, incentive-based compensation, contract labor costs and other non-recurring expenses, partially offset by lower restructuring expenses related to a cost savings program that was implemented in 2023 and, to a lesser extent, equity-based compensation expense. General and administrative expenses as a percentage of net revenue was 6.6% in the 2024 period, compared to 6.3% in the 2023 period. General and administrative expenses in the 2024 period included$8.0 million of equity-based compensation expense and other non-recurring expenses of$12.5 million, consisting of$6.8 million of expenses associated with systems implementation activities,$2.8 million of expenses associated with litigation, and$2.9 million of other expenses, primarily related to professional and consulting expenses. General and administrative expenses in the 2023 period included$12.3 million of equity-based compensation expense and other non-recurring expenses of$17.6 million, consisting of$8.5 millionof expenses associated with litigation,$6.2 million of expenses associated with the cost savings program, $2.6 millionof expenses associated with systems implementation activities, and$0.3 million of other expenses.

Current wording

General and Administrative Expenses. General and administrative expenses for the nine months ended September 30, 2024 and 2023 were $154.6 million and $142.8 million, respectively, an increase of $11.8 million or 8.3%. This increase is primarily due to higher professional and consulting fees, software costs, and increased legal reserves, partially offset by lower equity-based compensation expense and restructuring expenses related to a cost savings program that was implemented in 2023. General and administrative expenses as a percentage of net revenue was 6.4% in the 2024 period, compared to 6.1% in the 2023 period. General and administrative expenses in the 2024 period included$8.4 million of equity-based compensation expense and other non-recurring expenses of$20.9 million, consisting of$9.7 million of expenses associated with systems implementation activities,$3.3 million of expenses associated with litigation,$3.2 million of severance charges (of which $3.0 million relates to the separation of the Company's former President), and$4.8 million of other expenses, primarily related to professional and consulting expenses. General and administrative expenses in the 2023 period included$15.8 million of equity-based compensation expense and other non-recurring expenses of$24.8 million, consisting of$11.3 millionof expenses associated with litigation,$8.5 million of expenses associated with the cost savings program, $3.9 millionof expenses associated with systems implementation activities, and$1.1 million of other expenses.

Previous wording

Depreciation and amortization, excluding patient equipment depreciation. Depreciation and amortization, excluding patient equipment depreciation, for the six months ended June 30, 2024 and 2023 was $22.8 million and $31.1 million, respectively, a decrease of $8.3 million, primarily related to lower intangible amortization expense.

Current wording

Depreciation and amortization, excluding patient equipment depreciation. Depreciation and amortization, excluding patient equipment depreciation, for the nine months ended September 30, 2024 and 2023 was $34.0 million and $45.6 million, respectively, a decrease of $11.6 million, primarily related to lower intangible amortization expense.

Previous wording

Goodwill Impairment. The goodwill impairment charge for the three months ended June 30, 2024 relates to an immaterial business disposal during 2024.

Current wording

Goodwill Impairment. The Company did not recognize an impairment to goodwill during the nine months ended September 30, 2024. The goodwill impairment charge for the nine months ended September 30, 2024 relates to the disposition of certain immaterial custom rehab technology assets during 2024. The Company performed a goodwill impairment test as of September 30, 2023, and based on the results of the test, it was concluded that the estimated fair value of the Company’s reporting unit was less than its carrying value, as such, the Company recognized a non-cash goodwill impairment charge of $511.9 million during the nine months ended September 30, 2023. Refer to Note 5, Goodwill and Identifiable Intangible Assets, for additional information.

Previous wording

Interest Expense, net. Interest expense, net for the six months ended June 30, 2024 and 2023 was $65.5 million and $64.5 million, respectively, an increase of $1.0 million. Interest expense related to AdaptHealth's credit agreement increased slightly in the 2024 period compared to the 2023 period as a result of higher interest rates, offset by lower average outstanding borrowings in 2024 compared to 2023. Interest expense on AdaptHealth's finance leases increased by $1.1 million in 2024 compared to 2023.

Current wording

Interest Expense, net. Interest expense, net for the nine months ended September 30, 2024 and 2023 was $96.9 million and $96.8 million, respectively, an increase of $0.1 million. Interest expense on AdaptHealth's finance leases increased by $1.7 million in 2024 compared to 2023. Interest expense related to AdaptHealth's credit agreement decreased $1.7 million in the 2024 period compared to the 2023 period, primarily as a result of lower interest rates as well as lower average outstanding borrowings in 2024 compared to 2023.

Previous wording

Change in Fair Value of Warrant Liability. AdaptHealth has outstanding warrants to purchase shares of Common Stock, as discussed in Note 10, Stockholders’ Equity, to the accompanying June 30, 2024 interim consolidated financial statements. These warrants are liability-classified, and the change in fair value of the warrant liability represents a non-cash charge in thesix months ended June 30, 2024 and a non-cash gain in thesix months ended June 30, 2023, for the change in the estimated fair value of such liability during the respective periods.

Current wording

Change in Fair Value of Warrant Liability. AdaptHealth has outstanding warrants to purchase shares of Common Stock, as discussed in Note 10, Stockholders’ Equity, to the accompanying September 30, 2024 interim consolidated financial statements. These warrants are liability-classified, and the change in fair value of the warrant liability represents a non-cash gain in the 2024 and 2023 periods for the change in the estimated fair value of such liability during the respective periods. These warrants expire on November 8, 2024.

Previous wording

Other Loss. Other loss for the six months ended June 30, 2024 consi sted ofa pre-tax expense of $2.4 million for the change in fair value of shares of AdaptHealth's Common Stock that were issued in July 2024 following final court approval of the settlement of a previously disclosed securities class action lawsuit, as well as an expense of $0.9 million to settle a shareholder derivative complaint. See Note 14, Commitments and Contingencies, for additional information. Other loss for the six months ended June 30, 2023 consisted of$1.4 million of impairments of operating lease right-of-use assets,$1.2 million of expenses associated with legal settlements, and$0.7 million of lease termination costs.

Current wording

Other Loss, net. Other loss for the nine months ended September 30, 2024 consi sted ofa pre-tax expense of $2.4 million for the change in fair value of shares of AdaptHealth's Common Stock that were issued in July 2024 following final court approval of the settlement of a previously disclosed securities class action lawsuit, as well as an expense of $0.9 million to settle a shareholder derivative complaint. See Note 14, Commitments and Contingencies, for additional information. Other loss, net for the nine months ended September 30, 2023 consi sted of $4.1 million of lease termination costs associated with a cost management program, $1.4 million of impairments of operating lease right-of-use assets, $1.2 million of expenses associated with legal settlements, anda $0.3 million charge for the increase in the fair value of a contingent consideration liability related to an acquisition, offset by $0.5 million relating to the write-off of certain operating lease liabilities for closed locations.

Previous wording

Income Tax Expense. Income tax expense for the six months ended June 30, 2024 and 2023 was $13.9 million and $3.7 million, respectively. The increase in income tax expense was primarily related to higher pre-tax income, net of warrant liability fair value adjustments and goodwill impairment charges.

Current wording

Income Tax Expense / Benefit. Income tax expense and income tax benefit for the nine months ended September 30, 2024 and 2023 was $21.9 million and $30.9 million, respectively. The increase in income tax expense was primarily related to higher pre-tax income, net of warrant liability fair value adjustments and goodwill impairment charges.

Previous wording

AdaptHealth defines Adjusted EBITDA as EBITDA (as defined above), plus equity-based compensation expense, change in fair value of the warrant liability, goodwill impairment, litigation settlement expense (gain), and certain other non-recurring items of expense or income.

Current wording

AdaptHealth defines Adjusted EBITDA as EBITDA (as defined above), plus equity-based compensation expense, change in fair value of the warrant liability, goodwill impairment, loss on extinguishment of debt, litigation settlement expense, and certain other non-recurring items of expense or income.

Previous wording

The following unaudited table presents the reconciliation of net income attributable to AdaptHealth Corp. to EBITDA and Adjusted EBITDA, and the reconciliation of net income attributable to AdaptHealth Corp. as a percentage of net revenue to Adjusted EBITDA Margin, for the three months ended June 30, 2024 and 2023:

Current wording

The following unaudited table presents the reconciliation of net income (loss) attributable to AdaptHealth Corp. to EBITDA and Adjusted EBITDA, and the reconciliation of net income (loss) attributable to AdaptHealth Corp. as a percentage of net revenue to Adjusted EBITDA Margin, for the three months ended September 30, 2024 and 2023:

Previous wording

(e)The 2024 period consists of $6.8 million of consulting expenses associated with systems implementation activities, $2.8 million of expenses associated with litigation, $1.6 million write-down of assets, and $3.1 million of other non-recurring expenses. The 2023 period consists of $9.6 million of expenses associated with litigation, $4.9 million of severance charges (of which $2.9 million relates to the separation of the Company's former CEO), $2.6 million of consulting expenses associated with systems implementation activities, $1.4 million of impairments of operating lease right-of-use assets, and $3.4 million of other non-recurring expenses.

Current wording

(e)The 2024 period consists of $3.3 million of severance charges (primarily related to the separation of the Company's former President), $2.8 million of consulting expenses associated with systems implementation activities, $1.1 million write-down of assets, $0.5 million of expenses associated with litigation, and $1.5 million of other non-recurring expenses. The 2023 period consists of $3.6 million of lease termination costs associated with a cost management program, $2.9 million of expenses associated with litigation, $1.5 million of severance charges, $1.3 million of consulting expenses associated with systems implementation activities, and $2.5 million of other non-recurring expenses.

Previous wording

The following unaudited table presents the reconciliation of net income attributable to AdaptHealth Corp. to EBITDA and Adjusted EBITDA, and the reconciliation of net income attributable to AdaptHealth Corp. as a percentage of net revenue to Adjusted EBITDA Margin, for the six months ended June 30, 2024 and 2023:

Current wording

The following unaudited table presents the reconciliation of net income (loss) attributable to AdaptHealth Corp. to EBITDA and Adjusted EBITDA, and the reconciliation of net income (loss) attributable to AdaptHealth Corp. as a percentage of net revenue to Adjusted EBITDA Margin, for the nine months ended September 30, 2024 and 2023:

Previous wording

(b)Represents a non-cash charge or gainfor the change in the estimated fair value of the warrant liability. See Note 10, Stockholders’ Equity, included in the accompanying notes to the interim consolidated financial statements for the three and six months ended June 30, 2024 for additional discussion of such non-cash charge or gain.

Current wording

(b)Represents a non-cash gainfor the change in the estimated fair value of the warrant liability. See Note 10, Stockholders’ Equity, included in the accompanying notes to the interim consolidated financial statements for the three and nine months ended September 30, 2024 for additional discussion of such non-cash gain.

Previous wording

(d)Represents a $2.4 million charge for the change in fair value of shares of Common Stock of the Company that were issued in July 2024 following final court approval of the previously disclosed Securities Settlement, as well as an expense of $0.9 million to settle a shareholder derivative complaint. See Note 14, Commitments and Contingencies, included in the accompanying notes to the interim consolidated financial statements for the three and six months ended June 30, 2024 for additional information.

Current wording

(e)Represents a $2.4 million charge for the change in fair value of shares of Common Stock of the Company that were issued in July 2024 following final court approval of the previously disclosed Securities Settlement, as well as an expense of $0.9 million to settle a shareholder derivative complaint. See Note 14, Commitments and Contingencies, included in the accompanying notes to the interim consolidated financial statements for the three and nine months ended September 30, 2024 for additional information.

Previous wording

(e)The 2024 period consists of $5.8 million of consulting expenses associated with systems implementation activities, $1.6 million of expenses associated with litigation, $0.9 million write-down of assets, and $2.0 million of other non-recurring expenses. The 2023 period consists of $2.5 million of expenses associated with litigation, $4.9 million of severance charges (of which$2.9 million relates to the separation of the Company's former CEO),$1.4 million of consulting expenses associated with systems implementation activities, $1.4 million of impairments of operating lease right-of-use assetsand $2.5 million of other non-recurring expenses.

Current wording

(f)The 2024 period consists of $9.7 million of consulting expenses associated with systems implementation activities, $3.3 million of severance charges (primarily related to the separation of the Company's former President), $3.3 million of expenses associated with litigation, $2.7 million write-down of assets, and $4.5 million of other non-recurring expenses. The 2023 period consists of $12.5 million of expenses associated with litigation, $6.3 million of severance charges (of which $2.9 million related to the separation of the Company's former CEO), $4.1 million of lease termination costs associated with a cost management program, $3.9 million of consulting expenses associated with systems implementation activities, $0.9 million of net impairments of operating lease right-of-use assets, and $6.1 million of other non-recurring expenses.

Previous wording

As of June 30, 2024, AdaptHealth had approximately $69.8 million of cash.

Current wording

As of September 30, 2024, AdaptHealth had approximately $100.2 million of cash.

Previous wording

In January 2021, AdaptHealth entered into a credit agreement (as amended, the "2021 Credit Agreement"). As of June 30, 2024, AdaptHealth had $650.0 million outstanding under the 2021 Credit Agreement. The 2021 Credit Agreement consisted of a $800 million term loan (the “2021 Term Loan”) and $450 million in commitments for revolving credit loans with a $55.0 million letter of credit sublimit (the “2021 Revolver”), both with maturities in January 2026. The outstanding borrowing under the 2021 Term Loan requires quarterly principal repayments of $10.0 million through December 31, 2025, and the unpaid principal balance is due at maturity in January 2026. The Company made voluntary repayments on the 2021 Term Loan totaling $36.6 million during thesix months ended June 30, 2024. Borrowings under the 2021 Revolver may be used for working capital and other general corporate purposes, including for capital expenditures and acquisitions permitted under the 2021 Credit Agreement. During the six months ended June 30, 2024, the Company borrowed $75.0 million under the 2021 Revolver which was repaid during that period. As of June 30, 2024, there was $21.6 million outstanding under letters of credit. As of the date of this filing, there were no outstanding borrowings under the 2021 Revolver. As of June 30, 2024, based on the financial debt covenants under the 2021 Credit Agreement, the maximum amount the Company could borrow under the 2021 Revolver, net of outstanding borrowings, and remain in compliance with the financial debt covenants under the agreement was $346.4 million.

Current wording

In September 2024, AdaptHealth entered into an amendment to its then existing credit agreement (as amended, the "2024 Credit Agreement"). As of September 30, 2024, AdaptHealth had $600.0 million outstanding under the 2024 Credit Agreement. The 2024 Credit Agreement includes a $650 million term loan (the “2024 Term Loan”) and $300 million in revolving credit commitments with a $55.0 million letter of credit sublimit (the “2024 Revolver”, and together with the 2024 Term Loan, the "2024 Credit Facility"). The 2024 Credit Facility matures in September 2029. However, if the 6.125% Senior Notes (as defined below) have not been refinanced (to extend the maturity date to a date that is later than December 13, 2029) or repaid in full, on or prior to December 31, 2027, then the 2024 Credit Facility will mature on May 1, 2028; and, if the 4.625% Senior Notes (as defined below) have not been refinanced (to extend the maturity date to a date that is later than December 13, 2029) or repaid in full, on or prior to December 31, 2028, then the 2024 Credit Facility will mature on May 1, 2029. As of September 30, 2024, the outstanding borrowing under the 2024 Term Loan requires quarterly principal repayments of $4.1 million through September 30, 2026, increasing to $8.1 million from December 31, 2026 through June 30, 2029, and the remaining unpaid principal balance is due in September 2029. In September 2024, AdaptHealth made a voluntary repayment on the 2024 Term Loan of $50.0 million. At September 30, 2024, there was $600.0 million outstanding under the 2024 Term Loan. Borrowings under the 2024 Revolver may be used for working capital and other general corporate purposes, including for capital expenditures and acquisitions permitted under the 2024 Credit Agreement. AdaptHealth had no borrowings under the 2024 Revolver. At September 30, 2024, there was $22.4 million outstanding under letters of credit. As of the date of this filing, there were no outstanding borrowings under the 2024 Revolver. At September 30, 2024, based on the financial debt covenants under the 2024 Credit Agreement, the maximum amount AdaptHealth could borrow under the 2024 Revolver and remain in compliance with the financial debt covenants under the agreement was $277.6 million.

Previous wording

At the option of AdaptHealth, amounts borrowed under the 2021 Credit Agreement bear interest at variable rates based upon either the Base Rate (as defined), payable quarterly, or Term SOFR (as defined), payable monthly or quarterly. Interest periods for loans based on Term SOFR are available for one or three months at the option of AdaptHealth. Borrowings using Base Rate 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 (as defined) ranging from 0.50% to 2.25% per annum determined based on the Consolidated Senior Secured Leverage Ratio (as defined) of AdaptHealth. Borrowings using Term SOFR 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) a Term SOFR Adjustment (as defined) of 0.10%, plus (c) an Applicable Margin (as defined) ranging from 1.50% to 3.25% per annum determined based on the Consolidated Senior Secured Leverage Ratio of AdaptHealth. The 2021 Revolver carries a commitment fee during the term of the 2021 Credit Agreement ranging from 0.25% to 0.50% per annum of the actual daily undrawn portion of the 2021 Revolver depending on the Consolidated Senior Secured Leverage Ratio of AdaptHealth.

Current wording

At the option of AdaptHealth, amounts borrowed under the 2024 Credit Agreement bear interest at variable rates based upon either the Base Rate (as defined in the 2024 Credit Agreement), payable quarterly, or Term SOFR (as defined in the 2024 Credit Agreement), payable monthly or every three months depending on the interest period selected. Interest periods for Term SOFR loans are available for one, three, or six months at the option of AdaptHealth. Base Rate loans accrue interest at a per annum rate equal to the sum of (a) the Base Rate determined on each day (subject to a zero percent floor), plus an applicable margin ranging from 0.50% to 2.25% per annum based on AdaptHealth's Consolidated Senior Secured Leverage Ratio (as defined in the 2024 Credit Agreement). Term SOFR loans accrue interest at a per annum rate equal to the sum of (a) Term SOFR for the applicable interest period (subject to a zero percent floor), plus (b) an applicable margin ranging from 1.50% to 3.25% per annum based on AdaptHealth's Consolidated Senior Secured Leverage Ratio. The 2024 Revolver carries a commitment fee during the term of the 2024 Credit Agreement ranging from 0.25% to 0.50% per annum of the actual daily undrawn portion of the 2024 Revolver depending upon AdaptHealth's Consolidated Senior Secured Leverage Ratio.

Previous wording

Any borrowings under the 2021 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 2021 Revolver may be reborrowed. Mandatory prepayments are required under the 2021 Revolver when borrowings and letter of credit usage exceed the total commitments for revolving credit loans. Mandatory prepayments are also required in connection with the disposition of assets to the extent the proceeds thereof are not reinvested, unpermitted debt transactions, and from annual Excess Cash Flow (as defined) if certain leverage tests are not met.

Current wording

Any borrowing under the 2024 Credit Agreement may be repaid, in whole or in part, at any time and from time to time without premium or penalty, other than customary breakage costs, and any amounts repaid under the 2024 Revolver may be reborrowed. Mandatory prepayments are required under the 2024 Revolver when borrowings and letter of credit usage exceed the total commitments for revolving credit loans. Mandatory prepayments are also required in connection with certain dispositions of assets and receipt of certain insurance proceeds or condemnation awards to the extent proceeds thereof are not reinvested, and unpermitted debt transactions.

Previous wording

AdaptHealth may also redeem some or all of the 6.125% Senior Notes before August 1, 2023 at a redemption price of 100% of the principal amount of the 6.125% Senior Notes, plus a “make-whole” premium, together with accrued and unpaid interest. In addition, AdaptHealth may redeem up to 40% of the original aggregate principal amount of the 6.125% Senior Notes before August 1, 2023 with the proceeds from certain equity offerings at a redemption price equal to 106.125% of the principal amount of the 6.125% Senior Notes, together with accrued and unpaid interest. Furthermore, AdaptHealth may be required to make an offer to purchase the 6.125% Senior Notes upon the sale of certain assets or upon specific kinds of changes of control.

Current wording

In July 2020, AdaptHealth issued $350.0 million aggregate principal amount of 6.125% senior unsecured notes (the “6.125% Senior Notes”). The 6.125% Senior Notes will mature on August 1, 2028. Interest on the 6.125% Senior Notes is payable on February 1st and August 1st of each year. The 6.125% Senior Notes will be redeemable at AdaptHealth’s option, in whole or in part, at any time on or after August 1, 2023, and the redemption price for the 6.125% Senior Notes if redeemed during the 12 months beginning (i) August 1, 2023 is 103.063%, (ii) August 1, 2024 is 102.042%, (iii) August 1, 2025 is 101.021% and (iv) August 1, 2026 and thereafter is 100.000%, in each case together with accrued and unpaid interest. AdaptHealth may also redeem some or all of the 6.125% Senior Notes before August 1, 2023 at a redemption price of 100% of the principal amount of the 6.125% Senior Notes, plus a “make-whole” premium, together with accrued and unpaid interest. In addition, AdaptHealth may redeem up to 40% of the original aggregate principal amount of the 6.125% Senior Notes before August 1, 2023 with the proceeds from certain equity offerings at a redemption price equal to 106.125% of the principal amount of the 6.125% Senior Notes, together with accrued and unpaid interest. Furthermore, AdaptHealth may be required to make an offer to purchase the 6.125% Senior Notes upon the sale of certain assets or upon specific kinds of changes of control.

Previous wording

As of June 30, 2024 and December 31, 2023, AdaptHealth had working capital of $90.4 million and $112.0 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.

Current wording

As of September 30, 2024 and December 31, 2023, AdaptHealth had working capital of $130.8 million and $112.0 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.

Previous wording

Cash Flow. The following table presents selected data from AdaptHealth’s consolidated statements of cash flows for the six months ended June 30, 2024 and 2023:

Current wording

Cash Flow. The following table presents selected data from AdaptHealth’s consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023:

Previous wording

Net cash provided by operating activities for the six months ended June 30, 2024 and 2023 was $247.0 million and $226.6 million, respectively, an increase of $20.5 million. The increase was the result of a $12.3 million reduction in net income, a net increase of $38.3 million in non-cash charges, primarily from goodwill impairment charges, depreciation and amortization, the change in the estimated fair value of the warrant liability, deferred income taxes, and the reduction in the carrying amount of operating and finance lease right-of-use assets, a payment of $1.9 million for contingent consideration in connection with an acquisition, and a net $3.8 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.

Current wording

Net cash provided by operating activities for the nine months ended September 30, 2024 and 2023 was $391.4 million and $325.4 million, respectively, an increase of $66.0 million. The increase was the result of a $464.6 million increase in net income, a net decrease of $428.8 million in non-cash charges, primarily from goodwill impairment charges, depreciation and amortization, the change in the estimated fair value of the warrant liability, deferred income taxes, and the reduction in the carrying amount of operating and finance lease right-of-use assets, a payment of $1.9 million for contingent consideration in connection with an acquisition, and a net $32.1 million increase resulting from the change in operating assets and liabilities, primarily from the change in accounts receivable, inventory and accounts payable and accrued expenses.

Previous wording

Net cash used in investing activities for the six months ended June 30, 2024 and 2023 was $169.2 million and $189.8 million, respectively. The use of funds in the 2024 period related to equipment and other fixed asset purchases. The use of funds in the 2023 period consisted of $171.7 million for equipment and other fixed asset purchases, $17.9 million for business acquisitions, and $0.1 million for other investments.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2024 and 2023 was $223.4 million and $266.9 million, respectively. The use of funds in the 2024 period consisted of $228.7 million for equipment and other fixed asset purchases, partially offset by $5.3 million of proceeds from the sale of assets. The use of funds in the 2023 period consisted of $248.8 million for equipment and other fixed asset purchases, $17.9 million for business acquisitions, and $0.1 million for other investments.

Previous wording

Net cash used in financing activities for the six months ended June 30, 2024 and 2023 was $85.2 million and $38.0 million, respectively. Net cash used in financing activities for the 2024 period consisted of repayments of $149.9 million on long-term debt and finance lease liabilities, a payment of $5.1 million for contingent consideration and deferred purchase price in connection with acquisitions, a payment of $3.5 million for a distribution to the noncontrolling interest, payments of $1.4 million in connection with the Company's liability relating to the TRA, and payments of $1.4 million for tax withholdings associated with equity-based compensation, offset by borrowings on lines of credit of $75.0 million, proceeds of $0.6 million in connection with the employee stock purchase plan and proceeds of $0.5 million relating to stock option exercises. Net cash used in financing activities for the 2023 period consisted of repayments of $68.7 million on long-term debt and finance lease liabilities, payments of $9.2 million for Common Stock purchases under a share repurchase program, payments of $3.2 million in connection with the Company's liability relating to the TRA, payments of $4.4 million for tax withholdings associated with equity-based compensation and stock option exercises, a payment of $2.5 million for a distribution to the noncontrolling interest, and payments of $1.0 million for deferred purchase price in connection with acquisitions, offset by borrowings of long-term debt of $50.0 million and proceeds of $1.0 million in connection with the employee stock purchase plan.

Current wording

Net cash used in financing activities for the nine months ended September 30, 2024 and 2023 was $145.0 million and $48.7 million, respectively. Net cash used in financing activities for the 2024 period consisted of repayments of $381.7 million on long-term debt (primarily in connection with the refinancing of the Company's credit agreement) and finance lease liabilities, payments of $6.4 million for debt issuance costs, payments of $5.3 million for contingent consideration and deferred purchase price in connection with acquisitions, a payment of $3.5 million for a distribution to the noncontrolling interest, payments of $1.8 million for tax withholdings associated with equity-based compensation, and payments of $1.4 million in connection with the Company's liability relating to the TRA, offset by borrowings on long-term debt and lines of credit of $253.5 million, proceeds of $1.0 million in connection with the employee stock purchase plan and proceeds of $0.7 million relating to stock option exercises. Net cash used in financing activities for the 2023 period consisted of repayments of $79.6 million on long-term debt and finance lease liabilities payments of $9.2 million for Common Stock purchases under a share repurchase program, payments of $3.2 million in connection with the Company's liability relating to the TRA, payments of $5.3 million for tax withholdings associated with equity-based compensation and stock option exercises, a payment of $2.5 million for a distribution to the noncontrolling interest, and payments of $1.5 million for deferred purchase price in connection with acquisitions, offset by borrowings of long-term debt of $50.0 million, proceeds of $2.0 million in connection with the employee stock purchase plan and proceeds of $0.5 million relating to stock option exercises.

Previous wording

The following table reconciles net cash provided by operating activities to free cash flow, which is a non-GAAP measure, for the three and six months ended June 30, 2024 and 2023:

Current wording

The following table reconciles net cash provided by operating activities to free cash flow, which is a non-GAAP measure, for the three and nine months ended September 30, 2024 and 2023:

Previous wording

Free cash flow was $116.7 million for the three months ended June 30, 2024 compared to $3.7 million for the three months ended June 30, 2023. The increase in free cash flow was due to higher net cash provided by operating activities, primarily due to a net increase in the source of cash from operating assets and liabilities related to accounts receivable, inventory and accounts payable and accrued expenses. In addition, during the three months ended June 30, 2024, free cash flow was positively impacted by the release of pending claims related to the Change Healthcare cybersecurity incident and funds received in connection with AdaptHealth's participation in the Optum Temporary Funding Assistance Program (see further discussion below). The increase in free cash flow was also, to a lesser extent, due to a decrease in, and timing of, purchases of patient medical equipment for operating requirements.

Current wording

Free cash flow was $84.8 million for the three months ended September 30, 2024 compared to $21.7 million for the three months ended September 30, 2023. The increase in free cash flow was due to higher net cash provided by operating activities, primarily due to a net increase in the source of cash from operating assets and liabilities. Free cash flow during the three months ended September 30, 2024 was positively impacted by cash collections of accounts receivable from certain pending claims related to the Change Healthcare cybersecurity incident (see further discussion below). The increase in free cash flow was also, to a lesser extent, due to a decrease in, and timing of, purchases of patient medical equipment for operating requirements.

Previous wording

Free cash flow was $77.9 million for the six months ended June 30, 2024 compared to $54.8 million for thesix months ended June 30, 2023. The increase in free cash flow was due to higher net cash provided by operating activities, primarily from funds received in connection with AdaptHealth's participation in the Optum Temporary Funding Assistance Program (see further discussion below). The increase in free cash flow was also, to a lesser extent, due to a decrease in, and timing of, purchases of patient medical equipment for operating requirements.

Current wording

Free cash flow was $162.7 million for the nine months ended September 30, 2024 compared to $76.6 million for thenine months ended September 30, 2023. The increase in free cash flow was due to higher net cash provided by operating activities, primarily from funds received in connection with AdaptHealth's participation in the Optum Temporary Funding Assistance Program (see further discussion below). The increase in free cash flow was also, to a lesser extent, due to a decrease in, and timing of, purchases of patient medical equipment for operating requirements.